BusinessDay 17 Sep 2018 by BusinessDay

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news you can trust I **monDAY 17 SEPTEMBER 2018 I vol. 15, no 141 I N300

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Smart buyers go bargain-hunting as stock prices hit new lows How multinationals IHEANYI NWACHUKWU, LOLADE AKINMURELE & EMEKA UCHEAGA

s stock valuations remain depressed, some investors are seeing value and buying stocks with confidence that the current downtrend will not last forever. The ‘smart buyers’ believe there can be no better time to beef up their portfolios in value stocks in anticipation of superior future Return on Investment (ROI) other than now that shares of many large capitalized companies are selling below their intrinsic values. Shares in Heineken’s Nigerian unit jumped 10 percent on Friday, the most since April 2015, as declines make valuations compelling for bargain-hunting traders, said Ifedayo Olowoporoku, analyst at Vetiva Capital. “The rating for Nigerian BrewContinues on page 45

Nigerian Breweries up 10% on Friday are jettisoning Dangote Cement raised to Buy at Chapel Hill Denham Nigeria since advent L-R: Ladi Balogun, chairman, Credit Direct Limited and group chief executive, FCMB Group plc; Adam Nuru, managing director, First City Monument Bank (FCMB); Olasubomi Balogun, founder, FCMB Group; Akinwande Ademosu, managing director, Credit Direct, and Fola Ogunsiakan, director of the company, at the commissioning ceremony of the new head office of Credit Direct, a subsidiary of FCMB Group, in Lagos.

Stakeholders weary of Telco’s dominance in financial inclusion drive ENDURANCE OKAFOR & DIPO OLADEHINDE

obile money is not just changing the economic and social fabric of the world; it is also affecting the

dynamics of payments in African countries. However for Nigeria, which still runs a bank led mobile money model that has made limited progress over the years in financially including its citizens,

concerns over potential dominance by Telco’s may be giving regulators and other stakeholders cause for pause. Sources tell BusinessDay that the country’s financial institutions, telecommunication com-

panies, Central Bank of Nigeria (CBN), Nigerian Communications Commission (NCC) and the Vice President, Yemi Osinbajo, held a meeting recently which was aimed at finding common Continues on page 46

of Buharinomics DIPO OLADEHINDE

INSIGHT

fter a tension soaked campaign that brought President Muhammadu Buhari to power three years Continues on page 45

Citing tough environment, Nigerian crude traders switch to swap deals ... 8m barrels already exchanged in trades ISAAC ANYAOGU

new regional swap market has emerged on the West African sub region as oil traders challenged by a tough operating environment worsened by competition from shale producers, are increasingly Continues on page 45

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Nigeria lags as Ghana plans $350m re-gasification plant ... Africa’s biggest gas reserve holder playing catch up ISAAC ANYAOGU

hana is set to construct the first re-gasification plant in Sub-Saharan Africa at a cost of $350 million, which upon completion will generate close to 2 million tonnes of Liquefied Natural Gas (LNG) meeting up to 30 per cent of the country’s total electricity demand annually, yet Nigeria with Africa’s biggest gas reserves plays catch up. A re-gasification plant allows gas to be imported from distant production fields by liquefying and transporting it to a desired location by sea in gas tankers. The LNG is then reheated and regasified for use by industries, vehicles and power plants. The report by a Kenyan newspaper saidthattheGhanaNationalPetroleum (GNPC) signed a 12-year gas supply agreement with Russia’s Rosneft. Agreements were also signed between officials of Tema LNG Terminal Company Limited which is controlled by Helios and China Harbor Engineering Company,whohavestartedexpanding the Tema port in preparation. “If we are going to succeed in rapidly pushing the industrial development of our country, the supply of gas, which will mean even more affordable rates of power, is now a matter of very great importance for us,’ Nana Addo Dankwa Akufo-Addo said. Experts say Nigeria, with perennial threat of sabotage of pipeline infrastructure would greatly benefit from construction of regasification plants in industrial areas to provide power and grow the manufacturing sector. Olufola Wusu, oil and gas lawyer who helped review Nigeria’s new gas policy told BusinessDay that Nigeria at the moment does not have one regasifacation unit “which is part of

the problem with utilisation of gas domestically, there are so many uses of gas that Nigeria is not benefiting from.” Traditionally, Nigeria’s gas strategy is primarily geared towards exporting the bulk of its production. According to industry figures, Nigeria produces about 8.0 bcf/ d of natural gas but 38 percent of this, the equivalent of 3.05 bcf/d is exported in the form of LNG by the NLNG. Thirty six percent or 2.9 bcf/d serves as re-jection fuel and for other operational uses. Sixteen percent or 1.3 bcf/d of gas produced is dedicated for domestic consumption in power and industries and 0.75 bcf/d or 10 percent is flared. Every year Nigeria exports 22million tonnes per annum (MPTA) yet, the country imported 165.71million litres of Liquefied Petroleum Gas (LPG) between April and June 2018, a 55 percent increase from 107.14million litres recorded in the first quarter of 2018 according to figures by the National Bureau of Statistics,(NBS). “Nigeria’s LPG market is growing very fast and this increase is as a result of the import parity differential on imported LPG against domestic LPG,” Ifeanyi Uwandu, a clean energy business expert and the founder of Kiakia Gas Nigeria Limited, an energy solutions service provider in Africa told BusinessDay. Countries keen to industrialise rapidly are building regasification plants. According to figures by GlobalData, Japan has the world’s highest Liquefied Natural Gas (LNG) regasification capacity of 9.6 trillion cubic feet (tcf). Japan accounts for 28.3 per cent of the total global LNG regasification capacity with 35 active LNG regasification terminals.

•Continues online at www.businessdayonline.com

Economic management team meets on minimum wage this week – Ngige

....Says FG worried over non-payment of salaries in states by many state Governors, ... Buhari to get report soon salaries a situation he described as a major Tony Ailemen, Abuja

orkers in Nigeria will from this week know their fate on the proposed Federal government minimum wage as the National Minimum Wage Committee is set to meet with the Economic Management Team (EMT) headed by Vice President Yemi Osinbajo. The meeting, BusinessDay gathered at the Presidential Villa, over the weekend, is expected to review the reports of the National Minimum Wage Committee and come up with recommendations that will be submitted to President Muhammadu Buhari. This is just as the Labour and Employment Minister, Chris Ngige, insisted that the new Minimum wage policy “must “be implemented before the tenure of the administration ends. According to Ngige, “We have an economic management team meeting on Tuesday, specially dedicated to the issue of national minimum wage to be chaired by the Vice President. For anybody to say that this government is stalling or playing games will be uncharitable, because, we have done what we are supposed to do.” Ngige however expressed concern over the non- payment of

drawback to the implementation of the new minimum wage policy. He also lamented the inability of somestategovernorstoprovidefiguresto beincludedinthedebatebythecommitteenegotiatingthenewminimumwage. According to him” We have the interest of workers at heart, we have not retrenched anybody, there is no embargo on employment, there is no embargo on promotions, we are paying backlog of promotional arrears, and we are backing backlog of transfers and repatriation and the rest of them. “So this government is a labour friendly government.” Former Minister of Housing and member of the committee, Amma Pepple, while speaking with State House Correspondents on Friday, said the report will be presented to the President “very soon.” According to her, “Everything is on course but we need a definite figure from government and of course we have to carry the states along. So, we need those figures so that we can include in our report.” On how soon the new minimum wage will be ready, Pepple said, “We are submitting our report to Mr. President this month.”

•Continues online at www.businessdayonline.com

Umaru Ibrahim (2nd l), MD/CE, Nigeria Deposit Insurance Corporation (NDIC); Uche Olowu (2nd r), president and chairman of council, Chartered Institute of Bankers of Nigeria (CIBN); Seye Awojobi (r), registrar/CEO, and Deji Olarewaju, national treasurer, during the council’s visit to the NDIC management at the corporation’s head office, Abuja.

United States fears Chinese infrastructure loans may bankrupt African borrowers EMEKA UCHEAGA

he United States Senate has expressed concern over multiple bailout requests to the International Monetary Fund (IMF) from countries heavily indebted to China. In a letter seen by BusinessDay, dated August 3, 2018 to US Treasury Secretary, Steve Mnuchin and US Secretary of State, Mike Pompeo, the US Senate stated that there is growing concerns over countries seeking IMF bailout funds after accepting China’s predatory infrastructure financing. The letter states: “In2016,IMFagreedtoa$1.5billion bailout fund for Sri Lanka due to unsustainable debts to China. Pakistan is also looking to pursue a bailout request from IMF to fund the country’s current account deficit and external debts owed to China. In Djibouti, China has lent the nation around $1.4 billion in infrastructure spending, the equivalent of 75 percent of Djibouti’s GDP. A default will see Djibouti lose its national port to China in similar fashion like Sri Lanka after they were forced to give up their national port in a 99 year lease to China after the country defaulted on its debt. China strategi-

cally loans hefty sums to nations in hope that when the country defaults, China will be able to seize a national asset to compensate for the default.” This has not deterred African leaders from continuing to seek fresh loans from China even though their chances of repayment are incredibly slim. Nigeria is currently seeking a fresh $6 billion from the China Exim Bank for the construction of the IbadanKano rail line. This is excluding around $5 billion which President Buhari said Nigeria has borrowed from China in the last three years to fund multiple infrastructure projects around the country in a speech during the FOCAC Round Table meeting in Beijing. This could send Nigeria’s debt stock to China north of $11 billion, equivalent to 50 percent of our current total external debt stock. Ghana is mulling a $50 billion century dollar bond to provide Ghana with the resources to finance infrastructural and industrial development which has the potential to put Ghana’s financial situation in the most precarious condition. The public debt to GDP in 2016 was 73.1 percent. Nana Addo Dankwa Akufo-Addo, President of Ghana, has asked China to invest to provide funding support

to make the bond successful. The $50 billion bond is equivalent to 106 percent of GDP and 45 times Ghana’s net export earnings in 2017. Ghana’s current external reserves sit at around $7.3 billion with most of Ghana’s export earnings coming from mineral resources. Since Gold contributes around 90 percent to Ghana’s mineral export earnings, if China eventually decides to invest in the bond, it is not farfetched that they will be seeking to collaterize the debt with gold mines in Ghana. Speaking on Chinese predatory infrastructure lending programme in Africa, a Kenya political commentator said, “if you have $600 billion in loans in a poor 3rd world country, you will not spend it on rail, you should spend it on providing clean water to villages and road access for farmers. The railway infrastructure project in Kenya stinks because the feasibility study was done by the Chinese, the costing was done by the Chinese, which will then be funded by a Chinese bank and constructed by a Chinese company, then finally the locomotives for the rail travels will be bought from China. And now the latest is that they want to run the rail for 10 years. The whole thing stinks!” he rebuked.

