Businessday 17 may 2018 by BusinessDay

FG to spend N1.09trn on power, works, housing in 2018

... as National Assembly finally passes N9.12trn budget ... declines Buhari’s $496m Tucano jets’ anticipatory approval KEHINDE AKINTOLA & OWEDE AGBAJILEKE, Abuja

he federal government is concentrating its spending power on the power, works and housing sector in 2018 in a bid to improve the nation’s

infrastructure. This is an area that most Nigerians have criticised the current administration of having had little impact despite the huge figures that it has budgeted in the past. Yesterday, the National Assembly passed the 2018 budget of N9.120 trillion

with an embedded fiscal deficit of N1.955 trillion or 1.73 percent to GDP. The National Assembly also urged the Presidency to submit a supplementary budget to cover fuel subsidy and the purchase of

news you can trust I **THURSDAY 17 may 2018 I vol. 15, no 56 I N300

Continues on page 38

L-R: Christophe Charlier, chairman of the board of directors of Renaissance Capital; Temitope Popoola, CEO, Nigeria, Renaissance Capital; Edoh Kossi Amenounve, CEO, Cote D’Ivoire Stock Exchange; Tinuade Awe, executive director, Nigerian Stock Exchange; Ekow Afedzie, deputy managing director, Ghana Stock Exchange, and Charles Robertson, global chief economist, Renaissance Capital, at the 9th Annual Pan-Africa 1:1 Investor Conference in Lagos, yesterday.

Devaluation takes toll as Nigerian banks absent from S&P top 30 South Africa, Egypt banks dominate in Africa

PATRICK ATUANYA

he latest global bank rankings report from S&P Global Market Intelligence found that South African and Egyptian banks dominated the list of largest banks in Africa in 2017, accounting for (7) of the 30 largest banks in the Middle East and Africa region, collectively reporting $668.18 billion in assets at the end of 2017. The ‘Big Four’ South African banks Standard Bank Group (ranked 3rd on the list), First Rand (4th), Barclays Africa Group (9th) and NedBank Group (13th), remained as the top four banks in Africa by assets yearover-year, posting a combined Continues on page 4

NSE says engaging SAHCOL, Fintech firms for IPO on exchange ... MTN Nigeria listing now seen in August Endurance Okafor, Micheal Ani & Bunmi Bailey

he Nigerian stock exchange (NSE), at the 9th annual Pan-Africa investor conference by Renaissance Capital yesterday, Wednesday 16 May 2018 said apart from the much anticipated MTN Nigeria Continues on page 38

Oyegun backs out of chairman race as APC Reps caucus endorse Oshiomhole ... convention holds July 23 James Kwen, Abuja

J L-R: Adewunmi Alode, company secretary; Mobolaji Balogun, chairman, and Michel Puchercos,GMD/CEO, all of Lafarge Africa plc, at the 59th annual general meeting of the company in Lagos, yesterday. Pic by Olawale Amoo

ohn Oyegun, National Chairman of the ruling All Progressives Congress, APC will not contest for second term again. Business Day has reliably learnt. Oyegun who was obviously interested in seeking re-lection Continues on page 38

BUSINESS DAY

Thursday 17 May 2018

BUSINESS DAY

Thursday 17 May 2018

C002D5556

businessday market monitor Commodities Brent Oil

Biggest Gainer

$78.24

Nestle N1600

Cocoa

US $2,728.00

Biggest Loser

1.72pc

Everdon Bureau De Change

Bitcoin

NSE Okomuoil N78.4

40,992.97

-4.97pc

3,167,269.97

+0.21pc

Buy

Sell

$-N 360.50 363.50 £-N 490.00 499.00 €-N 425 .00 433.00

FMDQ Close Foreign Exchange Market

Spot $/N

I&E FX Window 360.77 CBN Official Rate 305.85

fgn bonds

Treasury Bills 3M

5 Years

10 Years

20 Years

-0.20 13.62

-0.79 12.45

0.10% 13.40%

0.03% 13.37%

0.05% 13.25%

Why force majeure has not been declared on trans Forcados pipeline OLUSOLA BELLO

ndustry operators have given an insight as to why a force majeure has not been declared by Shell Petroleum Development Company (SPDC) the operators of the Forcados export terminal since the shutting down of the pipeline nine day ago. The Trans-Forcados pipeline is the major trunk line in the Forcados Pipeline System with an export capacity of 400,000b/d and the second largest network in the Niger Delta which services mainly opera-

tors in the western Niger Delta. According to some stakeholders that spoke to BusinessDay last night , they said even though they know that Shell has sent letters concerning the situation to concerned stakeholders about the changes in loading schedule at the terminal they however they don’t know what consideration the multinational oil giant is having that has made it hesitant in declaring force majeure in respect of an incident that has resulted in the loss of about 240,000 barrels of crude oil per day. Force majeure is Standard

clause found in construction and supply contracts, it exempts the contracting parties from fulfilling their contractual obligations for causes that could not be anticipated and/or are beyond their control. But a source with fair knowledge of how the facility works told BusinessDay that Shell can only take such an action if the actual operators of the trunk line , in this case Heritage oil decided to declare force majeure, by stating that it cannot convey the crude through the pipeline to the terminal for reasons beyond its control.

He however stated that the Trans Forcados trunk line is not the only one servicing the Forcados terminal. He said if trunk lines like Trans Escravos and Ramos are not affected by this action it may not be necessary to declare force majeure. He also said that declaring force majeure would be a bad signal for some of the oil operators that use the trunk line as their investors may begin to query the security of their investment. Some of the users of the line that Business Day tried to reach refused to comment on this development.

However an operator of one of the oil fields that also evacuates crude through the pipeline said that there has not been any production activities since the incident. The companies affected by the incident are Shell Petroleum Development Company (SPDC), Seplat Petroleum Development Company Plc, Shoreline Resources Limited, Neconde, First Hydrocarbon Nigeria (FHN) and NPDC. Some marginal field producers such as Pillar Oil, Midwestern Oil and Gas, Platform Petroleum and Energia also convey their crude oil through the pipeline.

Devaluation takes toll as Nigerian banks... Continued from page 1

$454.11 billion in assets. This is up since last year’s ranking, with the banks benefitting from strengthening Rand against the US dollar. National Bank of Egypt (ranked 14th) with assets of $75.3 billion, Attijariwata Bank of Morocco (23rd) with assets of $50.9 billion, Investec Ltd of South Africa (27th) with assets of $44.42 billion and Banque Misr SAE of Egypt (28th) with assets of $43.4 billion, round off the African Banks on the top 30 list. The top five Nigerian Banks by total assets at the end of 2017 were Zenith Bank $15.5 billion (N5.59 trillion), FBN Holdings $14.54 billion (N5.23 trillion), Access Bank $11.394 billion (N4.102 trillion), UBA $11.3 billion (N4.06 trillion) and Guaranty Trust Bank $9.3 billion (N3.51 trillion). Following the 2016 recession, Nigerian banks’ loan books contracted 15.4 percent in 2017, according to data from ratings firm Moody’s. Major devaluations in 2015 (move from $1/NGN160 to $1/ N199), 2016 (CBN move to $1/N282) and 2017 (I & E window), has also negatively impacted the value of the Nigerian banks assets in dollar terms. “As bank profitability improves in terms of return on average equity, we expect banks to move away from cost-cutting and towards sustainable growth. In this low rate environment, growing the balance sheet can be an effective way to generate earnings. Moreover, as interest rates rise, we can expect a boost to bottom line earnings and this bodes well for future growth prospects within the banking sector,” said JP O’Sullivan, Managing Director of Financial Institutions at S&P Global Market Intelligence.

Looking at all banks in the top 30 list , Qatar National Bank is the largest bank by assets in Africa and the Middle East for the third consecutive year, according to the S&P Global Market Intelligence ranking. The Qatari lender reported $229.01 billion in assets at the end of March 2018, $46.89 billion more than UAE-based First Abu Dhabi Bank, which placed second. The strengthening of the Israeli shekel against the U.S. dollar helped Israel’s Bank Hapoalim BM and Bank Leumi le-Israel BM climb to the fourth and fifth spots in the ranking, respectively. The banks would have ranked seventh and eighth if the shekel had remained flat against the dollar over the last year. Another Israeli bank, Mizrahi Tefahot Bank Ltd., jumped four spots to 12th position as its assets grew to $81.12 billion. The company’s assets were adjusted higher to account for the pending acquisition of Union Bank of Israel, which had $12.07 billion in assets at the end of 2017. In the global rankings the U.S. had thenexthighestnumberwith11banks holding $12.196 trillion in assets. However, Wells Fargo was pushed out of the top 10 spot by France’s Crédit Agricole Group, while other U.S.-based banks also suffered ranking drops from the previous years. Goldman Sachs Group fell three spots last year to 35, Morgan Stanley dropped one spot to 38 and State Street Corp. fell ten spots to 100. In Europe, HSBC maintained its position as the largest European bank with total assets of €2.100 trillion (US$2.522 trillion). It was the only Europeaninstitutionabovethe€2trillion mark. Among the top 10 European banks, six posted a year-over-year decline in assets in euro terms.

L-R: Olu Akanmu, executive director, retail banking, First City Monument Bank (FCMB); Chinyere Egwuonwu, director, standards, Standards Organisation of Nigeria (SON); Adam Nuru , managing director of the bank; Felicia Obozuwa, divisional head, corporate services, and Oluwakayode Adigun, divisional head, service management and technology, during the presentation of the International Organisation for Standardisation (ISO) 9001:2015 certificate for Quality Management System to FCMB by SON, in Lagos, yesterday.

“Asian banks continue to dominate the S&P Global Market Intelligence global bank rankings with Chinese institutions claiming the top four spots,” S&P said. S&P Global Market Intelligence data shows that Chinese banks recorded the highest growth in assets in the past ten years. Nearly a third of the 20 largest S&P Global Market Intelligence-covered banks are based in China and reported an average of 190 percent increase in terms of asset

growth over the decade. S&P Global Market Intelligence compiled the World Bank Rankings using data derived from individual bank’s regional reporting standards. Banks reporting under IFRS have gross value of derivative assets reported on balance sheets, whereas reporting under U.S. GAAP, requires the net value to be disclosed. In the latest ranking, company total assets were adjusted for pending mergers, acquisitions and

divestitures, as well as M&A deals that closed after the end of the reporting period through March 31 on a best-efforts basis. Assets reported by non-U.S. dollar filers were converted to dollars using period-end exchange rates. Total assets were taken on an “as-reported” basis and no adjustments are made to account for differing accounting standards. S&P Global Market Intelligence is a division of S&P Global.

Thursday 17 May 2018

BUSINESS DAY

6 BUSINESS DAY NEWS

C002D5556

Thursday 17 May 2018

Ikoyi, V/I, Ikeja GRAs top list as Lagos set for urban renewal JOSHUA BASSEY

ighbrow areas of Ikoyi, Lekki, Victoria Island and the Ikeja GRA are top on the list as the Lagos State government unveils new construction equipment preparatory to urban regeneration programme. The equipment, including three road printers and three giant wheel leaders, were unveiled after a public demonstration to the media and government functionaries on Joseph Hotounu Street, Lekki, where the government is currently completing interlocked road with the aid of some of the new construction equipment. Other equipment also taken delivery of are five driving rollers, hand operating rollers, an excavator, paver, tractors, wheel loaders, chip sealer, milling machine, sweeper machine, synchronous chip sealer, etc. The equipment will aid the urban renewal programme, which the state is starting off with Ikoyi, Victoria Island and Ikeja GRA and Lekki. BusinessDay gathers that the road printer, for example, has the capacity to pave 400 to 600 metres square in a day working shift of eight hours. “These new equipment have been procured in line with efforts to reposition the Lagos State Public Works Corporation (LSWC)

for the urban regeneration programme aimed at addressing environmental and infrastructural challenges in Ikoyi, Victoria Island and Ikeja G.R.A,” Governor Akinwunmi Ambode said on Wednesday. According to Ambode, who was represented by Rotimi Ogunleye, his commissioner for physical planning and urban development, the equipment will immediately be deployed for the urban for the purpose they have been acquired and will aid the drive to change the Lagos landscape. “These equipment would further upgrade the activities of the Lagos State Public Works Corporation so that from their three centres in Badagry, Ojodu and Imota, they can take care of the rest of Lagos State. “This development is a sign that government is commitment to the regeneration and renewal of the Lagos landscape,” he said. Tunji Bello, secretary to the state government, observed that with the paving stone machines and road printers, the public works corporation would be in the position to deliver roads that last longer even waterlogged terrains. “We carefully thought about it before we even embarked on it. It was planned long time ago for the equipment to be acquired and having been acquired, they will be deployed immediately for road construction.

‘Rome poverty alleviation confab: We are strengthening collaboration to boost oil palm production in Edo’

overnor of Edo State, Godwin Obaseki, has assured of stronger international collaboration with more foreign partners and investors in the state’s agricultural sector, following the commitments he secured at the Rome conference on Eradicating Poverty Through the Agriculture and Plantation Industry to Empower Peace and Humanity, held on Tuesday in Italy. The event assembled heads of governments, elite investors in the agricultural sector, particularly the oil palm sub-sector, members of the diplomatic community, the academia, and the clergy, among others. In attendance were the Ambassador of Indonesia to Germany, Arif Havaz Oegroseno; Maritime Coordinating Minister of Indonesia, Luhut Binsar Pandjaitan; Malaysian Ambassador to the Vatican, Tan Sri Bernard Gilgal Dompok; and the Prefect, Dicastery for the Promotion of Integral Human Development, Cardinal Peter Turkson. Others were the Indonesian Ambassador to Poland, Peter Gontha; Executive Director, Council of Palm Oil Producing Countries (CPOPC), Mahendra Siregar; and Ryan Edwards of Dartmouth University as well as investors, regulators and other stakeholders in the agricultural and allied sectors. Obaseki said: “The conference provided the platform for oil palm producing countries and states such as Indonesia, Malaysia and Edo State,

amongst others, to articulate the peculiar challenges militating against unhindered access of agricultural produce to European market. “We compared notes on several issues and shared our experiences. Edo State is the largest producer of oil palm in Nigeria which makes the sector an area of strength for us.” Marketing Edo State as the preferred investment destination on the continent, the governor told the conference participants that “the reforms in land administration in the state have removed all man-made encumbrances and have made land acquisition stress-free. “We have moved away from the dark ages in which land grabbers reigned supreme, harassed and killed themselves over land. This scared away potential investors and sent the wrong signal to people prospecting for businesses in the state. “Our rising profile on the Ease of Doing Business Index is attributable to the reforms in land administration and other sectors. Access to land is no longer a big deal in Edo State. We have very creative and industrious workforce; my administration is favourably disposition to supporting businesses; and our state is strategically located for markets in all parts of the country.” He added, “We are committed to leveraging the competitive advantage we have in this sector to create jobs for our youths and create wealth for our people.

L - R: Femi Adebayo, counselor, Hello Lagos, Lagos State Ministry of Health; Anita Aiyudu, marketing/partnerships manager, MTV Shuga Naija; Solafunmi Oyeneye, head/MTV Base ROA, and Adeola Birch, team lead, Hello Lagos, Lagos Ministry of Health at the Private screening of MTV Shuga In Real Life in Lagos Pic by Pius Okeosisi.

Nigeria’s maritime investors missing out on $60bn trade fest -LCCI

Edo Assembly suspends lawmaker over petition

… urges private sector to get their PVCs

IDRIS UMAR MOMOH, Benin

ODINAKA ANUDU

agosChamberofCommerce and Industry (LCCI) says indigenous ship owners did not benefit from Nigeria’s $60 billion trade with the rest of the world in 2017. The chamber attributed it to the country’s inability to implement several policies targeted at promoting the participation of indigenous players in the shipping industry. At a quarterly press briefing held in Lagos on Wednesday, Babatunde Paul Ruwase, president of the LCCI, listed such policies as the National Shipping Policy Act of 1987-2003; the Coastal and Inland Shipping (Cabotage) Act of 20032007; the Cabotage ImplementationGuidelineof2007;theCabotage Vessel Financing Fund (CVFF) Guideline; the NIMASA Act 2007; the Merchant Shipping Act, and the Nigerian Oil and Gas Industry Content Development Act of 2010. He pointed out that most of these Acts and policies were yet to be fully implemented, which was why indigenous participation in the shipping industry was only 10 percent.

Ruwase also said that several federal government properties in Lagos had been completely abandoned, pointing out that it was a colossal economic waste to abandon valuable government assets for many years and allowing such assets to rot away. “Some of these properties include CBN properties in Lagos; the old federal secretariat, old National Assembly complex at the Tafawa Balewa Square, Independence Building that used to house the defence Ministry and former Federal Ministry of Commerce at Tinubu Square,” he said. Ruwase said apart from being economic wastes, many of these buildings served as hideouts for hoodlums, criminals, and miscreants, thereby posing security risks to Lagos residents. “We urge the federal government to either return the property to the Lagos State government, which is the original owner of the land, or give them out on lease to the private sector,” he stated. He urged private sector players to be more active in the entire chain of the electoral process, while asking them to register and obtain their PVCs.

He asked entrepreneurs and private sector players to stand for elections for various offices from the local councils to the presidency; from councillors to the National Assembly. “The business community cannot continue to be passive in the political and electoral process. The reality is that the quality of economic policies is impacted by the quality of political governance. It is the economic policies that determine the prosperity or otherwise of our businesses. “It is the economic policies that will determine how equitable the society will be and the capacity of the economy to create jobs. It is the social and economic policies that will determine the degree of social justice that we experience as a people. For these and other reasons, we need to play a more active role in influencing the choice of political leaders at all levels of government,” he added. He said in view of the spread of Ebola in the Democratic Republic of Congo, which had killed 19 people in the country, Nigeria should take urgent measures to track the movement of people from the country.

Ebola outbreak: DRC to commence ring vaccination ANTHONIA OBOKOH

he Democratic Republic of Congo will begin a ring vaccination as the first batch of 4,000 experimental Ebola vaccines arrived on Wednesday to combat the outbreak of the disease in the country, World Health Organisation (WHO) says. “Vaccinations would start on the weekend, the first time the vaccine would come into use since it was developed two years ago,” the health ministry says. According to WHO, a total of 42 Ebola virus disease cases had been reported in DRC,

including 19 deaths. It is the ninth time Ebola has been recorded in the central African nation, whose eastern Ebola River gave the deadly virus its name when it was discovered there in the 1970s. The disease killed eight people in the country last year. “The Ebola vaccine is an additional tool in our response to the outbreak,” Tedros Adhanom Ghebreyesus, director-general, WHO, says. “The Ministry of Health of DRC with support from WHO, Gavi and other partners are preparing to conduct vaccination of high-risk populations in affected areas.

The outbreak is centred on the remote town of Bikoro in the province of Equateur, which has 31 of the cases and 274 contacts. There have also been eight cases and 115 contacts in Iboko health zone. The WHO says it had sent 300 body bags for safe burials in affected communities. Ebola Virus Disease is a rare disease that can lead to death, mostly affecting human and non-human primates (monkeys, gorillas, and chimpanzees). It is caused by an infection with one of five known Ebola virus species, four of which can cause disease in human.

odwin Adenomo, an All Progressives Congress (APC) lawmaker representing Ovia South-West Constituency in the Edo State House of Assembly, was on Wednesday suspended for three months by the House over alleged unpaid allowances amounting to over N220 million. The suspension was taken at a plenary session sequence to an ad hoc committee report constituted by the House to investigate the embattled lawmaker’s petition through his lawyer, Kingsley Obamogie, over the House refusal to pay his entitlements and recover monies unduly paid to Sunday Aghedo, an occupant of the position that was sacked by a Supreme Court judgment. While presenting the ad-hoc committee’s report, Victor Asein, the chairman of the ad hoc committee, APC, representing Owan West, said the lawmaker deliberately avoided the committee’s invitation. Asein, who said the lawmaker did not explore the proper channel in line with the House rules, added that, his action was political and a deliberate attempt to malign and bring the House to disrepute. He opined that his claims in the petition were frivolous, inaccurate and unfounded, saying, “The salaries and emoluments of members are determined by the Revenue Allocation, Mobilisation and Fiscal Commission (RAMFAC).” In its report, the committee recommended that the lawmaker be suspended for three months in the first instance, pending when he presents himself before the committee. The House, in adopting the committee’s recommendation directed the suspended member to submit all government property in his possession to the deputy clerk administration of the Assembly.

Thursday 17 May 2018

C002D5556

BUSINESS DAY

Thursday 17 May 2018

C002D5556

BUSINESS DAY

C002D5556

COMMENT

Thursday 17 May 2018

comment is free

Send 800word comments to comment@businessdayonline.

Bin the bag: Business can lead the offensive against plastic waste

IJEOMA NWAGWU Dr. Nwagwu is a Faculty member at the Lagos Business School

ome good news from the homeland – African countries are at the forefront of the fight against plastic bags. More than 15 countries on the continent have either banned them completely or charge a tax on them. This is a powerful reminder of two things: First, it reminds us that there are myriad possibilities around managing our environment in a responsible way. Second, it reminds us that our businesses should take the initiative to ensure that we effectively address plastic waste, taking up the challenge in partnership with government and civil society. Over a decade ago, Rwanda put an embargo on the use of plastic bags, becoming one of the first countries to do so in the world. Rwanda’s status as one the world’s cleanest countries is not unconnected with its careful attention to the details of the human environment. Eritrea banned the use of plastic bags in 2005. In 2013, Mauritania banned the use, manufacture and import of plastic bags. In Kenya, selling or using plastic bags may earn one a four-year jail term or a $40,000 fine. Tanzania, Botswana, Tunisia, South Africa, Cameroon, Guinea-Bissau, Mali,

Ethiopia and Malawi are also among countries that have limited the use or placed bans on the use of plastic bags. As nations across the world fine-tune their response to plastic waste, it is time Nigerian businesses and communities revisit our casual acceptance of plastic bags. This ‘convenience’ plays a key role in life-threatening floods, depleting fish stocks when we need food for our teeming population. These bags aesthetically blight our living space, destroy soil fertility altogether dealing a blow to our quality of life. Nigeria and the use of plastic bags It is estimated that 50 billion plastic bags are used annually in Nigeria. It’s no surprise Nigerians have found several creative ways to utilize plastic bags. Plastic bags are used for faeces disposal (colloquially termed ‘shotput’ in the nation’s urban slums where sanitation facilities are limited) as raincoats or food containers. Plastic bags have become an integral part of everyday living in Nigeria. A study published by Nature entitled “River Plastic Emissions to the World’s Oceans” states that the Imo River, Cross River and Kwa Ibo River are responsible for 67% of global plastic inflow into the ocean. In 2014, the Federal Ministry of Environment announced a ban on the use of plastic bags. However, no consistent enforcement action was initiated to back up the plan. Indeed, Nigeria’s inability to get a grip on the use of plastic bags makes the efforts of other West African countries that

The Imo River, Cross River and Kwa Ibo River are responsible for 67% of global plastic inflow into the ocean. Indeed, Nigeria’s inability to get a grip on the use of plastic bags makes the efforts of other West African countries that have banned them less effective as plastic bags are smuggled into those countries from Nigeria have banned them less effective as plastic bags are smuggled into those countries from Nigeria. Lagos – the urban challenge Lagos State reportedly generates 9000 metric tons of waste daily, 86% of which is made of plastic bottles and bags. Each rainfall in Lagos is accompanied by the blockage of drainages with plastic debris, forcing water into buildings and creating rivers on the streets. Lagos State is home to over 2000 bottled and sachet water manufacturing and distribution companies. The ‘Pure Water’ business generates tonnes of plastic bag waste that harms the ecosystem. In an attempt to solve these environmental problems, Lagos has created a number of initiatives to curb the waste problem in Lagos. A few are LAWMA’s program to encourage the sale of

used plastic bags to a state agency for recycling. Wecyclers social entrepreneurs also go from doorto-door to collect plastic waste. The Cleaner Lagos Initiative which began early 2018 is hopefully setting the stage for another assault on plastic waste in Lagos State. Businesses taking the lead Businesses have particular advantage in the fight against plastic pollution - as manufacturers, retailers and shapers of consumer preferences through marketing. Nigerian organizations should take a cue from leading businesses who have pledged to use 100% reusable or recyclable plastic packaging. They include, Amcor, Ecover, Evian, L’Oréal, Mars, M&S, PepsiCo, The Coca-Cola Company, Unilever, Walmart, and Werner & Mertz. Pointing to the power of awareness, the issue of plastic waste though not a new development, caused a public outcry after the public viewed the BBC series Blue Planet II. The UK government has budgeted £61.4m to fight the plastic pollution in the world’s oceans. Already, four Commonwealth countries have joined the UK in the fight -New Zealand, Sri Lanka, Vanuatu and Ghana. Simple ways your company can rethink the use of plastics Organizations often have difficulty working out ways their internal processes can be more environmentally friendly. Being conscious of the effect your organization’s daily operations has on the environment is important. This consciousness can deliver innovative solutions, whilst also building the ethical muscles of your organiza-

tion. Ideas and opportunities for businesses include: 1. Do a waste audit. Take a look at what is in your garbage. If you find that there is excessive packaging waste, you can engage with your suppliers to purchase supplies in bulk with minimal plastic packaging? 2. Reuse All That You Can. It may seem more expensive upfront, but it will save you money in the long run. For example, you may replace plastic cups, cutlery and plates with real plates and silverware in the employee kitchen. 3. Switch or ditch. One of the easiest ways your business can reduce its plastic footprint is by substituting plastics with other alternatives. When giving gifts to clients, do some research and find cheaper sustainable corporate gifts. 4. Recycle. Having a workplace recycling scheme will help reduce plastic waste and other types of waste. At a broader level, there needs to be a change in consumer behavior (for instance, stopping the habit of littering) and product design (by manufacturers) coupled with commitment from governments and businesses to reimagine the use of plastics. Supermarkets and retailers also have to put a halt to the distribution of plastic bags. Success depends on constructive dialogue between business and policymakers to create policies, campaigns and strategies that positively reimagine communities we live in today.

Send reactions to: comment@businessdayonline.com

On the presidential panel for recovery of public property

FRANCIS KEHINDE EMENI Emeni is a professor of Accounting at the University of Benin and research fellow, Institute of Chartered Accountants of Nigeria.

he history of Nigeria is replete with corruption. Kleptocracy is not only pervasive but it has also been assumed as institutionalized. Corruption has affected every facet of our national life permeating secondary schools, tertiary institutions, religious organizations (churches, mosques), government parastatals, judiciary and the political system. A brief history of corruption in Nigeria, according to Mikky (2015), reveals that between 1960 and 1979, there was no obvious case of corruption in Nigeria. From 1979 to 1983, the economy was characterised by looting of public funds and properties. This led to the campaign for zero tolerance to corruption between

1984 and 1985. The years 19851993 witnessed a monumental increase in corruption and public funds were carted away by public servants. In one fell swoop, about $12 billion mysteriously disappeared. Within a space of five years, 1993-1998, an estimated $5 billion was stolen while about $2 billion was alleged to have been stolen between 1998 and 1999. Other misappropriations that characterized the Nigerian economy include the diversion of the $16 billion voted for electric power projects between 1999 and 2007 and $2 billion meant for road projects. The outcry against corruption heightened from 2007 to 2010 in the country. In the 2011 election year, about N2.6 trillion was diverted from government coffers. With this persistent phenomenon of corruption in Nigeria, the Federal Government on August 1, 2017 set up the special Presidential Investigation Panel for the Recovery of Public Property. Recovery of public property refers to the task of reclaiming of properties that have been wrongfully taken, stolen, fraudulently misappropriated or otherwise disposed of to remove them from their rightful owner.

A chronology of public property recovery shows that it is not new to Nigeria. Decree no. 3, 1984, Economic and Financial Crimes Commission (Establishment) Act, 2004, and Recovery of Public Property (Special Provisions) Act 2004 ushered in investigation of the assets of any public officer who is alleged to have been engaged in corrupt practices, unjust enrichment of himself or any other person who has abused his office or has in any way breached the code of conduct for public officers contained in the constitution of the Federal Republic of Nigeria. There has been mounting public outrage against public officers who have significantly increased their wealth during their time in office or hidden their asset through complex ownership arrangements. This corrupt practice is made possible in a kleptocratic government, where ‘thieves’ rule and misappropriate state funds at the expense of the wider population. Government officials attain personal wealth and political power without even the pretence of honest service. One, therefore, considers this special presidential investigation panel both timely and practical. A panel on the recovery of public property in Nigeria can help build a climate of integrity in public service, prevent

abuse of power, and be an effective tool in the efforts to recover public property. Though recovery of public property is laudable, there are a number of issues that need to be addressed. First is non-prosecution of looters of the national treasury, thereby making the anti-corruption war in Nigeria a laughing stock of the world. Another issue is on the activities and operations of the panel on the recovery of public property in Nigeria since its inception in November 2017. One is not oblivious of some controversies trailing the panel in the news media. According to Soniyi (2018), it has been reported that there is no gazette backing the establishment of the panel and the panel is accused of political witch-hunting of opposition political parties. There is also complaint on the legality of the panel to solicit and receive petitions from members of the public and also inviting citizens to fill asset declaration forms, which is said to be the constitutional preserve of the Code of Conduct Bureau. On the legality of the panel, Decree No. 3, 1984, promulgated by the then military regime, confers necessary powers on the panel. However, the accusation of political witch-hunting is unfortunate. The government

should ensure that members of the panel are unbiased and impartial in order to safeguard the success of the ongoing war against corruption. Asset recovery has three main elements – identification, redeployment, and disposition – which can generate funds and goodwill. The Panel on Asset Recovery needs to take into cognizance these three elements of asset recovery for it to be efficient and effective. Furthermore, to ensure smooth and unbiased operations of the panel, it is advisable that the panel provides platforms for dialogue, collaboration with relevant stakeholders irrespective of ethnic or political affiliation, and also facilitate contact among different jurisdictions involved in asset recovery; for example, the stolen asset recovery initiative of the World Bank Group. One hopes that stakeholders in the recovery of public property will find this submission a useful tool in guiding their decision making, and ultimately, to help Nigeria build more effective systems that improve accountability and transparency in the recovery of public property.

Send reactions to: comment@businessdayonline.com

Thursday 17 May 2018

C002D5556

COMMENT

BUSINESS DAY

comment is free

Send 800word comments to comment@businessdayonline.

Shielding the economy from adverse effects of smuggling

UCHE UWALEKE Uche Uwaleke is the Head of Banking & Finance department at Nasarawa State University Keffi

ecently, the Senate Committee on Customs Excise and Tariff organized a public hearing in Abuja on measures to tackle the menace of smuggling in the country. During the occasion, the Senate President, Bukola Saraki, in a speech titled “Smuggling: Threat to Nigeria’s Quest to SelfSufficiency in Rice Production’’ decried the increasing spate of smuggling activities in the country. To be sure, smuggling is any clandestine activity involving the import or export of goods through unlawful means with the aim of evading taxes. The Nigeria Customs Service, the agency saddled with policing the nation borders describes smuggling as “false declaration and concealment of goods, wilful under-payment of Customs duties, trafficking in prohibited or restricted goods, use of unapproved routes and ports, forging of Custom documents and touting in Customs goods and documents.” Although smuggling is acknowledged to be a global challenge, studies have shown that it is more prevalent in developing countries and relatively closed economies. It goes without saying that it is rampant in Nigeria.

Smuggled goods are not only available in markets in major cities such as Lagos, Kano and Port harcourt to name a few, they are equally found in rural areas. A recent report by the World Bank on smuggling in Nigeria, which was cited by the Senate President in his remarks during the public hearing, had disclosed that about N1.45 trillion worth of different goods are smuggled into Nigeria annually through Benin Republic alone. Evidence from literature indicates that smuggling is motivated by differential tariffs or price disparities between markets. Some other factors that pave way for smuggling include cumbersome customs procedures, reluctance by traders to obtain quality standards and certifications, lack of competitive advantage in domestic products, harsh economic conditions as well as inadequate employment opportunities especially in border regions. Much as tariffs and trade restrictions are major push factors, a number of empirical studies which employed the Multiple Indicators Multiple Causes (MIMIC) model to analyse the determinants of smuggling equally found that the presence of weak rule of law and high level of corruption encourage smuggling. This is because strong institutions and rule of law make it difficult for smugglers to escape justice when apprehended. Little wonder these studies established a negative relationship between the index of rule of law and the size of smuggling. Conversely, there is a strong correlation between corruption and smuggling which means theoretically the two are birds of a feather. It is a fact that

…a number of empirical studies which employed the Multiple Indicators Multiple Causes (MIMIC) model to analyse the determinants of smuggling equally found that the presence of weak rule of law and high level of corruption encourage smuggling…these studies established a negative relationship between the index of rule of law and the size of smuggling. smuggling activities are often carried out with the connivance of corrupt government officials who see their postings to border areas as opportunity to make quick money. This is unpatriotic to say the least. Smuggling hurts the economy in a number of ways. Because it is an act of tax evasion, the government is deprived of the much-needed revenue to provide social services and undertake development projects especially for an economy that is vulnerable to external revenue shocks. Smuggled goods distort market prices since they are often cheaper than the ones supplied to markets through legal routes thereby exposing genuine traders to unfair competition. As a corollary, it undermines the local industry not least because smuggling undercuts prices of goods manufactured in Nigeria thus crowding out the market for local products. The

undesirable outcome is collapse of local industries accompanied by loss of jobs and high rate of unemployment. There is equally the low productivity associated with health and safety hazards on the part of consumers who patronize substandard, expired and fake products. In order to shield the economy from these negative effects of smuggling, it is time the government rose up to the challenge of putting in place effective measures for the patrol of the nation’s borders. Tight control at entry and exit border checkpoints is sine qua non. It is common knowledge that the security operatives at the borders lack effective communications equipment and other enablers such as operational vehicles, patrol boats and helicopters. The use of modern technology including CCTV cameras and satellitebased surveillance systems at the borders will go a long way in curbing smuggling activities. It is important therefore to ensure that border patrol officials are well equipped, well trained and well remunerated to be able to discharge their duties effectively. Moreover, the use of carrot and stick approach that gives due recognition to hardworking and honest Customs staff while punishing corrupt officials who connive with smugglers will boost staff morale. To be more effective, the special task force against smuggling comprising other security agencies should be strengthened by involving representatives of other key stakeholders especially the Manufacturers Association of Nigeria. Effective policing, though necessary, is by no means sufficient to tackle the menace of smuggling in

view of the over 1400 illegal entry points into the country according to data from the Nigeria Customs Service. Besides, it is difficult to adequately patrol the nation’s borderlines of over 4000 kilometres. Therefore, in addition to the use of modern devices to police the borders, eliminating the incentives to smuggle can reduce this nefarious activity. The current rate of smuggling through neighbouring countries is encouraged by significant tariff differentials which have made it more economically viable for importers to patronize other ports. This is especially true in the case of import of vehicles. For many foreign goods with local substitutes such as rice and textiles, the price difference can be attributed to higher cost of production in Nigeria relative to exporting countries. What is not in doubt is that smuggling is only symptomatic of the inability of local firms to compete. To this end, government should continue to enhance the ability of domestic producers to compete by facilitating access to cheaper loans. The many initiatives of the Central Bank of Nigeria especially the Anchor Borrower programme are commendable and should be sustained and possibly scaled up. Furthermore, within the broad framework of improving the ease of doing business, the government should continue to facilitate legitimate trade through the elimination of unnecessary bureaucratic procedures.

Note: the rest of this article continues in the online edition of Business Day @https://businessdayonline.com/ Send reactions to: comment@businessdayonline.com

The Niger Delta: A prescription for restorative justice

OLUWADARA ALEGBELEYE Oluwadara is a writer as well as an academic researcher. She is currently a PhD student at the Department of Food Science, University of Campinas

he Niger Delta is among the 10 most important wetland and coastal marine ecosystems in the world. In its pristine state, it is a fascinating destination with rich biodiversity, tourism prospects, diverse culture and according to numerous accounts; amazing food. It is however, home to some of the largest oil fields in the world, the abuse and mismanagement of which has been a bane to the region. Consistent improper oil exploration and production has generated astounding environmental pollution and destitution; disrupting agricultural activities and livelihoods as well as causing extensive air, soil and water pollution. In addition to militancy, war, political strife, oil bunkering and vandalism, other tragic woes of the Niger Delta include aesthetically im-

paired landscape and poor health prospects for its inhabitants. Oil reportedly seeps out of leaky pipes in some areas, obliterating aquatic species and impacting wildlife. Soot is reportedly visible in many areas, settling on furniture, clothing and peoples’ skin. Dangerous levels of life-threatening pollutants have been detected in drinking water sources in many communities, constituting significant threats to humans particularly children. Certain medical reports signify a rise in health problems associated with air pollution over the last several years and life expectancy in the Niger Delta is 40, 10 years below Nigeria’s average. While the focus of this article is remediation of the region and not blame appropriation, it is necessary to examine a few pertinent facts to effectively determine how the restoration of the region should progress. Oil exploration started in the Niger Delta in the 1950s, with the oil exploring multinationals (notably) Shell, expanding rapidly over the subsequent years. In the first instance, the oil multinationals and other key industry players had the moral and social responsibility to improve the oil rich communities, which did not happen and was not negotiated. Despite the fortune realized from oil exploration (more

than £ 30 billion worth of oil has been extracted from Ogoniland alone), the region has experienced no substantial socio-economic or infrastructural development. At some point, Shell proposed investing 1 500 million pounds into constructing new pipelines to avoid communities where so-called sabotage was rampant. If the company spent a tenth of that money developing the communities, we could argue the theft and vandalism would be averted. Further, in the past, infrastructural mishaps or equipment failure have been responsible for massive oil spills, which were conveniently blamed on criminality and sabotage. Shell alone has admitted to 1 693 recent oil spills, releasing 55 809 000litres of crude oil into the environment since 2007, which according to multiple private research statistics, is a gross underestimate. The Nigerian law stipulates that oil operators commence clean-up of spills within 24 hours. Two years after the well-documented 2009 spill near K. Dere, the United Nations Environment Programme (UNEP) detected massive pollution, well above the government’s safety limits. Apparent haphazard remediation attempts by the offending oil companies is another issue. According to Amnesty International, at least four spill sites that Shell publicly claimed to have cleaned up are still acutely contaminated even

now. Soil around Bonu well II is according to research, still encrusted with oil decades after it blew out. Recent highly publicized clean-up endeavors (such as the clean-up of Ogoniland) have been stalled with little or no tangible progress or even prospects of progress in sight. Negligence and irresponsible oil production and exploration, using techniques such as open gas flaring, which are cheaper but more hazardous and have been phased out in sane countries, is a matter that I think all Nigerians should hold the government, concerned regulatory institutions and oil companies to account for. Even though contemporary, eco-friendly technologies for extraction and exploration are available, oil companies operating in the region are hesitant to invest in these. This is due in large part, to lax state regulations and weak government control. Irrespective of who is to blame, the oil multinationals, other western influencers, corrupt government officials or the so-called bandits, the restoration has to happen and must commence in earnest. It is estimated that clean-up will cost at least 1bn dollars and will take up to 30 years and so further delay is inimical. Nigerians seem to lack the vital appreciation for the need to replenish the region and prevent fur-

ther pollution, but everyone needs to be aware of how important it is to remediate the polluted Niger Delta and start agitating for this. Relevant media personnel and outfits have to harp on these issues and continue to fuel the requisite debate. This may influence the political will of the government of the day. We have to now insist on enforcing international standards and push for policies that will ensure sustainable oil exploration that will not compromise environmental integrity and public health wellbeing. There must be a blueprint for how the oil industry should operate responsibly in the region. A joint venture between the government and the oil companies as well as collaboration across other relevant boundaries to achieve clean-up is undeniably necessary. Compensation where needful, poverty alleviation schemes, stimulation of the economy, job creation, diplomatic measures to pressurize home countries to regulate the activities of the multinational companies are some other potential options to explore. Overall, to achieve sustainable remedy to the crisis, designed strategies and policies must seek to create political and social coherence in the region.

