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ODINAKA ANUDU, JOSEPHINE OKOJIE & GBEMI FAMINU

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How weak economy shut down 2,877 firms in 4 years n February 19, 2016, South African retailer Truworths exited Nigeria, shutting down two remaining stores in Africa’s biggest market. The clothing retailer cited stringent import regulations and rising costs as key reasons for exiting the market. Many medium enterprises like Truworths exited the Nigerian market between 2013 and 2017 owing to sluggish growth, recession, regulatory pressure and poor economic management. The latest report by the National Bureau of Statistics and the Small and Medium Enterprises Development Agency (SMEDAN) put this number at 2,877, which

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NGUS jul 29 2020 362.53

Stockbrokers to charge 5% VAT on all stock market transactions

…to dampen investors’ morale Iheanyi Nwachukwu & oluFikayo Owoeye

ll dealing member firms of the Nigerian Stock Exchange (NSE) have been notified to resume charging of 5 percent Value Added Tax (VAT) on all NSE transactions effective next week Thursday, July 25, 2019. Retail and institutional investors are expected to bear the brunt of the new charges, leading to higher

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Inside Jonathan visits, condoles with Fasoranti, says FG’s security approach has failed P. 2 L-R: Agada Apochi, managing director/CEO, Unified Payment Services Ltd; Mike Ogbalu, CEO, Verve International; Adesola Adeduntan, CEO, First Bank of Nigeria Limited; Bashirat Odunewu, group executive, international banking group, FirstBank; Musa Jimoh, deputy director, payments system policy and oversight, Central Bank of Nigeria, and Premier Oiwoh, managing director, NIBSS, at the Joint Seminar with sub-Saharan African Banking and Telecom Regulators convened by FirstBank in Lagos.

First Bank promotes Financial inclusion through digitisation in Sub-Saharan Africa P. 2

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news Global central banks set to ease monetary policy coming months …sick of driving economy alone …MPC holds next week with financial market expecting slight rate cut HOPE MOSES-ASHIKE

lobal Central Banks including the Federal Reserve, European Central Bank (ECB) and perhaps even the Bank of Japan are all set to ease monetary policy in coming months. Fed Chairman Jerome Powell last week confirmed he would cut interest rates this month, while ECB President Mario Draghi is leaning in the same direction. This is coming as the Nigeria’s Monetary Policy Committee (MPC), chaired by Godwin Emefiele, governor of the country’s central bank (CBN), is scheduled to hold next week Monday, July 22, and Tuesday, July 23, 2019, with financial market expecting a slight cut in the Monetary Policy Rate (MPR). Ayodele Akinwunmi, head of research, FSDH Merchant Bank Limited, expects the MPC to reduce the benchmark interest rate by 0.5 percent. Nigeria’s inflation rate dropped to 11.22 percent year on year in June 2019, a 0.18 percent points decrease

compared to 11.40 percent recorded in May. The CBN at the last MPC meeting in May retained all benchmark lending parameters, including the MPR at 13.5 percent, Cash Reserve Ratio (CRR) at 22.5 percent, Liquidity Ratio at 30 percent, as well as asymmetric corridor of +200/-500 basis point around the MPR. Global central bankers are again in the driving seat when it comes to propping up the world economy, but many are demanding governments join them in the rescue effort, according to Bloomberg report. Johnson Chukwu, managing director/CEO, Cowry Asset Management, sees this as a general statement that is not specific for Nigeria. Central bankers and finance ministers from the Group of Seven nations meet today north of Paris for talks on the global economy as an unpredictable trade war risks precipitating a deeper downturn, and some bond markets hint at a growing possibility of a recession. The Bloomberg report

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Jonathan visits, condoles with Fasoranti, says FG’s security approach has failed YOMI AYELESO, Akure

ormer President Goodluck Jonathan on Tuesday asked the President Muhammadu Buhari-led Federal Government to urgently devise new methods of tackling increasing security challenges in the country, saying that the current security approach had failed Nigerians. Jonathan, who spoke with journalists during a condolence visit to Pa Reuben Fasoranti in Akure, Ondo State capital, over the killing of his daughter Funke Olakunrin, said the current approach being used by the security agencies to secure lives and property had failed, necessitating an urgent change in the security architecture and new security mechanisms to fight armed banditry, kidnapping, terrorism, killing and all other vices that have been a daily occurrence in the country. The former president, who arrived at the residence of the Afenifere leader at about 11:20am, Tuesday, said that the security situations in the country had deteriorated and an urgent deployment of technology and human resources to tackle crimes would help in no small measure to curtain the appalling level of insecurity.

“Every generation has human beings been faced by problems and that generation must find way in solving those problems. Every government faces problem. The first commercial kidnapping, because it involves money, happened in 2006 when I was the governor of Bayelsa. From that, it moved to terrorism in the North. It is a major problem in the country,” Jonathan said. “I want to believe that the Federal Government in conjunction with state governments must design a different approach to this issue. I was there as president and security challenges were there but now it is getting worse every day and we can’t continue to use the same old method,” he said. Jonathan said the police, army, DSS and the rest must use technology, urging the Federal Government to set up a special unit to tackle the kidnappings, killings and other crimes. “We can’t continue like this, it is not possible. We can’t even talk about managing the economy of this country when people are not safe. The economy is for the people, people must be alive to enjoy the infrastructures.”

L-R: Chima Igwe, director-general/CEO, Federal Institute of Industrial Research, Oshodi (FIIRO); Nike Akande, former president, Lagos Chamber of Commerce and Industry (LCCI); Moni Udoh, director, ICT, Ministry of Communication; Babatunde Ruwase, president, LCCI, and Gabriel Idahosa, vice president, at the opening ceremony of the LCCI 5th edition of ICTEL EXPO 2019, with the theme ‘Fourth Industrial Revolution: The Nigerian Story’ in Lagos, yesterday. Pic by Olawale Amoo

First Bank promotes financial inclusion through digitisation in sub-Saharan Africa ENDURANCE OKAFOR

irst Bank of Nigeria Limited recently organised a Joint Seminar with subSaharan African Banking and Telecom Regulators to promote financial inclusion through digital innovations in sub-Saharan Africa. The event which was held in Lagos recently was themed “Advancing ePayment and Digital Innovations in Africa- Evolution of Nigeria’s Payment Systems”. The seminar was organised to provide key officers of regulatory authorities in these Markets – notably locations with FirstBank subsidiaries; Ghana, Senegal, DRC, Gambia, Sierra Leone and Guinea – a platform to get familiar with developments in the Nigerian Payment Systems and Digital Products Industry thereon replicat-

banking is concerned. “Today, we have more than 8.5million people on our USSD *894# banking platform, more than 3 million people on our Firstmobile platform. We are the only Bank in Nigeria that has issued cards in excess of 10 million in Nigeria. When you are looking at that institution that has achieved a lot in terms of digital payment, it is FirstBank. More than 80 percent of our transactions are carried out on our digital channels.” According to EfinA’s 2018 biennial report, 63.3percent of Nigerian adult population are financially served while 36.8 percent are unbanked. This leaves the Central bank of Nigeria (CBN) with inclusion gap of 16.8 percentage points if the regulator is to achieve its exclusion target of 20 percent by the year 2020. “We have been very aggressive with our FirstBank Agent Banking network.

Today we have over 27,000 agents spread across the nooks and crannies of the country, indeed second to none as far as Nigeria is country. At FirstBank, the economic growth and development of our host communities is important to us; assisting Nigeria and the continent at large address poverty is very imperative and that is why for us financial inclusion is a key part of our business strategy,” Adeduntan concluded. In furtherance of CBN’s mandate to promote a sound financial system in Nigeria and the need to enhance access to financial services for low income earners and unbanked segments of the society, the industry regulator plans to on-board 500,000 mobile money agents by the year 2020. Less than six months be-

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Strengthening farm, market linkages will help boost Nigeria’s food security Josephine Okojie

xperts, industry stakeholders, leaders and policy makers will gather at the 2019 BusinessDay’s Agribusiness and Food Security Summit to proffer possible solutions to the broken linkages between the farm and market. The summit scheduled to hold on July 18th, 2019 at the Landmark Event Centre in Lagos, with the theme ‘Fixing the Broken Linkages between Farm and Market’, will take a pragmatic approach in advancing solutions that will fix germane problems plaguing market linkages in the agricultural sector. Individuals and organisations with cognate experience and outstanding success rates •Continues online at in the agricultural sector will www.businessday.ng participate in the discourse in www.businessday.ng

ing and adopting the learnings from the seminar with a view to bolster the finance industry in their respective countries. Key players and regulators in the finance and digital banking ecosystem at the event included: Agada Apochi, Managing Director/CEO, Unified Payment Services Ltd; Mike Ogbalu, CEO, Verve International; Musa Jimoh, Deputy Director, Payments System Policy and Oversight, Central Bank of Nigeria; Premier Oiwoh, Managing Director, NIBSS; Bashirat Odunewu, Group Executive, International Banking Group, FirstBank and Adesola Adeduntan, CEO, First Bank of Nigeria Limited amongst others. Speaking on FirstBank’s leading role in promoting digital banking and financial inclusion across the country, Adeduntan said, “FirstBank by any measure has been a success story as far as digital

…Nestle, others to tackle challenge fixing the problems. The audience will get to learn from the insights shared, and also interact with these entities and other participants at the summit. “To achieve real success with connecting farmers to industry - a 360-degree approach which will include the aggregators, processors, and logistics suppliers, must be considered within this value chain,” said Mauricio Alarcon, managing director and CEO, Nestlé Nigeria plc, in a statement. “Forums such as the BusinessDay’s Agribusiness and Food Security Summit will bring all the players within the ecosystem together to design solutions to strengthen the linkages. This is why

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we continue to support this event over the years,” Alarcon said. He said that his organisation expects that the 2019 summit will help in making progress towards an end-to-end solution in line with its theme. Focus areas for this year’s summit include risk management approaches to agricultural finance and trading; as lack of access to adequate financing by farmers and other actors in the sector has remained a major impediment to increase productivity and sustain growth. The summit will champion purposeful discourse on ways banks can hedged against risks associated with funding agriculture so that the sector can attract more @Businessdayng

finance from the financial sector. The second area of focus will attempt to solve the issues of post-harvest losses as farmers continue to lose more than half of their produce owing to inadequate storage facilities. The discus will centre on innovations and technologies that can help address the issue of post-harvest losses. The third area of focus will be on the state of agriculture across various states in the country. Government officials and representatives from various states will give insights on projects executed or designed to create jobs through the sector.

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Intimacy as a competitive edge for the small business Small Business handbook

Emeka Osuji

any would-be entrepreneurs are scared stiff of the thought of facing the big names in the industry they plan to enter. This fear is understandable. There are so many things going for the big established firms. They have market power, which we can describe very simply as the capacity to significantly influence what happens to price and quantity in the market. They have a variety of products that appeal to and attract a wide range of customers. Established firms have enormous goodwill. Over time, they have built an extensive network of partners, friends, admirers and loyalists, which often manifests in their ability to get away with things that would end the life of any small business. Anyone contemplating a start up in the cement industry, for instance, who does not reckon with Dangote Cement and BUA is suffering from baseless arrogance. This kind of arrogance is suicide dressed up as Santa Claus. It is a disease that kills its sufferers, and even when they are stone dead, they continue ignorantly to plead the innocence of the disease that killed them – arrogance fueled by ignorance. Big companies are powerful and constitute an entry barrier into the industry they bestride. This fact raises questions regarding size and its importance in the competition matrix. Almost all the big businesses we hear of in today’s international

economy have one story or the other that indicates they either started in a garage or someone’s car park. They often start small. The entire Silicon Valley success story has links to starting small and capturing world attention and hence consumers’ disposable income. Hewlett and Packard, Page and Brin (the Google duo), Wozniak and Jobs (the Apple pair), all started small before expanding into big businesses. The world’s largest online retailer, Amazon, has grown from a mere online bookstore to its present status of number one global online store – far from a bookstore. When budding entrepreneurs begin it is easy to get scared when they look at the likes of Dangote and Amazon. These entities create the impression that the virtues of starting small, have waned overtime. As we read this story, Amazon is racing ahead of its competitors, especially Apple and Google, to become the world’s first one trillion dollar market capitalized company. Surely, the incentive to think and start big is quite alluring. Over a decade ago, the concept of Barbell Industrial Structures was developed by McKinsey. This industrial structure is one in which there exists a few gigantic global players and an increasingly large number of small players, with a rapidly shrinking population of medium-sized companies. This appears to have become a global trend, which is likely to accelerate with attendant increase in competition among the micro, small and medium enterprises. The need has therefore become more urgent for small companies to prove their worth and survive, even in the face of the big players. How would they do this? First, our small businesses need to have a better customer service culture; of welcoming and retaining customers. Just get into any small shop, no matter how well laid out the

display of items are, and focus on the mannerism of those attending to you. There is nothing that says we want you to return the next time you need what we are offering you today. That is why you could be standing there and the attendant initiates a long telephone conversation with a friend, and intermittently talks to you. I recall visiting Frankfurt in Germany in the 90s, when we tried all kinds of entrepreneurial activity. I used to own a company that was into import and export, including automobiles. I was in Frankfurt to close deals on cars for shipment to Nigeria. I visited this company with which we had never had any dealings. The way they treated me led me to wonder if they knew me beforehand. In their narrow 6x6 office space I was offered coffee the moment I walked. Somebody said “its winter sir and am sure it’s different in your country, so coffee for you”. It was like they were trying to lure me way from a nearby competitor. To date, I still wish I could visit that shop in Misales Strasse, Frankfurt, once again. But here, the butcher is ready to knife his customer just for offering a low price. The pastries and food joints will not let you have a taste before you buy – like they are not sure of their product. Others are lack the kind words that draw customers close and keep them coming. Everything is devoid of the humanity that makes life worth living. Perhaps, our small businesses have been fooled by our excessive and largely illiterate population, massing around the markets with little or no disposable income. This, and the perennial and endemic shortage of everything, has helped to strip the customer of his kingship. We do not care if the customer comes back or not. There should be a change of attitude towards repeat business. Nigerian businesses, hardly understand the value of customer service,

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Intimacy is when you step out of the profit motive to get into the service motive with an eye on the customer and not the profit

and that a satisfied customer is the best advertisement a business can place. They therefore do not know what customer loyalty means to a business. And so they do not care if the customer comes back or not. There is research evidence pointing to poor customer service, not poor product quality, as the reason why companies lose customers. To compete with the big players and find your little space in the sun is possible, but the small business must be different from the big ones, to successfully compete with them. There must be points of differentiation both in products carried, office design and service delivery. A company called Kazoo Toys competed successfully with Walmart, Toys “R” Us and other large firms by being different in many ways. Not only did it have a unique design for its shops, it welcomes professionals, such as speech therapists, to bring their patients into the store to play with them and choose the kind of toys that will help the patients. In this way Kazoo staff learnt new things about the needs of its customers and got ahead of competition in providing them. In simple terms, what Kazoo Toys has done is to get intimate with its customers. Intimacy is when you step out of the profit motive to get into the service motive with an eye on the customer and not the profit. By this strategy, the company is fully familiar with its customers and their present needs. It is also able to glean into their future needs and thereby gets a head-start in providing them. Intimacy may entail giving before receiving benefits. Opening your facilities for customers´ purposes that are not directly sales related but which eventually rub off positively on the bottom-line. Dr Emeka Osuji is head of the department of Economics at Pan Atlantic University Lagos. eosuji@pau.edu.ng @Emekaosujii

Nigeria’s grazing crisis threatens the future of the nation Ethnic tension sparked by cattle herding has resulted in thousands of deaths

igeria’s cattle-grazing crisis has become a national security threat, sparking ethnic tension nationwide. Amnesty International estimates that more than 2,000 deaths in 2018 alone resulted from clashes between herdsmen and farmers over access to water and pasture and the destruction of land and property — particularly belonging to farmers in the country’s middle belt region. Herdsmen from the Fulani ethnic region in the north have brought their cattle to other parts of the country to graze for generations. Climate change, rapid population growth and desertification in the north have made it difficult to breed cattle. The brutal violence has been a problem for some years. In 2014 the Global Terrorism Index judged Fulani militants to be the fourth most deadly terror group in the world, behind Boko Haram, Isis and the Taliban. Last year, Nigeria’s National Economic Council took action. It came to the conclusion that the development of designated cattle ranches would be the best solution to the problem. The ministry of agriculture also de-

veloped a National Livestock Transformation Plan to address food security and promote industrial growth. The NLTP committee, chaired by vice-president Yemi Osinbajo, also advocated ranching. Tension escalated late last month when the government of Benue state in the middle belt complained the federal government had improperly created “Ruga” (rural grazing area) settlements in the state. Unlike ranches, these are cattle colonies for herdsmen from across different states to relocate to. But the project is widely seen as a strategic ploy enabling herdsmen to claim subsidised land, in the same areas where they have caused serious unrest. “The current government wishes to dissolve diversity in favour of an ethnic programme,” said Odia Ofeimun, a poet and polemicist. The press secretary to the Benue state government, Terver Akase, says open grazing in the state has been phased out: “Anyone who wants to rear livestock in Benue has to go through the due process.” That process entails obtaining a licence from the state ministry of agriculture. The

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federal government must also seek the state’s permission for land allocation, as required by Nigeria’s 1978 Land Use Act, which they did not do. This undermines the government’s separation of powers and shows serious disregard for Nigeria’s diversity, of nearly 500 ethnic groups. Pressure from citizens and stakeholders led the government to suspend the Ruga project on July 3. Ruga’s supporters, such as the Coalition of Northern Groups, gave the president an ultimatum: either it should revoke the suspension within 30 days, or have southerners living in the north of the country face a serious threat. This is a problem that policy will not be able to solve without taking into account the region’s cultural history. Nomadic herdsmen have for thousands of years taken their cattle along routes to more states with better resources. The cutting of these cultural ties has made the herdsmen feel victimised. They see a threat to their means of survival. Meanwhile, farmers feel overwhelmed by the volume of cattle. Without the right incentives, both groups

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Laila JohnsonSalami

remain reluctant to adopt different ways of farming and raising livestock. One attempt by the government to change this is through a Fulani radio station with programmes aiming to educate Fulani listeners. But critics see this as partial and biased treatment in favour of an ethnic minority that includes President Muhammadu Buhari. The government must take this dangerous bull by the horns; the longer the situation is mismanaged, the more insecure Nigeria becomes. The tension will only mount: Nigeria is set to become the world’s third most populous country by 2050 and we are still recovering from the horrific Biafran civil war almost 40 years later. There is no room for any more ethnic division. Laila Johnson-Salami is a journalist based in Nigeria

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comment A lie is a lie, white or not (Part 2) Character Matters with Daps

Dapo Akande

hose white lies you tell your child over time gradually erode trust and confidence in you because sooner or later the child will come to realise that she can’t take you at your word. At home our children must ask permission before taking anything in the fridge or the store. My wife and I have always spoken in one voice so they know they can’t manipulate us or play us against each other. Once one of us says no they dare not go and ask the other, who they think may be more favourable. These things have not only engendered trust between us but have made the children trustworthy and

dependable too. And this is evident in their behaviour even when away from home. Needless to say, it also makes it very difficult for house helps to pilfer and then conveniently blame it on the children as we know what our children can do and cannot do. The helps, to their chagrin, discover this too, soon enough. I remember a time when my wife and I wrongfully accused our son of something. We knew it would be totally out of character for him to do such a thing but everything just seemed to point in his direction. He was meant to take part in an interschool arts competition but very suddenly he began to complain of having a stomach upset. There was no sign of this at all when I woke him up just a couple of hours before. We concluded he was feigning ill health, especially when we got information that his, or rather our club, Manchester United were playing that afternoon and this meant he would miss the match. As it turned out, he had suffered a similar bout at school the day before but we weren’t aware of this. I scolded him so badly but he kept insisting that he wasn’t faking it.

Later that day, we discovered a note in his room that he had written to himself expressing deep pain because we refused to believe him. We felt so bad and guilty for putting him through that and for making him feel his word couldn’t be relied upon. We called him, revealed that we had seen the note, hugged him and apologised profusely. Good manners are not just about saying “please” and “thank you” but also saying “sorry” when you’re wrong. Many of us aren’t too good at that. Too often, while totally disregarding the cacophony of car horns blaring, we cause terrible traffic just because we stop to patronize street hawkers and rather than apologise to those who we’ve so selfishly inconvenienced while contravening the state’s traffic law, which in itself is bad enough as it betrays a total lack of discpline, we hurl abuse at those trying to correct us. I’ve never quite understood why we do that. No matter how one looks at this, it’s just wrong. Why, when it’s so clear we really don’t have the moral legs to stand on, do we stubbornly insist we’re in the right? Ironically, when we begin to notice selfish

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‘

These things have not only engendered trust between us but have made the children trustworthy and dependable too. And this is evident in their behaviour even when away from home

tendencies in our children we wonder where they got it from! The ability to say sorry when wrong often requires a generous measure of humility. However, we Nigerians are inherently proud people dwelling in a society that also conditions us to be so. Someone once said, “Manners are a sensitive awareness of the feelings of others. If you have that awareness, you have good manners.” If we genuinely desire to positively transform our society, we need to properly equip the younger generation with the right ideals and it’s the responsibility of each and every one of us to play his or her part regarding this. I close our discussion with this rather apt quote by Edward Everett Hale which says: “I am only one, but I am one. I cannot do everything but I can do something. And I will not let what I cannot do interfere with what I can do” Changing the nation...one mind at a time Akande is a graduate of the University of Surrey, UK, author of the acclaimed book: “The last fight: A personal journey to discovering values.” Contact: dapsakande25@gmail.com

What are you building?

his was one of the questions that Niyi Yusuf, Managing Partner at Verraki posed to me during my first ‘chat’ with him. He was, at the time, Country Managing Director (CMD) of Accenture, trying to set up an African practice and I was Marketing and Communications Manager at MainOne. My knowledge of Niyi was limited to the little I had seen in the newspapers. I knew he succeeded Omobola Johnson as CMD, after she became Minister for Communications and Technology and wasn’t born with a silver spoon. I cannot remember what I said but I believe I must have mumbled a satisfactory-enough answer around my purposeful work at MainOne and what I was interested in, as well as why I wanted to become a Verraki employee. I had spent almost seven years at MainOne and had led the company’s communication efforts, ‘converting’ African media partners to our cause. At the time, I had tried to live with a ‘why’; a purpose for existence, even before I heard about Simon Sinek. I had been fortunate to work with people who espoused purpose for living. Working with Funke Opeke, Nigeria’s cyber-revolutionary also contextualized this and gave me a raison d’être: helping to digitize Africa via broadband connectivity. But that question shook me. Long after my session with Niyi, my mind kept going back to that question. I rephrased it several times in my mind; what am I building, what have I built, what should I build, what can I build, what will outlast me? The question, a blend of four simple words with so much emotion had no easy answer. No one had ever asked me such a question before. I tried not to be the typical Nigerian graduate who gets a job after school, moves jobs, each time, adding a little extra, with little or no satisfaction or purpose on the job and eventually goes abroad to a better country

where electricity or armed robbers do not conspire to rob you of peace. But I was, like most Nigerians, still a consumer. The average Nigerian is a consumer. He wants good roads, 24/7 electricity at less than N5,000 monthly and full healthcare insurance cover or free. He demands free education and security but does not want to pay too much tax. While most Nigerians have the capacity to innovate, they do not take time to invest in its intentional process. Most companies do not dedicate enough time and resources to support innovation but want quick solutions within a short time. They sufficiently tick the ‘what’ and ‘how’ boxes but do not demonstrate a ‘why’; no fundamental purpose of existence. Sadly, this is displayed in an illness that has gripped most Nigerian entrepreneurs, Acute Copycat Manifestation Syndrome (ACMS). ACMS has stunted potentially innovative practices. I will use two business ideas that have manifested the most complex copycat mentality; noodles, and Okada (motorbike). Since the late 1980s when Indomie, a brand of instant noodles was introduced into Nigeria by Dufil Prima Foods, at least 10 noodle manufacturers have attempted, unsuccessfully to take a big slice of this market. While motorbike taxis in Nigeria predate the regime of military ruler, Ibrahim Babaginda, the attempt to digitize them has led to a flurry of online commercial motorcycle apps in Nigeria, the latest being Max.ng, Gokada, O’Ride and SafeBoda. Cumulatively, these four companies have received more than $15million. While ACMS may seem attractive to your business, because of developed markets and consumers in Nigeria, it may indicate a bigger problem – you don’t have a ’why’. When you copy another’s ideas, you lose the context of the original idea by not asking the questions

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that are relevant to the future of your business and your possibilities. You are merely closing doors to the things that only you can create. Copying closes your mind to what you can truly build, the path that works best for you and the enjoyable adventure you should take. In ‘The Prosperity Paradox’ by Christensen, Ojomo, and Dillon, the authors assert a line I continue to ponder on ‘What might seem hopeless on the surface is often actually an opportunity to create new and thriving markets’. Africa’s teeming hurdles provide us a call to innovate, not a flag of caution. What hopeless situation can we devise answers to? What troubling situation can we deconstruct and solve? I paraphrase President J.F. Kennedy’s commencement address at the American University, Washington in 1963 “Our problems are man-made — therefore, they can be solved by man. And man can be as big as he wants. No problem of human destiny is beyond human beings. Man’s reason and spirit have often solved the seemingly unsolvable — and we believe they can do it again.” Africa’s problems are man-made and will be solved by Africans, supported by others. At Verraki, we believe that the answers to Africa’s challenges and problems are within the continent. We, and no one else, can take up this challenge. Verraki, comprised of former Accenture management in Nigeria, has the right blend of international exposure, grit, and passion for Africa to take on these intractable challenges and turn them around. We know that innovation is not sexy; in fact, it is messy, uncertain, scary and fraught with failure. But. Someone. Has. Got. To. Build. Truth be told, Niyi won me over with his optimism about Africa and commitment to building. At the time I hadn’t quite seen anyone so filled with purpose. Life was about service and mentoring. Our conversation made me realize I wasn’t doing as much service to

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Temitope Osunrinde

Nigeria as I should, as I could. I had thought Niyi was a unicorn till I interacted with other partners of the firm and understood they all lived the same values: stewardship, partnership, integrity, commitment and excellence. As well as a focus on people and an intentional focus on building Africa. Verraki has taught me two major things; a truly great company culture isn’t about the perks - it’s about the people. A company is only as extraordinary as its people and Verraki people are truly extraordinary because they genuinely care about each other and the success of the business. Secondly, you must be a positive thinker to see possibilities. Nigeria is already full of pessimists and unbelievers with a tendency for negative thinking, and that working in a place filled with energy, optimism, and enthusiasm is like fresh air. The world will also have vacancies for builders and innovators; inspired people who plan to leave the world better than they meet it. Not consumers or copycats; we already have too many of that. The journey to purpose starts with a question. What are you building? Osunrinde works with Verraki Partners, a business solutions firm focused on changing Africa’s narrative by helping enterprises and governments accelerate the development and transformation of Africa

Wednesday 17 July 2019

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Frank Aigbogun editor Patrick Atuanya DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Chuks Oluigbo EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, STRATEGY, INNOVATION & PARTNERSHIPS Oghenevwoke Ighure GENERAL MANAGER, ADVERT Adeola Ajewole ADVERT MANAGER Ijeoma Ude FINANCE MANAGER Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso BUSINESS DEVELOPMENT MANAGER (South East, South South) Patrick Ijegbai

Avoiding heartache on the Lekki-Epe Expressway

usinessDay draws attention once again to the imperative of urgent action on the Lekki-Epe Express road. At the time it was constructed and commissioned in 1981, the expressway was topnotch. It was also visionary as it anticipated and probably enabled the southward movement of Lagos to the new axis. Over the years, it became inadequate to cope with the larger and increasing numbers of vehicles following the population bulge. The massive downpour of July 1 is still the topic of animated but anguished discussions in the Ibeju Lekki axis of Lagos State. Residents in that axis also known as the New Lagos felt brutally the brunt of the rainfall due to blockage of the drainage channel at Abraham Adesanya roundabout. The traffic snarl stretched backwards from there

to the toll gate at the beginning of the Lekki-Epe expressway. Motorists spent seven hours on the road on average. Many residents on that axis got home around 1am or 3am. Some slept in their vehicles to continue to work the next day. The administration of Babatunde Raji Fashola expanded the road through a concession scheme. Lagos state government introduced tolls to recoup the expenditure on expanding the road. Unfortunately, expansion of the road stopped at Abraham Adesanya Estate junction rather than stretch to Epe. Many on that axis hoped that the administration of Governor Akinwunmi Ambode would continue work on expanding the road. It did not happen. The damage blocked drains caused at the Abraham Adesanya junction is symptomatic of the increasing incidents of failure on that road. Several areas call for

attention. There are huge traffic snarls each time it rains. Remarkably, the causes of the snarl are things that some remedial work would easily fix. Currently one of the busiest arterial roads in Lagos, it links to the new promise of Lagos in the Lekki Free Trade Zone, the Dangote refinery, an airport and many commercial entities. The presence of many estates on that axis and two universities has also led to a massive and growing population. Both the Lagos state government and estate developers toot their horns about the area and invite investors and developers through a constant stream of infomercials. The road is now akin to the heartbeat of that part of Lagos. It promotes mobility. Lagos owes its vitality and vibrancy to a populace constantly on the move in pursuit of their endeavours. It is critical that people should move easily on major roads such as the

second section of the Lekki-Epe Expressway. There is an additional consideration. From Abraham Adesanya junction on to Epe, the road draws attention to the glaring absence of security consciousness in having only one access to and from an area with so much at stake in human and material resources. BusinessDay in its review of the THEMES agenda of Governor Babajide Sanwo-Olu drew attention to the imperative of action on building the coastal road that Lagos has regularly mentioned as an ideal. For now, immediate short-term fixes to the bad portions of the Lekki-Epe expressway should be urgent and important for the Lagos State Governor and whoever he charges with the ministries of Works and Transportation. Quick fixes will prevent clogging of this artery and heartache for Lagos. Too much is at stake on that axis.

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Wednesday 17 July 2019

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Getting recruitment, selection and placement right

Jude Adigwe

ecruitment and selection costs time and money. It costs a lot of money especially when it is outsourced to recruitment agencies. There are lots of recruitment agencies out there; some are exceptional in the discharge of their duties while others are not. This can also be said of Human Resource departments of organizations that carry out their recruitment and selection exercises by themselves. I strongly believe that the bar can be raised to effectively justify the amounts of money and time spent on recruitment and selection. Recruitment, selection and placement are strategic activities aimed at staffing any organization with people with the right blend of knowledge, skills and abilities (KSAs) that are instrumental to the achievement of the objectives of the organization. Other than times when organizations have to headhunt, it is important to recruit rightly (internally or externally) by tactically attracting a large pool and probably the best crop of applicants. Recruiting internally (before throwing the recruitment net in the public domain) is very essential because it communicates the importance that organizations place on the career advancement of their staff. If they are eligible and come highly recommended, give them the chance.

This will boost their commitment and ultimately strengthen employee retention. If no staff is eligible to fill the vacant role(s), make the job opening public. It is important that recruitment adverts be balanced and detailed enough to enable applicants make informed and wise decisions. Well, I am not oblivious to the fact that some ineligible applicants send in their applications despite clearly spelt out criteria. As regards recruitment adverts that are balanced, it is crucial I mention an aspect of recruitment that is usually overlooked. This aspect is called realistic job preview (RJP). Michael Aamodt in his book titled ‘Industrial/Organizational Psychology: An Applied Approach’ defines a realistic job preview as ‘… giving an applicant an honest assessment of a job’. He further mentioned a variant of realistic job preview called expectation-lowering procedure (ELP) which ‘…lowers an applicant’s expectation about work and expectations in general’. These approaches might be considered naive because of the common practice of ‘positive positioning and presentation’. But have you ever thought about what disillusionment does to a staff – its effect on morale and work performance? The idea behind RJPs and ELPs is to ensure that expectations are effectively managed and there are no negative surprises that trigger counterproductive behaviours and perhaps, turnover and/or attrition. However, it is important to mention that discretion is key. – reveal as much as is necessary for applicants to make balanced analyses and informed decisions. When the application window closes, all applications should be screened and the qualified ones should be invited for the selection exercise(s). Those who did not

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It is paramount to move away from the basic practice of mindless lifting and utilization of only test questions from GMAT and/or GRE study guides etc. and have robust test batteries

measure up should also be given feedback – the feedback should be courteous and encouraging. Be humane – show some empathy because job hunting could be exhausting and demoralizing. Let us shift focus to selection and placement. Central to selection are concepts called predictor and criterion. A good selection exercise takes into consideration the link between selection tests (predictors) and performance on the job (criterion). Also, a good selection test (employment test) should not only discriminate (i.e. differentiate) among test takers, it should predict (with high level of confidence) performance of test takers on the job if employed. It is paramount to move away from the basic practice of mindless lifting and utilization of only test questions from GMAT and/or GRE study guides etc. and have robust test batteries (a combination of two or more selection instruments) that cover a large scope of the job that assess cognitive abilities, personalities, values, interests etc. A comprehensive job profile should guide the choice of specific tests to be bought or constructed. The use of a solid test battery not only increases the chances of making sound predictions, it also enhances the conduct of a proper placement exercise. Unfortunately, selection tests used by some organizations fail to capture personality attributes, interests etc. of applicants which have great implications for performance on the job. Interestingly, these aspects (personality, interests, values etc. which are not garments that can be worn or taken off at will) influence human activities and sadly, they are somewhat permanent. Lest I forget, there are techniques involved in the selection of applicants that help strengthen the process and these can be adopted

while using test batteries. I would be remiss if I fail to specifically address job interviews in this piece. A job interview is one out of many selection instruments and by far the most common. Sometimes, it is the only utilized selection instrument. As regards this selection instrument, it is pertinent to ask some questions: how standardized are those questions? How bias-free are the questions? How practical are they? How do you prevent fatigue and emotions from impairing assessments? It is interesting to note that despite the use of accompanying rating scales, interviews are still subjective. At best they should be used in combination with other test instruments and interviewers must strive to dispense with sentiments during interview sessions. At the end of the selection exercise, again, all who took part in the exercise (the successful and unsuccessful) should be given feedback. This is basic but it creates positive impressions about organizations in the minds of applicants. Placement is simply about assigning successful candidates to the vacant positions in the organization. To ensure optimal performance, individuals should be assigned to positions that align with their skill mix. Putting square pegs in round holes spells chaos. It is crucial to effectively manage recruitment, selection and placement exercises because they can guarantee meaningful engagement at work, job satisfaction and minimization of training cost owing to poor performance, a direct fallout of poor selection and placement). Keep in mind that this article barely scratched the surface because there is more to the topic. Adigwe is a certified Human Resource Management (HRM) professional and an Industrial-Organizational Psychologist. He runs a website www. adigwejude.com on HRM and OB issues

Digital upstarts need to play by the same rules as everyone else We need to create an environment in which the benefits can be reaped while minimising the risks

s a tennis fan, I watched a rising generation of young stars challenge the old guard at Wimbledon last week. It made me think of another field where upstarts are pushing their way on to centre court: the payments industry. Digital players, ranging from tiny start-ups to Facebook-backed Libra, are seeking to elbow aside large banks and credit card companies. We at the IMF are watching the growth of so-called stablecoins closely and on Monday we published a paper that identifies their benefits and risks, and highlights some regulatory issues that are likely to emerge. Stablecoin sponsors offer what they describe as less volatile versions of cryptocurrencies such as bitcoin. They want to do for payments what the internet has done for information: make transactions secure, cheap and instantaneous. To create the price stability that has eluded most cryptocurrencies to date, many sponsors offer redemptions at face value — essentially a money-back guarantee. However, they lack the government backstops that banks enjoy, so the risk of losses remains. The new companies need to prove they can do what they claim. So why use stablecoins? The answer lies

in convenience. Low costs, global reach, speed and ease of use are all huge potential benefits. Stablecoins could broaden financial inclusion. Versions have been especially successful in east Africa. But the real enticement is the networks that promise to make transacting as easy as using social media. That said, the banks and card companies will try to compete by offering their own innovative solutions and higher interest on deposits. We are likely to gain from heightened competition. But the risks are real: first, this could create new monopolies. Tech giants could use their networks to shut out competitors and monetise information. At the heart of this power is proprietary access to data on customer transactions. We need new standards for data protection, control and ownership. Second, there is a threat to weaker currencies. In countries with high inflation and weak institutions, people might give up local currencies for stablecoins in foreign currency. This would be a new form of “dollarisation” and might undermine monetary policy, financial development and economic growth. To avoid this, countries must improve their monetary and fiscal policies. The question is whether they can or

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should restrict foreign currency stablecoins in the interim. Third, we must ensure consumer protection and financial stability. Customer funds need to be safe and protected from runs like the one that took down Lehman Brothers investment bank. In part, this calls for legal clarity on what kind of financial instruments stablecoins represent. One approach would be to regulate stablecoins like money market funds that guarantee fixed nominal returns, requiring providers to maintain sufficient liquidity and capital. Another option is to allow stablecoin providers to hold central bank reserves — the safest and most liquid assets around. This opens the door to “synthetic central bank digital currencies”. Fourth, stablecoins could foster illicit activities. Providers must show how they will prevent the use of their networks for activities like money laundering and terrorist financing. This means complying with international standards. New technologies offer opportunities to improve monitoring. So, supervisors will need to adapt to the more fragmented value chain of stablecoins, including wallet providers, crypto exchanges, validation nodes and investment vehicles.

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David Lipton Fifth, loss of “seigniorage”. Central banks have long captured, on behalf of taxpayers, the profits stemming from the difference between a currency’s face value and its cost of manufacture. Issuers could siphon off profits if their stablecoins do not carry interest but the hard currency backing them is invested at a return. One way to address this issue is to promote competition so issuers would eventually pay interest on coins. We need to create an environment in which the benefits of this technology can be reaped while minimising the risks. This will require co-operation — across countries, but also across sectors. Central bankers, regulators, ministries of finance, antitrust authorities, currency issuers and technology experts will need to speak a common language for a common purpose. The bottom line is to foster competition and protect consumers. So let the competition go on but, as with tennis, make sure everyone is playing by the same rules. David Lipton is acting managing director of the IMF

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Wednesday 17 July 2019

BUSINESS DAY

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Aging farmers, trees hurt Nigeria’s crop output ... threaten food security ...cocoa, coconut, cotton suffer most Stories by Josephine Okojie

h e av e r a g e a g e o f farmers in the country is a major setback to the countr y’s quest for food security as the agric sector is badly hurt by aging farmers which has seen crop output decline in recent years, experts say. The average age of farmers in the sector is 60 years and this implies that the sector is yet unattractive to Nigeria’s young population. Nigeria’s food import bill may continue to rise owing to the inability of aged farmers to increase production matching the country’s population high growth rate, industry sources say. “The average age of a farmer in Nigeria today is 60 years. For a crop that is highly labourintensive, 60 years will not give the maximum impact in the industry,” Sayima Rima, president, Cocoa Association of Nigeria, told BusinessDay in a telephone response to questions. “Tree crops like cocoa suffers the most. We need to start making cocoa and the likes attractive to the youths through incentives because the investments in tree crops are

very high and most youths cannot afford it” Rima said. The agricultural sector grew by 0.17 percent from 3 percent in Q1 2018 to 3.17 percent Q1 2019, while on a quarter-on-quarter basis it increased by 0.72 percent compared to the preceding quarter, according to data from the National Bureau of Statistics (NBS) GDP report. Crop production which is the main driver of growth in the sector accounts for 85 percent of agricultural GDP. “The average age of farmers in the country is a huge threat to food security. Our agriculture

May to 1.36 percent in June. “Right now there is cassava glut in the market which has affected the prices of all it’s by products such as garri, fufu a m o n g s t o t h e r s ,” A b o i d u n O lorundenro, operations manager, Aquashoots Nigeria told BusinessDay in a telephone response to questions. The marginal decline in the food inflation index was caused by drop in prices of bread and cereals, meat, fish, oils and fats, coffee, tea and cocoa, potatoes yam and other tubers and vegetables, the report says. According to the United Nations Development Agency (UNDA) food agriculture commodity price watch forecast, inflationary food costs on some food commodities will ease in 2019 due to higher production levels and relatively strong us dollar. But with the decline in food prices in Nigeria, some analysts still see the drop to be temporary, saying food prices are expected to trend upwards owing to increase in the prices of key farm inputs and flooding. www.businessday.ng

Our population is growing very fast and the current average age of farmers cannot feed our growing population,” said A f r i c a Fa r m e r M o g a j i , c h i e f executive officer, X-ray Farms Limited and head, agric group, Lagos Chambers of Commerce and Industry (LCCI). “If we are serious to feed ourselves as a nation, we must attract the younger generation to farming. If we fail to achieve this, our food import bill will continue to rise,” Mogaji added. Currently, the Federal Government is making efforts to make agriculture more attractive

to the youths but such efforts have yielded little impact as most youths do not want to be involved in drudgery. “ Yo u t h s w i l l o n l y f i n d agriculture attractive if there is innovation and technology in the sector. Technology is very crucial if Nigeria really wants to boost agric productivity and make youths embrace agric,” said Olorundenro who was earlier quoted. Nigeria still has deficiency in most of its crop production and fast losing its status in key commodity crop like cocoa where the country which is second global producers of the crop has dropped to fourth.