Uncertainty over Adeosun’s resignation adds to investor-angst ... Worry over possible replacement HOPE MOSES-ASHIKE, MICHAEL ANI & CYNTHIA IKWUETOGHU

nvestors and analysts in the Nigerian financial services sector at the weekend expressed concern over uncertainty surrounding news that Kemi Adeosun’s the country’s Finance Minister had resigned. The Finance Minister, has been in the eyes of the storm over “alleged forgery” of National Youth Service Corps NYSC, exemption Certificate. Several analysts who spoke with BusinessDay said investors are positioned and waiting to see who President Muhammadu Buhari will appoint to succeed Adeosun. “Investors would be interested in the economic orientation and

the attribute of her successor, to determine the effect the successor will have on economic policy and development,” said Johnson Chukwu managing director /CEO, Cowry Asset Management Limited. “They will not bother so much on the fact that she has left, because they have factored in the allegations against her which has been on for more than 3 months.” Adeosun was appointed Minister of Finance in November 2015 under the Buhari Led- administration after holding several other positions like being the commissioner of finance for the Ogun state government between 2011 and 2015. The Presidency has refused to confirm or deny reports of the alleged resignation. Special Adviser to the President

on Media and Publicity, Femi Adesina, while responding to enquiries by BusinessDay on the issue over the weekend, declared that “there is nothing to hide. Like pregnancy, if it is true, it will show.” Adesina, who had attended the meeting of Abia State elders who met with President Buhari, did not however speak further on the issue. BusinessDay however gathered on Friday that the Minister was in her “office working.” Uche Uwaleke, head, banking and finance department, Nasarawa State University Keffi, said if the resignation of Kemi Adeosun over allegations of NYSC certificate forgery is true, it bodes well for the image of the country and so will be positive for the Nigerian economy.

•Continues online at www.businessdayonline.com

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Monday 17 September 2018

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Monday 17 September 2018

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Monday 17 September 2018

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Bending the arc and heart of history Punch” newspaper (July 3, 2018)

BASHORUN J.K RANDLE Randle is Chairman/Chief ExecutiveJK Randle Professional Services Chartered Accountants

• Continued from last week

ccording to Onoja, while the school keeps increasing in the numbers of intakes, it does not work on increasing the numbers and quality of teachers. In his record, he pointed out that in one hundred years, King’s College had produced only forty professional teachers. He said: “1982 -1988 set produced thirty-six medical doctors, but never produced a single teacher.” In 100 years, KC has produced 40 teachers only. He posited that education will suffer in our country if the Ministry of Education does not treat the sector like it treats the Health sector. He lamented that while only the medical doctors and qualified health practitioners are allowed in the sector, any non-teaching graduate could be admitted into the teaching profession. Speaking in the same vein, the Deputy Head Teacher, Lead British International School, Abuja, Mr Clement Chukwudifu urged KC authorities to guide against population explosion, adding that population without corresponding qualities in personnel and infrastructure will affect academic performance. vi. Front page editorial: “The ADESEGUN OGUNDEJI Ogundeji is the Deputy Director, Public Affairs, Lagos State Ministry of Education

ithout a doubt, teachers are pretty important to the society. They hold the key to the future since they help to mould future leaders. They don’t just teach, they are critical personalities who nurture young folks to mature, to understand the world and to understand themselves. Evidence shows that teachers, their professional knowledge and skills are the most important factor for quality education in any society. It will be an understatement to state that teachers have an enormous role to play in the education of not only students but the education of a nation. They play multifaceted role in the society. In taking care of pupils and students put in their care for a considerable number of hours on a daily basis (it has been discovered that students/ pupils spend a great proportion of their day under the watchful eyes of teachers), they act proxy parents. By helping to shape the destinies of numerous children, they perform the task of social workers. A teacher could equally be likened

Headline “Rising debt is entrenching poverty” “Statistics on Nigeria’s rising debt profile raise fresh concerns over the direction of the economy on President Muhammadu Buhari’s watch. With the total national debt stock at N23.7tn by March 31 this year and new borrowings underway, the mismatch between infrastructure, productivity and employment on one hand and debt on the other hand, is frightening. Unless Buhari applies the brakes and takes practical measures to grow the economy and create jobs, Nigeria may be headed for another recession and new debt peonage. A report that about N1tn was added to the national debt stock in the first few months of this year is depressing enough. Debt Management Office data reveals that national debt rose from N12.6tn in December 2015 to N22.70tn by March end, this year. This increase of N10.1tn in less than three years suggests that we are headed for a new debt trap. According to the DMO, of the total debt, N6.74tn or $22.07bn is external debt while domestic debt stands at $52.20bn or N15.96tn. In United States dollar terms, the total debt as of March 31 was $74.27bn. In a belated move to curb the borrowing binge, the Federal Government, through the DMO, has instructed deposit money banks not to grant fresh credit, either directly or from the bond market, to the state governments, except with the written approval of the Minister of Finance. Bogged down by debts and dwindling revenues, the states rely on credit to fund their often-unrealistic budgets and pay salaries. Of the domestic debts, the states and the Federal Capital Territory jointly

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Nigeria’s federal and state governments do not place emphasis on productivity: ours is a “sharing” economy. All policies should be directed at creating jobs to reduce the over 40 per cent unemployment and underemployment rate among our youths

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owe $11.05bn or N3.35tn. But while debt statistics are rising, other figures are moving in the opposite direction. About nine million jobs have been lost in the past three years, according to the National Bureau of Statistics. Between January 2016 and September 2017, NBS said 7.95 million Nigerians had lost their jobs with the number of newly unemployed rising from 8.03 million persons by late 2015 to 15.99 million by the third quarter of 2017. A new report by the Brookings Institution says 87 million Nigerians now live in “extreme poverty.” For the African Development Bank, 80 per cent of Nigerians are actually living below the United Nations poverty threshold of $2 per day. Therefore, how do we justify our borrowing with poverty and joblessness stalking the land or infrastructure in tatters? The answer lies in the profligacy of the previous governments and

the cluelessness of Buhari. Inheriting a battered economy laid low by the free-for-all looting under the preceding Goodluck Jonathan administration and crashing oil prices, Buhari needed to come with ingenious initiatives to reduce the debt dependence that had already started before him, direct energy into production and open up the economy to local and foreign direct investment. He has failed on all counts. Refusing to embark on privatisation and liberalisation initiatives, and hit by an oil price crash and depleted buffers, his administration has, like his predecessor, had to rely on domestic and foreign borrowings to fund the budget and critical infrastructure. Budget and National Planning Minister, Udoma Udo Udoma, has said that N1.6tn would be borrowed to finance the 2018 budget, made up of N793bn from the domestic market and N849bn in foreign borrowings. Revenue shortfalls and the addition of N508bn by a cavalier National Assembly raises the possibility of higher borrowings. Some N1.3tn was the planned borrowing in 2017. Sadly, most of the borrowings finance consumption, such as salaries, overheads and debt servicing, rather than infrastructure. This template can only deliver job losses, poverty and insecurity. To change the narrative, Buhari should first go for low hanging fruits, such as immediate privatisation of the four loss-making refineries, Ajaokuta Steel Company; concession the airports and seaports and, most importantly, dismantle the Nigerian National Petroleum Corporation, whose control over the country’s major revenue source has enabled it to hold the economy to ransom. Liberalising the railway sector by repealing the Nigerian Railway Corporation Act of 1955 and working

with the states will open the sector to FDI and create jobs. The government should discontinue the self-defeating recourse to loans for building major rail links when it can, by policy and the necessary political will, attract private investors to do so. Inheriting a civil war-ravaged country, President Paul Kagame of Rwanda has restructured the economy that grew by an average eight per cent per year between 2001 and 2014. He has channelled aid, loans and revenues into infrastructure and opened the economy to investment. East European economies that emerged after the fall of communism also took bold initiatives to change the fundamental structure of their economies: they compete for investments and invest in infrastructure, skills and social services while private capital thrives. Nigeria’s federal and state governments do not place emphasis on productivity: ours is a “sharing” economy. All policies should be directed at creating jobs to reduce the over 40 per cent unemployment and underemployment rate among our youths. FDI is critical: rather than go to China for loans for rail, road and power projects, why not simply allow the private sector to move in as India is doing? Dealing more effectively with corruption, blocking revenue leakages, reducing the size and cost of governance, as well as radical overhaul of revenue-generating agencies are steps that need to be taken to reduce borrowing and boost the economy. Nigeria exited a three decade-old external debt trap in 2005; Buhari should not drive us into a new one”

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Ambode’s new deal for Lagos teachers to a miracle worker who is well schooled in the art of helping a student to discover his/her untapped potentials. Whenever the innate but largely hidden potential of a student comes in contact with the therapeutic skill of a teacher, a miracle occurs. It is in realization of the key role teachers perform that the Akinwunmi Ambode Administration in Lagos State has continued to make efforts towards motivating them to put their best into raising and developing the various skills required by the future generation of leaders that we all can be proud of. The love of the current administration for teachers and the teaching profession has been succinctly captured when Governor Akinwunmi Ambode opened a window of insight into what he thinks of teachers. He described them as “the catalyst to realize any meaningful, functional, quality and effective education delivery”. This combined with the professionalism, passion, dedication and love of the Deputy Governor of Lagos State, Dr. Idiat Oluranti Adebule for teachers, pupils and everyone concerned in moving the Education Sector forward. Little wonder that the Lagos State government has continued to consolidate on the many reforms initiated

to adequately empower teachers and appropriately reward them. Presently, the teaching profession which used to be derided a few decades ago, leading to dearth of teachers in our schools, especially, the public schools has been dressed in the colourful gown of a beautiful bride by the Akinwunmi Ambode led Administration. In the last three years, over 2000 new teachers have been employed to help in grooming our future leaders. Currently, the process of recruiting 2,200 teachers into the State’s Teaching Service, with a view to further reducing the pupils/teacher ratio and improves teaching and learning, has aroused the interest of many job seekers. 65,818 applications were received for the 2, 200 teaching job opportunities which were recently made open to the public by the State Government. The job portal was closed at 12 midnight of Thursday, 6th September, 2018. A breakdown of the applications shows that 44,725 people will compete for the 1,200 jobs in the Public Secondary Schools category while 21,093 applied to teach in the public primary sector. The rush for these appointments that will put food on the table of 2,200 people and their dependants is largely a function of the better deal that the State government has extended to teachers in the