Send reactions to: comment@businessdayonline.com

BUSINESS DAY

C002D5556

Thursday 17 May 2018

Editorial PUBLISHER/CEO

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

Bashir Ibrahim Hassan

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

Remembering Leah Sharibu

n Monday May 14, Leah Sharibu, the only remaining kidnapped teenager from Dapchi still in captivity, turned 15 in the custody of her captors despite repeated promises of the president and top security agents to secure her release. On Februar y 19, the Islamic terrorist organis a t i o n , B o ko Ha r a m , dressed in military fatigues and armed with sophisticated weapons, invaded Dapchi and went straight to the Government Girls Science Technical College where they kidnapped 110 students of the school. Amnesty International’s Nigeria Office stated in a report of March 19 that the militar y failed to respond when it was alerted to a convoy of Boko Haram heading towards G overnment Girls Science and Technical College in Dapchi, Yobe State, in the afternoon of February 19. It said testimonies from credible sources indicated that the army and the police received multiple emergency calls up to four hours before the attackers reached

Dapchi, but did not respond. “Evidence available to Amnesty International suggests that there are insufficient troops deployed in the area and that an absence of patrols and the failure to respond to warnings and engage with Boko Haram contributed to this tragedy, said Osai Ojigho, head of Amnesty International in Nigeria. Regardless, on Wednesday, 21 March, following what the Director-General of the Department of State Security, DSS, described as a series of “behind-thescene discussions,” Boko Haram drove back into Dapchi again in a convoy and returned 105 of the 110 girls abducted from the town. Four of the girls are said to have died during their abduction and one – Leah Sharibu – was left behind for refusing to denounce her Christian faith in favour of Islam. The terrorists even had time to preach and parade round Dapchi before their exit to loud cheers from the local community. They were even said to have apologised for taking the girls saying they would not have taken the girls if they realised they were Muslim girls! Amidst celebration by the presidency, a state-

ment was released to convey the pledge of president Buhari to ensure that “the lone girl is not abandoned”. “The Buhari administration will not relent in efforts to bring Leah Sharibu safely back home to her parents as it has done for the other girls...President Buhari is fully conscious of his duty under the Constitution to protect all Nigerians, irrespective of faith, ethnic background or geopolitical location and will not shirk in this responsibility, the statement signed by Garba Shehu, said. In fact, three days later the Inspector General of Police said Miss Sharibu will be released in a matter of hours. However, 58 days after and 88 days after her abduction, there has not been any word on Miss Sharibu neither have the security agencies succeeded in rescuing her as promised by the presidency. Rather it appears the presidency and the country has moved on and has forgotten about the girl. This is sad and deplorable! It was a great error and a big blunder, in the first instance, for the government to agree to leave out Miss Sharibu in the negotiations that secured the release of

the 105 girls. In a religiously sensitive country like Nigeria – or even in normal climes, it is something no government should do. It reflected very badly on the image of the government and its ability to manage Nigeria’s diverse religious and ethnic differences. We may even accept the views of the Catholic Secretariat which described Miss Sharibu’s continued detention by the terrorist sect as a demonstration of increas ed hostilities against the Christian religion in Nigeria. We commend the Bring Back Our Girls (BB O G) movement that have continued to put her issue and those of the other abducted Chibok girls in the front burner and for always demanding for their release. We also commend goodspirited Nigerians for celebrating Miss Sharibu’s birthday on social media and using the opportunity to remind the government of its promise to rescue her. We encourage them and many other Civil Society and religious groups to continue to put pressure on the government to live up to its promise to bring back the girl and the over hundred Chibok girls still in captivity.

EDITORIAL ADVISORY BOARD Dick Kramer - Chairman Imo Itsueli Mohammed Hayatudeen Albert Alos Funke Osibodu Afolabi Oladele Dayo Lawuyi Vincent Maduka Wole Obayomi Maneesh Garg Keith Richards Opeyemi Agbaje Amina Oyagbola Bolanle Onagoruwa Fola Laoye Chuka Mordi Sim Shagaya Mezuo Nwuneli Emeka Emuwa Charles Anudu Tunji Adegbesan Eyo Ekpo

ENQUIRIES NEWS ROOM 08022238495 08034009034 Lagos 08033160837 Abuja

}

ADVERTISING 01-2799110 08116759801 08082496194 SUBSCRIPTIONS 01-2799101 07032496069 07054563299 www.businessdayonline.com The Brook, 6 Point Road, GRA, Apapa, Lagos, Nigeria. 01-2799100 LEGAL ADVISERS The Law Union

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

OUR CORE VALUES

BusinessDay avidly thrives on the mainstay of our core values of being The Fourth Estate, Credible, Independent, Entrepreneurial and Purpose-Driven. • The Fourth Estate: We take pride in being guarantors of liberal economic thought • Credible: We believe in the principle of being objective, fair and fact-based • Independent: Our quest for liberal economic thought means that we are independent of private and public interests. • Entrepreneurial: We constantly search for new opportunities, maintaining the highest ethical standards in all we do • Purpose-Driven: We are committed to assembling a team of highly talented and motivated people that share our vision, while treating them with respect and fairness. www.businessdayonline.com

Thursday 17 May 2018

BUSINESS

COMPANIES & MARKETS

DAY

BoI engages SMEDAN, NEXIM to improve data, credit access for SMEs

Pg. 14

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

Africa Re emphasises innovation, creativity in growing insurance market Modestus Anaesoronye

o deepen the African insurance industry, companies and the players must embrace innovation, creativity in the way insurance services are deliv-

ered to the consumers. This is the only way we can win more consumers, sustain confidence and increase penetration, irrespective of social and environmental challenges. Corneille Karekezi, group managing director/CEO, African Reinsurance Corporation

(Africa Re) made the remark at the Company’s award ceremony to recognize outstanding firms and individuals contributing significantly to insurance growth in Africa. Karekezi said the award, an initiative of Africa Re will help build capacity and bring com-

L-R: Akin Akinfemiwa, group chief executive officer, Forte Oil and Gas Plc; Fasheun Kayode, managing director, Arrow Head Motors, and Julius Owotuga, group executive director, finance and risk, during the launch of Texaco Havoline Lubricants in Lagos.

petitiveness among companies in the industry. The award held at the recently concluded African insurance Organisation Conference in Accra, Ghana saw Nigeria’s FBNInsurance emerging ‘Insurance Company of the Year’; Richard Lowe of Activa, Cameroon emerging CEO of the YEAR; Jubilee Insurance of Kenya winning innovation company of the year; and Richard Lowe Richard Lowe has demonstrated to the entire African insurance industry that he is truly a man of Vision. He created “Globus Network”, the first Panafrican multilingual network present in 48 countries and also Globus Re, a reinsurance captive of the Globus network. 20 years ago, he started from the scratch “ Activa Assurance” which is today present in over seven countries. It is one of the major insurance company Africa can boast of. With over 30 years’ experience in the industry ,Richard Lowe held the position of Controller General from 1981 to 1989 at AGF (current ALLIANZ)He rose to the position of Deputy Managing

Cyber Security: Reactive measures not enough against attacks, says Dizengoff Josephine Okojie

gainst the background of increasing high profile data breaches with increasing sophistication, Dizengoff Nigeria has cautioned organisations against implementing reactive protective measures. According to Dizengoff, the sheer viciousness of growing cyber-attacks and threats globally makes it imperative for security efforts to focus on prevention rather than reactive protection measures. Akanna Iweka, sales &channel manager, networks and cybersecurity, Dizengoff Nigeria, who gave the advice in a chat, while reviewing Nigeria’s cyber security outlook for the year 2018, cautioned organisations to get security products that provide superior security value. “Organisations should go for products that deliver value

not just in terms of monetary cost but more for their security effectiveness,” Iweka said. He canvased the adoption of more secure preventive security platforms like the ‘Palo Alto’ which natively brings together all key network security functions, including advanced threat protection firewalls, IDP/IPS and URL filtering. “Organisations are struggling to protect themselves from security breaches. They implement various security tools and networks, applications, cloud, endpoints etc.; they make conscious efforts to meet regulatory compliance; their security teams’ work to comb through endless security alerts; and yet, there has been an increase in successful cyber breaches and data loss,” he said. Akanna said responses that have been implemented have failed in part because threats and threat actors have evolved, while many security solutions have not. ‘

“All of these have happened while many security tools, solutions and platforms have maintained the same practices proving inadequate for protecting systems against breaches.” He maintained that Palo Alto which takes the preventive approach, gives a superior alternative because all key network security functions that is advanced threat protection firewalls, IDP/IPS and URL filtering are natively built into the platform and share important information across the respective disciplines ensuring better security than legacy firewalls, UTMs, or point threat detection products. Akanna who itemized key challenges that reactive response products like Anti-Virus is not addressing in the market urged a shift away from such reactive measures focused on improving detection and response time which only narrows the window from when an attack occurs to when it is detected.

He maintained that security effectiveness is measured by the technology’s ability to deliver on three core capabilities at a minimum. Firstly is the issue of performance of intended function, which is measured by effectiveness of endpoint security in preventing malware and exploits from compromising endpoints and servers, as well as prevention of known and unknown variants of each malware and exploit. Then again the question of whether the technology has the ability to prevent attackers from bypassing its security functions. The third criterion is whether such technology can evolve to accommodate new applications, systems and platforms. Antti Ritvonen, CEO, Dizengoff said “we are leading solution provider in cyber security and we are currently providing endpoint security to major banks in the financial sector and other sectors against cyber breaches.”

Director from 1989 to 1998 in the same AGF (current ALLIANZ). He founded ACTIVA Cameroon in 1998 and remains its CEO till date. FBN Insurance Nigeria Between 2014 and 2017, FBN Nigeria achieved an average growth of 57.36 percent of premium income, 58.6 percent of net profit and 43 percent of shareholders ‘fund. For a relatively new company as FBN, the panel of judges considered those figures as exceptional performance especially in a country where insurance level is less than 1 percent. The company’s aggressive strategy to develop the retail life market led to the opening of 2000 distribution agents; the pioneering role in the use of mobile phone to bring insurance products to the lowest class of citizens in Nigeria has led FBN Insurance Nigeria to achieve 70 percent of its revenue from retail life market. Despite being approximately four years old in the insurance industry as at 2014, FBN Insurance Nigeria had become a top five life in-

surer (having risen from the 27th position as at 2010). In line with this rapid growth strategy, FBN Insurance proceeded to acquire 100% stake in Oasis Insurance Plc, a general insurance company in 2014. Through this acquisition, FBN Insurance diversified its business from only life insurance to life and general insurance. From a loss position after the acquisition, FBN Insurance Nigeria succeeded in becoming a very profitable company in the first year of operation. This profit position has been sustained annually up till now. In recognition of this strategic acquisition, the company received an award for Africa Deal of the year by M&A Atlas Awards in 2015. Jubilee Insurance, Kenya The innovation that earns Jubilee Insurance of Kenya this price is called “Julie”. “Julie” is an artificial intelligence. It is a Digital Virtual Assistant (DVA) that responds to almost all the customers’ inquiries and even offer products that customers can buy with minimal human intervention.

Dangote to employ 350 LSETF’s trainees JOSHUA BASSEY

frica’s richest man and chairman, Dangote Group, a leading employer of labour, will be absorbing 350 graduates of the Lagos State Employment Trust Fund (LSETF) Employability Support Project, who recently completed eight-week training on skill acquisition. Akintunde Oyebode, the Executive Secretary of LSETF, who is elated that Dangote will be employing the trainees, says the employability support project provides a viable platform to bridge the gap of shortage of skilled and employable labour required to fill the needs of the job market. “Manpower skills gap remains a significant issue for businesses operating in Nigeria and we are pleased to see that world-class brands are satisfied with the employability scheme and the quality of our trainees “I enjoin other corporate

organisations to follow Dangote’s lead in recruiting the well trained and certified manpower that the scheme is producing and supporting Lagos State’s effort to bridge the unemployment gap.” Amit Washington, CEO Arc Skills, says the decision by the Dangote Group to absorb the LSETF’s employability scheme is a testament to the quality of the scheme. “It is fulfilling that a multinational organisation of Dangote’s calibre has shown interest in recruiting a large number of our trainees,” says Washington, represented by Ebunoluwa Bolodeoku, general manager, Arc Skills, Nigeria. The employability support project, is an initiative of LSETF with support from the United Nations Development Programme (UNDP), and it is designed to provide unemployed and underemployed youths in Lagos State with vocational skills training by well-certified and credible training partners.

BUSINESS DAY

C002D5556

Thursday 17 May 2018

COMPANIES & MARKETS BoI engages SMEDAN, NEXIM to improve data, credit access for SMEs … as PEBEC seeks to make credit access easier for small businesses HARRISON EDEH, Abuja

lukayode Pitan, managing director of the Bank of Industry said the Agency is discussing with the Small and Medium Enterprise Development Agency of Nigeria(SMEDAN) and the Nigeria Export and Import Bank(NEXIM) for a possible way of de-risking small scale businesses for easier loan access. Pitan disclosed also that the bank is working closely with the mentioned agencies to embark on SMEs rating, and how to ensure easier credit lending to those that meet riskacceptance criteria for loan access from the Bank. Pitan who gave the information while he played host to the Presidential Council on the Ease of Doing Business Secretariat in Abuja said there are ongoing efforts to ensure easier access of credits for small scale businesses, while considering credit behaviour of small and medium enterprises. He said, “We are working with SMEDAN and NEXIM to have a credit registry data. Once we have that kind of data by end of the year, it would help us to monitor credit behaviour of people and improve access of credit to them.” He pointed out further that, “People say accessing

credit from the BoI is difficult because we are asking of Bank guarantees. Yes, we do ask for Bank guarantees, but it is not in all our credits that we ask for such guarantees” Clarifying further, he said, “There are some facilities that all you require are two guarantees, such as the programme we have for young graduates. What is important is that we want Nigerians to know that borrowing from the Bank of Industry is not to access your own share of the National cake. BoI

has been there for 59 years and must be handled sustainably” Speaking further on BoI stance on collateral registry, Pitan said,”We have registered, but there are some transactions we are currently working on. We want to make credit access easier for small scale business. A lot of collateral registries in the country, because people are not registered as such. But we are working with SMEDAN and NEXIM to ensure proper data profiling of people who come for credits”

head of its 2020 business growth transformation and plan hinged on providing efficient and reliable pension service in Nigeria, Sigma Pension has appointed Mark Collier to lead its board. Mark Collier’s appointment has come at a time of the implementation of the organisation’s strategic business objective for 2020 which heralds a firm outlook for business growth and transformation. Collier has been a NonExecutive Board member of the Company for over two (2) years, and his appointment as Chairman provides continuity in the newly restructured Board of the Company as it seeks to build and take advantage of new and developing opportunities. Mark Collier is a highly

or Nigeria to continue to produce outstanding professionals, former Minister of Health, Julius Adelusi-Adeluyi, has said young and upcoming professionals must be mentored and encouraged by successful and established professionals. Speaking at the induction of ten new fellows into the Professional Excellence Foundation of Nigeria (PEFON), Adelusi-Adeluyi, represented by Ifeanyi Atueyi, said the future of Nigeria depends on the younger elements and if they are mentored well, it means the country’s future is guaranteed.

L-R: Chinedum Okereke, managing director; Rosemary Akpo, marketing director; Chika Adibo, head of Lucozade brands & innovation, and Ola Ehinmoro, HR & corporate affairs director, all of Suntory Beverage and Food Nigeria Limited, at the launch of the 2018 Lucozade Airtime Promotion in Lagos.

Sigma Pension strengthens capacity ahead 2020 growth transformation plan Modestus Anaesoronye

In her earlier remarks, Jumoke Oduwole, who heads the Secretariat for the Presidential Council on the ease of doing business said, “For the past eighteen months, we have been having 60 days National Action Plan, which are interventions we use in harnessing our strategic initiatives with MDAs of the governments.” She remarked that, “We worked with about 40 MDAs that we worked with and 8 strategic areas we focused on high impact on business climate.”

Experts harp on mentoring to build new generation of professionals

experienced Non-Executive Director, entrepreneur and business leader with an extensive international track record in both developing and building winning financial services companies. He has a rare mix of business, strategic, sales and marketing, people and financial management skills. In 2017, the Company took strategic measures to enhance the overall brand perception by completely changing the brand’s identity. The Company unveiled a new logo and new brand elements which showcase a futuristic approach to business operations. The company also launched social media drive across all media platforms as well as a digital platform, “The Sigma Clique” for young entrepreneurs. These initiatives are targeted towards reaching out to the teeming population of young IT savvy Nigerian youths. As a result, the Company’s online

fan-base increased by over 2,000 percent at the end of 2017. Dave Uduanu, managing director/CEO of the Company attributed the past years’ success to the refreshment of the new brand identity and the renewed commitment of the company towards demonstrating the core values of Teamwork, Leadership and Competence. He said, “We believe in strong work ethics, extremely high professional standards and excellent delivery of our brand promise. We are set to change the narrative of pension business in Nigeria. This is evident in the recognition of Sigma Pensions by the London Stock Exchange (LSE) as one of the fastest growing companies in Africa. From the moment a contributor registers with Sigma Pensions until retirement, we never stop working tirelessly for you”.

“We should be role model to them so that these youths can have better future and we supported them through counseling and educational support.” He maintained that for the future of the youths and Nigeria, there is need to help youth professionals. “The older ones will expire and there are people coming behind us, if they are not properly guided, they can miss the track.” Providing insight about the organization, he said PEFON is a body of professionals from different professions, formed to promote ethical and excellent acts among professionals. “We are not just businessmen and traders but professionals, reason ethical conduct is taken seriously. We are also concerned about upcoming youths.” One of the inducted fellows, Lateef Bakare, thanked the Foundation for recognizing him. He also said it is important that senior professionals provide the right leading and guidance to young one. Morenike Oshinibosi, who stood in for her husband, Richard Oshinibosi, said she was very impressed about the objectives of the foundation, especially the aspect of professionals investing in people behind them. “I am all for it. It is very encouraging and I am encouraged, as I will be leaving with a better perspective to help upcoming and young professionals.”

Julius Berger celebrates Nigerian professional technical skills … at EFCC complex commissioning

anaging Director of Julius Berger Nigeria plc, the flagship of the country’s engineering construction industry, has described the new EFCC head office complex in Abuja as a proud “product of local content” that exemplifies a “shining example of what can be achieved in Nigeria, by Nigerians for Nigeria.” Wolfgang Goetsch made the remarks at the commissioning ceremony of the new Economic and Financial Crimes Commission (EFCC) head office complex in Abuja on Tuesday, saying, “Julius Berger feels privileged to have been the chosen construction partner for the project.” He said the building, an engineering construction masterpiece, and its supporting infrastructure would contribute substantially to the continued

development of Nigeria. According to Goetsch, Julius Berger, a Nigerian company, constructed the optimally designed, efficient and iconic edifice together with a robust team of mainly domestic consultants, subcontractors and suppliers. He thanked them all for providing the “utmost professional consultancy services and partnership,” noting, “From the most complex structural component down to the smallest screw has been achieved by Nigerians, through hard work, great talent and expert craftsmanship. “It is proof that Nigeria’s real asset and resource is not finite oil, but rather the infinite skill of its people and their commitment towards success – this is what has, and will continue to drive Nigeria forward.” He congratulated and thanked the EFCC and the Fed-

eral Government for dedicating themselves to developing such an edifice for the purposes of fighting financial crimes, adding that it clearly indicated to the local and international community the seriousness of Nigeria’s priority, pledge and strong commitment towards ending corruption in the country. Functionally laid out and comprising of gate houses, main administration building, technical area with power house and water treatment, parking deck and lots, security room, lounge and toilets, restaurant, library, briefing hall, clinic, forensic laboratories, information and communication technology rooms, cell buildings, gym, conference and executive and chairman’s offices, he said the construction of the head office had been a long and momentous journey.

Thursday 17 May 2018

C002D5556

BUSINESS DAY

COMPANIES & MARKETS Yola Electricity Distribution Company now viable, says govt DIPO OLADEHINDE

igerians should expect less worrying experiences in the hands of electricity distribution companies (DisCos) as Yola Electricity Distribution Company (YEDC) has become the first distribution company to engage a consumer on the eligible customer policy. Babatunde Fashola, minister of Power, Works and Housing made the remark at the 27th monthly power sector operators meeting held in Yola,Adamawa State He said although the private investors gave up on Yola DisCo by declaring force majeure but government took it up and has proven the business is viable. “For the DisCos who still doubt the possibility of eligible customer policy, Yola DisCo has proven that it is not about anybody trying to take the big customers, it is about you having a redefined relationship with your big customers,”

Fashola said. Fashola noted that in 2015, Yola DisCo was the only one of the 11 (eleven) privatized DisCos that was given up as being unviable, however following the Government appointment of Engr. Mustapha Umara to manage the DisCo, he and his team has proven Yola DisCo is not unviable. “Change is not an event but a process that involves the application of methods and the making of choices, some of which are difficult, but very often resourceful, even if sometimes misunderstood,” Fashola said. The Managing Director of YEDC, Mustapha Baba Umara said the public firm has improved its revenue collection by over 200 per cent and is the first DisCo to actualise the Eligible Customer regulation. He said it has fixed 80 per cent of the lines destroyed by the insurgency to supply more power to the northeast adding that it has keyed into the Meter Assets Provider (MAP) regulation to install meters for more of its customers. Speaking on the changes

in the last one month, Fashola announced that a substantive Chairman, in the person of Professor James Momoh, is now in place for the Nigerian Electricity Regulatory Commission (NERC), following confirmation by the Senate, and his swearing in on the 3rd day of May 2018. “Within the last one month, i had the privilege to Commission the Odogunyan Transmission Substation completed by TCN to serve customers in Lagos and Ogun States, under the Ikeja DisCo franchise,” Fashola said. The minister for power and housing ascertain that the government is making progress on the Federal Government’s planned intervention in the Distribution Value Chain to help deliver the 2,000MW that is constrained by distribution equipment. He added that the advertisements for quotation by original equipment manufacturers for Transformers, Breakers, and Associated Equipment compiled by the DisCos have been published and awaits responses.

Business Event

L-R: Chinedu Amadi, regional co-ordinator, South-east/South-south, Agribusiness of First City Monument Bank; Fatai Afolabi, secretary-general, Plantation Owners Forum of Nigeria (POFON); Shola Obikanye, head, agricultural business finance & STCF of FCMB; Emmanuel Ibru, chairman of POFON, and Dauda Momodu, manager, mission road branch (Benin) of the Bank, during the launch of the Roundtable on Sustainable Palm Oil (RSPO) National Interpretation, supported by FCMB, in Benin City, Edo State.

Techfest charts era of collaboration for tech ecosystem in Nigeria FRANK ELEANYA

n a bid to emphasis the importance of collaboration for the future of the technology ecosystem - and by extension financial technology - in Nigeria, eight companies whose businesses depend largely on technology, banded together for the maiden edition of TechFest 2018. Led by Diamond Bank, the companies which include Visa, Microsoft, Deloitte, Interswitch,

MTN Nigeria, Beat FM and the Nigeria Inter-bank Settlement System PLC (NIBSS) organised what is arguably the largest technology gathering of 2018 at the Landmark Event Centre. According to some of the partners who spoke to reporters, Techfest became necessary given the increase in homegrown innovations from the players in the country and the disparate way they operate. Yemi Saka, partner at Deloitte responsible for Consulting Business across West Africa, told

BusinessDay that “Often you do not get an event where a lot of these smart vibrant young people and the right organizations come together to provide an outlet where we can showcase innovation.” For the tech ecosystem to make an impact and realize the potential that it is known for, collaboration among the players no matter their size is seen critical. Techfest which had the theme ‘Spark Your Curiosity’, saw an impressive 8,000 online registered participants for a firsttime tech event in Nigeria.

L-R: Yahaya Yahaya, partner, Canary Legal/company secretary for Momas Electricity Manufacturing Company Limited; David Ogunniyi, chief operating officer, Momas Electricity Manufacturing Company Limited (MEMMCOL); Tunde Omole, member, board of directors, MEMMCOL; Kola Balogun, chairman, MEMMCOL, and Alaba Lawson, presenting the Local Content Award to MEMMCOL, during the LCCI Awards held recently in Lagos.

Promasidor reaffirms commitment to human capital development KELECHI EWUZIE

romasidor Nigeria Limited as part of its corporate social responsibility initiative to develop careers capacity for the next generation professionals has organised the third edition of its career guidance workshop for secondary schools in the Federal Capital Territory, Abuja. The career guidance workshop is organised with the aim of enhancing students’ knowledge in making informed decisions on the right choice of career. Anders Einarsson, Managing Director, Promasidor Nigeria Limited, said Promasidor’s Harness Your Dream was initiated to guide students to choose careers that match their talents, skills and aspirations. Einarsson, who was represented by Andrew Enahoro, Head, Legal and Public Rela-

tions, explained that students at the JSS3 level were the main target because they would be faced with the task of choosing relevant subjects that would determine their future careers in the next academic session. He said youth unemployment is part of the problem experienced in the country and that they would have been more creative with less dependence for means of livelihood if some of them had been properly guided in making right career choices. According to him, the success of past editions held in Lagos and Abeokuta, has prompted Promasidor to extend the laudable initiative to schools in Abuja and other parts of the country since the company serves the nutritional needs of people across the country. Kabiru Ibrahim Matazu, Chairman, Universal Basic Education Board (UBEB), Abuja,

observes that guidance is the key that unlocks the brain of a student in achieving good results while making the right career choice. Matazu who was represented by Usman Yahaya, Board Member 1 of UBEB, Abuja, said that through “Promasidor’s Harness Your Dream,” students would be able to know the steps and processes to take to attain their career objectives which would place them in leadership and entrepreneurial positions in future. According to him, “Promasidor’s career guidance initiative is in line with UBEB’s order that “Education for All is the Responsibility for All.” On her part, the Principal of Jabi Junior Secondary School, Aisha Bello also applauded Promasidor’s resolve to enhance students’ perception in choosing the right profession, and said that the workshop is very crucial to students at the JSS3 level.

L-R: Wole Olufore, executive director, commercial; Wale Odufalu, deputy managing director; Femi Akintunde, group managing director; Babatunde Green, managing director, Alpha Mead Healthcare Management Services (AMHS) and Amaebi Fiderikumo, executive director, finance all of the Alpha Mead Group, at 2018 Nigerian FM Roundtable pre-event press conference in Lagos.

L-R: Hillary Akpan, general manager, gas division, NAPIMS/NNPC; Moses Ekpo, deputy governor, Akwa Ibom State , governor Udom Emmanuel and Paul McGrath, MD/chairman ExxonMobil at the groundbreaking ceremony of 3 community assistance projects by NNPC/MPN JV at Mkpat Enin, Akwa Ibom recently

BUSINESS DAY

C002D5556

Thursday 17 May 2018

BUSINESS DAY

C002D5556

Investor

In association with

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

Year Open

38,243.19

Market capitalisation

N13.609 trillion

NSE Premium Index

The NSE-Main Board

NSE ASeM Index

2,564.13

1,713.69

1,087.32

Week open (04 – 05–18)

41,218.72

N14.931 trillion

2,951.14

1,835.05

958.52

Week close (11 – 05–18)

41,022.31

N14.860 trillion

2,961.39

1,814.94

958.52

Percentage change (WoW) Percentage change (YTD)

-0.48 7.27

0.35 15.49

NSE Lotus II

NSE Ind. Goods Index

NSE Pension Index

330.69

2,560.39

1,975.59

1,379.74

993.55

359.10

2,682.65

2,088.13

1,606.90

974.72

359.55

2,691.76

2,087.78

1,602.05

NSE Banking Index

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

1,746.68

475.44

139.37

1,873.70 1,865.24

525.53

144.36

527.92

145.56

NSE 30 Index

-1.10

0.00

-0.45

5.91

-11.85

6.79

0.45 11.04

976.10

0.83 4.44

-1.90 -0.14

0.13

0.34

-0.02

8.73

5.13

5.68

-0.30 16.11

Courteville, Sovereign Trust, Unic, Niger, top underperforming stocks’ league …record over 50% value loss year-to-date HEANYI NWACHUKWU

nvestors in stocks such as Courteville Business Solutions Plc, Sovereign Trust Insurance Plc, Unic Insurance Plc, and Nigeria Insurance Plc were unlucky not to have benefitted from over N1trillion capital appreciation seen so far this year at the Nigerian stock market. After an impressive 42percent rally recorded last year, many equity analysts have remained bullish that the Nigerian equity market space still offers pool of untapped potential for value hunters. While the Nigerian stock market yields in excess of 6.3percent returns this year, equity investors in the aforementioned stocks and some other were caught in the web of value loss year-to-date (Ytd). Though the Nigerian stock market rolled into positive territory at the end of trading week to May 11, equity analysts at Lagos-based Vetiva Capital still believe the underlying mixed sentiment in the market will continue to drive a sideways trading pattern on the Exchange. As at Monday May 14, 2018, no fewer than forty-four (44) equities prices have underperformed the Nigerian Stock Exchange (NSE) All Share Index (ASI) at 40,677.61 points. Already, stocks that recorded over 50 percent decline in value

NSE data as at week ended May 11, 2018

this year include Courteville Business Solutions Plc which was priced at 20kobo, representing d e c l i n e o f 6 0 p e re nt ; Nig e r Insurance Plc at 24kobo has lost 52percent this year; Sovereign Trust Insurance Plc at 20kobo per share represents a decline of 60percent this year; likewise Unic Insurance Plc which at 20kobo per share represents 60percent loss. INVESTOR checks on price lists at the Nigerian bourse show other stocks that have not impressed shareholders in the market to include: A.G. Leventis (Nigeria) Plc which as at Monday May 14 recorded year-to-date loss of 15.7percent to 59kobo. Also, Newrest Asl Nigeria Plc has underperformed the NSE ASI after losing 17.6percent of its share price this year; Equity Assurance Plc (-44percent); Aluminium Extrusion Industries (-4.8percent); Cadbury Nigeria Plc (-16.4percent); Cornerstone Insurance Plc (-30percent); Dangote Flour Mills Plc

(-5.3percent); Dangote Sugar Refinery Plc (-7.3percemt); Deap Capital Plc (-4percent); Etranzact Plc (-9percent); and Fidelity Bank Plc (-2.4percent). Research analysts at Capital Bancorp in their outlook are cautiously bullish in this first half (H1) of 2018 than in the second half (H2) of 2018. They believe the current prices of stocks still give room for ample upside and significant return to investors. They advised that investment in the stock market

be made mainly on fundamental analysis and not on the back of a band wagon effect which could easily fizzle out at any moment and keep the investor trapped in a wrong stock. Further look at the stocks that have underperformed the NSE ASI include: Dunlop Plc (-36percent); Nigerian Enamelware Company Plc (-4.9percent); First Aluminium Nigeria plc (-18percent); Forte Oil Plc (-8.1percent); Hallmark Insurance Plc (-42percent); and International Breweries Plc (-5percent). “Over the past 3 months, the performance of Nigerian equities has remained largely calm. The strong full year 2017 and firstquarter (Q1) 2018 corporate earnings, as well as improving macroeconomic indicators, have failed to spur another round of bullish momentum as seen in January 2018”, said Kayode Tinuoye-led team of research analysts at United Capital in their

May 15 note to investors. “Though the downtrend has created an opportunity for bargainhunters, sentiment remains grossly underwhelming, with the broader index depreciating 8.3percent as at May 14, 2018 relative to January 31, 2018”, the analysts added. They further noted that recently released first-quarter 2018 capital importation data by the National Bureau of Statistics (NBS) clarifies why appetite for equities is waning. Also this year, International Energy Insurance Plc share price has lost 12percent ; Japaul Oil Plc (-26percent); LASACO Plc (-22percent); Mutual Benefit Insurance Plc (-42percent); Meyer Plc (-2.9percent); Mobil Oil Nigeria Plc (-3.4percent); MultiTrex Plc (-20percent); Nigerian Breweries Plc (-9.6percent); Neimeth Plc (-4percent); Nestle Plc (-1.7percent); and Prestige Assurance Plc (-8percent). Other stocks on the laggards table this year are: Regency Insurance Plc (-46percent); Royal Exchange Assurance Plc (-36percent); Staco Insurance Plc (-4percent); Total Nigeria Plc (-3.5percent); Tripple Gee Plc (-17percent); UACN Plc (-1.2percent); UACN Property Development Company Plc (-22.9percent); Union Bank of Nigeria Plc (-13.5percent); UBA Capital Plc (-6.5percent); Universal Press Plc (-3.1percent); Veritas Kapital Plc (-16percent); and Lafarge Africa Plc (-8.4percent).

BUSINESS DAY

Thursday 17 May 2018

C002D5556

Investor

Helping you to build wealth & make wise decisions

United Capital investment views

Investor’s Square

ASI defies oil market rally, down 0.5% week-on-week

ontrary to its global counterparts, the domestic equities market was largely bearish in the trading week to May 11, as sell sentiments dominated proceedings on the local bourse. The market ended the first four trading days of the review week in the red but rebounded on the last day. Accordingly, the All Share Index (ASI) declined 0.5percent week-onweek (w/w) to settle at 40,022.3 points, market capitalization lost N71.1billion w/w to close at N14.9trillion. Performance across the sectors we track was mixed as 3 of 5 sector indices ended the week in the green. The Financial services [Banking (+0.5percent); Insurance (+0.8percent)] led the week’s gainers, recording a total of 1.3percent gain w/w as investors hunt for bargains in ZENITH (+5.1percent), FIDELIT Y (+4.1percent), LINKASSURE (+11.8percent) and MANSARD (+4.7percent). T h e O i l & Ga s i n d e x followed, chalking modest 0.1percent gain w/w on the back of price appreciation in ETERNA (+20.7percent). On the flip side, the Consumer Goods (-1.9percent) index led the losers camp, consequent on profit-taking in NB (-3.5percent), while the Industrial Goods recorded 2bps loss w/w owing to a price decline in DANGCEM (-0.2percent). Investor sentiment weakened as market breadth settled at 0.8x (relative to 1.2x in the previous week); 30 stocks appreciated against 36 decliners. Also, activity level softened as average volume and value traded decline 4.7percent and 0.2percent w/w to 317.1mn units and N5.2billion respectively. In the week ahead, given the positive close to the week, we expect to see investors hunt for a bargain in the early session of the week. Money Market: Renewed aggressive mop-up drives rates higher Deviating from the cash build-up stance that the CBN has assumed for the past couple of weeks, last week brought about tighter system liquidity as money market rates averaged 21.7percent for the week (Previous week: 3percent). Open Buy Back (OBB) and Overnight (ON) rates closed the week at 65percent and 73.4percent respe ctively (Previously 3.3percent and 2.8percent). The week’s liquidity profile was weighed by outflows from OMO and Wholesale FX interventions by the CBN. The OMO auction was carried

out on Thursday, wherein the CBN mopped up the total subscribed amount of N454.2billion at an average stop rate of 11.6percent. All of these tightening activities more than offset the N290.9bn that hit the system in the form of OMO maturities. In terms of liquidity profile, N330.3billion maturing bills are expected to hit the system this week (N67.7billion from primary issuance maturities and N262.6billion from OMO issuance maturities). The CBN is also scheduled to hold its bi-monthly NTB auction with a total offer amount of N33.8billion. Yields : Average yield succumb to aggressive mopup The week to 11th April 2018 saw a bearish market as fixed income players responded to the aggressive OMO mop up by the CBN. Consequently, average T-bill yield increased

of the naira is expected to remain tied to the spate of CBN’s intervention in the spot and forward market. Global equities bullish amid oil market rally Global equity indices posted solid gains in the prior week, thanks to the renewed uptrend in the global price of crude oil following President Trump’s withdrawal from the Iranian Nuclear deal last Tuesday. As at close of the week, Brent crude price settled at a record $77.1/ barrel. Equity benchmarks in the US rebounded, driven by positive Q118 corporate earnings result and momentum in the oil market, with W TI hovering above $70/b for the major part of the week, amid the announcement of U.S sanction on Iran. O v e ra l l , t h e t e c h - l a d e n Nasdaq Composite Index,

RSA fund price of PFAs as at May 11, 2018 S/N 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

PFAs CrusaderSterling Pensions Premium Pensions ARM Pension Mgrs. Stanbic-IBTC Pensions Legacy PFA PAL Pensions NLPC PFA First Guarantee Pension Trustfund Pensions Leadway Pensure PFA SigmaVaughn Pensions AIICO Pension Managers APT Pensions Fidelity Pensions AXA Mansard FUG Pensions OAK Pensions Investment One Pension Mgrs. IEI Anchor Pension Managers Radix Pension NPF Pensions

CURRENT PRICE 3.9743 3.9058 3.8881 3.7536 3.5849 3.4329 3.4110 3.2661 3.2385 3.1208 3.1101 3.0091 2.7975 2.7114 2.6821 2.6170 2.5212 2.4556 2.2966 2.0160 1.4583

•Have you been shabbily treated by your registrar, stockbroke r or other capital market operators? Let us know and investor will help you investigate and report back. E-mail: iheanyi.nwachukwu@businessdayonline.com

OTC market: Activities in T-Bills seen rising OTC Monthly

…account for 45.85% of N14.94trn fixed income, currency market turnover Vol. 4, No. 4; April 2018

IHEANYI NWACHUKWU

S&P 500 Index and Dow Jones Industrial Average, all inched higher w/w by 2.7percent, 2.4percent, and 2.3p ercent resp e ctively. European stocks also closed h i g h e r w i t h U K ’s F T S E (+2.1percent), Germany’s DAX (+1.4percent), PanEuropean STOXX 600 (+1.4percent) and France’s CAC (+0.5percent), all closing higher w/w. All indices within the BRIC classification trended northwards too. Russia’s RTSI (+4.1percent) amassed the most gains w / w , t ra i l e d by B raz i l’s IBOV (+2.5percent), China’s S C H O M P ( + 2 . 3 p e rc e n t ) and India’s BSE SENSEX (+1.8percent). African equity indices performance was largely bearish, save for the South Africa’s FTSE/JSE (+1.3percent) which posted a w/w gain, Egypt’s EGX100 (-4.2percent), Kenya’s NSE (-1.5percent) and Ghana’s GSSECI (-0.6percent) all closed the week in the red territory.