Group hosts ‘Bole Festival’ to promote plantain farming

Nigeria’s food inflation declines marginally in June

igeria’s food inflation i n d e x ha s d e c l i n e d marginally to its lowest level in three months to 13.56 percent as prices of major food items dropped across the country, data from obtained the National Bureau of Statistics (NBS) states. According to the NBS data compiled by BusinessDay, on a year-on-year basis, it declined marginally by 0.23 percent from 13.79 percent in May 2019 to 13.56 percent in June 2019. While on a quarter on quarter basis, food inflation declined by 0.05 percent from 1.41 percent in

is still labour intensive, so what can 60 years old do?” asked Abiodun Olorundenro, Manager, Aquashoots Limited. “This is why our crop output has remained low. The youths are the future. We must ensure we incentives them into farming,” Olorundenro said. According to industry players, f a i l u re t o ma ke ag r i c u l tu re attractive to the younger generation would be disastrous to the country as population continues to grow at a very high rate. “It is going to be disastrous if in the next two years the average age of farmers is still 60 years.

n a bid to boost planting production in the country, a group that promotes food production in the country is set to host the third edition of Nigeria’s ‘Bole Festival’ to promote plantain farming and the rich food heritage of the Niger Delta people. The Bole Festival which is currently the biggest food festival in the south that attracted over 8,000 lovers of food from across the country is aimed at celebrating the rich heritage of the Niger Delta through food. The emphasis is on the various creative ways ‘bole’ is prepared with fish, making it the most popular street food in the region. Bole which is a street food in Nigeria made from plantain is usually served in different ways depending on the region. In places like Port Harcourt & Bayelsa and most cities in the southsouth region, it is often served with pepper sause, roasted fish, with yam or potato by the side, while in Akwa Ibom you can have it served with roasted chicken and a special sauce. “We expect another successful and fun filled event that will also set the standard in highlighting the importance of celebrating our culture and local cuisine,” said Kennedy Chinonso Iwuh, organiser of the event in a press statement

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made available to BusinessDay. “Bole Festival has grown in prestige and attendance over the years. This year we want to the event to represent that growth in creativity in terms of market appeal as a brand while maintaining the casual fun atmosphere that has endeared us to the people,” Iwuh said. There will be food exhibitors in attendance to showcase and sell diverse Bole and fish meals as well as side attractions, such as music performances, comedy, food competitions, indoors and out-door games with prices to be won and fun and game activities for kids, the organisers say. According to the organisers, beyond the food exhibition, the festival has a strong urban appeal that attracts adults of all ages, small @Businessdayng

and medium sizes businesses and sponsors from all industries, all coming together to celebrate this local meal. Since the inception of the first edition of the Bole Festival in 2016, the organisers of the festival has offered free vendor space as a means to give back and empower local street food sellers, there by giving them an opportunity to show case their creativity with the Bole, gain clients and increase monthly sales by over 200 percent on the day of the festival. The festival now offers over 200 stall spaces for small businesses to display and sell their goods on the day of the event. This year’s Bole festival themed; ‘Our taste, Our Culture’ and it is stated to hold on the 3rd of August in Port-Harcourt.

Wednesday 17 July 2019

BUSINESS DAY

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Africa’s $2.3bn agritech market remains largely untapped - report Josephine Okojie

ore than 90 percent of the market for digital services that support African smallholders remains untapped and could be worth more than €2 billion (U S$2.26b), a new report by the Technical Centre for Agricultural and Rural Cooperation (CTA) and Dalberg Advisors says. The report which found nearly 400 different digital agriculture solutions with 33 million registered farmers across sub-Saharan Africa stated that the market penetration only accounts for six percent of the total $2.6 billion market. “Digitalisation for agriculture has the potential not just to support agricultural transformation in Africa but to do so sustainably and inclusively f o r A f r i c a’s 2 5 0 m i l l i o n smallholder farmers and pastoralists,” said Michael Tsan, partner and co-leader of Dalberg Advisors global digital and data practice. “While the opportunity is immense, the report is not

naïve about the challenges that remain and the significant work required by agribusiness, governments, donors, and investors to maximise the transformative impacts of digital agriculture in years to come,” Tsan said. Th e stu d y n o t e d t hat with more investment in the continent’s agrictec industry, African younger population will find farming attractive. “Digitalisation can be a game-changer in modernising

and transforming Africa’s agriculture, attracting young people to farming and allowing farmers to optimise production while also making them more resilient to climate change,” said Michael Hailu, director of CTA. “ This report indicates t hat d e s p i t e c ha l l e n g e s, the economics are rapidly improving, with a handful of players beginning to develop viable, large-scale bu s i n e s s e s. To re a c h i t s

Kogi RIFAN decries devastating effect of flood, says farmers’ hope dashed VICTORIA NNAKIAIKE, Lokoja

abi Emaiku, chairperson of Rice Farmers Association of Nigeria (RIFAN), Kogi state chapter has decried the devastating effect of the 2018 flood that shattered the high hopes of farmers as it affects their productivity. The chairperson attributed it to the penchant resale of inputs by some farmers under the Anchor Borrowers Scheme inputs credit facilities. “Farmers went to farm with high hopes of bountiful harvest but suddenly we were attacked by the flood and everything we planted was destroyed by the devastating flood and I had to cry to Abuja,” Emaiku said. She disclosed this while addressing newsmen in Lokoja recently, saying that political farmers was also undermining the objective of

the scheme at boosting rice production in the country, adding that some culprits who were enlisted and registered as farmers had also made recovery of the loans given to the association very difficult. “They sell the inputs lower than the cost at which they were given. They resell each pumping machine given to them at the cost of N39, 000 for as low as between N10, 000 and N12, 000,” she said. “Fertilizer given to them at N6, 950 per bag they resell for between N2,500 and N3,500. At whose loss is this? It is annoying because they will have to pay back the loans or others will not benefit,” she added. “That is why the Central Bank of Nigeria (CBN), Unity Bank, RIFAN and other stakeholders have resolved that a farmer will have to pay 20 per cent of the total value of the inputs approved for

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full potential, companies will now need to focus on converting customer reach to actual use in order for this type of model to yield returns,” Hailu said. T h e re p o r t i d e n t i f i e s online marketplace solutions such as Nigeria’s Agrikore as significant use cases of how digital tools are being built to tackle major challenges of attracting and retaining a significant number of buyers and sellers, and in thus doing,

help to solve the problem of inefficient and fragmented agricultural markets. Also, the report identified Cellulant as being among only 390 active Digitalization for Agriculture (D4Ag) solution providers that are working across the continent and have the potential to not only support agricultural transformation but also the ability to do so sustainably and inclusively. The report presents evidence on how these enterprises have proven that digital tools can improve market efficiency, transparency, aggregation and integration. Speaking on this findings of the report, Bolaji Akinboro, c o - C E O, C e l l u l a n t s a i d “technology is at the heart of transformation in Africa. We believe by innovating around how supply and demand are organised, we can solve Africa’s food crisis. “We are scaling up our existing payments products in the agriculture sector, this will allow us to increase access to payments for the millions of farmers who are still unbanked, despite the financial inclusion revolution,” Akinboro said in a statement made available to BusinessDay.

Unlike many of the D4Ag solution providers studied in the report, Cellulant’s Agrikore solution was noted to be one of the few marketplace players that are focusing on digitizing at both the input and produce stages by linking all the players in agriculture at the input level (farmers, agrodealers, financial institutions, governments, development partners ) and at produce level. Among the digital solutions tracked and analysed in the report were farmer advisor y ser vices, which provided weather or planting information via SMS or smartphone applications, and financial services including loans and insurance for farmers. Other solutions linked farmers with markets for farm inputs and farm produce, or provided supply chain management to improve traceability and last-mile logistics. Some services used satellite imagery, weather data, powerful big data analytics and machine learning techniques to deliver valuable real-time agricultural insights and forecasts at national and regional levels.

Investing in boiler chicken production OLUMAKINDE ONI

him before they can access it,” Emaiku lamented. She equally disclosed that N114.3 million was recovered in 2019 as repayment for the loans and remitted to the Central Bank of Nigeria (CBN) from farmers who were not affected by the flood that devastated the riverine areas and swept off farm crops in the previous year. However, she hinted that approval has been given for 9,708 rice farmers in the state to access the facilities in 2019, adding that distribution of inputs, based on payment of the 20 per cent commitment, started two weeks ago. She said that the total package of the facilities per farmer amounts to N231, 500. In 2017, 731 farmers benefitted from the first RIFAN project in the state during the dry season farming while in 2018, 11,706 farmers benefitted from same programme across the state, the association says. She equally commended G overnor Yahaya B ello for payment of the 2019 counterpart contribution to the Anchor Borrowers Scheme which she said made it possible for the state to be reconsidered.

he importance of animal protein to the survival and growth of human beings cannot be over-emphasized. Animal protein is one of the most important food items in the world. Protein helps in bodybuilding and growth, in the reproductive systems and in prevention of diseases. Animal protein sources include fish, beef from cow, goat meat, pork from pigs and chickens meat. To get animal protein in commercial quantity, broilers is one of the easiest sources. Broilers are special breeds of chickens, which are raised under intensive care for the sole purpose of being slaughtered within a period of eight weeks. Nigeria is the second largest market for broilers in Africa after South Africa. There is large market for chicken meat in the country as Nigeria still has a demand supply gap of over 1 million metric tons. To this end, whatever is produced will definitely get market, even at good price. The land requirement for broilers production is very minimal. 5,000-broiler farm will need about two plots of land for effective take off. Broiler production is highly profitable. Percentage return on investment is about 50 per cent. The recent ban on

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importation of frozen chicken has made commercial broilers production very lucrative. A serious minded broiler farmer can also take up an insurance policy cover for its birds. Technical Information To establish a poultry broiler farm, a farm site that is accessible all the year round is required. On acquisition, poultry house is constructed with a section as brooder house to nurse day old chicks for two weeks before being transferred to the broiler pen. Interested investors can be put through in the areas of design and construction of poultr y houses. O n construction, wood shavings are needed on the floor of the houses before day old chicks are brought in, day old chicks are procured from reputable hatcheries located all over the country especially in Lagos, Abeokuta, Ibadan, Oyo, Warri and Sapele. Prospective investors can be assisted in the procurement of day old chicks. On purchase of day old chicks they are brought to the brooder house already built. Broilers stay in the brooder house for two weeks before they are transferred to the broiler pens. Other routine works needed on daily basis are poultry drugs administration, feeding with well-formulated poultry ration and provision of clean water. Within eight weeks of @Businessdayng

intensive feeding, the broilers would have reached table size ready to be sold to interested consumers, hotels food canteens, catering houses and reputable markets. A largest-scale broiler farmer may eventually go into the sale of frozen chickens through investment in processing and freezing. Financial Implication Pre-Investment 200,000 Landandbuilding 1,750,000 Dayoldchicks(5000) 1,000,000 Provisionforfeeding 2,000,000 Other working capital & Utility items 750,000 TOTAL N5,700,000 Profitability On the establishment of the farm, 10,000 broilers can be raised within 8 weeks. This can be repeated at least four times in a year. A clever investor will have processing unit and freezing facility and marketing outlet with the project. To raise 10,000 broilers, a minimum of N300 net profit is realizable from a bird. Total profit realizable by cycle is N3, 000,000. This can be done 4 times in a year, net income of N12 million is achievable. There are living examples of farms in Nigeria that have made fantastic income from broiler farming. Investors can be assisted from inception to the actualization of this project. Author’s Contact: 08023058045, olumakindeoni2@yahoo.com

Wednesday 17 July 2019

BUSINESS DAY

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Wednesday 17 July 2019

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COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

Consumer Goods

AB InBev cancels plans to raise $10bn from Asian IPO, cites prevailing market conditions OLUFIKAYO OWOEYE

n what would have been the world’s largest initial public offering in 2019, w o r l d ’s b i g g e s t brewer, Anheuser-Busch InBev, AB InBev has canceled plans to sell 1.6bn shares of its Asian business to investors, citing “prevailing market conditions”. The Brewer had hoped to raise almost $10bn from listing its Asia Pacific subsidiary Budweiser Brewing Company APAC in Hong Kong, and helped the giant brewer reduce its debt, while giving it a valuable currency to pursue Mergers & Acquisition in Asia. “The company is not proceeding with this transaction due to several factors, including the prevailing market conditions, the company will closely monitor market conditions, as it continuously evaluates its options to enhance shareholder value, optimise the business and drive long-term growth, subject to strict financial discipline.” AB InBev said

L-R: Osagie Ogunbor, group executive director, corporate services, Nosak Group; Thomas Oloriegbe, group chief operating officer, Nosak Group; Toni Ogunbor, chairman/CEO, Nosak Group; Xigong Huang, MD, Lekki Free Trade Zone Development Company (LFTZDC); Popson Popoola Jaiyesimi, deputy MD, LFTZDC, and Osaheni Ogunbor, group executive director, operations and production, Nosak Group, at the signing of the Memorandum of Understanding (MoU) between the management of Nosak Group and LFTZDC to invest in the Free Trade Zone in Lagos recently.

The brewer had stated it would use the funds to pare down its huge debt of over US$100bn racked up primarily from its acquisition of SABMiller in

2016 and also used part of the proceeds to expand its business in Asia by acquiring regional rivals. The Belgian Brewer was off to an impressive start

this year with a strong Q1 2019 performance accelerating its momentum from the full year 2018 performance. The brewer recorded a 5.9percent

growth in revenue buoyed by volume growth of 1.3 percent, with own beer volumes up 1.0percent and non-beer volumes up 4.9percent, revenue per

hl growth of 4.6percent, driven by healthy volume growth, global premiumization, and revenue management initiatives. The top-line result was driven by healthy performances in several key markets, including Nigeria where it recently introduced Budweiser in the premium segment, others include Brazil, China, the US, Europe, and Colombia. The Brewer posted revenue of $12.59 billion in Q1 ended 31st March, with combined revenues of its three global brands, Budweiser, Stella Artois and Corona grew by 8.5percent globally and by 14.0percent outside of their respective home markets. Cost of Sales increased by 6.0percent in Q1 and by 4.6% on a per hl basis. AB InBev made an inroad into the Nigerian market in 2017 when it acquired 72.17percent of SABMiller’s shares in International Breweries Plc, in a series of transactions which resulted in AB InBev acquiring controlling interests in the company.

Insurance

Lasaco Assurance gains 7 percent as NSE lifts embargo on shares

...grows FY 2018 profit by 11% SEGUN ADAMS

hares of Lasaco gained some 7 percent on Monday after the Nigerian Stock Exchange (NSE) announced it had lifted suspensions placed on trading on the shares of the insurer which had failed to meet up with the regulatory timeframe for making available its full-year 2018 Audited Financial Statement. The exchange had on 2 July 2019 issued a market bulletin wherein it notified dealing members of the suspension of Lasaco, alongside 10 other com-

panies which ran afoul of exchange regulations. However, the NSE noted that Lasaco had satisfied exchange requirement hence was reversing the ban which had restricted trading in the company’s shares. “The dealing members are hereby notified that the suspension placed on trading on the shares of Lasaco Assurance Plc was lifted today, Monday, 15 July 2019,” the NSE said. According to Rule 3.1, Rules for Filing of Accounts and Treatment of Default Filing, Rulebook of The Exchange, if an Issuer fails to file the

relevant accounts by the expiration of the Cure Period, the Exchange will issue a “Second Filing Deficiency Notification” within two (2) business days after the end of the Cure Period. Thereafter, the exchange would suspend trading in the Issuer’s securities; and notify the Securities and Exchange Commission (SEC) and the Market within twentyfour (24) hours of the suspension. Rule 3.3 of the Default Filing Rules, however, provides that: “The suspension of trading in the Issuer’s securities shall be

lifted upon submission of the relevant accounts provided The Exchange is satisfied that the accounts comply with all applicable rules of The Exchange. For full-year 2018, Lasaco grew its profit by 11 percent from N661.88 million to N736.28 million, its biggest profit since 2016, driven by a 20 percent surge in gross insurance premium income in the year. Gross premium income rose 35 percent to N9 billion although unearned premium increased by 77 folds to N989 million, weighing on Lasaco’s gross insurance premium in-

come. Net insurance premium income rose 26 percent to N4.6 billion as the insurance company’s reinsurance expense increased 14 percent to N3.4 billion. However, a 91 percent growth in fees and commission income helped Lasaco post a net underwriting income of N5.22 billion as against N3.99 billion noted in 2017, a 35 percent rise year-onyear. Net claims paid fell 8 percent. Total underwriting expenses for Lasaco rose to N3.2 billion, 15 percent more than it previously recorded in 2017. However,

Lasaco was able to grow its underwriting profit by 65 percent to N2.06 billion in 2018. The insurer noted a mixed performance in other income-generating segments and was able to shake off the effect of a 24 percent increase in administrative expenses to record a 12 percent increase in its profit before tax. On the back of its performance, earnings per share rose to 13 kobo from 12 kobo year on year. Shares of Lasaco gained 6.9 percent to close at 31 kobo per share while the broad market fell by 0.79 percent.

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

Wednesday 17 July 2019

BUSINESS DAY

COMPANIES&MARKETS

Business Event

Financial Services

CAFEi launches in Lagos to address consumers’ complaint in financial sector SEYI JOHN SALAU

s complaint by the various users of financial services in Nigeria continue to increase on the social media space due to the slow response time by the deposit money banks, the Consumer Awareness and Financial Enlightenment Initiative (CAFEi) was recently launched in Lagos to address consumers’ complaint especially in the financial sector and ensure that response time are drastically reduced in order to rendered satisfactory services to the banking public. The initiative that has been endorsed by the Central Bank of Nigeria (CBN) and the Chartered Institute of Bankers (CIBN) will expectedly drive consumer awareness of financial institutions offerings in the market and boost service delivery across the industry value-chain. Debola Osibogun, the

President of CAFEi, a nongovernmental organisation (NGO) initiative created to serve the financial sector said the initiative is aimed at driving financial literacy and consumer engagement in Nigeria, noting that the initiative would elevate consumer literacy in the country. “Our mandate is to drive consumer education in furtherance of the society here accountability is embed in our DNA and a country where contracts, written or implied, are enforced for the benefits of ensuring shared responsibility as well as prosperity,” said Osibogun. According to Osibogun, her engagement with stakeholders in the financial sector shows that individuals, organisations and regulators are genuinely concerned about forging inclusive progress and sustainably shared prosperity, hence the initiative would work in collaboration with industry experts to improve the

delivery of goods and services across the country especially in the financial sector through its annual symposium. Uche Messiah Olowu, President of the Chartered Institute of Bankers (CIBN), while speaking on the initiative expressed the desire of the institute to collaborate with deposit money banks to improve consumers’ engagement the across value-chain of the industry. Olowu, who noted that he was not aware that banks are not responsive to customers’ complaints on social media, opined that the banking industry is a free market system. According to him, if a bank does not respond to complaints, consumers have better choice to go to where quality services are being rendered. “This means that it has to create effectiveness where the ills of the institutions are highlighted and thrown that if you don’t react effectively well.”

L-R: Ugochukwu Obi-Chukwu, chief commercial officer, Ikeja Electric; Chinyere Muda-Sanusi, group head, corporate banking, FCMB; Folake Soetan, chief operating, officer, Ikeja Electric; Kofo Awonuga, general manager, PEP Stores Nigeria Proprietary Limited, and Olaitan Akano, head franchise and payment channels management, Ikeja Electric, at the launch of Ikeja Electric retail outlet in partnership with PEP and FCMB in Lagos.

NGOs

Spotlight Africa to reward LAWMA women for their community service ENDURANCE OKAFOR

potlight Africa, a nonprofit organization set up to foster, advocate, empower and invest in the human capital of diverse groups and communities has said it is poised to reward the women with orange uniform who are working with Lagos Waste Management Authority (LAWMA) to keep the roads in Lagos clean. Scheduled to hold on Friday, July 26th 2019, the one day award ceremony will acknowledge over 150 selected women who have stood out in their day to day lives as sweepers and will be inspired,

trained and rewarded. “In this 2019 edition of ‘’Women Making a Difference Community Service Leadership Awards’’, Spotlight Africa in partnership with LAWMA is recognising 150 diligent and devoted Lagos Female Street Sweepers including the street sweepers who have lost their lives on duty,” Nonye Nnaji, the President of Africa Spotlight said in a recent interview. She added, saying the need to recognise the street sweepers was as a result of the fact that “these women in their everyday work have exceeded all expectations and are worthy of our applause.”

The Lagos-based NGO started its operations in Jos about 12 years ago. It championed various leadership programs for public and private high schools. Since 2017, it has continued to scale up its outreach and have recorded impactful results with over 30,000 Nigerians. “I want to say thank you to Spotlight Africa for identifying with the women sweeping our roads,” Ola Oresanya, MD of LAWMA said. The MD added saying that the non-governmental organisation is assisting them to do their job and as such he is open to “support Spotlight Africa.”

COMPANY RELEASE

DU&T, BRASI USA sign deal to run certification courses in Nigeria MIKE OCHONMA

onsulting signs a partnership agreement with Business Research and Service Institute (BRASI) USA. DU&T Consulting Nigeria and Business Research and Service Institute (BRASI) USA has announced that it has signed a new partnership agreement to run some certification courses in Nigeria. The courses that fall under this agreement include BRASI certificates in supply chain & operations management; supply chain assurance management; fleet management;

procurement and contract management including product development. Other areas that BRASI awards certificates are in the areas of customer support management; shipping management; maintenance management; facility management; port facility security management as well as certificates in integrated logistics support management. According to John Aderibigbe, managing consultant, DU&T Consulting “Having reviewed the achievement of BRASI, we are very optimistic that it will not only contribute to development of professional

skills in Nigeria, but also assist organisations in Africa to be positioned for global competition and opportunities”. “DU&T’s decision to partner with BRASI is born out of the authenticity observed in BRASI programs and processes as well as the future opportunities enshrined in globalization. “We are positive it will yield positive result in transforming the global village,’ Aderibigbe added. Since its inception in 1981, BRASI has provided education in the field of economics and business management, for the benefit of businesses and individuals.

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L-R: Daniel Adebola, president, Redeemers Men’s Fellowship, Redeemed Christian Church of God, LP 21, Magodo; Bayo Olugbemi, host/Pastor-in-Charge of Province, LP 21, Biodun Adedipe, CEO, BAA Consult/ guest speakers, and Tonye Cole, CEO Sahara Group, at the RCCG LP 21 Redeemers Men’s Fellowship 2019 Convention in Magodo, Lagos.

L-R: Chris Wulff-Caesar, marketing director, FrieslandCampna WAMCO, receiving the Marketing Personality of the Year Award, at the MARKETING EDGE Brands and Advertising Awards of Excellence 2019. Presenting the award are Tunji Olugbodi (l), executive vice chairman, Verdant Zeal Group, and Steve Babaeko (r), CEO, X3M Ideas

L-R: Kemi Michael-Jabagun, public affairs and communication manager, NBC Limited; Bade, LAWMA supervisor; Ola Oresanya, CEO, LAWMA; Nonye Mike-Nnaji, president, Spotlight African Network; Amaka Onyemelukwe, head of public affairs and communication, Coca-Cola, and Spence O. Olakojo, unit head of operations, FRSC, at the unveiling of Spotlight African Network and press conference in Lagos recently.

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Wednesday 17 July 2019

BUSINESS DAY

cityfile Insurance graduate bags 4 months REMI FEYISIPO, Ibadan

Anambra State Lawyers Forum protesting over the killing of Nigerians in South African on Monday in Lagos. NAN

Navy nabs smugglers, seizes 483 bags of rice in A’Ibom ANIEFIOK UDONQUAK with agency

peratives of Nigerian Navy Forward Operating Base, Ibaka, in Mbo local government area of Akwa Ibom, have arrested eleven suspects conveying 483 bags of smuggled rice in two wooden boats. The commanding officer of the base, Toritseju Vincent, who handed over the suspects and the seized bags of rice to the Nigeria Customs Service (NCS) in Ibaka on Sunday, said that the suspects were arrested in two separate operations on July 10. According to Vincent, the navy patrol team arrested five suspects with 319 bags

of 50kg rice and six others with 164 bags of 50kg rice in wooden boats coming from neighbouring Cameroon. “In the past months, there has been a drastic reduction in rice smuggling between Cameroon and Akwa Ibom. This is largely due to our efforts on the water. We will continue to intensify our patrols to nip this completely in the bud,” he said. The suspects and seized rice were handed over to Assistant Controller of Customs, Ali Garko, who commended the navy. “As part of the synergy that the Nigerian Navy has been having with the Nigeria Customs, we wish to state that we are grateful for this kind gesture and wish it to continue,”

Garko said. Two of the suspects, a student and an artisan, however, denied that they were smugglers. They claimed that they were passengers who joined the boats. Elisha David, a student and indigene of Ilaje in Ondo State, said he left Cameroon for Nigeria to process his passport so he would participate in the National Youth Service Corps pro gramme upon the completion of his studies there. “I am a victim of circumstance. I was a passenger in one of the boats that was arrested and do not know anything about the smuggled rice. I came Nigeria to pursue my Nige-

rian passport in Uyo. “I am a final year student in Higher Institute of Management Technology in Cameroon and the passport is one of the requirements for the NYSC programme. I had started the process and have the receipt of the passpor t with me. My coming to Nigeria was to check if the passport was ready,” he said. The other suspect, Ezekiel Omogunle from Gbokoda in Ondo narrated that he was a fisherman in Cameroon and was returning to Nigeria to get treatment for an illness but was unfortunate to be arrested by the navy in the boat carrying the suspected smuggled rice.

FRSC sets deadline for road unworthy trucks

he Federal Road Safety Corps ( F R S C ) s ay s a rticulated vehicles without minimum safety standards would be barred from operating in the nation’s ports and tank farms as from September 1. Boboye Oyeyemi, the corps marshal, made this known while flagging off “Operation Safe-To-Road” on Lagos-Ibadan Expressway on Monday. Oyeyemi, represented by the assistant corps marshal, Victor Nwaokolo, in charge of command administration and strategy, FRSC, headquarters, said that the corps was passionate about

maintaining sanity on major highways. The corps marshal said that the “Operation SafeTo-Load” was in line with the Federal Government’s concerns for haulage operations in the country. He said that the Federal Government had set up inter-ministerial committee on haulage operations headed by Secretary to the government of the federation with all other stakeholders as members. Oyeyemi said that implementation of the committee’s mandate was ongoing and would be concluded with action plan. According to him, very www.businessday.ng

soon, there will be policy statement from the Federal Government on the haulage operations. “The haulage operation in Nigeria has been taken care of, and this is just a start of it. “This will go on simultaneously with sensitisation slated to hold between July and August. “ F ro m S e p t e mb e r 1 , something will happen, something very good. Very soon, we will bring sanity to haulage operation in Nigeria. “What is this all about? It is that all these, whether wet or dry cargo vehicles, keep to the minimum safety standard. If they don’t have it,

they will not be on the road. “There will be no operation (for articulated vehicles) in the Nigerian Port Authority- the port, no operation in the tank farms except the vehicles meet these minimum safety standards,” FRSC chief said. According to him, articulated vehicles will be left with no other options than to meet the minimum safety standards, if they want to continue in business. He said that FRSC would be very firm and strict in enforcing minimum safety standard for trucks and trailers on the corridor to end carnages on the highways.

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24-year graduate of insurance, Oyaremi Olalekan Olabode, has been sentenced to four months in prison. He was found guilty of a one-count amended charged filed against him by the Economic and Financial Crimes Commission (EFCC), Ibadan zonal office, before Justice Patricia Ajoku of the Federal High Court, Ibadan judicial division. Oyaremi, who graduated from Polytechnic Ibadan was arrested on March 23, 2019 at Kolapo Ishola Estate, Akobo area in Ibadan for internetrelated offenses. The charge against him contravenes Section 22 (2) of Cybercrimes (Prohibition, Prevention Etc) Act, 2015, and punishable under Section 22 (2)(b)(iv) of the same Act. He was said to have fraudulently presented himself as one Angelina Kimberly, an American nurse, via an e-

mail angelinakimberly126@ gmail.com. In line with the terms of the plea bargain agreement he entered into with the EFCC, the accused person pleaded guilty to the onecount charge. Due to the guilty plea, the prosecution lawyer, Sanusi Galadanchi, prayed the court to convict him in accordance with the plea bargain agreement. The presiding judge upheld the prayer as she pronounced the accused person guilty and sentenced him to four months in prison.The court also ordered Oyaremi to restitute the sum of $3,600 to his victim, through the Federal Government of Nigeria. He will equally forfeit his Apple laptop, Toshiba laptop, one Samsung Galaxy Luna Pro, one iPhone, one Nokia phone, one Apple watch, and one Smile 4G internet modem to the Federal Government of Nigeria, being items he bought with the proceeds of his fraudulent act.

Pipeline fire: Community seeks improved security, fire service station

esidents of Ijegun, Lagos State, which recently suffered an oil pipeline explosion, have called for regular security patrol, establishment of a fire service station and rebuilding of a canal in the area. The requests from the residents followed a recent attempt by vandals to open another pipeline near a market in the community. They said that the relevant authorities should also relocate a public school near the pipeline to save pupils from fire disaster. Recall that an explosion on July 4, resulting from pipeline vandalism in Ijegun, reportedly claimed about 12 lives and destroyed several properties. Augustine Mbuba, immediate past vice chairman of Landlord Association, Catholic Mission Street, Ijegun, said that the residents were living in fear of the unknown. “Our people cannot sleep anymore; imagine that five days after the last explosion, some vandals shifted to another location to open up another pipeline that would have caused another explosion. “Thanks to the vigilante and security agents who scared them away before they could complete their task of siphoning fuel with their gadgets,” he said. A retiree of the Nigerian National Shipping Line, Roland Ejere, on his part, stressed the need to improve security in the communi@Businessdayng

ty. He urged that pipelines should be buried deeper to make it difficult for vandals to access them. He also called for establishment of a fire service station in Ijegun for timely intervention in the event of an explosion. He noted that the nearest fire station to the pipeline area was located at Ikotun, another community. “The government should establish a fire service station in Ijegun because it has become a centre for fire disasters,” he said. According to a bookshop owner in the community, Victoria Osigwe, artisans around the pipeline should be made to vacate the area and ply their trade from afar. She noted that the July 4 pipeline explosion in Ijegun was the second, urging that the community should not suffer anymore. “Once beaten, twice shy,” she said. A landlord, Okwudili Arachie, called on the state government to work on a canal in the community. He advised the government to properly channel the canal so that water or fuel from it would not get into houses. “The canal has been affected by erosion which is why it has expanded too close to our houses, especially houses of those who lost their lives during the last explosion. “The relevant authorities should put the canal in shape and cover it so that any form of fuel flow would not get into people’s homes but be controlled,” he said.

Wednesday 17 July 2019

BUSINESS DAY

Wednesday 17 July 2019

BUSINESS DAY

ALLEN ONYEMA

CEOINTERVIEW

Chairman/CEO, Air Peace

Interview with Private Sector Leaders

AirPeace can never combat international aeropolitics without government’s support – Onyema Allen Onyema is the Chairman and Chief Executive Officer of Air Peace. In this interview with IFEOMA OKEKE in Dubai, he speaks on the airline’s planned expansion of international operations and how it intends to survive on its prospective routes, amongst other issues.

he challenge to Nigerian airlines operating international service is how to take passengers beyond point to point. Does Air Peace have code-share partner for your Dubai operation? First and foremost I thank God almighty for what is happening. I thank Nigerians and the federal government for their support. We have started our international operations into Sharjah and into UAE (United Arab Emirates) and we are not just doing Lagos-Sharjah alone, we are also doing every destination in Nigeria to Sharjah and Dubai. We have an agreement with SATA, those in charge of Air Arabia and some other airlines. With our agreement with SATA, they have the consent of Air Arabia and others to act on their behalf as middlemen. So when we bring our passengers through SATA on to Air Arabia, they will take them to the next destinations outside Sharjar. So that’s what it is. And it is a very seamless arrangement. For example, if you are going to Jeddah, Mumbai, Medina, New Delhi and some other cities in India and of course even up to Moscow, we put you through SATA or Air Arabia to take you to the next destination. So when you check in your luggage in Nigeria, you will get it at the next destination. Assuming we have connecting passengers like this one, it is a straight connection, we don’t unburden the person’s luggage; we take it to the next flight. It is a seamless arrangement. So, Air Peace is a one-stop shop for people travelling to some cities in Asia. Now that you have started international flights and you have acquired long-haul aircraft, Boeing 777, what other destinations are you looking at? Apart from Sharjah, you know the federal government of Nigeria has given us some six destinations, Mumbai, Guangzhou, China, Atlanta, Houston (US), Heathrow (London) and Johannesburg (South Africa). We have started Sharjah (Dubai); the next to come in is Johannesburg. The Nigerian government was magnanimous to give us our destinations some three years ago. We have written to these countries since then but it took them a long time to respond to us. This is why I keep on talking about open sky in Africa, the Single Africa Air Travel Market (SAATM). Sometimes I say SAATM is a fraud against Nigeria because while our country keeps to the principles of SAATM, other countries that endorsed it have refused to abide by those principles for Nigerian airlines. We made requests to these countries but it took them three years to answer us. It was the Director-General of the Nigerian Civil Aviation Authority (NCAA) that intervened on our behalf as we pilled pressure on those countries before they answered us. I remain grateful to NCAA and the federal government. So South Africa has given us the permit now for us to come in. They have audited Air Peace and they have found us okay to come into their country, so they have given us the permit to come. We have already started setting up our structures in South Africa, Johannesburg. And at the same time we are looking for a partnering airline in Johannesburg so

that when we drop you in Johannesburg our partnering airline will take you to Cape Town, Durban, Port Elizabeth and others cities and even beyond South Africa, to Lesotho and to some other neighbouring countries around. We are looking for partner airlines to do that. AirPeace does not just want to do Lagos to Johannesburg only, we want to be able to have these alliances with other airlines to be able to move Nigerians and the flying public seamlessly to destinations they will want to go. I believe that will help us to succeed in the long run. This is what our airlines were not doing before, so we are learning from that. We are not going to start South Africa without having an agreement with a partnering airline, which we are already very close to signing. So any moment now we think we are going to start Johannesburg before August 30, 2019. And by then we must have signed a kind of arrangement with another partnering airline. After Johannesburg, the next in line is India. Depending on what happens, we might be starting India and South Africa almost the same time or at most September, by God’s Grace. The Indian community in Nigeria is yearning for Air Peace to come in. You must have heard from their Ambassador in Nigeria. They want a direct flight from Nigeria to India; so they are in the forefront, they are the ones pushing and the federal government has designated Air Peace to that destination. The federal government even wrote them to support us. So I thank President Muhammadu Buhari for giving us that support. They have written the Indian government urging them to give us every support. We have even employed Chief Security for Air Peace because that is part of the Indian requirement. You must employ somebody who has been in their military or any of their forces as your chief security officer and he must be a citizen of India. We have already done that in India. They recommended somebody to us and he is highly placed. So we have done that; it is just some little more process remaining, so I am sure by God’s Grace at most second week of September Air Peace will be flying to Mumbai. And we are looking forward to discussing with Air India, their national carrier, which has a better spread to be able to spread for us within India. And their government also is urging us to partner with Air India. In the near future and after we have succeeded in these first three international destinations, we would look at flying to Guangzhou. Why did you purchase Boeing 777 within a short period of time? We planned to do international routes. When we started this airline we outlined our growth pattern and we have religiously followed it. So when Air Peace was importing one Boeing 777 after another and bringing them and keeping them at Lagos international airport, we were criticized. We had to do so because if you wish to fly to China, for example, if you don’t have up to three long-haul aircraft they won’t give you the permit. So when we knew this, we went to China to present our papers and the Nigerian Ambassador in China cooperated with us. He really offered a lot of help to us. www.businessday.ng

And that gave me hope because we came from a country called Nigeria. The man took us like his brothers and took us everywhere we needed to go and helped us and made it very easy for us. That is why I believe that the government of Present Mohammadu Buhari is very, very eager to change the economic narrative of Nigeria. He is a pan-Nigeria nationalist. There is no doubt about that. He is very eager to support indigenous investment. We pray that other people, all the civil servants and appointees should also imbibe the vision of the President and everything will be okay. When we went to Beijing, we were given utmost cooperation. The Nigerian Ambassador did everything possible to make it easy for Air Peace. But as at that time our third plane had not arrived. You see, before they give you permit, you must show them the registration of your three aircraft, either by way of dry lease or outright purchase. And most importantly in the outright purchase they prefer that you own it before they can give you permit. So we went about trying to equip Air Peace in such a way that we won’t go out there in the international arena and not be able to face competition. If Air Peace did not buy the number of aircraft we bought, yesterday (Friday, July 5), we would have disappointed Nigerians. We dropped the first aircraft we wanted to

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use because at 2:00 pm the previous day, a snag showed up, these are man-made machines, but assuming we had only one aircraft, that flight would have been cancelled. You know what that would have done. We were sweating, but because we had backup, we rolled out our Boeing 777-300, which even had more capacity and opened it up and within hours people were boarding it. So if we didn’t have that capacity we wouldn’t have been able to operate. So, that is why we went out there acquiring more and more and we are still acquiring. There are two more that are about to come because we really want to make Nigeria proud. God willing, before the end of this year Air Peace will own six Boeing 777. Would you want to partner with another African airline to go to the US? Yes, a major African airline approached us; there was negotiation for us to have professional partnership. In aviation all over the world there is always partnership but the issue is what kind of partnership it is. I am a nationalist and I have even been given award on it before. I believe in the country and I believe that if everything is well done, Nigerians will not have any cause to regret being citizens of the country. I am always calling for everybody, in your small space to do things that would not short-change the country. About the interlining, agreement or partnership with another airline you talked about, it is true we were approached; it is true we agreed to have partnership, it is true that we even went to sign a MoU with the airline. That was MoU that will precede the

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real agreement. But when it got to the real agreement Air Peace disagreed. We don’t want to be receiving royalties from any airline even though it will enrich our purse without us flying, even though it will makes us have more money without flying, it is going to make us richer but where does that leave the employees of Nigeria? Where does that leave numerous Nigerians that are unemployed roaming the streets? When I am taking royalties from another airline flying in my name to that country and I will remain behind collecting money, am not caring because I am collecting money? We wrote them and I said I will not short-change my country, that I will not accept it. I will not allow anything that will make another country to come here and be flying in the name of any airline and there is capital flight out of Nigeria, which is not generating jobs for Nigerians. Even though it is going to favour us, it does not favour the general Nigerian public. I leave by example, I have been criticising such things and when it came to my table for me to take raw money, I rejected it and I have a letter to it. So I am waiting for anybody to come and do it and I will bring my letter for Nigerians to see that I rejected this before. So if I want to do partnership I want it to be a level-playing partnership whereby we do it in such a way that it will benefit our country. Anything that will not benefit Nigeria and the Nigerian unemployed masses, I will not accept it. How do you intend to combat aeropolitics with your international operations because it

is obvious that your competitors would want to drive you out of the market through various strategies? Let me make this clear, Air Peace will never be able to combat international aeropolitics without the support of the government. We can only combat it if our government supports us. It is a shame that several Nigeria airlines have come here (Dubai) and they were pushed out either through unfair competition or some arm-twisting tactics. It is very unfair. The only plan we have is the plan of sustainability, to sustain our operations to the best of our abilities. That is so far as we can go, if we are not supported. So Air Peace needs the support of everybody. We gathered that an airline from UAE wants to increase its frequency to Nigeria. If government allows that it will count against its indigenous carrier. Like in other countries, the first obligation of government is to protect its own. In the past, government officials would say Nigerian airlines don’t have capacity, but I am sure they cannot say that against Air Peace now. If they give them another frequency they will make it uncompetitive for us and that will force us to close this route and I will let Nigerians know why I closed the route. So, let us think of Nigeria first. Air Peace can only stay here as long as we are protected by our government. We have BASA (Bilateral Air Service Agreement) with UAE. It is a country we love so much. We have BASA with them, Etihad is coming to Nigeria, Emirates is doing two frequencies into Lagos, one frequency to Abuja, this is the only time that a Nigerian airline is coming so we should be allowed to be. Air Peace is energising the economy of our country; Air Peace is acting as a catalyst, an airline doing about 110 flights daily, moving Nigerians around in the economy. That airline should be supported. As you start operations to Dubai, India and Johannesburg, what will be the number of workers you will need and what will be the projected number of workers you will employ? You don’t want to know the kind of employ-

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ment Air Peace has generated in the last four years. We have generated over 3,000 direct workers; over 9,000 ancillary jobs, even the people doing catering, the other day I went there, I saw about 500 people working in the factory. That factory is filled up with Air Peace staff. These people are employed because of Air Peace, because they are the ones doing 110 flights daily. It is because of that these 500 people were given jobs. I shed tears, and my tears were born from the fact that some people in government agencies do not share in the same dream as even the President of this country. The President and I share the dream of creating more jobs for Nigerians. We want to create an enabling environment; we want to create the platform for people. The truth is, if we are not protected by the government in our international operations, we will not last, no matter what we try to do. Government must discourage unfair competition. The American government did the same thing for their airlines. The Gulf airlines brought unfair competition, the airlines in America complained and the American government stepped in and that stopped. Multiple and proliferation of designations to foreign airlines into Nigeria, multiple frequencies are to disservice Nigeria. I don’t see why a foreign airline, when we are trying to make our own airlines grow, be allowed to be doing local flights in the name of open skies. I don’t see the reason why Turkish Airline should land in Abuja, from Abuja to Port Harcourt, Port Harcourt back to Abuja, Abuja back to their country. This is when you have Nigerian airlines aspiring to come onto the international scene. When you talk some people will tell you it is good for competition. Competing with whom? Competing in denigrating your country’s economy? Is that what you are competing with? Again, and at the same time, the President of the country, I can assure you, wants the survival of indigenous airlines, that I can swear to and I know why I said this. That is why it didn’t take him anything to remove VAT, remove import duties, which

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helped us today to be buying planes. If we were to be paying duties we might not be able to buy the planes we are buying. So I thank President Muhammadu Buhari for doing that, I am very grateful to him. When somebody does something good let us praise him and when somebody does something bad, let us find a way of correcting the person with love. On this he has done everything possible to improve our situation as airlines. But we beg others to emulate him; the President cannot be everywhere; so they should help in carrying the vision of this President. We should stop giving multiple designations to foreign airlines. Let me tell you about America. |Even with your private jet, when you land in America, they only allow you one more stop. If you land in New York and you want to go to Atlanta, they say okay, they take it, as you want to refuel. The next one you are not allowed to fly again, you must use their local airlines to move about, then when you come you take your plane out of their country. If government continues to encourage us we will grow and be able to create more jobs. This will be good for Nigeria. The more the airlines come up, the more jobs they provide for Nigerian people. How are you connecting other airports to your international service? That is what we are doing now. We are taking passengers from every part of the country, using our local flights. Today, we had people who checked in from Abuja, Kano, and other cities in Nigeria. And we checked them in from the airport closets to them. When they get to Lagos we put them on our buses. It was seamless. We also gave them rebate. You know if you fly another airline outside Air Peace to UAE or to anywhere, you pay domestic airline to take you to Abuja or Lagos where you will connect the international airline that will take you out of the country. So we save you money. We can save you as much as N80, 000 for a return ticket in a domestic flight to and from your international trip with other airlines. When you fly with Air Peace we will take you from where you land. Once you clear with customs we pick your luggage. We take it and take you to our awaiting place. Like today when they landed, people were saying they have never seen a thing like that. That is so good. So, we are spreading our tentacles to other parts of the country. Would you want to get more airplanes on lease to meet your passenger demand in the near future? Yes, but now there is an unofficial blacklist of Nigeria airlines. I can tell you for sure, it exists. We lost about 10 aircraft we wanted to acquire through leasing. You cannot survive in this business without leasing; even all these big airlines we know in the world, a majority of their planes are leased or financed. So we need leasing and the only way we can do that is to start polishing our acts. And the government will also have to do a kind of image laundering that things have changed. Any government official tomorrow that goes out to say our airlines in Nigeria are bad, talking about us in the negatives, will not help our image. It will affect not only the airlines but other sectors of the economy. This is what Air Peace is trying to change.