State’s public schools. Teachers’ salary has been consistently paid regularly on the 23rd day of every month. This has helped them to plan effectively on their income and expenditure. Hence, they are now immune from what in Public Service parlance is referred to as “financial embarrassment”. Interestingly, this good deal for teachers in the State has equally been extended to retired teachers who now receive their pensions and gratuities promptly and without stress. The underlining basis for this is that once those that are still actively engaged in the Public Service are aware that the system will take adequate care of them when they exit the service, they will definitely put in their best to move the State forward. In the last one year, N1, 056,878,908.23billion was paid as pension benefits to retirees in the Teaching Service as accrued pensions and gratuity. Equally, all promotable officers since 2015 to date have been promoted as at when due while training of officers has also become a regular occurrence. By the plans for 2018 training programme, a total of 11,491 teachers are expected to be trained by the end of year. As part of staff welfare package, car loans were awarded to 491 beneficiaries to the tune of N40, 170, 000.00k

and N30Million Housing Loan was approved for 38 (Thirty Eight) beneficiaries in the Teaching Service in the last few months. To boost the morale of teachers and achieve healthy competition whilst promoting and rewarding excellence, diligence, dedication, hardwork and commitment to work; Education Merit Award is organized annually in honour of outstanding performers in the various categories of Award in the Education Sector of Lagos State. More than 100 Education Merit Awards are given out with the Star prize of a brand new car awarded to the Best Teacher in both the Primary Secondary Schools’ categories. Apart from improved teachers’ welfare, the state government’s huge investment in education infrastructure has also contributed immensely to the improvement of education in the State. These include the supply of Teachers and Principal furniture to all schools, a march away from the era when such officers use broken furniture to their discomfort.

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Toward ‘America First’ NAFTA

DAN STEINBOCK Dr Dan Steinbock is the founder of Difference Group and has served as research director at the India, China and America Institute (USA) and visiting fellow at the Shanghai Institutes for International Studies (China) and the EU Center (Singapore). For more, see https://www.differencegroup.net/

ast Friday, the trade talks between the United States and Canada broke off without an agreement. The negotiations on the revised North American Free Trade Agreement (NAFTA) are not over, however. The talks continue and US Trade Representative Robert Lighthizer will meet again Canada’s foreign minister Chrystia Freeland. Trump’s art of the deal In the past year, the US and Mexican negotiators have been able to agree on a tentative outline for a new pact. The two also claim progress in the socalled “rules of origins” for automobiles, which govern how much of a car must be made within the NAFTA countries to avoid tariffs. According to current rules, any car sold in North America that includes 62% of parts made within the region are exempt. However, the Trump administration wants to raise the figure to 75% hoping that more parts would be made in the U.S. The current talks remain focused on agricultural issues, particularly the dairy industry. President Trump has called Canada’s dairy regulations protectionist and harmful to

U.S. dairy farmers. In reality, both countries have their subsidy systems. Canada’s dairy sector operates under a regulated supply management system, whereas the U.S. government supports dairy farmers directly. Reportedly, U.S. support equaled 73% of U.S. dairy market returns in 2015. In the dairy industry, the subsidies will artificially maintain lower prices, which effectively deter more competitive dairy industries, particularly from emerging and developing markets. In the automobile industry, the new NAFTA will increase the costs of cars sold in North America, which, in turn, will reduce offshoring, disrupt the ecosystems of car producers and translate to higher prices to consumers. Under the revised NAFTA, a share of the car parts would have to be built by workers making at least $16 an hour. Adding vacation weeks and assuming 40 hours a week that ends up being an estimated $33,300 per year in salary. In the U.S., that’s only 55% of average per capita income; in Canada, almost 75%; but in Mexico, a whopping 360%, or 3.5 times higher than average per capita income. Under such rules, Mexico would gain the most, America still the least The other implication is even more important. If the Trump administration will seek to project its revised NAFTA as a blueprint elsewhere in the world (as the Clinton administration tried with its NAFTA deal in the ‘90s), it would mean a war against all offshored production capacity outside the U.S – which in the past four decades have sustained relatively low prices for consumers in North America, while boosting living standards in less-prosperous economies. If Canada will not agree to a revised NAFTA, Trump has vowed to sign a trade deal with just Mexico. He expects Canadian concessions because he thinks that the country has “no choice” but to make a deal. However, Freeland said on Friday

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If the Trump administration will seek to project its revised NAFTA as a blueprint elsewhere in the world …. it would mean a war against all offshored production capacity outside the U.S – which in the past four decades have sustained relatively low prices for consumers in North America, while boosting living standards in less-prosperous economies

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that “Canada will only sign a deal which is good deal for Canada.” Nevertheless, President Trump has informed Congress that he anticipates a signed trade deal with Mexico and possibly Canada in 90 days, according to U.S. Trade Representative Lighthizer’s statement. From North American NAFTA to America First NAFTA In the past year, Canada and Mexico have been hedging their bets against a potential NAFTA collapse by pushing for deals with new partners, particularly with China and other Asian countries. NAFTA’s record has proven mixed since its inception in 1994. While the

agreement has broadly benefited consumers, critics complain that it has contributed to investment outflows, unemployment, and offshoring. Nevertheless, most Americans support NAFTA, as does the majority of Canadians. However, NAFTA has not boosted consumer welfare significantly in Mexico, where per capita incomes have been lagging behind those in the U.S. and Canada. In the U.S., the ongoing tariff wars and increasing friction with U.S. trade partners in the Americas, Europe, and Asia has added to uncertainty in the mid-term elections. In turn, Mexico is heading toward a dramatic transformation, which is precisely why Trump wants a signed deal before December when Mexico’s president will change. Last July, the center-left López Obrador won a landslide victory in Mexico’s presidential election. While Obrador has long been a critic of NAFTA, his center-left election platform was more moderate. Unlike the incumbent center-right President Enrique Peña Nieto, he would not see the failure of the NAFTA renegotiation as fatal for Mexicans. In Canada, conservatives have mocked Justin Trudeau’s government, posturing for the 2019 elections. Nevertheless, liberals have been rising in recent polls as Canadians rally behind Trudeau against Trump tariffs. As the three-way talks with Canada and Mexico fell apart in June, the U.S. has been conducting one-on-one talks with Mexico, ignoring Canada. The separate bilateral trade deal with Mexico became possible only after the U.S. dropped its “sunset clause”; a trade mechanism to force a renegotiation of NAFTA every five years if the new terms failed to foster “more balanced trade” between the three member countries. Relying on his imperial rule-anddivide strategy, Trump wanted U.S. Trade Representative Lighthizer to force an agreement, even a diluted

one, with Mexico, so that Canada’s Trudeau would have to sign the final “America-First-NAFTA” deal. Nevertheless, if and when the final treaty is signed, it will not be the one that Trump initially wanted. Moreover, due to general distrust on the Nieto government, Obrador is likely to monitor both the fine print and the execution of the treaty. While Trudeau does need a deal, he is trapped between an unwillingness to settle for a “bad NAFTA” and an inability to reject a revised NAFTA treaty if both the U.S. and Mexico agree on final terms. The take-it-or-leave-it stance The goal of the NAFTA talks – and other FTA talks by the Trump administration - is not to achieve multilateral compromise. To the White House, that is bad history. Instead, the strategic objective of the Trump White House is either to redefine the terms on the basis of U.S. economic leverage and unipolar geopolitics or – if that is not acceptable to other parties – to withdraw the U.S. from such FTAs. That’s the strategy that Trump will soon try to force on the proposed new Trans-Pacific Partnership (TPP) in Asia Pacific, the new transatlantic TTIP with Europe, and other FTAs elsewhere. In the Bush era, the White House defined loyalty in terms of security partnerships. As President Bush put it, “Either you are with us or you are against us.” In the Trump era, the definition has changed, as evidenced by President Trump’s rhetoric. Now the assumption is, “Either you accept our redefined terms, or you get nothing.” This commentary is based on Dr Steinbock’s recent briefing on “NAFTA amid ‘America First’ Headwinds.”

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The role of the internal audit function in corporate governance

BISI ADEYEMI Bisi Adeyemi is the Managing Director of DCSL Corporate Services Limited. For comments and reactions, kindly contact badeyemi@dcsl.com.ng.

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nternal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.”- Institute of Internal Auditors Internal Audit has evolved significantly from an essentially accounting oriented function to more of a management function in view of the support the role provides to the Board in the performance of its oversight

function. Indeed, industry regulators require that that the Head of Internal Audit should not be below the rank of an Assistant General Manager. Within the context of corporate governance, an Internal Auditor provides an independent and objective assessment of the appropriateness or otherwise of the organization’s internal control structures and processes. Responsibilities of the function include: a. Develop an audit plan to evaluate the institution’s financial and operational controls. b. Assess the efficient use of resources. c. Determine the level of compliance with laws, regulations, company policies and procedures. d. Investigate cases of misappropriation and fraud. e. Follow-up on the adequacy of corrective actions. Keep the Audit Committee and Board fully informed on a timely basis of the activities of the Internal Audit Department. Support the Audit Committee in fulfilling its responsibilities. A major challenge faced

by the Internal Audit Function in ensuring sound corporate governance practice is that of independence. The SEC Code of Corporate Governance for Public Companies requires the Internal Audit function to report directly to the Audit Committee “while having a line of communication with the CEO/MD”. In practice, this is not always the case. More often than not, the Internal Auditor reports directly to the CEO who appraises his performance and can dismiss him. Indeed, the NAICOM Code of Corporate Governance for Insurance Companies provides that the “Head of the Internal Audit Unit shall report directly to the MD/ CEO but a copy of the Audit Report shall be forwarded to the Audit Committee on regular basis”. Where the insurance company is a public company, it is expected to comply with the SEC Code and in the event of conflict with the Industry specific Code, the Code with the stricter requirement prevails. However, the exposure draft of the amended NAICOM Code requires that the Head of Internal Audit report directly to the Board Audit Committee, with a copy of

the report to the MD/CEO. In an attempt to guarantee the objectivity of the Internal Audit Function, the CBN Code of Corporate Governance in addition to the requirement that the Head of Internal Audit shall report directly to the Board Audit Committee (BAC), provides that the BAC shall be responsible for assessing the performance and objectivity of the Internal Audit Function as well as recommend to the Board the appointment and if necessary the dismissal of the Head of Internal Audit. A similar provision is contained in the exposure draft of the Nigerian Code of Corporate Governance. In practical terms, it is suggested that the performance appraisal of the Internal Audit Executive be handed proportionally by the respective Board Committee and the CEO – with the Committee taking the larger proportion. The SEC Code of Corporate Governance and the exposure draft of the NAICOM Code provide that an external assessment of the effectiveness of the Internal Audit Function be undertaken at least once every three years by a qualified independent

reviewer. It is also expected that the purpose, authority and responsibility of the Internal Audit Function be clearly defined in an Audit Charter approved by the Board. The Board has a responsibility to ensure that the Internal Audit Unit is adequately staffed by competent staff who receive ongoing training and development. There is usually a tendency to overlook staff of the Internal Audit Function when drawing up training plans and more often than not most Internal Audit Units have a deficiency of qualified manpower. The independence of the Internal Audit function should also be safeguarded for maximum effectiveness. On Thursday, 25th October 2018, DCSL will be hosting a Masterclass themed “The Role of the Internal Audit Function in Corporate Governance” where the subject matter of this publication will be discussed extensively. Kindly contact ntaiwo@dcsl.com. ng or 08037699347 for registration and further details.