Foreign Exchange 36.60%

ctivities in the Treasury Bills (T.bills) market rose remarkably in April and accounted for 45.85percent of record turnover in the Fixed Income and Currency (FIC) markets. In March it represented 35.69percent of turnover in the Fixed Income and Currency OTC Monthly markets. Vol. 4, No. 4; April 2018 The turnover in the Fixed Income and Currency markets OTC Ma OTC Turnover Tran for the month of April amounted of A Fixed Income Turnover (₦'trn) reco to N14.94trillion; a 4.59percent ($0.16billion) from the previous recorded the previous month Activ (N720billion) decrease from the month ($10.98billion) and a respectively. Year-to-Date (YtD), turn 36.6 value recorded in March and 126.83% ($6.05billion) increase trading intensity was 1.79 and Agre 11.1 a 69.81percent (N6.14trillion) YoY ($4.77billion). Member-CBN 0.45 for T.bills and FGN bonds cont increase year-on-year (YoY), trades recorded $3.83billion in respectively. T.bills within the six FX Mar Tran according to recently released April, representing a decrease of (6) toYield twelve (12) 11.8 Benchmark Securities ( % Δ)month maturity the m report at FMDQ OTC Securities 32.83percent ($1.87billion) from bucket became the most actively FX W whil Exchange. the previous month ($5.70billion) traded, accounting for a turnover rate The Foreign Exchange (FX) and a 60.02percent ($1.44billion) of N1.87trillion in April. depr 29, 2 marketaccountedfor36.60percent increase YoY ($2.39billion) Yields on the short, medium Tota 21.7 of the total turnover (39.06percent as the effect of the Secondary and long-term spectrum of the tota Inter in March); while the Money Market Intervention Sales (SMIS) sovereignyieldcurvedecreasedby relat Market (Repurchase Agreements continued to boost activity in the anaverageof360basispoints(bps), YoY ($0.1 (Rep os)/Buy-Backs and FX Market 62bps and 55bps respectively. YoY Mem Unsecured Placements/Takings) The 22 nd Naira-settled OTC The spread between 10-year and ($1.8 ($2.3 accounted for 11.17percent of to bo Fixed Income Turnover (₦'trn) market turnover (17.62percent in The $660 March), according to the report, APR OTC Monthly. Fixed In Turn These three (3) segments ₦7.7 acco collectively contributed circa 82.8 Outs 93.61percent to the total turnover (₦0. in the FIC markets. incre Benchmark Securities Yield ( % Δ) Trad Transactions in the FX OTC Monthly 0.51 the p market settled at $16.47billion Vol. 4, No. 4; April 2018 and buck (N5.47trillion) in April, a decrease OTC Market Summary OTC Turnover Apri Transaction turnover in the Fixed Income and Curren of 11.80percent ($2.20billion) Yield of April amounted to ₦14.94trn; a 4.59% (₦0.72 decr recorded in March and a 69.81% (₦6.14trn) increase when compared with the value Activities in the Treasury Bills (T.bills) marketThe acc 214b turnover (35.69% in March), while the Foreign Excha recorded in March ($18.67billion). 36.60% of the total turnover (39.06% in March). Th Money benchmark yields closed In the month under review, the FX Futures contract, NGUS APR 3-month Agreements (Repos)/Buy-Backs & Unsecured Place Activ 11.17% of market turnover (17.62% in March). These Apri 25, 2018, worth $660.49million, positive at 214bps for April 2018 Naira depreciated at the Investors’ contributed circa 93.61% to the total turnover in(₦2. the (-122bps in March) indicating an decr Market & Exporters’ (I&E) FX Window matured and settled in April, FX Unse Transactions in the FX market settled at $16.47bn (₦ sloping yield curve. closing the month at $/N360.51 whilst a new 12-month contract – upward 53.1 11.80% ($2.20bn) when compared with the value re the month under review, thesecured Naira depreciated 51.5 at t Activities in the (from $/N360.20 as at March NGUS APR 24, 2019 – for $1billion, Aver FX Window closing the month at $/₦360.51 (from $/ due whilst also trading (i.e. at a discount to the parallel mark Market Repos/Buy29, 2018) while also trading at a was introduced by the CBN at $/ Money rate at the beginning and end of the month atMarket $/₦362 N362.44. Backs) settled at N1.60trillion in depreciated slightly, losing ₦0.05 to close at $/₦305. discount to the parallel market The 29, 2018) amo Turnover in the Fixed Income April, which was 38.81percent Total value traded at the I&E FX Window in April se which maintained the same rate Exec 21.78% ($1.32bn) relative to the value recorded in M lower than the value Mar at the beginning and end of the marketforthemonthofAprilunder (N1.02trillion) total value traded year-to-date at the I&E FX Window in Ap Inter-Member trades (N2.62trillion). recorded $1.82bn in April, a review settled at N7.77trillion, recorded in March month at $/N362. relative to the value recorded in March ($2.00bn), an YoY ($0.56bn). turnover Member-Client trades stood at $1 a 15.20percent (N1.02trillion) Year-on-year, on Repos/ The CBN Official Spot rate ($0.16bn) from the previous month ($10.98bn) and recordeda44.14percent YoY ($4.77bn) depreciated slightly, losing N0.05 increase month-on-month Buy-Backs Member-CBN trades recorded $3.83bn in April, repr from ($1.87bn) from the decrease previous month ($5.70bn) and a to close at $/N305.70 (from $/ (MoM). Transactions in the T.bills (N1.27trillion) ($2.39bn) as the effect of the Secondary Market Inte marketaccounted the value recorded in April 2017 N305.65asatMarchFixed 29,2018). Total Turnover to boost activity in the FX Market Income (₦'trn) for88.18percent The 22 Naira-settled OTC FX Futures contract, valuetradedattheI&EFXWindow oftheoverallFixedIncomeMarket, (N2.87trillion). $660.49mm, matured and settled in April, whilst a n APR 24, 2019 – for $1.00bn, was introduced by the C Unsecured Placements/ in April settled at $4.74billion, an increase from the 82.88percent Fixed Income Market (T.bills and FGN bonds) Takings closed the month at a decrease of 21.78percent recorded in March. Turnover in the Fixed Income market for the m a 15.20% (N1.02trn) increase MoM. Tra OutstandingT.billsattheendof a ₦7.77trn, turnover of N63.74billion, ($1.32billion) relative to the value accounted for 88.18% of the overall Fixed Income recorded in March 53.11percent decrease recorded in March ($6.06billion). the month stood at N13.60trillion, a 82.88% Outstanding T.bills at the end of the month stood at ₦ an increase of 3.10percent (N72.19billion) from (₦0.41trn) from the previous monththe (₦13.19trn). FG This brings the total value traded increased marginally to close at ₦8.03trn, from ₦7.8 Benchmark Securities Yield ( % Δ) recorded in Income March Trading intensity in the Fixed market for the year-to-dateattheI&EFXWindow (N410billion) from the previous figure 0.51 and 0.12 for T.bills and FGN bonds, respectivel month (N13.19trillion). FGN ( N 135.92billion) and a to $19.95billion. the previous month respectively. YTD Trading intens . 5FGN 0 pbonds e r c respectively. e n t d e cT.bills r e awithin s e the six (6) Inter-Membertradesrecorded bonds outstanding value also 5 1and bucket became the most actively traded, accountin April on YoY basis $1.82billion in April, a decrease of increased marginally to close at (N67.69billion) Yields on the short, medium and long-term spectru decreased by an average of Average 360 basis points (bps), 6 8.71percent ($0.17billion) relative N8.03trillion, from N7.89trillion (N131.42billion). The spread between 10-year and 3-month bench Overnight – 2018 Nigerian Inter214bps for April (-122bps in March) indicating Money (Repos/Buy-Backs and Unsecured Place BankMarket Offered Rate (NIBOR) for Activities in the secured Money Market (i.e. Repos/B the period review stoodlower than April, which under was 38.81% (₦1.02trn) YoY, turnover on Repos/Buy-Backs r at(₦2.62trn). 3.88percent in 2017 (₦2. decrease from the(15.97percent value recorded in April Unsecured Placements/Takings closed the month March), due to improved inter53.11% decrease (₦72.19bn) from the figure record 51.50% decrease (₦67.69bn) on YoY basis bank liquidity. The number of (₦131.42b Average O/N NIBOR for the period under review sto due to improved inter-bank liquidity on executed trades captured Market Surveillance the E-Bond Trading System The number of executed trades captured on the E to 21,574 as against 14,055 recorded in M inamounted April amounted to 21,574 Executed T.bills trades increased by 59.34% (6,772 whilst14,055 executedrecorded FGN bonds trades asMarch) against in also incre in April (2,642 in March) March. Executed T.bills trades increased by 59.34percent to the value recorded in March in March. ($2billion), and a 224.16percent Trading intensity in the Fixed (6,772) to 18,185 in April (11,413 ($1.26billion) increase YoY Income market for the month in March) whilst executed FGN ($0.56billion). Member-Client under review settled at 0.51 and bonds trades also increased by trades stood at $10.82billion, 0.12 for T.bills and FGN bonds, 28.27percent (747) to 3,389 in a decrease of 1.44percent respectively, from 0.42 and 0.15 April (2,642 in March). FGN Bonds 6.14%

T.Bills 45.85%

FX MARKET TURNOVER ($'bn)

Inter-Member

Member-Clients

Member-CBN

Total Turnover

3M-6M FGN Bonds 6.14% 12M-2Y 0.03 0.00 3Y-5Y 0.03 0.02 7Y-10Y 0.01 15Y-20Y

April 1.40 0.41 0.00 0.01 1.82 7.20 2.41 0.58 0.31 10.82 1.77 0.00 0.67 0.81 3.83 16.47

FX Spot FX Swaps FX Futures Others Total FX Spot FX Swaps FX Futures Others Total FX Spot FX Swaps FX Futures Others Total

March 1.43 0.49 0.00 0.07 2.00 7.35 2.18 0.14 0.58 10.98 2.94 0.10 0.67 1.11 5.70 18.67

Unsecured Placements/Takings Repurchase 0.43% Agreements/Buy-Backs 10.74%

Other Bonds 0.25%

Up to 1M

0.28

MoM2Δ3 ($'bn) -0.03 -0.08 0.00 -0.06 -0.17 -0.15 0.22 0.44 -0.26 -0.16 -1.16 -0.10 -0.01 -0.29 -1.87 -2.20

MoM Change Δ (%) -1.96 -16.72 0.00 -89.19 -8.71 -2.01 10.17 324.38 -45.53 -1.44 -39.62 0.00 -1.11 -26.60 -32.83 -11.80

Foreign Exchange 36.60%

0.78 0.86

1.87

0.24

0.22

T.Bills 45.85%

FX MARKET TURNOVER ($'bn)

0.00

April 1.40 -0.97 0.41 -2.45 0.00 0.01 1.82 7.20 2.41 0.58 0.31 10.82 1.77 0.00 0.67 0.81 3.83 16.47

-1.00

FX Spot FX Swaps FX Futures Inter-Member -3.00 Others -4.00 -3.52 Total -3.94 -5.00 -4.55 FX Spot FX Swaps FX Futures Member-Clients Others Total FX Spot FX Swaps FX Futures Member-CBN Others Total Total Turnover -2.00

Up to 1M

0.28

12M-2Y

March

-0.731.43 -0.58

0.49 0.00 0.07 2.00 7.35 2.18 0.14 0.58 10.98 2.94 0.10 0.67 1.11 5.70 18.67

MoM2Δ3 ($'bn) -0.03-0.62 -0.08 0.00 -0.06 -0.17 -0.15 0.22 0.44 -0.26 -0.16 -1.16 -0.10 -0.01 -0.29 -1.87 -2.20

-0.60

MoM Change Δ (%) -0.62 -1.96 -16.72 0.00 -89.19 -8.71 -2.01 10.17 324.38 -45.53 -1.44 -39.62 0.00 -1.11 -26.60 -32.83 -11.80

-0.62

0.78 0.86

3M-6M

1.87

0.03 0.00 0.03 0.02

3Y-5Y

FX Mar ■ Tran 11.8 the m FX W whil rate depr 29, 2 ■ Tota 21.7 tota ■ Inter relat YoY ($0.1 YoY ■ Mem ($1.8 ■ ($2.3 to bo ■ The ■ $660 APR

Fixed In ■ Turn ₦7.7 acco 82.8 ■ Outs ■ (₦0. incre ■ Trad 0.51 the p and buck Apri ■ Yield decr ■ ■ The 214b

Money ■ ■ Activ Apri (₦2. decr ■ Unse ■ 53.1 51.5 ■ Aver due

■ Market ■ The amo ■ Exec Mar in Ap ■

Notes: 7Y-10Y 0.24 * “Others” include FX Forwards, Options & Cross Currency Interest Rate Swaps; “Member” means Dealing Member (Banks) 0.01 1 – Year-on-Year; 2 – Month-on-Month; 3 – Change; 4 – Central Bank of Nigeria; 5 – Federal Government of Nigeria; 6 – Anonymous Firm Order; 7– 15Y-20Y This report is produced 0.22 by the Market Development Group of FMDQ OTC Securities Exchange (FMDQ) for information purposes only. DISCLAIMER: and other information in this report, as well as reference materials and/or links to other sites, have been compiled from publicly available sources belie ■ or solicitation to any person to enter any transaction or adopt any hedging, trading or investment strategy, nor does it constitute any prediction to lik in any illustration contained therein. All rates and figures appearing are for illustrative purposes only. To the extent that the research data emanate f to be relied upon for investment purposes. All information is provided "as is" without warranty of any kind. FMDQ (and affiliates) and the third-party user and/or any third party including warranties as to accuracy, timeliness, completeness, merchantability, or fitness for any purpose. Unless, in the no liability in tort, contract, or otherwise (and as permitted by law, product liability), to user and/or any third party. FMDQ (and affiliates) and the t ■ 0.00 lost opportunity, indirect, special, consequential, incidental, or punitive damages whatsoever, even if FMDQ has been advised of the possibility of su

Enquiries: mdg@fmdqotc.com

-1.00

Phone: +234 -1-2778771, 2771719

-0.97

-2.00 -3.00

Unsecured Placements/Takings -4.00 Repurchase 0.43% Agreements/Buy-Backs -5.00 10.74% Other Bonds 0.25%

-0.73

-0.58

-0.60

-0.62

-2.45

-3.94

■

-3.52

■

-4.55

Foreign Exchange 36.60%

■

FGN Bonds 6.14%

■

T.Bills 45.85%

Inter-Member

Member-Clients

Member-CBN

Total Turnover

Up to 1M

April 1.40 0.41 0.00 0.01 1.82 7.20 2.41 0.58 0.31 10.82 1.77 0.00 0.67 0.81 3.83 16.47

FX Spot FX Swaps FX Futures Others Total FX Spot FX Swaps FX Futures Others Total FX Spot FX Swaps FX Futures Others Total

3Y-5Y

7Y-10Y

15Y-20Y

0.03 0.00 0.03 0.02 0.01

2 3

MoM Δ ($'bn) March MoM Change Δ (%) ■ 1.43 -0.03 -1.96 0.49 -0.08 -16.72 0.00 0.00 0.00 0.07 -0.06 -89.19 ■ 2.00 -0.17 -8.71 ■ 7.35 -0.15 -2.01 ■ 2.18 0.22 10.17 0.14 0.44 324.38 0.58 -0.26 -45.53 ■ 10.98 -0.16 -1.44 Notes: 2.94 -1.16 -39.62 * “Others” include FX Forwards, Options & Cross Currency Interest Rate Swaps; “Member” means Dealing Member (Banks) 0.10 -0.10 0.00 1 – Year-on-Year; 2 – Month-on-Month; 3 – Change; 4 – Central Bank of Nigeria; 5 – Federal Government of Nigeria; 6 – Anonymous Firm Order; 7– 0.67 -0.01 is produced by the-1.11 DISCLAIMER: This report Market Development Group of FMDQ OTC Securities Exchange (FMDQ) for information purposes only. and other information in this report, as well-26.60 as reference materials and/or links to other sites, have been compiled from publicly available sources belie 1.11 -0.29 or solicitation to any person to enter any transaction or adopt any■ hedging, trading or investment strategy, nor does it constitute any prediction to lik 5.70 -1.87 -32.83 in any illustration contained therein. All rates and figures appearing are for illustrative purposes only. To the extent that the research data emanate f 18.67 -2.20 -11.80 to be relied upon for investment purposes. All information is provided "as is" without warranty of any kind. FMDQ (and affiliates) and the third-party

user and/or any third party including warranties as to accuracy, timeliness, completeness, merchantability, or fitness for any purpose. Unless, in the no liability in tort, contract, or otherwise (and as permitted by law, product liability), to user and/or any third party. FMDQ (and affiliates) and the t lost opportunity, indirect, special, consequential, incidental, or punitive damages whatsoever, even if FMDQ has been advised of the possibility of su nd Phone: +234 -1-2778771, 2771719 ■

Enquiries: mdg@fmdqotc.com

0.28

0.78 0.86

3M-6M

12M-2Y

■

FX MARKET TURNOVER ($'bn)

by 88bps w/w to close the week at 13percent (91-day (up 178bps to 13.4percent), 182day (up 117bps to 13.1percent) and the 364-day (down 31bps to 12.5percent). In a similar theme, average bond yield inched higher by 44bps to end the week at 13.4percent. Looking into the week ahead, we expect to see some buy-side activity as players trade expectations from the widely-anticipated fall in inflation rate, as well as auction sentiments, considering the fact that the CBN only intends to roll over 49.9percent of maturing NTB’s. Currency Market: Naira depreciates across all FX windows The Nigerian naira d e p re c iate d aga i n st t h e dollar across all foreign exchange windows we track. Particularly, the naira shed 14bps, 20bps, and 8bps to close at N361.5/$1, N305.8/$1 and N361.1/$1 in the parallel market, official and I & E FX windows respectively. Looking ahead, the outlook

OTC Ma ■ Tran of A reco ■ Activ turn 36.6 Agre 11.1 cont

OTC Turnover Unsecured Placements/Takings Repurchase 0.43% Agreements/Buy-Backs 10.74% Other Bonds 0.25%

1.87

■

0.24

0.22

■

0.00

■

-1.00

-0.97

-2.00 -3.00

-0.58

-0.60

-0.62

-2.45

-4.00 -5.00

-0.73

-3.94

-3.52

■

-4.55

■

Notes: * “Others” include FX Forwards, Options & Cross Currency Interest Rate Swaps; “Member” means Dealing Member (Banks) 1 – Year-on-Year; 2 – Month-on-Month; 3 – Change; 4 – Central Bank of Nigeria; 5 – Federal Government of Nigeria; 6 – Anonymous Firm Order; 7– Request-for-Quote; 8– Overnight; 9 – Nigerian Inter-Bank Offered Rate DISCLAIMER: This report is produced by the Market Development Group of FMDQ OTC Securities Exchange (FMDQ) for information purposes only. FMDQ is NOT an investment advisor and does not endorse or recomme and other information in this report, as well as reference materials and/or links to other sites, have been compiled from publicly available sources believed to be reliable and are for general informational purposes only. This re or solicitation to any person to enter any transaction or adopt any hedging, trading or investment strategy, nor does it constitute any prediction to likely future movements in rates or prices or any representation that any s in any illustration contained therein. All rates and figures appearing are for illustrative purposes only. To the extent that the research data emanate from public sources, the accuracy or completeness of the information con to be relied upon for investment purposes. All information is provided "as is" without warranty of any kind. FMDQ (and affiliates) and the third-party information providers make no representations and disclaim all express, user and/or any third party including warranties as to accuracy, timeliness, completeness, merchantability, or fitness for any purpose. Unless, in the event of wilful tortious misconduct or gross negligence, FMDQ (and affili no liability in tort, contract, or otherwise (and as permitted by law, product liability), to user and/or any third party. FMDQ (and affiliates) and the third-party information providers shall under no circumstance be liable t lost opportunity, indirect, special, consequential, incidental, or punitive damages whatsoever, even if FMDQ has been advised of the possibility of such damages.

Enquiries: mdg@fmdqotc.com

Phone: +234 -1-2778771, 2771719

C002D5556

Thursday 17 May 2018

BUSINESS DAY

Investor

Helping you to build wealth & make wise decisions

Stockbrokers laud ABC Transport growth path IHEANYI NWACHUKWU

he stockbrokers at t h e Nig e r i a n Stock E xchange (NSE) have applauded ABC Transport Company Plc for achieving record growth in 25 years. ABC Transport Company Plc, one of the largest road transportation companies in West Afr ica is listed on the Services Sector (Road Transportation Subsector) of the Nigerian Stock Exchange (NSE) Main Board. The stockbrokers acknowledged the c o m p a n y ’s g r o w t h o n Tu e s day May 1 5 , 2 0 1 8 , w h e n F ra n k Nn e j i , t h e founder and CEO of the ABC Transport Company Plc led the management of the company to sound the closing gong on the trading floor of the Nigerian Stock Exchange as part of the celebration o f t h e c o m p a n y ’s 2 5 t h anniversary. “ Th i s i s a c tu a l ly 25 years of our existence as a company. We listed in December 2006 that is 12 years ago. We are glad to be here listed o n t h e Ni g e r i a n S t o c k Exchange. Now as a transport company, we cover wider spectrum of the transport business,” Nneji said on the trading floor before sounding the closing gong. Sam Ndata, doyen of the stockbrokers said “We welcome you to this floor.

We worked with you when you listed. We are inviting y o u t o c o m e f o r Fa c t s Behind the Figures which is one of the things you signed when you listed. We know you are doing well as a company. We r i d e o n y o u r v e h i c l e s. Congratulations to ABC Transport for the 25 years celebration”. ABC Transport Plc consolidated financial statements for the period ended December 31, 2017 show group revenue grew to N7.186billion from a low of N6.710billion in 2016 financial year. Gross profit increased to N1.617billion from N1.211billion in 2016. The company rep or te d profit before tax (PBT) of N766.84million in 2017 aga i n st l o ss b e f o re t a x (LBT) of N490.579million in 2016. I n t h e f i r s t- q u a r t e r (Q1) to March 31, 2018, ABC Transport Plc reported group revenue of N1.481billion against N1.77billion in cor responding firstquarter of 2017. ABC Transport Plc has market capitalisation in excess of N762.542million with shares outstanding of 1,657,700,001 units. As at Tuesday May 15, 2018, t h e c o m p a n y ’s s h a r e price stood at 46kobo. ABC Transport Plc commenced operation in road passenger transportation on Februar y 13, 1993 as a n of f-sho ot of Rap ido

L – R shows Bamidele Asije, Non-Executive Board Member, ABC Transport Plc; Prince Olumide Obayomi, Chairman, ABC Transport Plc; Tinuade Awe, Executive Director, Regulation, The Nigerian Stock Exchange (NSE); Frank Nneji (OON), Managing Director/CEO, ABC Transport Plc; John Okoro, Independent Director, ABC Transport Plc and Godstime Iwenekhai, Head, Listing Regulation, NSE during a Closing Gong Ceremony to commemorate their 25th Anniversary at The Exchange recently

Ventures with a view to running a modern road transportation system in Nigeria. In March 2003, Capital Alliance Private Equity (C APE) acquired 30percent shares of ABC Transport. With the acquisition, Capital Alliance (Nigeria) became stakeholders i n A B C T R A N S P O R T, a partnership that re-positioned the company for greater

p e r for mance. ABC Transport operates luxury bus services a c c o rd i n g t o a c c e p t e d international standards of road transportation. Its services are specially designed for distinguished travellers who would otherwise use air service. The company’s o p e ra t i o n s w i t h i n a n d outside Nigeria are carried out in ultramodern terminals, with

comfortable lounges in various cities like Lagos ( Jibowu and AmuwoOdofin), Aba, Owerri, P o r t- H a r c o u r t , A b u j a , Enugu, Onitsha, Umuahia, Jos, Mbaise, Bolade, and Accra (Ghana). ABC buses are dubbed w i t h t h e c o m p a n y ’s trademark the Reindeer. The company said choice of the Reindeer as the company’s symb ol was made after a careful study of the peculiarities

o f th e a n i ma l wh i ch i s strong, fast and moves in herds. F o r t h e c o m p a n y ’s remarkable achievement in transpor tation, ABC Transport was adjudged the Best Transporter in Nigeria by the Chartered In s t i t u t e o f T ra n s p o r t, Ni g e r i a a n d h a s s i n c e then consistently won the Nat i o na l Bu s O p e rat o r of the Year Award along with other accolades by renowned bodies.

Vetiva wants investors to ‘hold’ Presco stock …raises target price to N80.08 IHEANYI NWACHUKWU

quity research analysts at Lagosbased Vetiva Capital P l c hav e re v i s e d h i g h e r their target price (TP) for Presco Plc to N80.08 from p re v i ou s t a rg e t p r i c e o f N75.76. A l s o , t h e To m i n i y i Ramon-led team of analysts wants investors to hold the stock of Presco Plc. PRESCO is the only fully integrated player in the Nigerian oil palm industry, specialised in the cultivation of oil palms and in the extraction, refining and fractioning of crude palm oil (CPO) into refined products. The Siat Group currently own 60percent of the company with the remaining 40 percent held

by Nigerian institutions and individuals. Presco share is currently priced at N75.60 with N75.60billion market capitalisation. Ve t i v a r e s e a r c h analysts’ commentary Earnings beat despite year-on-year (y/y) declines across profit lines PRESCO recently released first-quarter (Q1) 2018 results reporting y/y declines across major profit lines. Notably, PAT over the 3-month period was down 33percent y/y to N2.6 billion. The earnings decline was largely on the back of an 8 percent y/y drop in revenue (N6.6 billion) amidst higher operating costs over the period. We highlight that Q1’17 Revenue was a high base due to significantly lower Crude Palm Oil (CPO) prices and in fact the

strongest quarterly Revenue ever recorded by PRESCO. Further dragging earnings lower was a moderation in Gains on Revaluation of Biological Assets from N634 million in Q1’17 to just N96,000 in Q1’18. We however note that excluding this volatile line item, earnings would still have moderated by c.24percent y/y. Notwithstanding, we find the results quite impressive given than we had earlier anticipated a much sharper drop in earnings - Revenue, EBIT and PAT beat our estimates by 6percent, 22percent and 32percent respectively. Margins holding up despite weaker CPO prices G ro s s m a r g i n f o r t h e Q1’18 period moderated t o 7 8 p e rc e n t v s. Q 1 ’ 1 7 : 80percent and Q4’17:

82percent. We believe this m u s t h av e b e e n l a r g e l y driven by softer local Crude Palm Oil (CPO) prices as well as and lower prices of derivative products (Stearin, Olein and so on) particularly since secondhalf (H2) 2017. We highlight that the magnitude of the margin moderation was less steep than we had expected ( Vetiva Q1 gross margin forecast : 73percent). We had earlier maintained that P R E S C O ’s p ro d u c t s w i l l command some pricing premium given the quality associated with its brand name, and that a majority of its customer profile are large refined oil palm users who are less sensitive to price changes compared to the mainstream retailer. We believe this must have

supported margins in the last quarter. Although we expect this support to persist, we anticipate further margin contraction in subsequent quarters as the outlook on local CPO prices continues to spell further downtrend. Pa r t i c u l a r l y , i m p r o v i n g N i g e r i a’s F X i n f l o w s i s expected to drive import higher (including oil palm products) and mount p re ssu re o n p r i c e s. Th e near-term outlook on global CPO prices is also relatively weak and presents further downside to local CPO prices. That said, we revise our forecast FY’18 Gross margin to 74percent, lower than Q1’18 level but higher than our previous estimate of 71percent. Va l u a t i o n r e v i s e d higher amidst Q1

outperformance Despite outperforming o u r e s t i m a t e, w e re t a i n our FY’18 Revenue at N22.3 billion due to our less optimistic outlook on local CPO prices. Based on our revised gross margin estimate and relatively unchanged assumptions on operating costs estimate, we revise our FY’18 PAT to N11.1 billion (Previous : N10.1 billion). Meanwhile, PRESCO secured a 20percent N4.5 billion 4-year bank loan within the quarter, which we believe will be used to partly fund t h e c o m p a n y ’s o n g o i n g expansion projects. As such, we revise our FY’18 interest expense to N1.3 billion (Previous : N0.6 billion). O v e r a l l , o u r F Y ’ 1 8 PAT is revised to N7.0 billion (Previous: N6.7 billion).

BUSINESS DAY

C002D5556

Thursday 17 May 2018

C002D5556

BUSINESS DAY

FEATURE

Egg powder to the rescue of struggling poultry farmers Poultry farmers in Nigeria lose about $1 billion annually due to egg glut in certain periods of the year, but investments in egg processing plants could remedy the situation, writes Josephine Okojie

lademiji Akinlolu runs a flourishing poultry farm. He is a 25-year old farmer based in Iseyin, Oyo State. Akinlolu started his poultry business three years ago while still an undergraduate. However, his constant efforts to sell his eggs often hit a brick wall, and this is becoming a yearly occurrence. The reason for this is not farfetched. Egg glut is hitting the Nigerian market. It occurs between February and May, owing to increased production and low consumption of eggs within that period. This is when the poultry farmer makes losses and is desperate to find an escape route. “After my tertiary education, I could not secure employment, so I decided to go into poultry farming because it is profitable. But since starting it, I have realised that raising layers for egg production has not been quite profitable owing to the yearly egg glut farmers’ experience,” Akinlolu said. “Between February and May each year, there is always low egg consumption because the weather is hotter. So people consume less of it. Eggs are mostly consumed during the raining season.” “I started rearing layers for egg production but had to switch over to broiler production because the yearly egg glut was hitting hard on my profit margins,” Egg powder machine he added. Akinlolu’s case is similar to that of poultry farmers across the country, as lar period farmers usually experience most of them continue to suffer hugely glut,” Francis Toromade, former group from the yearly egg glut. head, policy and strategy at Amo Group Nigeria is the largest producer of Farms, said. eggs in Africa with 10.3 billion eggs pro“In Nigeria, there is low usage of eggs duced annually, data from the Poultry because the food and beverages indusAssociation of Nigeria (PAN) shows, but try in the country uses egg powder that the nation is yet to fully take advantage is not being produced in the country, but of this situation by processing eggs into imported,” Toromade said. powdery forms. Nigeria’s inability to process its ex“Each year, millions of tonnes of eggs cess eggs into powder despite this glut are harvested in Nigeria but a good is costing the country $1billion every number of them go down the drains as year, Nigeria’s Poultry Association says. wastages, due to the short shelf life and This increases the pressure on the low demand for the product at a particu-

The Nigerian poultry industry suffered a N200 million loss last year on account of rise of input prices such as maize and soybeans as well as declining sales in chickens and eggs. Despite the price of maize, a key input, declining by 20 percent year-onyear, from N150,000 in March 2017 to N120,000 in March 2018, Nigeria poultry farmers eggs and chicken are still not competitive in the market. Gumboro, a vaccine sells at N4,000 per 20 doses as against N1,000 sold in 2016. Lyfine is now sold for N48,000 as against N14,000 sold early last year, while Methionine goes for N64,000 as against N25,000 despite exchange rate stability. The ban placed on some poultry products have not been effective and have made no real impact on actual foreign imports as the majority of these products continue to find their way into the country. This has made smuggling poultry products, especially chicken and turkey, a big business for importers of these products. Nigeria, Africa most populous nation, needs more than one million metric tonnes of poultry products annually to meet local demand. Figures from the Food and Agricultural Organisation (FAO), shows that Nigeria farmers are only able to produce 504,657 metric tonnes in 2016. With the wide gap between supply country’s foreign exchange reserves, money that could have been saved if the country processes its fresh eggs into powder. “I suffered N500, 000 loss from last year’s egg glut,” Onyekachi Eze, a poultry farmer in Onitsha, Anambra State, said. “Last year, the challenge for us farmers was double, as prices of feeds doubled and egg sales declined,” Eze said. Egg powder is used in production of oil-based emulsions. It is also used in preparation of foods such as ice-cream,

when Nigeria practiced her unique brand of true federalism known as regionalism, that I suggest the introduction of matching grants to states, that have succeeded in increasing their internally generated revenue. bread, cakes, biscuits, noodles, and doughnuts. It can likewise be rehydrated to make dishes such as scrambled eggs and omelettes. “The country has been losing a lot of money due to our inability to process eggs into powder. It has really been a tough year for poultry farmers, yet they still have to struggle with the annual egg

glut,” said Kabiru Ibrahim, former president, Poultry Association of Nigeria (PAN), in a telephone conversation with BusinessDay. “We need to start processing eggs into powder to help address the issue of egg glut in the country and also increase the shelf life of our eggs,” Ibrahim said. Farmers lose a lot of their profits during the period of egg glut. “There is low purchasing power for eggs in the country, especially in the Northern region, due to the economic downturn in the country. Nigerians are not consuming eggs like before and it has continued to create a glut in the market,” Dayo Gawati, managing director and chief executive officer, Fdot Farms in Ilorin, Kwara State said. “The issue is difficult for us farmers because there is only one company in the country, as we speak, that processes fresh eggs into powder. Most of the industries import processed egg powder they use in production,” Gawati said. Raw eggs are said to last about four weeks, while powdered eggs can last up to a year. The yoke, the whole eggs and the albumen can be processed into powder. Eggs contain protein and are consumed in homes across the country, especially by the burgeoning middle-class. Eggs likewise serve as a cheap source of protein for young Nigerians between the ages of five and 40, which constitute over 60 percent of the country’s 198 million population. High input cost, smuggling complicate matters The high cost of key inputs such as poultry feeds and vaccines across the country has continued to frustrate farmers’, a development experts say may threaten the country’s livestock production and the diversification drive of the government.

and demand, smugglers are encouraged by the inability of local suppliers to meet demand for these products. According to experts, smuggling of poultry products persists because of the huge demand of chicken and turkey in the country and is not likely to stop until Nigeria is able to increase its local production capacity. Experts say that the country can only address the issue of smuggling when the governments at all levels deliberately provide land for poultry businesses and establish funding mechanism for the development of the poultry value chain. Despite the National Agency for Food and Drug Administration and Control (NAFDAC) strongly warning against the consumption of imported poultry products and threatening to

Atiku Fresh eggs passing through the breaking system of the machine

take action against smugglers or dealers found with the banned products, these products have continually been found in the Nigerian market in high volumes. Imported poultry products, especially chicken and turkey, have been identified as causative agent in non- communicable diseases (NCDs) and antibiotics resistance. Some of these health conditions include hypertension, kidney disease, and cancer, experts say. Yet, many Nigerians still prefer patronising imported chicken over locally produced ones as the prices are cheaper and are easily available. “Over 1million tons of chicken are smuggled into the country yearly. If these smuggled chickens are produced in the country, there will be jobs. But now these jobs are exported to the countries these chickens are imported from,” Toromade said. Infrastructural gaps One of the greatest problems con-

fronting rural farmers and communities in Nigeria is the absence of critical infrastructure especially good roads. Nigeria continues to suffer low levels of agricultural productivity due to infrastructural deficit across the country. Due to the deplorable state of roads, farmers have to grow only what they can eat or the extra they can carry on their heads to nearby markets. Most times, fresh fruits, vegetables and food get spoilt during transit, as a result of many hours or days spent in transporting the food items to where they are needed due to bad roads. Meanwhile, urban dwellers have to spend very large percentage of their income to buy food. This is because the food that gets to the towns and cities are far more expensive than what the poor struggling farmers would have sold them. The high prices of these commodities are blamed on the middlemen but they are also quick to point out that they incur huge costs transporting the food as a result of bad roads. “The channel of eggs distribution in the country is faulty because the road network is bad and eggs are fragile commodities,” Toromade said. A life line for farmers Despite the large volume of eggs produced in Nigeria, the country has only one firm that is currently processing eggs into powder. Answer Industries Limited, makers of Karakara Chicken Egg Powder, is the only player in Nigeria and West Africa egg powder market. Located at the outskirt of Atoyo Ijebu in Ijebu-East Local Government Area of Ogun State, Answer Industries Limited produces less than five percentage of what the country requires. This shows the huge opportunity for processors of egg powder in the country and has become a life line for poultry farmers.