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Wednesday 17 July 2019

BUSINESS DAY

MARITIMEBUSINESS Shipping

Logistics

Maritime e-Commerce

FG generates over N382.52bn import duties from Apapa, Tin-can Ports in H1 …As dilapidated road infrastructure threatens businesses amaka Anagor-Ewuzie

he Federal Government has raked in approximately N382.52 billion as revenue generated by the Nigeria Customs Service (NCS) in the nation’s two major economic gateways, Apapa and Tin-Can Island Ports (TICP) commands. The revenue, which was announced recently by both Customs commands in a separate reports, represents the amount generated in Customs duties paid by Nigerian importers on their imported cargoes from the month of January to June (first six months) 2019. As the major seaports that handle over 70 percent of Nigeria’s import cargoes, Apapa and Tin-Can Island Ports, also generates over 70 percent of revenue, collected for the government from the seaports. Ironically, the roads leading to both seaports are presently in bad shape as motorists, commuters and port users, find it increasingly difficult to access Apapa port city where both ports are located, due to the traffic gridlock that has become a daily reoccurrence, since the last five years. The traffic situation wors-

ened due to the failure of government to utilise a fraction of the trillions generated from the ports annually by Customs, NPA, NIMASA, SON and others, to repair the bad portions of ApapaOshodi Expressway, the major access into Apapa. For this singular reason, majority of the trucks and trailers going to the seaports and oil tank farms littered in all parts of Apapa city, are forced to pass through IjoraApapa-Wharf road, thereby creating travel difficulties for motorists and port users. Tony Anakebe, a Lagos-

based Customs Licensed Agents, said the seaports are the goose that lay the golden eggs for the Federal Government, yet the government has failed to invest in development of port infrastructure especially roads. Meanwhile, the Customs revenue was over N33.27 billion higher than about N349.27 billion generated by both Customs commands within the first half of 2018. A breakdown of the revenue generation shows that Apapa Customs collected total revenue of approximately N203.26 billion in the

Denmark beats US to become world’s fifth largest shipping nation amaka Anagor-Ewuzie

g a i n , D e n m a rk has improved its place on the list o f t h e w o r l d ’s largest shipping nations, surpassing the United States to claim the fifth place. The milestone is coming one and half years after Denmark surpassed Germany on the sixth spot. Measured by the number of merchant ships sailing under a country’s flag, the list is spearheaded by Greece, whose fleet measures 300.4 million in total deadweight tonnage. Greece is followed by Singapore, China and Japan in the top four spots. With 83.8 million of total deadweight tonnage,

Danish shipping firms exported USD28.4 billion worth of business last year, making shipping one of the country’s largest export industries. Reaching fifth place on the list shows that the Danish shipping strategy has worked, said Anne H. Steffensen, the CEO of Danish Shipowners’ Association. “We have seen great growth in the ships operated by Danish shipping firms, and at the same time there are more ships flying the Danish flag than ever before,” Steffensen said. “The next 5 to 10 years will be crucial in finding the way towards the CO2neutral ship, which will be a condition for growth in shipping. The knowledge required must come through investment from www.businessday.ng

the industry, targeted research, education and innovative start-ups,” he said. Simon Kollerup, Denmark’s business minister reiterated that the country must continue to focus strongly on research and innovation in shipping. Recall that the International Maritime Organization (IMO) has agreed that greenhouse gas emissions from shipping in 2050 must be reduced by at least 50 percent compared to the level in 2008. This was why Danish major, Maersk Line has set a goal of being completely CO2 neutral in 2050. Denmark is also making its register more attractive to shipowners by developing a digital register of shipping by the end of 2020.

period under review, which represents 54.5 percent of its annual revenue target of N372.56 billion and N26.51 billion higher than that of the same period in 2018. In Tin-Can, Customs collected the sum of N179.26 billion, representing 52.28 percent of the annual target, and N6.76 billion higher than that of the same period in 2018. Further breakdown shows that in January, Customs generated the sum of N32.58 billion in Apapa and N29.67 billion in TICP; in February, it recorded the

sum of N27.52 billion in Apapa and N23.19 billion in Tin-Can; in March, Customs collected the sum of N34.61 billion and N25.99 billion in Tin-Can. The month of April, Customs collected the sum of N37.39 billion in Apapa and N27.79 billion in Tin-Can; in May, the service generated the sum of N38.31 billion in Apapa as well as N32.39 billion in Tin-Can, and the month of June, it collected the sum of N32.85 billion from Apapa port as well as N28.86 billion from Tin-Can Port.

Reacting, Muhammed Abba-Kura, Customs Area Controller of Apapa command, said the command was able to achieve the feat due to strict adherence to professionalism through sensitisation of officers as to their responsibilities in line with the standard operating procedures for optimal revenue collection. “Periodic stakeholder engagements, open-door policy, prompt resolution of disputes by the Dispute Resolution Committee, as well as maintaining the right synergy and collaboration with sister-agencies were other factors that helped increased revenue from Apapa port,” he added. On the other hand, Mba Musa, Customs Area Controller of Tin-can Island Port said the command has gone beyond revenue collection/ generation, to creating an enabling environment for legitimate businesses to thrive in line with the Presidential directives on Ease of Doing business at the ports. He said his command has resolved to achieve speedy clearance of cargo from its port terminals in order to reduce the cost of doing business, adding that these were factors that have projected the command to becoming a hub and most business friendly port.

Court’s classification of oil rigs as vessel to create more jobs - Peterside amaka Anagor-Ewuzie

akuku Peterside, the director-general of the Niger i a n Ma r i t i m e Administration and Safety Agency (NIMASA), has commended the judgement of the Federal High Court in the case involving Seadrill Mobile Unit Nigeria Limited and the Federal Ministry of Transportation (FMOT), which confirmed NIMASA’s right to collect levies from drilling operations. He described the judgement as a landmark attempt by the judiciary to set the record straight and boost implementation of the Coastal and Inland Shipping Act (Cabotage), which in turn will generate opportunities for jobs. The suit instituted by

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Seadrill was to determine whether drilling operations falls within the definitions of “Coastal Trade” and “Cabotage” under Cabotage Act, and whether on a proper interpretation of the Cabotage Act, drilling operations falls within the definition of “vessels”. Presided by Justice Babs Keuwumi, the court ruled that drilling operations fell within the ambit of exploration, exploitation, or transportation of mineral or nonliving natural resources of Nigeria, whether in or under Nigerian waters. Similarly, the court held that the combined reading of the Admiralty Jurisdiction Act, Interpretation Act, and Cabotage Act meant that drilling rigs fell under the definition of vessel in the Cabotage Act. @Businessdayng

The court however granted NIMASA right to collect all outstanding payment of the 2 percent Cabotage surcharge from owners of drilling rigs and associated platforms. Reacting to this, Peterside said the judgement marked the opening of an important opportunity for job, incomes, and economic growth in Nigerian maritime sector. He appealed to persons engaged in inland trade to pay their Cabotage fees, even as he reaffirmed the Agency’s commitment to the enthronement of global best practices in the Nigerian maritime sector. “We expect that with this judgement, all parties will obey the court order and do the needful for the growth of the maritime sector,” he said.

Wednesday 17 July 2019

BUSINESS DAY

MARITIMEBUSINESS Shipping

Logistics

Maritime e-Commerce

Nigeria and global promotion of gender equality in shipping business amaka Anagor-Ewuzie

ith mind set on raising the number of females participating in the global seafaring profession, the International Maritime Organisation (IMO), the global maritime regulatory body, launched a global campaign aimed at encouraging more female to build career in seafaring and shipping business in general. IMO, which doubles as a specialised organ of the United Nation’s came up with a theme “On Board with Gender Equality,” with special focus on empowering women in the maritime community, for the 2019 Day of the Seafarer celebration, held on 25 June. The IMO advised member-states to key into the theme by opening up their maritime sectors for more women to participate. Globally, the IMO earmarks June 25 every year to be the Day of the Seafarer, an annual international event, coordinated by the IMO, and celebrated world over to honor the unique contribution made by seafarers from all over the world to international seaborne trade, the world economy and civil society as a whole. Seafarers are persons employed by a shipowner to service on board a ship at sea. They take part in ship operation and maintenance especially in places like deck

department, engineering department, steward department, and others. Seafaring profession particularly, ship captains, Marine Engineers, Nautical Scientists, Marine Surveyors, Deck officers and Master Mariners, are mostly male dominated professions. This has created concerns in the minds of global maritime leaders, who believed that maritime business can be better harnessed for greater growth if more women are encouraged to participate in shipping business. Available statistics show that only 2 percent of the total seafarers across the world are females and more disappointing was the fact that majority of this percentage are from the Philippines, a country presently dominating the world’s seafaring profession in huge numbers, raking in huge income and foreign exchange for the Philippine’s economy. Coming home, out of the 6,039 seafarers on the Nigerian seafarers’ register, only 567 representing 9.3 percent were females, according to statistics from the Nigerian Maritime Administration and Safety Agency (NIMASA). Also, data from the Maritime Academy of Nigeria (MAN), Oron, shows that only 26 out of the total 250 students in the school registry, representing 10.4 percent of the total students in the Academy, are female. For these obvious reasons, Nigeria through NI-

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Dakuku Peterside

MASA started focusing on creating gender equality beginning with the celebration of the 2019 Day of the Seafarer that had Aisha Buhari, the First Lady, leading other dignitaries and stakeholders in the maritime community to localise the global campaign. On its own part, the management of NIMASA promised to use deliberate steps designed to accommodate more women in the nation’s shipping business, to redress this abnormally. Dakuku Peterside, director-general of NIMASA said the agency would look into creating more avenues through interventionist programmes and proper education for Nigerian female students to build career in maritime business.

Peterside said the Nigerian maritime sector cannot afford to exclude the women, who make up about 50 percent of the nation’s population. According to him, NIMASA shall in response to the global concerns, begin to engage stakeholders in the sector to design measures and modalities for the engagement of more women in shipping activities and other areas within the maritime workforce. He however called on men to support women, especially in maritime, “towards reaching their potential and navigating work place challenges.” Contrary to the general perception, seafaring profession is not a career that is solely reserved for men,

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but one that is meant for all genders. Prior to the Seafarers’ Day, NIMASA held a oneday sensitisation workshop in Lagos for over 400 Nigerian female students to showcase to them, the benefits of taking a career in seafaring. Aisha Buhari, who commended NIMASA’s efforts geared towards promoting and encouraging women in the maritime sector, said such was in line with the President’s aspirations for the sector. “Mr. President is desirous of seeing more women play active role in the maritime industry. This celebration focusing on women seafarers is, therefore, apt,” the First Lady said. She however called on all government agencies, especially those in the maritime sector, to ensure the achievement of the United Nations’ Sustainable Development Goal 5, which is aimed at attaining gender equality and the empowerment of all women and girls. Meanwhile, Peterside said NIMASA would going forward, also begin to sensitise industry operators and players on the significance as well as economic importance of bridging gender inequality, and the need for men to support women towards reaching their potential. “For us to have more women at sea and onshore, the men have a major role to play in terms of providing the needed support. However, NIMASA will continue to pursue policies and

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programmes that will accelerate gender equality and empowerment of women in the maritime sector. For instance, in addition to the 304 female cadets NIMASA have trained in seafaring since the inception of the Nigerian Seafarers Development Programme (NSDP), Peterside said greater attention will now be given to the training of female seafarers in specialised courses and areas to enable them take up professional responsibilities in specialised vessels and offshore operations, and maritime sector generally. He however added that placement of women on board vessels will be given high priority, with greater attention given to providing an enabling environment for female seafarers. Cleopatra DoumbiaHenry, President of the World Maritime University (WMU), who applauded Nigeria’s effort in encouraging more female professionals in the maritime industry, said Nigeria is one of WMU’s long-standing partners that have provided funds for WMU’s M.Sc. fellowships. “Under the MoU with NIMASA, as well as the support provided by the Nigerian Ports Authority, today, we have 199 WMU alumni from Nigeria, of which 31 are women. About half of these Nigerian female graduates were funded by the government. The rest received funding from other sources and other WMU partners,” she said.

Wednesday 17 July 2019

BUSINESS DAY

BANKING

In Association with

As CBN swings into action on banks’ lending to economy The Central Bank of Nigeria (CBN) has demonstrated its readiness to stimulate growth in the economy through its recent directives to the deposit money banks which focus on boosting credit to the real sector. Hope Moses-Ashike

he CBN within the last two weeks swung into action after Godwin Emefiele, its governor, recently unveiled his policy trust and vision for the financial services sector in the next five years. Emefiele was on May 2019, re-appointed for a second term as the CBN governor by President Muhammadu Buhari, an action that was widely accepted by both Nigerian and foreign investors. On assuming office the following month after the expiration of his first term, Emefiele unveiled an 84-page policy trust, which centred around promoting price and monetary stability, exchange rate stability, financial system stability as well as efforts to spur growth through development finance interventions. Working closely with the fiscal authorities, Emefiele pledged to target a double-digit growth by the next five years and committed to working assiduously to bringing down inflation to a single digit, while accelerating the rate of employment. Part of the CBN governor’s policy trust reads: “Put succinctly, our priorities at the CBN over the next 5 years are the following; First, preserve domestic macroeconomic and financial stability; Second, foster the development of a robust payments system infrastructure that will increase access to finance for all Nigerians thereby raising the financial inclusion rate in the country; Third, continue to work with the Deposit Money Banks to improve access to credit for not only small holder farmers and MSMEs but also Consumer credit and mortgage facilities for bank customers”. Consequently, the CBN swung into action as it has in the last two weeks released two circulars, which focuses on increasing lending to real sector, thereby stimulating growth in the economy. In the first circular to all banks with reference number BSD/DIR/GEN/MDD/01/045, dated July 3, 2019 and signed by Ahmad Abdullahi, director, banking operations of the CBN, the apex bank required all DMBs to maintain a minimum Loan to Deposit Ratio (LDR) of 60 percent. The circular titled ‘Regulatory Measures to Improve Lending to the Real Sector of the Nigerian Economy’, as seen by BusinessDay, said “all DMBs are hereby required to maintain a minimum Loan to Deposit Ratio (LDR) of 60 percent by September 30, 2019”. It said the ratio “shall be subject to quarterly review”. The CBN said these measures were intended “to ramp up growth of the Nigerian economy

Godwin Emefiele. CBN governor

through investment in the real sector”. “To encourage SMEs, retail, mortgage and consumer lending, these sectors shall be assigned a weight of 150 percent in computing the LDR for this purpose. The CBN shall provide a framework for classification of enterprises/businesses that fall under these categories,” it said. The apex bank warned that failure to meet the stipulated minimum LDR by the specified date “shall result in a levy of additional Cash Reserve Requirement equal to 50 percent of the lending shortfall of the target LDR”. Cash Reserve Ratio (CRR) is a specified minimum fraction of the total deposits of customers, which commercial banks have to hold as reserves either in cash or as deposits with the central bank. CRR is set according to the guidelines of the central bank of a country. Analysts have critically looked at the policy and came up with their different verdicts. Taiwo Oyedele, head, Tax and Regulatory Services, PwC, said on one hand that it was a good development that should encourage banks to increase their lending especially to the private sector. On the other hand he said the risk is that the quality of banks’ loan portfolios may deteriorate in an attempt to meet the target at all costs, which may result in a relatively high non-performing loan ratio. “The CBN therefore needs to ensure a balance between the potential benefits and inherent risks of the new guideline,” Oyedele added. Uche Olowu, president/chairman of council, Chartered Institute of Bankers of Nigeria (CIBN) said banks would comply but they were expecting a detailed framework to this directive. He said the reason for the new guideline was

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that the CBN wanted to jump-start exposure to the real sector. Olowu said the CBN coming up with a 60 percent loan-to-deposit ratio meant that banks’ lending to the real sector had not been sufficient. He added that the reason for deficient lending was the fact that the risk environment had not been mitigated. “There should be a winwin situation,” he said. The overall availability of credit to the corporate sector decreased in Q2 2019 but was expected to increase in Q3 2019, according to Credit Conditions Survey Report published by the CBN. One of the questions asked lenders in the report was, “How has the overall availability of credit to the corporate sector changed?” The response was 0.08 for current quarter, and -2.33 for the next quarter. Ayodele Akinwunmi, head of research, FSDH Merchant Bank Limited, said the development meant more money from banks’ customer deposit will be channelled as lending to the real sector of the economy. Given the positions of customer deposits and loans of commercial banks in Nigeria as at December 2018, if Banks are to comply with the directive from the Central Bank of Nigeria, over N1.5trillion additional money would be available as credit to the real sector of the economy. It is also possible that commercial banks may sell down some of their holding of fixed-income securities in their portfolio to enable them meet the regulatory requirement. This may lower price with a possibility of increasing yields on fixed-income securities. However, it is also important to address those hindrances to lending in Nigeria, otherwise lending in the name of complying to meet regulatory a requirement may lead to a rise in non-performing loans. Ronak Ghadia, director of Sub-Saharan African Banks, EFG Hermes Research, said, “We think the regulation could be damaging for the Nigerian Banking industry; normally banking sector regulators introduce maximum LDR thresholds to limit risk taking by banks. Conversely, in Nigeria, introduction of a minimum LDR by the CBN encourages banks to undertake more risks at a time when the macro-environment remains fragile at best. Moreover, the regulation encourages banks to lend to sectors that they have historically been uncomfortable lending to. We think there is a risk that the new regulation could lead to banks underwriting high-risk loans which could lead to further asset quality deterioration and destabilisation of the industry, at a time when the regulator has limited scope for further bail-outs”. The second circular FMD/DIR/CON/ OGC/12/019 to all banks and discounts houses

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on ‘Guidelines on Accessing the CBN Standing Deposit Facility’, and signed by Angela SereEjembi, director, financial markets department, the CBN said the remunerable daily placement shall not exceed N2 billion. With this circular, the CBN has reduced the amount of excess cash that banks and merchant banks (discount Houses) deposit with it, which is known as SDF by 73.3 percent to N2 billion from N7.5 billion since 2014. “The amount is not a lot, so we don’t expect it to significantly affect the banks’ credit profiles. Nigerian banks’ revenue is largely influenced by their interest income on their loans and advances and treasury bills and bonds, and fee and commission income. Income from their deposits with the Central bank in the Standing Deposit Facility is negligible,” Moody’s said. In a commentary made available to BusinessDay, Moody’s said the banks may still mitigate the loss of interest on the extra N5.5 billion by moving the extra liquidity to the interbank market, which may depress interbank interest rates, and benefit net interbank borrowers, somewhat. “The latest measure signals the central bank’s intention to stimulate lending to the real economy. However, in our view, this directive is unlikely to force Nigerian banks to grow their lending aggressively. Already, banks were only remunerated up-to NGN7.5 billion, and any amount above N7.5 billion was not remunerated. Assuming banks would lend out amounts above the new N2 billion placement ceiling, the additional lending would be only N5.5 billion per bank, and will likely be less than 1% of total loans outstanding. In our view, the additional liquidity will likely move to the inter-bank market rather than lending.” Ayodele Akinwunmi, head of research, FSDH Merchant Bank Limited, it is important that the efforts of the CBN are supported by appropriate fiscal policies and incentives to reduce the risk of lending to the economy and also develop new businesses and sectors that bank loans can be directed to. Continuing in his policy trust, Emefiele said, “We shall also during this intervening period encourage our Deposit Money Banks to direct more focus in supporting the Education Sector. Fourth, grow our external reserves; and fifth, support efforts at diversifying the economy through our intervention programs in the agriculture and manufacturing sectors. We are confident that when implemented, these measures will help to insulate our economy from potential shocks in the global economy. In my second term in office, part of my pledge is to work to the best of my abilities in fulfilling these objectives”.

@Businessdayng

Wednesday 17 July 2019

BUSINESS DAY

PENSION today

In Association With with contributions from

‘For effective compliance, moral suasion should have been over in pension industry’ Paddy Ezeala is a communication and development specialist who has worked for reputable international relief and development agencies. He was West Africa Regional Communication and Campaigns Coordinator for Oxfam and also Africa Communications Officer of World Wide Fund for Nature (WWF). He has also contributed immensely to Pension Funds Administration in Nigeria, having worked at First Guarantee Pension Limited (FGPL) and also Premium Pension Limited (PPL) head of Corporate Communications and later The Regional Manager, South East.

chattered management consultant and Fellow of the Institute of Management Consultants, he bares his mind on the workings of the Contributory Pension Scheme (CPS) in Nigeria. You recently left the Pension industry after close to a decade, how do you feel being part of this industry and the level of transformation that has taken place within the past 15 years? I’m in a good position to comment on this having been a pioneer staff, so to speak. I joined First Guarantee Pension Limited in 2006. I witnessed all the teething challenges in the industry and can now say that the transformation and growth in the industry has been tremendous. From the quality of personnel to the application of cutting-edge technology in the rendition of service, it has been steady growth ever since. I am one of those who believe that the Contributory Pension Scheme (CPS) remains one of the best policies, if not the best, that has come from the Federal Government since the return to democratic governance since 1999. I am very proud to have been part of it. When you look back, what is your biggest regret that you wished hadn’t happened or could have been done in a better way in the pension industry? My life doesn’t have space for regrets. However, looking at the industry as a whole, three things that are intertwined evidently could have been better. The first is that the level of public awareness of the modus operandi, requirements and potential of the industry is still below par. This is not just at the level of the uneducated. Even the lettered and powerful are still struggling to come to terms with what the industry is all about. The second is the level of compliance. The Federal Government through the regulatory agency has yet to wield the big stick. The time for moral suasion should have been over. Pension is in the interest of the individual worker as well as the Government and society. It is as important as tax payment and should receive equal attention. There is no doubt that many corporate bodies in Nigeria are out of the loop of the Contributory Pension Scheme. Nigeria’s working population is about 100

Paddy Ezeala

million. Even when we know that more than 40 percent of this population is either unemployed or under employed, market penetration in the pension industry is still hovering around 10 percent. I don’t know whether this can be said to be impressive. This dovetails into the third issue which is funds under management. Pension Assets under Management in Nigeria should be higher than what it is right now. What is the implication of this? Great economies are usually those with huge financial backbone. The CPS has the potential to provide the necessary financial cushion in our drive to build a solid and diversified economy beginning with addressing our infrastructural deficiencies. From a deficit of more than two trillion naira in the old Defined Benefit Scheme before 2004, the CPS currently has more than 9 trillion naira in Assets under Management (AuM) even when a greater percentage of this is illiquid as about 70 percent of the pension funds are in FGN Bonds, Treasury Bills, State Government Securities and other asset classes. In other words, less than 10 percent of Nigerian workers in the formal and informal sectors of the economy that enrolled in the CPS have been able to contribute such huge sum. This explains the great potential and immense

possibilities of the industry unpacks. But is this sum really reflective of the size of our economy? The answer, I’m afraid, is in the negative. In South Africa, the pension assets is about R4 trillion which is about $300 billion while Nigeria’s is about $25 billion. With that figure, South Africa has the 8th biggest pension pot in the world. There is no doubt, pension wise, that South Africa punches far above its weight. But the truth remains that huge pension funds guarantees the good life for workers during retirement, mainstreams the industry in the socio-economic dynamics of a country and cushions the economy. There is every reason for the various tiers of Government to take the CPS seriously. It is a contradiction that we are pursuing a GDP of $600 billion while have total pension Assets under Management of $25 billion after 15 years of contribution. We all have to put hands together for a more aggressive drive and compliance enforcement. Today one of the major challenges facing the industry is non remittance by many private sector employers; what do you think that can be done? This is in line with what we have been discussing. Compliance is not just about enrolment or registration (opening a Retirement Savings Account and having a PIN Number). It is more about remittances. The private sector in Nigeria largely has not demonstrated much enthusiasm with regard to the Contributory Pension Scheme. Some of the private sector employers of labour who have attempted to comply did so because it is a prerequisite to render service to or execute contract for Government. More of such stringent rules are required even in the area of monitoring remittances. The hammer must begin to fall on those who have refused to comply. You should also know that it is not only the private sector that is guilty of nonremittances. Recently, the director-general of the National Pension Commission, Aisha Dahir- Umar accused State Governments of withholding up to N3.40 billion already deducted from state employees. This is unfair because it, among other setbacks denies the contributing employees the investment income that should have accrued to them.

There must be severe sanctions for noncompliance of any form. How has the Nigerian labour benefited from this scheme, looking at where we are coming from? The condition of retirees across board under the former Defined Benefit Scheme was quite pathetic. It was obvious that such a scheme was unsustainable. The more the responsibilities of government expanded, the more it became difficult to offset pension liabilities. It even seemed as if pension was the last thing government thought of in the event of liquidity squeeze. Corruption, analogue documentation and excessive bureaucracy worsened matters. The aged were dying off, even in queues during verification. The various tiers of government practically proved incapable of handling the situation.But nowadays, the situation has changed to a great extent. There is a fiduciary relationship between the PFAs and clients. You know who to report to and hold accountable if you are not satisfied with service rendered. Unfortunately, the Government has not been forthcoming with regard to prompt payment of accrued rights. This causes undue delay in payment of entitlements and the blame unfortunately is heaped at the doorsteps of the operators of the CPS. Pension should not be treated as favour being done to workers. It is their entitlement. Recent reports on registered contributors show that more men are enrolled than women, what is the implication of this on their social welfare? This is not in any way indicative of gender bias in the pension industry. It only goes to show that there are more men in the formal sector than women. When I was working at Oxfam, research showed that 80 percent of all the food consumed in West Africa is produced by small-holder farmers and that 80 percent of these small-holder farmers are women. So, naturally if the pension industry enlists rural farmers and petty traders, there would be more women in the loop. Oxfam recently ranked Nigeria very low in gender equity. Something should be done about it. Economic and social exclusion of any kind impacts negatively on social welfare.

RC634453

Diamond Pension Fund Custodian Limited with contributions from

1A, Tiamiyu Savage Street, Victoria Island, Lagos State. Tel: 01-4613753, 2713680, 2713954 Fax: 01-2713955 Email: info@diamondpfc.com Website: www.diamondpfc.com www.businessday.ng

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

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Wednesday 17 July 2019

BUSINESS DAY

insurance today

E-mail: insurancetoday@businessdayonline.com

Insurers recount valuable contributions of departed colleagues to growth of industry Stories by Modestus Anaesoronye

he Nigerian insurance community was bathed with emotions last week during a Service of Songs at the Chapel of Christ the Light in Alausa, Ikeja, recounting valuable contributions of their three departed colleagues who have gone to join their makers. In several tributes that depicted love, affection and long standing relationship, the industry bid farewell to Oladipo Bailey, former commissioner for Insurance; Olorunfumi Adeyemi, former director general of the Nigerian Insurers Association(NIA) and Uju Ndubuisi Chukwu, former the deputy director general of the Chartered Insurance Institute of Nigeria (CIIN). They unanimously observed that the legacies they left behind are huge and that their shoes would be difficult to fill. Paying tribute to Chief Oladipo Bailey, the President, Chartered Insurance Institute of Nigeria(CIIN), Eddie Efekoha, said, Bailey was an iconic insurance practitioner and former commissioner for insurance, an astute professional and administrator of purpose. He stated that that the deceased was a personality who helped to shape the perspectives and lives of many in the insurance profession, adding that late Bailey was an administrator of note and was quite detailed and belonged to the school of administrators who instilled discipline in their subordinates

in all ramifications. According to him, “He was a pillar in the industry and worked tediously to make insurance part and parcel of the consciousness of the government, the people of Nigeria and the West African sub-region. He was a problem solver and a bridge builder between the young and the old. He was a man who gave his all to the insurance industry in general and the CIIN in particular. He will always be remembered for his mien and gentility.” On late Funmi Adeyemi, he said, the past director general of the Nigeria Insurers Association(NIA) contributed in no small measure to the development of the insurance industry through his legal expertise, following the examples of people like Joseph Irukwu . “He was also the Company Secretary/Legal Adviser of National Insurance Corporation and was part of the pioneering team that took NICON to a great height. He will surely be missed for his contribution to the industry,” he pointed out. To him, the death of Uju Ndubisi-Chukwu, who, until her death, was the deputy directorGeneral, CIIN, was too sudden and shocking and it took all unaware. To make the matter worse, he said, the cause of her death has been linked to unnatural cause by strangulation. “We have since written officially to the Nigerian High Commission in South Africa and the organizers of the conference AIO/ Institute of Insurance in South Africa to assist in getting to the bottom of this. The Nigerian High Commission has in turn

L-R: Sukanmi Adekeye, executive, Allianz Nigeria; Abimbola Alabi, company secretary/head, Corporate Services, Allianz Nigeria; Asue Ighodalo, non-executive director, Allianz Nigeria; Fola Adeola, chairman, Allianz Nigeria; Bernhard Schlagheck, German ambassador to Nigeria; Owolabi Salami, executive, Allianz Nigeria; Stefan Traumann, German consul general; and TaiwoTellaNdukwe, divisional head, Corporate Clients & Intermediaries, Allianz Nigeria during the visit of the German government to the head office of Allianz Nigerian in Lagos

confirmed working with the South African Police authorities to unravel the cause of death. As the Institute work with the family of Ndubisi-Chukwu and others to unravel the cause of death, we enjoin all parties concerned to exercise patience and avoid making statements that will prejudice official investigations,” he stressed.

Paying his tribute to Olorunfumi Adeyemi, the Chairman, Nigerian Insurers Association(NIA), Tope Smart, said, Adeyemi, was one of the finest insurance lawyers in Nigeria, and that, many insurance professionals drew significant inspiration from him through his many books on insurance and law.

Allianz Nigeria partners German Business Community in Nigeria

Zenith Insurance assures brokers, clients of better services, swift claims payment

llianz Nigeria, local operating entity of global insurance giant, Allianz, has cemented a strategic partnership to provide insurance and protection services to German nationals and businesses domiciled in Nigeria. Representing the Federal Republic of Germany, the Ambassador to Nigeria, Bernhard Schlagheck, paid a visit to executives and board members of Allianz Nigeria last week. It was a productive meeting as there were crucial deliberations on strategic plans for Allianz Nigeria to provide support for the German diaspora in Nigeria with attendant consequences on the Nigerian economy. The German industry is very active in Nigeria with a large number of small and medium sized German companies operating in the country. Expressing these sentiments, Owolabi Salami, executive at Allianz Nigeria remarked that whereas Germany and Nigeria have excellent bi-lateral relations,

Remi Feyisipo, Ibadan

there is ample opportunity to intensify and deepen the relations between both countries. “Germany and Nigeria are the largest national economies in their respective continents. Interestingly enough, Allianz, our parent company is native to Germany. By default then, securing the needs of German businesses and individuals in Nigeria is our serious responsibility”, he enthused. 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. Thanks to a systematic integration of ecological and social criteria in their business processes and investment decisions, the Allianz Group holds the leading position for insurers in the Dow Jones Sustainability Index. In 2018, over 142,000 employees in more than 70 countries achieved total revenues of 131 billion euros and an operating profit of 11.5 billion euros for the Group. www.businessday.ng

enith General has assured its brokers and esteemed clients of qualitative services as well as genuine claims payment as fast as possible. Kehinde Borisade, managing director/ CEO who gave the assurance at the Brokers’ forum hosted by the Company in Ibadan said the company is always ready to meet the expectation of its customers, disclosing that the claims department has been re-engineered to render best services which will be second to none in the industry. While boasting of paying claims within 24 hours, he noted that the company paid over N4 billion claims last year and already paid about N3.5 billion claims half of this year. He also told the brokers that the underwriting firm has grown its revenue over the years with N10.9 billion recorded last year and N7.7 billion generated in the last six months of 2019. Borisade pointed out that Zenith general is a solid insurance firm whose business grew by 13 percent, solvency margin with 768 percent and shareholder’s funds in excess of N23 billion. With these, Borisade revealed that, his company would meet the N10 billion new capital base for general insurance companies stipulated by NAICOM with ease by 2020. Adeyemo Adereni, chairman, South West Region of NCRIB was in attendance to receive the underwriter. Borisade further stated that as a forward

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looking organisation, it has embarked on some initiatives by investing in automation, new products development and manpower training within and outside the country. According to him, Zenith general has introduced retail products like auto insurance, householder insurance, personal accident insurance and for Small and Medium Enterprises (SMEs) to meet the needs of our customers stressing that this is part of the business concern’s ongoing efforts to deepen penetration and reach a larger population In his address, Adereni urged the company and other insurance companies to look into the issue of taxes especially Value Added Tax(VAT) and Withholding Tax. He pointed out that a lot of brokers had been having running battle with Federal Inland Revenue Service (FIRS) on the issue of VAT because of direct premium most insurance companies received directly from insured. “By virtue of provisions of instant laws that created these taxes, we brokers are the collecting agents for the former, while you underwriting firms are the collecting agents for the latter; i want to say that a lot of brokers have been having issues with FIRS. Adereni who is the MD of New Alliance Insurance Brokers said “it is statutorily mandatory for underwriting companies to include VAT elements with our brokerage when making such payments and also remit the withholding tax deducted from the fee of brokers to FIRS with the tax identification number of the brokers concerned.

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Wednesday 17 July 2019

BUSINESS DAY

insurance today E-mail: insurancetoday@businessdayonline.com

Data recapturing to protect pension contributors, retirees against cybercrime – IEI Anchor PFA Stories by Modestus Anaesoronye

he ongoing data recapturing exercise of pension contributors and retirees by the Pension Fund Administrators (PFAs) nationwide is meant to protect pension clients against cybercrime and other fraudulent intents and activities. Glory Etaduovie, managing director/CEO, IEI-Anchor Pension Managers Limited in his position paper on ‘National Data Base Harmonisation and Pension Data Recapture’, stated that since last year, the National Pension Commission(PenCom) has been upbeat about data recapture of its existing clients and the streamline of future contributors registrations in a move to have accurate database of its clients. The need for national ICT database, according to him, cannot be overemphasized, as information, like com-

munication, is the lifeblood of a nation. He stated that the massive pension fund accumulation and its fast pace of growth has drawn more attention to it than may be necessary, adding that since pension fund is now a veritable source of funding and development in the country, other individuals with evil intents are exploring how to penetrate the fund structure, hence, Cyber security must then be enhanced. The pension project of data clean up and harmonisation with the national data base, he said, is the way to go as it is in tandem with modern ICT trends to synchronize data bases for national groups. Saying the banks’ BVN registration exercise has improved the tracking of individuals financial history and activities as well enhancing transparency and reducing financial manipulations, fraud and corruption,” he noted that, the ongoing exercise will get pension op-

erators prepared for more international best business practices, standardisation and acceptability globally. To him, “the world is now very dynamic and fast paced in financial technologies. It is easy to be left behind too quickly. Playing Catch up can be quite expensive in time and value. So, when many have questioned reasons for the high drive of the Pension Regulator and the industry at large, they only need to review activities surrounding globally. ICT has made operating in isolation near impossible. Globalisation has taken over.” Etaduovie noted that some clients were afraid to give more personal details as requested by PFAs, he noted that, these informations are, however, inevitable as long as they are released to the right recipients upon verifying true identity of those requesting. “Often BVN and NIN numbers have been requested alongside ten finger prints. Until recently, resist-

ance was very tight. This was likely due to newness of the scheme, the lack of enough awareness and sensitization. More so, this was money matters and their future savings for retirement,” he noted. Believing it was necessary to initiate these financial safety measures in view the ‘eagle eyes’ of cybercrime perpetrators, impersonation and forgery, and possible in-house collusion, even though, it is very uncommon in the Pension industry, he stated that, in the wake of international money laundering and terrorism funding, it became a requirement for financial institutions to know it’s clients fairly well with critical minimum level of personal information. According to him, “A correct database is thus inevitable. This has to do with collection of relevant individual clear and concise personal verifiable personal details for efficient availability and ready use if and when necessary.

REFin Homes sees quality attainment set new standard in real estate sector …say’s insurance arrangement solid

xecutive management of REFin Homes, a real estate company says its recent quality standard certification award of ‘ISO 90001:2015’ which ensures that it meets the needs of customers through an effective quality management system will redefine the real estate industry. Being the first real estate company to win the quality standard certification less than two years after its commencement of business, the firm said it has come to transform the industry and give consumers the opportunity to make choice and have what their money can afford without compromising quality. “We set up a company to bring stability, and in other to achieve that we decided to go for certification. If as an institution we begin to do things differently, in terms of offering customers quality, we hope our success will motivate others to take the same step and it will be in the interest of the industry, Olatunde Macaulay managing director, REFin Homes said. Macaulay who announced the certification of the company by the Standard Organisation of Nigeria said the company is not leaving any stone unturned

in ensuring quality delivery with adequate protection for customer’s investment. “We have our insurance partners in case a client have issues paying up for his choice property may be as a result of loss of job or other things, he said. “REFin Homes is delighted to have been awarded ISO 9001:2015 certification, an internationally recognized standard that ensures our organization meets the needs of our customers through an effective quality management system. “The company’s decision to work towards ISO 9001:2015 accreditations demonstrates our commitment to continually improving our products and services. To become ISO 9001:2015 compliant, the REFin Homes team who are based in Nigeria, underwent an extensive company-wide audit that included quality management system development, a management system documentation review, pre-audit, initial assessment, and clearance of non-conformances. This reinforces REFin Homes relentless focus on creating industry-leading products and services, measured against global benchmarks of industry excellence.