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EDITORIAL ADVISORY BOARD

Monday 17 September 2018

The debt peonage is finally here

n our editorial of July 25, 2018, we warned of an impending debt peonage if the large scale of borrowings, at usually high interest rates, were not curbed by the government. In a poor attempt to defend the borrowings of the government, The Debt Management Office (DMO) wrote a rejoinder to our editorial, which we published on August 2, 2018, denying any debt crises and assuring the reading public that regardless of Nigeria’s high debt to service ratio, Nigeria’s borrowing is sustainable and that the “government has also embarked on several revenue boosting initiatives with a view to increasing the size of the revenue available to finance the budget and reduce the debt service to revenue ratio.” For added measure, when we advised the government to seek loans from multilateral agencies with very low interest rates instead of approaching shylock investors and borrowers, the DMO accused us of a poor understanding of the lending policies of multilateral agencies and that Nigeria could not approach these agencies because she has no balance of payment crisis. The DMO puts Nigeria’s total (federal, state and FCT) debt stock, as at June 30, 2018, at N22.38 trillion (or $73.2 billion) representing 19 percent of GDP. This comprises external debt of

about N6.75 trillion (or USD22.08 billion) and domestic debt of about N15.629 (or USD51.12 billion). Based on the debt to GPD ratio, the Director-General of the DMO, Pat Oniha, has not missed an opportunity to remind Nigerians that “Nigeria’s borrowing remains sustainable in the short, medium to long term levels, guided by the DMO objective of prudence” and has even gone ahead to review the self-imposed country specific debt limit from 19.39 percent to 25 percent in the medium-term of 2018-2020 thus providing scope for more government borrowing. But the federal government and the DMO have continued to rely on the low debt to GDP ratio to lull the country into a feeling of complacency that all is well whereas they have disgracefully led the country into another embarrassing debt trap. Data from the Office of the Accountant General of the Federation and the Budget Office for the period January to June 2017 indicate that the total revenue accruable to the federal government was N1.3 trillion while the debt service for the first half of the year was N927.74 billion. Therefore, debt service to revenue ratio between January and June 2017 works out at about 70 percent – a figure quite high and unsustainable by global standards. Of course the International Monetary Fund (IMF) in its most recent article IV Consultation

report raised a red flag regarding the debt level which was “creating some form of vulnerabilities.” Even the result of the 2017 Debt Sustainability Analysis exercise by the DMO admitted that ‘’the ratios of external debt service-toexports and external debt-serviceto-revenue also deteriorated throughout the projection period thus, indicating that Nigeria’s total debt portfolio is highly susceptible to revenue shocks’’. So, whereas the DMO want Nigerians to believe government revenues will rise rapidly to lower the revenue to debt service ratio, in reality, government revenues have consistently been declining to this day with all revenue targets been missed by wide margins. Yet the government has continued to borrow. The federal government is currently seeking a fresh $6 billion from the China Exim Bank for the construction of the Ibadan-Kano rail line. This is excluding around $5 billion which President Buhari said Nigeria has borrowed from China in the last three years to fund multiple infrastructure projects around the country. This could send Nigeria’s debt stock to China alone north of $11 billion. The results of unregulated borrowings from China are beginning to show. Recently, the United States Senate expressed concern over multiple bailout requests to the International Monetary Fund (IMF) from countries heavily indebted to China. In a letter dated

August 3 to US Treasury Secretary, Steve Mnuchin and US Secretary of State, Mike Pompeo, the US Senate stated that there is growing concerns over countries seeking IMF bailout funds after accepting China’s predatory infrastructure financing loans. In 2016, IMF agreed to a $1.5 billion bailout fund for Sri Lanka due to unsustainable debts to China. Pakistan is also looking to pursue a bailout request from IMF to fund the country’s current account deficit and external debts owed to China. In Djibouti, China has lent the nation around $1.4 billion in infrastructure spending, the equivalent of 75 percent of Djibouti’s GDP. A default will see Djibouti lose its national port to China in similar fashion like Sri Lanka after they were forced to give up their national port in a 99 year lease to China after the country defaulted on its debt. China strategically loans hefty sums to nations in hope that when the country defaults, China will be able to seize a national asset to compensate for the default. Alarm bells ought to start ringing across Nigeria. With the government’s inability to increase its revenues, any decline in the price of oil will automatically throw Nigeria into a huge debt crisis. We hope Nigeria will not be required to cede its strategic national assets to China in the near future over its inability to meet its debt obligations.

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Monday 17 September 2018

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BUSINESS DAY

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Monday 17 September 2018 In Association With

The Brexit negotiations

The unlikely survival of May’s Chequers plan for Brexit Despite being shot down from all sides, Theresa May’s Chequers plan for Brexit refuses to die

OMPROMISES have few friends. So it has proved with the Chequers plan for Brexit, which proposes staying in the single market for goods along with a complex “facilitated customs arrangement” chiefly designed to avert a hard border in Ireland. Brexiteers hate being tied closely to Brussels. Pro-Europeans think the plan is worse than continuing membership. And the EU sees both of its main features as unworkable and undermining the integrity of its single market. The noisiest attacks come from hardline Tory Brexiteers. Two ministers, Boris Johnson and David Davis, quit the cabinet in July over Chequers. They want Brexit to be based on a Canada-style free-trade deal instead. Yet this week the Brexiteers failed to come up with the detailed alternative plan that they had long promised. A paper claiming that a no-deal Brexit would boost the economy attracted much ridicule. So did a purported plot by Tory MPs to oust Theresa May as prime minister. Yet Tory hardliners believe that, even if they cannot topple Mrs May, they have enough votes to scupper a Chequers deal in Parliament. At the same time, Chequers is disappointing to the hardliners’ opponents. They see rule-taking in the single market for goods, with no privileged access for services, as a backward step. Several would prefer to be like Norway, which as a member of the European Economic Area is fully in the single market. Some Tories are arguing for the Norway option as a temporary home that would both avoid the pain of a no-deal Brexit and create the time and space needed to negotiate a more comprehensive free-trade deal. Others like the idea of another referendum, especially if Parliament cannot pass any deal. Across the channel other EU countries are closely watching Britain’s political chaos. They expect Mrs May to have a torrid time with Mr Johnson and his friends at the Conservative Party’s conference in two weeks’ time (see article). They know that Labour is likely to oppose any deal she brings back from Brussels. That this would make it hard

Slow train to Jerusalem

Why Israel still moves on Ottoman-era railway tracks The old line follows a donkey track

SRAELI politicians and entrepreneurs like to present their country as a global centre of transport technology. That was underlined last year by Intel’s purchase for $15bn of Mobileye, which develops software for self-driving cars. But driving from Tel Aviv to Mobileye’s headquarters in Jerusalem, only 55km (34 miles) as the drone flies, can be an hour-long crawl along a

to win parliamentary approval will colour their approach to Mrs May. Why concede ground over a deal they dislike if it is heading for rejection at home in any event? The timetable is now desperately tight. Brexit is due to happen on March 29th 2019. Next week Mrs May will lobby her fellow EU leaders at an informal summit in Salzburg. They will listen politely and are likely to avoid declaring Chequers dead. Yet hopes that leaders might then soften the strict guidelines they have set for the Brexit talks will be dashed. Only at the October summit will they seriously engage with Brexit, for the first time. There is then likely to be an emergency summit in mid-November that tries to agree to a deal, although many in Brussels consider December a more realistic goal. What sort of deal might be achievable? In Brussels the emphasis is on the formal Article 50 withdrawal treaty that has to be agreed and ratified before Brexit, whereas details around future trade relations will be negotiated afterwards. Most of the withdrawal treaty, on money, EU citizens and so on, is settled, but with one big outstanding issue: a backstop to avoid a border in Northern Ireland in all circumstances, even if no deal can be reached.

The EU claims that last December Mrs May acquiesced to a backstop that keeps Northern Ireland in the customs union and single market even if the rest of the country leaves both. Mrs May says this is unacceptable since it implies a border in the Irish Sea. Yet Brussels is unwilling to apply the backstop to the whole country, insisting it must be for the province alone. It also downplays worries about a border in the Irish Sea. Already inspections of meat products take place on ferries. Adding extra customs checks on all goods would hardly amount to the EU annexing Northern Ireland—and would surely be less damaging than the alternative of border checks between north and south. It may be possible to fudge some aspects of the backstop, but EU diplomats say it has to be legally operational. Even so Mrs May could accept it on the ground that it will never come into force as a future trade deal supersedes it. That points to ensuring that a political agreement on the future deal is reasonably specific about its terms. Yet Mujtaba Rahman of the Eurasia Group, a consultancy, sees this as tricky, since the other EU countries want to make clear that the future arrangement is not one that is overtly based on the

Chequers model. Hence the appeal of another idea that would, in effect, kick the can down the road. The detailed withdrawal treaty would still have to be agreed and ratified, but the political declaration on the future trade relationship would be kept largely aspirational. Mrs May could still maintain that this keeps the Chequers plan going (despite what the EU says). If the declaration avoids too many specifics and gestures towards a deep and comprehensive free-trade agreement, the thinking is, it will be harder to attack. Surely neither Brexiteers nor Remainers can easily object to a vague statement of intent? Such an ambiguous, “blind” Brexit may run into problems with the European Parliament, which will have to ratify it. But the bigger obstacle will be Westminster. Mrs May has proved a rotten salesman for Chequers, both at home and abroad. Many MPs say they would be unhappy to be asked to approve a withdrawal treaty, including paying some £39bn ($50bn) to the EU, without firmer guarantees about the exact nature of a future trade deal. Yet officials think that Mrs May could still win the day, mainly by using different arguments for the various factions in her party.