“We produce a ton of egg powder per day using between 3,400 and 4,000 crates of eggs per day. The demand for the powder is very high as we have a lot of food and beverage companies patronising us,” said Samuel Sewoniku, director of general operations, Answer Industries Limited. “We use the spray drying technology that is used by the dairy industry in converting milk into powder to extract the moisture continent from the eggs, turning them into powder,” Sewoniku said. He noted that investment in the technology is very vital for the country and the poultry sector in particular, as it would help address some of the fundamental problem besetting the sector. Nigeria’s egg powder industry is estimated to worth $1 billion dollars (N350bn) currently with less than five percent produced locally. This implies that about $950million worth of egg powder is imported into the country. On a monthly basis, an average of $79.2 million worth of egg powder is imported into the country. In terms of volume, this could not be ascertained as the country does not have any data for the industry. The business is viable and suitable because eggs in powder form are more durable, stable, portable and applicable for multiple usages in various food and beverages industry, military establishments and production of fast foods, instant baby formula, beverage and health products; athletes’ and body building foods, several value added products including mayonnaise. This story and investigation was done with support from Code for Nigeria via the Naija Data Ladies Programme

BUSINESS DAY

Thursday 17 May 2018

CityFile Injustice fueling insecurity in Nigeria, says university don SIKIRAT SHEHU, Ilorin

Refuse dump along the road at Onopa community in Yenagoa on Tuesday. Last year, Bayelsa government warned residents over poor refuse disposal habit that result in flooding.

Group to aid Lagos, 8 African cities escape impact of climate change

Stories by JOSHUA BASSEY nongovernmental organisation- C40 Cities Climate Leadership Group says it will provide technical assistance to Lagos and eight other African cities in order to prevent climate change catastrophe. Mark Watts, the executive director of the group made this known at the unveiling of the ‘‘C40 Climate Action Planning Africa Programme’’ in Lagos. Other African cities include Accra, Addis Ababa, Cape Town, Dakar, Dar es Salaam, Durban, Johannesburg and Tshwane. The nine African cities will develop climate action plan that delivers on the objectives of the Paris agreement. According to Watts, the unveiling of the programme signifies the official start of the C40’s Climate Action Planning (CAP) technical assistance programme in the African region. The CAP technical assistance programme would focus on

building capacity for implementation of ambitious climate action. ‘‘Accra, Addis Ababa, Cape Town, Dakar, Dares Salaam, Durban, Johannesburg, Lagos, and Tshwane have revealed their commitment to bold climate action and pledged to deliver on their share of the Paris agreement. ‘‘The CAP Africa programme will provide direct support to the nine African cities in developing unprecedented, robust and evidence-based long-term climate action plans that align with the ambitious objectives of the Paris agreement. The support will include a dedicated city advisor based in each city, a series of workshops and access to expert technical advice as needed. ‘‘Nairobi and Abidjan have also joined the programme and are anticipated to submit their climate action commitments soon,’’ he said. Watts explained that the programme is jointly funded by the International Climate Initiative (IKI) of the German

Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) and the Cities Alliance and Children’s Investment Fund Foundation. Lagos State governor, Akinwunmi Ambode, said that climate change was anticipated to have far-reaching effects on sustainable development of developing countries. Ambode, who was represented by the commissioner for the environment, Babatunde Durosinmi-Etti, added that the effects on developing countries were because they had fewer resources to adapt socially, technologically and financially. According to him, concerted global action is needed to enable developing countries to adapt to the effects of climate change that is happening now and will worsen in the future. ‘‘Capacity building at local, national and regional levels is therefore vital to enabling developing countries to adapt effectively to the effects of climate change.

Lagos woos film makers at global scene

ola Adeyemi, permanent secretary, Lagos ministry of tourism, arts and culture says the state holds the most potential in film making and any international film maker not yet in Lagos has not tasted Africa. Adeyemi made the observation at the unveiling of ‘Cinema’, a magazine that showcases the endowment of Lagos in culture, arts, tourism and film making, at the recent Cannes International Film Festival, in France. According to him, film makers and producers around the world are, there-

fore, advised to take advantage of infrastructure and enabling environment provided by the state government to shoot their films in Lagos. Adeyemi, who described Lagos as a land of opportunities, also encouraged global investors to look in the direction the state which he said operates with liberal policies and programmes which guarantee returns on investment. Africa. He said the Governor Akinwunmi Ambode-led administration is passionate about creative arts/entertainment

with the vision to making it the next global money spinner. Adeyemi said that Lagos is blessed with natural beaches and scenery for film quality and production. “We warmly invite you to Lagos to shoot your films.” Desmond Elliot, chairman, Lagos House of Assembly committee in tourism, arts and culture, on his part, said Lagos State was not just in Cannes to market itself as a venue for shooting films but to tell the world that it was committed to promoting the entertainment industry.

bdulrazaq Olayinka Oniye, an associate professor of education with the University of Ilorin, says most of the security challenges plaguing Nigeria are fallout of injustice within the system. He made the observation in a lecture he delivered at a summit and award presentation organised by the Nigeria Union of Journalists (NUJ), Monday, in Ilorin, Kwara State Oniye, who spoke on ‘‘insecurity and challenges of governance in the 21st century Nigeria,” identified other factors to include corruption and unemployment. “Corruption has affected all facets of life and it is fuelling insecurity in our country. If we continue to allow corruption to thrive, we are playing with the entity called Nigeria”. “If we do not want that to happen, we, all stakeholders- government, politician, academia and the rest must come together and say Nigeria must continue to exist. Nothing must be done to endanger the corporate existence of Nigeria. “We must see it as our fundamental responsibility to protect the entity called Nigeria.” Oniye decried what he called unprecedented hardship faced by the populace and advocated that adhere to the provisions of the constitution. “Unless we allow our constitution to work the way it should be, the system will never work.

Woman arrested for maltreating minor

he police in Lagos have arrested a 45-year woman for allegedly maltreating an eight-year boy after accusing him of being a wizard. Commissioner of Police in Lagos State, Edgal Imohimi, told newsmen in Ikeja that the act was “a case of man’s inhumanity to man.’’ “This is a case of man’s inhumanity to man reported by one Chinonye Iyonetu, eight-years-old, against one Charity Iyonetu of Animal Kingdom, close to Seme Border, Lagos. “The complainant alleged that the suspect is the elder sister to his father. That sometime in 2016, the suspect came to their village, Agbaai, Nkota in Imo State and brought him to Lagos after his mother abandoned him and left to an unknown place. “He claimed that the suspect always maltreat him, accusing him of being a wizard. However, the ordeal of the little boy came to the fore when on May 9 as the suspect use horse whip on him, inflicting injuries all over his body. “She thereafter locked him in her one room apartment with his two hands tied behind his back and left to her shop. The complainant was crying for help which attracted one Peter Aluku to call the police. When the police team arrived, they broke the door of the house and rescued the child,” the police boss said. Imohimi added that the suspect would be charged to the Special and Sexual Offences Court as soon as investigation was concluded. NAN

Thursday 17 May 2018

C002D5556

BUSINESS DAY

Selling Nigerian travel, tourism, ahead of president Macron’s visit to Nigeria Stories by IFEOMA OKEKE

resident of France, Emmanuel Macron desires to explore opportunities in Nigeria’s travel, culture and youth sectors when he visits in July this year; this makes the Nigerian Creative Arts Exchange holding in Paris a strategic initiative. The past few years have witnessed a remarkable growth in bilateral relations between France, one of the most powerful nations in the world and Nigeria. The cordial diplomatic relationship has led to some mutually beneficial feats in the area of security and economy. Aside the efforts of France in helping Nigeria fight insurgency in the North East, following a security summit that brought together the leaders of Nigeria, Benin, Cameroon, Niger and Chad, and representatives of the United States, the United Kingdom and the European Union on May 17, 2014, the Prime Minister of France, Bernard Cazeneuve, also received Yemi Osinbanjo, Nigeria’s Vice President, at his Hôtel de Matignon offices on 30 March, 2017, while he was visiting France to take part in the OECD Global Anti-Corruption & Integrity Forum. These and several of such interactions are believed to have aided over 3.2 billion Euros in trade between the two nations, where Nigerian has interestingly benefitted in excess of 2 billion Euros. While this is encouraging, expectations are rife that the relationship will generate more economic benefits with the proposed visit of the French President, Emmanuel Macron, who is scheduled to be in Nigeria sometime in July. But this can only be fruitful if Nigeria is well-positioned to reap the benefits that will accrue from such an epoch visitation. With Macron’s apparent interest in Nigeria’s culture sector, largely believed to have enormous potential for the Nigerian economy, this is undoubtedly the best time to flaunt that aspect of Nigeria’s national life that has constantly intrigued the world. But how prepared is Nigeria to reap the bounty of this window of opportunity staring glaringly at her? This is where accolades should be rightly accorded to the Nigerian Mission in France, whose foresight is positioning the country’s travel

L-R: Mabel Ndagi, Bank of Industry; Moses Umoru, CCI France-Nigeria; Taiwo Taiwo, Art of Life Foundation and representative of Ambassador to France, Modupe Irele; Carol Bossier representative of French Community in Nigeria and Stella Okoli, CEO Emzor Pharmacwuticals Ltd.

and creative sectors in this direction. Encouraged by the Ministry of Foreign Affairs, headed by Geoffrey Onyema, Modupe Irele, the Nigerian Ambassador to France, has initiated a cultural exchange that will flaunt some of the best in Nigeria’s arts and culture sector to the French community. Aptly tagged: Nigerian Creative and Arts Exchange, (NCAE) 2018 is being positioned to be a platform that will stimulate a partnership between Nigerians and their French counterparts, not only in the creative sector but also in business, hopefully boosting the FDI (Foreign Direct Investment). According to Irele in her speech, NCAE will stimulate business interest amongst the French about Nigeria. “Initially, I had described the event as a ‘cultural extravaganza’, showcasing a selection of the best in Nigeria’s creative industry. “Our art, music, film, fashion, and in recent times, our food too, have caught and received international attention and acclaim. They have shown that they are industries that can and in many cases already are successfully operating internationally, at the requisite high standards. Like many industries in Nigeria, they still remain full of opportunity and open to further investment. While this description does remain true, it is important to note that the event is not simply an opportunity to exhibit our culture or parade the talent we undoubtedly have in this country. It more importantly is a platform by which

to harness the positive publicity created by these industries to stimulate broader interest in Nigeria and strengthen the foundation for investment in and trade with our country. We feel this platform will be particularly appreciated by our French counterparts whose country boasts some of the top cultural institutions in the world, and whose cultural and creative industries contribute an important part of its economy. “Through the Nigerian Creative Arts Exchange, we are thus creating a forum where participants can make enquiries, network and build useful links, in a relaxed setting. We invite participants to both experience the elements of Nigerian culture that will be on display, and to use the occasion to initiate conversations with representatives from the different industries which will range from fashion to pharmaceuticals, agriculture to real estate, finance to tourism, amongst others. These together represent a wide array of trade opportunities.’.’ The NCAE which will showcase artistes drawn from visual arts, film, music, cuisine and fashion will be a two-day event taking place at Le Pavilion Dauphine, Paris, and Saint Clair. So far the event has been getting an overwhelmingly reception as the various participating artistes see it as a veritable platform to drive home the Nigerian brand. One of the artistes, Adekunle Gold, a singer sees it as an opportunity to tell the world

that Nigeria is unique and dominated by various interesting features. According to him, “It will be an opportunity to show what Nigeria is made of. There will be music, fashion, and cuisine, and you know Nigeria has some of the best dishes anyone can think of’’. Lanre Da Silva, Fashion designer, who will also be participating at the event equally sees the event in positive light. She says, ‘’When I got the call that I will be participating at the event, I was excited. It is actually a good opportunity to showcase what we have in Nigeria to the outside world. I will be there and my designs will be showcased at the event.’’ Other artistes who will be taking part in the event are: Nike Ekundaye of Nike Art Gallery, Lekki, Lagos; Ituen Bassey (Fashion); Orange Culture (Fashion); Andrea Iyamah (Fashion); Chef Fregz, and Kemi Lala Akindoju amongst others. Corporate supporters are also keying into this platform, realising how important a strategic partnership with France is in Nigeria’s economic life. Stella Okoli of EMZOR Pharmaceuticals, one of the supporters amongst others like the Bank of Industry and Total, believes Nigeria can benefit a great deal from a cosy relationship with France in the area of pharmaceuticals. “France and Nigeria have come a long way, and honestly I see huge potential in the pharmaceutical industry with this event’’. Mabel Ndagi of the Bank of Industry, says the platform is impor-

tant for the bank as a government agency because the federal government is committed to tapping into other resources which are abundant in the cultural sector. “As a government institution’’, she says, “We are looking at platforms that will present investment and employment opportunities for Nigerians. NCAE is one of them’’. Moses Umoru of Franco-Nigerian Chamber of Commerce & Industry, CCI France Nigeria, lauds the initiative and says it would help change the narrative about Nigeria which has often been negative in the international scene. “The perception of the Nigerian amongst international business people is not good at all. NCAE will change the narrative, especially at this time, when all we get to see and hear is the kidnap of the Dapchi Girls, amongst others. There are greater and more exciting things about Nigeria that is being talked about in the foreign circles and the Nigerian Creative Arts Exchange is one of such platforms to stimulate such discourse’’. The French incidentally appear willing to work with Nigerians on this, judging from the comments of a French national, Carol Bossier who lives in Nigeria. According to her, culture remains the only way to change some of the prejudices that have tainted the Nigerian nation before the western world. “The perception about Nigeria outside is not totally right and culture is one of the ways to change this. It will paint Nigeria in positive light’’, she explains. For some experts, Nigeria should be looking at the benefits inherent in this by considering how this effort will boost the existing economic ties which are showing positive balance sheets so far. France’s economic, cultural and educational projects are abundant in Nigeria and include: Bureau which supports French businesses in Nigeria, with the aid of the Business France office; Office which supports French imports and exports to Nigeria which currently services 120 businesses since it opened in 2016. In the cultural scene, there are: French Institute; a French Institute for Research in Africa (IFRA) branch based in Ibadan; ten Alliances Françaises located in Lagos, Ibadan, Port-Harcourt, Owerri, Enugu, Jos, Kano, Maiduguri, Kaduna and Ilorin; a French school (Lycée) in Lagos; a French school in Abuja; and a business school in Port Harcourt.

Turkish Airlines’ ‘Troia’ themed aircraft, now in the sky

ollowing the announcement of year 2018 by the Republic of Turkey Ministry of Culture and Tourism as ‘The Year of Troia,’ that coincides with the 20th anniversary of the admission of the archaeological site of Troia to UNESCO’s World Cultural Heritage List, various introductory activities continue to be conducted

on a global scale to promote the region during the whole year. Turkish Airlines, flies to 302 destinations in 121 countries as the only airline that reaches more international flight points in the world, supports to the promotion activities of ‘The Year of Troia’ with its ‘Troia’ themed aircraft. This aircraft, introduced to the

press with a special event in the Hangar of Turkish Technic Inc., will contribute to the promotion of the ‘The Year of Troia’ through its worldwide flights. The global carrier specially designed its A321-type aircraft with a livery of the ‘Trojan Horse’ image after the Republic of Turkey Ministry of Culture and Tourism announced 2018 as ‘The Year of Troia’.

“As the flag carrier airline of Turkey, we place great importance on promoting our country and our values. The Trojan, which dates back to 3000 BC, is one of the unique civilizations of Anatolia with its history that was the subject of many epics. We’re honoured to contribute to the introduction of “Troia” with our Troia themed aircraft at

many worldwide destinations that we serve. We’re inviting the global community to see “Troia”, and to our fascinating country which hosts many more epics such as “Troia” in its rich history.” İlker Aycı, Turkish Airlines Chairman of the Board and the Executive Committee, in his speech at the launch ceremony, said.

BUSINESS DAY

Harvard Business Review

Thursday 17 May 2018

Global Business Perspectives CONNEC TING

THE

WORLD

ONE

BUSINESS

TIME

India’s Indian ocean challenge ing Seychelles and Mauritius to join the existing maritime security cooperation arrangement among India, the Maldives and Sri Lanka in 2015, Modi was underlining that New Delhi seeks “a future for Indian Ocean that lives up to the name of SAGAR — Security and Growth for All in the Region.”

HARSH V. PANT

ONDON — As SinoIndian competition for influence in the Indian Ocean region heats up, India suffered a setback in the Seychelles, due mostly to local politics rather than Chinese resistance. Still, India will seek other avenues in the region to bolster its position. In January, India signed a 20-year pact with the nation to build an airstrip and a jetty for its navy on Assumption Island, due north of Madagascar — pursuant to a deal made by Prime Minister Narendra Modi during a 2015 visit to the Seychelles. New Delhi agreed to invest $550 million in building the base to secure its vessels and others in the southern Indian Ocean. The government of the Seychelles, an archipelago nation of 115 islands, had justified this pact by underlining that the base would help the country’s coast guard patrol its exclusive economic zone off the African coast for illegal fishing, drug trafficking and piracy. The agreement proved easier to sign than to implement. Local politics in the Seychelles, a country that depends on agriculture and tourism, played spoilsport. Critics of the Indian presence in the island nation galvanized the political opposition to derail the project. President Danny Faure of the Seychelles informed parliament in March that he would not move to ratify the Assumption Island project with India after an opposition leader rejected the deal. India’s attempt to gain a foothold in the western Indian Ocean may have suffered a temporary setback, but it won’t be the last attempt. In the Seychelles, back channel negotiations are happening that could

President Donald Trump embraces Prime Minister Narendra Modi of India after their dinner at the White House in Washington, June 26, 2017. China, seeing the U.S.India relationship as the greatest threat to its effort to carve out a “Sinocentric Asia,” is sending a message, analysts say. (CREDIT: Doug Mills/The New York Times)

In November 2017, India signed a deal with Singapore to expand existing Indian access to the Changi naval base. India contributes to the development of Agaléga in Mauritius with dual-use logistical facilities. India and France, both eyeing the Indian Ocean, have signed the “reciprocal logistics support” agreement, which grants warships of both nations access to each other’s naval bases. Modi visited Oman in February and secured access for India to the Port of Duqm for military use and logistical support. The port in southeast Oman is about 400 kilometers to Iran’s Chabahar Port — directly across the Gulf of Oman — and offers the potential to enhance India’s regional footprint. The Chabahar Port being developed by India 72 kilometers from the Chinese-backed Pakistani port of Gwadar is viewed as a strategic play to limit the influence of China’s “Belt and Road Initiative” in that area. India’s Indian Ocean outreach coincides with its efforts in the wider Indo-Pacific region. India is relaying the message that it is not merely an Indian Ocean and South Asian power, but one with capacity and the intent to shape the wider Indo-Pacific — stretching from its established presence in the Indian Ocean to interests in the South China Sea, the Middle East and Africa and into the Pacific. And this un-

still deliver the project to India. The Indian Ocean littoral New Delhi’s resolve to expand has the potential to become the influence in the region has leading source of new global only strengthened since the growth over the next 20 years. summer of 2017, when China Indian Ocean channels carry inaugurated its first overseas two-thirds of the world’s oil military base in Djibouti, in- shipments, a third of the bulk creasing India’s anxiety about cargo and half of all container China’s growing profile in the traffic. China’s rise adds anothwestern Indian Ocean. Com- er dimension with traditional petition for regional influence power equations in flux. India is heating up with China and sits astride the Indian Ocean India both building their own as the pre-eminent power, facilities across the Indian and China’s encroachment Ocean littoral. is changing how India thinks While China has been about the region. India’s cenbuilding ports, roads, bridges trality influenced how comand power stations across mercial and cultural ties have Asia, countries express grow- evolved throughout the region ing concern about the terms and along the ocean’s periphfor such infrastructure invest- ery. Today, India wants to rement. China’s acquisition of store its status in the region but Hambantota Port in Sri Lanka faces strong headwinds. The Modi government has in a debt-to-equity swap deal underlined problems with made the Indian Ocean a what has been called China’s priority, and former Foreign “debt trap diplomacy.” Opaque Secretary S. Jaishankar has terms and predatory loan argued in favor of “reviving practices without social or the Indian Ocean as a geopoenvironmental assessments litical concept.” Modi has also have entangled some nations highlighted the value of the in Chinese strategic objectives. “Indian Ocean region,” visiting India has tried to differenti- not only Seychelles, Mauritius ate its approach with outreach and Sri Lanka but also several that is more partnership in ap- East African nations along the Indian Ocean littoral. By invitproach. 2017 Harvard Business School Publishing Corp. Distributed by The New York Times Syndicate

derstanding of Indian strategic reach is widely accepted. The United States has welcomed India’s growing footprint and other major powers have also responded positively. The reemergence of the “Quad,” a collaborative effort among the United States, Japan, Australia and India to develop regional security strategies, reflect this consensus. China challenges India’s status in the Indian Ocean in unprecedented ways, as demonstrated by the crisis in the Maldives. A power struggle is underway with the current president embracing China’s Belt and Road infrastructure, land grabs and increasing debt while a former president reached out to India for support. A state of emergency was declared in February and India’s advice was pointedly shunned by President Abdulla Yameen. China’s growing profile in the Maldives has been dramatic since 2011, when it did not even have an embassy in the island nation. Today, China has become central to the nation’s domestic developments. Even in the Seychelles, which has a long-standing defense relationship with India, the Chinese military is exploring options to expand its engagement. Such a rapidly shifting strategic landscape puts India’s credibility as a regional power on the line as the country can no longer engage in diffident posturing, but must live up to the expectations it has generated instead. As of now, it is not evident that New Delhi can navigate the Indian Ocean’s tricky waters. (Harsh V. Pant is a distinguished fellow at the Observer Research Foundation, New Delhi, and a professor of international relations at King’s College London.)

Innovation

Apps

Fin-Tech

Start-up

Gadgets

Ecommerce

IOTs

Broadband Infrastructure

Bank IT Security

BUSINESS DAY

Thursday 17 May 2018

Banks Vs FinTechs — who should be afraid? (PART 1) guidelines. While on the surface, this is supposed to be a disadvantage as it increases their cost structure, it puts existing banks at an almost untouchable level because it gives them all the advantages inherent in an oligopolistic market and makes it very difficult for real disruption to happen from outside.

SEGUN ADEYEMI (Guest Writer)

n the 6th of April, 2016 while addressing a church congregation at This Present House (TPH) Lekki, Lagos, the CEO of Guaranty Trust Bank, Segun Agbaje made a confident and interesting statement about disruptions in the banking space. He said, “I confront disruptive technology for survival, I will never sit down and let other people take what I believe is my own business and my own market share, so if you think you’re Paypal or Apple Pay and I’m going to seat back, no, I will do *737*, simple banking for every Nigerian. And for every dollar or Naira you spend, I will spend as well, but I will not give up my market space.” He went on to talk about how they would beat all the ecommerce players in the marketplace game because he is ready and can afford a free marketplace. I think it was a very interesting and optimistic talk and if you have some spare time, it might be worth watching the full video here. This is not about the bank CEO’s comments but I observe the same level of confidence in his voice when I speak with some other bank executives. Despite the numerous global reports that banks are at the risk of losing up to 25% of their revenue to FinTech companies within the next few years and comments like Bill Gates’ assertion 24 years ago that

“banking is necessary but banks are not,” I do not think Nigerian banks are losing much sleep over FinTechs. I also doubt if any bank has collapsed globally owing to the fact that FinTechs stole their market and I doubt that will be happening soon. Don’t get it twisted though. Publicly, banks make it look like they are concerned about FinTech disruption and they should be, but behind closed doors, I do not think that their worry is much about the FinTech companies springing up in Nigeria. If you notice from my earlier assertion that the GTBank boss made reference to two global tech companies (Apple Pay and Paypal that aren’t even very active in the market yet) and not one Nigerian FinTech company. The reason for this is because the banks

know that they have some strong inherent advantages that startups that are seeking to disrupt them will struggle to overturn. However, there are companies that have similar advantages and might pose a threat but they are not necessarily the FinTech startups. With my experience in the FinTech space in Nigeria so far, I know that as long as banks dominate on deposits, lending, payments and investing, they will be around for a while. The struggle for FinTechs remains the ability to achieve enough scale independently to the point of actually displacing the banks. But before we go too far, what are these inherent advantages that are making the banks overbearing? Trust (Established Relationship) Trust is a very valuable cur-

rency in the world today, more-so in the financial world. Even though a lot of customers think their banks are sloppy, they still trust that the banks will be around for a long time and they will have their money whenever they need it. This trust has been built over the years due to established customer relationships and the guarantee of the government through regulation (CBN, NDIC). This is the first subtle feature that takes time to build and very difficult to beat. Scale By the very nature of banking business, banks need to be big to be successful. They need to be able to pay for the right infrastructure, people, processes and systems that are required as a highly-regulated entity and more importantly, they

need a balance sheet that is strong enough to withstand economic stress. The bigger the bank, the more the confidence as a result of the varied spread of assets and base of deposits and considering the fact that no matter the bank size, the same compliance and standards are required. The scale also enables the banks to offer a variety of products under the same umbrella thereby diversifying their revenue base and limiting their risk. Regulation Th e f i na n c i a l s e r v i c e s space is a highly regulated industry. This is permissible because of how strategic the banking sector is to the economy. Banks understand and help craft regulation and employ hundreds of people to ensure they’re complying with regulatory

Customer Base and Distribution There are about 65 million active bank customers with about 108 million individual and corporate accounts in Nigeria spread across approximately 21 banks, that’s an average of 3 million customers per bank (according to NIBSS as at end of March 2018). The numbers are not a lot if you consider Nigeria’s estimated population but if you look at those actual numbers, they’re not small. No pure FinTech company has a customer base close to that, in fact, no tech company in Nigeria with such customer base easily comes to mind. Customer acquisition is hard and expensive and this is something the banks have been able to find a way around over the years. What this means is that banks have ubiquitous distribution through branches and other channels and can distribute products to a wide spread of people, businesses and even government, access cheap deposit and build a large balance sheet. Segun Adeyemi is the founder and CEO of Amplify Pay.

60 million Nigerian digital natives to unlock new market innovations – EY FRANK ELEANYA

uch of the benefits of digital transformations disrupting many industries in Nigeria today may not be seen immediately and digital natives could be the real beneficiaries. A new study released by Ernst & Young (EY) suggest that as much as 60 million of this demographic in Nigeria are more willing to try and adopt new market innovations than the rest of the population. Digital natives refers a person born or brought up during the age of digital

technology and so similar with computers and the internet from an early age. EY’s Digital in Consumer Products & Retail (CPR) report says the digital natives fall among the 13 to 35 age bracket. The report defines “digital” as a continuous form of disruption to existing (or new) business models, products, services or experiences, enabled by data and technology across the enterprise. Given their nature of discontentment with almost everything, over 60 percent of digital natives focus more on life experience

than consumer products. In other words, loyalty does not come easy with them. Companies that will tap and perhaps dictate the market for what EY describes as the “Next Gen” of consumers must leverage digital trends such as social media, cloud, mobile, omni channel, big data analytics, API economy, blockchain, internet of things, virtual and augmented reality, 3D printing and cyber. Omni Channel which provides a seamless and consistent shopping experience across different channels and devices is seen as representing the largest

opportunity for CPR. Omni Channel as a strategy recognises the opportunities of offline and online models. Inasmuch as the digital transformation has seen billion of consumers move online for convenience, a significant number of transactions still take place offline. EY’s report showed that 93 percent of revenues are via bricks and mortar stores today. Although the number may drop to 85 percent in five years, 74 percent respondents are hopeful storebased sales will continue to dominate in developed markets in the next five years.

Nevertheless, the future still belongs to online channels with 88 percent of those who responded to EY’s survey saying they can no longer rely solely on traditional sales channels to drive growth. Robotics process automation (RPA) is another trend that could prove pivotal for every business, particularly where it concerns cost optimisation and operational efficiencies. An estimated 85 percent of a typical firm’s over 900 processes can be automated. To maximise the potential of digital, EY says implementation must be

Team: Frank Eleanya, frank.eleanya@businessdayonline.com; Caleb Ojewale, caleb.ojewale@businessdayonline.com

tailored towards solving a real problem. Focus for digital adoption should be about using innovative technologies to improve the experience of the end customer. It enhances the ability of an organisation to drive collaboration and provides employees with the required tools to succeed. Digital should aim to eat into traditional share of the market as well as create new revenue streams. Finally, operational efficiency is one of the key objectives of digital by eliminating traditional overheads and costs.

BUSINESS DAY

Luxury

Malls

Companies

Deals

C002D5556

Thursday 17 May 2018

Spending Trends

Shisha consumers perceive it as cool, trendy …Experts warn of health costs STEPHEN ONYEKWELU & BUNMI BAILEY

ou might have noticed a growing trend in your neighbourhood, of consumers who smoke through some fancy waterpipes at night clubs, pubs and some restaurants around Nigeria. The shisha (waterpipe smoking) industry is gaining traction in Nigeria as more consumers find it cool and trendy. There are no hard data on this. Shisha is typically smoked in social settings, very frequently smoked by urban youth, young professionals, and university and college students. “My curiosity was pricked because I was told shisha was harmless smoke without any form of tobacco or processed drug in it. But after taking it I was almost knocked out for two days,” consumer who does not to be identified told BusinessDay. Before this famous smoke started trending in restaurants, social hubs and clubs it was mostly seen in some Lebanese homes. At Q4, a popular night club in Ikeja the product was on display. In the club, it is sold for N2500 for a single pipe and N3500 for a double pipe. “Shisha sells really well here. People demand for different flavours without the use of weed inside but if you want weed (marijuana)I will put it for you,” Opeyemi Bolaji, shisha attendant said to BusinessDay reporter who posed

as a customer. In a restaurant on Victoria Island called La Pizza, there were about six shisha bottles there sitting on the table. The price ranges between N3500 - N7000 depending on the flavour.

“Shisha comes in different flavours such as apple or mint which are a bit lighter than power horse. At the moment the volume of patronage is increasing,” a restaurant manager said. Shisha, also called hookah,

Still Broke brand launches clothing line, promises quality STEPHEN ONYEKWELU

till Broke, a Lagos-based clothing line officially launched May 13, determined to become a globally recognised African fashion label, synonymous with quality, class and standard, able to compete anywhere in the world. The official launch of this daring line of designer underwear has gathered some of the industry’s biggest names a shift in the world of fashion at Oasis Medspa Ikoyi. Still Broke was founded April 17 by Michael Uyi Agho, fondly called Godson. In 2014, Kuddus Kolawole, creative director, Kola Kuddus Couture and then Lagos State Coordinator of the Fashion Designers Association of Nigeria (FADAN), said the nation’s fashion industry is worth about 10 billion dollars (about N1.55 trillion) and should attract investors “because it is juicy.” “Our population in Nigeria, I

must say, is one of the advantages we have in the fashion industry because it provides the platform for our works” Kolawole told the News Agency of Nigeria in 2014. “I can boldly say that Nigeria’s fashion industry is worth over 10 billion dollars, but we are yet to tap into all the potential because of the cost of production which is aggravated by poor power supply” the fashion entrepreneur said. Ushbebe, an on air personality (OAP) and comedian emceed the

launch, which was star-studded with an ambience filled with renowned fashionistas, artists, actors and media personalities; including afropop star Solidstar, veteran musician 2Baba, ex-reality TV star Bassey, Tiwa Savage, Mavin’s first lady and music producer Pheelz, and Osas Ighodaro Ajibade an AmericanNigerian actress. The brand got considerable amount of pre-launch buzz with Wizkid, Annie Idibia and Lilian Esoro spotted rocking the underwear.

L-R: Bovi, a Nigerian comedian; Michael Uyi Agho (Godson) founder, Still Broke and founder’s fan at official launch of Still Broke, in Lagos, at the weekend.

narghile, or hubble bubble smoking, is becoming an increasingly popular method of tobacco use worldwide. It originated in the Eastern Mediterranean region and is now gaining popularity in many western countries including

Australia, the United Kingdom, Canada, and the United States of America, and also in Southeast Asia. Shisha smoking is a growing threat to public health. The reason is because, there is a common misconception that smoking shisha is relatively less hazardous than smoking tobacco cigarettes, and most outlets offering shisha remain largely unregulated. A review of the health effects of smoking shisha show that shisha smoking leads to significant exposure to polycyclic aromatic hydrocarbons (PAHs), volatile aldehydes, carbon monoxide, nitric oxide, nicotine, furans and nanoparticles. Drawing tobacco smoke with the help of a hookah pipe only alters the temperature of the smoke and the chemical structure almost remains the same. A consumer employing a hookah may be exposed to noxious chemicals that are not actually cleaned and sorted out by the water. In addition, there is a high probability of infectious disease taking place when hookahs are shared with each other. Diseases like oral cancer, lung cancer, stomach cancer, cancer of the esophagus, respiratory diseases, heart disease, and fertility problems can take place with hookah smoking. This sort of smoke seen as fun to some its consumers has been banned in countries such as Pakistan, Jordan, Singapore, Saudi Arabia and now Malawi.

India prepares action plan for Nigeria retail market share DAVID IBEMERE

ndia commerce ministry formulating a comprehensive action plan to boost India’s trade with Africa and has earmarked Nigeria as its number one target. Suresh Prabhu, Commerce and Industry minister says the plan is aimed at increasing India trade to Africa using a series of engagements with various players and regulators. “As part of our strategy to explore new markets, we are constantly engaging with Africa where there is huge scope for exports.We have decided to prepare an action plan to boost exports and imports from Africa,” the Commerce and Industry minister said. To strengthen the dialogue on trade and investments, “we have divided them in five parts - east, west, north, south and central”, Prabhu said. Deliberations have been com-

pleted in the eastern part and soon similar engagements would be organised in places including Algeria and Nigeria, he added. “The idea is to discover new markets. We are meeting them regularly. Trade is relatively very small with Africa,” Prabhu said. With India’s exports growing at a relatively slower rate, Africa holds huge potential to boost exports. According to experts, India needs to take more steps to increase cooperation with the continent in various areas including services. “India has lot of prospects in Africa. We need to increase our engagement with the continent. We have not yet exploited that fully as compared to China, which has huge presence,” said Biswajit Dhar, a professor of economics at Jawaharlal Nehru University. Prabhu has earlier pitched for a free trade agreement with Africa to boost economic ties between the two regions.

Thursday 17 May 2018

C002D5556

BUSINESS DAY

Global retail update

Big deal in America almart has indicated it is looking to take Indian ecommerce major Flipkart public in four years, according to a filing report with a US regulator. The deal still awaits authorisation from India’s anti-trust regulator and is likely to close later this year. Ambitious plans Amazon has quietly retreated from buying a popular type of Google advertising, with commentators suggesting the shift may be a sign the company is hastening its own digital ad plans. The online giant is also working to make its voice assistant Alexa morebeneficial in the healthcare sector, and is hot on Apple’s heels to be the first American company to reach USD 1 trillion. Supermarket dealings The proposed GBP 12 billion merger between Asda and Sainsbury’s could see 73 supermarkets sold, according to research by Maximise UK. The firm specialises in ascertaining the best locations for stores, and estimates 6% of the stores to be in jeopardy. Meanwhile, Tesco chief Dave Lewis’s pay packet has increased by 17.5% to GBP 4.9 million. Progressive produce Carrefour Poland is going green with its new Food Transition policy. The French multinational retailer plans to provide Polish customers with a constant supply of verifiable, organic foods, and has signed contracts with seven local farmers to kick-start the scheme.