OAK Pension plans increase accessibility for grassroot contributors

O L-R: Samuel Owa, financial controller/quality champion; Charles O’Tudor, brand strategist for Refin Homes; Kazeem Owolabi, deputy managing director at Refin Homes; Olatunde Macaulay, managing director at Refin Homes; and Colman Obasi, ISO consultant at the Standard Organization of Nigeria (SON) Lekki Office where Refin Homes became the first wholly indigenous real estate company to get ISO Certified

AIICO pays out N90bn to customer in five years

IICO’s unwavering commitment to fulfilling its obligations to its customers has resulted in a cumulative claims and benefits pay out of over N90 billion in the past 5 years. In 2014, AIICO’s pay out grossed N10.5 billion; and it has since continued to rise from N13 billion in 2015 to N14.6 billion in 2016, N23.3 billion in 2017 and N29.1 billion in 2018;

which represent an average annual growth of 27.7 percent. This year-on-year increase is an indication that the company has kept its focus on superior service delivery for differentiation. Ba b a t u n d e Fa j e m i rokun, executive director/ COO said, “As a company, we exist, not just to create wealth but to provide protection for our clients in return for premium payments. In the past 5 years, www.businessday.ng

we executed our transformation plan and within the period, the improvement in our performance has also reflected in the growth of our claims and benefit payments. We are relentless in our resolve to continue to hold up our end of the bargain, through promptness in claims settlement, Fajemirokun said. The company is positioned for industry leadership by leveraging on the

strength of its sales force and excellent service delivery. AIICO Insurance Plc., a leading composite insurer in Nigeria, commenced operations in 1963. AIICO provides life insurance, health insurance, general insurance, wealth management and pension management services as a means to create and protect wealth for individuals, families and corporate customers.

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AK Pensions Limited says it will continue to make pension more accessible to the grassroots, so as to enable the formal and informal workers to plan for their financial future. Awa Ibraheem, chairman of the company made the disclosure while presenting the 2018 financial result of the company during its 13th annual general meeting in Lagos. He said, “We are making pension more accessible to all workers and those at the grassroots. We are interested in the micro pension scheme, which was designed to ensure pension services get to the grassroots. The scheme is an attempt by the regulatory authority to ensure pension is less elitist.” The chairman said the company would continue to ensure excellence in service delivery, ensure prompt payment of retirement benefits and leverage on technology. He said that it was cogent @Businessdayng

for people to start preparing for pensions early in life, so as to have a comfortable future. Ibraheem said the company had continued to organise forums for its contributors in the country, where they are able to relate with the company, and are enlightened on the benefits of the scheme, as well as the retirement options. He said that since inception, the Contributory Pensions Scheme had increased, and as people saw more benefits in it, they would embrace the scheme. Samuel Inyang, managing director/CEO disclosed that the company’s assets under management rose by 19 per cent in 2018. He said the company was uniquely positioned to offer pension with complimentary integrated solutions that promotes financial security for the future, build loyalty and locked-in long-term relationship.

Wednesday 17 July 2019

BUSINESS DAY

Harvard Business Review

MANAGEMENTDIGEST

Is an 80-hour workweek enough to train a doctor? ANUPAM B. JENA

ecoming a doctor has always been difficult. In the U.S. it requires four years of college followed by four years of medical school and, depending on the specialty, three or more years of residency training, a period when doctors routinely work up to 80 hours a week. Yet becoming a doctor is actually easier than it used to be, at least in terms of time spent on the job. Resident doctors in the 1980s, for example, sometimes worked more than 100 hours a week, with hospital shifts frequently lasting more than 30 hours at a stretch. The reason for these grueling hours: Many in the profession believed that long hours were a rite of passage necessary for giving doctors the clinical skills to practice independently. But in 2003, amid mounting concerns about fatigued doctors and patient safety, major reforms were enacted that prohibited resident doctors from working more than 80 hours per week and limited shift lengths to 24 hours. These reforms were arguably the largest natural experiment in the history of modern medical training. But they were hotly contested. For many doctors the 2003 reforms raised concerns that the quality of medical training would be diminished by a shiftwork mentality, an erosion of professionalism and an inability of doctors-in-training to witness firsthand the hour-by-hour progression of a critical illness, all of which may lead doctors to have less experience on which to base future treatment decisions and insufficiently prepare them for the long hours and patient commitments required in real-life practice. In 2009 one physician wrote to the editor of the New England Journal of Medicine that, as a result of the 2003 reforms, “We now force [residents] to leave a patient with whose treatment they are intimately involved or to cease the observation of an instructive surgical procedure midstream. It did not take long for this system

to produce residents who would either walk away when their time had expired or else lie in order to violate the rules.” Similar concerns were raised in surgery: Reductions in work hours would reduce operative volume of surgeons-in-training. One surgeon noted in a recent article, “When I trained, good or bad, I worked about 120 hours a week. That was just expected. Today the average resident finishes with around 900 operative cases. I finished with twice as many.” While physician sentiment toward long work hours has undoubtedly softened, many doctors, often those who trained in an era without restrictions on work hours, still question whether doctors today are trained as well as they used to be. In a study published in the BMJ, my colleagues and I analyzed the outcomes of nearly 500,000 hospitalized patients in the U.S. who were treated by newly independent doctors with varying exposure to work-hour restrictions during their residency training. We found that newly independent doctors who trained in a period where their residency work hours routinely reached 90 to 100 hours

per week had no better patient outcomes, despite the additional hours spent in training, than doctors whose residency training involved substantially less time in the hospital. An 80-hour workweek seems sufficient for training a doctor. Our analysis was straightforward. Because residency workhour reforms were implemented in 2003, internists who completed residency after 2006 would have been exposed to a cap of 80 hours per week for their entire threeyear residency, while internists who completed residency before 2006 would have worked longer hours for one or more years of their training. We compared the patient outcomes of newly independent doctors — first-year internists just out of residency training — before and after 2006. (These outcomes were patient mortality and readmission to the hospital within 30 days of being hospitalized, as well as the costs of care.) We also looked at secondyear internists — those who completed residency two years earlier — and found identical results. To account for the fact that overall hospital care has improved over time, we used as a second

control group doctors who completed residency 10 years earlier. We looked at the same three patient outcomes for these doctors, who were never exposed to workhour restrictions during their residency training. Any trends in their patient outcomes over time should reflect only changes in the quality of hospital care, rather than any impact on care of having worked fewer hours during residency training. Comparing doctors who completed their training before 2006 with those who completed theirs after it, 30-day mortality rates for hospitalized patients treated by first-year internists fell from 10.7% to 9.9%, a change that could incorrectly be used to argue that working fewer hours in residency led to better-trained doctors. But a similar decline was observed for 10thyear internists, whose patient mortality rates fell from 11.2% to 10.4%. Because mortality fell by a similar amount for both the treatment (doctors who worked 80-hour weeks) and the control group (doctors who worked 100 hours), the decline can’t be attributed to hours of training and is more likely due to hospital quality improvements. We simi-

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larly found that spending fewer hours in the hospital during training had, on average, no effect on internists’ hospital readmission rates or costs of care when they subsequently entered independent practice. Our findings relate to the current epidemic of burnout among physicians — a phenomenon that often starts during the busy years of residency training. If the intense nature of residency training is a prerequisite for doctors to deliver high-quality care once they enter independent practice, simply because a large number of hours spent treating patients is absolutely necessary for clinical expertise, then it may be difficult to further reduce resident work hours without compromising downstream quality of care. On the other hand, additional training may be at the “flat of the curve,” meaning extra hours spent in the hospital offer little marginal benefit in terms of added expertise. This is particularly relevant today, as any small gaps in an individual doctor’s expertise can likely be mitigated by the increasingly team-based nature of medical care and the growth in health care technologies, including electronic health records and various safety systems. At a minimum, the data suggests that the incremental experience gained from working more than 80 hours per week as a resident doctor doesn’t generally translate into improved patient outcomes later. And with rates of physician burnout increasing in recent years, it’s worth considering whether residency work hours could be reduced further, or restructured to address other causes of fatigue (such as electronic health records and insurance issues), without compromising clinical expertise and quality of care for patients.

•Anupam B. Jena is an associate professor of health care policy at Harvard Medical School and an internist at Massachusetts General Hospital.

Wednesday 17 July 2019

Harvard Business Review

BUSINESS DAY

MANAGEMENTDIGEST

4 ways to help your team avoid digital distractions restored and less productive after returning to work. A 2019 study of more than 4,000 employees worldwide found that “less happy” workers are about 57% more likely to spend their lunch breaks using social media, whereas “happier” workers are about 275% more likely to take a leisurely lunch with friends.

AMY BLANKSON HAPPINESS

n our always-on culture, employers expect workers to be reachable and responsive at all times. However, research shows that constant connectivity may be counterproductive when it comes to engagement and productivity levels. Today’s smartphone users check their phones 150 times a day. Reading a single text message can double error rates on basic tasks, and it takes an average of 11 minutes to get back into the flow. Our phones have become compulsions rather than tools of efficiency. Distraction’s long-term impact on productivity may very well outweigh the benefits of added efficiency. To overcome, or at least counterbalance, these effects, employers can build upon proven practices for fostering a positive digital culture: — CREATE QUIET SPACES FOR MENTAL RECHARGING: Designate a space for employees to step away from work and devices to just

be and think. Whether you install nap pods like Google, meditation pods like Cigna or just set aside a corner with comfy pillows, having space for downtime helps employees activate their neural default mode network, which plays a crucial role in chunking information

and connecting disparate ideas. — ENCOURAGE PHONE-FREE BREAKS: More than half of workers turn to their smartphones during downtime, even though research shows that employees who take their phones on breaks feel less

— SET THE SOCIAL SCRIPT FOR COMMUNICATION: Many employees feel compelled to respond immediately when an employer reaches out, even if communication comes after work, over the weekend or on vacation. Fifty-five percent of American workers reported checking their email after 11 p.m. Leaders can create a more positive digital culture for employees by explicitly setting the policy on when and how employees are expected to respond. Companies such as Deloitte are beginning to create “team charters” to document communication preferences and expectations. — EMPOWER EMPLOYEES TO BLOCK OUT FOCUS TIME: Amid the constant din of meetings and emails, many employees feel they lack the uninterrupted time to ac-

tually get their work done. Employees who get even 55 minutes of time to themselves report feeling more energized (56%), friendlier (53%), funnier (23%) and even smarter (22%). To empower employees to be their most productive selves, encourage them to block out chunks of “focus time” on their calendars. They can even set up a short-term auto-responder explaining what they are doing and when they will be back (“I’m stepping away from my email to finish this project. I’ll be back in one hour.”). This small gesture communicates a sense of respect to other team members, but also signals that they value doing good work. By actively cultivating both mental and physical spaces within the workplace, employers can reduce distraction and drive long-term engagement. It’s time to give employees a (real) break and, by doing so, unlock the full potential of your workforce.

• Amy Blankson is a co-founder of the Digital Wellness Collective and the author of “The Future of Happiness.”

What to do when you’re caught in a lie (even an unintentional one) differently than before? As you recognize signs of weakening credibility, you may be triggered to lie even more to regain it. Instead, evaluate the gap between the reputation you want and the reputation you have. Do you want to be known as someone with great ideas who delivers on commitments? Once you’re clear on this, you can more accurately evaluate the degree of doubt you may have raised by attempting to dishonestly engineer your reputation.

RON CARUCCI

eople lie, on average, one or two times per day. While the percentage of lies told by a person, the conditions under which we lie and the degree to which the truth gets stretched all vary, research agrees: We all do it sometimes. So it’s inevitable that, at some point, we will get caught. Many people, however, don’t see it that way. Most of us believe that our lies actually work. But frequently there are cues, if we’re willing to see them, that indicate skeptical doubt, even outright disbelief, on the faces of those we lie to. If you sense that spinning information, denying a mistake or exaggerating a contribution has backfired, don’t assume things will be OK after the painful silence or furrowed eyebrows subside. Your reputation is now in question. Here’s how you can earn back some of your credibility: — REFLECT ON WHY YOU LIED: Dishonesty is never random. Underneath our lies are unmet needs that we believe lying might satisfy. Identifying these needs is

the first step to finding healthier ways to fulfill them. Think about the last time you lied at work. Did you feel overlooked or unfairly judged by your boss? Did you fear your mistake would be more harshly criticized than warranted? My research on dishonesty, a 15-year longitudinal study on conditions that predict why people lie in organizations, reveals that some companies may be unwww.businessday.ng

wittingly creating circumstances that actually encourage us to lie. For example, when we feel our work is being unfairly evaluated, we are almost four times more likely to be dishonest. — ASSESS THE CREDIBILITY DAMAGE: Pay attention to how people now respond to you. Is your opinion being solicited less? Are things you say being engaged

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— LOOK FOR WAYS TO DEMONSTRATE HONESTY: If you lied, it’s likely that your colleagues now wonder about your capacity for honesty. In some cases, they may also be questioning other aspects of your character. You may not have the opportunity to outright confess that you lied; political conditions inside many companies often make such admissions too risky. (Although if you feel it’s safe to do so, by all means, take responsibility for your actions.) Once you identify the conclusions people have drawn about you, however, you can practice demonstrating honesty in ways that refute them. If your humility is being questioned, genuine expressions of self-doubt about your ideas, self-deprecating ac@Businessdayng

knowledgments of things you aren’t good at and affirmations of others’ greater abilities can help. Free yourself from the self-destructive cycle of dishonesty. Take stock of the conditions under which you are tempted to lie. Be honest about what legitimate needs you are trying to meet, and what legitimate reputation you are trying to form. Doing so will help you find more legitimate ways to do both.

•Ron Carucci is a co-founder and managing partner at Navalent and the author of “Rising to Power.”

Wednesday 17 July 2019

BUSINESS DAY

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DFM set to alter Chinese brands perception among Nigerians MIKE OCHONMA Transport Editor

ith the Nigerian middle class battling low purchasing power and high cost of vehicles purchase remaining a major concern among prospective car buyers, Dana Motors Limited (DML) in partnership with Dongfeng Motor Corporation (DFM), has assured that, the time has come for the negative perception attached to the Chinese brands in the country will soon be confined to the dustbin of history. This declaration was made representatives of both companies during the recent presentation of select model range of vehicles in Lagos by DML and DFM. Positioned to be the new dress code for Nigeria roads, the introduction of DFM brand in the local market is aimed at meeting the needs of customers in terms of quality aftersales services to and best-in-class model range from the premium sedan, to uniquely built SUV and all-terrain Pickup utlity vehicles. DFM is one of the global brands with a uniquely innovative design that continuously remains at the vanguard of leading auto brands and setting the pace in automotive engineering across the globe. Birthed in China, DFM has continued to spread its operations all over the world with its growing footprints in Africa, particularly Nigeria. Company sources said with the model line-up assembled and distributed here in Nigeria by Dana Motors Limited, DFM is set on the path of limitless possibilities in the Nigerian auto market, as it boasts of impressive penetration of Dana Motors operations to give the brand a far-reaching presence across the major cities in the country. Making its first entry into the local market at the newly opened DFM showroom on Victoria Island, Lagos, the Chinese brand depicts the forward thinking automotive engineering

L-R: Henry Lian, commercial manager, DFM Africa; Hassan Grema, representative of the MD/CEO, Dana Motors Limited; Olu Tikolo, vice president, Dana Motors Limited, Stanley Ebeigbe, principal partner, DFM Nigeria, at the unveiling of DFM brand in Nigeria, held in Victoria Island, Lagos.

that’s evident in the top-of-the-segment model range that had continued to draw praises from other countries of operations across the globe, owing to the innovative and stylish designs of the cars. Jacky Hathiramani, Managing Director/CEO of Dana Motors, speaking on the partnership state “all of us at Dana Motors are extremely proud to introduce DFM, the leading Chinese brand into the Nigerian automotive markets. And we are here to build more than just great cars. We aim to set a new standard in the Nigerian auto industry by providing consumers with world-class products and services while engaging customers exceptionally with quality service deliveries at every touch point’’. “Having being a major stakeholder and the leading company in the Nigerian auto industry, DML has been offering best-in-class brands with a second to none after-sales service to customers in the country for over twenty years. Together, both Dana Motors Limited and DFM Global

are committed to providing the bestin-class cars to meet our esteemed customers’ vehicular requirements and exceed their expectations with quality after sales services” said, Jacky. DFM award-winning products are now among the most popular cars on sale in China and some parts of Africa today, gaining praise for attractive design, high-tech features, and reliability. The company’s distinctive design identity runs through the brand’s entire vehicle the line-up, making the brand’s cars immediately recognizable all over the world. According to Henry Lian, commercial manager, Africa, DFM Global, ‘’ The newly launched DFM model range in Nigeria is proof of the company’s plans to introduce cars that cater to the changing paradigm of the Nigerian market in the near future’’. On the provision of after-sales service support for DML, Henry stated that the DFM global team are readily available to provide all the necessary spare parts and expertise to support it in delivering exceptional aftersales

service to the teeming customers. In line with the fit-for-purpose the operational approach of DFM in Nigeria, the newly launched DFM brand vehicles will be rolled out from Dana’s assembly plant in Lagos. The locally produced compact sedan, SUV and all-terrain pick up are specially built for the Nigerian market. “We are delighted to announce that DFM brand model range will be produced here in Lagos,” said Olu Tikolo, vice-president of Dana Motors. “Producing cars in our assembly plant will enable us to sell highly tropicalized cars in the Nigerian market while providing greater flexibility for our local customers”. We at Dana Motors are thrilled to start operations at such a time where the need for the diversification of the economy is evident. To further show our commitment to advancing the frontiers of the Nigerian economy through our company’s industrialization drive, the introduction is geared towards making Nigeria one of the manufacturing hubs of Africa.

Fuel-efficient petrol engines heralds new 7-Series

he all new BMW 7 series is now available for viewing at Coscharis Motors. The BMW brand flagship comes with a more distinctive, luxurious and outstanding dynamics. It stands out with its prestigious, elegant appearance, superlative comfort and exceptionally sporty performance, a combination that only the BMW 7 Series delivers in this class. At a glance, the new 7-Series looks like a completely new model – especially at the front and back. In many respects, it has become even more luxurious, with numerous highly advanced components. This includes more powerful and fuel-efficient petrol engines, a new, pioneering infotainment system and the latest driver assistance systems. Now in its sixth-generation, the BMW 7 Series Sedan also sets stand-

ards in terms of providing both maximum ride comfort and a sporting and dynamic driving experience. This is due to an advanced chassis design complete with a self-levelling two-axle air suspension included as www.businessday.ng

standard. With its intelligent mix of aluminium, high-strength steel and a body structure benefiting from magnesium and carbon reinforcements (Carbon Core), the BMW 7 Series also has the lowest weight among its com-

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petitors. All models but the M760Li and 745Le xDrive are available in a short- and a long-wheelbase version. In the words of Cletus Aregbeshola, marketing manager for BMW, Coscharis Motors; “around three-anda-half years on from the introduction of the sixth generation in 2015, the BMW 7 Series sedan has undergone a wide ranging and effective updates. These updates have positioned the flagship model as a trendsetter, introducing world-firsts that are being copied by other manufacturers’’. Coscharis Motors is the sole franchisee of BMW brands in Nigeria with sales and service networks across Nigeria. Currently, her BMW sedan range includes 7, 6, 5, 4, 3 and 2 Series. The X Range includes X6, X5, X4 and X3. Orders have recently been placed for the latest and first ever BMW X7. @Businessdayng

COMACE appoints Akpabio new Commandant FRSC Academy

s part of concerted efforts to reposition the Federal Road Safety Corps’, the Corps Marshal, Boboye Oyeyemi has appointed assistant corps marshal (ACM) Nseobong Charles Akpabio the former zonal commanding officer of Zone RS 3, Yola as the new Commandant FRSC Academy, Udi, Enugu State. ACM Nseobong Akpabio is taking over from assistant corps marshal Edward Zamber who has been redeployed to RS3 HQ Zonal Command Yola, Adamawa state as the Zonal Commanding Officer. The list of other officers posted to the academy in the reorganisation as was released according to Bisi Kazeem, FRSC Corp Public Education Officer includes deputy corps commanders Obed Shekarau, former deputy corps public education officer who is to resume at the academy as head of department, physical and regimental studies, Chorrie Mutaa as head of school general studies, Silas Eze as head of studies, information and communication technology, while chief route commander Boniface Iyakhemie is to resume as provost of the Academy among others. Speaking during the induction of the newly posted Officers at the Academy, the Corps Marshal charged them in a paper titled, ‘ Ethics, Com-

ACM Nseobong Charles Akpabio

mitment, Patriotism and Service Delivery’ that the FRSC as a public organization with commitment to eradicate road traffic crashes through well defined strategies cannot afford to fail in its responsibilities. According to him “As members of the Corps, we must make optimal contributions to its growth and development which are predicated on public approval of quality of service delivery” He called on the newly redeployed Commandant and other staff of the academy to work within the arm bit of the regulations guiding their performance. According to him, “Those who have been charged with leadership responsibilities must lead and guide their wards well within the regulations while the followers must also comport themselves well to achieve the desired symmetry of overall accomplishment. Anything short of these would result to an aberration capable of tarnishing the hard earned reputation of the Corps and we cannot allow this to happen” Oyeyemi reminded them that road safety is everybody’s business to accomplish, the FRSC Service Compact with all Nigerians is every staff’s business and together we shall deliver.

Wednesday 17 July 2019

BUSINESS DAY

TRANSPORTATION Motoring

RailBusiness

ModernTravel

Roads

Mercedes retains top spot on premium segment log …despite spate of ongoing model changes

A Lagos SGR project: New Costain bridge near completion MIKE OCHONMA Transport Editor

s part of efforts towards mitigating the sufferings of road users in the Lagos metropolis as result of the ongoing construction of the Lagos-Ibadan standard gauge rail project, the Lagos state government has assured that, the new bridge being constructed around Constain would be completed and ready for use in September. Speaking over the weekend, Obafemi Hamzat, the Lagos state deputy governor stated that when completed and put to use to ease free flow of traffic, the existing bridge would be destroyed and raised up for the passage of the passenger and freight trains when the Lagos-Ibadan standard gauge rail is eventually

completed. Recall that in November 2017, there was public out-cry and apprehension when Rotimi Amaechi, the immediate past former Minister of Transportation hinted that Jibowu and Costain bridges in Lagos would be demolished to give way for the laying of rail tracks of Lagos-Ibadan standard gauge rail line. Explaining the need during his meeting with the Steering Committee of the project and the China Civil Engineering Construction Company (CCECC) in Lagos, Amaechi noted that “the two bridges that we may likely demolish are Jibowu and Costain to give way to the rail lines. The ex-minister allayed public fears about the resultant traffic gridlock that the demolition may cause and assured that the bridges will not be abandoned as they will be rebuilt immediately.

According to the deputy governor, “We have come to inspect the project because there will be a need to divert traffic while they are constructing. People cannot pass through this place and we want to ensure that people’s lives are not endangered. “So, we are here to check and plan on how to divert the traffic around this axis so that people do not go through pain or lockdown this area while we do developmental network that is necessar y. This is to prevent confusion and traffic gridlock while the project is on. It’s something that needs to be done for the development of our state,” he said. Hamzat noted that the state ministry of transportation would sensitise the public on the diversion plans ahead of the time to help people move around with ease.

Dubai Airports moves towards solar-powered future

ubai Airports and Etihad Energy Services Company have announced the successful installation of a solar energy system comprising 15,000 photovoltaic panels at Dubai International’s Terminal 2 represnting the largest at any airport in the region. With a capacity of five MWp, the solar project will generate 7,483,500 kWh energy annually for Dubai Airports, resulting in savings worth AED3.3 million. The project will reduce existing Terminal 2 load by approximately 29 percent, while also slashing annual CO2 emissions by 3,243 metric tonnes, which is equivalent to 53,617 tree seedlings grown for ten years or 688 passenger vehicles driven for one year. Etihad Energy Services Company is a leading energy service company and a wholly-owned subsidiary of Dubai Electricity & Water Authority (DEWA). The project is part of Shams Dubai, DEWA’s first smart initiative that aims to promote the use of clean renewable energy sources.

The programme encourages installation of solar panels on rooftops to generate electricity from solar power and connecting it to DEWA’s grid to transfer surplus generation. Etihad ESCO will provide maintenance services for Dubai Airports for a period of seven years from completion. Michael Ibbitson, executive vice president, infrastructure and technology, Dubai Airports, said: “Dubai Airports has undertaken a variety of green initiatives over the past several years to limit our carbon footprint and support Dubai’s goal for a 30 per cent reduction www.businessday.ng

in the city’s energy consumption by 2030. These include the use of energy efficient fittings, the optimisation of cooling systems, the installation of energy efficient LED bulbs and many others. “In addition to enabling us to limit our carbon footprint while cutting costs, these initiatives also support our long-term vision for a carbon neutral future in line with the aviation industry’s target. We look forward to working on more energy efficiency initiatives with Etihad ESCO in the future’’. The executive vice president said.

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fter the first six months of the year, Mercedes-Benz is still the leader among the premium car brands in a highly competitive environment worldwide, despite ongoing model changes. From January to June, 1,134,729 cars were handed over to customers by Mercedes-Benz (-4.6%). Unit sales decreased under the period primarily due to ongoing model changes for SUVs, the brand’s segment with the largest volume. In the second quarter, 573,856 cars (-3.5%) were sold. Sales momentum in those three months came primarily from the new compact-car models, including the new A-Class Saloon worldwide, and the new B-Class and new CLA Coupé in Europe. In June, the Stuttgart-based company with the three-pointed star sold 196,230 vehicles (-3.7%) and maintained its market leadership in the premium segment in the first half of the year in many global markets. As stated by Britta Seeger, board member of management

ally between January and June (-1.8%). During the same period, unit sales of the long-wheelbase version of the C-Class Saloon increased by 4.7% while C-Class Estate were 23.4% higher in June than in the prior-year month and increased by 3.4% in the first half of the year. Sales of SUVs under the period were below the high prior-year level due to model changes, with approximately 367,000 units of the GLA, GLC, GLC Coupé, GLE, GLE Coupé, GLS and G-Class sold (-13.3%). Despite ongoing model changes, one third of all Mercedes-Benz cars sold worldwide in the first half of the year were SUVs. The G-Class set a new sales record in the first six months of its 40th anniversary year; deliveries actually more than doubled in June. In the first half of this year, 60,318 two-door and four-door cars of the smart brand were handed over to customers worldwide (-8.1%). In Europe, unit sales increased by 0.6% in the first six months. The smart brand enjoyed great popularity especially in Germany, with unit sales increasing by

of Daimler AG responsible for Mercedes-Benz Cars Marketing and Sales “After a challenging first half of the year, it continues to be at the top of the premium segment. We are particularly pleased with the great popularity of the new compact models. In the third quarter, we anticipate sales momentum from the new SUVs with the star,” stated. “In July, two real customer favourites will be in showrooms such as the new GLC and the GLC Coupé. The GLC, which has been the highest-volume model in our SUV portfolio for several years, comes with the latest intelligent driver assistance systems just like the GLC Coupé and is equipped with MBUX as standard.” In terms of unit sales by region and market, 457,595 vehicles were sold in the Europe region (-4.0%). In Germany, the domestic market, 147,351 units were sold in the first six months (-2.7%) and 24,033 cars with the star were handed over to customers in June (-6.2%). More than 206,000 units of the C-Class Saloon and Estate models were delivered to customers glob-

12.8% to a new record in the first half of the year. The Stuttgart-based company with the star increased its sales by 1.3% to a total of 344,657 units in China, the region’s core market, in the first six months. Deliveries in June were slightly higher than in the prior-year month, with a total of 57,018 vehicles handed over to customers in China (+0.1%). Unit sales in South Korea increased by 2.1% last month, and a new record for cars sold in the first half of a year was achieved in Vietnam. In terms of unit sales by model. Unit sales of the compact cars from increased in the first half of the year, with a total of 313,000 A- and B-Class, CLA, CLA Shooting Brake and GLA models sold (+4.2%). More than 57,000 compact cars sold in June represents growth of 13.7% compared with the same month of last year. Demand for the new A-Class was strong worldwide last month (+47.0%), while the new CLA Coupé also posted strong double-digit growth in Europe in the second month after its market launch there (+66.6%).

@Businessdayng

Wednesday 17 July 2019

BUSINESS DAY

FEATURE New dawn for low-fees schools financing? Low-fee schools have received sustained attention in recent times for both the right and wrong reasons. One of the biggest challenges they face is access finance to improve quality and expand operations. STEPHEN ONYEKWELU shines light on an indigenous drive to provide funds for these schools.

t 7:00 am each workday, Muyibi Street in Olodi Apapa is already bubbly with activities; bus drivers hurl abusive words at each other to gain the right of way, passengers complain about running late to work and sometimes traffic grinds to a halt as Lagos yellow bus drivers and concerned passengers step out to control traffic flow. One remarkable feature on the 1.25 kilometres long street with over 200 residential buildings are the early morning school runs. Some of the houses on this street have been around for the past 100 years, judging from the rusty, coffee-brown corrugated roofing sheets and the architectural design commonly called face-me-I-face-you. It is also contiguous to Ajegunle, known for its slum settlements. Mothers and housemaids walk the streets and shout intermittent notes of safety to children, who tend to run off on their own, all dressed up in a variety of school uniforms. Most of these children will end up in one of the over 10 private schools, which charge less than N10, 000 per term, on Muyibi street. These schools have been classified as low fees private schools and have become common landmarks on almost every street on Mainland Lagos. Low fees schools specialised in the delivery of basic education have drawn attention for both helpful and unhelpful reasons. Field visits to 10 low fees schools across Lagos: Ajegunle, Ikorodu and Alimosho local governments, five schools in Benin City, coupled with the long hours of interview at the Association for Formidable Educational Development (AFED) secretariats in Lagos and Benin City show that many low-fees schools are struggling to keep their doors open to the growing number of parents who come to them seeking basic education for their wards. The realities Many low-fees schools in Lagos and Benin City can best be described as makeshift structures, located either

in uncompleted church buildings, church multi-purpose halls, residential buildings (with tenants living alongside the schools) and crowded noisy environments (which makes learning a major challenge). During a visit to one of such schools, Brighter Future Nursery and Primary, School in Isolo area, the school was located in the type of building called face-me-I-face-you of 12 rooms. The school renovated and occupies six of the rooms. When the reporter arrived at the school’s premises, 11:13 am some of the tenants were busy preparing lunch and the aroma filled the air while pupils in each of the six classrooms chorused one repetitive rhyme or item of a lesson as instructed by the teacher. “We used to stay in a smaller building across the street but as the number of our pupils grew, we had to expand into this building. We hope to eventually acquire a piece of land and build our permanent site” the propri-

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etor, who wishes to stay anonymous said. “But banks will not lend us the money we need.” Segmentico’s mission to change the narrative Segmentico Ltd, an innovative financial company is breaking new ground in its push to increase access to funding for low-fee private schools at a time when the numbers of Nigeria’s out-of-school children are growing but the government’s ability to intervene is waning. Low-fee private schools are filling the gap and providing formal education to children and wards of low income earning Nigerians, in a country where over 70 million people live below the poverty threshold of $1.90 a day (N685.43). All the proprietors of low-fees who have been interviewed have said they are not able to access loans and expand their operations. This they said was because they do not have the ministry of education approval and risk closure of such school. Lack of access to finance means these schools are not able to improve and expand. Since most of the low-fee schools are run by private individuals, most banks will not lend to this sector. There are between 18,000 – 25, 000 private schools in Lagos alone, all of which have created assets – land and buildings. As they expand, these schools need money to put up additional classrooms or a laboratory or some other facilities. Most of them borrow from private money lenders, paying up to 60 percent interest a year. This slows down improvement and expansion at these schools. Segmentico has developed replicable sector-specific systems and processes, which allow for efficient and effective operations. The company currently serves more than 40 schools in Lagos and additional capital will

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allow the company to extend its successful model to more than 5,000 schools throughout the country over the next five years. “We have disbursed over N10 million worth of loans and the repayment rate has been impressive 100 percent.” Wale Odeja, founder, Segmentico Ltd said. “But we have limited funds to provide loans to all applicants and the maximum loan amount is too small for some applicants.” Segmentico has embarked on a journey of transforming into a leading, customer-centric, diversified lending company; it plans to continue building on its leadership position in the education finance space with an objective of positively transforming the education lending space in Nigeria. The core loan offering enables low-fee private schools to improve the quality of education and increase the capacity to educate more children from low-income households The company has mapped out plans to expand across the country through strategic partnerships. It will continue to emphasise on building capabilities in risk and control, analytics, underwriting, information technology, people and brand to ensure that Segmentico delivers growth which is sustainable with robust asset quality. “Our school’s partnership with Segmentico has enabled us to reach out to more children with all the opportunities that a good education can provide” “Abioye Funmilola, head, Rosemanuel Educational Services said. Segmentico’s model is working because people have little faith in government schools and are willing to pay more for quality education, while schools with no access to bank credit are proving to be bankable as borrowers. The company was founded in March 2019 and is determined to focus on continuous innovation in products and services to remain relevant to changing customer needs, leveraging technology to deliver better customer experience. Low-fees schools have also come together under the Association for Formidable Educational Development (AFED). This Association’s emergence on the scene is helping low fees schools’ operators interface with government, particularly in Lagos State, where there have been appreciable milestones. The Association has also established a secretariat in Benin City. AFED schools got 40 out of the 60 available slots meant for the Code Lagos training programme. “There is a need for AFED schools to begin repositioning students to harness, create and leverage on local and global opportunities” said Ronke Soyombo, director general, Office of Education Quality Assurance, Lagos State Ministry of Education at AFED’s 2018 National Congress. But a lack of access to funds leads to skills gap because the schools are not able to train and re-train their @Businessdayng

teachers. Some of the schools employ Senior Secondary Certificate Examination (SSCE) holders for two reasons. The communities in which some of the low fees schools are located are the type in which graduates flee from as soon as they are able to do so. Consequently, those left to be employed are SSCE holders, who sometimes present pleasant surprises. “I understand that people expect us to employ either the National Certificate of Education (NCE) holders or first-degree holders. The truth is that given what we charge as school fees and our target population, we may not be able to sustainably pay some of them. However, SSCE holders come in handy and some of them outperform some NCE holders” Dele Ehi, a teacher and low fees school owner in Benin City, Edo State said. Performance at external examinations On learning outcomes and performance, students from AFED schools had over 90 percent pass rate at the Lagos State Examination Board’s 2018 placement test into junior secondary schools, according to the master result for over 10 local governments among which were Ikorodu, Surelere Alimosho, Kosofe and sighted by the reporter; the least score was 50 percent. Low-fees schools have come to stay because they serve the urgent and genuine need of providing basic education for Nigeria’s exploding population of children. In 1999, the Federal Government of Nigeria introduced the Universal Basic Education, a programme to provide free primary and secondary education for every Nigerian child aged 6 – 16 years. But the UBE programme got legal backing only five years after, with the Compulsory, Free Universal Basic Education Act, 2004. Experts have also said education has gone beyond what government alone can provide at any level. Private sector participation is necessary. At the basic education phase, the scale: either big or small does not matter. What counts most is compliance with set standards, especially with reference to the quality of teachers. “Whether a school is low or high fees, it needs to comply with basic standards. We do not regulate private schools but we regulate their teachers” Josiah Ajiboye, registrar and executive officer of the Teachers Registration Council of Nigeria said when contacted for comments. This comes with some financial cost. Segmentico is developing an indigenous solution in this regard. In 2014 the Department for International Development (DFID) of the United Kingdom paid £3.45 million to Bridge International Academies (BIA), a global chain of low fees schools that aims to deliver education services for the poor. This sum facilitated the entry of the International low-fees schools chain into Lagos.

Wednesday 17 July 2019

BUSINESS DAY

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Wednesday 17 July 2019

BUSINESS DAY

FINANCIAL INCLUSION

& INNOVATION

Usage, not access, is key to making financial exclusion history - Mastercard Stories by Endurance Okafor

he World Bank and many other organisations have defined financial inclusion to mean access to financial products and services but a recent report by Mastercard revealed that simply providing access to financial services is not enough. To achieve any real financial inclusion impact, people also need to become active users of financial products, the New York-based multinational company has said. “Simply providing access to financial services is not enough. To achieve any real impact, people also need to become active users of financial products,” Ann Cairns, Vice Chairman of Mastercard said. The report, Unravelling the Web, which was commissioned by the financial services company revealed that globally, 20percent of people with a bank or mobile money account have not used it for more than a year, and many more people only ever use their account on an occasional basis. Thus, in the absence of banking services, or if financial products are rarely used, people inevitably turn to informal providers, such as neighbourhood savings clubs, local money lenders, and un-

licensed remittance services or Esusu, Adashe, or Ajo, as its fondly called in Nigeria. The most populous country in Africa with 36.6 million excluded adult population. According to Mastercard, most people on low incomes tend to be experienced users of these informal financial products, and to have intricate and well-ordered financial lives. However, they do not have legal protection, face significant risks, and may pay more for a vastly inferior product. As the report says, “the battle for inclusion is not about creating completely new behaviours or building entirely new markets. Nor is it about providing simple access to the financial mainstream. It is about how bona fide players and regulated

providers can do a better job of out-competing the informal sector.” The recent report by Mastercard revealed that mobile technology has the potential to draw an extra 607 million people into the financial mainstream - and reduce the world’s unbanked population by more than a third. “On its own, technology cannot tackle exclusion, nor can it address the deep gender gap in financial inclusion. On the contrary, it could exacerbate the inequalities,” Cairns noted. Thus, the financial services company recommended the need to take a humancentred perspective. “We need to better understand the financial lives of underserved populations, evaluate the informal financial

products and services they currently use, and the risks they are exposed to.” “If you live on $2 a day, why would you upload that into a bank account or a mobile phone, instead of keeping the hard cash close to you? Only by coming up with the solutions and technologies that are culturally sensitive and demonstrably enhance the individual’s situation can we ensure that they will be used and help bringing the excluded into the financial mainstream,” the Mastercard Vice Chairman said. Also commenting, Ashish Lall, Senior Advisor at PS-engage said indeed, understanding individual and country context is critical for the successful introduction of technology. “Providing access to financial services

without thinking of ways to increase incomes is of little value. The informal service sector is huge (and cash-based) in developing countries and this initiative represents an excellent three-way partnership to provide access to formal credit as well as training on financial skills.” The Central Bank of Nigeria (CBN) said it is poised to ensure it include 80 percent of Nigerian adult population by next year. To drive home that course, the apex introduced various financial inclusion schemes. On October 23, 2012, the central bank of Nigeria in collaboration with industry stakeholders launched the National Financial Inclusion Strategy (NFIS) aimed at reducing the financial exclusion rate of adult population from about 53 percent in 2008 to 20 percent in 2020. Less than a year to the deadline, the apex bank has 16.8 exclusion gap to bridge to achieve the set target. According to Godwin Emefiele, the governor of Nigeria’s central bank, over the next five years, through initiatives and policy measures such as the Shared Agent Network (SANEF) and the Payment Service Bank (PSB), the apex bank intend to broaden access to financial services to individuals in underserved parts of the country.

EFInA advocates female financial service agents in driving financial inclusion

here is enough research to support the argument that women are better savers than men- they are better planners for their families’ future needs yet globally, women are less likely than men to have a bank account and are underrepresented generally among the financially included adult population. Thus, EFInA’s 2019 and tenth Agent Network Breakfast Series meeting which held recently in Lagos focused on the topic ‘Assessment of Female Financial Service Agents in Driving Financial Inclusion in Nigeria’. The Agent Network Breakfast Series is a platform organised to provide credible market information to stakeholders; discuss obstacles to the deployment of ubiquitous agent networks in Nigeria, highlight regulatory obstacles and opportunities to move the industry to the next level. According to EFInA’s Access to Financial Services in Nigeria (A2F) 2018 survey, 55.9percent of the financially excluded adults are female. In order to drive the deployment of widespread agent networks in Nigeria and close the gender gap in financial access, there is therefore need to encourage more participation of women in agent banking, EFInA said.