jammed motorway. Going by train is a poor alternative. That takes an hour and 40 minutes and ends at an isolated temporary station. Exactly 126 years since the first train arrived in Jerusalem from the Mediterranean coast, a new high-speed rail link, built at a cost of 7bn shekels ($2bn), is scheduled to start running between Tel Aviv and Jerusalem on September 24th. But with just three weeks to go, Israel’s transport ministry is not sure it will be ready. The inauguration has already been postponed twice. This is par for the course for a project that started in 2001 and was originally planned for completion by 2008. If the line from Jerusalem does open this month, it will run only as far as Tel Aviv’s Ben Gurion Airport. The rest of the route will not be electrified until next year. The promise of reaching Israel’s capital from Continues on page 15

Monday 17 September 2018

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BUSINESS DAY

In Association With

The Economist at 175

A manifesto for renewing liberalism Success turned liberals into a complacent elite. They need to rekindle their desire for radicalism

IBERALISM made the modern world, but the modern world is turning against it. Europe and America are in the throes of a popular rebellion against liberal elites, who are seen as self-serving and unable, or unwilling, to solve the problems of ordinary people. Elsewhere a 25-year shift towards freedom and open markets has gone into reverse, even as China, soon to be the world’s largest economy, shows that dictatorships can thrive. For The Economist this is profoundly worrying. We were created 175 years ago to campaign for liberalism—not the leftish “progressivism” of American university campuses or the rightish “ultraliberalism” conjured up by the French commentariat, but a universal commitment to individual dignity, open markets, limited government and a faith in human progress brought about by debate and reform. Our founders would be astonished at how life today compares with the poverty and the misery of the 1840s. Global life expectancy in the past 175 years has risen from a little under 30 years to over 70. The share of people living below the threshold of extreme poverty has fallen from about 80% to 8% and the absolute number has halved, even as the total living above it has increased from about 100m to over 6.5bn. And literacy rates are up more than fivefold, to over 80%. Civil rights and the rule of law are incomparably more robust than they were only a few decades ago. In many countries individuals are now free to choose how to live—and with whom. This is not all the work of liberals, obviously. But as fascism, communism and autarky failed over the course of the 19th and 20th centuries, liberal societies have prospered. In one flavour or another, liberal democracy came to dominate the West and from there it started to spread around the world.

Laurels, but no rest Yet political philosophies cannot live by their past glories: they must also promise a better future. And here liberal democracy faces a looming challenge. Western voters have started to doubt that the system works for them or that it is fair. In polling last year just 36% of Germans, 24% of Canadians and 9% of the French thought that the next generation would be better off than their parents. Only a third of Americans under 35 say that it is vital they live in a democracy; the share who would welcome military government grew from 7% in 1995 to 18% last year. Globally, according to Freedom House, an NGO, civil liberties and political rights have declined for the past 12 years—in 2017, 71 countries lost ground while only 35 made gains. Against this current, The Economist still believes in the power of the liberal idea. Over the past six months, we have celebrated our 175th anniversary with online articles, debates, podcasts and films that explore how to respond to liberalism’s critics. In this issue we publish an essay that

is a manifesto for a liberal revival—a liberalism for the people. Our essay sets out how the state can work harder for the citizen by recasting taxation, welfare, education and immigration. The economy must be cut free from the growing power of corporate monopolies and the planning restrictions that shut people out of the most prosperous cities. And we urge the West to shore up the liberal world order through enhanced military power and reinvigorated alliances. All these policies are designed to deal with liberalism’s central problem. In its moment of triumph after the collapse of the Soviet Union, it lost sight of its own essential values. It is with them that the liberal revival must begin. Liberalism emerged in the late 18th century as a response to the turmoil stirred up by independence in America, revolution in France and the transformation of industry and commerce. Revolutionaries insist that, to build a better world, you first have to smash the one in front of you. By contrast, conservatives are suspicious of all revolutionary pretensions to universal truth. They seek to preserve what is best in society by managing change, usually under a ruling class or an authoritarian leader who “knows best”. An engine of change True liberals contend that societies can change gradually for the better and from the bottom up. They differ from revolutionaries because they reject the idea that individuals should be coerced into accepting someone else’s beliefs. They differ from conservatives because they assert that aristocracy and hierarchy, indeed all concentrations of power, tend to become sources of oppression. Liberalism thus began as a restless, agitating world view. Yet over the past few decades liberals have become too comfortable with power. As a result, they have lost their hunger for reform. The ruling liberal elite tell themselves that they preside over a healthy meritocracy and that they have earned their privileges. The reality is not so clear-cut. At its best, the competitive spirit

of meritocracy has created extraordinary prosperity and a wealth of new ideas. In the name of efficiency and economic freedom, governments have opened up markets to competition. Race, gender and sexuality have never been less of a barrier to advancement. Globalisation has lifted hundreds of millions of people in emerging markets out of poverty. Yet ruling liberals have often sheltered themselves from the gales of creative destruction. Cushy professions such as law are protected by fatuous regulations. University professors enjoy tenure even as they preach the virtues of the open society. Financiers were spared the worst of the financial crisis when their employers were bailed out with taxpayers’ money. Globalisation was meant to create enough gains to help the losers, but too few of them have seen the pay-off. In all sorts of ways, the liberal meritocracy is closed and selfsustaining. A recent study found that, in 1999-2013, America’s most prestigious universities admitted more students from the top 1% of households by income than from the bottom 50%. In 1980-2015 university fees in America rose 17 times as fast as median incomes. The 50 biggest urban areas contain 7% of the world’s people and produce 40% of its output. But planning restrictions shut many out, especially the young. Governing liberals have become so wrapped up in preserving the status quo that they have forgotten what radicalism looks like. Remember how, in her campaign to become America’s president, Hillary Clinton concealed her lack of big ideas behind a blizzard of small ones. The candidates to become leader of the Labour Party in Britain in 2015 lost to Jeremy Corbyn not because he is a dazzling political talent so much as because they were indistinguishably bland. Liberal technocrats contrive endless clever policy fixes, but they remain conspicuously aloof from the people they are supposed to be helping. This creates two classes: the doers and the done-to, the thinkers and the thought-for, the policymakers and the policytakers.

The foundations of liberty Liberals have forgotten that their founding idea is civic respect for all. Our centenary editorial, written in 1943 as the war against fascism raged, set this out in two complementary principles. The first is freedom: that it is “not only just and wise but also profitable…to let people do what they want.” The second is the common interest: that “human society…can be an association for the welfare of all.” Today’s liberal meritocracy sits uncomfortably with that inclusive definition of freedom. The ruling class live in a bubble. They go to the same colleges, marry each other, live in the same streets and work in the same offices. Remote from power, most people are expected to be content with growing material prosperity instead. Yet, amid stagnating productivity and the fiscal austerity that followed the financial crisis of 2008, even this promise has often been broken. That is one reason loyalty to mainstream parties is corroding. Britain’s Conservatives, perhaps the most successful party in history, now raise more money from the wills of dead people than they do from the gifts of the living. In the first election in unified Germany, in 1990, the traditional parties won over 80% of the vote; the latest poll gives them just 45%, compared with a total of 41.5% for the far right, the far left and the Greens. Instead people are retreating into group identities defined by race, religion or sexuality. As a result, that second principle, the common interest, has fragmented. Identity politics is a valid response to discrimination but, as identities multiply, the politics of each group collides with the politics of all the rest. Instead of generating useful compromises, debate becomes an exercise in tribal outrage. Leaders on the right, in particular, exploit the insecurity engendered by immigration as a way of whipping up support. And they use smug left-wing arguments about political correctness to feed their voters’ sense of being looked down on. The result is polarisation. Sometimes that leads to paralysis, sometimes to the tyranny of the majority. At worst it emboldens far-right authoritarians.

Burmese generals should stand trial... Continued from page 14

its business centre in less than half an hour is still remote. The delays are partly because of a seven-year row with environmental groups worried about damage to nature reserves. Politics is also partly to blame. Germany’s Deutsche Bahn was originally supposed to have advised on the project, but pulled out in 2011 amid a controversy over a few miles of track that pass through areas occupied by Israel in 1967. And funding rows between the transport minister and the treasury delayed the purchase of carriages. As a result, there will be only one or two trains an hour from Jerusalem until 2020. The current rail link between Jerusalem and Tel Aviv has remained nearly unchanged since it was inaugurated under the Ottoman empire in 1892. The first line was the initiative of a Jewish businessman and was financed by French Catholics to help pilgrims travelling from the port of Jaffa to the holy city. It was upgraded by the British in 1920 and again by Israel. But it follows much the same winding route along an ancient donkey trail. Trains going up along the single-track railway through the Jerusalem Hills often have to slow to 25kph on the bends and to wait in passing loops for the train coming the other way. Plans for a new line were mooted in 1971, but the government invested in motorways instead. It has also lowered taxes on new cars, leaving Israel’s roads four times more clogged up than those of other rich countries in the OECD. Time to change track.

BUSINESS DAY

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Monday 17 September 2018 In Association With

End of the road

Zambia slumps towards another debt crisis Corruption and easy money are a toxic combination

HE cars in Lusaka are moving even more slowly than usual: hidden speed cameras have spooked drivers in Zambia’s capital. The government is desperate for cash, so motorists who speed are being fleeced. The regime has also announced taxes on boreholes, internet calls and even weather reports. “The pressure is falling on the ordinary people,” complains John Phiri, a taxi driver. “All because the state has run up too much credit.” Concern on the street is mirrored in markets. Of the 75 countries whose bonds make up the Bloomberg Barclays Emerging Markets Index, a basket of sovereign debt, none has performed as badly in 2018 as Zambia (see chart). Given crises in Argentina and Turkey, that is some achievement. “The market is pricing in a default,” notes Gregory Smith of Renaissance Capital, an investment bank. Zambia is therefore a warning for other African countries which also received debt forgiveness in 2005-06 but today find themselves on the verge of another crisis. Zambia’s economy made a good start to the century. Growth averaged more than 7% a year from 2000 to 2010, buoyed by high

prices for copper, which makes up 80% of exports. (The top destination for Zambia’s exports is Switzerland—home to Glencore, a commodities trader.) The boom meant that aid, which amounted to 57% of national income in 1995, was just 5% by 2010. The boom ended in about 2011. Copper prices fell and growth slowed. The Patriotic Front (PF), which still rules Zambia, was elected that year. It soon embarked on a spending splurge. As well as new roads, hospitals and airports, the PF has almost doubled the civil-service wage bill in real terms and expanded the number of districts from 72 to 115 so as to dole out more patronage. Extra spending has been funded by borrowing. Public debt increased rapidly, from 21% of GDP in 2011 to 59% at the end of 2017. Roughly two-thirds of that borrowing is denominated in foreign currency and owed to Chinese creditors or Western investors who bought its Eurobonds: $3bn worth of dollar bonds issued in Europe. Paying back these debts is putting huge pressure on Zambia’s finances. The biggest item in the budget used to be education. Today it is debt service, with nearly

a quarter of government spending going to pay back loans. The fiscal deficit for 2018 is set to be more than 9% of GDP. Civil servants were not paid on time last month. When pay was delayed last year a government spokesperson helpfully recommended that bureaucrats start breeding chickens. Arrears for government contractors are mounting. This in turn is hurting businesses. The share of bad loans on banks’ books has increased to 13% from 8% two years ago. Zambia is one of 18 African countries the IMF says is at risk of “debt distress”—double the number in 2013. A further eight are already in distress (meaning they are delinquent or in default).