Acquisitions abound Norwegian sportswear icon Helly Hansen has been sold to the Canadian Tire Corporation in a deal worth USD 771 million, with current CEO Paul Stoneham expected to remain on. Across the channel, UK retailer The Co-operative has finalised its purchase of convenience store chain Nisa. Human rights It will soon be compulsory for large Australian retailers to report on modern slavery, in accordance with new government regulations. Businesses turning over more than AUS 100 million will be required to address slavery, trafficking and forced labour all the way up their supply chain. Wardrobe newsflash Australian clothing retailer Noni B is set to acquire 832 new stores as part of a AUS 31 million deal with Speciality Fashion Group. Across the Tasman, the New Zealand Commerce Commission has launched an inquiry intolocal clothing brand ‘World’ after several complaints were laid

about its ‘Made in NZ’ assertions. Quick cuisine Transport provider Grab Vietnam is expanding its services to include food delivery, with the launch of GrabFood in Ho Chi Minh City. Customers will be able to order food from local restaurants that have signed up with the new app. Smart experience Model homes have been set up across the US for people to trial Amazon’s ‘Alexa’ in the domestic sphere. Customers can experience using the voice aide to perform tasks such as turning on appliances, ordering food and dimming the lights. Meanwhile, check out what it’s really like inside the till-free, technosavvy Amazon Go. Camera chaos While face recognition technology has long been used by retailers worldwide to reduce crime, it is causing a stir in New Zealand after a man was misidentified as a shoplifter. The case has been referred to the privacy com-

missioner amid concerns over the use of covert surveillance. High street carnage Thousands of British jobs may be under threat as Poundworld’s US parent company TPG has reportedly stopped its restructuring plan and put the discount chain up for sale. Just recently, the company sought creditor approval for a proposal that included store closures. Revamping in Russia After reporting a secondquarter loss to shareholders of EUR 52 million, German retailer Metro said on Tuesday it has taken steps to restore growth in its Russian business. It still expects a big fall in profits and a marked decrease in sales from the unit for the 2017/18 financial year. On track Berlin-based Hellofresh raised its full-year revenue guidance after reporting strong growth in the first quarter. The multinational meal-kit delivery firm, which competes with struggling US

rival Blue Apron, now expects its revenues to grow 30 to 35 % and wants to reach breakeven in Q4. Sneak peeks German discounter Lidl has opened its first Swiss city store (German captions) in a historic building in Zürich, while Netherland’s Albert Heijn has launched a concept store in Hoofddorp with an emphasis on its fresh assortment. Click here for pictures (text in Dutch). Fending off Amazon As the peak season for home improvement begins, shares at Home Depot have climbed and investorsbelieve that the retailer is well positioned to withstand the competitive online threat. Etsy sees itself in a similar position. The vintage goods marketplace reported a 25% revenue gain. Revival approved Southeastern Grocers and Tops Friendly Markets have receivedfederal bankruptcy court approval to proceed with their separate restructuring plans. The former, whose banners include Winn-Dixie, Bi-Lo, Harveys Supermarket and Fresco y Más, expects to wrap up its reshuffle in the coming weeks. Online focus in Brazil Ca r re f ou r B ra s i l ha s launched a new click-andcollect style service in São Paulo, as the company keeps up its recent focus on ecommerce. The new service will allow customers to select items online, before driving to a designated drive-through area. Partnership in Belize

Du t c h - b a s e d b re w e r Heineken has acquired a minority stake in Belize Brewing Company, which has been an importer and distributor of Heineken brands in the country since 2016. The financial terms of the deal have not been disclosed. Profit jump Profit at South Africa’s Astral Foods surged more than five-fold for the first half ended March, helped by higher sales and prices in its poultry business, where revenue increased by 23% to USD 448.5 million. Astral also produces animal feeds. Special offers Aldi and Costco are driving down the prices of fresh produce, particularly in Western Australia, where prices are falling faster than elsewhere in the country, according to new research. Shoppers in Perth, for example, spent 6.9% less on fruit and vegetables last year. Speedy delivery 7-Eleven Japan will launch a service to deliver goods from its stores in as little as two hours. The country’s biggest convenience store chain is looking to capitalise on grocery delivery as online rivals such as Amazon Japan make inroads into the highly competitive field. Stellar results South Korean retail major Shinsegae saw a 149% surge in profit in the first quarter thanks to solid performances from its department store and duty-free units. Net profit came to USD 78.4 million on a consolidated basis in the period. Operating income shot up 45.9%.

don’t sell, I cannot sell the next day, so I make losses some days. Dependants: Husband and seven children School fees: I am finding it difficult to pay my children’s school fees. Sometimes I get assistance from customers, but that is not enough because my children spend more time at home than in school. House rent: My monthly rent was N5, 000 and I still owed some months’ rent when my landlord who was a

bit understanding died. Now his children have increased the rent to N6, 000 and asked me to either pay a year rent or move out. I have been pleading with them but they have threatened to throw me out if I don’t pay. Challenges: The high cost of food items is a huge challenge for me. If the price of food items can come down, it will go a long way to help my situation a little bit. To eat is a big problem for us and my husband who is supposed to assist me has been sick.

Living under poverty line How Nigerians are struggling to survive

If you want to contact the writer of this story call: +234(0) 803 889 1567, +234(0) 8155184838 chinwe.agbeze@businessdayonline.com

Petty trader needs help to pay bills Name: Rebecca Reuben Origin: Kogi State Business: I roast yam and plantain with pepper sauce. I also roast corn and pear when it’s in season. Profit: I was making little profit but since the prices of food items have been going up, it has been difficult for me to cope. Some days I just sit at home because I don’t have money to go to the market. The plantain I usually bought for N700 is now N1, 500 and the price of a tuber

of yam has also increased. The money I spend on transportation is now twice what it used to be, and most times the money I make after sales is not enough to buy more goods. This is the only business sustaining my entire family since my husband lost his job due to sickness. Customers complain anytime I increase the price a little to accommodate the price changes in the market and sometimes I am forced to sell below the cost price because once I roast and

Rebecca Reuben

Analysts: Chinwe Agbeze, Stephen Onyekwelu, David Ibemere, Graphics: Fifen Famous

BUSINESS DAY

Thursday 17 May 2018

INSIGHT

NEXIM Bank: One Year of Strategic Reforms to Drive Higher Non-oil exports JAMILU YUSUF

bubakar Abba Bello, the forward-looking Managing Director of the Nigerian Export – Import Bank (NEXIM) and his management team on 2nd May 2018, marked one year of overseeing the operations of the important development finance institution. Most analysts and industry stakeholders agree that the team has started off on a strong note. Under the purposeful leadership of Abba Bello, they have pushed a strategic action plan to turnaround NEXIM Bank that is recording impressive results at several levels. Key areas of impact include strengthening the bank’s financial capacity; re-tooling existing export financing support programs and developing new ones to expand reach and impact while driving institutional reforms to boost confidence of international partners. The reforms have triggered a positive shift in the narrative of NEXIM Bank that is refreshing and inspires hope. Not only for the professional integrity of the bank as a thriving world-class development finance institution, but for the practical crystallization of what it represents to the growth and strength of the country’s economy. A financially strong, transparent, bigger and professionally run NEXIM Bank is critical to the realization of the goals of the 2017–2020 Economic Recovery Growth Plan (ERGP) of the Buhari administration. As a catalytic financing institution set up to power local export businesses by mobilizing long term low cost funds from international development finance bodies, NEXIM Bank has the unique and strategic potential to aid sustained inclusive growth by leveraging the power and industry of the private sector to create and support a robust non-oil export industry. This is especially so, given the urgent need to restructure the economy, which remains highly import dependent, undiversified with oil accounting for more than 95 per cent of exports and foreign earnings, while the manufacturing sector accounts for less than one per cent of total exports. The good news is that the changes recorded by the Abba Bello team at NEXIM provide a glimmer of hope for a steady and sustainable turn around in the non-oil sector. A year ago, when the Abba-Bello-led Executive Management Team was appointed, NEXIM Bank was challenged at many levels. At the core was the lack of a strategic action plan to guide its operations, the apparent absence of professionalism in the conduct of the bank’s business,

Abubakar Abba Bello, managing director, NEXIM Bank

abuse of corporate governance in the provision of loans to businesses, as well as weak risk management standards. These institutional gaps led to a surge in the volume of nonperforming loans, a development that negatively affected the bank’s balance sheet. Another implication was that these poor operational standards and procedures also significantly eroded the confidence of critical international partners of the bank possibly impacting the flow of external capital. Inadequate capitalization and the resulting paucity of operational funds also limited the bank’s ability to adequately support local export businesses. To establish a scientific basis and chart a precise direction and framework for its actions, the new management started off by conducting a comprehensive diagnostic analysis of the bank. This formed the basis for the strategic internal and external reform initiatives that are being implemented methodically. One of the key outcomes of the exercise is the Strategic Action Plan for 2018 – 2022. The plan details an ambitious vision for the bank outlining the steps and actions to achieve it with timelines. This framework has provided the management with a reliable and well thought out blue print for charting a program of reforms that are designed to strengthen the bank, increase efficiency, enhance transparency and robustly build capacity to drive non-oil exports by support local manufacturing in a sustainable manner. Building a Stronger Financial Base A notable result of the implementa-

tion of this plan the massive turnaround in the financial position of the bank. Statistics show that the team successfully grew NEXIM bank’s balance sheet from N67.73 Billion in April 2017 to N120.40 Billion as at March 2018 as part of a strategic drive to achieve financial soundness and performance. This represents an increase of N52.67.23 Billion. In addition, they pursued a bold and aggressive debt recovery drive that increased recoveries of outstanding loans from a meagre N200 Million in December 2016 to N1.6 Billion in December 2017. The bank has set an ambitious target to achieve a Balance Sheet of at least N1.2trillion by 2022. Smart Financing Intervention Programs for Non-Oil Export Businesses The new management also collaborated with the Central Bank of

It is interesting to note that so far, NEXIM has processed about 56 applications worth N79billion and $4million for local export manufacturing businesses under these interventions

Nigeria (CBN) to implement two strategic intervention schemes to supporting the non-oil export sector by addressing the perennial problem of poor access to funding by exporters. Both intervention schemes are anchored on the philosophy of “Produce, Add Value and Export” (PAVE), which aims to encourage exporters to advance from the export of raw materials to value added exports. The first is the N500Bn Export Stimulation Facility (ESF). Although the program was initially launched in June 2016, the new management added some strategic improvements to make it more effective and impactful. The enhanced version was re-launched last December and is currently being implemented. The ESF is specifically designed to provide long term concessionary funds to support existing or new export oriented projects. It provides term loans at a single digit interest rate, for tenors up to eight (8) years, with moratorium up to two (2) years, or as working capital/stocking facility. The second program is the N50Bn Export Development Fund (EDF). This is a new scheme that the new management conceived and was approved last December for execution. It is structured as a regional/state intervention scheme, which targets mainly the Small & Medium Enterprises. Its aim is to accelerate industrialization, economic diversification and exports. Under the EDF scheme, a minimum of N1billion is earmarked for each state towards developing one or two identified export products where the state has the highest competitive advantage. Already about six states have keyed into this scheme and the bank is at various levels of engagements to firm up the transactions and commence disbursements. In addition, a portion of the fund is earmarked to support industries that are major employers of women and youth under a special economic empowerment scheme for the vulnerable groups as part of NEXIM’s contribution towards meeting the targets of the Sustainable Development Goals. It is interesting to note that so far, NEXIM has processed about 56 applications worth N79billion and $4million for local export manufacturing businesses under these interventions. This is commendable. Providing Financial Lifelines for Critical Export Growth Drivers A practical demonstration of NEXIM Bank’s interventions is its strategic business rescue programs. A good example is the bank’s spirited plans to revive Multi-Trex Integrated Foods Plc, the flagship

of the Nigerian cocoa-processing sub-sector. The company’s operations were shut in June 2015 by the Asset Management Corporation (AMCON) under controversial circumstances bordering on unpaid bank debts totalling about N13billion. Industry experts argue that AMCON acted out of turn when it secured a court injunction to close the business since the company was duly servicing the loans that provided basis for the takeover. The closure of the company’s business rendered about 300 employees jobless, and the fully functional modern processing plant and equipment inactive and exposed to vandalism and disuse. NEXIM bank has announced plans to provide a N5bn facility to Multi-Trex for the resuscitation of the plant. Another example of NEXIM bank’s export business support interventions is the strong financial support for the Beloxxi Industry Limited, Agbara. Beloxxi Industries Limited is a leading local producer and supplier of cream cracker biscuits. NEXIM has always supported Beloxxi industry’s growth from the outset. It helped the company in import substitution when it decided to go into local production of biscuits as the government banned the importation of all kinds of biscuits into Nigeria. NEXIM was there when the company started local large-scale operations and began export of biscuits to other countries in Africa and rest of the world. Under the leadership of Bello, NEXIM bank is working to help the biscuit manufacturer to expand its operations. Multi-Trex and Beloxxi are only a few of many local businesses that NEXIM has helped to roar back to life or is in the process of supporting. What is really exciting is that within this first year, under the purposeful and dynamic leadership of Abba Bello, the bank has witnessed a positive turnaround in its finances. There is unarguably a clearer sense of direction for the bank. The new management has also demonstrated a commendable commitment and drive to reform and re-orient the bank on the path of professionalism. This should be supported. Abba Bello and his team have done a brilliant job of reversing the slide and creating a significant level of reform momentum that if sustained will help to grow investor confidence, re-set NEXIM on the sustainable path of growth, capital expansion and overall, boost its capacity to drive the growth of non-oil exports. They deserve some accolades! Jamilu Yusuf is a public affairs analyst in Abuja

C002D5556

Thursday 17 May 2018

BUSINESS DAY

LegalBusiness BD Business Law Industry Report Practice Intelligence Partnerships

Attracting investment to Nigeria’s hospitality industry: legal and Other Considerations

INSIDE 31

About the new cama bill

DOA Inaugural Business Series focuses on TMT & Finance

32 NBA sympathises with Rivers State Chief Judge over courtroom attack

CHUKS OKORIEKWE AND AYOOLUWATUNWASE FADEYI

he Hospitality and Tourism Industry (HTI) has the potential to bolster Nigeria’s investment landscape and achieve increased contribution to our Gross Domestic Product (GDP). Given Nigeria’s population and natural endowments, a steady investment in infrastructure and HTI friendly policies, coupled with sensitisation efforts to encourage in-country vacations and thereby conserving Nigeria’s forex reserves - would be positive factors in this regard. Nigeria’s abysmal ranking (129th out of 136 countries) in the Global Travel and Tourism Competitive Index 2017, should provide necessary impetus (coupled with efforts at improving Nigeria’s Ease of Doing Business) to underpin government and stakeholder actions to deliver impactful outcomes, manifesting in improved ranking in future editions. There have been diverse initiatives to promote the HTI, though arguably not enough to intensively spur the needed growth. The HTI was accorded preferred sector status by the Federal Government (FG) in 1999 with incentives such as tax holidays and import duty exemption on tourism-related equipment whilst some States, like Lagos and Cross River have designated specific areas as tourism development zones (Lekki Tourism Zone/ Tinapa Resort etc.) making acquisition of land easier. The Minister of Information and Culture had launched the Economic Value of Geospatial Services in Nigeria - a collaboration with Google to create street mapping of Nigeria potentially showcasing the country’s rich tourism sites to the world. The Minister of Information and

Culture also disclosed that the FG had inaugurated the Presidential Council on Tourism which will be working closely with the United Nations World Tourism Organization (UNWTO) to implement the long abandoned Nigeria Tourism Master Plan focused on strengthening institutional capacity of the Nigeria tourism sector. This article seeks to discuss HTI’s potential in attracting investment and routing traffic to Nigeria’s tourist destinations through applicable legal and other instruments. Substance & Optics: Unbundling Tourism Potential in Nigeria Whilst other countries have continued to provide the right investments to make their countries attractive tourist destinations; security challenges, poor infrastructure, especially unavailability of steady power supply, have continued to deter potential tourists from Nigeria. One fall out of the foregoing is the global ‘price notoriety’ of Nigerian hotels, they are considered as overpriced. Another impediment is the burden of

multiplicity of taxes weighing down HTI: hotel operators are liable to Company Income Tax (CIT), Tertiary Education Trust Fund Tax (TET Fund Tax), Value Added Tax (VAT), and Consumption Tax in some States like Lagos Hotel Occupancy and Restaurant Consumption Tax. The recent automated monitoring of Consumption tax initiated by Lagos State Government, has generated another form of controversy between hotel operators in Lagos State and the Lagos State Government. In its recent decision, the Supreme Court (SC) in AG Lagos State v. Eko Hotels Limited (2018) 36 TLRN 1 held that the imposition of Sales Tax (ST) on the Defendant constituted double taxation, since VAT was also chargeable in the same transaction. Following the SC’s ratio in this case, its earlier decision in AG Lagos State v. AG Federation [2013] 16 NWLR (Pt.1380) 383 where it validated the Hotel Occupancy & Restaurants Consumption Law (HORCL) which imposes tax equivalent to the ST on hotel operators in Lagos State in addition to VAT appears to have Continues on page 31

Lagos State judiciary holds first Biennial Lecture

he Lagos State Judiciary on Monday held its first Biennial Lecture at the City Hall in Lagos. The event was attended by members of the bar and bench and various other justice stakeholders. The Chief Justice of Nigeria (CJN), Hon. Justice Walter Nkanu Onnoghen, who was represented by the Hon. Justice Olabode Rhodes-Vivour delivered the keynote Lecture, titled “Judicial Standards, Integrity, Respect And Public Perception - A Comparative Analysis For Independence In 1960 Into The Present Millennium”. In his presentation, he traced the erosion of judicial independence to military intervention. Looking at the current system of judges’ appointment in the country. Also present at the biennial lecture was the Executive Governor of Lagos State, Akinwunmi Ambode, who applauded the

Hon. Justice Opeyemi Oke, Chief Judge of Lagos State

Hon. Justice Olabode Rhodes-Vivour of the Supreme Court.

Honourable Chief Judge of Lagos State, Hon. Justice Opeyemi Oke and the Attorney-General of Lagos State, Adeniji Kazeem for their major reforms in the Judicial Sector. The Chief Judge of Lagos State,

The event was chaired by President, Prof. Yemi Osinbajo, SAN, who was represented by his Senior Special Adviser on Financial Crimes, Abiodun Aikumo. Other dignitaries present at this event were Dr. Idiat Adebule,

Hon. Justice Opeyemi Oke also spoke on the theme, “Judicial Standards, Integrity, Respect And Public Perception - A Comparative Analysis From Independence In 1960 Into The Present Millennium” of the Lagos State Judiciary.

deputy governor of Lagos State; Justice Rosaline Bozimo, the Administrator of the National Judicial Institute; Adeniji Kazeem Attorney General of Lagos State, judges, magistrates, Senior Advocates of Nigeria, amongst others.

BUSINESS DAY

C002D5556

GREYMATTER

M&A experts explain why recession should trigger bolder moves towards expansion and growth Continued from last week

Crossing the Fine Line: Legal Issues of Data Misuse in Nigeria Continued from last week

lthough civil liability for data misuse could be gleaned from contract and statute, could there be a criminal angle arising from such misuse, for instance, criminal breach of trust? To answer this question, section 311 Penal Code Act (PCA), Cap. 532, LFN 1990 (applicable to only Northern parts of Nigeria) could be helpful. It states: “whoever, being in any manner entrusted with property or with a dominion over property, dishonestly misappropriates or converts to his own use that property or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which that trust is to be discharged or of a legal contract express or implied, which he has made touching the discharge of the trust, or wilfully suffers any other person so to do, commits criminal breach of trust.” (Emphasis supplied) In establishing ingredients of the said offence, the Court of Appeal in Hon. Yakubu Ibrahim & Ors v. Commissioner of Police (2010) LPELR – CA/A/6C/2007 per Peter-Odili JCA (as she then was), held: “The ingredients of the offence of criminal breach of trust … are:- (a) that (t)he accused was entrusted with property or with dominion over it. (b) that he (i) misappropriated the property; (ii) converted such property to his own use; (iii) disposed it. (c) that he did so in violation of:- (i) any direction of law prescribing the mode in which such trust was to be discharged; or (ii) any legal

contract of law expressed or implied which he had made concerning the trust; or (iii) he intentionally allowed some other persons to do or commit the above stated, (d) that he acted dishonestly as in (b) above.” Could it therefore be argued that DH’s ToS creates a trust

policy. Any form of misuse by DHs would constitute criminal breach of trust thus, increasing their legal exposure in both contract and trust.

relationship between the DHs and DOs? Although, trust is a creation of equity it has been rightly opined that the relationship between DHs and DOs could be classified as such. For instance, when compared with bailment, where goods are delivered to the bailee without transferring ownership, the bailee thereafter becomes a ‘trustee’ for the goods delivered to him. Same position could be applied to DHs/DSs relationship, the data is owned by the DS whilst the DH merely act to hold such data. Consequently, data being an incorporeal property to which DOs have rights, can validly fall within the contemplation of section 311 PCA and the relationship between the DHs and DOs are governed by the ToS including its privacy

is important that in processing DS’ data, DHs must ensure that the purpose for which such data is to be used is well stated in their privacy policy. This would invariably create a measure of disclosure and informed consent by the DS. Although, the ETB is yet to become applicable, its provisions are instructive and as such DHs should begin to take steps to ensure that their data disclosure and use standard are aligned with its provisions. By so doing, reputational risk exposure (in addition to potential fines, damages and possible criminal breach of trust), would be minimized.

Conclusion Whilst it is true that data drives the digital economy, it

Chuks Okoriekwe is a commercial lawyer and practices with LeLaw Barristers & Solicitors.

SERAP demands accountability for post-privatisation spending on the power sector Continued from last week

The organization expressed concern that “the privatisation of the sector and unbundling of the Power Holding Company of Nigeria (PHCN) into different generation, distribution and transmission as well as post-privatisation spending and the identities of those who bought GENCOS and DISCOS have remained shrouded in secrecy.” The letter read in part: “The privatisation of power assets has already caused major crises, ranging from illiquidity, load rejection, metering, corrupt practices, lack of gas to power the stations, disinterestedness of investors, lack of injection of fresh capital after acquisition of financing, tariff interest, consumer apathy, foreign exchange hostilities, and sundry issues.” “SERAP is concerned that gains of privatisation have been lost through

alleged corruption, manipulation of rules and disregard to extant laws and lack of transparency in the exercise. The goals of privatisation have been marred by the sale of the sector to preferred bidders that could not pay the bid value on the sale, instead the PBE encouraged the deferment of payment and restructuring of payment terms in contravention of bidding rules to the disadvantage of other bidders.” “Government has had to further intervene by way of funds ejection, guarantees and assurances despite privatizing those assets. Nigerians are also entitled to the right to truth derived from the obligations of the government to carry out an investigation of allegations of corruption committed within its jurisdiction; to identify, prosecute and punish those responsible; and to ensure that victims have the simple and prompt recourse for protection against violation of fundamental rights, as well

Thursday 17 May 2018

as to ensure transparency in public administration.” “SERAP believes that the right to truth allows Nigerians to gain access to information essential to the fight against corruption and in turn development of democratic institutions as well as provides a form of reparation to victims of grand corruption in the country.” “By Section 1 (1) of the Freedom of Information (FOI) Act 2011, SERAP is entitled as of right to request for or gain access to information, including information on post-privatisation spending by the Federal Government and accounts of spending by the private entities such as GENCOS and DISCOS. “The information requested for, apart from not being exempted from disclosure under the FOI Act, bothers on an issue of national interest, public concern, interest of human rights, social justice, good governance, transparency and accountability.”

And regulations on M&A, in Nigeria, thus providing a unique platform for enhancing the quality of M & A legal practice. While M&A transactions are not alien to Nigeria, they are yet to become the regular vehicle for corporate growth and expansion which they ought to be, in comparison to more developed countries where M & A transactions thrive so excellently and contribute significantly to a buoyant and prosperous economy. Also, the adverse impact of the global decline in oil prices on Nigeria’s economy, exacerbated by the general policy uncertainty witnessed through 2015 and 2016, saw a marked reduction in foreign direct and portfolio investment in Nigeria, which had a domino effect, slowing down M&A activities in the country. Although Nigeria has technically exited recession, the economy is yet to substantially rebound from the effects of the recession. The overarching goal of this seminar is for interested stakeholders to deliberate on the issues impacting on M&A and tease out how these issues may have contributed to the low incidence of M&A in Nigeria. For those of us that are professional advisers on M&A Transactions, we are often in a quandary when it comes to interpretation of laws and regulations relevant to M&A, and while it is the distinctive mark of the lawyer to discover and articulate points of disagreement for the sustenance of the practice of law, this peculiar tendency of ours need no stress-testing with respect to M&A transactions, as the rules are often so amorphous as to be subject to multiple interpretations. We are lucky to have the SEC here with us today, and we hope that they will be able to shed light on some of these nebulous provisions to aid consistent interpretation. We thank the SEC for their continuous efforts to improve the Rules and Regulations for a more efficient governance, and in this respect acknowledge the several laudable regulatory improvements made in recent times, such as the 2015 reduction from a 3-stage to a 2-stage filing process for fast track approval for mergers, as well as a definitive amendment to what falls within the ambit of an “affected transaction” for corporate re-organizations. In 2017, SEC further proposed some new changes to the existing rules including the addition of selfexplanatory provisions regarding the timing of a take-over bid and detailed explanations as to what specific factors should prompt same. While these improvements are laudable and noteworthy, we are yet to achieve the desired level of growth for mergers, acquisitions and corporate reorganizations in Nigeria. At a time where some columnists might describe the Nigerian corporate restructuring landscape as growing immensely, statistics tell us that the percentage of corporate transactions that fall within M & As in Nigeria are at 37%, while a country such as the United Kingdom captures them at

a staggering 62%. In the same vein, a recent study acknowledges that with regard to cross-border M & A, Nigeria ranks within the 6th percentile while India ranks within the 1st percentile of countries engaging in such. Again, it begs the question, what are we missing? Why are there so few transactions, comparative to our potential? In light of these, who could be better placed than the 29 speakers and panelists we have put together, consisting of lawyers, business executives and other key stakeholders, to discuss the issues impacting on mergers, acquisitions and corporate reorganisations in Nigeria. These esteemed individuals will engage in sessions I am very glad that we have representation from SEC, the NSE and NASD, who will be shining more light on the issues surrounding the corporate restructuring landscape, from their perspective, in our Regulators’ Question & Answer Session. I would like to thank the SBL for the tremendous support they have provided, and in particular Mr. Olumide Akpata as the Chief Host of this event. My immense gratitude also goes to the Seminar Organizing Committee, namely Fola Olusanya and Aramide Oyeneyin of Jackson Eti & Edu, Olujimi Bucknor of ACAS-Law, Seun Lofinmakin of Detail Commercial Solicitors, Temiloluwa Olowu of UUBO, and Lisa Onianwa of Sefton Fross, who, working together with the Executive Committee of the M & A Committee, Ozofu Ogiemudia, Babasola Alokolaro, Ibidolapo Bolu and myself, have put together an engaging programme and hopefully a stimulating Seminar. We are fortunate to have the support of Mrs. Mary Uduk, the Director-General of the SEC, Mr.; all of whom I hope you will get to meet during the Seminar. Our eternal thanks go out to our Sponsors, without whom we would not have been able to make this event free for participants. As platinum sponsors we have Udo Udoma & Bello-Osagie, Jackson Etti & Edu, Sefton Fross and The New Practice. As gold sponsors we have Leadway Assurance Company Limited and Templars. As silver sponsors we have SPA Ajibade, Detail Commercial Solicitors, Chapel Hill Denham, ACAS-Law and Aelex. We would also like to thank our media partners. My wish, and that of the organizing committee, is that you will enjoy this Seminar, contribute effectively towards it and take back with you, beneficial knowledge, relevant experience, valuable contacts and happy memories. I hope that as the market for corporate re-organizations deepen in Nigeria, we can all hum (in, and not on camera, I hope): We’re in the money, We’re in the money, We’ve got a lot of what it takes to get along. Nigeria no doubt has a lot of what it takes to get along, and I hope this Seminar will contribute to the improvements SEC continues to make to its Rules and Regulations and the frequency and size of corporate reorganizations in Nigeria will continue to grow.

Thursday 17 May 2018

C002D5556

BUSINESS DAY

THEBAR

INLAW

Attracting investment to Nigeria’s hospitality...

About the new cama bill

Continued from page 29

been impliedly overruled. However, the SC needs to expressly make a pronouncement on this issue. Another challenge encountered by HTI is regulatory conflicts and competition: the Federal and State Governments’ respectively vies to regulate hotels, resulting in duplicative compliance requirements, instead of complementary intergovernment oversight for sector advancement. AG Lagos State v. AG Federation (supra) provided the opportunity for the SC to hold that it is States that have powers to regulate hotels since hotel is not included in the Exclusive and Concurrent Lists of Parts 1 & 2, Second Schedule 1999 Constitution. The FG therefore lacks the constitutional vires to make laws outside its legislative competence: hotel regulation being a residual matter is reserved for States’ Houses of Assembly. New trends are daily evolving in the HTI. For example, conventional hotel and flight reservations are being disrupted by entrants like hotels. ng, wakanow.ng and travelstart.ng amongst other operators who have continued to shape the HTI through bespoke services. Another major global digital disruptor is the Airbnb model (working with individuals who are willing to sub-let spaces in their homes for a fee), which reportedly made revenues of US $1 billion in Q3, 2017 alone. No doubt the hospitality space in Nigeria would be transformed with the potential entrance of initiatives such as Airbnb. It is expedient that the Nigerian Government put in place, and ensure the enforcement of adequate policies to ensure that Nigerian HTI develop in line with emerging global trends. By so doing, operators in the HTI will take advantage of the enhanced tourism activities and economic benefits of Nigeria’s HTI. This will increase competitiveness in the country’s HTI. Increasing Private Sector Participation in the Hospitality and Tourism Industry New operators are emerging in the HTI whilst existing operators are also upgrading their operations. For example, Carlson Rezidor, owners of Radisson Blu brand which recently welcomed a second Lagos hotel to its fold, made known its plans to invest about US$400 million in Nigeria in the next four (4) years and also open additional six (6) hotels in Nigeria under its various brands, Transcorp Hotel recently commenced construction of a 25 storey hotel building project in Ikoyi, Marriott, Accor, Hilton are also looking to improve and increase their investment in Nigeria by constructing new hotel apartments. These developments illustrates importance of the HTI in contributing to Nigeria’s economy. In order to enhance and foster participation in the HTI, the FG is set to enact the Nigeria Tourism Development Authority (NTDA) Bill 2017 (the NTDA Bill), harmonised version of which was passed by the Nigerian Senate in October, 2017. Currently, Nigerian Tourism sector is regulated by the Nigerian Tourism Development Corporation (NTDC) Act, Cap. N137 LFN, 2004. Enacted in 1992, and with some of it provisions held to be unconstitutional by the Supreme Court in AG Lagos State v. AG Federation

(supra), the NTDC Act is expected to be repealed by the passage of the NTDA Bill. A perusal of the NTDA Bill, points to FG’s intention to create an enabling environment for practitioners in the industry, particularly the introduction of Tourism Development Fund, sections 26 and 27, NTDA Bill. The various sources of the Fund include monies provided by the FG, donations from other tiers of government as seed capital by way of intervention fund, contribution, loan, grant; monies borrowed and capital raised by the Authority under the Bill or any other enactment including such sums as may be received by the Authority from other sources. Others include monies earned by the operation of any project, enterprise financed from the fund or investment and other sums collected or received by the Authority for services rendered; and other monies that the Minister of Finance in consultation with the Minister may determine with the approval of the President. The Fund would be utilised for funding tourism development and tourism related projects/programs including: marketing and promotion of tourism, capacity building,

market research and development of tourism infrastructure, amongst others. Section 17 NTDA Bill, also established the Conventions and Visitors Bureau focusing on destination marketing as well as involvement in international biddings for hosting rights of events. The initial draft of the NTDA Bill proposed a Tourism Development Levy (section 30) which was to be generated from tourism visa fee, tourism development contribution levy of 1% per room rate or flat rate or any rate as may be prescribed by the Authority, levy on corporate Nigeria comprising an approved minimum percentage of interest rate on banks, telecommunication and other corporate entities and from such other levies or fees as the Authority may prescribe. However, after much controversy on this Levy, it was deleted from the final Bill passed by the National Assembly. Unlike the NTDC, the NTDA Bill excluded the State and Local Government from the National Tourism Board, this is perhaps in a bid to give effect to the Supreme Court judgment in AG Lagos v. AG Federation (supra). Moreover, there are incentives for practitioners in the industry which arguably, have not been fully utilised. For example, section 37, Companies Income Tax Act (CITA), Cap C21 LFN, 2004 provides a 25% income tax exemption to hotel operators where the income is in convertible currencies derived

from tourists by a hotel and such income is put in a reserved fund to be utilised within five (5) years for building of new hotels, conference centres and new facilities for the purpose of tourism development. This CITA provision aims at combating the financial challenges faced by hotel operators given the long gestation periods of most hotel projects. Investors in the HTI are also allowed to maintain domiciliary accounts with no compulsion to convert their foreign currencies receipts into Naira, section 15(4) Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, Cap. F34, LFN 2004. The tourism plans of various States, is an indication that the HTI will experience a positive turn around in the nearest future. Lagos State for instance has three hundred and twenty- seven (327) parks and gardens. Significant events like Osun-Oshogbo Festival (Osun State), Calabar Carnival (CrossRiver State), Ojude-Oba Festival (Ogun State), Durbars (Kano and many Northern State), etc. awareness attract tourists and spices up Nigerian HTI. Conclusion Undoubtedly, creating an ena-

bling environment for HTI would ensure steady growth with increased revenue potential through taxes: at the corporate (profits) level; on transactions (VAT and Consumption Tax on goods and services); and Personal Income Tax of direct and indirect employees. This is apart from the positive and impactful spill over effects for the wider economy. It is therefore prescient that sector friendly policies be put in place to encourage investment in the HTI. If HTI potential in Nigeria is to be unlocked, government at all levels must put in place holistic policy with well thought out implementation strategy. All hands will need to be on deck to ensure the improvement of Nigerian HTI, avoiding mistakes and errors from the past and embracing modern development trends including technology. Hotel and hospitality staff should utilise the opportunity of enhanced foreign training and exposure. Various industry opportunities resident in Nigeria should foster new energy, spawning a competitive landscape that hopefully, a favourable business environment will make more appealing to investors and tourists. All said and done, a positive outlook beckons and all stakeholders should make it realisable. Chuks Okoriekwe and Ayooluwatunwase Fadeyi are commercial lawyers and practice with LeLaw Barristers & Solicitors.

he new CAMA bill, described as the biggest business reform bill in Nigeria in over 28 years, is the latest towards the promotion of good business practices in Nigeria. The senate on Tuesday passed the repeal and re-enactment of the Companies and Allied Matters Act, which the legislative body termed the “biggest business reform bill in Nigeria in over 28 years.” Here are a few things the bill seeks to achieve: 1. Make Nigeria’s business environment as competitive as its counterparts around the world 2. Allow individuals start up and register companies all by themselves 3. Focused on promoting the use of technology in the registration of businesses 4. Remove of all the unnecessary regulatory provisions for small companies.

5. Reduce the minimum share capital for companies and start-up in Nigeria. 6. Create a new form of legal identity for Nigerian businesses; and 7. Ensure that Nigerians can now register their businesses from anywhere in the country through the e-registration system.”

Review of the salient provisions of the meter asset provider regulations 2018 Continued from last week

arbitration.

Insurance and Disaster Recovery Plans Under the MAP Regulations, it is the obligation of the MAP to insure the meter assets and secure all metering equipment deployed in accordance with the Metering Service Agreement (MSA) while the DisCo and the MAP are jointly obliged to ensure frequent back-up of relevant data, to ensure integrity of the metering system.

CONCLUSION The development and issuance of the MAP Regulations indicate the commitment of NERC to using its rule-making powers under the Electric Power Sector Reform Act (2005), to address critical challenges affecting the Nigerian power sector. Essentially, the MAP Regulations make transitional arrangements to the effect that, pursuant to the tariff reset in the year 2018, only meters installed by DisCos by December 31, 2018 shall form part of their Regulatory Asset Base. Furthermore, any further deployment of meters beyond December 31, 2018 under a subsisting contract entered by DisCos is to be structured under the MAP regulatory framework. Again, customers who are provided with meters under this arrangement are to pay a monthly metering service charge and appropriate energy tariff reflective of the financing structure while DisCos are expected to present to the Commission for approval, additional customer classes disaggregating customer tariffs, based on the mode of financing of the meter asset that are installed on their premises. Whilst figures released by NERC indicate a metering gap of 4,740,275 meters for all DisCos as at December 31, 2017 (with the gap projected to widen significantly by the time the ongoing customer enumeration in the NESI is concluded), it is expected that the operation of the MAP Regulations will bridge the metering gap and eliminate the billing crisis currently ravaging the NESI.

Capping of Unmetered Customers Bills To address the issue of estimated billing in the NESI, the MAP Regulations provide that within 120 days of its commencement, NERC shall issue an Order on the Capping of the Bills of Unmetered Customers. Customer Financing of Meters Another significant initiative in the MAP Regulations is the provision for self-financing of meter acquisition by electricity customers, who elect to pay for a meter asset upfront. In this case: a DisCo shall provide the customer with authorization specifying the amount to be paid for the installation of a meter, after inspection of the customer’s premises and certifying the readiness of the premises for a safe and secure installation of the meter asset; the customer shall pay to the MAP the full price of the meter as specified in the DisCo’s authorization; and the MAP shall supply and install the meter at the premises of the customer within ten (10) working days of the Customer’s full payment. Under the customer financing arrangement, a customer shall not be liable for the payment of metering service charge through the DisCo, and the amount payable to the MAP by the customer shall be the efficient costs of the meter and its installation, as determined by the procurement process for MAPs conducted by the DisCo. Dispute Resolution All agreements entered into by parties further to these Regulations shall contain appropriate dispute resolution clauses for settlement of disputes by

The Grey Matter Concept is an initiative of the law firm, Banwo & Ighodalo DISCLAIMER: This article is only intended to provide general information on the subject matter and does not by itself create a client/attorney relationship between readers and our Law Firm. Specialist legal advice should be sought about the readers’ specific circumstances when they arise.