NIBOX partners SystemSpecs to extend financial services, deepen inclusion

IBOX, a multiplatform payment solution p rov i d e r, ha s partnered with SystemSpecs, the developer and provider of the innovative Remita financial technology solution, to extend financial products and services to the banked, underbanked and unbanked on NIBOX’s self-service Payment Terminals strategically located throughout Nigeria, and online through NIBOX’s mobile platforms. Through this partnership, services such as Federal and State Governments payments, electricity recharge token, airtime and data phone top-up, cinema tickets purchase, insurance premium payment, cash

transfers and other utility bills will be accessible on NIBOX touch points. NIBOX already has 55 terminals deployed in Lagos and Abuja, with a planned deployment of additional 500 terminals in Lagos and Abuja by the end of 2019. Transactions can be conducted round-the-clock on the NIBOX terminals using electronic or cash payments. “We are glad to be collaborating with SystemSpecs to deliver new services to customers. Indeed, the value proposition and attainments of the Remita brand are a boost for this partnership and would ultimately be to the advantage of the end-user, who would now have improved access to

various services and products across Nigeria,” George Manuwuike, CEO/Founder, NIBOX told BusinessDay. According to the CEO, “the partnership is also in line with our aim of becoming the fastest and most con-

venient platform for cash payment for broad-based goods and services for public and private sectors.” Available in public spaces such as shopping malls and leading supermarkets, NIBOX Payment Terminals

George Manuwuike, CEO/founder of NIBOX, demonstrating the functionalities of Nibox APP on iOS to industry stakeholders during an exhibition at the 19th Digital Pay Expo conference which held recently in Lagos.

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do not require the presence of an agent or operator to function. Each self-service kiosk is equipped with a bold user interface and a touchscreen for easy user interaction Commenting on the development, Demola Igbalajobi, SystemSpecs’ Divisional Head, Payment Gateway and Infrastructure, said “At SystemSpecs, we understand that access to financial services is key to the development of a strong and efficient financial ecosystem, which facilitates economic growth. It is therefore a delight for us to partner with NIBOX to further bring Remita services closer to customers at their point of convenience using NIBOX touch points.” @Businessdayng

NIBOX is one of the leading financial inclusion solution provider that is currently present in the market via cash-in/cash-out payment terminals and unique builtin infrastructure that has the potential to enhance rural deployment of financial services across Nigeria. The Central Bank of Nigeria (CBN) plans to include 80 percent of Nigerian adult population into the formal financial cycle by the year 2020. NIBOX provides financial payment solutions for the banked, underbanked and the unbanked population, offering payment solutions to active mobile customers and financial inclusion to those exempted from banking services.

Wednesday 17 July 2019

BUSINESS DAY

tax issues Why indirect taxes are the next frontier in controversy As VAT becomes a crucial revenue source, governments are stepping up enforcement and looking to tackle the challenges of the digital era, write tax experts at EY Global

ven as governments attempt to better align corporate income tax policies with modern business activities to collect more revenue, they are also focusing intently on indirect tax collections. The European Commission, for example, estimates that 15.2percent of value-added tax (VAT) went uncollected by the European Union’s 28 member states in 2013, a tax gap of €170 billion. Controversy over indirect taxes — including VAT, goods and services tax (GST), and customs and excise duties — is far from new. However, it is on the rise as indirect taxes — collected on the government’s behalf by those selling goods and services — come to provide a growing share of state revenues. Tax and customs administrations are stepping up compliance and enforcement efforts for indirect tax, including for digital products and services. The challenges and risk of controversy within the indirect tax space are multifold, including complex legislation and different compliance obligations from country to country, and changing business models. For the C-suite, the increased risks surrounding indirect taxes have moved this area up the corporate agenda. Engage with tax authorities early to highlight areas of uncertainty arising from increasing online transactions and help shape new laws. Not so simple There is much at stake for governments and taxpayers alike. Consumption taxes today on average generate 30percent of the national tax take for member states of the Organisation for Economic Co-operation and Development (OECD), according to the OECD’s Consumption Tax Trends 2016. That’s as much as personal and corporate income taxes combined, and ahead of social security taxes (26percent). One of the reasons why there is a strong appeal for governments around indirect taxes is that they are consumption based and therefore a consistent source of revenue. Consumption taxes have spread quickly around the world. Invented in Germany and first introduced in France in 1954, VAT is today levied in 167 countries from Albania to Zimbabwe. The US is the only OECD member that doesn’t have a federal sales tax. But 45 of the 50 states, and thousands of local jurisdictions, impose sales taxes, generally collected by retailers and service providers and remitted to the state. However, the line between

taxable and non-taxable items may not always be clear and their treatment may vary from country to country, according to University of Sydney Law Professor Rebecca Millar. Examples include complex multi-party arrangements such as loyalty programs and third-party warranties, she says. Multi-jurisdictional and digital transactions only add to the increasing complexity of consumption taxes. “The suggestion that VAT is a simple tax fails to take account of the complexity of realworld transactions,” says Millar. Going on the offensive Improving collection rates for indirect taxes has become the goal of governments everywhere. After all, a decline in these taxes can threaten the ability of the state to pay its bills or keep up interest payments on its loans. An EY report on managing indirect tax controversy in 2015 found that 56 countries (out of 82) are sharing information on VAT/GST with different domestic government departments, while 51 countries are sharing VAT/GST information with other countries in an effort to improve compliance and identify risk. One of the most striking examples to stamp out VAT/GST evasion and fraud was launched in Portugal. The tax authority set up a central VAT monitoring database connected to the systems of all companies achieving sales of more than €100,000 a year. The system quickly detected 128,000 companies with irregularities, and total tax revenue surged 13% in 2013. In the restaurant sector, VAT increased 140% in the period 2011–13. Golden tax Similar real-time system linkwww.businessday.ng

ups to tackle fraud have been rolled out in Brazil and China. In the latter country, for example, vendors are obliged to enter transaction details into the Jinshui, or Golden Tax software system, to issue a VAT invoice. “China used to have an issue with VAT fraud,” says Ball. “So they implemented the Golden Tax software system.” In Asia, tariffs and excise duties often remain important components of state revenues, with a focus on audits and enforcement activities. The challenges of an audit can be compounded by some revenue authority schemes that provide incentives for officials to maximize assessments, says Ball. However, soaring use of data and data analytics, both by authorities and businesses, is changing the way that audits and enforcement will happen, says Ball. “That’s a tidal wave that’s sweeping through the countries of this region,” says Ball. “I think it’s going to be increasingly used by reformists to address issues of collection efficiency and corruption within the collection agencies.” Digital drain But even as governments focus on resolving longstanding indirect tax issues, the digital economy has raised a slew of new, especially cross-border challenges. Mike Semes, EY’s Pennsylvania-based National Director State and Local Tax Controversy Services, says a large proportion of future controversies will arise from the digital economy. “Our clients want to know what the rules are, so that they can play by the rules,” says Semes. “Further, it is extremely difficult for state laws and regulations to keep up

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with the pace at which business is changing.” Semes says online retailing poses enormous tax administration tests. For example, when an online retailer doesn’t charge sales tax to a customer from another US state or country, the customer is obliged to remit the tax, but few, if any, customers do so. As a result, governments are taking a big hit on tax revenues. Governments must also work to create a consensus on how to address the services side of indirect taxation, which is increasingly the heart of the cross-border economy, says Itai Grinberg, Professor of Law at Georgetown University in Washington, DC. These issues will become increasingly important going forward as countries rely more on indirect taxes and reduce their reliance on direct taxes, according to Grinberg. “The question is whether that attention is coordinated in a way that prevents cross-border services from being overtaxed on the indirect side,” Grinberg says. “That is probably one of the next serious questions that will arise, both for indirect taxation and for international tax globally.” On the hook Since going after individuals is administratively unfeasible, many US states have now adopted what they call a bright-line nexus call to define the responsibilities of online vendors. Even if a company has no physical operations in a particular state, it is liable for collecting and paying sales taxes if the company’s in-state revenues exceed $500,000. The bright-line threshold exempts small businesses that would otherwise face disproportionate costs @Businessdayng

from collecting VAT on crossborder transactions. The European Commission, which supervises tax collection in Europe, has reached similar, albeit stricter, conclusions. In January 2015, the EU shifted to a destination basis for VAT collection for broadcasting, electronic services and telecommunications within Europe. Now the supplier has to collect VAT at the rate of the state where the customer lives, and remit the tax to the government there via the so-called Mini One Stop Shop run by national tax authorities. This initiative failed to resolve controversy, however, because turnover thresholds at which vendors were required to register for VAT vary from country to country, and EU rules made cross-border online vendors liable for VAT no matter how small their sales. Small sellers of online services, including designers, authors and musicians, voiced concerns about the administrative and financial burdens. ‘Level the playing field’ In December 2016, the Commission adopted its VAT Digital Single Market Package, which seeks to make it easier for ecommerce businesses to comply with VAT regulations. Given that EU businesses are reckoned to incur VAT compliance costs averaging €8,000 a year in each state where they operate, the change is expected to save firms €2.3 billion a year. This should counter intensifying controversy and help innovative start-ups challenge the dominance of existing online platforms. Australia’s revenue lawmakers have wrestled with similar issues. In 2017, Australia will reduce the AU$1,000 limit under which one can personally import items GSTfree, a step that should help “level the playing field between Australian retailers and online sellers,” according to Howard Adams, EY Asia Pacific Law Leader. But this is only a first step in reducing VAT controversy, he says. “No doubt there will be more changes as the tax system tries to keep up with the digital revolution.” Key action points Track legal rulings on VAT liabilities and nexus in jurisdictions where you are present and verify that you are conforming to emerging obligations. Prepare now to implement new laws and directives on VAT being introduced in the European Union and elsewhere in a drive to tax the digital economy. Engage with tax authorities early to highlight areas of uncertainty arising from increasing online transactions and help shape new laws.

Wednesday 17 July 2019

BUSINESS DAY

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Wednesday 17 July 2019

BUSINESS DAY

news Policy reform, digital skills development prerequisites for fourth tech revolution

Dele Fajemirokun’s book advances enterprise culture in Nigeria

Jumoke Akiyode-Lawanson

Modestus Anaesoronye

nformation Communication Technology (ICT) and telecoms industry stakeholders have pointed out that theformationofapolicyframework that promotes digital transformation, with modern regulations, infrastructure and digital education are necessities in Nigeria’s fight towards participatingandbenefittingin thefourthindustrialrevolution. The fourth industrial revolution (4IR) is the fourth major industrial era since the initial industrialrevolutionofthe18th Century.Itischaracterisedbya fusion of technologies that are blurring the lines between the physical, digital and biological spheres, collectively referred to as cyber-physical systems. Paul Babatunde Ruwase, president, Lagos Chamber of Commerce and Industry (LCCI), says Nigeria must narrow the gap between technological potentials and the required policy framework needed to benefit in the global

revolution. Speaking at the ICTEL Expo 2019, in Lagos on Tuesday, Ruwase said, “it has become more pertinent than ever for us as a nation to focus on exploring innovative approaches to harness the benefitsoftechnologicaladvancement in this ever-changing world.” According to Ruwase, recent technological advances such as Artificial Intelligence, Robotics, Big data, Augmented reality, Internet of Things, cloud computing, blockchain technologies and the likes, have the potential to fundamentally redefine the economy, and this presents ample opportunities that needs to be explored for the present and future generations. “In order to catch up with the fast-growing trends in ICT therefore, the country needs to address necessary policy challenges in three key areas: E-commerce, data flows and new technologies,” Ruwase said.

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I, formerly known and addressed as Miss Adaobi Ogechukwu Oguebego now wish to be known and addressed as Mrs Adaobi Ogechukwu Chukwuemeka. All former documents remain valid. General Public please take note.

I, formerly known and addressed as Martins Sophia Obiageli now wish to be known and addressed as Obi Sophia Duru Obiageri. All former documents remain valid. General Public please take note.

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‘MSMEs can leverage Development Bank’s risk sharing to grow sector’

ntrepreneur and business mogul with hands on different sectors of the economy including insurance, pensions, hospitality, security among others, Dele Fajemirokun, has launched a book titled: “The Making of Me: The Odyssey in Business,” which analysts say advances enterprise culture in Nigeria. The book, which is his autobiography, is a personal account of Fajemirokun’s grass to grace story, which provides highlights on his humble beginnings and family background, and his journey through life in business and his various accomplishments till date. Also the book, which providessolutionstobusinessand foundation for entrepreneurship, contains strategic ways to achieve success in business and serves as resource materials for future generations of

businessmen and women. Fajemirokun in his welcome remark during the book launch in Lagos said he wrote thebooktorecordthosethings he involved in during his lifetimeaswellassharehisexperiences for the benefits of future generations. “What happens in the field is different from the theories welearntintheclassroom,and that is the real essence of this book,” he said. While speaking on the secret of his success he said, “I haveneverbeenafraidoffalling down but you can never meet medownbecausefallingdown isnotafailurebutstayingdown is the failure.” “I developed a survivalist spirit very early on in life as a result of the special upbringing my father gave me, something that he did not do for his other children.AllmylifeIhavebeen a survivalist - a fighter and this has been the hallmark of my existence,” he said.

SEYI JOHN SALAU s players in the Micro Small and Medium Enterprises (MSMEs) segment of the economy continue to face stiff financial huddles to scale and keep their businesses afloat, the Development Bank of Nigeria (DBN) has urged them in the sector to leverage its partial risk sharing offerings, which guarantee credits with prospective financial institutions granting loans to MSME operators to aid in reducing the risk associated with the sector. Tony Okpanachi, managing director, DBN, stated this in a recent interview where he said limited access to finance for the MSME segment severely constrained opportunities for economic diversification in Nigeria, explaining the factors that differentiate the bank from other business and industry lenders.

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Okpanachi explained that with a lot of financial hitches facing MSMEs in Nigeria, despite the growing number of lenders in the country, DBN’s effort to bridge the gap was to open its loan range to cover businesses in all sectors. “When SMEDAN carried out their survey in 2015, it puts the number of MSMEs in Nigeria at about 37 million. So, no single financial institution will be able to do it all. The Bank of Industry focuses on industry and in some cases SMEs. NEXIM bank is providing exporters with funding. While the Bank of Agriculture focuses strictly on how to provide funding to farmers. For us at DBN, the difference is that most of these other institutions focus on specific sectors or areas, but DBN’s focus is on the whole gamut of the MSMEs space,” Okpanachi said. CORRECTION OF NAME

This is to notify the general public that the name was written as Badamasi Abdul-Rasheed Amoo on my account while on my BVN it was written as Badamasi AbdulRasheed Amodu. Henceforth, I want to be known and addressed as Badmus Abdul-Rasheed Amoo. All former documents remain valid. General public should take note.

Wednesday 17 July 2019

BUSINESS DAY

news Stockbrokers to charge 5% VAT on all stock market... Continued from page 1

transaction costs. This follows the expiration of Order for Exemption of VAT from all NSE transactions which was granted in 2014 by Ngozi Okonjo-Iweala, then coordinating minister of the economy and minister of finance. As part of the Federal Government’s policy measures to encourage investments in the Nigerian capital market, the Order which became effective on July 25, 2014 was to operate for five years. It expires on July 24, 2019. Following this development, VAT on commissions will now be charged on transactions conducted on the NSE. Federal Government had five years ago exempted from VAT commissions earned on traded value of shares payable to Securities and Exchange Commission (SEC); payable to the Nigerian Stock Exchange (NSE); and payable to the Central Securities Clearing System (CSCS). At the NSE, despite that prices remain attractive across the board, investors are not positioning in anticipation of an impending market reversal and have not shown the willingness to take advantage of beaten-down prices. Market analysts had noted VAT on NSE transactions would impact negatively on the market that is already down and struggling to recover. For instance, the domestic investors are not buying stocks as they should and the foreign investors are not play-

ing big here. The stock market is down by -9.83percent yearto-date (Ytd). Reacting to this new development, Obinna Igwe, a Lagos-based stockbroker, said the new directive was coming at the wrong time when activities in the equities market were at their lowest run. “ Th i s c ou l d f u r t h e r dampen the morale of investors, the market is waiting for the right policies to spur growth and not this kind of policy,” he said. Emeka Uzom, a stockbroker, said the order of exemption for VAT on all NSE transactions conceived in 2014 did not really achieve its aim. “There has to be more robust policy thrust by the government to drive the capital market,” he said. Uzom lamented that months after the general elections, the Presidency was yet to constitute the National Executive Council. Many emerging markets try to limit taxes on their capital markets in a bid to make them more attractive for investors to participate. For South Africa, securities transfer tax is payable at a rate of 0.25 percent of the purchase consideration for the relevant security, unless that consideration is less than market value, in which case the securities transfer tax is based on the market value. Securities transfer tax is also payable on the redemption or repurchase of securities. The tax is payable by the company whose shares are redeemed or repurchased.

Global central banks set to ease monetary... Continued from page 2

quoted Andrew Bosomworth, a portfolio manager at Pacific Investment Management Co., to have said, “We would expect to see fiscal policy being the new monetary policy going forward.” Taiwo Oyedele, head, tax and regulatory services, PwC, said the central bank alone cannot drive economic growth without the collaboration of and in cohesion with fiscal authorities. “Essentially, monetary policy interventions are short-term in nature while fiscal policies usually have long-term impacts both of which must work hand in hand to drive the economy,” Oyedele said. In Europe, Draghi has complained that monetary policy has taken on a “disproportionate” burden in the last decade. The CBN has released its strategic agenda to drive the growth of the Nigerian economy in the next five

years. It has also released some circulars to put its goals into actions. The goals will be achieved if there are complementary fiscal supports in the areas of improving business environment to enable businesses thrive, Akinwunmi said. He said the fiscal authority will have to complement the CBN’s measures in the areas of provision of growth enhancing infrastructure (appropriate transport network), signing appropriate bills into law, particularly in oil and gas to stimulate lending, rule of law, judicial reforms that will enhance the speedy adjudication of disputes arising from commercial transactions, port and border reforms, political will to make adjustments to electricity and Premium Motor Spirit (PMS) prices, provision of security to protect lives and property and more collaborations between regulators and business operators. www.businessday.ng

L-R: Fola Adeola, founder/chairman, FATE Foundation; Kabiru Adewale, Oba of Ikorodu; Kehinde Durosinmi-Etti, co-author; Rilwan Akiolu, Oba of Lagos; Temitope Oshikoya, co-author; Babatunde Fashola, former minister of Power, Works and Housing, and Abimbola Ogunbanjo, president, The Nigeria Stock Exchange (NSE), at the public presentation of the book Frontier Capital Markets and Investment Banking in Lagos yesterday. Pic by David Apara

How weak economy shut down 2,877 firms... Continued from page 1

shows why unemployment rate is 23.1 percent in Africa’s most populous country. “The number of mediumsized enterprises decreased significantly from 4,670 in 2013 to 1,793 in 2017, indicating a 61 percent drop,” said the report launched last Thursday. Interestingly, the number of micro, small and medium, enterprises (MSMEs) when viewed as a group grew from 37million in 2013 to 41.5million in 2017, the National Survey shows. However, micro enterprises were responsible for this growth, with the number hitting 41.469 million (99.8 percent). Small enterprises were 71,288 (0.2 percent), but medium-scale businesses were only 1,793 (0.004 percent) from 4,670 before 2013. “The periods covered by the survey were when the Nigerian economy was mostly down and in recession. The small and medium enterprises suffered from shocks in the economy, forcing many to close shop,” Friday Opara, director, strategic partnership, SMEDAN, who contributed to the survey, told BusinessDay by phone. “This was why we had a decline in the number of medium-sized businesses. The growth recorded in micro businesses was as a result of so many retrenched workers starting up micro businesses to keep life going,” Opara explained. Micro enterprises are businesses that employ less than 10 workers and are worth less than N5 million. Small businesses, on the other hand, employ 10 to 49 workers and are valued at N5 to less than N50 million. Medium enterprises, however, engage 50 to 199 staff members and are valued at

N50 to less than N500 million. “The number of MSMEs grew but the increase in numbers are made up of micro enterprises involved in trade, and not production, “Femi Egbesola, national president, Small Business Owners of Nigeria (ASBON). “This is not what we need to grow our economy and create the needed jobs. The economic situation has been very challenging for SMEs and these have forced lots of them to close shop or operate far below their capacity,” he said. In August 2016, the Manufacturers Association of Nigeria (MAN) and the NOI Polls reported that 222 smallscale businesses closed shops, leading to 180,000 job losses. Grif, maker of aluminium drums, exited Nigeria, including Federated Steel from China, maker of iron rods, which sold its assets to MNIL Limited. Another iron rod maker, Universal Steel, was also among firms that shut down. These are medium-scale manufacturers. Frank Jacobs, former president of MAN, said 54 firms closed their factories between 2015 and 2016 owing to foreign exchange shortages. Oil prices showed signs of peaking in 2013 and 2014 under former President Goodluck Jonathan. It eventually slumped below $50 in 2015. After the general elections in 2015, however, Muhammadu Buhari won but could not appoint his cabinet six months into his administration. These and other factors helped to tip the economy into recession in 2016 and the unemployment rate reached 23.1 percent, according to the NBS, with almost 50 percent of the 200 million Nigerians in multidimensional poverty cadre, according to the United Nations Development Programme (UNDP).

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“The challenge is that it is even the medium enterprises that create the jobs that are closing down,” Ike Ibeabuchi, a manufacturer and analyst, said. “Micro enterprises can only employ one, two or three, but medium businesses can employ up to 100 at a go. This calls for a policy shift and serious introspection on the part of the Nigerian leadership,” he added. Most SMEs commit 40 percent of their expenditure to energy and pay 54 taxes introduced by different levels of government, according to experts. The World Bank ranks Nigeria 146th on its Doing Business Index, which reflects the difficult situation faced by businesses. The SMEs are left to battle with various issues ranging from a tough environment to restrictive economic policies, overbearing regulatory agencies and tax multiplicity. Access to finance is poor, with interest rate on loans from banks hovering between 20 and 35 percent. The Manufacturers CEOs Confidence Index (MCCI) survey conducted by the Manufacturers Association of Nigeria (MAN) in the first quarter of 2019 highlighted various issues hurting Nigeria’s productive sector. According to the MCCI, CEOs confidence stood at 51.3 points in the first quarter of the year, slightl y ab ove t h e 5 0 p o i nt s benchmark of a good performance. Issues around foreign exchange, double digit interest rate, government capital implementation, multiple taxes, overregulation and raw m at e r i a l s w e re i d e nt i fied by chief executives of Nigerian firms as some of the challenges dragging the growth of the sector backwards. @Businessdayng

First Bank promotes financial inclusion... Continued from page 2

fore the projected deadline, the apex bank has enrolled 65,753 mobile agents, data obtained from the Nigeria Interbank Settlement System (NIBSS) showed. This is 86.85 percent less than the 500,000 mobile agents targeted by the regulator to serve about 105 million adult Nigerians by 2020. The central bank would have to enrol addition 434,247 mobile money agents to achieve its next year target. However, financial industry stakeholders; the Nigeria Interbank Settlement System Plc., CBN, Chartered Institute of Bankers of Nigeria (CIBN), commercial banks and other operators in the payment system in 2018, developed a Shared Agent Network Expansion Facility (SANEF) initiative to offer basic financial services across the country. Thus, the apex bank mandated all Deposit Money Banks (DMBs) and Microfinance banks to open a minimum of 7.6 million new savings accounts to meet its financial inclusion target. First Bank of Nigeria Limited (FirstBank) is the premier Bank in West Africa and the leading banking services solutions provider in Nigeria for 125 years. With some 15 million customer accounts, FirstBank provides a comprehensive range of retail and corporate financial services with over 750 business locations. The Bank has international presence through its subsidiaries, FBN Bank (UK) Limited in London and Paris, FBNBank in the Republic of Congo, Ghana, The Gambia, Guinea, Sierra-Leone and Senegal, as well as a Representative Office in Beijing.

Wednesday 17 July 2019

BUSINESS DAY

Wednesday 17 July 2019

BUSINESS DAY

BANKING

Access Bank treats Customers with XclusivePlus this Summer Stories by HOPE MOSES-ASHIKE

uxury is often associated with the very rich and wealthy; after all, the finest things in life must be paid for. While the specifics of what makes up an affluent living vary on a personal level, most people would describe it as enjoying premium goods and services, all of which do come at a cost. For many average affluent individuals, a life of luxury remains a dream. However, for as low as

Herbert Wigwe, Access Bank, Group managing director/CEO

N5,999 per month, Access Bank will help you live this dream with the unique XclusivePlus service – a package that gives you a luxurious life on a not-soluxury budget. XclusivePlus is a premium service that is available to any customer of the bank that appreciates preferential treatment. It is a subscription-based service that costs you N5,999 a month in exchange for unique services that suit your lifestyle needs. According to Adaeze Ume, head, consumer proposition, the introduction of Xclusiveplus followed a survey conducted among

Insightful conversations follow Union Bank’s role at NEDIS

nion Bank and The Education Partnership (TEP) Centre recently partnered to host the 2019 Education Innovation Summit (NEDIS), a platform that highlights the role of education innovations in solving challenges facing the education sector. The summit which held in Lagos, drew educators and stakeholders from government, research and academia, and a broad range of education innovators for two days of rich discourse, knowledge sharing, learning, capacity development and networking. In a statement by the bank, panellists and speakers at the summit included Obi Ezekwesili, former Minister of education, Fela Durotoye, Chief Executive Officer, GEM Group and Statistician-General/CEO National Bureau of Statistics Yemi Kale among others. The two-day event also featured an enlightening session on ‘Sustainable Financing for Innovative Teaching and Learning’ during which the Head of Education Institutions at Union Bank, Emmanuel Essien, joined by Cofounder of Andela, Iyinoluwa Aboyeji and other industry stakeholders dis-

cussed critical issues relating to financing education on Nigeria. Speaking on the Bank’s partnership with TEP Centre for the summit, Ogochukwu Ekezie-Ekaidem, Union Bank’s head of corporate communication and marketing, said, “Union Bank is pleased to support NEDIS; a platform whose essence aligns with our focus on boosting the education sector. Following the first edition of our education event - edu360, which held last year, we realise that great ideas and collaboration are key to mov-

ing the education sector forward. We hope that the discussions and conversations at NEDIS will unearth new ideas and stories that will help build this very crucial sector.” As part of her welcome remarks to the delegates at NEDIS, TEP Centre’s Managing Director, Modupe Adefeso-Olateju said, “In making the leap from a small-scale of innovations into a larger scale across the country, it is important to make the Education Innovation Summit a platform where there is a focus on things that are

Emeka Emuwa, group managing director, Union Bank www.businessday.ng

pertinent in the education sector, and bring together a cross-section of stakeholders from various sectors to view the thematic focus of education from various lenses. With this, we can resolve the challenges in the education sector through combination, coordination, and cooperation of these diverse stakeholders.” While addressing the attendees, Ezekwesili highlighted major areas for improvement in the Nigerian education system. According to her, “The focus on education systems is timely and needed if Nigeria is to advance globally. It is imperative we disrupt the status-quo because the world has left us behind and we need to catch up in terms of strengthening our education systems.” Since its inception, conversations at NEDIS have explored new, exciting and sustainable approaches for increasing access to quality education, especially for the marginalized and underserved. Discussions at the summit underscore the importance of identifying and systematically scaling innovations such that they become more deeply embedded in policy systems and reach more beneficiaries.

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the bank’s customers, which revealed a rise in customers’ expenditure on luxury travel, luxury experiences and luxury products. “It is a premium lifestyle offering specifically designed to provide customers with the exceptional service and exclusive privileges that they deserve. It was launched in October 2018 and today has thousands of subscribers who understand the value of the proposition. It takes less than 2minutes to subscribe to XclusivePlus with only N5, 999. One can also choose to make an upfront payment for one year and get a 20

percent discount to enjoy a bouquet of benefits such as: Free upgrade to a Visa Signature debit card – a debit card with access to local and international spend, Travel in style with free access to over 800 premium airport lounges globally, Free medical emergency cover for you and your loved ones anytime you travel; Free movie and premium event tickets; shows, concerts, exhibitions and more, Network with Industry leaders at our various seminars and conferences, Experience VIP treatment and best rates at over 900 luxury hotels worldwide, 24-hour global concierge service,” She said.

Fidelity private Bank wins at PWM Global Wealth Tech

idelity Bank won the ‘Best Digital Networking Bank For Entrepreneurs, Africa 2019’ at PWM Wealth Tech Awards held in London, United Kingdom (UK) recently. Organised by Professional Wealth Management (PWM), a Financial Times Publication, the awards celebrate excellence in wealth management technology. According to the organisers, technology and service delivery were key components in the criteria considered by the independent panel that selected the award winners. The month-long period involved gathering series of detailed information on KPIs, portfolio management, asset allocation, due diligence, risk management, growth strategies, customer service, innovation and ethical practices. The award presented at an elaborate ceremony in London, was received on behalf of the bank by Gbolahan Joshua, Chief Operations and Information Officer (COIO), Fidelity Bank, and divisional head, private banking, Chioma Nwankwo. Commenting on the development, Nnamdi Okonkwo, CEO, said it was gratifying to see that private banking division of the bank, set up over two decades ago, has remained the @Businessdayng

leading provider of financial services to HNIs in the country. In line with the bank’s digitisation programme, he said Fidelity Bank had continued to seek better, easier and more convenient ways of providing financial services, with the aid of technology, to its teeming customers. “Our resolve to continue to offer innovative solutions to all customers, including those of our Private Banking Division, is further strengthened by this award and recognition” he stated. Fidelity private banking was set up in 1996. Over the years it has grown reputation for high service standards, providing financial and wealth management services and solutions for a select clientele, with a view to building strong and enduring foundations for their future generations. “PWM among other things, reviewed our tech investments, growth strategy, digital customer service, client communications, virtual assistant and portfolio management processes in arriving at the result. “We are delighted that the bank’s investments in ensuring high level of process automation and provision web-based wealth management solutions to our customers, is paying off,” said Nwankwo.

Wednesday 17 July 2019

BUSINESS DAY

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Wednesday 17 July 2019

BUSINESS DAY

NEWS

Abraka-based retailer wins car in Dangote Cement consumer promo SEGUN ADAMS

n Abraka, Delta Statebased cement retailer, Benjamin Igherighe, has emerged first grand prize winner in the ongoing Dangote bag of goodies promo, winning a brand new saloon car. The car was presented to him at a grand ceremony held in Warri, Delta State. Joe Makoju, group managing director, Dangote Cement plc, congratulated the winner for becoming the first to emerge as the star prize winner and tasked the consumers to keep buying as there were numerous prizes to be won. Customers from Warri, he said, “are always eager to buy our products and at the same time proffer solutions to challenges.” Speaking on the loyalty of Warri customers, he said, “We are working on improving our services to you as loyalty here is one of the best and highest. It is a mutual relationship like in a marriage, hence we are working hard to maintain the relationship.” Funmi Sanni, marketing director, Dangote Cement, in her remark was full of appreciation for the consumers of Dangote Cement in Warri for their loyalty and support, adding that the promo was ‘the more you buy, the more you win.’ According to Godson Okoro, regional director, Dangote Cement, South South, the bag of goodies promo is aimed at rewarding consumers who are the end users of Dangote Cement products. He commended the consumers for their loyalty and allegiance to the brand, which

has made the clear leading cement brand within Warri and its environs. The regional director, employing the popular parlance, ‘Warri no de carry last,’ noted that Warri and environs accounted for the first grand prize winner meaning that the city remains a special place. The grand prize winner, Igherighe gave an emotional thank you speech to the chairman of Dangote Cement, Aliko Dangote and the cement company. In an emotion-laden voice, he said he had never won anything in his life until now. Giving an insight on how he became a winner, he said he bought a trailer load of cement from a distributor, Fibo Ventures and looked for loaders to offload the truck. He stated that rainfall disturbed the offloading as the loaders dispersed, which made him to hire two other loaders, remove his shirt and joined them in taking the cement bags into his store. According to Igherighe, he took a position inside the truck and was transferring the bags to the loaders on the ground, in the process, three bags of cement got torn with one hanging on the railings of the vehicle. In the process of scoping and rearranging the torn bags, a bag of goodies promo scratch card fell out, which he picked and placed inside his pocket. He said, “On scratching the card, I saw that I have won a saloon car. It was like a dream. I called the distributor and she said the promo is real. I appreciate Dangote. They are reliable.”

‘Inspiring entrepreneurs should deploy calculated risk to be successful’ KELECHI EWUZIE

or inspiring Nigerian entrepreneurs to be successful in their future business prospects, they need to embrace calculated risk strategies in the delivery of both products and services, Adebola Akindele, group managing director, Courteville Business Solutions, advises. Akindele states this while speaking at the third edition of the ‘Go Beyond Series,’ a mentorship programme dedicated to knowledge sharing for aspiring Entrepreneurs and Entrepreneurs in Lagos. Speaking on the theme ‘Leveraging Social Capital for Business Growth,’ Akindele says if you decide to be an entrepreneur, you must be ready to take the risk. The go beyond series is focused on Akindele, fondly called Uncle B, sharing real life experiences and the struggles of being an entrepreneur, and it is a mentorship platform opened to entrepreneurs or aspiring entrepreneurs and students

to benefit from. According to Akindele, for you to succeed in business, you must have something you want to sell, you must be known for your expertise in a particular area, either product or service. He opines that no matter how good an entrepreneur idea is it is nothing without the support of capital, adding that similarity, familiarity, compatibility are three things that should guide the principles in the life of any entrepreneur. His acumen for business operations puts him in the position of leading the company and working as its spokesperson. He speaks regularly at events on e-commerce, entrepreneurship, leadership, technology and business strategy in Nigeria and internationally. The last two events had in attendance aspiring Entrepreneurs and Entrepreneurs from various backgrounds not to forget staff of Courteville who were also present to take down success tips from the vastly experienced Uncle B. www.businessday.ng

L-R: Chris Rembges, marketing consultant, Mouka; Raymond Murphy, MD/CEO, Mouka, and Henry Onukwuba of Lagos Business School (LBS), at a dinner hosted by Mouka in partnership with LBS in Lagos.

Investment experts advocate long-term capital raising to develop Nigeria’s economy …as Oba of Lagos, Fashola unveil book on frontier capital markets, investment banking OLUWASEGUN OLAKOYENIKAN

xperts in investment banking and Nigeria’s capital market have called for a need to raise long-term capital for the real sector of the Nigerian economy to accelerate the pace of development in Africa’s largest frontier market. The finance professionals made the call Tuesday at the launch of a book titled ‘Frontier Capital Markets and Investment Banking: Principles and Practice from Nigeria’ authored by Temitope Oshikoya, managing partner of Nextnomics Advisory, and Kehinde Durosinmi-Etti, former group managing director of the defunct Skye Bank plc. The book, which contains 16 chapters divided into six parts, discusses the role of the capital markets and investment banking in Nigeria, according to Durosinmi-Etti. Beyond the portfolio invest-

ment Nigeria currently enjoys, the country needs “to attract longterm funds to grow the real sector”, Ndubuisi Nwokoma, a professor of Financial Economics at the University of Lagos and one of the book reviewers, said. “For us to develop the Nigerian economy, we need to attract more foreign direct investment,” he said. In the first quarter of 2019, Foreign Portfolio Investment into Nigeriajumped56.5percentto$7.14 billion from $4.56 billion recorded in the corresponding period of 2018, while Foreign Direct Investmentnosedivedby1.32percentto $243millionagainst$246.6million achieved a year earlier, according todataobtainedfromtheNational Bureau of Statistics (NBS). Foreign Portfolio Investment is “quick money”, according to Nwokoma, stressing that the newly launched book would help create more awareness for those in the academia and practitioners in the industry to revive the principles and practices of

investment banking and capital markets operations to enhance the economy. Long-term capital is very critical to the development of infrastructure, according to Konyin Ajayi, professor of Law at Babcock University and Senior Advocate of Nigeria (SAN), who also reviewed the book. “Without this, there can benomeaningfuldevelopmentin the country.” Ajayi noted that there is currently no book in the country which combines the history of investmentbanking,capitalmarket, current issues on these two and the way forward. Hence, indicating the novelty of the book. The reviewers explained that thenewbookexplorescapitalraising through equity underwriting, debt underwriting, and private equity, paying particular attention to putting capital to work on mergers and acquisitions, project andinfrastructurefinanceandreal estate finance. Former Minister of Power,

Works and Housing, Babatunde Raji Fashola, who was the chairmanoftheevent,urgedstakeholders in the nation’s financial sector to embrace more investment in infrastructure. “The omens are good for Nigeria,” the former minister said. “There is a gap in financing and that lies opportunities for investors, bankers, capital market operators, among others.” Speaking on the rationale behind the book, Oshikoya said Durosinmi-Etti and himself thought it was important for them to document developments in the nation’s capital market to enable students, policymakers and international investors to know the attractiveness of the Nigerian markets. “A lot is being done in the Nigerian capital markets that are not well documented for the future generation,” Oshikoya said. “It is important to show Nigeria is the largest frontier market in the world.”

Agric reform: Edo set to clear 1,000 hectares for women cassava growers … as Police relations C’ttee lauds Obaseki’s support for security agencies

doStategovernmenthasset aside 1,000 hectares of land forcassavacultivationinthe state,aspartofitsagriprenuerprogramme targeted at galvanising womenfarmerstowardsrealising its food security target. In a statement signed by Godwin Okonofua, permanent secretary, Ministry of Agriculture and Natural Resources, the state government said the 1,000 hectares were dedicated for cassava production under the women empowerment initiative. Okonofua noted that the state sourced funds from the Central Bank of Nigeria under the auspices of the Commercial Agricultural Credit Scheme towards implementing the project. “The government has undertaken to clear 1,000 hectares at Oria, Esan South East Local Government Area for its women empowerment initiative,” he said.

The state government is pursuing a holistic agricultural programme that prioritises key crops, notably rice, maize, cassava and oil palm, with heavy public and private sectors’ involvement. While the state government is working with the Nigeria Incentive-Based Risk-Sharing System for Agricultural Lending (NIRSAL) for the projects on rice and maize, using mechanised farming, private companies are expanding their investments in oil palm plantations, with new entrants bolstering the agricultural scene in the state. In a recent interview with journalists, Joe Okojie, special adviser to Governor Obaseki on Agriculture, Food Security and Forestry, said the state government accessedN5billionfromtheCBNfor its agricultural programme. Of the money, he said N2.2 billion would be used for crop production, N2.3

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billion for land development and N100 million for irrigation. He explained that N1.2 billion would be used to cultivate rice in Iguoriakhi,Iguomon,Illushi,WarrakeandAgenebode,whilemaize would be cultivated at Usugbenu, Sobe and Ekpoma. Meanwhile, the state Police Community Relations Committee (PCRC), has commended Governor Obaseki for his support for security agencies in the state, noting that the governor’s efforts are yielding results. In a letter to the governor signed by chairman, PCRC, Edo State Command, Atekha Odemwingie, the committee said the governor had recorded immense developmental strides across the state, which had endeared him to the people. According to the PCRC, “The records of your monumental achievements in the state are @Businessdayng

visible and clear for all to see and the news of it has gone round the state like wildfire since you assumed office. This is evident and enviable among other governors in the country. “Apart from the developmental strides your administration has brought to Edo State, your contributions towards the security and peace in our dear state is worth mentioning. A year and some months ago you supported the Nigeria Police Force in establishing a Police Marine Base in the state. You also set up a new security architecture named ‘Wabaizigan’ to support the Police and other sister security agencies in fighting crime and criminalities, and they are yielding unquantifiable results.” The committee encouraged the governor to continue with his good work, as history would not fail to paint his name in gold.