Yet Zambia is resisting the fund’s call for restraint and relations with it have all but broken down. Talks over a bailout are on ice and, under pressure from Zambia, the IMF has reassigned its representative. It is not as if the money has been well spent. Much has been spent haphazardly—or, in some cases, stolen. “People are asking: where did all the money go?” says Geoffrey Chongo of the Jesuit Centre for Theological Reflection, a local charity. One answer is tarmac. Since 2011 Zambia has announced plans to build 9,000km of roads. Few doubt the need for better infrastructure. But the country has overpaid. A study by the World Bank in 2017 found that Zam-

bia paid $360,000 per kilometre, which is more than twice the African average. And since upkeep has been neglected, many new roads are already potholed. Other deals have been similarly wasteful. Zambia bought 42 fire engines for $1m each—a 70% mark-up. And it has regularly paid over the odds for infrastructure built by state-owned Chinese companies. Take the contract for the new airport terminal in Lusaka (known locally as “the hamburger” though it looks more like a bao sandwich), which has been designed to accommodate a rather improbable ten-fold increase in passenger traffic. These deals are opaque. Typically loans are agreed between Zambian government departments and China’s Export-Import Bank, which then lends directly to the Chinese contractor. Only later, if at all, are the true costs revealed. Many worry that some deals remain undisclosed, and that President Edgar Lungu will hand over state assets such as ZESCO, the energy utility, to China in exchange for debt relief. A Zambian delegation returned last week from Beijing, where it attended the triennial summit of Chinese and African leaders.

War and cheese

The world’s least blessed cheesemakers are in Congo How dairy farmers cope with chaos

ASTERN CONGO is best k n o w n f o r p ro d u c i n g coltan, a mineral used in mobile phones, and refugees. But it also makes rather good cheese. At his dairy on the hillside of Masisi in North Kivu, Lambert Sinamenye churns out 12 rounds a day. After maturing for 21 days they taste like Gouda, only more salty, and are named “Goma”, after the provincial capital, 55km away. The verdant hills of this region, dotted with Friesian cows and known as “Africa’s Switzerland”, are ideal for caseiculture. Some Belgian monks who arrived in the 1970s soon began crafting camembert. Italian missionaries whet appetites for mozzarella. In their heyday, dairies in Masisi also churned out butter, cream and yogurt. Now, however, farmers are lucky to eke out a few dollars a day. War and lawlessness have curdled their business. Twice a week Mr Sinamenye sells his

cheeses for the equivalent of $3 each to a trader who straps them onto the back of a motorbike and braves the muddy track to Goma. There they are sold to shopkeepers, who in turn sell them for $5 each. Mr Sinamenye could make bigger profits selling milk. But, as in most of Congo, there is no electricity to pasteurise it or keep it cool on the way to market. The only way of preserving it is to cast

it into sturdy rounds. A few villagers come and buy fresh milk in plastic jerrycans, but most of it is turned into cheese. Making a profit is something of an achievement. Mr Sinamenye, whose family has managed a dairy farm here since 1976, recalls how it once supported a herd 4,500-strong. Then chaos spilled across the border. After the genocide against Tutsis in neighbouring Rwanda in 1994,

the Hutu militias that had perpetrated it fled into Congo (then called Zaire), where they terrorised civilians and slaughtered cows, which were seen as symbols of Tutsi wealth. “Twice a week we’d flee at the sound of their gunshots,” he remembers, “and return to find more cows were missing.” Many of the carcasses were left to bloat in the fields. Over the following few years armed groups would loot the farm, killing cows to eat or for meat to sell. By 1998 all the cattle were dead and Mr Sinamenye had fled to Goma. In 2000 he returned, leasing enough land from the farm’s owner, an army general in Kinshasa, to graze 400 cows. Business is picking up since the reopening of a nearby coltan mine: he now has hungry miners coming to the farm to buy cheese and milk. Sometimes they even buy a whole cow, which is chopped up and cooked for them by Mr

Sinamenye’s wife. But he still fears the rebels who descend from North Kivu’s nearby hills, killing and kidnapping villagers. “We can only rely on God to protect us,” says Mr Sinamenye. Not all cheesemakers are blessed.

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REAL SECTOR WATCH BUSINESS DAY

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How FrieslandCampina’s €23m investment will impact milk production

ODINAKA ANUDU

oyal Friesland Ca mp i na recently announced plans to invest €23 million in Nigerian milk production as part of its Dairy Development Programme (DDP) in the country. Hein Schumacher, the company’s global CEO, made the announcement in Abuja while leading FrieslandCampina’s delegation on a courtesy visit to Yemi Osinbajo, vice president, at the Presidential Villa. Speaking to journalists at the State House afterwards, Schumacher said: “The Vice President asked us to continue to invest in local dairy farming to increase local production of milk and we are fully aligned with his request. We will take forward the programmes we have been running and expand them. “We are investing around €23 million in our evaporated milk and ready-todrink milk factory in order to provide fresh milk for the Nigerian consumer. FrieslandCampina WAMCO has been successful with dairy development in recent years and milk yield is improving.”

L-R: Ben Langat, managing director, Friesland Campina WAMCO; Roel van Neerbos, president, Consumer Dairy, Royal FrieslandCampina; Hein Schumacher, CEO, Royal FrieslandCampina, The Netherlands; Yemi Osinbajo, vice president of Nigeria; Jacobs Ajekigbe, chairman, FrieslandCampina WAMCO, and Ore Famurewa, corporate affairs director; (Behind are Musa Galadima, DDP beneficiary, and John Olayiwola, DDP manager) during a courtesy visit to the vice president in Abuja on September 7

Highlighting the milestones of FrieslandCampina WAMCO’s DDP, Ben Langat, managing director, explained that “four model farms with crossbred cows have been established to improve local milk collection across its five milk collection centres. Our company is fully committed to working with local farmers to grow local milk production and ultimately ensure that Nigerians continue to benefit from the nutritious content of milk. “Working with 3,500 dairy farmers in over 90

farming communities in Oyo State, we are already providing the required knowledge transfer and sustainable livelihoods for communities. We plan to transform additional 500 pastoralists to settled dairy farmers under the DDP model. Already over 100,000 people have been positively impacted around these communities.” Numbers do not lie. Statistics published by Dairy Chain in 2014 put the annual demand of milk in Nigeria at 1.1 billion litres, with estimated annual pro-

duction around 400 million litres. This, therefore, puts demand-supply gap at 700 million litres. Official data from Nigeria’s Ministry of Agriculture show that the country imports dairy worth $1.3 billion annually. The dairy products come from different parts of the world, especially from the Netherlands, the UK, China, France and other countries. Less than 10 percent of the raw milk is sourced local milk, meaning that much of raw material (raw milk) is imported.

Nigeria’s dairy industry needs deep-pocket investment to meet the yawning local demand. But meeting the local demand requires developing the backward integration segment to ensure local sourcing of raw milk. This has an advantage of cutting down currency and foreign exchange risks. In Nigeria today, FrieslandCampinaWAMCO remains the only player that is changing the status quo in dairy production, especially in the backward integration segment. It started a programme called the Dairy Development Programme (DDP) in 2011, with a target to source more milk from Fulani farmers. The company brought Fulani herders together in five communities in Oyo State, supporting them with training, water, cross-breeding, new methodologies and infrastructure to boost milk production from cows. The company also provides a ready market for the Fulani farmers, buying as much milk as can be produced. One of the biggest advantages of this is that it prevents cows from roaming the farms, thereby curbing farmers-herders clashes and ensuring copious production of healthier milk. A cow that does not roam about produces much more milk than the other

which moves from place to place, experts say. This programme is already going on in Fasola, Maya, Saki, Iseyin and Akele, with a bulking centre (a place the company pools all the milk into a truck and moves it to the factory). As highlighted by Langat, the DDP has supported over 3,500 local dairy farmers (including women) to expand their investment opportunities as the milk collected from the dairy farmers is used in the local manufacturing of Peak evaporated milk. Hence the proposed €23 million new investment by the dairy firm is expected to expand local milk production and include many more herders in the fold. This will not only reduce poverty and unemployment, but will also reduce unnecessary clashes and deaths resulting from farmers-herdsmen conflicts. More so, it will steer competition among herders and enable them to adopt global best practices. Again, such investment will equally help FrieslandCampina begin to consider extending DDP programme beyond Oyo State, which, if done, will make bigger impact in terms of job creation, GDP growth, conflict resolution between farmers and herdsmen, among others.