BUSINESS DAY

C002D5556

Thursday 17 May 2018

INDUSTRY FILE

sympathises with Rivers State DOA Inaugural Business Series NBA Chief Judge over courtroom attack focuses on TMT & Finance T …As Experts Call For Investments To Grow Sector

egal, TMT and Finance experts have called for more investment in the telecommunication, Media and Technology, (TMT) sector in a bid to grow the country’s GDP and create employment opportunities. This call was made at a Breakfast session organised by the law firm of Duale, Ovia & Alex-Adedipe, (DOA) a fast-growing commercial law firm providing expert services TMT, Finance, Energy and other key areas of law. The event, which took place at the Wheatbaker Hotel in Ikoyi, Lagos was the first in a series of business meetings to hold annually. It had in attendance key stakeholders in Telecommunication, Media, technology (TMT) and finance. Speaking at the event, DOA partner, Adeleke Alex-Adedipe stated that there were opportunities for lawyers in TMT and that the opportunities are endless. He said, “For every investment, there is some legal work that is attached to it. If TMT continues the way it is today, we will not have real investment without proper legal advice, whether it is in due diligence, pure legal advice or setting up entities or advising the banks or the big players in respect of funding. “It is a growing business. As we grow and advance, the reality of the matter is that there would be more opportunities and as opportunities open up, there will be work for lawyers.” Panelists, which include Partner, Synergy Capital Managers, Dr. Akintoye Akindele, CEO, Terragon Group, Elo Umeh, Partner, Bluechip Technologies Ltd/Leadpath, Olumide Soyombo, managing director, Wakanow, Obinna Okezie COO, Netplus, Adekumbi Ademiluyi and Country COO, Barclays Nigeria, Sadiq Abu discussed “TMT investment in Nigeria – Developing opportunities and challenges. Managing partner, EchoVc, Eghosa Omoigui, Co-founder, Interswitch, Idris Saliu, director, Lagos Business School, Mrs Olayinka David-West, MD, FNB Quest Funds, Ijeoma Agboti and Lloyd Onaghinon discussed “investment in mobile payment/ Fintech in Nigeria – a digital revolution.” Also speaking during the event, Adeniyi Duale, Managing Partner of the firm said Nigeria must collectively address the inhibiting factors to attracting investment into the telecommunication, FinTech, E-commerce and all other sectors of the economy that can help Nigeria realise it’s full potential and not continually depend on oil as mainstay of the economy. Duale said “As at 2008, there were about four companies who had received funding but today they are about 20 and we are grateful that your are panelist. We are passionate about this industry and we are keen on supporting TMT companies from inception through various stages of their growth and cycle (which range from raising seed capital financing, early stage investments, growth capital as well as exits).” He noted that the breakfast session which focused on investments in Nigeria’s TMT market was apt as it seeks to address development in Nigeria and Africa as a whole. Duale added that the inaugural edition of the DOA Business

Gbenga Oyebode speaking at the DOA Business Series in Lagos.

LEFT-RIGHT: Adeleke Alex Adedipe, Partner, DOA; Lloyd Onanighon, Head TMT, Stanbic; Ijeoma Obatoyinbo, MD, FBN Quest Funds; Eghosa Omoigui, Echo VC; Idris Saliu, Co-Founder, Vanso/Interswitch; Mrs. David West, Director, Lagos Business School; Soibi Ovia, Partner, DOA; and Niyi Duale, Managing Partner, DOA

he Nigerian Bar Association has sympathised with the Ag Chief Judge of Rivers State over the attack on the premises of the High Court of Rivers State, Port Harcourt Judicial Division; by hoodlums who destroyed properties; leaving several persons injured. According to the statement released on Monday, May 14th, by the general secretary of the Association, Isiaka Abiola Olagunju, he stated that the attention of the Nigerian Bar was drawn to an attack on the premises of the High Court of Rivers State, Port-Harcourt Judicial Division on Friday 11th May 2018 by certain persons alleged to be hired thugs who in the course of the attack obstructed the course of justice, damaged properties and left some persons within the court premises injured with the intention to disrupt the delivery of a ruling in the matter of the APC wards congress that was expected to hold in Port Harcourt on Saturday May 12, 2018. “The height of the attack was said to be when a sitting judge was chased out of the court premises by these thugs. This act is an attempt to ridicule the judiciary and also to undermine the integrity and powers of the Judiciary and same shall not be tolerated in any manner,” he stated. NBA is therefore urging the Inspector General of Police to constitute a high powered special investigation team into the matter to ensure that all those who were involved and their sponsors in this highly reprehensible invasion of the premises of Rivers State Judiciary, Port Harcourt Judicial Division, be

identified and brought to face the wrath of the law as this act is not acceptable in any civilized society. “We sympathise with the Acting Chief Judge of Rivers State Hon. Justice Iyayi Lamikanra on this act that tried to impede and diminish the integrity and confidence of the people in the Rivers State Judiciary. “The NBA issues a stern warning to all politicians and their aides not to involve the judiciary in whatever political mess that exists between them. The Judiciary is the hope of a common man, the last resort for justice and an epitome of the rule of law and as such should not be forcefully joined into the political partisanship. All political office holders are enjoined to settle their differences within the ambit of the law and allow justice to prevail in accordance with the already laid down court procedures,” he added. The GS further stated that the NBA will continue to reiterate their commitment to peace, safety, and security of the nation, as well as preserving the dignity and respect of the Judiciary.

Photos from the Business Development Training organised by the Training Committee of the Nigerian Bar Association Section on Business Law (NBA-SBL) in collaboration with Lareine Gold Consulting. Panel of Discussants

Breakfast Series seek to stimulate discussions and resolutions that can generate possible roadmaps for an industry that is itself disruptive and can assist the government’s growth and recovery plan. Speaking during the panel session, Akintoye Akindele, CoFounder, Synergy Capital Managers, advised tech entrepreneurs to ensure investor engagements are very memorable and have a proper business preposition. “You must have a good business model and must be able to explain your business. You must be sure of the capital you need to drive your business model. You must also get the right people that will provide a legal framework around your business idea,” Akindele added. Obinna Ekezie, managing director, Wakanow, who also spoke during the panel session said Wakanow saw

an opportunity and decided to create value to customers. “We identified lack of transparency, inability to make payment online and buy tickets as fast as possible. So, we used technology to create solution. This led to huge uptake for customers who needed these services,” Ekezie said. Among key stakeholders at the event were, Gbenga Oyebode MFR, Chairman, Aluko & Oyebode and Director, MTN; Idris Saliu, Co-Founder, Vanso (Now Interswitch); Elo Umeh, Founder/CEO, Terragon Group; Olumide Soyombo, Partner Blue Chip Technologies; and Dele Adeyinka, Chief Digital Officer, Wema Bank. Others are, Ijeoma Agbot-Obatoyinbo, MD/CEO, FBN Quest Funds; Llyod Onaghinon, Head TMT, Stanbic IBTC, Adekumbi Ademiluyi, COO, Netplus and Sadiq Abu, Country COO, Barclays Nigeria,

Thursday 17 May 2018

C002D5556

INSIGHT

BUSINESS DAY

9mobile sale and the distress signals from Nigeria’s telecom industry OSEBUMERE ODIA

casual observer of Nigeria’s telecom industry may have been carried away a few months ago by news of supposed interest in acquiring 9mobile by hordes of corporations far and near. Several companies were said to have lined up for the bid including mobile network operators like Globacom and Airtel the broadband services provider, Smile Communications. Others were Helios, a private equity firm and Teleology a special purpose vehicle of telecom industry veterans. A good number of these companies made considerable effort at generating hype around their ambitions and the media was awash with claims and promises, not too dissimilar to those commonly associated with politicians. A particular bidder, days before the final bid even claimed that it had already won the bid, and that the forthcoming bid was merely a formality. On the day of reckoning however, only two companies, Teleology and Smile Communications were able to accompany their bids with financial propositions. While Airtel and Helios backed out completely, Glo reportedly did not back-up its bid with a financial proposition. Feelers from Barclays Africa indicate that Teleology actually bid more than double the USD 300million which Smile Communications reportedly bid, which in addition to all of the technical and other assessments, qualified it for the preferred bidder position. Smile Communications automatically got the reserve bidder slot, a position which implied that in the event that Teleology defaulted in the discharging its financial obligations under the terms of the sale, the preferred bidder slot would automatically be transferred to Smile. A condition for the transaction was upfront payment of a non-refundable fee of USD 50million within 21 working days of being appointed preferred bidder. Days before the deadline, Teleology paid the deposit and publicly announced its preparedness to execute a 10-point plan of action on taking over 9mobile. The industry is now literally waiting with baited breath to see if Teleology will discharge the second critical requirement of the deal, namely pay the bid amount within the specified period. Should Teleology make good on its promise to pay up its bid price within the specified period, then the Nigerian telecom industry would have enjoyed a fortuitous shot in the arm. It may have been saved from a potentially turbulent situation which some analysts say could even have been a fore-runner to systemic distress in the sector. This is particularly so as news emerging from the media indicates that the reserve bidder, Smile Communications appears to be

contending with severe financial difficulties bordering on indebtedness. According to THISDAY newspaper (May 9, 2019), the company is reeling from the after effect of a default of a USD 125 million loan, sourced from Afrexim Bank and routed through Diamond Bank. The loan default, the newspaper says has put Diamond Bank in a fix as Smile Communications is currently unable to meet the conditions for its full disbursement. The result has been that the bank is now torn between withholding further disbursement of the loan (with the attendant worsening of Smile Communications’ position) and disbursing the final tranches of the loan to Smile and worsening its bad loan exposure. Even though Smile Communications has curiously through its PR agency rather than its lawyers, put out a rather meek denial, the company may indeed be tottering on the brink of insolvency, according to industry analysts, especially judging from its stagnation – in terms of network coverage and active subscriber numbers – over the years. The recent reports of Smile’s possible insolvency raise critical questions not only about the future of the company, but also about its reported bid for 9mobile. What was its exact objective for bidding to acquire 9mobile? If it is indebted to the tune of USD125m to Afrexim Bank/ Diamond Bank, how did it intend to raise the USD 300million offer it made for 9mobile? There are yet other questions. Smile Communications received its operating license from the NCC in 2009, but it took it all of five years to launch its 4G/LTE network. The network was launched in 2014. Since receiving its license in 2009 and launching five years later in 2014, however, Smile Communications has only been able to extend services to 8 cities: Lagos, Ibadan, Asaba, Onitsha, Benin, Port Harcourt, Abuja and Kaduna. It doesn’t have a presence in any of the thousands of rural and semi-urban areas across the country, neither is it accessible in any of the motley highways across Nigeria. According to current data released by the Nigerian Communications Commission, NCC, Smile Communications had a total of 78,808 subscribers as at end of March 2018. By contrast 9mobile, which it had bid to acquire, had as at March 31, according to NCC’s figures, more than 16million active subscribers. In addition, in contrast to Smile’s 8-city

coverage, 9mobile has coverage spanning the entire country – hundreds of cities, towns, villages, hamlets as well as roads and highways. Was Smile seeking to transfer the experience garnered from managing its network in 8 cities and catering to a little under 80,000 subscribers to taking over a much larger network? Did it sufficiently analyze the scope of work which this portended? An analysis of an interview recently granted to THISDAY Newspaper by Mr. Ahmad Farroukh, Smile Communication’s executive director, operations, hints that the organization may have been either naïve and simplistic in its evaluation of the prospects and challenges of the company it sought to acquire, or lacking in analytical proficiency. In his interview with THISDAY’s Emma Okonji, (THISDAY, March 10, 2018) Farroukh had claimed that “9mobile currently has 500 base transceiver stations (BTS) across the country, and by the time we add our 400 existing BTS and combine it with 600 BTS that we can provide within 90 days, 9mobile will be having approximately 1,500 BTS which will match the number of BTS that the largest telecoms operator in the country currently has.” He added that “so should we acquire 9mobile, we will make it competitive from day one, with unprecedented speed of service delivery.” A simple analytic inquest could have questioned this assertion. How can 9mobile which boasts over 16 million active subscribers conceivably service such a massive customer base with a mere 500 base stations? Perhaps a more efficient due diligence regime could have helped to reveal to Farroukh that 9mobile operates in excess of 5,000 base transceiver stations. But even this number is a far cry from the number of operational base transceiver stations of the industry’s biggest operator which is in the region of 15,000. A critical review of the pedigree of Smile Communications, notably the small size of its operations reflected in its coverage (8 cities only) and its subscriber numbers (under 80,000 subscribers), the extent of its understanding of the scope of operations that are implied in managing a country-wide network of the scale of 9mobile coupled with its financial viability which according to THISDAY now borders on insolvency, raises serious questions about its bid for 9mobile. Was its bid a mere gimmick to draw attention to financiers and

perhaps help it re-negotiate its financial position? Smile Communications’ current dire financial situation also calls to mind recent disclosures by the NCC about the level of financial stability of the overall telecom industry. According to the NCC, a good number of firms in the telecom industry may actually be struggling with financial viability. The signs are indeed poignant. Current reports indicate that interconnect debt in the telecom industry is in the region of well over N30billion. Interconnect fees are monies that are paid between mobile network operators when calls are terminated on their networks from other networks. That such a huge debt is owed on interconnection alone is a huge red flag for the industry. It is also clear that on account of the fallout of the financial challenges of recent years especially with regard to Nigeria’s recent economic recession and the foreign exchange challenges that have dogged the economy, the telecom industry is hallmarked by diminishing CAPEX investments. In fact, according to the telecom industry consultancy, Xalam Analytics, CAPEX investments in Nigeria’s telecom industry may have shrunk by as much as 40 percent in 2016 alone. In addition, in real terms annual revenues in the industry are declining. While revenues may be growing in Naira terms, year-on-year, in dollar terms 2017 revenues are actually considerably lower than 2014 revenues. Xalam Analytics estimates the difference to be up to 40 percent. This scenario is unfortunately worsened by the cut-throat competition in the industry which is aggressively whittling away at margins in the sector and making profitability harder to attain and sustain. It is in the face of these and other considerations that analysts are in agreement that 9mobile’s sale may indeed be a fortuitous intervention in Nigeria’s near-beleaguered telecom industry. With existing mobile network operators severely hamstrung for capital in the face of the difficulties in the operating environment, the interests of Nigeria would be best served by the injection of fresh foreign capital into the industry. Incidentally, none of the established global telecom operators – Vodafone, Telefonica, Orange – appear to have much interest in Nigeria’s telecom industry despite it being touted as the largest in Africa. The next best option for attracting

fresh foreign capital, therefore, was for Nigeria to sell 9mobile to a Greenfield operator. In this light, I had argued in opeds published last January in THISDAY, TRIBUNE and BUSINESSDAY respectively, that it was in the best interests of Nigeria to sell 9mobile to a Greenfield operator rather than an existing operator. Thankfully, Barclays Africa appeared to have heeded the call, even if not deliberately with its appointment of Teleology as preferred bidder in the circumstances. As stated earlier, none of the mobile network operators which had expressed interest prior to the 9mobile sale followed their interest through with financial proposals. This left the stage for two players only: Smile Communications whose heroic bid turned out to be considerably less than the bid made by the only Greenfield operator standing, Teleology. With Teleology’s prompt payment of its $50m non-refundable deposit ahead of the 21-working day deadline stipulated by the terms of 9mobile’s sale, it would appear that the injection of fresh capital into the telecom industry may have begun in earnest. Many analysts are of the view that this payment portends a good signal of seriousness by Teleology to fully consummate the 9mobile deal. Teleology in announcing its 10-point plan of action upon acquiring 9mobile, hinted of a partnership with Kenya’s leading mobile network operator, Safaricom. Despite the more than 300-year cumulative telecom industry experience of the promoters of Teleology, apparently the organization is unwilling to leave any stone unturned in demonstrating its technical competence to take over 9mobile and aggressively lead it to the path of recovery. A few roadblocks remain. Some erstwhile minority shareholders have since gone to court to challenge the 9mobile sale, claiming that their interests were not accommodated in by the decision and process of the sale. It is hoped that all of the stakeholders including the regulators, CBN and NCC would engage these investors and arrive at a mutually agreeable consensus in due course. The CBN and the NCC have played the very enviable role of forestalling the job losses and potential systemic risk to the larger telecom industry that may have accompanied the foreclosure of 9mobile by the bank consortium to which it is indebted. The choice of Teleology, a Greenfield operator that may conceivably inject fresh foreign capital into the telecom industry is fortuitous and is clearly a needed tonic for Nigeria’s struggling telecom industry. Will Teleology live up to its billing as a savior of Nigeria’s telecom industry? Time will tell.

• Osebumere Odia, an economist and technopreneur, writes from Lagos

BUSINESS DAY

Thursday 17 May 2018

GARDEN CITY BUSINESS DIGEST HYPREP needs swift powers to deliver Ogoni $1bn clean up faster after 8 years •As stakeholders identify mistrust, expectation gap, re-pollution as key challenges IGNATIUS CHUKWU

takeholders including civil society organizations, community members, media, and oil workers have called for more pore powers to the Hydrocarbon Pollution and Remediation Project (HYPREP) in form of an Executive Order to reduce excessive bureaucracy and delays that threaten the trust the communities had in the government. The call came at the end of a one day conference organized in Port Harcourt, Rivers State, by the Centre for Peace, Development and Child Welfare (CEPEDECW), in partnership with HYPREP aimed at briefing the stakeholders on updates of the much-talked about Ogoni Clean Up exercise. The stakeholders had noted many obstacles on the path of the HYPREP which is the agency expected to begin the processes of repairing the difficult relationship between the Ogoni ethnic nationality and the rest of Nigeria. The Ogoni lost their oil field as well as a crop of 13 leaders plus over 2000 natives in the endless crisis that began with peaceful agitations in the 1990s. HYPREP is driving a remediation scheme estimated by the UN at $1Bn to last for up to 30 years. Stakeholders noted that eight years are lost most already (between 2011 when the UNEP

Report was submitted and 2016 when the FG re-started the process) without actual clean up, and blamed the slow pace on bureaucratic processes. They resolved that an executive order from the Presidency would help HYPREP do certain things without passing through all the civil service processes. The stakeholders also agreed that the successful execution of the recommendations of the UNEP Report is desirous in order to improve the health of Ogoni indigenes and residents. They highlighted challenges that may be disrupting the exercise including mistrust. “A perception study undertaken by Centre for Environment, Human Rights and Development (CEHRD) shared at the conference indicated high levels of mistrust by the beneficiaries of Clean Up exercise due to perceived delays in the takeoff of the clean-up.” Also identified is expectation gap. “Many communities in the Ogoni region equate the Clean-up with potential receipt of compensation rather than an opportunity to remediate their environment. In addition, the community values the creation of job opportunities over remediation efforts. This expectation gap may create problems and create outcry that the needs of the people have not been met. The larger implications on health and environment seem lost on the communities”. Fears of politicization were also expressed by local com-

Leading stakeholders at the HYPREP update dialogue: (L-R) Emem Okon of Kebetkache, Inemo Samiama of CEPEDECW (convener), Nninno Bassey of Health of Mother Earth Foundation, and Abel Agbulu of Community Peace Building (Catholic priest that facilitated the Bodo clean up)

munity members who showed concerns that benefits and contracting processes would be hijacked by political and local leaders to the detriment of the community as a whole. Concerns over re-pollution were high at the conference as stakeholders worried over the possibility of continued pollution. It was highlighted that ‘You cannot mop the floor while the tap is on”. The bush refinery syndrome has become a menace, causing soot and other environmental hazards in the state. Lack of steady flow of information to all strata of the Ogoni community was also pointed out as a setback because it seems to create doubts in the minds of those not sensitized. The stakeholders thus urged the FG to quicken the pace of implementation so that the

people would begin to see clean-up activities taking place in the area. In the communiqué, HYPREP was urged to mount extensive sensitization in the communities to explain to the people that compensation was not a recommendation of the UNEP Report and would not be provided by the Government. “Demonstration of sincerity and commitment from Government and politicians would go a long way in reducing the palpable fear of hijack of the Clean Up project. In this regard, the promise of a website to boost transparency is highly encouraged. Stakeholders described breaking of oil pipelines as outright acts of criminality. Security agencies were therefore urged to step up their policing of the pipelines. Stakeholders however appealed to the Govern-

ment to embark on measures to provide alternative livelihood opportunities for the youth of the oil region to reduce their participation in illegal activities and vandalism. In addition, security agencies should find other ways of handling stolen crude seized from bunkerers instead of burning and causing soot and adding further to the environmental degradation of the region.” Stakeholders called for urgent action in the establishment of the Integrated Soil Centre in Ogoni land. The participants commended the organizers of the conference for the effort to create critical awareness on the clean up exercise and particularly commended the CEPEDECW on their partnership with HYPREP and urged for more and expanded sensitiza-

tion programmes in the coming weeks.” It was recalled that at the request of the Nigerian Government, the United Nations Environmental Programme (UNEP) initiated a comprehensive study of the environment of Ogoniland in 2006 with the purpose of creating a viable but scientific remediation scheme that would restore the environment and livelihood of the Ogoni people. UNEP submitted the report to the Federal Government on August 5, 2011. The Report recommended layers of actions and sums needed to actualize the recommendations. The UNEP Report recommended, among other things, the creation of an agency to drive the clean up exercise. This gave birth to the creation of the Hydrocarbon Pollution and Remediation Project (HYPREP). In 2015 the gazette establishing HYPREP was amended by President Muhammadu Buhari to reflect a new governance framework. It was in view of this that the Centre for Peace, Development and Child Welfare (CEPEDECW) partnered with HYPREP to create awareness as well as brief key Stakeholders on the progress of the Clean Up process. The Centre also prepared infographics as a new way to educate and communicate with Ogoni communities so they could easily understand and appreciate the clean up project and cooperate better.

Out, Bonga Fish; In, Bonga Oil: Was EIA done in Bonga oil field project? •CEO of SNEPCo says Bonga Oil field has pumped 763m barrels of oil so far •President of fishermen says 35,000 fishermen lost N432Bn worth of Bonga fish

Port Harcourt by Boat With IGNATIUS CHUKWU

ome years ago, motorists and other road users could hardly find their way past the front of the Brick House in Port Harcourt, the seat of power here. This was because sudden flooding took over the place, such a sensitive place. The cause was the construction work of the CBn building next door. Experts said the structure with underground facilities blocked the natural drain system of the city, the Nta-Nwogba Creek that through the city to the Bonny Island and to the Atlantic Ocean. This beautiful construction seemed to do more

harm than good. Experts working on the project considered several options to save the city and determined that a bypass would be good but it would gulp up to N500m at that time. It was a huge project. It was eventually done but the fact that such a sensitive project was constructed in such a sensitive location without the much-talked about Environmental Impact Assessment (EIA) was surprising. This was because at that time, an army of environmental activists had emerged in the oil region to harangue oil corporations anywhere even a hut was to be built; on account of EIA. Soon, EAI became a money making gimmick whereby oil companies settled activists to allow projects proceed because EIA involved raising all manner of hell such as publishing the report, picking bones with every item in

it, etc. They would point out a shrine that would be affected, a pond that contained the only fish their ancestors loved to eat, etc. They would demand huge sums as compensation. It became a practice, not juts advocacy. So, how come such a huge project like the CBN building was constructed without the eagle eyes of the environmental activists? Or, was it only oil companies that must undergo scrutiny? Now, if oil companies were the target, how come Bonga Oil project, one of the largest oil fields, was executed without anybody realising the likely ecological consequences so as to design preventive measures in the onset? Or, was it why the FG and oil companies seemed determined to shift into the offshore and divest in the onshore despite higher costs of drilling offshore? Could it be that the prying eyes and

understanding of activists and community militants could hardly stray much into the offshore and deepwater areas? Perhaps, the IOCs have won, at last. Now, last week, Bayo Ojulari, the CEO of SNEPCo, the Shell company doing the Bonga magic, gleefully announced that the field has since 2005 when it was sunk 1000 feet below seabed, pumped 763 million barrels of crude oil to Nigeria. Great! This is 10 per cent addition to Nigeria’s oil production per day. So, going by an average oil price of $80 per barrel between then and now, the field has likely earned $61Bn or N15.2 trillion, going by average exchange rate of N250 per Dollar between then and now. On the other hand, 35,000 fishermen from the coastal areas from Delta State to Akwa Ibom have been thrown

out of serious fishing practice since the 2011 Bonga oil spill and the chemicals used in clean up that drove away Bonga Fish, Nigeria’s richest fish stock. In the process, their lawyer Chima Willians has computed their loss at N432Bn within a short period. Their president, Samuel Ayadi from Akwa Ibom, says were asked out of the fishing zone for over one year but even when they were allowed back in September 2012, they no longer find the Bonga Fish. Nigeria seems to have exchanged Bonga Fish for Bonga Oil. Onga Fish is that brand of fish that floats on salty water and is very abundant, but due to the oil and chemicals, they migrated to as far as Cameroon where gendarmes point guns at any Nigerian fisherman coming close. The fishermen want a form of compensation but they said Diezani refused

to talk to them, Jonathan refused to listen to them, until Buhari (this Buhari we love to hate) came and their file began to move toward attention. The case may no longer end in court. So, what is hard nicking just N432Bn out of N15 trillion to path the fishermen on the back? What is wrong finding out how to attract the Bonga fish stock back? Science can do anything and Shell is about science. Can the government not see that our wives now buy one card of Bonga Fish at N360 instead of N60 it was 10 years ago? Cameroon may soon export this fish to Nigeria. Can you see the opportunity cost of Bonga oil project? Can you see the displacement quotient? Can you see the critical role of EIA in project conception? Where are the environmentalists and activists that look for roles?

Politics & Policy Thursday 17 May 2018

C002D5556

BUSINESS DAY

Atiku on NNPC: Buhari’s men display ignorance of modern economy - AASG

he All-Atiku Support Group has blamed the criticism by the Buhari Media Organisation of the proposal by former Vice President Atiku Abubakar to privatise some aspects of the oil and gas sector as a display of poor knowledge about modern economic management. The AASG in a press statement signed by Oladimeji Fabiyi, its coordinator, said that the Buhari administration was least qualified to pass a remark about ideas geared towards modernising and optimising the operations of the Nigerian oil and gas sector, and indeed of any other sector of the economy. “What the BMO has done by its criticism of Atiku’s proposal is to further expose its lack of knowledge in the way modern economies are run. As it is today, the Nigerian National Petroleum Corporation (NNPC) is unprofitable, unwieldy and not accountable. Compared to its contemporaries like Petronas of Malaysia and Petrobras of Brazil which have since liberalised and modernised its operations, the NNPC still riddles in inefficiency and obvious lack

of capacity,” the group said. A c c o rd i n g t o A A S G : “There are clearly good examples of how liberalisation of some sectors of the economy had benefitted Nigerians such as in the telecommunications industry and the banking industry. If the Obasanjo/Atiku administration had held on to NITEL, we wouldn’t have had the GSM revolution. If our commercial banks were not recapitalised, we still would be having failed banks. It is important to note that similar groups to the BMO had opposed the banking consolidation and telecoms revolution as anti-people, but history has shown that they were wrong. “The trend the world over is for countries to liberalise the downstream sub-sector of the oil sector to improve efficiency and ensure product availability at all times. We are surprised that the BMO is ignorant of Saudi Arabia’s celebrated decision to privatise Aramco and raise needed cash to fund its social and economic services. We know exactly who the masquerades are: they are the very people who feed fat on the misfortune that has befallen the refiner-

Atiku

ies - largely as a result of the inaction of the government.” “What will happen when the NNPC is liberalized is that the company will be more transparent and accountable and Nigerians can actually buy into the shares of the NNPC. Maybe, by that time too, we could have energy revolution.” “Tying the proposal for the liberalisation of NNPC to ‘amplifying the long con-

‘Injustice is responsible for insecurity in Nigeria’ SIKIRAT SHEHU, Ilorin

takeholders in Nigeria have been charged to collectively rise to the challenge of insecurity by bringing injustice and corruption down for the country to continue to exist. Abdulrazaq Olayinka Oniye, associate professor of Education at the University of Ilorin, made the observation in a lecture delivered at a summit and award presentation organised by The Herald Chapel of the Nigeria Union of Journalists (NUJ) held at the NUJ Press Centre, Ilorin, Kwara State capital. Oniye, who was the guest speaker of the event, speaking on the theme, ‘‘Insecurity and Challenges of Govern-

ance in the 21st Century Nigeria’, pointed out that a major cause of insecurity in Nigeria was injustice. Other factors he identified to be responsible for the prevailing insecurity challenges bedeviling the country include corruption and unemployment, saying, “A major cause of insecurity in Nigeria is injustice and in any country where there is no justice, bloodletting would be rampant.” “Also, corruption has affected all facets of life and it is fuelling insecurity in our country. If we continue to allow corruption to thrive, we are playing with the entity called Nigeria,” he said. According to the guest speaker, “The country’s system is not working well. God forbid,

there was a country called Nigeria. If we do not want that to happen, we, all stakeholders, be it government, politician, academia and the rest must come together and say ‘look, let Nigeria continue to exist, nothing must be done to endanger the corporate existence of Nigeria’. We must see this as our fundamental responsibility to protect the entity called Nigeria.” Oniye expressed dismay over the level of unprecedented suffering Nigerians are facing, describing Nigeria as “a strange and failing country”, because of what he described as ‘‘systemic failure” caused by the operators of the nation’s constitution whom according to him, were implementing it “at variance’’.

demned IMF recommendation’ smacks of illiteracy and a poor attempt to hoodwink Nigerians about the shadiness in the operations of the NNPC,” the group said. “For an administration that campaigned heavily about jettisoning subsidy regime and ‘stabilising global oil prices’ coming out to criticise a workable idea to liberalise the country’s oil and gas sector is unfortunate

to say the least,” the statement further said. The group noted that while the operations and revenue of the Nigerian oil giant has been shrouded in secrecy for years past, it is worrisome that a group such as Buhari Media Organisation will employ cheap blackmail to cover up the operations of the NNPC, saying such tendencies isn’t in line with the change that Nigerians expected. “Today, this administration pays over N1.4 trillion annually on subsidy on fuel consumption in Nigeria, a staggering 386 percent when compared to the figure of N774 million daily given in March this year. Till this day, ordinary Nigerians have no idea how much revenue the NNPC makes in crude sales and the NNPC continues to drench in corruption without transparency and accountability. “The contradiction inherent in the position of President Buhari on subsidy is evident for Nigerians to see. After saying there was no subsidy, to making Nigerians buy fuel at the highest price in the history of this country without palliative or cushioning effects to Ni-

gerians and now paying over 1 trillion naira on subsidy. This same contradiction attendant upon by shallow understanding of economics is what leaves Nigeria with a jumbled compassless economy devoid of defined ideology. The world has moved beyond indecision. “You can’t be going to the US to negotiate free market deals in the name of wooing investors while coming home to frustrate any genuine attempt to free the economy. The most fundamental question is what has the Buhari administration done to the refineries? Three years down the line, Nigeria still imports fuel. And some people want us stuck to a past that does not work. We need a present that can make Nigeria work again.” Oladimeji stressed that if privatising the refineries, and even providing the required incentives for the private sector to get competitively involved in owning and running modular refineries is what can make Nigeria wriggle out of the trap imposed on her by NNPC, the courage to say that, and the commitment to do it, should be commended not condemned.

Benue’s major stakeholders throw weight behind Ortom’s re-election bid BENJAMIN AGESAN, Makurdi

ajor stakeholders of the A l l P ro g re s sives Congress (APC) in Benue State have thrown their weight behind Governor Samuel Ortom and pledged to stand by him in his re-election bid in 2019 election. The over 250 delegates promised to mobilise grassroots support for Ortom throughout the state. They made the declaration in a communiqué after a meeting of leaders of associations, non-governmental organisations, groups and political stalwarts held in

Makurdi. Member of the National Assembly representing Katsina-Ala/Ukum/Logo constituency, Emmanuel Udende and former Vice Chancellor of the University of Mkar, Nancy Agber, a professor, signed for the Benue North East while former Makurdi Local Government Chairman, Godwin Donko and former Vice Chancellor of the Benue State University, Professor Akase Sorkaa signed for the North West District. Signatories for the Benue South are member of the House of Representatives for the Okpokwu/Ado/Ogbadibo constituency, Saleh

Hassan, and former minister of the Niger Delta, Sam Ode. The delegates reaffirmed their confidence in Governor Ortom’s leadership, particularly what they termed “his putting his life and political future at risk for the people of the state” and pledged support for his reelection. They expressed their continued support for his position on ranching and noted his vindication at various levels. The stakeholders noted that Ortom is tackling security and economic challenges which they said were not his creation with commitment, transparency and fairness.

NCP clearly stipulates how the party shall raise funds, i.e membership fees, donations and/or contributions from well-meaning individuals or bodies, proceeds from sale or auction of party materials and publications and income from investments. Nowhere is it stated in the constitution that funds shall be generated by

levying aspirants mandatorily! “This action is in further breach of Article 4.1.3 (c) of the NCP which stipulates that a National Congress must be convened to discuss the affairs of the Party and to take such decisions and/or give general guidelines as may be necessary for the progress and proper working of the Party.

2019: Ikubese, presidential aspirant, quits NCP over N7m levy YOMI AYELESO, Akure

residential hopeful in the 2019 general election, ThomasWilson Ikubese has resigned his membership of the National Conscience Party (NCP) over a controversial levy running into N7 million which he said was against ideology of

the party as a populist party. Announcing this at a Press Conference in Akure, the Ondo State capital, Ikubese said his decision to quit the party was hinged on plans by the National Chairman of the party, Yunusa Tanko to scheme him out of taking part in the presidential election on the party’s platform with a controversial

N7.04million levy. “The National Chairman Yunusa Tanko and the National Secretary Ayodele Akele drafted a document directing that any presidential aspirant who is less than two years in the party should pay the sum of N7.04 million to the party, which is against the age-long tradition laid down

by Gani Fawehinmi that party members who seek to run for offices should do so at no cost, as a populist party, to encourage the masses to participate actively in politics. “The argument advanced by the duo is that this money will serve to finance the party. Conversely, however, Article 9.4.1 of the constitution of the

36 BUSINESS DAY NEWS ERGP to create $22.5bn investments, 500,000 jobs - Osinbajo TONY AILEMEN, Abuja

ederal Government says it sees the unlocking of over $22.5 billion investments in 164 projects that will create about 500,000 new jobs under the Economic Recovery and Growth Plans (ERGP). This is as government has applauded the ‘Focus Labs’ for meeting its target, saying, “The labshaveachievedsetoutgoals.” VicePresidentYemiOsinbajo, while addressing the “Open Day” meeting of the Focus Labs in Abuja on Tuesday, identified $10.9 billion out of the $22.5 billion projects as “most ready projects” to be unlocked soon throughprivatesectorinitiatives. According to Osinbajo, in six weeks, “the lab has largely achieved what it set out to do: that is, to provide a platform for private sector investors to have direct access to regulators, senior government officials, and relevant cabinet ministers in a single location to resolve problems with regulatory or bureaucratic delays inhibiting their businesses. “Indeed, the Lab was set up to fast-track the resolution of these tough issues, particularly the inter-agency bottlenecks

and the regulatory delays with licensing and approvals that private sector investors face in the course of their normal businesses,” he said. The ERGP was established to focus on implementation of government ease of doing business supported by the highest level of political will, from the President himself through to our civil servants on the ground. In February 2018, government had commenced Wave 1 of the ERGP Focus Labs to accelerate the implementation of the ERGP. For six weeks, the participants of the labs, made up of both public and private sector representatives, rigorously drilled down the issues with the projects presented, and brain-stormedonhowtoresolve them as well as the bureaucratic reforms needed to fast-track the development. “The ERGP Focus Labs have succeeded in identifying more than $22.5 billion in private investments from about 164 projects that can be unlocked. “Ofthisamount,$10.9billion are what we call ‘Most Ready’ projects; that is, we are almost sure to unlock these projects and accelerate their delivery by the private sector.

C002D5556

Thursday 17 May 2018

Peaceful co-existence: Edo calls for tolerance, inclusive mindset to drive sustainable growth

FG lauds Edo’s foresight in conducting school census

do State governor, Godwin Obaseki, has called for tolerance and promotion of a mindset of inclusiveness among Nigeria’s diverse ethnic groups to create an enabling environment for growth and societal advancement. The governor, who said this in commemoration of the International Day of Living Together in Peace, marked every May 16 by the United Nations, said the imperative for peaceful co-existence was to engender development of the country without the fissures of parochial or self-perpetuating considerations among the country’s different ethnic and religious groups. According to Obaseki, “We have come a long way as a country and it behoves on us to preserve the legacies of the founding fathers of Nigeria. Much as it is obvious that we have lingering problems and the challenges that threaten our resolve to live together, it is important to know that much can be achieved if we stick together, discuss the basis of our co-existence, agree on reforms that will foster unity and forge ahead with a clearer sense of purpose and direction. “In Edo State, we have demonstrated this by agreeing on

xecutive secretary, Universal Basic Education Board (UBEC), Hamid Bobboyi, has commended Edo State governor, Godwin Obaseki, for the ongoing education reforms as well as the governor’s foresight in conducting a school census to strengthen the education sector. Bobboyi made the submission in Benin City, during the monitoring of ongoing National Personnel Audit (NPA) of primary and secondary schools in the state, being conducted by UBEC. Recall that the Edo State Universal Basic Education Board (SUBEB) had conducted a similar exercise in public schools few months ago, comprising public primary and secondary schools from Kindergarten to Senior Secondary School (SS) 3. The current exercise by UBEC covers public and private schools across the country. In his remarks, Bobboyi said, “It is highly commendable that the state governor understands the essence of the exercise, having conducted a similar exercise to generate data from schools to aid planning. The exercise by UBEC will help map out primary and

certain principles that assure the greatest good for all. It is this constant negotiation of our expectations and the deployment of resources to attain them that we arrive at consensus that make us a strong, united force.” He noted that the country will be better off if there is a constant negotiation on the basis of coexistence, stressing that only such arrangement will put paid to pockets of agitations from different parts of the country. According to the United Nations, “The UN GeneralAssembly, in its resolution 72/130, declared 16 May the International Day of Living Together in Peace, as a means of regularly mobilising the efforts of the international community to promote peace, tolerance, inclusion, understanding and solidarity. “The Day aims to uphold the desire to live and act together, united in differences and diversity, in order to build a sustainable world of peace, solidarity and harmony. “The declaration came about as a result of the longheld and cherished concept — contained within the Constitution of UNESCO — that ‘since wars begin in the minds of men, it is in the minds of men that the defence of peace must be constructed.’

secondary schools across the state.” According to Bobboyi, “The ongoing National Personnel Audit is being organised to collect data for planning. The exercise is being carried out in public and private schools. It also covers faith-based schools and is being conducted nationwide. Through the exercise, UBEC will develop a geographical information system (GIS) for locations of the schools. “This will be done in collaboration with the National Space Research and Development Agency (NASDRA). The data generated will be useful for strategic planning in the basic education sub-sector.” Acting chairman, Edo SUBEB and special adviser to the governor on basic education, Joan Osa Oviawe, said, “The state will continue to strengthen existing collaboration with UBEC as the state governor remains committed in his strategic vision to improve access to quality basic education in the state.” She commended the team of enumerators, noting, “The state government will be as responsive as possible in areas where there are challenges in the ongoing exercise.”