Wednesday 17 July 2019

BUSINESS DAY

news British private equity firm Actis takes over two Abraaj funds OLUFIKAYO OWOEYE

rivate equity firm, Actis LLP, has completed the takeover of two Abraaj funds run by now defunct buyout firm, Abraaj, in a deal that will boost Actis’ footprint across Africa and the Middle East. Actis is taking over the management rights of the $1.6 billion Abraaj Private Equity Fund IV and Abraaj Africa Fund III. The deal includes investments in 14 portfolio companies across the two funds, bolstering Actis’ operations in Africa and the Middle East. Actis has been in talks since January to take over Abraaj’s funds and it currently manages $12 billion in assets. According to Abraaj, it was invited to step in and provide a solution that was acceptable to investors, known as Limited Partners (LPs), of the two funds and liquidators of Abraaj. Abraaj Africa Fund III focuses on investment in sub-Saharan Africa. Abraaj’s APEF IV, also known

as Fund 4 or Fund IV was set up to invest in greenfield projects, privatisations, growth capital opportunities and buyouts in the Middle East, North Africa, South Asia and the Levant region. Abraaj, which claimed to have managed almost $14bn in funds, was forced into liquidation in June of last year after a group of investors, including the Bill & Melinda Gates Foundation, the World Bank’s International Finance Corporation and The Overseas Private Investment Corporation (Opic), a US government agency, commissioned an audit to investigate the alleged mismanagement of money in its $1bn healthcare fund. The investigation increased scrutiny of the firm and the alleged misappropriation of funds of US investors and a US government agency attracted the attention of the Securities and Exchange Commission and other US authorities. Arif Naqvi, the founder of Abraaj and five other senior

executives of the firm are alleged to have raided Fund 4 to plug shortfalls, obligations and meet due payments. Investors in Fund IV included members of royal families in the Arab world, highnet-worth individuals, pension funds, US banks, Hamilton Lane and Falcon Flight, among others. Abraaj had invested in Nigeria’s Mouka foam and Eleme Fertilizer under its Sub-Saharan Africa fund III in 2015 and 2016 respectively. It also has 20.25percent stake in CWG Plc also has a 5.92percent stake in Custodian & Allied Insurance Plc, others include Bridge Clinic, Therapia Health Limited, and AOS Orwell Limited. Abraaj, which founded in 2002 and managed almost $14 billion, was the Middle East’s biggest private equity fund and one of the world’s most influential emerging-market investors with stakes in health care, clean energy, lending and real estate across Africa, Asia, Latin America and Turkey.

Nigerian port concession model is used globally to improve efficiency – NPA AMAKA ANAGOR-EWUZIE

anaging director of the NigerianPortsAuthority (NPA), Hadiza Bala Usman, has described Nigerian port concession model as one used globally to improve efficiency in port system. Usman, who notes the port concession regime has not only brought about port efficiency, but has also helped to increase revenue generation of the NPA, lauded the Federal Government for entering into the concession agreement. According to Usman, though port concession has been of a tremendoussuccess,buttherecould be improvement in deployment of operational efficiencies across all Nigerian ports. SpeakinginLagosonMonday when the executive members of the National Association of Government Approved Freight Forwarders (NAGAFF) paid her a courtesy visit in her office at the NPA headquarters, she said the NPA revenues had quadrupled after the concession. “I think it is important to cast our minds back to the status of

theportsbeforetheywereconcessioned. While we note that there are concerns right now, but the concession of the Nigerian ports have been a tremendous success. We have seen improvement in turnaround time for vessels and huge improvement in our operational capacities,” she said. Usman assured that the ongoing review of the concession agreement would bridge observed loopholes in the existing agreement, as the review would put in place measures that would discourage non-compliance by both the NPA and the concessionaires. She further pointed out that the new agreement would also provide for sanctions for any party that defaults in compliance, addingthatsomeofthekeytakeaways from the review would include sanctioningonbothsidesfornoncompliance by either the concessionaires or the government. “Ifgovernment,forexample,is required to maintain a particular depth of draft, and failed to do that, there will be a penalty that government has to take for not meeting its obligations. These were recommended to us by a consultant engaged by the World

Bank to support the NPA and we are working with the terminal operators on what needs to be done to conclude this review,” she said. Usman, who did not give specific timeline for the completion of the concession agreement review, assured that it would be concluded within the shortest possible time. She listed issues around Guaranteed Minimum Tonnage (GMT) as one of those delaying the review as the NPA was presently discussing with the concessionaires to see what needed to be done because there were parts of the agreement that cannot be changed to a certain extent. Earlier, Increase Uche, president of NAGAFF, solicited for the removalofallbarriersthatimpede the growth and productivity of the port. “We need to look into the high cost of doing business at the ports because we are the ones bearing the brunt. Trade must be facilitated and the port must be seen to be efficient. Transport efficiency too must be combined especially as Nigeria has just signed the Africa ContinentalFreetradeAgreement (AfCFTA),” he requested.

Nigeria’s children record lowest vaccination rate globally in 2018 ANTHONIA OBOKOH

igeria has been recorded among 16 countries where more than one in 10 children - or 20 million worldwide - missed out last year on vaccines against life-threatening diseasessuchasmeasles,diphtheria and tetanus, according to new data from the World Health Organisation(WHO)andUnitedNations Children’s Fund (UNICEF). In a report on global immunisation coverage, the agencies found that vaccination levels are stagnating, notably in poor countries or areas of conflict. “Vaccines are one of our most important tools for preventing outbreaks and keeping the world safe,” said Tedros Adhanom

Ghebreyesus, director-general of WHO. Ghebreyesus stated that while most children today were being vaccinated, far too many were left behind, saying, “It’s often those who are most at risk – the poorest, the most marginalised, those touched by conflict or forced from their homes - who are persistently missed.” Almosthalfareinjust16countries-Afghanistan,CentralAfrican Republic, Chad, Democratic Republic of the Congo (DRC), Ethiopia, Haiti, Iraq, Mali, Niger, Nigeria, Pakistan, Somalia, South Sudan, Sudan, Syria, and Yemen. Globally, since 2010, vaccination coverage with three doses of diphtheria, tetanus and pertussis (DTP3) and one dose of the measles vaccine had stalled at around www.businessday.ng

86 percent. According to the report, this is not sufficient, since 95 percent coverage is needed – globally, across countries, and communities - to protect against outbreaks of vaccine-preventable diseases. In 2018 for example, the number of measles cases around the world more than doubled, to almost 350,000. “Measles is a real time indicator of where we have more work to do to fight preventable diseases,” said Henrietta Fore, UNICEF’s executive director. “Because measles is so contagious, an outbreak points to communities that are missing out on vaccines due to access, costs or, in some places, complacency. We have to exhaust every effort to immunise every child.” https://www.facebook.com/businessdayng

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44 BUSINESS DAY

Wednesday 17 July 2019

NEWS

Tax rebates, infrastructure key attractions Insecurity: PDP calls for state of to Lekki Free Zone - experts emergency, asks Buhari to resign JOSEPH MAURICE OGU

vailability of tax rebates in both Federal and State as well as infrastructure to support business operations are the key attraction to businesses and residents who are flocking the Lekki Free Zone (LFZ), experts say. The LFZ, spanning across 16,500 hectares and widely acclaimed as the most ambitious project in Lagos State, has received remarkable attention this year; partly due to the several milestones celebrated by major investors in the zone in the past few months. This attention, as well as the fact that the Lekki-Epe axis has emerged as the most prolific development corridor in Nigeria, has resulted in an increased scramble by residents and businesses for real estate in that axis. One of the critical attractions for them, according to experts, is the tax rebate available in the zone. Businesses in the LFZ are exempt from all federal, state and local government taxes, levies and rates while operating in the zone. Some of these taxes include: Value Added Tax (VAT), Withholding Tax (WHT), Company Income Tax and Custom/Import Duties. “These investors are attracted by, among other things, the tax

breaks available with operating in a free trade zone,” said Bidemi Olumide, Partner and CEO of Taxaide, a tax management firm. “For your company to be operating in that territory, you have a significant rebate in taxes; and that’s a conservative way of putting it. You have zero to no income taxes; you have no transactions taxes; etc. Then on the regulatory side, you are not dealing with multiple regulators; you are dealing with one regulator, which is the Nigeria Export Processing Zones Authority (NEPZA), who then organises all the relevant regulators under one umbrella so that you have only one port of call for all regulatory matters which significantly reduces your compliant costs. Similar to others across the globe, the free zone is the place to be for all businesses that seek to add value.” Dangote Group, one of the biggest investors in the LFZ, is investing billions of dollars in the construction of a petroleum refinery, a fertilizer processing plant, a gas pipeline project and a petro-chemical plant in the South East Quadrant of the zone. While all these are still in construction phase, an estimated 120 companies are already providing goods and services valued at N148 billion at the sites. According to the company’s Group Executive Director, Strategy, Portfolio

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Development and Capital Projects, Devakumar Edwin, a daily estimate of 126 trucks rumble around the site, while 37,500 people are directly or indirectly involved in various construction activities on the site. In the South West Quadrant of the zone, the Lekki Free Zone Development Company (LFZDC), a joint venture between China-Africa Lekki Investment and the Lagos State Government, has already attracted such investors as Sinotruck, Bollore, etc. The presence of these companies, as well as ongoing construction of facilities in the quadrant, has resulted in thousands of direct and indirect jobs; as well as increased activity in the zone. In the North West Quadrant of the zone, Rendeavour, the largest new city developer in Africa, is the major investor. The company, in a partnership with the Lagos State Government, is building Alaro City, a planned 2,000-hectare mixed-use satellite city that has been widely hailed as the next phase in the evolution of Lagos. Launched in January, Alaro City has already attracted some investors who have commenced construction of their facilities in the city. Ongoing construction of supporting infrastructure in the city, as well as facilities being built by investors, have already created hundreds of jobs.

… Yuguda urges Buhari to beam light on migrant herdsmen … Reps urge FG to install CCTV on streets OWEDE AGBAJILEKE, Tony Ailemen & James Kwen, Abuja

he People’s Democratic Party (PDP) has tasked President Muhammadu Buhari to declare a state of emergency on security, even as it asked the President to resign. This comes as the party called on the President to address the issues raised by former President Olusegun Obasanjo in his open letter. Speaking at press conference on Tuesday in Abuja, PDP national chairman, Uche Secondus, insisted that the present administration had collapsed in the country, and therefore called on the President to rejig the security architecture in the country. Secondus also threw his weight behind the views expressed by the Catholic Archbishop of Abuja, Cardinal John Onaiyekan, Nobel Laureate Wole Soyinka and former governor of Kaduna State, Balarabe Musa, who previously declared that the President cannot solve the myriad of challenges confronting the country. Secondus said: “The PDP wholeheartedly associates itself with the position of these patri-

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otic Nigerians and urges President Buhari to respond appropriately their timely advisories by declaring state of emergency on security in the country and go further urgently to address the issues raised in Obasanjo’s letter. “There is no doubt that the only thing apparent in President Buhari and APC administration is incompetence and this is clearly underscored in the way and manner they are handling the affairs of governance which has continued to take a huge toll on the nation. “The level of bloodletting occasioned by the barrage of criminalities across the country can only be happening in a country without government. “The killing of Mrs. Funke Olakunrin daughter of Pa Reuben Fasoranti, leader of the Yoruba socio cultural organisation, Afenifere is the height point of murdering of innocent Nigerians across the land. It certainly cannot be well for a nation that creates an ugly situation where a 94-year-old Nationalist would be burying her 58-yearold daughter. Sad! This certainly is not Nigeria of our dream”. Meanwhile, amid growing

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concerns over the current spate on insecurity in Nigeria, former governor of Bauchi State, Isa Yuguda, on Tuesday urged Buhari to beam searchlight on migrant herdsmen who might be taking advantage of current situation to perpetrate mayhem. This is just as Yuguda also urged Nigerians not to criminalise all herdsmen, especially those residing within the country because of the few bad ones among them creating problems. Speaking with State House correspondents at the Aso Rock Villa, after meeting President Buhari, he also called on the home Fulanis to help expose the bad eggs causing trouble for the country “Some of these migrant criminals would have taken advantage of what has been happening and unleashing mayhem on our people but that is not acceptable. I believe Mr. President is also addressing that to the best of his ability. “Most of you are aware Boko Haram started in Bauchi State and by the grace of Allah, Bauchi was able to address it. Of course, it has continued and Mr. President has been able to substantially defeat the insurgency in the Northeast,” Yuguda said.

Wednesday 17 July 2019

BUSINESS DAY

news Airline Operators of Nigeria seeks FG’s support on AirPeace international operations ... says Nigeria loses $3bn to foreign carriers on capital flight IFEOMA OKEKE

irline Operators of Nigeria (AON) has called on the Federal Government to support Nigeria’s largest indigenous carrier, AirPeace, as it commenced international flights into Dubai on Friday July 5, 2019. AON, while thanking the Federal Government for its role in making this feat possible, noted that the next level required strong government support, as AirPeace hadbecomeoneofthepillarstothe building of our nation’s economy. In a statement sent by Nogie Meggison, president, AON, the association said AirPeace was Nigeria’s private airlines’ fourth attempt into the international market, and it would be recalled that many of the airlines that went before them collapsed mainly due to aero politics, which is 85 percent the role of government to play, as foreign carriers dominate 100 percent of the Nigerian sky with capital flight of about $3 billion yearly. Meggison called on the Federal Government to put its full weight behind AirPeace and

give the carrier all the support required to succeed on the route in the face of stiff competition and aero politics, which the carrier will face in the near future. “AirPeace has taken a bold step and they should be encouraged by Nigerians. The airline’s maiden flight to Dubai means morejobsforourNigerianyouths; it means jobs for over 600 unemployed Nigerian pilots; it means hope for our various Aviation Training Academies at NCAT, Zaria, International Aviation College, Ilorin, and the International Helicopter Flying School, Enugu. “It also means more travel choices for Nigerian travellers at affordable rates; it means more contribution to the Nigerian economy and GDP; it means increased growth for the Nigerian aviation sector; it means the transfer of technology and technical expertise; and it also means a reduction in capital flight from the country by foreign airlines. Government therefore needs to rally round Air Peace as a proud Nigerian operator and give the airline all the support to succeed,” AON president said.

Economy loses N6trn to Apapa gridlock - OPS JOSHUA BASSEY

survey by the Organised Private Sector (OPS) shows that the Nigerian economy los es about N6 trillion to the intractable gridlock within the Apapa port environment. This was contained in a presidential report presented at the 62nd annual general meeting (AGM) of the Nigeria Employers’ Consultative Association (NECA), which held in Lagos on Tuesday, and attended by a wide spectrum of the business community. This comes as Vice President Yemi Osinbajo, represented by Adeyemi Dipeolu, a former economic adviser to President Muhammadu Buhari on economy recovery and job crea-

tion, said the ongoing effort at decongestion Apapa and making the port environment more business-friendly was yielding positive results, although more was expected to be done. The OPS report presented by Mauricio Alarcon, NECA’s 2nd vice president to a capacity audience at the AGM, specifically showed that about N3.06 trillion ($10bn) on non-oil export and N2.5 trillion earnings annually, across the different sectors of the economy were lost due to the Apapa gridlock. Indeed, until the recent efforts by the Federal Government that ceded the reconstruction of collapsed sections of Oshodi-Mile2-Apapa Expressway to the Dangote Group in lieu of taxes, the Apapa gridlock, which spanned over a decade, had defied solutions.

Its concomitant losses in monetary value as captured in the OPS survey are exclusive of human casualties resulting from incidences of containers falling on vehicles and snuffing lives out of occupants of such vehicles. This is also as the OPS decried a rather tough operating environment that continues to pose a challenge to businesses. According to the report, “One year after the Presidential Executive Order on the promotion of transparency and efficiency in the business environment to ease procedural and operational hiccups being experienced at the nation’s seaports, orderliness is yet to return.” This, they noted, is against the high expectation that the Executive Order would bring

sanity to the ports and save importers and shippers the avoidable pain, anguish and agony of doing business. Although the OPS commended some steps taken by the government in 2018 in the interest of the business community such as the withholding of presidential assent to the Federal Competition and Consumer Protection Bill, 2018, and the suspension of the 0.5 percent profit after tax contribution, which was foisted on organised businesses, they nevertheless stressed the need for the government to address the huge infrastructural gap in the economy. Other areas they also want tackled are unemployment, insecurity, support for the real sector, reduction in taxes and diversification of the economy.

Christine Lagarde resigns from IMF, effective September 2019 HOPE MOSES-ASHIKE

hristineLagarde,managing directoroftheWashington, DC-based International Monetary Fund (IMF) has resigned her appointment with effect from September 12, 2019. Lagarde was recently appointed president of the European Central Bank (ECB). “Today the IMF Executive Board accepted Managing Director Christine Lagarde’s resignation from the Fund with effect from September 12, 2019, a statement by the IMF’s Executive Board said. “We would like to express our greatest appreciation for all that Managing Director Lagarde has done for the institution. Her legacy of achievements has made a lasting imprint on the Fund. Under her guidance, the Fund successfully helped its

members navigate a complex and unprecedented set of challenges, including the impact of the global financial crisis and its aftershocks. “The Fund has excelled in serving its entire membership over the course of her tenure with cutting-edge policy advice supported by ground-breaking analytical work on a range of macro-critical issues. Her stewardship has been exceptional, and we are grateful for her innovative and visionary leadership. “With this decision by Managing Director Lagarde, the IMF Executive Board will initiate promptly the process of selecting the next Managing Director and will communicate in a timely fashion. The Executive Board has the utmost confidence in David Lipton, who remains Acting Managing Director of the Fund in the interim period.”

Sodium Brand emerges biggest winner at EXMAN 2019 Awards

odium Brand Solutions, an experiential marketing company in Nigeria, emerged the biggest winner of the night at the recently organised EXMAN Awards 2019, held weekend in Lagos. The Agency won four gold for its creative and innovative ideas. The categories for the awards won include Best Activation of an Entertainment Property, Best use of Props in an Event and Best Event (B2C), all for Coke Studio and Best Activation of a Sporting Property for the Coca Cola Golf Tournament. The EXMAN Awards for Excellence is designed to identify and celebrate outstanding member agencies, individuals and teams in the experiential marketing industry. It is organised by the Experiential Marketers’ Association of Nigeria (EXMAN),

the industry body of forward thinking agencies in the marketing communications industry. According to Titi SeunOremade, general manager of Sodium Brand Solutions, “The Awards are an affirmation of our agency’s dedication to making our clients’ marketing initiatives stand out. The extensive support of our clients is highly appreciated. We have over the years consistently aimed to surpass our clients’ expectations and we are glad that our efforts are now being awarded. The awards coincidentally came at a time that we are positioned and ready to do more than we have ever done in the industry.” Sodium Brand Solutions, a team of brand scientists, was founded in 2009. The agency intends to celebrate a decade of excellent service later in the year. www.businessday.ng

L-R: Oghenevwoke Ighure, executive director, strategy innovation and partnerships, BusinessDay Media; Patrick Atuanya, editor; Maria Glover, project lead, Impact Investment Foundation, and Lehle Balde, senior associate, strategy innovation and partnerships, BusinessDay Media, during Maria’s courtesy visit to BusinessDay head office in Lagos, yesterday.

Our commitment to meeting housing needs is non-negotiable, Lagos assures CHUKA UROKO

agos State government has assured that despite setbacks, especially the looting of some of its projects by miscreants, it remains committed to meeting the housing needs of its over 20 million citizens, stressing that it will continue to forge ahead with delivering on its mandate. Wasiu Akewusola, permanent secretary in the state’s Ministry of Housing, who gave this assurance on Tuesday, said the state government was also unwavering in its determination to meet the shelter demands of the people, which was why they were working out strategies to keep vandals and hoodlums out of ongoing schemes, just as they would step up their monitoring activities to ensure that those activities were completely eradicated. As Nigeria’s economic capital, Lagos has a very large population with a dire housing

situation. The state’s housing shortage, which is both qualitative and quantitative, is estimated at 3 million units that require building about 200,000 housing units yearly for the next 10 years to close. A Pison Housing Company report on the ‘State of the Lagos Housing Market’ estimates that over 80 percent of Lagos residents live in rented accommodation, spending over 50 percent of their income on paying house rents. As a response to this challenge, the state government, in addition to its public and private partnership (PPP) initiatives on housing provision, also embarks on housing schemes in various parts of the state with a view to providing housing for its people. Some of these schemes are located in Ibeshe, Igbogbo, Agbowa, Odo Onosa and Ayandelu. During an inspection tour of these schemes Tuesday, Akewusola confirmed the

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readiness of the state government to deliver on its mandate in providing high quality shelter for the people. He, however, called on community leaders and residents of adjourning properties to assist in securing government’s investment in these schemes, saying, “the security of the housing schemes constructed with taxpayers’ money should be a joint venture between the people and the government’’. ‘’The policing of these housing schemes that are yet to be delivered is best done by the immediate communities because of proximity and superior knowledge of the terrain of the area,’’ he pointed out, decrying a situation where uncompleted houses were vandalised by removing fixtures, transformers cannibalised and electric poles removed. Beyond this, the permanent secretary noted that some criminals had embarked on illegal sand digging activities around @Businessdayng

ongoing projects in Ikorodu, thereby endangering the land structure of the area. According to him, extensive illegal sand digging activities were being perpetrated by some people in Igbogbo 2B Scheme thereby damaging the land. The implications of these activities, he said, were economic loss and setback, noting, “the replacement of these items and restoration where applicable will definitely have huge financial implications and also result in delay in delivering the homes to the prospective owners.’’ He enjoined community leaders and residents to take interest in vigilance and surveillance over these schemes by offering information to security agents. “Please, give immediate report of any suspicious persons or unlawful incident to the police or any other government security agents,” he appealed.

Wednesday 17 July 2019

BUSINESS DAY

POLITICS & POLICY Nasarawa Assembly set-up 6-man panel to investigate delay, illegal deduction of LG salary Attah Solomon, Lafia

o r r i e d by the continued illegal deduction and delay in the payment of salaries of local government workers in Nasarawa State, the state House of Assembly has set up a 6-man probe panel to investigate the matter and other related issues therewith in order to address the problem. Speaker of the House, Ibrahim Balarabe Abdullahi, directed the committee to swing into action and submit their reports on Monday, July 22nd. Abdulahi, who transmitted the decision of the House during its plenary yesterday in Lafia, said that he saw no reason workers’ salaries at the local government council were still

not paid 16 days after the month end. He tasked members of

the panel to particularly probe the State Ministry of Local Government and

L-R: Harratt Thompson, British deputy high commissioner; Harrieth Baldwin, UK minister of State for Africa, Foreign Commonwealth Office and minister of State for Department of International Development; Obafemi Hamzat, Lagos State Deputy Governor, and Folashade Jaji, secretary to the State Government (SSG), during a courtesy visit to the Deputy Governor at the Secretariat, Alausa, Ikeja.

INEC official was caught with $10,000 on election day in Nasarawa, Atiku’s witness tells tribunal …As Buhari’s video shows Yakubu lists envisaged challenges of transmission of results Felix Omohomhion, Abuja

witness for the petitioners from Nasarawa State, Peter Alli, Tuesday, told the Presidential Election Petitions Tribunal in Abuja, that an official of the Independent National Electoral Commission (INEC), Abubakar Kaura, was found with $10,000 (ten thousand dollars) on the day of election. Alli, who said he was the ward collation officer for the People’s Democratic Party (PDP), also alleged that the $10,000 was a bribe for the INEC officer to manipulate the outcome of the election results in favour of the All Progressives Congress (APC). Under cross examination by INEC counsel, Yunus Usman (SAN), Alli admitted he reported the matter to the police which he claimed was later transferred to the State Criminal Investigation Bureau for further investigation. When asked if he knew whether anyone was charged for the said allegation, he said he did not know, adding that he does not have any report concerning the outcome of the investigation. Further, Alli said the claim was not a hearsay evidence, saying he personally witnessed the alleged $10,000 found in the custody of the INEC officer. Also, the INEC counsel asked him if he signed form

Chieftaincy Affairs over delay and illegal deduction of staff salaries in the state.

EC88 under duress. Responding, he said he signed it voluntarily mainly because his party won in the ward. The witness also asserted that out of the 24 units in the ward, he was only able to receive results of 23 units excluding the unit where the allegation of bribing was allegedly perpetrated. Other witnesses, who testified for the presidential candidate the PDP in the February 23 presidential election, Atiku Abubakar, and the party, posited Atiku was a bonafide Nigerian. Leading the team of the witnesses, a retired career diplomat, Ambassador Mabien Zamaki told the tribunal that Atiku was a Nigerian by birth and nationality, and was therefore, legally qualified for the presidential poll. The ambassador in his evidence said that he was aware with detailed record that Atiku was born on November 25, 1946, at Jada in the northern part of Nigeria. Led in evidence by Atiku’s lead counsel, Chris Uche (SAN), the retired career diplomat informed the tribunal that Atiku’s record in his former secondary School was not confidential and can be accessed by anybody doubting the nationality of the PDP presidential candidate. The witness, who claimed to have retired from active service in 2006, admitted that he saw the record from www.businessday.ng

the custodian of the record in their secondary school and that the record are still there for anybody to cross check. Zamaki further told the tribunal that he has fair knowledge of history of Nigeria as it relates to Jada in Adamawa and insisted that in 1946 when Atiku was born, Jada was part and parcel of Northern Nigeria and not part of Cameroon as suggested by the APC’s counsel. He vehemently denied that any part of Northern Nigeria including Jada was ever ceded to Cameroon. Another witness, Mohammed Kabir Hayatu, a retired Customs Officer, corroborated the Nigerian nationality of the former vice president. Hayatu, who was also led in his evidence-in-chief by Atiku’s lawyer told the tribunal that he came in contact with Atiku’s record in the Nigerian Customs Service where Atiku retired as a senior Customs Officer. Under cross examination, Hayatu said that Adamawa was part of Northern Nigeria and that Jada fell on the part of Nigeria and not Northern Cameroon. As at the time of this report five witnesses comprising Mabien Zamaki, Mohammed Hayatu, Likita Alli, Temago Sunday Anyamaga and Abubakar Sadiq Abdullahi from Adamawa and Nasarawa states had testified for the petitioners.

According to him, “It is heartless if a civil servant will work for 30 days and expected to receive his wages at the end of the month, 17 days after, nothing has been done. “Some of these habits are deliberate, and that is why I said they are heartless and we are going to step on toes to ensure that the right thing is done in the LGA, because all of us have parents, brothers and sisters in the sector. “I aligned myself with some members who said investigation should be carried out,” he said. “I will set up 6-man committee to include Hon. Mohammed Alkali of Lafia North constituency as the chairman and Ego Maikeffi, the clerk of the House to serve as secretary of the committee. “ Ho n. Da nla di Jatau (PDP-Kokona West), Hon.

Ibrahim Muluku (APC-Nassarawa Eggon East), Hon. John Osewu (PDP-Doma South) as members. “Other members of the committee are Hon. Daniel Ogazi (APC-Kokona East), Hon. Abdulaziz Danladi (Keffi East,” he said. Our correspondent gathered that, the plight of staff of local governments dated back to the administration of Governor Umaru Tanko Almakura, where workers at that level of government were subjected to series of screening, percentage payment of salaries, delay and illegal deduction of salaries. Two months into the new administration of Governor Abdullahi Sule, and contrary to the expectation of many local government workers that the end of their plight has come, it seems there is no respite to the challenges confronting the staff.

Atiku hails Makinde on public assets declaration …As Oyo APC queries governor’s huge net worth Innocent Odoh, Abuja and REMI FEYISIPO, Ibadan

ormer Vice President and Presidential candidate of the People’s Democratic Party (PDP) in the last general elections, Atiku Abubakar has expressed delight at the news that Oyo State Governor, Seyi Makinde has fulfilled his electoral pledge of making his assets declaration public. The Oyo State Governor on Monday declared assets worth about 48 billion, becoming the only elected public official so far to declare his assets publicly. The former Vice President in a statement issued on Tuesday by his Media Adviser Paul Ibe lauded the governor, stressing that his action is a thing of pride and demonstrated that “integrity is not a mere lip homage but a consistent course of action of an individual doing as they promised.” Atiku further commended the governor for his forthrightness and also expressed his support to him and his administration in delivering good governance in the Pace Setter’s state. “Recall that the Governor had hit the ground running after his swearing in as governor with ground breaking

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policies that seek to frontally address the problems of corruption in public and private sectors and also in advancing the access to universal basic education. These are programmes to which the PDP is heartily committed,” the statement said. The statement noted that the former Vice President is particularly proud of Governor Makinde because his action as the only elected public official so far to so publicly declare his assets speaks eloquently to the maxim of leadership by example. “By this, the governor has spoken without any ambiguity, that his administration will not condone corruption. His example is highly recommended to other leaders at all levels of government,” he said. However, the Oyo State chapter of the All Progressives Congress (APC) has said that Governor Makinde’s public declaration of his assets was a ploy to give a false impression of his real financial status now so that he would have a safe landing when he leaves office with stupendous wealth. According to the party, most of the companies listed in the declaration were relatively unknown even in the local Oil and Gas industry let @Businessdayng

alone the global arena as far as members of the general public are concerned. “How many oil rigs are in his possession and since when? Where are the operations base of those companies and what is their staff population? “As a graduate of Electrical Engineering, we do not know of any ground that has ever been broken by Makinde to have fetched him such a humongous wealth,” APC said. According to the party, “Even if he has had to lay claim to the commonwealth of a group of business partners to attract political favour, the governor should know now that elections are over. “What manner of billionaire would abandon his business partially or completely for 13 years in pursuit of political ambition and still claim to have multiplied his wealth more than corporate players in a globally competitive sector like oil and gas? “Does it mean that all monies he has lavished since 2006 were from donor agencies or directly from heaven?” The Oyo APC therefore, called on the Federal Government to investigate claims of Oyo State Governor Seyi Makinde that he is worth over N48 billion in assets and cash.

Wednesay 17 July 2019

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Tuesday 16 July 2019

Top Gainers/Losers as at Tuesday16 July 2019 LOSERS

GAINERS Company

Opening

Closing

Change

OKOMUOIL

N61.95

N55.8

-6.15

CAP

N27.5

N24.75

-2.75

0.5

N20.7

N18.65

-2.05

VOLUME (Numbers)

N29.5

0.5

CONOIL

N20.4

N18.45

-1.95

VALUE (N billion)

N170.5

0.5

FLOURMILL

N16.2

N14.6

-1.6

Closing

Change

N1228

N1250

N5.2

N5.71

0.51

N58.5

N59

GUARANTY

N29

DANGCEM

N170

NESTLE REDSTAREX NB

ASI (Points)

Company

Opening

DEALS (Numbers)

MARKET CAP (N Trn)

28,200.88 3,595.00 217,132,163.00 1.799

nvestors booked loss of about N68billion on Tuesday July 16 as the Nigerian stock market furthered its path into the negative territory. At the sound of trading closing gong, the Nigerian Stock Exchange (NSE) All Share Index (ASI) which tracks the performance the Bourse decreased by 0.49percent to reach new low of 28,200.88 points from a preceding day high of 28,340.98points. Week-to-date (WtD), the stock market has decreased by 1.28percent; monthto-date (MtD), the stock market has lost 5.89percent of its value. Year-todate (YtD), the ASI has decreased by 10.28percent. Stocks that contributed to the loss include Okomu Oil Palm Plc, Chemical and Allied Product Plc, Forte Oil Plc, Conoil Plc, and that of Flour Mills Nigeria Plc. In 3,595 deals, investors exchanged

217,132,163 units valued at N1.799billion. Deals increased by 15.56percent, while value of stocks traded decreased by 16.13percent. The volume of stocks traded increased by 23.96percent. The value of listed stocks closed lower at N13.743trillion, down from preceding day high of N13.811trillion.

Okomu Oil Palm Plc stocks recorded the highest price decline, from N61.95 to N55.8, losing N6.15 or 9.93percent. Chemical and Allied Products Plc followed after dipping from N27.5 to N24.75, down N2.75 or 10percent. Forte Oil decreased from N20.7 to N18.65, down N2.05 or 9.90percent.

FTSE 100 Index 7,577.20GBP +45.48+0.60% Generic 1st ‘DM’ Future 27,334.00USD -8.00-0.03% S&P 500 Index 3,009.47USD -4.83-0.16%

12.199

Stock market records further decline by 0.49% Stories by Iheanyi Nwachukwu

Global market indicators

Nestle Nigeria Plc recorded the highest gain, from N1228 to N1250, adding N22 or 1.79percent; while Redstar Express Plc followed, from N5.2 to N5.71, adding 51kobo or 9.81percent. Nigerian Breweries Plc also increased from N58.5 to N59, adding 50kobo or 0.85percent.

L – R: Oluwasegun Ogundipe (Laffup), Nigerian born comedian; Bola Adeeko, divisional head, Shared Services, The Nigerian Stock Exchange (NSE); Aituaje Iruobe (Waje), Nigerian singer; Omololu Shomuyiwa (Lolu), ex-housemates of Big Brother Naija (BBN); Clifford Akpolo, Team Lead, Brand Digital Marketing, NSE; Stanley Chibuna (Funny Bone), a famous comedian/MC; Olumide Bolumole, Divisional Head, Listings Business, NSE and Valentine Odili, 3rd Place NSE Runner, NSE during the Closing Gong Ceremony to commemorate NSE Corporate Challenge Race Ambassadors and Employee Awards Ceremony at the Exchange.

Deutsche Boerse AG German Stock Index DAX 12,430.97EUR +43.63+0.35% Nikkei 225 21,535.25JPY -150.65-0.69% Shanghai Stock Exchange Composite Index 2,937.62CNY -4.57-0.16%

Development Bank of Nigeria to drive call for MSMEs funding

evelopment Bank of Nigeria (DBN), the foremost wholesale Development Finance Institution (DFI) providing sustainable financing to Micro, Small, Medium Enterprises (MSMEs) has further shown its commitment to the needs of the sector by driving the call for MSMEs funding. DBN plans to do this through the maiden edition of its Lecture Series scheduled to take place in Abuja on July 29 2019. The lecture series is a thought leadership initiative of Development Bank of Nigeria, which provides a platform for a robust exchange of ideas to meet the challenges and opportunities that exist in the MSME segment of the economy. According to the Managing Director, DBN, Tony Okpanachi, the lecture series is one of the ways to further strengthen the economy by ensuring that MSMEs are adequately empowered to continually contribute effectively to the Gross Domestic Product (GDP) of the nation. In his words, “MSMEs in any clime is the backbone for inclusive economic growth. In advanced economies,

small businesses have been seen to be the driving force in achieving growth in all sectors of the economy they operate.” He noted that the central objective is to broaden the understanding of the challenges and critically examine practical steps to resolve some of the obstacles that constrain growth within the segment. Development Bank of Nigeria (DBN) is a wholesale bank that was conceived by the Federal Government of Nigeria in collaboration with global development partners to address the major financing challenges facing Micro, Small and Medium Scale Enterprises (MSMEs) in Nigeria. The bank lends to Participating Financial Institutions (PFIs) Microfinance banks, Commercial banks, existing retail DFIs and leasing companies who in turn lend to MSMEs. DBN’s objective is to alleviate financing constraints faced by MSMEs in Nigeria through the provision of financing and partial credit guarantees to eligible financial intermediaries on a market-conforming and fully financially sustainable basis.

NSE inducts 46 newly authorised Dealing Clerks

Ufot inspires young entrepreneurs at Ausso Leadership Academy

...urges them to uphold highest level of ethics, sense of responsibility

deme Ufot, Group Managing Director of SO&U has declared that the biggest obstacle to entrepreneurial success is not what the entrepreneur lacks, in terms of money or connections. Success, he said will come more from ideas that create value and help transform situations and businesses. According to him, “the most valuable asset in your entrepreneurial journey is the power of your ideas and your passion to drive the ideas to success”. Ufot was speaking at the weekly Masterclass session of the Ausso Leadership Academy, a leading platform for mentoring young entrepreneurs to institutionalize and scale their businesses geometrically. Using practical examples,

he Nigerian Stock Exchange (NSE) has inducted 46 recently qualified Dealing Clerks, charging them to uphold the highest level of ethics and sense of responsibility. Out of the 53 candidates who had passed the Chartered Institute of Stockbrokers (CIS) examination and went through the mandatory practical Automated Trading System (ATS) training at the NSE, only 46 passed the final oral examination at the Exchange. In his opening remarks, the Chief Executive Officer of the NSE, Oscar N. Onyema said “today’s ceremony is not just a celebration, it marks a call to stand tall in integrity, to be impeccable in character, to be professional in service and to up-

hold the high ethics and values for which the Exchange and the capital market are renowned. That is the big hurdle that you must cross effortlessly in your daily practice of this profession”. He said, “NSE has clear and enforceable rules and operates with a zero tolerance policy on all infrac-

Oscar N. Onyema, NSE chief executive Officer www.businessday.ng

tions. The NSE will support the inductees in developing their capacity. However, if infractions occur, NSE will not hesitate to wield the axe on any erring member that falls short on any of its rules”. Onyema also advised the new clerks to stay relevant in today’s dynamic environment, emphasizing that continuous training is a tool that should not be underestimated. He noted that the Exchange established X-Academy, to provide education to individuals who wish to improve their understanding of various aspects of the capital market. “I urge you to take advantage of this platform, especially the recently launched e-learning platform, to stay up to date on market developments, he added”.

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and drawing on his experience, he stressed that having the right skills and passion for excellence could be the difference between success and failure, no matter how financially well-resourced you are. He further stressed that for business to grow, the business leader must himself grow in terms of skills, experience, managerial capacity and network. A big obstacle to growth is a high sense of comfort with the present. Entrepreneurs must be prepared to constantly challenge themselves and pull out any sense of comfort with the status quo. Each new day must be seen as an opportunity to push the envelope further. On relationship building, Ufot stated that “some of the most successful people are superb relationship builders @Businessdayng

and managers. It is relationships that provide the opportunity to use skills to create value”. He went on to give the analogy in soccer of a great striker who is never passed the ball by his team mates. He further advised the young entrepreneurs not to dwell unduly on errors committed, but to quickly analyze them, asking themselves brutally frank questions as to what they did wrong to wind up in the bad situation. If they can find the right answers as to how they got into the bad spot, it will be the first step to getting out of the problem. In his closing remark, Founder, Ausso Leadership Academy, Austin Okere, expressed appreciation to Mr. Udeme Ufot for honouring the invitation to share impactful business tips with the young entrepreneurs.

Wednesay 17 July 2019

BUSINESS DAY

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Wednesday 17 July 2019

BUSINESS DAY

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Wednesday 17 July 2019

BUSINESS DAY

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Wednesday 17 July 2019

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

MEHREEN KHAN AND ALEX BARKER IN STRASBOURG

rsula von der Leyen has made her final pitch to members of the European Parliament to back her for the top job in Brussels, promising a programme of environmentally friendly policies to rally support ahead of a knifeedge vote on Tuesday evening. Speaking in English, German and French, Ms von der Leyen’s pledges included a new EU carbon border tax, carbon neutrality by 2050 and a green deal on investment within her first 100 days in office. She also hit out at international tech giants who “play” the European tax system, backed an EU-wide unemployment insurance scheme and proposed a gender-equal college of commissioners. In an impassioned speech, Ms von der Leyen urged MEPs to vote for her or risk rejecting the first woman ever nominated for the post. The German defence minister, who said she would resign from the post whether she wins on Tuesday evening or not, needs at least 374 votes in a secret ballot to be confirmed as president of the European Commission. Ms von der Leyen’s nomination has split the parliament’s centre-left group which objected to EU governments striking a

Ursula von der Leyen makes last-ditch appeal to MEPs

Nominee for EU commission presidency promises environmentally friendly policies ahead of vote

Ursula von der Leyen delivers her speech at the European Parliament on Tuesday. Her pledges included a new EU carbon border tax and carbon neutrality by 2050 © Getty

backroom deal over the bloc’s top jobs earlier this month. She also faced criticism from mainstream parties after her nomination was welcomed by illiberal leaders such as Hungary’s Viktor Orban.

But attacks on her candidacy by far-right groups in parliament are expected to have rallied support for Ms von der Leyen from mainstream parties. The Identity and Democracy

group, led by Italy’s League, has said it will not back her candidacy while the Eurosceptic European Conservatives and Reformists, led by Poland’s Law and Justice party, criticised her

push on climate change and labour market welfare. “I was quite relieved you won’t be voting for me as everything you said goes contrary to my deepest values,” Ms von der Leyen said in response to an MEP from the anti-Islam Alternative for Germany (AfD). To win over critics on the left, the German minister promised to “improve” the lead candidate system to pick the commission president, which was abandoned by EU leaders when choosing her. She also insisted her commission would not compromise on forcing governments to comply with the rule of law. “Anyone who wishes to help Europe will find in me a passionate fighter by their side,” said Ms von der Leyen. “Anyone seeking to split and destroy our values will find a fierce opponent”. Iratxe Garcia, the Spanish leader of the socialists, said the centre-left would “act responsibly” in the vote. “We don’t want an institutional crisis, but guarantees”.