SON unfolds standards for exportable food products

he Standards Organisation of Nigeria (SON) has unveiled international standards for most of the nation’s staple food products such as garri, dry beans, soya beans, rice and others. Osita Aboloma, director general, SON, said this move was to put an end to the high level of rejection faced by Nigeria’s agricultural produce at the international markets. Chinyere Egwuonwu, director of standards development, who represented the director general, said at a press briefing in Lagos that, “As far as agriculture is concerned, the standards we developed are to ensure that the products meet the global benchmark, thereby forestalling a repeat of the rejection of our products as it happened recently at

the international market. We have developed standards for many agricultural products such as shea butter, dry beans, smoked fish, yam flour, plantain chips, sesame seeds, oil, rice, cocoa, cocoa butter and garri. It will interest you to know that the standard we developed for garri is accepted globally and now adopted by countries in the Economic Community of West African States (ECOWAS).” Aboloma pointed out that out of the 800 standards the SON had produced in one year, 339 standards were developed for the nation’s agricultural produce. “Some of the standards include the anti-bribery and corporate governance standards, the African traditional medicine, human resource management, and hotel management, to mention a few. The standards

for agricultural produce were developed to end the rejection of exportable Nigerian farm produce at the global market. So far, the agency has developed standards for Nigeria’s dry beans, smoked fish, yam flour, cocoa, plantain chips, rice, garri, sesame seeds, oil and many more,” she explained. He stated that the standards would act as a code of conduct for the nation’s agriculture value chain, ranging from planting, processing, harvesting, packaging and transporting these goods within and outside the country. He noted that SON had continued to use standardisation and certification to support businesses to grow and be sustainable, adding that the agency’s goals were to use standardisation and quality assurance to

promote the federal government’s economic development policies such as the economic diversification, Economic Recovery and Growth Plan (ERGP), Presidential Enabling Business Environment Council (PEBEC), Ease of Doing Business, Backward Integration as well as agricultural and industrial revolution He appealed to all operators stakeholders, manufacturers, entrepreneurs, including MSMEs players, to work with SON, urging them to feel free and patronise the standards the agency had put in place for business growth and sustainability, restating its commitment to ensuring that local industries were protected from unfair competition as a result of sub-standard imported goods. “SON is therefore opening up new vistas and op-

portunities for farmers, agro-allied operators and commodity exporters. We are taking up agro products from farm to when they come to the table as meal. The aim for the uniformity of standards for agricultural products with CODEX, the global body responsible for food safety, is to boost food export and stop rejections of local agro products overseas due to quality and integrity concerns,” she averred. Th e S O N h e l m s ma n added that the agency had also coordinated the development of standards for Nigeria’s smoked fish, yam flour, cocoa, plantain chips, rice, garri, sesame seeds oil and many more in the agro and allied sector. The director general said in support of the Federal Government’s dodged fight against corruption, SON had developed two unique

standards— anti-bribery management system standard and the good governance standard. “It is important to also draw your attention to newly approved Nigeria Industrial Standards on African Traditional Medicine, human resource management, as well as tourism and hotel management, among many others. The expected value derivable from standardised African traditional medicine cannot be over-emphasised, particularly with the abundance of potent medicinal plants on the continent and Nigeria in particular. The Standards for human resource management and Tourism are also targeted at capacity development in support of the government’s economic diversification agenda and improvement in foreign exchange earnings,” he said.

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REAL SECTOR WATCH Addressing reputational challenges of made-in-Nigeria products ODINAKA ANUDU

igerian products are often seen as inferior or fake by a section of local consumers. In some markets outside Nigeria, some consumers think that products from Africa’s most populous country do not measure up to global standards. This is not necessarily true considering that the country plays host to a number of multinationals and well-known conglomerates such as Lafarge, Cadbury, Nestlé, Guinness, Cadbury, Dangote Group, Flour Mills of Nigeria and Chi Limited, among many others. Experience has shown that what these large enterprises produce in Nigeria are sold in Europe, the Americas and other parts of the world. What this, therefore, means is that the growth of madein-Nigeria products is hampered by poor consumer perception. Speakers at the fifth Lagos Public Relations Stakeholders’ Conference discussed this issue this year and unanimously agreed that there was a need for a deliberate and strategic approach involving public and private sector partnership to address the reputation chal-

L-R: Olabamiji Adeleye, managing partner, Addefort Limited; Babatunde Ruwase, conference chairman and president of Lagos Chamber of Commerce and Industry; John Ehiguese, president, PRCAN and Segun McMedal, Chairman, Lagos Nigerian Institute of Public Relations (NIPR) at the fifth Lagos Public Relations Stakeholders’ Conference, themed, ‘Addressing Reputation and Communications Challenges of Made in Nigeria’, held in Lagos recently.

lenges of made-in- Nigeria brands. Leading the discussion was Babatunde Ruwase, chairman of the conference and president of the Lagos Chamber of Commerce and Industry (LCCI). Ruwase said governments at all levels had major roles to play in the promotion of made-in-Nigeria products and obliterating the wrong perception from the minds of consumers. “Governments in Nigeria

are big spenders and could make a significant impact on the fortune of domestic producers,” he said. “We would like to see a demonstrable commitment to the recent Executive Order on the patronage of made-in- Nigeria products as well as indigenous skills. The country’s population is estimated at 200 million. Nigeria is home to about one in five Africans. Our youths are creative and enterprising. These are strengths we

can leverage to promote the Nigerian products and services,””he explained. A major multiplier effect of patronising local products was the increased demand for local labour, he said, adding that the country’s foreign reserves would be conserved through patronage of local goods, thus ensuring the stability of the macroeconomy. Delivering the keynote address at the conference, themed, ‘Addressing Com-

munication and Reputation Challenges of Made in Nigeria’, Oluwatoyin Sanni, managing director, Emerging Africa Capital Group, explained that as a country, Nigeria needed to make sure it was communicating right. She said ‘Made in Nigeria’ was not just about physical products, but everything related to the country: Education, dressing, attitude to work, quality of service and relationship with others, among others. She said there was a need for conscious creation of ‘Brand Nigeria’. “We must be deliberate to adopt all measures to promote the best of our country in the world. We need to understand that perception is reality and that our communication must be deliberate and strategic, involving everyone to sell ‘Brand Nigeria’. Before you market products, services and business, you need to market your country first. No one wants to do business with people who say their own country is no good. The people you are selling to should also buy into where you are coming from”. The conference concluded that Nigeria was operating at a very low capacity due to infrastructural challenges, adding that made-

in-Nigeria products were of quality but competing with low cost imported goods. It was also agreed that citizens must patronise ‘Made in Nigeria’ to encourage survival of local firms, while governments at all levels should lead the way by patronising these products. It was also concluded that government communication was a major problem facing the ‘Made in Nigeria’ brand, stressing the need for public institutions to be strategic in their communications to ensure that everybody was speaking with the same voice. The experts also opined that the country needed to promote institutional standardisation to get the best out of the production process, adding that there was a need to promote vocational training and pay less attention to paper qualification. It was also advised that Nigeria should articulate a communication strategy on how to brand Nigeria, while Nigerians should speak positively about made-inNigeria products. The Lagos Public Relations Stakeholders’ Conference is the brainchild of Addefort Limited, a public relations and concept development firm.

A.G Leventis optimistic about future amid challenges ENDURANCE OKAFOR

.G. Leventis (Nig) Plc, one of the leading conglomerates in Nigeria, has expressed optimism towards its future business operations despite recent challenges. The 81-year-old company disclosed this at its 59th annual general meeting, saying that recent recession that hit Nigeria impacted its revenue. Ahmed Mantey, group chairman of A.G Leventis, said, “The effect of recession in our economy continued to impact adversely on our operations as there was a reduction in credit opportunities which in turn affected our income. This harsh environment along with the continued lag in infrastructure especially power and road

network added to our cost of doing business. Nevertheless, we strove to ensure that we continued to develop our business as much as possible.” The group and company recorded a loss after tax of N3.5 billion and N2.6 billion respectively for the year ended 31 December 2017 compared with the figures of N2.6 billion and 3.8 billion respectively reported the previous year. “We remain optimistic for the future of our business. Our product lines remain a huge value driver for us, enhanced by our renewed focus on capacity building, operational efficiency, financial discipline and aggressive trade and marketing across our active categories. This will hopefully position our group now more than ever to

access and achieve sustainable growth in the future,” Mantey explained. Sunday Asade, group chief operating officer, said the company is working on remodelling its business and that should help it become more competitive and improve in identifying its challenges “Apart from modelling, we have strategic part which we are drawing to be able to cope with challenges. We are looking at some adjacent categories to our current business which will help us to be able to carry out backward integration,” Asade told BusinessDay. The firm’s total assets exceeded its liabilities for the group and company by N2.8 billion and 4.6 billion respectively as against N6.3 billion and N7.3 billion respectively

reported in the same period of the previous year. The Leventis Motors division recorded a 7 percent decline in revenue from N8.3 billion in 2016 to N7.7 billion in 2017. The firm linked this performance to Nigeria’s economic recession which affected sales of trucks. Another subsidiary Chrisstahl Nigeria Limited’s revenue dropped by 59 percent, from N281.91 million in 2016 to N116.23 million in the year under review. This was the same for Druckfarben Nigeria Limited, a subsidiary of A.G Leventis group, as its revenue was down 22 percent from N1.02 billion in 2016 to N801.1 million in 2017. Although there was 203 percent increase in the gross profit. Leventis Foods Limited also experienced challenges

in 2017 as there was 17 percent reduction in revenue from N2.80 billion in 2016 to N2.31 billion in 2017. “I will like to reassure our esteemed shareholders and stakeholders that our group’s prospects are promising and bright. Having been able to achieve a stable investment climate in the country, we shall leverage on that and strive to attract investment in our Fast Moving Consumer Goods (FMCG), automotive, real estate and logistics businesses and in line with our strategic business thrust, focusing on delivering excellent customer service and efficiency,” Mantey said. Meanwhile, in the real estate arm of the company, there was 5 percent increase in the division’s revenue when compared with the same period in 2016. This, the

company said, was largely as a result of higher occupancy rate achieved in prime locations and remarkable level of occupancy in outstations. The stocks of A.G Leventis as at the close of market Friday, 14 September 2018, traded N0. 40 and has a market capitalisation of N1.1 trillion as compiled from Bloomberg terminals. Mantey said, “We will continue to focus on innovation and develop new products for the market in order to increase our market share and explore growth opportunities with new commercial vehicles and construction equipment’s manufacturers and other forms of business combinations in order to broaden our earning base, create synergies and build a profitable and sustainable future.”

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Orange, MainOne sign agreement to reinforce connectivity on the West African Coast

range and Main One Cable Company have announced that they have signed an agreement allowing for a major investment by Orange in the West Africa submarine cable system, MainOne. Through this partnership Orange will acquire additional capacity, thereby reinforcing its position in the African telecommunications ecosystem. MainOne’s current cable system comprises a 7,000km submarine cable, which was launched in 2010 and has landing stations in Nigeria, Ghana and Portugal. The partnership between Orange and MainOne Company will provide for the construction and installation of two new branches and stations. These will connect the cable to Dakar in Senegal and

Abidjan in the Côte d’Ivoire by mid-2019. Orange will be the owner of the cable station in Dakar. Orange’s investment represents a major milestone for this project. Orange Marine, a 100 percent subsidiary of the Orange Group, has been chosen to manage the installation of these two new branches. Thanks to this new cable connection, local populations will benefit from better connectivity, lower prices and access to new services. Orange will benefit from multiple Terabits per second of additional bandwidth for the development of fixed and mobile data in Africa. More specifically, this cable extension is an opportunity to improve connectivity and offer a broader range of services for both Orange Côte d’Ivoire & Sonatel. In addition,

MainOne offers an alternative route that guarantees the protection of voice and data traffic passing through the other cables in the area – SAT3 WASC SAFE and ACE. Through this new partnership, Orange confirms its position as a leading player in the submarine cable market. In this role, the Group aims to develop the quality of service of its worldwide networks and facilitate the use of new digital services for end-users. Orange has a strong commitment to the African continent, which has been at the heart of the Group’s strategy for the last few decades. The Group is investing heavily in building infrastructure and providing access to communication services over the longterm. “Orange’s ambition on in-

ternational networks is both to meet the needs of our affiliates in their interconnection with the Internet world and to increase our leadership on the international data services wholesale market. This partnership with MainOne will allow us to strengthen our presence, with new significant assets in West Africa,” said Jérome Barré, chief executive officer of Wholesale and International Networks. “The development of new digital services in Africa has fostered huge social and economic developments over the past few years. As barriers to access continue to fall with improved networks and more affordable equipment, Orange, as part of its multi-service strategy, is seeking to position itself as an important partner in the continent’s digital trans-

formation Through this new partnership, Orange is set to secure and improve direct access to high-speed broadband services in two of its most important countries, Senegal and the Côte d’Ivoire,” said Alioune Ndiaye, chief executive officer of Orange Middle East and Africa.