Thursday 17 May 2018

C002D5556

BUSINESS DAY

NEWS

PIB: NNPC recommends split of petroleum licences HARRISON EDEH, Abuja

igerianNationalPetroleum Corporation (NNPC) has recommended the splitting of petroleum licences into two components for prospecting and production phases under the draft Petroleum Industry Administrative legislation, currently before the National Assembly. In a presentation at the public hearing organised by the House of Representatives Committee on the PetroleumIndustryAdministrative Bill (PIAB), Petroleum Industry Fiscal Bill (PIFB) and the Petroleum Industry Host Community Bill (PIHCB), group managing director of thecorporation,MaikantiBaru,said the proposed split would prevent a situation where operators would sit perpetually on oil acreages. The NNPC’s recommendation under the PIAB seeks a break up of Petroleum Licence into Petroleum Exploration Licence (PEL) - to prospect for petroleum, while the second component to be known as Petroleum Lease (PL), should be created to cover the production phase to searchfor,win,work, carry way and dispose of petroleum. The corporation also pushed for a re-think of the duration of licences as proposed in the PIAB, whichstipulatesinitialdurationof25 yearsforonshoreandshallowwater petroleum licence and 30 years for deep water and frontier acreages.

Senate panel meets Buhari on alleged plot to frame up Saraki over cultism OWEDE AGBAJILEKE, Abuja

enate leadership on Wednesday set up a 10-man panel to meet with President Muhammadu Buhari on alleged plot by the Inspector General of Police, Ibrahim Idris, to implicate Senate president, Bukola Saraki, over a cultism case in Kwara State. The panel, which would be led by the Senate president, is expected to express their dissatisfaction with the President over the desecration of the National Assembly by the Executive. Deputy Senate president, Ike Ekweremadu, who presided over the session, asked the committee to report back in one week. Other members of the committee include: Senate majority leader, Ahmad Lawan; chief whip, Sola Adeyeye, and Senate minority leader, Goodwill Akpabio. Others are: Chairman Senate Committee on Appropriations, Danjuma Goje; his counterpart in agriculture, Abdullahi Adamu; Aliyu Wammako; Sam Egwu; Fati-

ma Raji-Razaki, and Oluremi Tinubu. This came to the fore on Wednesday when the Senate president informed his colleagues after a closed-door session that lasted for over 40 minutes. Both the IGP and the Senate had been in a running battle for some weeks now following the refusal of the former to appear before the latter after three summons. For the first time in the history of the 8th Senate, Saraki was asked to step aside as Presiding Officer to allow his deputy, Ike Ekweremadu, to preside over the matter. Deputy Senate majority leader,BalaIbnNa’Allah,hinged his Point of Order on the fact that theSenatePresidentcannotbea judge in his own case. Earlier, Saraki revealed that the suspects have been transferred from Kwara State to the Force Headquarters, Abuja with a view to implicating him. According to Saraki, the move by the IGP is to settle scores with the upper legislative chamber for declaring him as incompetent and unfit to hold public office within

and outside the country. He said: “Last night, my state governor, Dr. Abdulfatai Ahmed, revealed to me an information at his disposal that a group of suspects who had been in police cells for several weeks for cultism and whose investigation had been concluded with prosecution about to commence under the State law based on the advice of the Director of Public Prosecution (DPP) and the Ministry of Justice were ordered to be transferred to Abuja this morning. “According to the information available to the Governor, the Inspector General of Police, Mr. Idris Ibrahim directed the Commissioner of Police in Kwara State to immediately transfer the men to the Force Headquarters. The plan, as the Governor was made to understand is that, under duress, the suspects would be made to alter the statements they already made in Ilorin. They will then be made to implicate the Kwara State government, and in particular, myself, in their new statement.

BDCs want CBN to review exchange rate band HOPE MOSES-ASHIKE

ureau De Change (BDC) operators have called on the Central Bank of Nigeria (CBN) to review the exchange rate band at which Bureaux de Changes (BDCs) buy dollars to align with commercial banks’ buying rate. BDCs buy dollars from International Money Transfer Operators (IMTOs) as directed by the CBN at N360/$ and sell at N361.5/$, whereas commercial banks buy at N357/$ and sell at N360/$. Aminu Gwadabe, president of Association of Bureaux De Change Operators of Nigeria (ABCON), urged the CBN to merge the BDCs and bank rates to achieve market harmony and level playing field for all stakeholders. He spoke to financial journalists in Lagos ahead of the 261st meeting of the CBN-led Monetary Policy Committee (MPC) scheduled to hold May 21 – 22, in Abuja. He said the underlying market intrigues and political anxieties in the country were pointers that the CBN needed to listen to ABCON demand and merge both rates in the interest of the naira and economy. Gwadabe said leaving the rates as they were presently do not allow for healthy competition between both segments of

the market. He added that the ongoing losses being recorded in the equities market where over N700 billion had been lost in recent weeks, as well as speculative tendencies among big foreign exchange players would continue to constitute big threat for exchange rate stability. According to Gwadabe, the rising naira liquidity, high demand for dollars in the travel seasons, payment for school fees for students studying abroad and rising forex demand at the retail end of the market remain big concerns for exchange rate stability. Gwadabe however said that despite the near gloomy picture painted above, all hopes are not lost on the state of the economy, market and CBN’s goal of achieving exchange rate stability. He cited the growing fiscal buffers that had seen the foreign exchange reserves hit $47.8 billion and the financial discipline seen in current administration as big plus for the economy and naira’s stability. He also said rising oil prices would continue to arm the CBN with required ammunition to tackle any act that will hurt the system. Oil prices are projected to hit $85 per barrel by July and have remained above $78 per barrel in the last few days.

Nigeria, others to access additional $10bn to bridge education funding gap KELECHI EWUZIE

Rotimi Ogunleye (5th r) representative of Lagos State governor and commissioner for Physical Planning and Urban Development); Akintola Benson (4th r), commissioner for Establishment,Training and Pensions; Prisca Ndu (3rd r), senior manager, Asset Management Corporation of Nigeria (AMCON); Ademola Abass (2nd r), special adviser to the governor, office of overseas affairs and investment; Folasade Adesoye (r), head of service; Eric Opah (5th l), managing director, Infrastructure Development and Energy Company (INDECO), and other members of the state executive council during the commissioning of the newly procured construction equipment for the State’s Public Works and Drainages, in Lekki, Lagos, yesterday. Pic by Pius Okeosisi

Court bars Police, SSS, EFCC from searching Wike’s houses anywhere in Nigeria FELIX OMOHOMHION, Abuja

Federal High Court sitting in Abuja on Wednesday barred the Inspector General of Police (IGP), the Economic and Financial Crimes Commission (EFCC), the State Security Service (SSS) and their agents from searching any of the houses belonging to Rivers State Governor Nyesom Wike. Justice Ahmed Mohammed, the trial judge, said, “The security agencies cannot search Wike’s house, whether in Abuja or any other part of the country without his presence.” Mohammed held that a court process, like a search warrant, which the Police

sought, cannot be issued on Wike, who enjoys immunity under Section 308 of the constitution, as a sitting governor. Wike had, in his suit prayed the court to declare that the Police and other security agents cannot get a search warrant to search any of his houses, a relief which the court granted, adding that, no civil or criminal proceeding can be filed against a serving governor, who is covered by Section 308 of the 1999 Constitution. In the suit FHC/ABJ/ CS/383,2017, filed by Sylva Ogwemoh, Wik wanted the court to determine: “Whether section 308 of the Constitution of the Federal Republic of Nigeria 1999 (as amended) precludes

the defendants from applying for and or obtaining any process of any court requiring or compelling the appearance of the plaintiff, who is the current governor of Rivers State. “Whether the defendants can, by combine effect or section 308 of the Constitution and sections 149 and 150 of the Administration of Criminal Justice Act (ACJA) 2015 apply for, obtain, issue or in any manner or form, effectively execute a search warrant at the residence of the plaintiff in Abuja or in any of the plaintiff’s residence in other locations in Nigeria without the physical presence of plaintiff or his privy in the course of the execution of such search warrant. “If the answer to question

2 above is in the negative, will the issuing, obtaining and executing of search warrant at the residence of the plaintiff in Abuja or in any of the plaintiff’s residence in any other location in Nigeria, not amount to a violation of section 308 of the Constitution where the issue and or execution of such search warrant would compel and or require the presence of the Plaintiff”. The Governor also sought a declaration that by virtues of the provisions of Section 308 of the constitution, the defendants cannot apply for, obtain, issue or in any way or manner howsoever execute any court process, requiring his appearance as the Governor of Rivers State.

igeria with more than eight million population of out-of-school youth will benefit from an additional $10 billion funding from a new International Finance Facility for Education. Nigeria, Africa’s largest economy by Gross Domestic product (GDP), has one of the world’s largest population of children deprived of education, and of this number, 60 percent are girls. The International Finance Facility for Education will work with countries such as Nigeria, Nepal, Kenya, and Sierra Leone to collectively achieve the largest education investment in history and empower the next generation to fulfil their potential. UN Special Envoy Global Education, Gordon Brown, warns of global education crisis with “wide and persistent divide” that risks excluding 400 million girls from employment by 2030. Brown says: “The human faces behind these statistics are the most heart-breaking. In Nigeria, girls living in poverty bear the greatest burden many of them drop out of school and get married early. They are left without skills for the modern economy and won’t have much hope for the future. “If no action is taken, more than 400 million girls around the world will not be on track to have the skills needed for

employment in 2030.” Learning standards across Africa are 100 years behind today’s average high-income countries, and by 2030 the International Commission on Financing Global Education Opportunity (the Education Commission) estimates that more than half of the world’s children and young people some 800 million youth - will not have the basic skills needed for the modern workforce. United Nations secretarygeneral, Antonio Guterres, says the International Finance Facility for Education could help countries get all children in school and learning. Guterres says the faculty would make aid more effective by leveraging and maximising the impact of donor resources through the World Bank and regional development banks to provide an additional 20 million places in school in its initial stage. Countries would multiply the impact by increasing their own funding and committing to critical education reforms. The UN secretary-general, while speaking after receiving youth activists who delivered a petition with 1.5 million signatures calling for the biggest global investment in education history, declared, “In our fast-changing world, we cannot accept 250 million children failing to learn even the most basic skills. In the coming decade, some one billion young people will enter the workforce.

38 BUSINESS DAY NEWS

C002D5556

Thursday 17 May 2018

and verifiable. Under our leadership, we will naturally have to do a couple of things differently, in the day to day management of the party, while interfacing with all those elected on the platform of the party at all levels,” he declared. In a related development, APC has fixed June 23 as the date for the elective convention. The convention was earlier scheduled for May 14 but was postponed indefinitely following adjustment in the ward, local government and state congresses time table. The new date has not been officially made public but a reliable source in the APC told Business Day that at the end of the congresses being conducted by the National Working Committee, NWC the Convention committee would resume immediately and hold the convention on the last Saturday of June(23). “It was agreed that the NWC should conduct the ward, local government and state congresses after which the Badaru committee will conduct the national convention. So as soon as the NWC are through with the congresses and after the Muslim fast, the convention committee will start the process.”

NSE says engaging SAHCOL, Fintech firms for...

L-R: Dan Agbor, chairman, UAC of Nigeria plc; Larry Ettah, former group managing director/CEO; Abdul Bello, group managing director/CEO, and Udoma Udo-Udoma, former chairman, at the send-off for Ettah and former executive director, corporate services, Joe Dada, organised by UACN plc, in Lagos.

•Continues online at www.businessdayonline.com

Oyegun backs out of chairman race as APC... Continued from page 1

as APC National Chairman has since the inauguration of the Governor Abubakar Badaru convention committee developed cold feet towards the contest. A reliable source close to the National Chairman who did not want his name to be mentioned told Business Day that due to certain developments in the party ahead of the convention, Oyegun chose to honourably and quietly withdraw from the race. According to the source, Oyegun’s decision is not unconnected with the endorsement of Adams Oshiomhole by President Muhammadu Buhari, APC Governors led by Imo State Governor, Rochas Okorocha and legislators. “As Buhari and all the Governors, members of the National Assembly and all who matter are backing Oshiomhole, Oyegun doesn’t want to waste his time. He knows he won’t get it even if he contests,” the source stated. Meanwhile, Oshiomhole has

been endorsed by the APC caucus in the House of Representatives as the APC National Chairman. The endorsement took place after the former governor of Edo state met the federal lawmakers in Abuja on Tuesday. Majority leader of the House of Representatives, Femi Gbajabiamila told journalists after the meeting, that “the lawmakers will queue behind Oshiomhole in his quest to emerge as the party’s national chairman.” This is coming less than a Week after Oshiomhole declared for the position of APC National Chairman with assurances of rebranding, revamping and rejuvenating the party for a victorious outing in the 2019 general elections. “It is my hope that if and when elected as National Chairman of the party, we will reposition and re-organise the party based on its philosophy of social democracy which basically means peopleoriented, membership driven and mass based political organization. “To be able to translate these into concrete action that is visible

FG to spend N1.09trn on power, works and... Continued from page 1

super Tucano aircrafts from the US which has already been paid for. The expected supplementary provision would take total expenditure for 2018 above N10 trillion, the highest in the country’s history. It could also easily double the projected budget deficit unless crude oil prices continue to rise from current levels. Already, the N9.12 trillion budget represents an increase of N580 billion above the N8.612 trillion proposal submitted by President Muhammadu Buhari to the joint session of the National Assembly on the 7th November, 2017. The 2018 appropriation bill, the largest in the nation’s history, was premised on key revenue assumptions of oil price benchmark of $51 (an increase of $6 above the $45 proposed by the Presidency); but retains 2.3 million barrels per day and exchange rate of N305/$1USD. On sectorial basis, critical sectors namely: Power, Works and Housing, Defence as well as Transportation got the highest capital allocation of N1.090 trillion out of total sum of N2.873 trillion in the 2018 budget which was laid before the National Assembly.

According to the documents seen by Business Day, Federal Ministry of Power, Works and Housing gets the highest allocation of N682.31 billion, followed by Transportation to that tune of N251.42 billion; N157.72 billion for Defence; N149.20 billion for Agriculture and Rural Development; N147.2 billion for Water Resources and N102.91 billion for Education while N150 billion was allotted for capital Special Intervention programme. Under the Statutory Transfer, National Assembly gets N139.5 billion; National Judicial Council (NJC) gets N110 billion as against the sum of N100 billion approved by President Muhammadu Buhari. Part payment to NDDC outstanding liabilities on Federal Government gets N33.98 billion while NNDC gets N81.883 billion; Universal Basic Education gets N109.064 billion; Independent National Electoral Commission gets N45.5 billion; National Human Rights Commission gets N3.014 billion while Public Complaint Commission gets N7.48 billion. Out of total sum of N2.014 trillion allotted to debt serving, the sum of N1.760 trillion is for domestic debts while N254.080 billion is for Foreign debts and additional

sum of N190 billion is for sinking fund to retire matured loans. From the total sum of N3.513 trillion approved for recurrent (nondebt) expenditure, Federal Ministry of Interior gets the highest allocation of N501.61 billion, followed by N439.26 billion for education; N419 billion for Defence; N269.97 billion for Health; N110.84 billion for Youth and Sports Development; N76.03 billion for office of the National Security Adviser; N63.54 billion for Petroleum Resources and N63.114 billion for Foreign Affairs. One of the major landmark sub-head approved by the National Assembly was the sum of N55.150 billion for the implementation of the National Health Act. Additional sums of N33.981 billion was also approved for Niger Delta Development Commission (NDDC); N12 billion for the 12 newly established universities and N43.5 billion for completion of federal roads nationwide. The two chambers had dissolved into Committee on Supply to do the clause-by-clause consideration of the budget. Meanwhile, the Legislators urged President Buhari to send a Supplementary budget with the view to address financial issues bothering on fuel subsidy and the Super Tucano Aircraft.

Continued from page 1

Initial Public Offering (IPO), the exchange is in early talk with Skyway Aviation Handling Company Limited (SAHCOL) and some Fintech companies to get them listed on the bourse. The NSE said the move is part of the exchanges commitment towards deepening the Nigerian capital market by providing enough liquidity. “Apart from the fact that we are working closely to see that the MTN Nigeria listing be successful, we have also started having some engagement with SAHCOL and a Fintech company to ensure that we bring the companies to the market,”Tinuade Awe, Executive Director at the NSE told BusinessDay. “In our talk with a Fintech company which I am not at liberty to disclose the name at this time, we are creating something we call the growth board and the idea of this board is to have these kinds of companies that may not yet be where they need to be organisationally but we are working with them so they can be able to come to the market,” Awe added. Last year, MTN group announced that its Nigerian unit will be listed on the Nigerian stock exchange following a compulsory fine that was slammed on telecoms giant. The group said they have made good progress on the IPO processes in Nigeria, and they aim to conclude it in 2018. As for when the Nigeria MTN IPO will commence a source that preferred to remain anonymous because of the sensitivity of the matter disclosed to Business Day that the listing would happen in 2-3 months’ time. According to a valuation carried out by BusinessDay Research and Intelligence Unit (BRIU), MTN Nigeria is forecast to have values ranging from $8.56 billion to $10.88 billion when listed. BRIU used various valuation methodologies including the discounted cash flow (DCF) and Abdulrasak Namdas, Chairman, House Committee on Media and Publicity who spoke at the post-Legislative week briefing, explained that $51 benchmark was jerked up as a result of increase in the price of crude oil at the international market. Meanwhile, both chambers declined to accede to President Muhammadu Buhari’s request to approve the sum of $496 million for the procurement of Tucano Jets. Buhari via a letter sent to the Senate and House of Representatives confirmed giving anticipatory approvalforthepaymentof$496million out of the $1 billion to be withdrawn from the Excess Crude Account. Worried by the development, the lawmakers who accused the President of usurping the powers of the National Assembly as enshrined in the 1999 Constitution (as amended), threatened to initiate Buhari’s impeachment. Most of the lawmakers from the Lower Chamber also faulted the communication procedure adopted by the Presidency. To this end, the leadership of the House mandated its Committee on Rules and Business to ascertain whether there was a precedence for such arbitrary approval in other climes. In response to BusinessDay

relative peer valuation. Analysts who also spoke to BusinessDay all anonymously said that MTN share sale will go a long way in deepening the Nigerian financial market especially since the market has not recorded any initial public offers for two years since the January 2015 listing that saw the birth of Transcorp. Awe said the NSE is very excited about the possibility of retail participating in the IPO, as participants will be able to transact through the use of their mobile phone. The exchange is also working with the Nigerian Communication Commission to enable the use of Unstructured Supplementary Service Data (USSD) so as to make the platform a robust one. “MTN has expressed publicly an interest to list this year and what I can tell you is that Nigerians are able, willing and ready to list the company this year. If MTN does not list, it will not be because of the Nigerian stock exchange as we are working on an electronic IPO platform that will ensure that the 150 million subscribers it has in the eco space, actively participate in the MTN listing,” Awe said. “The idea is basically to give retail participants who were broken in the mid 2000 a taste of the fact that the market is still there, as some of them have already started coming back but this will be an opportunity to get a lot of them back at the same time,” Awe said in an exclusive interview with BusinessDay. According to her, the exchange is working hand in glove with some private equity firms so as to expand the number of asset classes, and the number of listed firms that will help give investors varieties to invest in. “We engage with PE firms because we see that private equity firms have an exit strategy. Rather than selling to another private firm, you can exit through the market and get better price discovery.”

inquiry, Timothy Golu, chairman, House Committee on Budget and Research explained that the issue of Tucano Jets was not part of the deliberations of the House during the consideration of the N9.120 trillion budget which was approved. He also noted that the proviso in the Appropriation bill stipulates that any request for such approval should come by way of Supplementary Budget, signalling the rejection of the President’s request. On his part, Abdulrasak Namdas, chairman, House Committee on Media and Publicity, maintained that the request was dead on arrival as the Parliament opposed to any form of impunity. Earlier, Chairman, Senate Committee on Appropriations, Dajuma Goje, revealed that increase in the budget by N508 billion was done in consultation with the executive arm of government. This, he said, was attributed to the increase in oil price benchmark, hence resolved to jerk up the benchmark from $45 per barrel to $51 per barrel. Analysts expressed concern that the 2018 budget is coming seven months to the end of the year and three months to the commencement of party primaries for the 2019 elections. The delay in implementation could negatively impact its performance.

Thursday 17 May 2018

C002D5556

BUSINESS DAY

NEWS

LAPH initiative to put 20,000 units in Lagos housing market JOSHUA BASSEY

agos Affordable Public Housing (LAPH) initiative, a joint venture between the state and private estate developers, is to add in the least 20,000 units to the Lagos housing stock by 2020. Lagos, Nigeria’s commercial/economic hub, is said to be in the deficit of about 3 million housing units, and an estimated population of 21 people, a large chunk of which live in slum areas. The state government believes, however, that to defray the deficit, a sustainable partnership with private developers is required. Under the LAPH initiative, the state is providing land, documentation in terms of permits, approvals, registration of documents and stamping as its own contribution to the joint venture, while the venture partners are providing funds and construction expertise as their contribution. “In line with the investment policy of the state government and for the purpose of creating

an investment data base, title to the project site is vested in IBILE Holdings Limited, the investment agency of the state government which will in turn grant a deed of sublease of the unexpired residue of its interest to the Special Purpose Vehicle/Project Company to be incorporated for the purpose of execution and management of the project,” Gbolahan Lawal, Lagos commissioner for housing, said. According to Lawal, Special Purpose Vehicle (SPV)/Project Company is therefore made up of both parties and the shareholding would be based on the value of the equity contribution of the parties. Under the arrangement, the partners are looking to jointly delivering 3,300 units of housing at Ikota and Ogmbo scheme being developed by Multi-Purpose Infrastructure Development Construction Limited, while the Ibeshe and Owutu scheme that would deliver 3,000 housing units is being developed by Affordable Mass Housing Company Limited. Other joint venture part-

nership arrangements are the Igbogbo Housing Scheme, being developed by M-Bridge Ltd. To deliver 416 housing units; Ijora-Badiya, being developed by Brains and Hammers Limited, with 771 housing units; Imota, Ayobo and Idale scheme by Echostone Management Corp, with 2,000 housing units being developed; IlamoyeIsolo and Abijo Scheme, a 2,464 housing units scheme being developed by Baden Moyet Nigeria Limited/Lemine Investment Group and Tolu, while the Abule Ado housing scheme being developed by Tact Urban Infrastructure Development will deliver 2,126 housing units. Lawal said the government on its own will continue to implement the rent-to-own and rental housing policy with the aim to making housing readily accessible to the citizens especially the low and middle income earners in the formal and informal sectors. “Post construction management of housing estates remains a challenge and facility managers have been engaged by government to ensure the sustainability of government

PTAD set to recover N11bn Pension Assets CYNTHIA EGBOBOH, Abuja

ension Transitional Arrangement Directorate (PTAD) on Wednesday affirmed its commitment to recover outstanding pension assets with Insurance Brokers and Underwriters, in excess of N11 billion. Sharon Ikeazor, executive secretary, PTAD, said this while addressing the press in Abuja, stating that the directorate would ensure complete recovery of all these outstanding pension assets. She said, “PTAD will continue the recovery of all pension assets with Insurance Brokers and Underwriters. We have so far recovered cash and non-cash assets of over N16 billion from the BOTS and Insurance Underwriters. The cash component of N6.9 billion is domiciled with the CBN, in a designated Recovery Account created solely for the remittance of such funds. Properties recovered have been forwarded to the Federal Ministry of Works and Housing for proper assessment and valuation.” So far, the PTAD has made payment of the outstanding 33 percent arrears for pensioners under the Paramilitary (full

payment - 42 months), Civil Service (12 months outstanding), Parastatal (18- 36 months outstanding), she said, saying this varies for different agencies and Police (12 months outstanding. She noted that PTAD added over 700 verified Parastatal Pensioners from the Federal Housing Authority and NDA (civilians) to the payroll to begin to receive monthly pension payments, noting that PTAD started verification of defunct and privatised agencies in Q4 2017 with the verification of pensioners from Nicon, New Nigeria Newspapers, NDA (civilians), and the Federal Housing Authority. According to Ikeazor, “In the First Quarter of 2018, PTAD made pension payment of N2, 215,830,506.54 to 111,525 Civil Service Pensioners and 219 Retired Perm Secs and HOS in January, N2, 216,184,723.81 in February and N2, 216,703,124.70 in March respectively while 98,259 Parastatals pensioners, received N4, 097,429,279.59 pension payment in January, 98,224 Parastatal Pensioners N4, 134,638,576.19 in February and N4, 020,511,594.28 paid to 98,209 in March”. “Also a total number of 12,019 Customs, Immigra-

tion and prisons pensioners were paid N623, 145,648.93 in January, 11,972 pensioners were paid N620, 651,619.58 in February and N620, 328,452.73 was paid to 11,966 pensioners in march. While 16,048 Police Pensioners received N557, 862,130.70 in January, 16,040 pensioners received N557, 787,752.72 in February and 16,055 pensioners received N558, 036,667.13 in March, respectively”. She stressed that following the successful conclusion of the nation-wide civil service pensioners’ verification exercise in December 2017, pensioners who did not show up were given up to the end of March 2018 to come forward to be verified and a total of 22,021 who did not show up have now been suspended from the payroll, amounting to a monthly savings of N495, 022,747.57 to government adding that this would translate to approximately N6 billion per annum. “Discussions and plans with the NHIS for health insurance and other health care benefit to pensioners under the DBS. Other welfare benefit schemes to be explored include benefit discounts and rebates on essential services and products.”

Again, Customs arrests smuggled rice conceal in truck loaded with creates AMAKA ANAGOR-EWUZIE

ederal Operations Unit (FOU), Zone A of the Nigeria Customs Service (NCS), has again intercepted truck conveying smuggled bags of rice concealed in creates belonging to Nigerian Breweries. This arrest is coming one month after the unit intercepted 163 bags of rice concealed in creates of beer in a truck belonging the Nigerian Breweries. Speaking at a press briefing in Lagos on Wednesday, Mohammed Uba, said the unit would investigate incessant use of Nigerian Breweries trucks for smuggling of rice into the country. “We will be fair to the company, we will invite them to give their side of story. We cannot do investigation without listening to other party; we have to listen to other party for justice. “My advice and warning to individual and private organisation employing drivers and other workers using their mobility to convey their goods is that they should look at the credibility of such employees because they can dent the image of the company and slow down process of making their gains,” Uba said. In the same vein, the Unit said it intercepted nine trailers load of smuggled rice numbering about 5,516 bags and recovered N1.039 billion for the federal government. The Unit also intercept-

ed 30 exotic vehicles, 1068 cartons of frozen poultry products, 216 jerrycans of vegetable oil, 683 pieces of used tyres and sacks of Indian hemp. “Having deepened our anti- smuggling operations between April 10th to May 15 2018, we have intercepted various contrabands and other goods on detention with a duty paid value (DPV) of N1.10billion,” he said. He further said that the unit also recovered N29 million from under-payments making a cumulative of N1.39 billion within the weeks under review. The seized items include: 30 Exotic vehicles including 7 Toyota Hilux (2018 models), 3 Toyota Prado Jeep (2017), 1 Range Rover, 1 Ford Edge (2015), 5,516 bags of foreign parboiled rice (9 trailers), 1,078 cartons of frozen poultry products, 216 Jerry cans of vegetable oil, 173 bales of used clothing, 683 piece of used tyres, 8 sacks of Indian hemps weighing 134 kg among others. He also said two containers were seized for alleged false declarations and N25million recovered from the importers. While reading riot act to smugglers, he assured that unit would continue to make this zone uncomfortable for smugglers to operate, and urged every Nigerian to be patriotic and report any smuggling activities in their areas.

L-R: Olumide Obayomi, chairman, ABC Transport plc; Ngozi Nneji, wife of the author; Frank Nneji, founder, ABC Transport plc/author of a book “Who Says You Can’t?”; Ije Jidenma, CEO, Leading Edge Consulting; Reginald Ihejiahi, former MD/ CEO, Fidelity Bank plc; Ernest Ebi, chairman, Fidelity Bank plc, and Ubong Essien, certified speaking professional/dean, School of Eloquence, at the public presentation of “Who Says You Can’t?” in Lagos, yesterday. Pic by Olawale Amoo

Alleged N700m fraud: Absence of Ize-Iyamu, Dan Orbih stalls arraignment by EFCC IDRIS UMAR MOMOH, Benin

he arraignment of Osagie Ize-Iyamu, the 2016 governorship candidate of the PDP in Edo State, and Dan Orbih, the state chairman of the party and three others, by the Economic and Financial Crimes Commission (EFCC) on Wednesday, was stalled by their absence in court. Others to be arraigned along with them are Lucky Imasuen, the former deputy governor in the state, now an APC chieftain, Tony Azigbemi, former House of Representatives member, and Efe Er-

imuoghae Anthony. In a charge sheet number FHC/B/51c/2018, the EFCC said it was arraigning the defendants on eight-count charge bothering on money laundering, an offence contrary to Section 18 (a) of the Money Laundering Act, 2011 as amended. Other charges include taken possession and control of the sum of N700 million without any contract being part of proceeds of an unlawful act. They were also alleged to have make cash payment of N60.650 million to one Henry Tenebe of Estako West Local Government and N61,647,000 to one Momoh Andrew Ojo

of Akoko-Edo without going through a financial institution. The accused were further alleged to have make cash payment of N83,473,000, N125,993,000 and N105,000,000 to Ezekiel Egharevba, Thomas Aroko and Scott Osagiede, respectively, without going through a financial institution. In an interview, Ikide Chiehelua and Ferdinand Orbih, counsel to Ize-Iyamu told the court that their clients travelled out of the country. They said their clients were prepared to face trials and would be back Tuesday next week. “I have his instruction that he will be back to answer to

the charges. He is ready and willing to defend himself. His absence is not borne out of disrespect for the court. He was not served about the arraignment. He only heard about it and he instructed me to appear for him,” he said. On his part, Larry Peters, counsel to EFCC, said it was the duty of the Commission to produce the accused persons and not for them to be in court by themselves. He informed the court that all the accused persons had filed application for bail and asked for the court to adjourn to enable the EFCC produce all the defendants in court.

Thursday 17 May 2018

C002D5556

BUSINESS DAY

FINANCIAL TIMES UK East Coast rail line to be renationalised

Serbia’s Vucic insists ‘I’m obsessed with Kosovo’

Page A3

Page A4

World Business Newspaper

North Korea threatens to pull out of summit with US

Pyongyang hits back over Washington pressure to abandon nuclear programme BRYAN HARRIS

orth Korea has threatened to withdraw from a planned summit with the US if Washington continues to pressure it to “unilaterally” abandon its nuclear weapons programme. Marking a return of the regime’s fiery rhetoric, Pyongyang on Wednesday issued a flurry of missives castigating South Korean and US officials — in particular John Bolton, President Donald Trump’s national security adviser. “If they try to corner us and pressure us unilaterally to give up nuclear weapons, we will no longer be interested in such dialogue. We will have to reconsider whether to participate in the upcoming North Korea-US talks,” said Kim Kye Gwan, viceminister of foreign affairs, according to Pyongyang’s Korean Central News Agency. The official’s comments follow a decision by Pyongyang earlier in the day to axe high-level talks with Seoul scheduled for Wednesday in response to joint South Korea-US military drills. The annual “Max Thunder” air force exercises were a “deliberate military provocation to the trend of the favourably developing situation on the Korean peninsula”, said KCNA, a government mouthpiece. “The United States will also have to undertake careful deliberations about the fate of the planned North Korea-US summit in light of this provocative military ruckus. There is a limit in showing goodwill and offering opportunity,” it added. For sceptics, the comments will compound fears that Pyongyang is not genuine in its pledges to abandon its nuclear weapons and is instead attempting to manipulate its adversaries by drawing out and complicating talks. Kim Jong Un, the country’s supreme leader, was set to meet Mr Trump on June 12 in Singapore for a summit that the US president hoped

would spur the denuclearisation of North Korea. Pyongyang is believed to maintain an arsenal of about 60 nuclear devices and is close to mastering the technology needed to load those weapons on to long-range missiles capable of reaching the US, experts say. In April, Mr Kim met South Korean president Moon Jae-in in Panmunjom in the demilitarised zone between the two Koreas, with both leaders reaffirming their desire for reduced hostilities and a peninsula free of nuclear weapons. However, the comments from Kim Kye Gwan raise questions about those pledges. In particular, North Korea has taken issue with demands from Mr Bolton for a Libya-style process of denuclearisation. The western-backed overthrow and murder of Libyan leader Muammer Gaddafi serves as a salutary reminder to Pyongyang of why it should not abandon its nuclear weapons. “We shed light on the quality of Bolton already in the past and we do not hide our feeling of repugnance towards him. If the Trump administration fails to recall the lessons learnt from the past . . . the prospects of upcoming summit will be crystal clear,” said the North Korean foreign minister. Analysts say Kim Jong Un is unlikely to pull out of the meeting with Mr Trump and that threats to do so are attempts to increase the regime’s bargaining power. “The North’s actions are intended to maximise their negotiating power before the summit meeting,” said Park Won-gon, a professor of international relations at Handong Global University in South Korea. “The regime’s survival and security is the most sensitive issue for Kim Jong Un. So the sudden cancellation of talks is intended to deliver a message that its security cannot be compromised in the summit meeting.”

League/Five Star want return to ‘pre-Maastricht’ era Leak of draft deal shows Italian populist parties sought path out of euro JAMES POLITI

taly’s two leading populist parties, which are locked in talks to form a coalition government, want to return to a “pre-Maastricht setting” in European economic policy — before the introduction of the single currency and common fiscal rules, they said in a statement early on Wednesday. The anti-establishment Five Star Movement and the far-right League, which prevailed in the March general election, have vowed to break with eurozone economic orthodoxy but are immersed in heated discussions on the extent of the rupture. Late on Tuesday, Huffington Post

Italy published a draft version of their planned coalition agreement in which the two parties sought “specific technical procedures” to allow countries to leave the euro and recover their “monetary sovereignty”. Five Star and the League responded by saying that text, dated Monday morning, was old and had since been updated to remove any provisions that would question Italy’s membership of the euro. But on Wednesday, the parties released a new statement laying out their common position on the eurozone, revealing a desire to return to the days of the lira in the 1980s and Continues on page A2

North Korean leader Kim Jong Un, left, and US president Donald Trump were set to hold a summit on June 12 in Singapore © EPA

Small US banks prepare for mortgage market push Congress votes next week on bill to reduce regulations on community lenders BARNEY JOPSON AND BEN MCLANNAHAN

mall banks across the US are gearing up to take advantage of new freedoms to pile into mortgages and other areas of lending as the biggest rollback of banking regulation since the financial crisis moves closer to approval by Congress. Republican aides said the House of Representatives would vote next Tuesday on a bill aimed at giving small banks relief from post-crisis reforms that had driven them out of parts of the market. The bill has already been approved by the Senate, meaning it has advanced further than any other banking legislation since 2010. Alice Frazier, chief executive of Bank of Charles Town of West Virginia, said it could unlock parts

of the $9.3tn US mortgage market by relieving banks like hers of burdensome data collection requirements, while allowing them to hold more home loans on their balance sheets. “This gives us more opportunity [to] offer mortgages to folks we know,” said Ms Frazier, whose bank has $430m in assets. Both Republican and Democratic lawmakers agree the postcrisis reforms of the Dodd-Frank act did undue harm to small lenders known as community banks, which had little to do with the 2008-09 mortgage meltdown. But previous efforts to lighten the burden have been scuppered by Republican attempts to insert obvious giveaways for giant Wall Street banks into small bank bills. The current legislation waters down parts of Dodd-Frank in mod-

est ways, but falls far short of President Donald Trump’s campaign pledge to dismantle the reforms. Some leftwing critics — who do not have enough votes to stop the bill — nonetheless contend that it includes unjustified favours for the biggest banks. Paul Merski, head of congressional relations and strategy at Independent Community Bankers of America, a lobby group, said many of his member banks have signalled plans to get back into home loans and other products they had shunned. “If you’re only doing 20 or 30 mortgages a month, there were all kinds of new rules and you’d be putting yourself at risk of being sought out by the Consumer Financial Protection Bureau for not crossing a ‘t’ or dotting an ‘i’,” he said. “The cost-benefit just wasn’t there.”

Facebook’s blockchain experiment raises eyebrows Mark Zuckerberg flirts with decentralisation of his very centralised social network HANNAH KUCHLER AND CHLOE CORNISH

“A

lot of us got into technology because we believe it can be a decentralising force that puts more power in people’s hands,” Mark Zuckerberg wrote in his New Year message to his Facebook followers. The Facebook founder was lamenting how, with the rise of a small number of big tech companies — not least his own — many people believe technology only centralises power, rather than decentralises it. The remarks were largely read at the time as a riff on the political controversies engulfing his social network, but Mr Zuckerberg also vowed to explore “counter-trends” to centralisation, such as encryption and cryptocurrency. A few months later, that exploration appears to have stepped up a gear. Mr Zuckerberg last week appointed one of his most senior lieutenants, David Marcus, to head a team to experiment with blockchain,

the decentralised digital ledger technology that is exciting everyone from start-ups to big banks. Blockchain promises a new way to record transactions, including the transfer of cryptocurrency and other digital assets, without having to go through a central authority, such as Facebook’s own servers. What the company has not done is say anything, in public at least, about what Mr Marcus and his team will be doing — leaving others in the blockchain world to speculate, and poring over Mr Marcus’s resume for clues. The 45-year-old executive has been given his new assignment after a stint in charge of Facebook Messenger. Before Facebook, he was president of PayPal, the online payments company, and he also sits on the board of Coinbase, a US cryptocurrency exchange. Facebook could use the technology for payments on the social network, by creating its own cryptocurrency, blockchain experts say. It could use it to try to improve privacy, by giving users a new way to own and

control their personal data. Or it might think blockchain will help it fight fake accounts and provide more services by giving users a way to prove their identities. One particular threat of blockchain to Facebook could come from people building a decentralised alternative that rewards users with a new cryptocurrency for posting on their platform. “You’ll learn a lot about what Facebook is by what they think they are going to do with some of these technologies,” said Brewster Kahle, a digital librarian and activist trying to help build a decentralised web. Facebook first dabbled in blockchain research led by Morgan Beller, a corporate development executive, last year. The exploration of blockchain is about more than satisfying Mr Zuckerberg’s curiosity, or returning to his youthful dreams of giving power to the people. Facebook has long been focused on potential competitive threats, even very long-term ones, and has often moved quickly to squash them.