Goldman results boosted by strength IBM lands AT&T contract in equities and lending divisions worth ‘billions’ The bank’s fixed income desk posted another revenue decline LAURA NOONAN IN NEW YORK

strong performance from its equities and investing and lending divisions helped Goldman Sachs to a solid second quarter, but the bank warned that conditions in fixed income markets remained challenging while its pipeline of investment banking transactions is falling. The firm, which is in the midst of a historic transition from a pure investment bank serving major corporations to a more diversified financial services firm, reported revenues of $9.46bn for the second quarter, down 2 per cent year on year but far better than the $8.8bn expected by analysts. Earnings per share for the most recent quarter came in at $5.81 versus the $4.89 expected. “We’re encouraged by the results for the first half of the year as we continue to invest in new businesses and growth to serve a broader array of clients,” said David Solomon, who is now nine months into his term as Goldman boss. “Given the strength of our client

franchise, we are well positioned to benefit from a growing global economy. And, our financial strength positions us to return capital to shareholders, including a significant increase in our quarterly dividend in the third quarter.” Goldman had already announced plans to raise its quarterly dividend to $1.25 from $0.85 after this summer’s stress tests. Several of its peers also lifted their payouts. Equities was the standout performer in the second quarter, posting its best highest quarterly performance in four years, with revenues of $2.01bn. Fixed income, a division where Goldman has resolved to improved profitability after a punishing few years, suffered another 13 per cent fall in quarterly revenues, to $1.47bn, versus a year earlier. “During the quarter, FICC (fixed income, currencies and commodities) Client Execution continued to operate in an environment characterised by generally low levels of volatility and low client activity,” Goldman said, while also calling out “significantly lower net revenues” in interest rate products and currencies. www.businessday.ng

Chief executive Ginni Rometty says it is vindication of the value of recently acquired group Red Hat

RICHARD WATERS IN SAN FRANCISCO

BM has landed its first highprofile customer for the set of cloud computing technologies it assumed following the completion of its $34bn purchase of open source company Red Hat last week. The US tech company said on Tuesday that it had signed a multiyear contract with AT&T worth “billions of dollars” for a range of cloud and other technologies that included the Red Hat products, though it would not provide more precise details. Ginni Rometty, the IBM chief executive who has gambled on Red Hat reviving growth after years of contraction, claimed the contract was an early sign that the strategy was working. IBM bought the open source software company, best known for its support of the Linux operating system, to build out a software platform for customers to move their computing workloads between their own data centres and the cloud — known

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as hybrid cloud service — and to manage workloads spread between different cloud computing providers. “This is a vindication of the value of the hybrid cloud, and the value of Red Hat,” Ms Rometty said. IBM would handle much of AT&T’s computing workload in its own cloud data centres while also managing AT&T’s work with other cloud providers, she added. The telecommunications giant was already using Red Hat technology and has been one of IBM’s biggest customers for the past two decades. However, John Donovan, head of AT&T’s communications business, said that the IBM acquisition had given AT&T the confidence to move much faster in shifting to the cloud. IBM’s deep understanding of AT&T’s business should reduce the risk from a highly complex technology transition which would involve rewriting all the company’s internal applications, he said. Ms Rometty said the effects of the AT&T contract would be felt across IBM’s operations, reflecting the broad impact it hoped to get from @Businessdayng

the Red Hat deal. Besides higher sales for the Red Hat division than it could have achieved alone, she said the deal would bring extra revenue for IBM’s business services division, which handles app development, as well as its global technology services unit and public cloud business. The IBM chief has bet on Red Hat rekindling IBM’s growth by making its overall set of technologies more relevant after it lost out to public cloud services from Amazon and Microsoft. However, Red Hat’s revenue last year of $3.4bn was less than 5 per cent of IBM’s, raising a question about how much impact the deal will have on its overall business. The work of moving some of AT&T’s applications to the cloud was only part of the range of services covered by the contract announced on Tuesday, making it unclear how much of the value was tied to the Red Hat technology. The deal also includes developing “edge” computing to bring applications closer to AT&T’s customers, and IBM becoming a customer for some of AT&T’s networking services.

Wednesday 17 July 2019

BUSINESS DAY

NATIONAL NEWS

China looks to consumer to help economy weather trade war Economists fear falling exports will hit factory jobs and undermine domestic demand DON WEINLAND IN BEIJING

n the contest between China and the US over which country can better withstand the fallout from their trade war, Beijing is looking to its consumers to keep the nation’s economy afloat. Figures released this week showed China’s gross domestic product fell to 6.2 per cent in the second quarter of this year, the lowest rate since 1992 when the country adopted its current method for calculating GDP. The data would have been worse were it not for buoyant domestic consumption. But economists are increasingly worried about how long strong growth in domestic demand can last. “The direct impact of trade tensions is a slowdown in export orders but the indirect impact is probably more important, and that’s the impact on corporate confidence,” said Robin Xing, chief China economist at Morgan Stanley. “Firms might delay capital expenditure. The job market will face pressure and [that] will affect consumer spending.” The trade dispute, in which both sides have raised tariffs on billions of dollars of imports, has already hurt businesses in the world’s two largest economies. In the US, importers that rely on cheap Chinese materials and goods have faced price rises of up to 25 per cent on everything from aeroplane parts to frozen pollack. On the other side of the Pacific, Chinese manufacturers have suffered a fall in export orders, which declined 1.3 per cent in June compared with a year earlier, a clear sign that tariffs have started to bite. The question for the second half of the year is which country can hold out the longest as the dispute drags on. In the US, employment numbers have remained strong, with the economy adding more jobs in June than it has in any month this year. US president Donald Trump has bragged on Twitter that companies are fleeing China to avoid tariffs. He has even taunted his counterpart Chinese president Xi Jinping that the US is in “no hurry” to strike a deal. China, meanwhile, reported robust domestic consumption in June, with retail sales up 9.8 per cent, beating most analysts’ expectations and marking a sharp increase from the 8.6 per cent recorded in May. Service sector growth also remained stable in the first half of the year, growing 7 per cent on the same period last year, according to data released on Tuesday. But the strong headline figures disguised underlying areas of weakness in the numbers, economists said. Retail sales, for example, were led by auto sales, which received a major boost from rebates

during the month. Most other aspects of retail consumption in the country, including real estate, have been sluggish. ‘Whether [auto sales] is a oneoff or front-loading, we’ll have to wait until next month to see if it holds up,” said JPMorgan Asset Management’s global market strategist Marcella Chow. Service sector growth was also less promising than the headline figure suggested. Growth from financial services was a key driver in the second quarter of the year, Julian Evans-Pritchard, senior China economist at Capital Economics in Singapore, said. That meant activity in China’s securities houses, not areas such as demand for housing, were underpinning that growth. “That’s the support for the moment but not necessarily something I would count on if I was the Chinese government,” he said, noting that a disruption to China’s strong equity market performance so far this year could quickly stamp out the spoils from financial services activity. The CSI 300 index of major stocks listed in Shanghai and Shenzhen is up about 28 per cent this year. Consumer income was closely linked to industrial production in China due to the number of people employed in manufacturing, said Yue Yuan, an economist at China International Capital Corporation in Beijing. Until now, industrial output has proven resilient, growing 6.3 per cent in June from the same month a year earlier. “We’ve seen some impact from the trade dispute on industrial production but it has not had a huge impact on employment,” Mr Yue said. But Mr Evans-Pritchard warned that any impact from the trade war on export-oriented manufacturing would eventually hit factory jobs and the spending ability of average Chinese people. “There are lots of feedback loops” connecting trade with employment and domestic consumption in China, he said. To counter these effects, the government has directly intervened in the economy with stimulus measures, such as a record wave of infrastructure project spending at the start of this year. That has continued with an increase in special government bond issuance. Total social finance, a broad measure of credit growth in China, picked up in June — a sign that leaders in Beijing will resort to more debt-fuelled growth through to the end of 2019. Mr Yue noted that other domestic policies, such as a large value added tax cut, were set to play out in the second half of the year. The effectiveness of those policies is yet to be proven. “We have to wait and see.” www.businessday.ng

Donald Trump’s decision to block Broadcom’s $142bn hostile bid for Qualcomm made the Cfius process top of mind for dealmakers and corporate directors © AP

Demand grows for lawyers in secretive world of Cfius Firms target small number of attorneys who can navigate US national security reviews ERIC PLATT AND SAMI VUKELJ IN NEW YORK

eading global law firms are engaged in a bidding war for attorneys versed in the ways of US foreign investment reviews as Washington steps up its scrutiny of deals on national security grounds. Firms are facing pressure to poach specialists from each other and the US government because so few lawyers have deep firsthand experience dealing with the secretive inter-agency panel that can block deals on national security grounds — the Committee on Foreign Investment in the United States, or Cfius. “With Cfius it is not like you can pick up the book and know what you are doing,” said Mark Plotkin, a partner at Covington & Burling. “The law is not that complicated and it is reasonably straightforward, but there’s no body of cases.” Last week lawyers from Skadden Arps and Covington — the pre-eminent firms that advise on national security reviews

— were hired by rivals. Only months earlier Freshfields hired the former Treasury official who co-ordinated Cfius reviews, filling a vacancy created when Kirkland & Ellis poached a Freshfields attorney who had spent years at the Department of Homeland Security working on Cfius reviews. The battle for talent has been spurred by legislation last year, called the Foreign Investment Risk Review Modernisation Act, which required reviews of foreign investments in US businesses that supply critical technologies to more than two dozen industries. Before that, Cfius filings in such cases were technically voluntary. Another factor is President Donald Trump. His decision to block Broadcom’s $142bn hostile bid for the US chipmaker Qualcomm made the Cfius process top of mind for dealmakers and corporate directors across the country. “National security implications are so pervasive now in the business world,” said Ivan Schlager, a partner at Skadden.

“There are certain sectors that are inherently sensitive: semiconductors, composite materials, data and data analytics. The scope [for Cfius reviews] has expanded.” The threat that Cfius can derail a blockbuster deal has only intensified since Broadcom’s failed takeover of Qualcomm. Earlier this year the committee forced the Chinese owners of the popular gay dating app Grindr to sell the company over apparent risks to national security, roughly a year after the takeover had been completed. Alibaba co-founder Joseph Tsai has said the new Cfius regime has made it “very difficult” for the company to invest in the US, and iCarbonX, a company backed by Tencent founder Pony Ma, was forced to back out of two of its US investments. Reviews before Cfius climbed almost three-fold between 2009 and 2016, the most recent year for which data are available, with Chinese acquisitions ranking among the most scrutinised by the committee.

Pipelines dispute adds to Mexico investment fears López Obrador wants to renegotiate contracts with US, Canadian and Mexican companies JUDE WEBBER IN MEXICO CITY

dispute in Mexico over gas pipeline contracts is threatening to undermine fragile business confidence at a time when it is already shaken following the resignation of the country’s finance minister. The dispute is about whether CFE, the state-owned electricity company, will honour seven multibillion-dollar pipeline contracts with US, Canadian and Mexican companies agreed before Andrés Manuel López Obrador took of-

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fice as president and which the government says are exorbitant and unfair. This month, CFE began talks with the companies to seek to force them to renegotiate terms for the pipeline projects, including the subsea South Texas to Tuxpan pipeline beneath the Gulf of Mexico built by Canada’s TC Energy and IEnova, a unit of US group Sempra Energy. The dispute could overshadow ratification of Nafta’s successor, the USMCA free-trade treaty, which already faces hurdles in the US. @Businessdayng

The government has been at pains not to scare away foreign investors since it took office in December, but unsettled many when it scrapped a partially built $13bn airport project even before taking office. Confidence took another hit when Carlos Urzúa quit as finance minister this month, citing his “many” disputes with the president and the “imposition of officials who don’t know about public finances”. In an interview with Proceso, a news magazine, Mr Urzúa said the pipeline dispute had been one area of dispute.

Wednesday 17 July 2019

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

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Pete Buttigieg scoops largest fundraising in US Democratic race Mayor’s $24.9m second-quarter haul outpaces rivals, but polls suggest he is still less DEMETRI SEVASTOPULO IN WASHINGTON AND FAN FEI IN NEW YORK

ete Buttigieg, the South Bend mayor running for the Democratic presidential nomination, raised $24.9m in the second quarter, beating Joe Biden and 23 other rivals, and also generating more than any candidate in the previous quarter. The 37-year-old mayor of the small Indiana city leaped to the top of the fundraising rankings after outpacing Mr Biden, the former vice-president and leader in the Democratic primary race polls, who came second with $22m, according to data from the Federal Election Commission. Elizabeth Warren, the Massachusetts senator who has risen in the polls by outlining a range of policy proposals, came third with $19.2m, pushing Bernie Sanders, the Vermont senator and top first quarter fundraiser, into fourth place with 18m. Kamala Harris, the California senator who propelled her campaign with a pointed attack on Mr Biden in the first Democratic debate last month, rounded off the top five fundraisers with $11.8m. Coming 16 months before

the presidential election, the numbers clearly divided the field into the top five candidates and 20 other contenders. The top fundraisers put a huge distance between themselves and the next tier, which was led by Cory Booker, the African-American senator, who raised $4.5m. Beto O’Rourke, the former El Paso congressman who raised a stunning $6.1m on the first day of his campaign, saw a big decline. The Texan raised just $3.6m over the past three months, compared with $9.4m in the first quarter. The fundraising totals marked a tremendous result for Mr Buttigieg, the first openly gay presidential contender who rose to prominence in April when he provided clear answers to a range of questions during a televised town hall. The former McKinsey consultant and Afghanistan veteran has also benefited from fundraisers hosted by wealthy Democratic donors, unlike Ms Warren and Mr Sanders who have focused exclusively on small donors. While Mr Buttigieg has emerged as the frontrunner in the money race, his financial advantage has not been mirrored to the same extent in the polls.

JPMorgan disappoints investors with drop in lending margins Bank’s Wall Street business also under pressure ROBERT ARMSTRONG

lower loan growth, tighter lending margins and soft capital markets results from JPMorgan Chase unsettled bank investors on Tuesday morning, despite a strong performance in by the retail division and better than expected profits. The bank cut its 2019 outlook for net interest income, the difference in revenue it generates from loans and the cost of servicing them, from $58bn to $57.5bn. The bank, the largest in the US by assets, said revenue growth in its retail bank grew by 11 per cent, faster than the 9 per cent seen in the first quarter. But loan margins were squeezed by the tight gap between long and short term yields in the US. The shares fell 1.5 per cent in early trading. “We continue to see positive momentum with the US consumer — healthy confidence levels, solid job creation and rising wages” said chief executive Jamie Dimon. But in markets-driven businesses, the

bank saw “slightly lower client volume, probably due to slightly higher global macroeconomic and geopolitical uncertainties.” Total revenue for the bank, at $28.8bn, was just shy of Wall Street expectations, but net income of $9.2bn was well ahead of what analysts had pencilled in. The interest rate environment led the list of bank investors’ concerns coming into the quarter, as falling short-term rates and a flat yield curve threatens to compress lending margins. JPMorgan net interest margins tightened by seven basis points from the first quarter, as the yield on the bank’s loan book fell slightly and deposit costs drifted up. Solid loan growth in the credit card portfolio allowed non interest income to grow by 7 per cent, but that was a slowdown from the first quarter. Revenue in JPMorgan’s investment banking business fell by 14 per cent, with a bad quarter in equity underwriting leading the decline. The bank’s overall markets revenue was down 6 per cent, with bond trading revenue off 3 per cent. www.businessday.ng

Number of mega-funding venture capital rounds hits record Lift in raisings of $100m-plus in 2nd quarter accounts for half of $28.7bn raised MILES KRUPPA IN NEW YORK

handful of mega-rounds by fintech companies dominated fundraising in the second quarter of this year, highlighting how venture capital firms with significant amounts to spend and the Japanese investment goliath SoftBank continue to feed private companies and delay their arrival on public markets. The number of funding rounds totalling $100m or more hit a record last quarter, according to a report from CB Insights and PwC. Some 64 US companies ranging from the online lender SoFi to the food delivery company DoorDash completed these so-called megarounds, contributing to a 10 per cent increase in funding from the first three months of this year. Mega-rounds accounted for more than half of the $28.7bn total raised during the second quarter,

according to the report. Start-ups have been staying private for longer, fuelled in part by the SoftBank Vision Fund and billion-dollar pools raised by firms such as Sequoia Capital and Tiger Global Management. European and US venture capitalists held a record $128.5bn waiting to be invested at the end of June last year, an increase of almost 20 per cent from the previous 12 months, according to Pitchbook research. As a result, companies have increasingly looked to bankroll operations with infusions of private capital while avoiding the gaze of public investors. “The funding landscape for mid and later-stage companies remains healthy as mega-rounds . . . have become commonplace and show no signs of slowing,” said Anand Sanwal, chief executive of CB Insights. Fintech start-ups commanded

the most funding of any sector last quarter, taking in $5.1bn even as they executed 38 fewer deals than in the first three months of this year. The companies have largely avoided initial public offerings, with just three going on the stock market in 2018, according to CB Insights data. The five largest fintech fundraising rounds last quarter each totalled at least $300m, including deals raised by two US companies, digital payments processor Affirm and valuation software provider Carta. SoFi, best known for refinancing student loans, raised $500m in May from a group of investors led by Qatar Investment Authority, valuing the company at $4.8bn following the cash infusion. The new money added to the $1.9bn it had already taken in from investors such as SoftBank and Silver Lake Partners, most recently at a valuation of $4.3bn two years ago.

Banks lure customers with air miles and perks With interest rates low, lenders look to attract depositors with different rewards DAVID CROW IN LONDON AND ROBERT ARMSTRONG IN NEW YORK

n ancient Babylon, banks began paying interest on deposits. Two thousand years later, Standard Chartered has come up with an alternative. Any of the bank’s Hong Kong depositors with enough cash in their accounts can forgo interest payments and accept instead rewards from Asia Miles, the loyalty programme owned by Cathay Pacific. “The interest rate has been so low in Hong Kong that some customers are happy to trade interest for miles,” said Samir Subberwal, StanChart’s head of retail banking in Greater China and north Asia. Since it was launched in 2016, the Asia Miles account has at-

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tracted HK$5bn (US$640m) of deposits from 33,000 customers, two-thirds of whom had not banked with the group previously. While it is common for banks to hand out perks to credit card customers, there is a growing trend for rewards and points programmes in other parts of retail banking. This spring, US customers of Citibank who opened and used a new current account received 30,000 reward miles on American Airlines, enough to buy a one-way economy ticket within the US. Members of the bank’s Citigold programme, which requires that members hold $200,000 in balances, receive $200 a year towards subscriptions to Amazon Prime, Spotify and TSA Precheck, the expedited airport security scheme. @Businessdayng

Citi and other big US banks are also adding another wrinkle to the reward programmes: using them not only to entice new depositors but to encourage existing customers to take up multiple products. Customers with more than $50,000 in a Citi current or investment account can receive a lower rate — by an eighth of a percentage point — on a mortgage. At Bank of America, customers who sign up for its “preferred rewards” programme receive higher interest rates on savings accounts, faster credit card point accumulation, free stock trades in their brokerage account, lower fees for investment advice, cheaper car loans, lower mortgage fees, and so on. The rewards vary with the amount on deposit.

Wednesday 17 July 2019

BUSINESS DAY

ANALYSIS

Harder Brexit stance by Tory contenders hits sterling

Pound sinks below ‘flash crash’ trough as concerns over prospect of no-deal mount PHILIP GEORGIADIS AND MICHAEL HUNTER IN LONDON

terling has fallen below levels hit in a “flash crash” earlier this year to lows last traded more than two years ago as worries over a disorderly Brexit intensified. The pound fell 0.7 per cent on Tuesday to $1.2433, leaving it on course for its biggest single-session fall since March and taking it below the level breached in a temporary fall in January this year and to its lowest since April 2017. It was down 0.3 per cent on the euro at €1.108. The two contenders to replace Theresa May as Conservative leader and British prime minister, Boris Johnson and Jeremy Hunt, both hardened their stances on renegotiating the withdrawal agreement with Brussels in their final leadership debate on Monday, ruling out any changes to the Irish backstop and instead insisting it must be ditched altogether. The EU has previously ruled this out. “It will take a big charm offensive by Boris Johnson to move them. Hence why folks are saying this increases the risks of a no-deal Brexit,” said Jordan Rochester, FX strategist at Nomura. Sterling is the worst perform-

ing major currency against the US dollar over the past 12 months, and has fallen more than 2 per cent so far in July alone as investors have repriced the likelihood of a hard or no-deal Brexit amid tough rhetoric from Mr Johnson in particular, the overwhelming favourite. He has promised to leave the EU at the end of October deadline “come what may”. “In terms of the broader direction in UK politics, it certainly seems to us that foreign exchange investors have been gradually assimilating the notion that there is no easy way out of Brexit and that something eventually has to give,” said Stephen Gallo, head of FX strategy at Bank of Montreal. Traders are braced for a rough ride for the currency in the lead up to the October 31 deadline when Britain leaves the EU. “Over the next few weeks and months, the UK will have a new prime minister, chancellor, cabinet, Bank of England governor, budget and Brexit plan. Despite all the above, FX vols are near historical lows once again. This is unlikely to last,” Mr Rochester said. Investors in UK assets moved into the relative safety of UK government debt on Tuesday, sending yields lower, albeit at a measured pace.

Uber ties executive bonuses to diversity targets Ride-hailing company seeks to increase number of women and under-represented people in top roles SHANNON BOND IN SAN FRANCISCO

ber will factor in whether it meets specific diversity targets when it calculates bonuses for its chief executive and other top officials as the US ride-hailing company tries to increase the number of women and under-represented people in managerial roles. The company declined to say how much of bonuses are contingent on reaching the diversity goals, but a spokesman said it was a “significant” portion. He said diversity was one of a “limited number” of metrics used to determine bonuses for chief executive Dara Khosrowshahi, chief financial officer Nelson Chai, general counsel Tony West and head of human resources Nikki Krishnamurthy. Mr Khosrowshahi, Mr Chai and Ms Krishamurthy also have stock option grants that are contingent on the company’s equity valuation reaching $120bn, according to regulatory disclosures. The diversity-related bonus policy was put into place this year. It calls for Uber to increase the number of women in managerial roles and above to 35 per cent by 2022 and to raise the percentage of underrepresented employees at mid-level and above to 14 per cent in the same timeframe. The company did not

disclose the current levels. Uber has been struggling to overcome a reputation as a toxic workplace under co-founder Travis Kalanick and other executives who were pushed out in 2017 after a run of scandals. Among the issues precipitating Mr Kalanick’s departure was a blog post by a former employee alleging sexism, harassment and tolerance of bad behaviour. Uber has also come under investigation by the US Equal Employment Opportunity Commission over accusations of gender discrimination. Since becoming chief executive in 2017, Mr Khosrowshahi has brought in a new executive team, hired a head of diversity and inclusion and announced a new set of corporate values in an attempt to overhaul the company’s culture. However, progress has been mixed. Tying executive pay to diversity and inclusion metrics was one of the recommendations of a report Uber commissioned from Eric Holder, a former US attorney-general, following the events of 2017. Advocates have lobbied other tech companiestoadoptsuchpolicies.Microsoftsaidin2016itwouldtiediversity goals to executive bonuses after the companysawadeclineinthepercentage of female employees. Chipmaker Intel also includes diversity goals in its bonus calculation for top leaders. www.businessday.ng

Carlos Urzúa, Mexico’s finance minister, right, with President Andrés Manuel López Obrador. Mr Urzúa complained of cack-handed meddling by unqualified apparatchiks after his resignation © AFP

Does investing in emerging markets still make sense? Apart from China and India, there is little sign that developing economies are converging with the developed world JONATHAN WHEATLEY IN LONDON

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growth as the emerging world caught up. Hundreds of millions of people were being lifted out of poverty and into the consuming classes, offering new opportunities to local and foreign companies. Investment in factories, roads, ports and other infrastructure promised to keep the momentum going. But convergence is no longer assured. Today, high commodity prices are a fading memory. Trade is stuttering and global supply chains are being disrupted. Far from catching up with the developed world, many supposedly emerging markets are growing more slowly. As globalisation risks going into reverse, many investors are asking what, if anything, will drive the asset class in future, raising questions over the role of emerging markets in a diversified portfolio. “The entire rationale [for investing in emerging markets] has been exports and consumption,” says Bhanu Baweja, chief strategistat UBS and an emerging markets specialist. “People came into our industry at a time of hyperglobalisation. But now globalisation is flattening, not just because of [Donald] Trump, but for deeper, organic reasons.” For two decades after the creation of the benchmark MSCI Emerging Markets equities index, EM stocks tended to outperform the S&P 500 index of leading US stocks by a wide margin. For most of the past decade, however, EM stocks have stagnated, while US stocks have more than doubled in value. The threat to globalisation is one of three big changes simultaneously hitting emerging markets. The second is a slowdown in the rate of growth in China. The third is a change in global financial conditions after a decade of @Businessdayng

easy money. The talk of deglobalisation has come to a head in the trade war between the US and China, the latest manifestation of what the Bank for International Settlements last month called a “political and social backlash against the open international economic order”. While many emerging economies may be able to draw on longer-term advantages such as demographics, in the short to medium term the challenges for some threaten to be overwhelming. Argentina is one example. As its government struggles to recover from a crushing recession, “the great question is whether [the country] is ever going to grow again”, says Ignacio Labaqui of Medley Global Advisors. Brazil’s economy, once the darling of emerging market investors, has suffered recession or mediocre growth for nearly a decade. The risks are not shared evenly. Indeed, the fortunes of emerging economies have become so varied that many investors question the logic of talking about “emerging markets” at all. It is a disparate group, barely recognisable as the asset class of the 1990s and early 2000s, when a crisis sparked in one corner of the emerging world would spread like wildfire to the rest. In the past three decades, many countries have embarked on monetary and fiscal reforms, building firebreaks against flare-ups elsewhere. The result was clear during the sell-off that emerging markets witnessed last year. As the US dollar unexpectedly strengthened, prompting many investors to pull money out of emerging market assets, those countries with weak defences, especially Argentina and Turkey, were badly burnt, while others escaped relatively unscathed.

Monday 15 July 2019

BUSINESS DAY

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Wednesday 17 July 2019

BUSINESS DAY

cityfile Militants agree to end violence in Imo SABY ELEMBA, Owerri

Anambra State Lawyers Forum protesting over the killing of Nigerians in South African on Monday in Lagos. NAN

Patient stabs self at UBTH IDRIS UMAR MOMOH & CHURCHILL OKORO, Benin

yet-to-beidentified patient on Saturday reportedly stabbed himself to death at the University of Benin Teaching Hospital (UBTH). The ugly incident was said to have occurred at the Accident and Emergency (A & E) ward of the hospital on Saturday night. The incident occurred hours before a final-year student of the University of Benin (UNIBEN), report-

edly committed suicide by jumping down from the 2nd floor of a hostel building on Sunday evening at the faculty of arts. The deceased was said to be a student of the department of actuarial science, faculty of management sciences. The patient whose source of ailment was unknown at press time was alleged to have taken his own life while awaiting a doctor. The hospital’s image maker, Joshua Uwaila, who confirmed the incident, described it as unfortunate.

“An unfortunate incident happened on Saturday night, July 13, 2019 at about 10:30 pm when a young man who was a patient at the male medical ward of our hospital suddenly broke a louvre and stabbed himself. “All efforts to resuscitate him proved abortive as he was certified dead at 11:00 pm. The result of autopsy is being awaited at the moment” he said. It was also gathered that no sooner had the wife of the deceased stepped out of the ward to buy something at a nearby

shop within the hospital premises than the tragedy happened. The incident, however, resulted to a spontaneous protest by helpless patients at the ward. A witness who was also admitted in the ward on Saturday night, said: “the deceased came in to the hospital with his wife. The witness, who pleaded anonymity, said the deceased had a talk with his doctor before the incident. The remains of the deceased have since been deposited in the hospital morgue.

Residents applaud extension of tricycle operation in Aba GODFREY OFURUM, Aba

esidents of Aba, the commercial hub of Abia State, have applauded the government over its decision to extend the operational hour of tricycle operators in Aba, saying that the development would reduce the suffering of residents. They also obser ved that it would increase business hours and boost commerce in the

commercial city. Kalu Ogbu, a trader and one of the respondents, told CityFile that food vendors, especially fast fo o d facilities in the area, would benefit from the decision and urged security agencies in the area to increase patrols within Aba and its environs to ensure security. He also explained that this decision of government would boost confidence of patrons to Aba, who www.businessday.ng

come from neighbouring states, stressing that these set of patrons stayed out of the city during the ban. Governor Okezie Victor Ikpeazu, Monday, approved the extension of the hours of operation of tricycle operators, popularly known as Keke from 6.00am to 9.00pm in Aba and Umuahia. The governor in a statement signed by Onyebuchi Ememanka, his chief press secre-

t a r y , h o w e v e r, u r g e d the tric ycle operators to reciprocate the action by checking the use of their tricycles for criminal activities. The governor also directed the Commissioner of Police, Abia State and Hhads of other security agencies to remain vigilant and intensify their patrols with a view to nipping in the bud, any crimina l a c t i v i t y t hat may emanate from this extension.

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eace is imminent in the volatile local governments of Ohaji/ Egbema and Oguta, Imo State as militants operating in the areas have agreed to give peace a chance. This is as a result of the peace meeting initiated by Gerald Irona, the deputy governor of I m o St a t e, w h o h a i l s from Oguta. The meeting involved all the parties in the renewed violence in the affected areas. At a meeting in the deputy governor’s ancestral home, Oguta, the militants agreed to forgo all their grievances and immediately end every form of hostility in the area. Speaking during the meeting, Irona frowned at the renewed violence in the area, in spite of

subsisting amnesty from the state government, saying that the g ov e r n m e n t m ay n o t hesitate to cancel the amnesty programme, if hostilities and cult-related violence continue. “No government will fold its arms and allow her citizens terrorised, harassed and killed under whatever guise. Whatever the issue is, we shall not patronise criminals. The hostility must end immediately and unconditionally,” Irona warned. After the discussions that lasted for two days, all the warring parties accepted the deputy governor’s proposal of an unconditional end to every form of hostility in the area. They thanked the s t at e g ove r n m e nt f o r the decision to dialogue with them, instead of outright hostility, promising to turn a new leaf.

NAPTIP arrests 6 suspected human traffickers

enin zonal command of the National Agency for the Prohibition of Trafficking in Persons (NAPTIP) said it arrested six persons in connection with human trafficking. Nduka Nwanwenne, zonal commander of the zone, comprising Edo and Delta, said that the suspects, four males and two females, were arrested for organising foreign travel, involving an 18-year primary school drop-out, to Mali. He said that the victim who was an orphan was staying with her grandmother at Agbor in Delta, when she fell into the hands of the traffickers in May, 2018. He also said that the suspects were apprehended by operatives of the command, with the support of the police, at the weekend. The commander added that the suspects were picked up in Agbor and Asaba in Delta, and in @Businessdayng

Benin in Edo “in a wellcoordinated raid after surveillance activities’’. He explained that the victim had revealed that between the point of recruitment at Agbor and Mali where she was introduced into prostitution, she was passed on to various persons not less than eight times. He said that the victim also revealed that at every point of exchange, she was sold to the next trafficker, adding that she faced exploitation throughout the journey, until she got to a house in Farasabapie in Mali. Nwanwenne further said that the victim told the command that it was while she was being exploited that one of her customers assisted her to escape to Bamako, from where she was taken to the Nigerian embassy. He said that the victim was at the embassy for five months before she was brought to Nigeria.

WEST AFRICA

ENERGY intelligence oil

gas

power

Wednesday 17 July 2019

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BUSINESS DAY

OIL

Ghana: Petroleum downstream sector records 15 percent growth Page 58 GAS

L-R: Obi Uzu, managing director, Global Process & Pipeline Services Limited (GPPSL) & Paul McGrath, chairman/managing director, ExxonMobil Nigeria at the 2019 Nigeria Oil & Gas (NOG) Conference in Abuja recently

Report: Various sectors continue to boost the growth of global LNG market Page 59 Market Insight

Debrief

Lessons from Morocco’s decisive approach to unlock its power sector FRANK UZUEGBUNAM

Oil rises on tropical storm disruptions, glut forecasts weigh Page 63 OPEC weekly basket price DAY

PRICE

12/7/19

67.36

11/7/19

67.57

10/7/19

66.1

9/7/19

64.35

8/7/19

64.72 Source: OPEC

arly this year, Morocco unveiled an ambitious agenda for its power sector. The country has been walking the talk since then. The Moroccan agency for Sustainable Energy (MASEN) recently opened the first stage in a tender process to build, operate and maintain a 230MW solar plant near the town of Midelt in the Atlas mountains. Before now in May 2018, MASEN awarded Noor MideltI, a-800 MW plant worth about $781.5 million, to a consortium of France’s EDF Renewables, UAE’s Masdar and Morocco’s Green Energy of Africa. Both plants will use concentrated solar plant (CSP) and photovoltaic (PV) technologies, MASEN said. The two plants will have a combined capacity exceeding that of the already operational 580 MW Noor Ouarzazate CSP plant in southeastern Morocco, one of

the largest in the world. Morocco plans to exceed 52 percent of renewable energy in the national energy mix by 2030. Already by the end of 2018, Morocco had installed 1,215 MW of wind energy, 1,770 MW in hydropower and 700 MW in solar, according to official figures. Aziz Rabbah Morocco’s Minister of Energy, Mines and Sustainable Development Aziz Rabbah had outlined the country’s key projects for the year in January. He said power networks and sustainable development would be key focus areas in 2019 and would include several network interconnection projects, studies to connect the grid to Europe and a third interconnection to Portugal. Morocco’s goal, Rabbah said, is to create a regional electricity market and connect its grid to sub-Saharan Africa through Mauritania and also move forward with partial electricity auto production and studies to see if it is feasible to auto produce 20 to 30 percent of total national out-

put by 2030. In moving towards green and efficient energy, the ministry will design roadmaps to improve the sustainability of transport and buildings, including ministerial buildings. Strategic committees will be put in place to overlook energy efficiency in transport, industry, agriculture and public lighting. To support these challenges, a $92 million agreement was signed between Morocco and Germany in October 2018. Also, the long-awaited national authority of electricity regulation will became operational in the first quarter of 2019, in a bid to reassure private investors that the country’s electricity market is stable. Can Nigeria get it right? No country in Africa should be more decisive and pragmatic in solving its power sector conundrum than Nigeria. “Nigeria is projected to grow to a population of 450 million people by 2050 (highest population growth in Africa) and become the third

most populated country globally (behind only China and India). This will spur a high demand from power industries and other commercial enterprises,” Austin Avuru, Seplat Chief Executive Officer, said at a recent presentation at the Nigerian Stock Exchange’ Facts Behind the Figures. It is therefore imperative that Nigeria should pursue energy independence as an enabler for industrial development, commerce, environmental and social sustainability. This will be a real GDP growth driver for Nigeria, and would reduce production cost with reduced power costs to businesses, raise standard of living, develop human capital, and reduce environmental degradation and health risks. While still relying on gasfired power generation as base load, Nigeria should bring ambitious renewable projects into its energy mix especially with the vast potential that can spur wind and solar power projects in different parts of the country.

Wednesday 17 July 2019

BUSINESS DAY

oil

WEST AFRICA

Outlook

Ghana: Petroleum downstream sector records 15 percent growth

technology based schemes and policy initiatives aimed at propelling private sector growth. Consumption grew by “15 percent from 3.4 million Mt in 2017 to 3.9 million Mt in 2018. The petroleum sector contributed over GH¢86 billion to Ghana’s

hana’s petroleum downstream sector has experienced 15 percent surge in consumption during 2018 under review. That was attributed to efforts towards curbing illicit fuel activities coupled with deliberate

Brief

GDP representing an average of about 8 percent per annum in the period 2013 to 2018,” said Hassan Tampuli, Chief Executive Officer of the National Petroleum Authority (NPA), adding that despite the successes, there are still challenges plaguing the sector. Some of the challenges include smuggling via unapproved offshore routes, dumping of Gasoil declared for sale to foreign vessels at local filling stations, under-declaration and non-declaration of products lifted at depots; diversion of subsidized social products such as premix fuel, as well as fraudulent freight claims from transporters and siphoning LPG from BRVS into surface tanks at illegal LPG tank. He stated that these nefarious activities cost Ghana about $200million per annum of tax revenue; compromising product quality at filling stations due to laundering, which leads to damage to vehicle engines; and distortion of the national consumption statistics with over 300,000Mt of actual annual consumption was unreported. He indicated that the “Unified Petroleum Price Fund (UPPF) also recorded about $12million losses per annum.” The NPA has since rolled out series of measures to tackle the problem head on, in collaboration with the Ghana Revenue Authority, Ghana Navy and other relevant security agencies in the country. “We have also intensified digital solutions such as Enterprise Relational Database Management Software, Petroleum Products Marking Scheme and Bulk Road Vehicle Tracking project.”

Zimbabwe: Zimbabwe hikes fuel price again

imbabwe’s energy regulator has raised petrol and diesel prices by up to 16 percent, the fourth increase this year, after the finance minister said fuel was considerably cheaper than in neighbouring countries. President Emmerson Mnangagwa announced the biggest fuel price hike in January, a 150 percent increase, which sparked deadly protests by financially struggling Zimbaweans that left more than a dozen people dead after an army clampdown. The latest hike by Zimbabwe Energy Regulatory Authority will see petrol cost 6.10 Zimbabwe dollars ($0.70) a litre, up from 5.26, while the price of diesel had been increased 13 percent to 5.84 Zimbabwe dollars. Mthuli Ncube, Zimbabwean finance minister, was quoted as saying he would be happy if the price of fuel was equivalent to $1 per litre. While Ncube wants fuel prices to rewww.businessday.ng

flect import costs, many Zimbabweans can barely afford to pay them when the unemployment exceeds 80 percent and the entry-level wage for a government employee is about $49 a month - enough to buy a car tyre. But with no sign of an end to rolling power cuts in the southern African country, demand for fuel has risen as businesses resort to more expensive diesel-powered generators. Analysts say this is increasing the price of doing business, with companies likely to pass the cost to consumers, who are already grappling with inflation of nearly 100 percent. Hopes that living standards would soon improve under Mnangagwa, who came to power after Robert Mugabe was removed in a coup in 2017, have not been realised. Instead, Zimbabweans are frustrated by daily power outages lasting up to 17 hours and severe shortages of US dollars, fuel, bread, and medicines. https://www.facebook.com/businessdayng

WAF crude: Nigerian July spot cargoes remain, traders report Saturno outage

sizeable Nigerian crude oil overhang looms as a handful of spot cargoes remained for July loading. Around 6-8 cargoes of Nigerian crude were heard to remain for July loading. Higher production on the Forcados and Bonny light streams for August loading suggests Nigeria may have a sizeable overhang when new programmes emerge next week even amid higher demand. Data from the US Energy Information Administration showed the US had imported no Nigerian oil in its latest survey period, also importing none from Kuwait and Venezuela. However, high European gasoline cracks provided an incentive for imports of Nigerian oil, as the Philadelphia refinery outage has boosted margins and gasoline exports from Europe. BP sold two cargoes, an Escravos and Okono, to CEPSA as southern European gasoline margins were also robust. Meanwhile, traders reported an outage to the Saturno crude stream offshore Angola. The traders said a days-long outage at the Saturno offshore field was behind the deferral of a cargo of the grade by state oil company Sonangol to next month. It was not possible to immediately confirm the outage nor whether it was planned or due to maintenance with Sonangol or BP, which operates the block. Sonangol had first offered a cargo of the grade for a-August 29-30 loading after already delaying it once and will now offer it for September 2-3. Chad’s August-loading programme of heavy sweet Doba crude was heard to have sold out, amid strong demand for such grades due to looming marine fuel regulations and the absence of comparable Iranian and Venezuelan grades.

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Wednesday 17 July 2019

BUSINESS DAY

gas Brief

WEST AFRICA

ENERGY intelligence

Report: Various sectors continue to boost the growth of global LNG market

T Turkey vows to ‘protect’ rights to drill for gas offshore Cyprus

urkey has vowed to protect its right to drill for gas offshore Cyprus, following renewed calls from the EU and US for Ankara to halt exploration work as the dispute over maritime rights to the gas-rich waters of the East Mediterranean continues to intensify. The US urged Turkey to end its drilling operations off Cyprus, warning that such operations were increasing tensions in the region. That followed an earlier EU statement that the Turkish drilling operation off Cyprus’ coast was illegal and a “further unacceptable escalation which violates the sovereignty of Cyprus.” Cyprus is already home to as much as 550 Bcm of gas resources following the Aphrodite, Calypso and Glaucus discoveries of recent years, so the stakes are high. Turkey says it has the right to drill in the waters offshore Cyprus, saying the areas in question are part of the Turkish and Turkish Cypriot exclusive economic zones (EEZs), respectively. “As it protects its own continental shelf rights in the Eastern Mediterranean, Turkey will continue to defend Turkish Cypriots’ rights and interests around the island,” the Turkish foreign ministry said in a statement. The ministry said its second drillship, the Yavuz, has been deployed in northeastern Cyprus and would operate on behalf of the Turkish Cypriots within the license areas granted by Turkish Republic of Northern Cyprus (TRNC) to Turkey’s state-owned TPAO in 2011. It said the first drillship, the Fatih, continues its work that was started in May in an area west of Cyprus where Turkey granted licenses to TPAO in 2009 and 2012 “within our continental shelf in the Eastern Mediterranean notified to United Nations.”

he global Liquefied Natural Gas (LNG) market is anticipated to reach $19.73 billion by 2026 according to a new study published by Kenneth Research. Global demand for natural gas has risen significantly and has experienced a premium annual growth of 1.6 percent between 2015 and 2040. Consumption of natural gas growth will increased from over 3.5 tscm in 2014 to almost 5.2 tscm in 2040. The World Gas Model has scheduled production dependent on the lowest cost, accounting for the transportation to market through LNG or pipeline as well as the cost of production that are subject to contractual obligations. Worldwide LNG capacity has increased by 50 percent from 2015 to 2020, with several new projects currently under construction and ready to enter service influencing the LNG market. Moreover, another wave of upcoming LNG projects is planned between 2024 and 2030 and the third part from 2035 onwards. According to the study, the US has been a significant player in increasing demand for this product, with anticipation of hosting six projects up to 2020. Canada is also expected to launch three installation projects for liquefaction all of them in the Pacific coast, two after 2020 and one in 2035. Africa is also expected to play an important role in increasing demand for LNG directly increasing the LNG market. New liquefaction capacities are planned for set up in Cameroon, Ango-

la, Mozambique, Equatorial Guinea and Tanzania by 2025. An offline capacity is projected to reenter into services by 2023. Power generation industry has been one of the major demands creating sectors in the recent past with several technology developments for using LNG as fuel. Industrial and mining markets have

been yet another potential application sectors in this market. The transportation sector including heavy-duty vehicles, ships and rail, are all great sources of LNG applications. The study noted that LNG offers the perfect opportunity for the maximum economic transportation and storage of natural gas.