BUSINESS DAY

C002D5556

Thursday 17 May 2018

NATIONAL

Nigeria violence adds to pressure on President Muhammadu Buhari Ex-general’s bid for re-election threatened by Boko Haram militants that he promised to destroy NEIL MUNSHI

hen armed militiamen killed dozens in an attack on an isolated village in northern Nigeria this month, it was seen as a sign of rising levels of violence across Africa’s most populous nation, not least because it was the third attack that week with a death toll that ran

into double digits. Weeks after President Muhammadu Buhari announced his intention to seek a second term in elections due in February, his administration is under pressure as violence flares up across the country. In the past month alone, scores have been killed in twin suicide bombings that bore the grisly trade-

marks of Boko Haram, and clashes between farmers and nomadic cattle herders in the ethnically mixed Middle Belt states have reached a critical point. The administration does not “understand that this is an existential crisis for them”, said Oluseun Onigbinde, founder of BudgIT, a civic start-up. “It makes it look like the whole security

architecture you promised is falling apart, because [every day] you see 10 people killed here, 20 people killed there.” Mr Buhari, a retired general, was elected in 2015 on a promise to destroy Boko Haram, the jihadi group whose brazen attacks have killed at least 20,000 in the past nine years despite multiple declarations of vic-

League/Five Star want return to...

Total vows Iran pullout over Trump sanctions threat

Continued from page A1 early 1990s. “The structure of European economic governance, based on the dominance of the market, and the respect for rules that are stringent and unfounded from a social and economic point of view, requires a rethink with our European partners,” they said. “The spirit must be to return to the pre-Maastricht setting in which European states were moved by genuine intents of peace, brotherhood, cooperation and solidarity,” they added. The Maastricht treaty, which was signed in 1992 and entered into force in 1993, laid down the framework for the launch of the euro, and began setting economic policy standards — including fiscal rules — to foster convergence among the members of the future single currency. In reaction to statement by the Five Star and the League, investors sold Italian assets, sending yields on benchmark government bonds sharply higher while Milan-listed shares slipped against a trend of gains on European stock markets. The yield on 10-year government debt rose 6 basis points to 2 per cent. The FTSE Mib, the Italian stock market benchmark, fell 0.4 per cent. The gap between Italian and German 10-year bond yields rose to 137.35 basis points from 129bps late on Tuesday. In their statement on Wednesday, Five Star and the League did not address other features of the leaked text that could also set alarm bells ringing among economic policymakers and investors. Among them is a request for the ECB to cancel the €250bn in Italian debt it is due to hold by the end of its bond-buying programme — known as quantitative easing — a proposal that could run foul of an EU treaty that bans the monetary financing of countries. The ECB has declined to comment. On their tentative coalition agenda, Five Star and the League said this policy would result in a 10 percentage point reduction in Italy’s debt-to-GDP ratio, which currently stands above 130 per cent, one of the highest in the eurozone. The leaked document was published at the end of the latest day of high political drama in Rome, when the country’s relationship with Europe came into focus as one of the main sticking points in talks between Luigi Di Maio, the Five Star leader, and Matteo Salvini, the League leader. Although the talks suffered a significant setback on Monday after the two sides failed to reach a deal on naming a prime minister to head their alliance, Mr Di Maio and Mr Salvini were more optimistic after Tuesday’s meetings. There are expectations they might be in a position to reach a final deal by the end of the week, if not earlier.

tory by the military. He seeks re-election as the group, while significantly weakened, continues to wreak havoc, kidnapping more than 100 schoolgirls last month. Mr Buhari, 75, recently flew to London on his doctor’s orders, apparently for the same undisclosed ailment for which he spent more than three months in the UK last year.

French energy group says it would need US waiver to save key South Pars gas project

DAVID KEOHANE

Trump Jr defended election meeting with Kremlin-connected lawyer Senate releases testimony from participants in controversial 2016 Trump Tower meeting BARNEY JOPSON

onald Trump Jr, the US president’s son, told Senate investigators he did not think it was a problem to accept a 2016 meeting he was told was a Kremlin-linked effort to discredit Hillary Clinton. According to more than 2,500 pages of testimony and documents released by the Senate on Wednesday, Mr Trump Jr said he thought he “should listen” to the Russian group promising damaging information on Mrs Clinton ahead of the presidential election. The Trump Tower meeting with a Kremlin connected lawyer is under

scrutiny by Senate investigators and special counsel Robert Mueller, who is probing Russian election interference and other subjects. “To the extent that they had information concerning the fitness, character, or qualifications of any presidential candidate, I believed that I should at least hear them out,” Mr Trump Jr said. The meeting participants told investigators it turned out to be a disappointment for the Trump team. Rob Goldstone, a music promoter who helped set it up, said: “I don’t know what would be deemed damaging, but I didn‘t hear anything that I would deem to be damaging. And I didn‘t see anybody react in a way

that I believed people would react if they heard damaging information.” Mr Trump Jr said he was initially sceptical of Mr Goldstone’s outreach and “as it later turned out, my scepticism was justified”. The Russian participants in the meeting wanted to talk about the issue of US adoptions of Russian children — something that had been banned by Russia in retaliation for asset freezes imposed by the US on certain Russian officials. In addition to Mr Trump’s son, the meeting was also attended by Paul Manafort, then manager of the Trump campaign. The documents were released on Wednesday by the Senate intelligence committee.

Turkish central bank promises ‘necessary steps’ to calm lira Currency strengthens after hitting another record low earlier on Wednesday CAT RUTTER POOLEY AND LAURA PITEL

urkey’s central bank has moved to calm the market ructions shaking the lira, stating that “necessary steps” will be taken. “The Central Bank of the Republic of Turkey is closely monitoring the unhealty [sic] price formations in the markets,” it said in a statement on its website. “Necessary steps will be taken, also considering the impact of these developments on the inflation outlook,” the central bank added. The lira has been under pressure for weeks, but the weight has intensified since President Erdogan told the media and investors in recent days that he intends to take greater control over monetary policy after elections next month. Mr Erdogan has a longstanding

aversion to higher interest rates, and recently referred to rates as the “mother of all evil ”. Economists and investors say Turkey keenly needs sharply higher interest rates to get a grip on inflation and prop up the wilting lira. On Wednesday, Turkish media also reported that central bank governor Murat Cetinkaya will meet in Ankara with president Recep Tayyip Erdogan — along with prime minister Binali Yildirim and deputy prime minister Mehmet Simsek. The scheduled meeting, alongside an Iranian official, was intended to discuss boosting local currency trade between Iran and Turkey. It was unclear whether interest rates would be discussed after that. The lira weakened to 4.50 per dollar earlier in the day, the latest in a series of record lows, but reversed course after the central

bank’s move to trade at 4.40 lira per dollar. It stabilised around 4.43 lira per dollar, with the dollar 0.2 per cent weaker against the Turkish currency on the day. Mr Simsek, a key figure in Turkish politics who enjoys the measured confidence of disillusioned foreign investors, tweeted that he still has faith that “political pragmatism will ultimately prevail”. He added: A rule based market economy is the only viable option going forward. Therefore, we remain committed to a sound & prudent policy framework. The policy mix is much more likely to improve post elections. Analysts at Capital Economics said “we now think that an emergency rate hike, in the order of two percentage points, will happen in the next week or so.”

rench oil major Total has said it would not be able to continue with its project in Iran without a waiver protecting it from US sanctions after the Trump administration pulled out of the nuclear deal. Total signed a multibilliondollar deal last July to develop the giant South Pars gasfield. Although Total said it has so far invested less than €40m in South Pars, it still represents a larger commitment in Iran than any other western energy group and it was the Islamic republic’s first major energy contract with a European oil company in more than a decade. In a statement on Wednesday, the energy company said it “will not be in a position to continue the SP11 [South Pars] project and will have to unwind all related operations before 4 November 2018 unless Total is granted a specific project waiver by the US authorities with the support of the French and European authorities. This project waiver should include protection of the company from any secondary sanction as per US legislation.” Total said that it has “always been clear that it cannot afford to be exposed to any secondary sanction” due to the risk of loss of financing, the loss of its US shareholders or the inability to continue its US operations — US banks are involved in more than 90 per cent of Total’s financing operations, according to the company. “In these circumstances, Total will not take any further commitment related to the SP11 project and, in accordance with its contractual commitments vis à vis the Iranian authorities, is engaging with the French and US authorities to examine the possibility of a project waiver,” added Total Total owns just over half of the South Pars project with China’s state-owned CNPC taking another 30 per cent. According to people familiar with the situation, if the French oil company cannot secure an exemption that allows it to remain in the country and it is forced to withdraw, CNPC could take over Total’s stake in the project, provided that the Chinese company was itself able to avoid sanctions.

Thursday 17 May 2018

C002D5556

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

UK East Coast rail line to be renationalised LNER brand revived after failing franchise returns to state hands JIM PICKARD AND JOSH SPERO

ondon-Edinburgh rail line put under state control for third time in 12 years Stagecoach said it had lost £259m on the line Details of future ‘public-private partnership’ unclear The East Coast rail line between London and Edinburgh will be taken back under state control after collapsing under heavy losses just three years after its last privatisation. Chris Grayling, the transport secretary, said he would terminate the Virgin franchise on the line on June 24, and would rebrand the line “London and North Eastern Railway” (LNER) under public ownership and after a new public-private partnership begins in 2020. “The route has its challenges but it is not a failing railway,” he said. “Franchises can on occasion fail . . . we don’t and we can’t expect companies to hold unlimited liabilities when they take on franchises, they would not bid for them.” The government has appointed a partnership comprising engineering company Arup, SNC-Lavalin Transport Advisory and consultants to run the interim LNER franchise as an operator of last resort. The LNER name was last used before nationalisation of the UK rail network in 1948. Mr Grayling said he would not

stop Stagecoach and Virgin, the 90/10 joint operators of the franchise, from running other routes. The crisis at one of Britain’s three large inter-city rail franchises will provide more ammunition for the critics of private sector involvement in public services, with the opposition Labour party pushing for widespread nationalisations. Stagecoach said it would lose £259m in the move, including its £165m bond and a one-off charge of £75m. Stagecoach and Virgin had proposed to continue operating the franchise on a not-for-profit basis if it could not renegotiate the contract. Martin Griffiths, Stagecoach chief executive, said he was “surprised and disappointed” by the decision. Ellie Harrison of Bring Back British Rail, a campaign for state ownership, said: “We’re over the moon. That’s what we’re fighting for. We had East Coast in public ownership for five years, and it acted as a brilliant benchmark to measure the success of the other franchises.” Rail line has troubled history The announcement marks the third time that private companies have walked away from East Coast in just over a decade. Great North Eastern Railway was stripped of the franchise after its parent company became insolvent in 2006. National Express handed back the line in 2009 after financial difficulties.

Big tech ploughs money into capex and buybacks US tech giants are investing more in their businesses than many non-tech peers MILES JOHNSON

arge US technology companies are investing far more in their businesses as a percentage of revenues than many non-tech peers in spite of spending billions of dollars on share buybacks at the same time. The significant amounts of money spent by US companies on returning capital to investors through dividends and buybacks has for several years drawn criticism as being a piece of financial engineering that favours short-term equity returns over long-term investment. US companies are expected by analysts at JPMorgan to buy back about $800bn of their stock this year, with corporate coffers boosted by corporate tax reform. However, in the middle of this buyback boom recent filings show many so-called “big tech” companies are investing far more heavily in their businesses than old tech rivals, countering a prevailing market narrative that their surging share prices have been helped by buybacks at the expense of investment. Alphabet, owner of Google, and Facebook, the social network, both spent 23 per cent of their revenues on capital expenditure in the last quarter. Both companies are cur-

rently buying back billions of dollars of their own stock. Apple, which is in the process of the largest share buyback in US corporate history, spent more than 6 per cent of its revenues on capital expenditures, according to Bloomberg data. That compares to Mondelez, which spent 4.1 per cent of its sales on capital expenditure. Kraft Heinz is spending just 3.5 per cent of sales on capex. Apple is in the middle of buying back as much as $100bn of its own shares, while in January Mondelez said its board approved a further $6bn of share buybacks. Exact calculations of what spending counts as capital expenditure or research and development can differ from company to company, while certain businesses sectors are more capital intensive than others. Technology companies tend to generate profits from intangible assets, however, and many leading companies such as Alphabet are investing heavily in new technologies such as driverless cars and cloud computing. David Kostin, chief US equity strategist at Goldman Sachs, has predicted that large US companies will spend $1tn on capital expenditure while spending $1.2tn on buybacks and dividends.

Back to the future: LNER trains including the Flying Scotsman lined up at King’s Cross. The famous company brand will be reborn on the renationalised East Coast mainline. © REX/Shutterstock

Hong Kong and Indonesia reflect growing pressure on EM currencies Strengthening US dollar forces further intervention from HK’s de facto central bank EMMA DUNKLEY AND NICOLLE

strengthening US dollar intensified the pressure on currencies in Asia with Hong Kong’s Monetary Authority forced to once more defend its longstanding currency peg, while Indonesia’s rupiah touched its lowest level in nearly three years. Emerging market currencies across the board have been sliding for the past month as the dollar has been bolstered by signs of stronger US growth and higher interest rates. While Argentina and Turkey have led the EM sell-off, signs of pressure have been apparent in Asia. The HKMA’s intervention on Wednesday, using its reserves to sell US$200m and buy HK$1.57bn, marked the 14th time that it has stepped in to prop up the persistently weak local currency in the past month. Late into Asia hours, the authority

announced that it had intervened for a second time today and even more heavily — selling US$610m and buying HK$4.79bn. Indonesia’s rupiah dropped on Wednesday to its weakest level since late 2015 against the US dollar, weakening as much as 0.5 per cent to 14,109 per dollar, a day ahead of the Bank of Indonesia’s interest rate decision. Mansoor Mohi-uddin, a strategist at NatWest Markets, said: “The more highly-traded Asian currencies, like Korea and China, have also come under pressure. In Korea, it comes after the news that it could cancel its scheduled talks with the US. Hong Kong’s currency is pegged to the US dollar, trading within a band of HK$7.75-HK$7.85 against the greenback. The HKMA is required to support the peg if the Hong Kong dollar slips to the edges of the band and if other banks request the authority

to take action. However, the move to drain the excess liquidity in Hong Kong’s banking system is expected to lift the local short-term interest rate, called Hibor, which analysts said would weigh on borrowers and the property market. The expected increase in US interest rates in June would add further pressure, as Hong Kong tracks US rate changes as a result of its currency peg. HKMA’s actions have already had some impact, with three-month Hibor rising from 1.2 per cent in early April to 1.75 per cent, its highest level since the end of 2008. Chang Liu, China economist at Capital Economics, said he expects three-month Hibor to rise to nearly 3 per cent by the end of next year. “This would put Hong Kong’s overheated property market under strain: around 90 per cent of new mortgages in Hong Kong are priced off interbank interest rates.”

European Parliament takes hard line on EU’s euro clearing plans PHILIP STAFFORD

uropean parliamentarians have taken a hard line on EU plans to police London’s euro derivatives clearing business after Brexit, in a move that raises the prospect of tension with the UK and US over the prized activity. The parliament on Wednesday voted to toughen plans requiring UK clearing houses handling large volumes of euro-denominated contracts to comply with EU rules and accept European supervision. It also wants to give European regulators more powers to dictate the conduct and operations of these “systemic” institutions in “exceptional circumstances”. The vote will allow parliament and national capitals to begin talks to thrash out the final version of the EU rules. The rules target London, and London Stock Exchange Group’s LCH clearing house in particular. LCH handles around 90 per cent of euro clearing business and

has cleared nearly €80tn of euro derivatives so far this year. However, the US, which would also be affected by the EU’s plans, has set red lines on the proposals to either force relocation or demand direct oversight of euro clearing. The stance calls for a stronger regime than the one presented last June by the European Commission. The European Securities and Markets Authority would have the power to decide if volume of derivatives-clearing outside the EU are so vital to the bloc’s financial stability that the business must take place in the EU. The parliament said those discretionary powers may include greater say — in “exceptional circumstances” — over the type of collateral, such as sovereign bonds, held in the clearing house, and prior approval of changes to the way a clearing house calculates the amount of margin, or the insurance supplied to backstop a trade. “The Commission has been way too nice to the Brits so far.

Hence, it is only sensible that the Parliament now demands a tighter regime,” said Markus Ferber, a centre-right German MEP. “We have to make sure that even after Brexit euro clearing will be done in accordance with EU rules. After all, the European Central Bank would have to stand ready with emergency liquidity assistance in a crisis situation and EU taxpayers would be liable. Supervision and liability must remain in the same hand.” The fate of the City’s euro-clearing business has been a political flashpoint ever since last year’s Brexit vote. French authorities, notably the Bank of France, have consistently warned that it is unsustainable for London to remain the global centre for euro clearing once the UK leaves the EU. Last month Kay Swinburne, an MEP, told a conference in London that the proposals “are going to be brutal and the US are not going to be happy.” Ms Swinburne voted against the proposals.

BUSINESS DAY

C002D5556

Thursday 17 May 2018

ANALYSIS Qatar attempts to build its way out of a blockade Boycotted by some of its neighbours, the Gulf state is spending $200bn on infrastructure and opening new trade routes. But is it sustainable? SIMEON KERR

Serbia’s Vucic insists ‘I’m obsessed with Kosovo’ An ultra-nationalist firebrand in his youth, the president now sees EU membership as a catalyst for economic reform LIONEL BARBER AND BEN HALL

rom the balcony of his presidential office in Belgrade’s sombre New Palace, Aleksandar Vucic surveys the neatly trimmed gardens below. On this spot, he whispers, King Alexander and Queen Draga of Serbia were defenestrated in an army coup in 1903. When the king clung to the balustrade his fingers were hacked off; his wife’s body mutilated. “There is no Alexander who survived in power,” says Mr Vucic, with a touch of melodrama. His words are a not-so-subtle reminder of the constraints the self-styled moderniser faces as he edges along the path of economic reform, political stabilisation and, one day, potential EU membership. A previous pro-western Serbian leader Zoran Djindjic was himself assassinated in 2003, a suspected victim of organised crime. Serbia’s western destiny is also far from assured: as a “swing state” in the Balkans it has traditionally hedged its bets between the European powers, Russia and Ottoman Turkey in the 19th century. Moreover, Mr Vucic, a bear of a man at 6ft 6in (1.99m) tall, remains an ambiguous figure. He started in politics as an ultra-nationalist firebrand who vowed shortly after the Srebrenica massacre in 1995 that “for every Serb killed, we will kill 100 Muslims”. He served as information minister under Slobodan Milosevic, the Serbian leader accused of war crimes, and espoused Serbian expansionism in the former Yugoslavia. But in 2008, Mr Vucic and some colleagues broke with Vojislav Seselj, the radical Serb nationalist ideologue, and founded the pro-EU Serbian Progressive party. “You start to ask yourself whether those [radical] things are the only things worth fighting for,” he says of his chequered past.Today he backs EU membership as a catalyst for change, final proof that Serbia has escaped the nightmare of the Milosevic years marked by fanatical nationalism, the Nato bombing of Yugoslavia, hyperinflation and rampant warlords. “Another war would ruin this country and destroy the future of the Serbian people forever.” But to qualify for EU membership, Mr Vucic must first resolve the disputed status of Kosovo, the ethnic Albanian-majority southern province whose 2008 declaration of independence from Belgrade has been recognised by most western powers. Most Serbs, though, still regard it as the birthplace of the nation and the Serbian Orthodox church. They remain staunchly opposed to secession. “I’m obsessed with Kosovo,” Mr Vucic confesses. “Without resolving that problem everything I have achieved so far won’t be sustainable.

The first crisis will kill us.” Courted by China and the United Arab Emirates as well as Serbia’s occasional ally Russia, Mr Vucic, 48, is now seen by EU leaders, and especially Germany’s Angela Merkel, as the best bet to bring his country into the European mainstream. Critics counter that the EU has struck a Faustian pact with Mr Vucic. The hope is that the carrot of membership will induce reform, with the prospect of joining the EU by 2025. But that means meeting stiff conditions on strengthening democratic institutions and tackling corruption as well as resolving Kosovo. This year may well prove a decisive test, starting with a summit of EU and Western Balkans leaders in Sofia on Thursday intended to inject fresh impetus into the bloc’s enlargement. The cynics suspect Mr Vucic is playing along — and that the EU will accommodate him in the interests of regional security. Having won 55 per cent of the vote in last year’s presidential election, he is the undisputed master of the political arena. Nine television screens in his office suggest a man who keeps tabs on everything — and everybody. Some fear he could end up as another Viktor Orban, Hungary’s liberal-turned-nationalist leader, who complied with the EU’s rules to gain membership only to attack it from within. The parallel, says Mr Vucic, is “99 per cent crap”. Another analogy for some is Viktor Yanukovich, the former Ukrainian president, who played the EU off against Russia — until he was ousted by a popular uprising. Mr Vucic was Vladimir Putin’s guest of honour at the Victory Day parade in Moscow last week. He starts his working day at 6.30am with a Russian language lesson. But he rejects the notion that he could become a “fifth column for Putin in Europe”. He says he has always been clear with the Russian president that “Serbia remains on its EU path”. Overall, Mr Vucic’s approach owes something to the legacy of Marshal Tito, the postwar ruler of Yugoslavia who founded the Non-Aligned Movement and performed a balancing act between the western powers and the Kremlin. Optimists looking for signs of Serbia’s EU vocation point to Novi Sad, the country’s second city, located on the northern plains. Here the Austro-Hungarian empire left a deeper imprint than the Ottomans. In 2022 Novi Sad will be the European capital of culture, a chance to showcase its thriving arts scene and creative industries. Sitting on the terrace of the city’s Petrovaradin fortress, looking over the Danube river, Dusan Kovacevic recalls the “explosion of energy” of the 1998 student protests in the city against Milosevic that marked the beginning of his downfall. Mr Kovacevic now runs

the EXIT music festival, one of the largest in Europe with 150,000 attendees. Each July, it takes over the fortress in an event akin to a Glastonbury-onthe-Danube. EXIT is a showcase for a youthful, multicultural city that avoided the sectarian violence that consumed most of the former Yugoslavia. In Belgrade, 50 miles to the south, a very different riverside development is taking shape. Along the Sava river, 100 hectares of sheds and derelict buildings have been cleared for upscale apartments, luxury hotels and a shopping mall. The €3.5bn Belgrade Waterfront project is backed with Emirati money. In Serbian government circles, they refer to “his Highness”, meaning not Serbia’s Crown Prince Alexander but Abu Dhabi’s Crown Prince Mohammed bin Zayed whom Mr Vucic has met 20 times by his own account. But after bulldozers were sent to flatten buildings and goons cracked a few heads, the development triggered the biggest anti-government protests in 20 years. Standing on the roof terrace of an unfinished block of flats, Sinisa Mali, the young Belgrade mayor, rattles off statistics like a Manhattan real estate salesman. Mr Mali, who once worked at Credit Suisse, is a Vucic party man on the rise. “The idea of this project was to create a symbol of change in Serbia. This is a game changer for us.” For Mr Vucic’s critics, the Belgrade Waterfront is a glitzy façade that distracts from a moribund economy weighed down by cronyism, corruption and shady finance. Mr Vucic retorts that he has run fiscal surpluses for three years following an IMF programme during which he cut pensions and froze wages. Unemployment has halved to 12.9 per cent. The government hopes for 4 per cent GDP growth in 2018, after lagging far behind much of eastern Europe. Foreign investors are looking for opportunities in sectors such as mining. With encouragement from both Belgrade and Beijing, China’s Hebei Steel took over Serbia’s largest steel plant in Smederevo east of the capital, saving thousands of jobs. Mr Vucic cultivates the image of a man who gets things done. Some business figures agree and generally his opponents are regarded as weak, divided and tainted by corruption. “It’s easy for people to bad-mouth things and do nothing,” says Branko Zecevic, a metals and mining entrepreneur. One bright spot is a booming IT sector in Belgrade which is growing by 30 per cent a year. But to many it is an exception that proves the rule: the growth owes much to a cadre of highly educated Serbs who serve foreign clients under foreign contracts, unhindered by the state or government cronies. It is “employment by PayPal”, says Goran Gocic, a writer.

orth of Qatar’s capital, the new city of Lusail is a maze of empty streets and semicompleted towers. Dozens of cranes loom over construction sites. Signs indicate directions to the sole government building operating in the area, the economy ministry. The occasional glimpse of washing drying on a balcony is the only evidence of daily life in this waterfront city near Doha, which is planned to accommodate 200,000 people. Yet come 2022, Lusail’s 80,000-seater stadium, designed by Foster + Partners and under construction, will host the final of the football World Cup. The city’s rapid progress from dusty desert to global centrepiece comes as the rest of Qatar faces the

men say remains prone to shortages of hard currency. Its sovereign wealth fund has reduced some of its overseas stakes, such as in the jeweller Tiffany & Co and Credit Suisse, to divert cash to emergency domestic measures. Last month it successfully issued a $12bn bond . The crisis was triggered when Riyadh and Abu Dhabi, self-appointed guardians of regional stability, were incensed by tiny Qatar’s support for popular Islamist movements that grew out of the tumult of the Arab spring, plus more established organisations such as the Muslim Brotherhood, which briefly governed Egypt, and the Palestinian group Hamas . They feared these groups could upend the Gulf’s conservative monarchies. Qatar-owned al Jazeera’s rolling

most serious external threat in its four-decade history, the trade and travel embargo imposed last June by four Arab states — Saudi Arabia, the United Arab Emirates, Bahrain and Egypt — over the peninsula’s alleged support for terrorism. Charts showing Qatar imports The schism has turned strong US allies on each other, undermining Washington’s attempts to build a united front against Islamist terror and Iran. The US, which has its regional military headquarters in Qatar, is increasingly active in pursuit of a compromise deal, but few believe a breakthrough is imminent, with Riyadh and Abu Dhabi content with Doha’s isolation. Qatar, the richest country in the world on a per capita basis, is offsetting the economic impact of the embargo by ploughing ahead with its $200bn infrastructure development programme, building roads and railways. The government also redirected $50bn from the country’s sovereign wealth fund and reserves to protect the banking sector and exchange rate. “Qatar has been able to adjust, with a number of measures taken to compensate for the threat [to] trade and finance,” says Jihad Azour, regional director for the IMF. “But this is not an optimal situation. Any trade difference between neighbour countries affects investment sentiment.” The boycott, imposed last June, cut Qatar’s main supply lines — the land border with Saudi Arabia and shipping routes into the re-export hub at Dubai’s Jebel Ali port — and took out routes accounting for a fifth of seats sold by Qatar Airways, which has threatened to sue for damages. All Qataris were kicked out of the quartet of states separating families bound together by generations of intermarriage. It is calculated to have cost the economy in lower growth and higher import costs and forced the government to repatriate billions from its $340bn overseas portfolio to shore up a financial system that local business-

television coverage of the status quo under threat deepened that anger. The quartet’s initial demands, such as closing al Jazeera and a Turkish military base in the country, were reduced to six, including combating extremism and non-interference in neighbouring states. Qatar denies the claims, saying it will not accept any limits on its sovereignty. The Trump administration’s decision last week to withdraw from the Iran nuclear deal was enthusiastically backed by Doha’s rivals in Riyadh and Abu Dhabi. And it could deepen Qatar’s malaise, given its growing dependence on shipping routes to Iran and its neutral Gulf Cooperation Council neighbours Oman and Kuwait, both of which are seeking closer trading ties with the Islamic republic. Qatari officials say the level of trade with Iran is minimal when compared with Iran’s larger trading volumes with Dubai, its traditional partner and a member of the blockade against Qatar. “The UAE dominates 90 per cent of trade between GCC [states] and Iran, even after the blockade with Qatar,” says Lulwa al-Khater, Qatar’s foreign ministry spokeswoman. Official statistics show that Qatari imports from Iran have risen since the embargo, but remain less than imports from the UAE. Having survived the initial onslaught Doha is now turning its mind to fostering enough growth to fill the malls and residential towers rising across the urban sprawl of the capital. Last year’s fiscal deficit of 1.6 per cent of gross domestic product is forecast to swing to a surplus of 2.8 per cent in 2018 as crude prices hover around $80 a barrel , according to research from MUFG Non-oil related growth rates of about 4 per cent this year are better than those enjoyed by its neighbours, but Qatar’s domestic economy is a shadow of its former self, given average growth of more than 12 per cent between 2000 and 2014, a period when its population shot up from under 600,000 to 2.5m people.

BUSINESS DAY

C002D5556

NEWS YOU CAN TRUST I THURSDAY 17 MAY 2018

Opinion

Can we hold our leaders to account? CHRISTOPHER AKOR Chris Akor, a First Class graduate of Political Science, holds an MSc in African Studies from the University of Oxford and is BusinessDay’s Op-Ed Editor christopher.akor@businessdayonline.com

ne of the tragedies of a p o st- c o l o ny like Niger ia is the apparent refusal of leaders to be accountable and the glaring inability of citizens to hold their leaders to account. The leaders, often self-conceited and condescending towards the people they lead, are quick to take the glory for anything positive and refuse responsibility for negative outcomes. These leaders have a surfeit of excuses – colonial condition, external environment, previous governments, and the opposition – for the abysmal

fortunes of the country. They unwittingly reduce themselves to helpless victims, who are usually passive and acted upon. What is more, they take advantage of a citizenry who have a warped idea of the underlying social contract, a right-based idea that sees itself more as receiving from, rather than giving to the state. This is complemented by the reality that the Nigerian state does not depend on its people for revenue (about 80 percent of the country’s government revenues and 95 percent of its foreign exchange earnings come from the sale of crude oil). And as research has shown, where governments do not depend on their citizens for revenues, those governments are usually not responsible o r a c c ou nt ab l e t o t h e citizens even if they claim to be democracies. It is in that light that Wale Adebanw i and Ebenezer Obadare in their edited work, Encountering the Nigerian

State argue, for the most part, that the ‘modern’ Ni g e r i a n s t a t e re l a t e s ov e r w h e l m i ng l y t o i t s citizens as though they were, at worst, adversaries, or at best, a nuisance. Since the discovery of oil, successive governments no longer felt it necessary for the people to fund the state. Consequently, the taxation system bequeathed by the colonial government was virtually dismantled. Thus relieved of their basic duty, Nigeria citiz e n s w e re re d u c e d t o the status of beggars – those who needed to be helped by the state but with no rights or privileges to state resources. Any wonder then that the state treats its citizens as nuisance and in extreme case, as adversaries! Meanwhile, the ruling elite see the state mainly as a vehicle of accumulation and of exploitation. But even as the tides a re c h a n g i n g a n d t h e country is starting to demand and depend on

tax revenues to fund governments, Nigeria’s leaders are still stuck in their old ways. They see themselves as masters of the people, at best, and demand obedience and respect from the people without subjecting themselves to the rigours of accountability. But the blame for this goes squarely to the Nigerian middle class – that class between the oligarchy and the poor, who, in contemporary society, are best positioned to hold the government to a c c o u nt. A s I hav e s o often written, the Nigerian middle class are the greatest supporters and defenders of the ruling class and their oppression of the poor. Being part of the exploite d class but w ith professional knowledge or privileged positions in the civil service, they often offer their services and knowledge to the exploiters for hire. Consequently, they have become the greatest advocates

of the ruling class, the greatest defenders of Nigeria’s politics of plunder, neopatrimonialism and prebandalism. Being part of the exploited class themselves, they often speak the language of the downtrodden until they are noticed and called to the service of the ruling class where they have proved especially useful in fashioning strategies to further the exploitation of the downtrodden. In meetings with leaders, instead of asking those leaders tough questions, compelling them to account for every one of their actions, the Nigerian middle class is more preoccupied with establishing contacts and relationships for future contracts, jobs and favours. Of course, to put themselves in prime positions, they compete to eulogise the leader or public official as the best thing to have happened to the country. The average middle class Nigerian is inherently selfish and greedy and is

willing to sell the poor for a mess of pottage. They have made nonsense of the well-established theory that a large and strong middle class is essential for economic growth and democracy. Here, the rule of the jungle, and not some fine economic or democratic theory, prevails. To my mind, the main reason for this is the greedy quest by Nigerian middle class to become super rich and owners of capital themselves. Unlike the middle class in Western countries, they are not content with living a happy and moderate life. No! They see themselves as future Dangotes and Adenugas, stupendously rich and enjoying the good things life and money have to offer. Their main preoccupation therefore, is not the holding of leaders to account. They are more interested in joining the ranks of the ruling elite and will do anything to be incorporated into that privileged class.

How the west should judge a rising China •Advanced countries are hobbled by their inability to manage their own affairs MARTIN WOLF Wolf is the Chief Economics Commentator of The Financial Times.

o d a y ’s a d v a n c e d countries, dominated by the US and Europe, have a preponderant share of the global economy. The 14 per cent of humanity that lives in advanced countries generates 60 per cent of world output at market prices and 41 per cent at purchasing power parity. This will not last: as recently as 1990, advanced countries generated 78 per cent of world output at market prices and 64 per cent at purchasing power parity. The west must accept its relative decline or engage in a grossly immoral and probably ruinous struggle to prevent it. That is the most important truth of our era. For this reason, above all, westerners need to consider how those in the rising powers view the world. It is likely that China, in particular, will emerge as by far the world’s biggest economy. We need to evaluate and assess the

views of those who lead it. Two weeks ago, I presented what I heard in high-level meetings in Beijing. Now, I will assess what I heard, under the same headings. China needs strong central rule A noteworthy fact was the belief of our interlocutors that Chinese political stability is fragile. History suggests that they are right. The past two centuries have seen many man-made disasters, from the Taiping Rebellion of the 19th century to the Great Leap Forward and cultural revolution. It is quite easy therefore to understand why members of the elite seem convinced that renewal of the Communist party, under the control of Xi Jinping, is essential. We must recall that the upheaval of modernisation and urbanisation through which China is now going, destabilised Europe in the 19th and early 20th centuries. Yet this tightening of control could derail the economy or generate a political explosion in a country containing an ever more literate, interconnected and prosperous people. China wishes to be a

huge Singapore. Can it? Western models are discredited The Chinese elite is right: they are, alas. The dominant view among the rest used to be that the west was interventionist, selfish and hypocritical, but competent. After the financial crisis and the rise of populism, the ability of the west to run its economic and political systems well has come into doubt. For those who believe in democracy and the market economy as expressions of individual freedom, these failures are distressing. They can only be dealt with by reforms. Unfortunately, what the west is getting instead is unproductive rage. China does not want to run the world On this point, we can express doubts. For the first time, China will become a great power within a global civilisation. Like all great powers before it, China will surely wish to arrange the global order and the behaviour of other states (and private organisations, too) to its liking. China also has many neighbours, many of them historically allied to

the US. It is already trying to expand its influence, notably in the South China Sea. It is also trying to influence behaviour, not least of all Chinese students, abroad. All this represents the inevitable extension of Chinese power abroad. China is under attack by the US The Chinese elite is right that Americans increasingly regard their country as a rival, indeed a threat. Americans, in turn, argue that China is attacking them, by extending its military power and undermining allies, notably Japan. The truth is that power is inevitably a zero-sum game. The rise of Chinese power will be seen as a threat by the US, whatever China’s intentions may be. Developing countries (Martin Wolf) charts Moreover, many Americans, indeed many westerners, do not really accept Chinese positions on Tibet and Taiwan, are suspicious of China’s intentions and resent its success. Such mutual mistrust opens the so-called Thucydides trap of suspicion between incumbent and ris-

ing powers. US goals in trade talks are incomprehensible China is right: they are ridiculous. But within them are genuinely important issues, notably intellectual property. China will survive these attacks This is almost certainly true. Unless the US breaks all its commitments and seeks to impose an economic embargo on China, the current friction will not halt Chinese progress, although it may slow it. A greater threat to China would lie in the domestic reaction to a far more hostile external environment. The likely response would be yet tighter political and economic control, rather than the needed shift towards a more market-oriented, more private-sectorled and more consumptiondriven economy. This will be a testing year It will. In fact, it will be a testing century. The right view for the west to take is that China is indeed a significant competitor. Its rise will create many dilemmas for the west and especial-

ly for the US. But China is also an essential partner in ensuring a reasonably cooperative, stable, prosperous and peaceful world. The west needs to think much harder about how such a world should work. The US administration’s view — that the unilateral exercise of US power is all that is needed — will fail. It will not manage the global commons that way, not that the Trump administration cares about that, at all. It will also not achieve stability: if it doubts that, it should look at the cauldron that the Middle East has become after endless interventions. It is essential for westerners to realise that our biggest enemy has become our inability to run our own countries well. Meanwhile, the only future for an interdependent world has to be based on mutual respect and multilateral co-operation. This does not mean accepting every Chinese demand as legitimate. Far from it. Principled resistance is essential. But we are moving from a western-dominated past to a post-western future. We have to make the best of it.

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Ghana Office: Business Day Ghana Ltd; ABC Junction, near Guinness Ghana Limited, Achimota – Accra, Ghana. Tel: +233243226596: email: mail@businessdayonline.com Advert Hotline: 08116759801, 08082496194. Subscriptions 01-2950687, 07045792677. Newsroom: 08022238495 Editor: Anthony Osae-Brown. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.