Saipem says Saudi contracts part of gas shift

taly’s oil contractor Saipem says two contracts signed in Saudi Arabia for $3.5 billion are part of a shift in the company’s strategy to focus more

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on natural gas, Stefano Cao, the company’s Chief Executive said. Saipem said it won two new contracts from Saudi Aramco for the development

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of land facilities of the Berri and Marjan gas fields, which are both located in the Arabian Gulf. The gas contracts “confirm that this is the fundamental strategy for our company,” Cao said. Saipem shares rose 2.9 percent in Milan, outperforming a 0.8 percent rise in Italy’s blue-chip index. “The news is very positive and improves the visibility of our estimates on 2020-2022, in particular for the Exploration and Construction onshore division”, broker Equita said. Cao met in Milan with Filipe Nyusi, the president of the Republic of Mozambique, where Saipem last month won a $6 billion exploration, procurement and construction contract for the Anadarko Mozambique liquefied natural gas project. The Saipem CEO said Mozambique, a gas producer, would become one of the most important countries in the company’s portfolio. “In the energy transition toward renewables, the gas chain will play a fundamental role,” Cao said.

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Wednesday 17 July 2019

BUSINESS DAY

power

WEST AFRICA

ENERGY intelligence

Africa: Innovative financing programme to bring power to 4.5m people

South Africa: No power for repeat offenders, states Eskom

he African Development Bank Group (AfDB) has approved an innovative financing programme for Distributed Energy Service Companies (DESCOs), which would see 4.5 million people in sub-Saharan Africa gain access to solar power by 2025. The DESCOs Financing Programme promotes securitisation financing techniques to address barriers to accessing finance for DESCOs, while supporting their growth and expansion into existing and new markets. The programme will also facilitate local currency financing for DESCOs and provide local lenders with risk mitigation instruments to support them. Elaborating on the programme, Wale Shonibare, the bank’s acting vice-president for power, energy, climate change, and green growth said the institution will provide critical technical guidance and credit enhancement to DESCOs and local financial intermediaries. “Accelerating access to universal, affordable, reliable, sustainable and modern energy for underserved populations requires innovative financing solutions. Innovations such as receivables-backed financing structures provided by the programme are vital in the Bank’s efforts to unlock private sector participation and local currency financing for the energy sector,” said Shonibare. The programme will contribute to the installation of an estimated 45MW of distributed solar PV, which will provide clean energy access for 900,000 households by 2025 (4.5 million people). It will also create approximately 6,000

new direct jobs, mainly for the youth, and contribute to avoidance of nearly 37.08 kilotons of CO2eq emissions per year. The design of the programme supports the Bank’s Financial Sector Development Policy and Strategy and Industrialisation Strategy Flagship programme to grow liquid and effective capital markets, and support innovative financing mechanisms. Stefan Nalletamby, the AfDB’s director for financial sector development, said the programme would help build capacity within DESCOs and local fi-

nancial intermediaries in executing securitisation structures and other innovative frameworks for accessing finance. “It will also promote financial inclusion by availing consumer financing to customers in rural areas, building credit history, and encouraging the uptake of mobile payment solutions,” Nalletamby added. The board approval follows the approval of a €50 million guarantee facility and €6 million technical assistance grant by the European Fund for Sustainable Development (part of the European External Investment Plan).

outh African parastatal Eskom has announced an increasing number of repeated equipment failures in some areas, especially within Gauteng. The utility has attributed this to illegal connections leading to overloading, which results in failure of transformers and mini-substations. This is exacerbated by meter tampering, electricity theft and vandalism of infrastructure. In a company statement, the utility explained: “Increased equipment failure has a significant negative impact on our operations, finances and safety of our employees and the public. “Eskom has taken a decision that it will not be restoring power to areas that have repeated failures due to illegal connections, meter tampering and bypassing. Eskom will only restore supply to legal and paying customers in the areas, on condition that the community allows safe access to Eskom staff to conduct audits and remove illegal connections.” The utility added: “If we do not conduct the audits, we run the risk of continued failures without dealing with the root cause. In some areas, Eskom technicians have not been allowed to conduct these audits, which result in repeated

Morocco: Morocco prepares to launch tender for 230 MW plant in Atlas mountains

he Moroccan agency for sustainable energy (Masen) said it has opened the first stage in a tender process to build, operate and maintain a 230 megawatt solar plant near the town of Midelt in the Atlas mountains. Applications for the pre-qualification round of the Noor Midelt II project are open until September 16, 2019 the agency said in a statement on its website. Last May, MASEN awarded Noor Midelt I, a-800 MW plant worth 7.57 billion dirham ($781.5 million), to a consortium of France’s EDF Renewables, UAE’s Masdar and Morocco’s Green Energy of Africa. Morocco plans to exceed 52 percent of renewable energy in the national energy mix by 2030. Both plants will use concentrated solar plant (CSP) and photovoltaic (PV) technologies, MASEN said. The two plants will have a combined capacity exceeding that of the already op-

erational 580 MW Noor Ouarzazate CSP plant in southeastern Morocco, one of the largest in the world. By the end of 2018, Morocco had installed 1,215 MW of wind energy, 1,770

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MW in hydropower and 700 MW in solar, according to official figures. Aziz Rabbah, Morocco’s Minister of Energy, Mines and Sustainable Development, earlier this year outlined Morocco’s key projects for the year, ranging from power to energy efficiency and major midstream and downstream initiatives. Rabbah said power networks and sustainable development would be key focus areas in 2019 and would include several network interconnection projects, studies to connect the grid to Europe and a third interconnection to Portugal. With a goal to create a regional electricity market, the country is also in talks to connect its grid to sub-Saharan Africa through Mauritania. Morocco also plans to move forward with partial electricity auto production and studies will be launched in the next few months see if it is feasible to auto produce 20 to 30 percent of total national output by 2030.

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failures of equipment making power restoration a wasteful exercise.” The statement explained that the decision comes after the extensive customer and various stakeholder engagements across the Gauteng province were concluded, which aimed at resolving issues related to electricity services. Monde Bala Group Executive for Distribution said, “Eskom will continue to engage with councillors in all affected areas to deal adequately with these issues. Furthermore, Eskom would like to affirm its commitment to collaborate and engage with various communities to find solutions so that we can resume with our services. “I thank and applaud paying customers for their continued commitment to paying for the services that they use.”

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Wednesday 17 July 2019

BUSINESS DAY

POLICY

WEST AFRICA

ENERGY intelligence

Pushing the Nigerian Content initiative FRANK UZUEGBUNAM

takeholders in the oil and gas industry have called for the sustenance of the Nigerian Content in the oil and gas industry saying that initiative is at a critical stage. Taofik Adegbite, CEO, Marine Platform at one of the panel session during the recent Nigeria Oil & Gas (NOG) conference in Abuja stressed that stakeholders, especially the Nigerian Content Development and Monitoring Board (NCDMB), need to devise strategic ways of sustaining the gains of the initiative, especially the progress that made so far with the country’s oil and gas projects attracting foreign interest because of the local content component. While pointing out that local content performance has increased in recent times, Akintunde Adelana, Director, Monitoring and Evaluation, NCDMB, advised the stakeholders to continue to grow capacity, adding that the Board will provide an enabling platform for all industry players to thrive. He also stressed that the Board is focused on developing Local Content consciousness of oil and gas companies so that it becomes an integral part of their culture. In her own contribution, Iroghama Obuoforibo, COO, Starzs Investments Company Ltd, implored the Board to explore other application areas/sectors of local content, with emphasis on

building vessels in-country, urging all stakeholders to collaborate to ensure an increased compliance with local content Act. Meanwhile, Olayinka Oluwatimehin, Group Chief Executive, Amazon Energy, during another panel session called on government to reduce some of the bottlenecks which operators are grappling with while increasing its funding of the oil and gas industry adding that the local content has had some impact on the

economy. Godwin Izomor, GMD, MG Vowgas, also decried the poor funding of the oil and gas industry by the government. Izomor noted that the many taxes imposed on operators tend to stunt their growth and in turn slow down the development of the oil and gas sector and canvassed for more investment and government financing in the industry. He advised that funds should be given to companies that need them without

Snapshot

Nigerian Content in oil and gas has moved well above 30 percent from 5 percent before the inception of the Act with the goal of moving it to 70 percent by 2027

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stringent conditions, urging the government to create a more conducive environment for oil firms to thrive and attract more investment. Dele Aikhionbare, Head, Business Development, Eroton E&P, compared and contrasted current realities in the oil and gas industry with what obtained in the past, noting that local content has achieved some impact. He said a lot of progress has been made in the industry since the local content Act was enacted adding that there are threats to the implementation Nigerian Content, due to dearth of requisite human capital. The Executive Secretary of NCDMB, Simbi Wabote, said the key objective of the Nigerian Content Seminar is to reinforce Nigerian Content aspirations and provide clarifications especially for those who are new in the industry. “Nigerian Content in oil and gas has moved well above 30 percent from 5 percent before the inception of the Act with the goal of moving it to 70 percent by 2027”, Wabote said. On the various achievements of the board, the NCDMB helmsman said that the Board exited the federal government appropriation budget in 2018 and has largely become self-sustaining, in addition to facilitating initiatives like the Industrial Park and the construction of the Board’s Head Office Complex, inauguration of the research and development council, development of the NCDMB 10-year roadmap and partnership with

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Wednesday 17 July 2019

BUSINESS DAY

finance people appointments

WEST AFRICA

ENERGYintelligence

Ghana’s oil heritage fund accumulates about $490m - PIAC

Brief

Total divests UK assets to Petrogas for $635m

otal has signed an agreement to divest several UK non-core assets to Petrogas NEO UK Ltd, the exploration and production arm of the Omanbased conglomerate MB Holding. Petrogas has partnered with Norway-based private equity investor HitecVision. Formerly owned by Maersk Oil, these assets are located in the Eastern North Sea and include Dumbarton, Balloch, Lochranza, Drumtochty, Flyndre, Affleck, Cawdor, GoldenEagle, Scott and Telford fields. The overall consideration for this deal amounts to $635 million with an effective date of January 1, 2019. The transaction remains subject to approval from the relevant authorities and is expected to close in December 2019. “This transaction is consis-

tent with our portfolio management strategy, aiming at lowering our break-even point by optimizing capital allocation and divesting high technical costs assets. Our primary objective is to maintain the organic breakeven before dividend below $30/bbl and high-grading our portfolio will help us achieve this,” commented Arnaud Breuillac, president of E&P at Total. Following the Maersk Oil acquisition in 2018, Total became the second largest operator in the North Sea, which is one of its core areas. The region is home to some of the Group’s current major projects: Culzean, which started up last month in the UK, and Johan Sverdrup in Norway with first oil planned later this year.

hana’s oil revenue inflow into the Heritage Fund has reached $485,172,436.04 as at 2018, seven years after the country commenced commercial production of crude oil. The nation’s Petroleum Revenue Management Act (PRMA) 2011, set the Ghana Heritage Fund to save oil revenues for future generations of Ghanaians. But, the closing amount in the Ghana Stabilization Fund as at the end of 2018 was $381.20 million, a report by the Public Interest and Accountability Committee (PIAC) has revealed. The Stabilization Fund rather seeks to mitigate the negative effects of oil revenue volatility on the national budget, and sustain public expenditure capacity in the unanticipated event of a revenue shortfall. Steve Manteaw, Chairman of PIAC said Ghana’s oil production had seen some improvements adding that the Stabilization Fund was largely not serving the purpose for which it was envisioned under the PRMA. The country’s total crude oil production from the three producing fields – Jubilee, TEN and Sankofa Gye Nyame (SGN) jumped from 58,658,063.54 barrels in 2017 to 62,135,435.07 barrels in 2018. Of the total outputs, Jubilee field produced

28,461,755 barrels, TEN field 23,557,361 barrels and SGN field 10,751,671 barrels. Manteaw said a total of $977,093,285 accrued to the Petroleum Holding Fund from Royalties, Carried and Participating Interest, Corporate Income Taxes and Surface Rentals. He said the 2018 revenue constituted about a quarter of total receipts from 2011-2017, indicating the increased revenue was mainly due to drilling

of more TEN wells, crude price rebound on the international market and the coming on stream of SGN Field production. Manteaw expressed concern about the country’s over-reliance on the oil revenue to fund the free Senior High School Programme and called on the government to look for other alternative ways to augment funding to sustain the implementation of that laudable flagship educational programme.

Maersk steps into renewables with wind firm acquisition

.P Moller Holding, which controls Danish shipping giant A.P. Moller-Maersk will acquire Danish wind turbine supplier KK Group, it said in a first step into the renewable energy industry. The acquisition marks a new direction for the familyowned company, which has built its business on the shipping and oil industry. The parties declined to disclose the price of the deal. A.P Moller Holding will buy KK Group, whose main activities are through KK Wind Solutions, from Swedish private equity Solix Group. “Denmark is the leading hub for the wind industry worldwide with significant

global growth potential. We look forward to supporting KK Wind Solutions’ further development and growth in this important industry”, Jan T. Nielsen, chief investment officer of A.P Moller holding, said in a statement. KK Wind Solutions employs about 1,400 people globally and provides electronic systems to wind turbine giants like Siemens Gamesa, Vestas and GE Renewables. It generated sales of 1.6 billion Danish crowns ($240 million) in 2018. The acquisition, which needs approval from the Danish and German competition authorities, is expected to go through in the third quarter of 2019, the companies said. www.businessday.ng

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Wednesday 17 July 2019

BUSINESS DAY

marketinsight

WEST AFRICA

ENERGY intelligence

Oil rises on tropical storm disruptions, glut forecasts weigh

il prices inched up as US Gulf of Mexico crude output was halved by disruptions caused by a tropical storm, but concerns over a global crude surplus in the months ahead limited gains. Brent crude futures were up 31 cents to $66.83 a barrel. US West Texas Intermediate (WTI) crude futures gained 18 cents to $60.38 a barrel. Tropical Storm Barry, which is expected to become a hurricane just before making landfall boosted crude futures as oil companies in the Gulf of Mexico sliced production. “The crude oil market is being supported by the Gulf of Mexico production shut-in. It is going to look to see if Tropical Storm Barry becomes a major flooding event that impacts the refining sector in Louisiana and impacts gas and diesel,” said Andy Lipow, president of Lipow Oil Associates in Houston. Companies cut more than 1 million barrels per day (bpd) of output, or 53 percent of the region’s production, as the storm headed for possible landfall on the Louisiana coast. The International Energy Agency (IEA) forecast surging US oil output will outpace sluggish global demand and lead to a large inventory build around the world in the next nine months.

The world energy watchdog’s report came a day after the Organization of the Petroleum Exporting Countries predicted a crude glut next year despite an OPEC-led pact to restrain supplies. “The IEA report laid bare what the market is staring down and what OPEC is staring down next year, and really for the balance for this year, and that will continue to be a headwind,” said John Kilduff, a partner at Again Capital LLC in New York. The weekly US oil rig count,

an indicator of future production, fell for the second straight week, General Electric Co’s Baker Hughes energy services firm said. Drillers cut four oil rigs in the week to July 12, reducing the total to 784, the lowest since February 2018. The market remained on edge as tensions intensified between Iran and the West. Tehran said Britain was playing a “dangerous game” after seizure of an Iranian tanker on suspicion it was breaking European sanctions by taking oil to Syria.

IEA sees oil market oversupplied in 2019 on US production

urging US oil output will outpace sluggish global demand and lead to a large stocks build around the world in the next nine months, the International Energy Agency (IEA) said. The forecasts appear to predict the need for producer club OPEC and its allies to reduce production to balance the mar-

ket despite extending their existing pact, forecasting a fall in demand for OPEC crude to only 28 million barrels per day (bpd) in early 2020. “Market tightness is not an issue for the time being and any rebalancing seems to have moved further into the future,” the IEA said in its monthly report. “Clearly, this presents a major

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challenge to those who have taken on the task of market management,” it added, referring to the Organization of the Petroleum Exporting Countries and producer allies such as Russia. The demand for OPEC crude oil in early 2020 could fall to only 28 million bpd, it added, with non-OPEC expansion in 2020 rising by 2.1 million bpd, a full 2 million bpd of which is expected to come from the United States. At current OPEC output levels of 30 million bpd, the IEA predicted that global oil stocks could rise by 136 million barrels by the end of the first quarter of 2020. Maintaining its forecasts for oil demand for the rest of 2019 and 2020, the Paris-based agency cited expected improvement in US-China trade relations and US economic growth as encouraging. However, it also flagged weakness in European manufacturing and slower growth in Indian energy consumption.

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OPEC Flakes OPEC sees lower 2020 demand for its oil, points to surplus

PEC has forecast world demand for its crude will decline next year as rivals pump more, pointing to the return of a surplus despite an OPEC-led pact to restrain supplies. The drop in demand for OPEC crude highlights the sustained boost that OPEC’s policy to support oil prices by supply cuts is giving to US shale and other rival supply. This potentially gives US President Donald Trump more room to keep up sanctions on OPEC members Iran and Venezuela. Giving its first 2020 forecasts in a monthly report, the Organization of the Petroleum Exporting Countries said the world would need 29.27 million barrels per day (bpd) of crude from its 14 members next year, down 1.34 million bpd from this year. OPEC in the report also forecast that world oil demand would rise at the same pace as this year and that the world economy would expand at this year’s pace, despite slower growth in the United States and China, the top two oil consumers. “The 2020 forecast assumes that no further downside risks materialize, particularly that trade-related issues do not escalate further,” OPEC said of the

economic outlook. “Brexit poses an additional risk, as does a continuation in the current slowdown in manufacturing activity.” OPEC, Russia and other producers have since Jan. 1 implemented a deal to cut output by 1.2 million bpd. The alliance, known as OPEC+, last week renewed the pact until March 2020 to avoid a build-up of inventories that could hit prices. OPEC said its oil output in June fell by 68,000 bpd to 29.83 million bpd as US sanctions on Iran boosted the impact of the supply pact. According to figures OPEC collects from secondary sources, supply from Iran posted the biggest decline, by 142,000 bpd, as Washington tightened the screws on Iranian exports.

Iraqi oil minister says OPEC deal will lower inventories, stabilise prices

n agreement between OPEC and its allies to extend oil output cuts until the end of March 2020 will lower inventories, help stabilise the market and address price volatility, Thamer Ghadhban, Iraqi Oil Minister said. Asked about OPEC’s position on prices, Ghadhban said the general view was that $70 per barrel or higher was acceptable, adding that the producer group sought prices that were fair to consumers and producers alike. Brent oil is currently near $65. Iraq hopes navigation in the Strait of Hormuz will remain open and uninterrupted, said Ghadhban, who was speaking on the sidelines of an energy conference in Baghdad. “No fewer than 18 million barrels pass through the strait every day. The region needs to remain stable,” he said. Prime Minister Adel Abdul Mahdi said that any disruption to oil exports through the Strait of Hormuz would be a “major obstacle” for the economy of Iraq, which has few oil export outlets.

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The Iraqi government was studying contingency plans to deal with possible disruption, including alternative routes for oil exports, Abdul Mahdi said. A vital shipping route linking Middle East oil producers to markets in Asia, Europe, North America and beyond, the Strait of Hormuz has been at the heart of regional tensions for decades. Recent months have seen a bout of instability in the region, with six tankers attacked since May amid escalating tensions between Tehran and Washington.

Wednesday 17 July 2019

BUSINESS DAY

WEST AFRICA

talking points

ENERGY intelligence

Activities in FPSO market show Nigeria losing by delaying projects STEPHEN ONYEKWELU

he advantages associated with floating production storage and offloading (FPSOs) over traditional semisubmersible oil rigs have positioned them as the preferred offshore infrastructure of the future for drilling oil fields. Nigeria may be missing out on this opportunity by delaying pending FPSO projects. The latest global deals and investments are spurred by strong demand for FPSOs that oil and gas operators are currently seeking to develop oil and gas fields, especially in Brazil, Asia, and Africa. There are 186 FPSOs currently in operation around the world, 43 of which are operating in African waters, this just under 25 percent of the total. Ten percent of all FPSOs are operating specifically in West Africa, with one FPSO in Ghanaian waters, one off the coast of Mauritania, two in Cote D’Ivoire, and 14 off coastal Nigeria. Particularly when focusing on deepwater fields, European FPSO developments are experiencing a slower rate of advancement than the West Africa region, and with a population equal to that of the United States, and a massive maritime zone of control, more atten-

tion should be paid to those waters. This is an opportunity Nigeria can latch on to by creating clarity through competitive fiscal terms and a legal framework that guarantees the sanctity of contracts in the country’s oil and gas sector. Malaysian floating production, storage, and offloading vessel owner and operator Yinson Holdings has embarked on a shopping spree for very large crude carriers in anticipation of possible FPSO conversion jobs for which the company is currently bidding. The company last week reached agreements to buy two VLCCs respectively from Ridgebury Tankers and Neda Maritime Agency. Addressing Yemi Osinbajo, vice-president of the Federal Republic of Nigeria on August 10, 2018, during his tour of the Egina FPSO, Bayo Ojulari, managing director of Shell Nigeria Exploration and Development Company (SNEPCo) said about seven more floating, production, storage, and offloading vessels will be built in the next 15 years. But Ojulari added that Egina was possible because of government support. This highlights the critical role of government. In his remarks after touring the huge FPSO, Osinbajo said the Egina project showed the need for the federal government to continue to ensure an enabling environment for businesses to thrive in the country.

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Snapshot The latest global deals and investments are spurred by strong demand for FPSOs that oil and gas operators are currently seeking to develop oil and gas fields, especially in Brazil, Asia, and Africa

Some FPSO projects in the pipeline in Nigeria include the Zabazaba deepwater project being executed by Nigerian Agip Exploration Limited (NAE) in partnership with SNEPCO on Oil Prospecting License (OPL) 245 and the Bonga South West Aparo (BSWA) deepwater project being developed by SNEPCO.

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Three contractors with an active interest in building the BSWA 150,000 barrels per day FPSO include South Korea’s Samsung Heavy Industries, with a base-case proposal, said to involve using the SHI-MCI yard in Lagos which most recently handled the FPSO integration work on Total’s Egina project. A consortium of China’s Offshore Oil Engineering Company (COOEC) and Italy’s Saipem are also in the race. Iain Esau and Xu Yihe, analysts at Upstreamonline.com, an online platform that provides oil and gas news reported July 4 that an informed source said COOEC would build the topsides but would outsource hull fabrication work to other yards in China. Saipem will deal with the challenging local content aspect of the project. A third group believed to be preparing to submit bids documents is China’s CIMC Raffles and Monobuoy, a Lagosbased engineering concern with a United States of America parent company. CIMC was previously expected to tie up with Kavin Engineering and NOV, and it is not known if these two contractors remain involved. Indications emerged earlier that major contractors bidding for Zabazaba submitted competitive costs and concrete plans to fabricate and integrate over 50 percent of the FPSO topsides incountry.

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Wednesday 17 July 2019

BUSINESS DAY

Live @ The STOCK Exchanges Prices for Securities Traded as of Tuesday 16 July 2019

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 227,489.44 6.40 -3.03 194 8,791,754 UNITED BANK FOR AFRICA PLC 194,936.70 5.70 -2.56 284 24,173,874 ZENITH BANK PLC 588,684.26 18.75 -0.27 358 10,972,490 836 43,938,118 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 201,013.64 5.60 -4.27 243 46,757,346 243 46,757,346 1,079 90,695,464 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,605,377.67 128.00 -0.78 60 716,413 60 716,413 60 716,413 BUILDING MATERIALS DANGOTE CEMENT PLC 2,905,406.51 170.50 0.29 101 1,305,073 LAFARGE AFRICA PLC. 214,233.68 13.30 -1.48 88 765,403 189 2,070,476 189 2,070,476 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 311,875.62 530.00 - 26 33,982 26 33,982 26 33,982 1,354 93,516,335 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 14,408.66 5.40 - 0 0 0 0 0 0 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 0 0 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 OKOMU OIL PALM PLC. 53,228.18 55.80 -9.93 21 176,890 PRESCO PLC 44,800.00 44.80 - 3 5,000 24 181,890 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,520.00 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,440.00 0.48 - 17 437,993 17 437,993 41 619,883 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 794.19 0.30 - 2 2,600 JOHN HOLT PLC. 179.01 0.46 - 3 1,055,814 S C O A NIG. PLC. 1,903.99 2.93 - 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 40,647.99 1.00 -2.91 179 12,404,800 U A C N PLC. 16,711.52 5.80 -1.69 56 1,381,185 240 14,844,399 240 14,844,399 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 26,334.00 19.95 - 35 180,030 ROADS NIG PLC. 165.00 6.60 - 0 0 35 180,030 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 3,325.95 1.28 - 13 115,313 13 115,313 48 295,343 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 13,231.85 1.69 - 1 190 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 104,043.18 47.50 - 24 19,361 INTERNATIONAL BREWERIES PLC. 146,129.65 17.00 - 9 53,343 NIGERIAN BREW. PLC. 471,817.22 59.00 0.85 58 267,183 92 340,077 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 87,500.00 17.50 - 76 728,324 DANGOTE SUGAR REFINERY PLC 124,200.00 10.35 - 49 288,205 FLOUR MILLS NIG. PLC. 59,865.54 14.60 -9.88 47 536,779 HONEYWELL FLOUR MILL PLC 7,850.90 0.99 -1.00 26 605,430 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 39,741.58 15.00 -3.23 13 2,027,885 UNION DICON SALT PLC. 3,321.07 12.15 - 0 0 211 4,186,623 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 20,284.58 10.80 -9.62 16 118,486 NESTLE NIGERIA PLC. 990,820.32 1,250.00 1.79 50 26,471 66 144,957 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 4,628.12 3.70 - 20 249,781 20 249,781 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 25,014.01 6.30 1.61 27 615,261 UNILEVER NIGERIA PLC. 189,585.18 33.00 - 14 11,925 41 627,186 430 5,548,624 BANKING ECOBANK TRANSNATIONAL INCORPORATED 182,578.03 9.95 - 31 180,744 FIDELITY BANK PLC 46,939.17 1.62 -0.62 86 4,773,907 GUARANTY TRUST BANK PLC. 868,219.79 29.50 1.72 269 5,091,283 JAIZ BANK PLC 12,964.27 0.44 - 3 13,028 SKYE BANK PLC 10,687.83 0.77 - 0 0 STERLING BANK PLC. 62,763.11 2.18 -0.91 34 1,362,171 199,477.16 6.85 -8.67 46 735,074 UNION BANK NIG.PLC. 7,598.07 0.65 - 11 180,611 UNITY BANK PLC 23,144.68 0.60 -1.64 34 1,670,627 WEMA BANK PLC. 514 14,007,445 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 2 500,020 AIICO INSURANCE PLC. 4,504.63 0.65 -7.14 18 1,745,827 AXAMANSARD INSURANCE PLC 18,900.00 1.80 - 5 115,790 CONSOLIDATED HALLMARK INSURANCE PLC 2,439.00 0.30 -6.67 19 2,023,525 CONTINENTAL REINSURANCE PLC 19,811.94 1.91 - 0 0 CORNERSTONE INSURANCE PLC 3,240.49 0.22 - 5 108,902 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. 2,489.97 0.34 9.68 35 10,343,753 LAW UNION AND ROCK INS. PLC. 2,062.24 0.48 -9.43 4 398,386 LINKAGE ASSURANCE PLC 5,120.00 0.64 - 1 2,000 MUTUAL BENEFITS ASSURANCE PLC. 2,234.55 0.20 - 6 228,770 NEM INSURANCE PLC 12,092.35 2.29 4.09 6 164,158 NIGER INSURANCE PLC 1,547.90 0.20 - 0 0 PRESTIGE ASSURANCE PLC 2,583.62 0.48 - 3 12,130 REGENCY ASSURANCE PLC 1,333.75 0.20 - 0 0 SOVEREIGN TRUST INSURANCE PLC 1,668.16 0.20 -4.76 4 300,200 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 - 6 105,530 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 5,353.10 0.40 - 19 1,439,550 133 17,488,541

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MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 2,583.90 1.13 - 3 119,340 3 119,340 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 3,780.00 0.90 - 0 0 7,370.87 0.50 - 0 0 ASO SAVINGS AND LOANS PLC INFINITY TRUST MORTGAGE BANK PLC 5,796.93 1.39 - 0 0 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 6,900.00 3.45 1.47 38 451,817 CUSTODIAN INVESTMENT PLC 36,467.56 6.20 - 6 18,700 DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 FCMB GROUP PLC. 31,684.34 1.60 1.27 76 2,562,019 1,131.98 0.22 - 0 0 ROYAL EXCHANGE PLC. STANBIC IBTC HOLDINGS PLC 404,501.84 39.50 -1.25 31 9,763,856 UNITED CAPITAL PLC 13,140.00 2.19 -0.45 42 1,193,870 193 13,990,262 843 45,605,588 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 0 0 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 852.75 0.24 - 2 500,000 2 500,000 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 544.04 0.55 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 9,492.94 4.55 - 0 0 9,925.77 8.30 - 17 29,391 GLAXO SMITHKLINE CONSUMER NIG. PLC. MAY & BAKER NIGERIA PLC. 4,140.56 2.40 - 7 512,540 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 949.58 0.50 -3.85 7 334,018 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 325.23 1.50 - 0 0 31 875,949 33 1,375,949 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 745.92 0.21 -4.55 36 46,739,833 36 46,739,833 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 648.00 6.00 - 1 4,000 TRIPPLE GEE AND COMPANY PLC. 346.47 0.70 - 10 33,447 11 37,447 PROCESSING SYSTEMS CHAMS PLC 1,174.02 0.25 -3.85 18 394,773 E-TRANZACT INTERNATIONAL PLC 9,996.00 2.38 - 1 50 19 394,823 TELECOMMUNICATIONS SERVICES AIRTEL AFRICA PLC 1,215,762.01 323.50 - 14 1,860 14 1,860 80 47,173,963 BUILDING MATERIALS BERGER PAINTS PLC 2,028.76 7.00 - 5 3,102 CAP PLC 17,325.00 24.75 -10.00 21 256,479 CEMENT CO. OF NORTH.NIG. PLC 171,522.69 13.05 -10.00 55 1,308,447 FIRST ALUMINIUM NIGERIA PLC 844.14 0.40 - 0 0 MEYER PLC. 313.43 0.59 - 0 0 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,959.74 2.47 - 0 0 PREMIER PAINTS PLC. 1,156.20 9.40 - 1 75 82 1,568,103 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 2,906.18 1.65 - 11 211,345 11 211,345 PACKAGING/CONTAINERS BETA GLASS PLC. 33,173.14 66.35 - 5 34,825 GREIF NIGERIA PLC 388.02 9.10 - 0 0 5 34,825 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 98 1,814,273 CHEMICALS B.O.C. GASES PLC. 1,889.75 4.54 - 1 1,000 1 1,000 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 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 92.40 0.42 - 2 69,540 2 69,540 3 70,540 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,315.17 0.21 -4.55 23 1,711,245 23 1,711,245 INTEGRATED OIL AND GAS SERVICES OANDO PLC 49,725.65 4.00 -1.25 69 1,070,128 69 1,070,128 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 56,974.05 158.00 - 9 4,539 CONOIL PLC 12,803.42 18.45 -9.56 111 441,003 ETERNA PLC. 4,368.88 3.35 -1.47 16 141,888 FORTE OIL PLC. 24,291.27 18.65 -9.90 54 673,097 MRS OIL NIGERIA PLC. 6,354.80 20.85 - 2 3,010 TOTAL NIGERIA PLC. 44,137.84 130.00 - 40 50,389 232 1,313,926 324 4,095,299 ADVERTISING AFROMEDIA PLC 1,820.01 0.41 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 17,551.17 1.80 - 1 100 1 100 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 341.14 0.29 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 3,366.03 5.71 9.81 15 283,241 TRANS-NATIONWIDE EXPRESS PLC. 328.19 0.70 -4.11 1 150,000 16 433,241 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,723.78 3.05 - 2 21,000 IKEJA HOTEL PLC 2,847.95 1.37 - 2 6,060 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 0 0 TRANSCORP HOTELS PLC 41,042.18 5.40 - 0 0 4 27,060 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 241.92 0.40 - 15 445,330 LEARN AFRICA PLC 1,080.03 1.40 - 5 290,400 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 776.54 1.80 - 6 31,750

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BUSINESS DAY Wednesday 17 July 2019 www.businessday.ng

Does investing in emerging markets still make sense?

Apart from China and India, there is little sign that developing economies are converging with the developed world Jonathan Wheatley in London

wo controversial departures of high-ranking technocrats in the space of three days, one in Ankara, the other in Mexico City, have served as reminders of the high-risk nature of investing in emerging markets. The dead-of-night sacking last week by legally-dubious presidential decree of Murat Cetinkaya, governor of Turkey’s central bank, was followed by the shock resignation of Carlos Urzúa, Mexico’s finance minister, who slammed the door on his way out with complaints of cack-handed meddling by unqualified apparatchiks. Markets were immediately roiled. The Turkish lira and Mexican peso fell more than 2 per cent against the US dollar and analysts warned of disarray ahead, jeopardising economic growth and the ability of borrowers in both countries to repay their debts. For veteran investors, this may look like routine turbulence in markets where the prospect of fast economic growth has always gone hand in hand with political risk. But the basic calculations are changing for emerging markets as that growth potential dims — and with it, part of the core rationale for investing in the asset class. Starting in the early 1990s, globalisation, in the form of increased cross-border trade, the commodities supercycle and the rise of global supply chains, drove the emerging world inexorably — or so it seemed — along a path of convergence with the developed world. For many investors, emerging markets became a core part of their portfolios because they offered strong returns and faster growth as the emerging world caught up. Hundreds of millions of people were being lifted out of poverty and into the consuming classes, offering new opportunities to local and foreign companies. Investment in factories, roads, ports and other infrastructure promised to keep the momentum going. But convergence is no longer assured. Today, high commodity prices are a fading memory. Trade is stuttering and global supply chains are being disrupted. Far from catching up with the developed world, many supposedly emerging markets are growing more slowly. As globalisation risks going into reverse, many investors are asking what, if anything, will drive the asset class in future, raising questions over the role of emerging markets in a diversified portfolio. “The entire rationale (for investing in emerging markets) has been exports and consumption,” says Bhanu Baweja, chief strategistat UBS and an emerging markets specialist. “People came into our industry at a time of hyperglobalisation. But now globalisation is flattening, not just because of (Donald) Trump, but for deeper, organic reasons.” For two decades after the creation of the benchmark MSCI Emerging Markets equities index, EM stocks tended to outperform the S&P 500 index of leading US stocks by a wide margin. For most of the past decade, however, EM stocks have stagnated, while US stocks have more than doubled in value. The threat to globalisation is one of three

Jonathan Wheatley

big changes simultaneously hitting emerging markets. The second is a slowdown in the rate of growth in China. The third is a change in global financial conditions after a decade of easy money. The talk of deglobalisation has come to a head in the trade war between the US and China, the latest manifestation of what the Bank for International Settlements last month called a “political and social backlash against the open international economic order”. While many emerging economies may be able to draw on longer-term advantages such as demographics, in the short to medium term the challenges for some threaten to be overwhelming. Argentina is one example. As its government struggles to recover from a crushing recession, “the great question is whether [the country] is ever going to grow again”, says Ignacio Labaqui of Medley Global Advisors. Brazil’s economy, once the darling of emerging market investors, has suffered recession or mediocre growth for nearly a decade. The risks are not shared evenly. Indeed, the fortunes of emerging economies have become so varied that many investors question the logic of talking about “emerging markets” at all. It is a disparate group, barely recognisable as the asset class of the 1990s and early 2000s, when a crisis sparked in one corner of the emerging world would spread like wildfire to the rest. In the past three decades, many countries have embarked on monetary and fiscal reforms, building firebreaks against flare-ups elsewhere. The result was clear during the sell-off that emerging markets witnessed last year.

As the US dollar unexpectedly strengthened, prompting many investors to pull money out of emerging market assets, those countries with weak defences, especially Argentina and Turkey, were badly burnt, while others escaped relatively unscathed. Nevertheless, emerging economies remain bound together by their vulnerability to the changes under way, and in their need to find a route to growth beyond the trade and global manufacturing supply chains that have sustained them so far. “The idea that a developing country can take manufacturing from the US and still have access to the US market is not so certain in the new world,” says Brian Coulton, chief economist at Fitch, the rating agency. Shifts in the pattern of globalisation have not been bad for all emerging economies. Vietnam, for example, has been a winner as multinationals shift production from China in search of cheaper labour and, over the past year, to avoid the Trump administration’s import tariffs on goods made in China. Hanoi’s luck may not last, however: Mr Trump called Vietnam “the single worst abuser of everybody”before last month’s G20 summit in Osaka. But companies are not simply reallocating resources around the developing world. Foreign direct investment into emerging markets as a whole fell last year to its lowest level since the 1990s, according to the Institute for International Finance. “This is where I start to worry about emerging markets in a fundamental way,” says Robin Brooks, the IIF’s chief economist. “Over the past 20 years a lot of manufactur-

ing has moved to EMs to arbitrage wage differentials. That wave has run its course.” In fact, growth in emerging market economies has been falling behind expectations for a number of years. Leave aside the population giants of China and India and, in per capita terms, emerging markets have been growing more slowly than developed economies since 2015. In terms of productivity gains, too, developing countries have disappointed. Since the mid-1990s, the contribution of productivity to output growth in EMs other than China has been no greater than in developed markets, except for the few years before the global financial crisis when the commodities supercycle was in full swing. It was also during those years that China benefited the most from productivity gains, as technology transfer accelerated following its accession to the World Trade Organization in 2001. That period looks increasingly like an anomaly. “We don’t find much improvement in productivity in the large emerging markets in recent years,” says Mr Coulton at Fitch. Indeed, he adds, growth in the developing world is attributed not to productivity, but to demographics and investment. But while populations keep growing, investment has also now lagged. “Increasing [the ratio of ] investment to GDP is a really big challenge for emerging markets,” he says. “This has been China’s story for the past 30 years — it has invested much more and grown much faster. It’s not rocket science.” The significance of Chinese growth to the broader emerging market asset class is hard to overstate. “China is the father of global growth,” says Mr Baweja. “The last three growth cycles — 2009/10, 2012/13 and 2016/17 — were all born in China. They may have matured elsewhere but they were born in China, of the same cheque book — the Chinese consumer and government.” But the pace of growth in China, too, has been slowing since the global financial crisis. Not only that, its growth has become less dependent on imports from other developing countries. When it was driven by investment in infrastructure, China’s hunger for iron ore, copper and other inputs was a godsend for commodities exporters — from Brazil and Chile to Nigeria and the Democratic Republic of Congo. But Chinese investment has fallen, from the equivalent of 48 per cent of gross domestic product in 2011 to less than 45 per cent since 2015. Meanwhile, investment is moving towards services and other less commodity-intense activities. There are also potential risks to China’s economic stability. Non-financial-sector debt, for example, has ballooned. It was equal to about 135 per cent of GDP before the global financial crisis, according to the IMF. It rose to about 170 per cent in late 2011 as the government responded to the crisis. By the end of 2016, after government stimulus flowed again, it had swelled to about 235 per cent of GDP.

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