In her comments, MainOne’s chief executive officer, Funke Opeke reiterated the company’s vision for a connected West Africa: “MainOne continues to lead the digital transformation of our sub-region by investing in affordable connectivity to drive economic development.

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COMPANIES & MARKETS

NAIC offers palliative to support farmers in flood prone areas Modestus Anaesoronye

gricultural specialist insurer, Nigerian Agricultural Insurance Corporation (NAIC) has assured farmers in flood prone areas across the country of its commitment to protect their agro assets and properties through effective risk management. NAIC said in view of the recent flood disasters across the countr y, the Board and management sympathizes with affected farmers under its cover across various States, that the Corporation is ver y mindful of its corporate responsibility to give them relief and plough them back to prosperity through the prompt payment of appropriate compensations. Folashade Joseph, managing director/CEO OF NAIC said while the Corporation encourage its dear insured

farmers to make all efforts possible to avert and minimize the untoward effects of the torrential rains and floods on their farms, they should, please, promptly inform the nearest NAIC office, in their State, of their travails in order that appropriate support will be extended to them in a timely manner. “To other farmers who might have suffered from losses arising from the floods but did not have NAIC cover, the Corporation wishes to equally sympathize and encourage them to, in future, take advantage of the agricultural insurance solutions of the Corporation to offer protection to farmers who have answered the patriotic call to go back to agriculture.” Folashade also stated that apart from insuring the risk of loss of crops from flood, NAIC provides insurance against crop losses arising from fire, lightening, drought and pests. “Equally,

Ecobank offers seamless ‘Back to School’ payment option HOPE MOSES-ASHIKE

cobank Nigeria is offering a seamless payment for school fees and other purchases by parents and guardians as their wards resume for the new academic year. Ikechukwu Kalu, head, consumer marketing, affirmed that Ecobank provides services that support both local and international schools fees payments at very good rates; personal loans to help with school fees payments and the Ecobank versatile Mobile App that supports school fees and other related payments. All these are done in an easy, fast and convenient way. Kalu who was responding to media enquiries on various ‘back to school’ initiatives of Ecobank, stated that apart from personal loans, the bank. Has a mix of digital payment options like its fast and convenient internet banking

service. “As a bank that has the interest of its customers at heart especially this period when school resumes, we have put in place personal loan to help parents and guardians pay school fees for their children and wards. Also, we have put in place a convenient, accessible and reliable digital payment solutions like the Ecobank mobile app for shopping and school fees payment. We’ve got your back coverd this new school year.” He said Further, Kalu urged the various schools to appoint the bank as their collecting financial institution to remove stress of delayed money transfer off them, nothing that Ecobank has demonstrated pedigree and expertise in fee collection, locally and internationally. He encouraged schools and individuals that are yet to open account with the bank to do so in order to access the services the bank offers.

Olasubomi Balogun, founder of FCMB Group (4th left) flanked by some of the top Executives of the financial institution, during the naming of the University of Ibadan Conference Centre after Otunba Balogun by the University in Ibadan, Oyo State.

the risks of death of, or injury to, livestock caused by accident, disease, fire, lightening, storm or flood are insured by NAIC. “ And the beauty is that the

assessed premium payable to NAIC is subsidized. “The subsidy is 50 percent reimbursable to the Corporation by the Federal and State Governments. All

these areefforts to provide a secure future to farmers and eliminate the need for unpredictable ad-hoc assistance when insurable losses occur, the Company said.

SEC extends offer period for Mutual Benefits’ rights issue

utual Benefits Assurance Plc has received Security Exchange Commission (SEC)’s approval for an extension of the offer period of its Rights Issue. The Acceptance List for the Rights Issue which opened Monday 6th August, and billed to close Friday 14th September, will now close Friday 28th September 2018. The extension will afford shareholders who have not been able to exercise their rights the opportunity to do so. Commenting on the development, Akin Ogunbiyi, chairman of the Company said that the company “is optimistic that the exercise will be fully subscribed, given the massive support and expression of interest received from our shareholders.” The proceeds from the Rights Issue will enable Mutual Benefits carry out its recapitalization and growth plan, provide additional working capital and finance the transformation of its IT infrastructure to support the Company’s enlarged operations The shares are being offered to existing shareholders by way of Rights Issue of 4,000,000,000 ordinary shares of 50 kobo each at 50 kobo per share on the basis of one new ordinary share for every two ordinary shares held by shareholders, whose names appeared in the register of members as at close of business on 31stOctober, 2017.

UN Climate Change to present revamp action plan this week

s leaders gather in California this week for the Global Climate Action Summit (GCAS2018), UN Climate Change is presenting a revamped version of its Climate Action Portal, featuring the accelerated action underway by cities, regions, companies and investors to achieve the collective goals of the Paris Agreement. The preview coincides with what has been dubbed ‘the biggest moment for climate action since the Paris Agreement,’ to highlight progress being made around the five GCAS ‘challenge areas’: Healthy Energy Systems, Inclusive Economic Growth, Land and Ocean Stewardship, Sustainable Communities and Transformative Investments. Key commitments in these five areas will be presented at the end of the Global Climate

Action Summit today, and by the New York Climate Week in a fortnight, UN Climate Change will have uploaded all the actions under each of these five areas to the area, effectively serving as the legacy tool for the Summit. The energy and momentum emerging from GCAS2018 can help set the stage for the next steps in the international climate change process, starting with the UN Climate Change Conference in Katowice this December (COP24). Originally called the ‘NAZCA Portal’ – named after the ancient lines in Peru and launched by the Peruvian Government back in 2014 – the Climate Action portal was subsequently enshrined in the text of the Paris Agreement as the official portal to showcase the contributions of the so-called “non-Party

stakeholders”. The new design and improved usability of the website – centered around an interactive map – offers an improved visualization of the overall data and enhanced aggregation of climate action based on constituencies and sectors. The update also represents a unique collaboration between UN Climate Change and its core data partners who have been working tirelessly to harvest and consolidate the climate commitments and actions of non-Party stakeholders (cities, regions, businesses and investors): CDP, Carbonn Climate Registry, Climate Initiative Bonds, Cooperative Initiative Platform, Global Covenant of Mayors, Investors on Climate Change, The Climate Group, and UN Global Compac Recent studies have un-

derscored the vital role that these actors are playing to reduce global emissions and, in doing so, to create unstoppable momentum towards the Secretary-General’s 2019 Climate Summit. Specifically, some studies suggest that by 2030, global greenhouse gas emissions could be lowered by as much as 1.5 to 2.2 gigatons (CO2e) every year if the commitments from nearly 6,000 cities, states, regions and over 2,000 companies are fully implemented. The portal will therefore serve a critical function by capturing the breadth and depth of this action from the ‘real world’ economy, gradually incorporating new data over the coming months from more than 12,000 stakeholders, and capturing many more commitments going forward.

FrieslandCampina donates dairy products to IDP camp

ein Schumacher, global CEO, Royal FrieslandCampina, The Netherlands, has donated dairy products and education materials to internally displaced persons at the Durumi IDP Camp, Abuja. Schumacher made the donation as part of the four months nutrition outreach ofFrieslandCampina WAMCO

Nigeria to the IDP camp. Speaking at the occasion, Schumacher explained, “FrieslandCampina is committed to its purpose, Nourishing by Nature, which focuses on improving the overall health and nutrition status of populations where it operates. As a company, we want to provide better nutrition for the world.

We understand that a significant portion of the world’s population is faced with undernourishment; milk is filled with a lot of essential nutrients and can make a positive contribution towards solving this challenge.” In the company of Roel van Neerbos, president, Consumer Dairy, Royal FrieslandCampina, The Netherlands; Ben Langat,

managing director and Ore Famurewa, corporate affairs director, FrieslandCampina WAMCO Nigeria, Schumacher, who is on a two-day working visit to Nigeria, made the donation through the Nigerian Red Cross Society, which will be fully accountable for the distribution of the products and also deliver the project with care.

Monday 17 September 2018

BUSINESS

COMPANIES & MARKETS

DAY

Business Event

GE launches world’s first 6B repowering gas turbine solution

E’s Power Services Business Continues Investments in its power generation fleet with new solution that elevates existing 6B gas turbine performance to new unit capabilities. The new solution will help power producers achieve up to $3 million a year in fuel savings per unit• This Solution Enables Power Producers to Refresh their aging assets with the Latest Technology with Small Modifications to the Balance of Plant GE’s Power Services business is celebrating the 40th anniversary of its 6B gas turbine fleet by launching the world’s first 6B repowering solution. GE also announced it has signed its first agreement for the solution with a global chemical company to repower three 6B gas turbines and save significant amounts of fuel each year at its site in Asia. Today’s announcements mark another example of GE’s continued commitment to investing in its mature fleets to keep them competitive. In Africa, GE has an installed

base of 60 6B gas turbines at various locations with the most recent installation in Cabinda, Angola. The fleet is mainly used for power generation for grid supply as well as for large industrial uses like refineries. “We’re excited to mark our 40th anniversary of the 6B fleet and unveil our new repowering solution,” said Scott Strazik, president & CEO of GE’s Power Services business. “This fleet is known for its dependability—a reputation earned with global fleet reliability of 98.4 percent, which is about 2 percent higher than the industry average and translates to approximately 17 more days of availability per year. At the same time, the 6B fleet has aged, and there’s growing demand to improve performance. Today’s announcement and our recent expansion of our Advanced Gas Path technology to the 6B fleet highlight our continuing investment in our mature fleets to help power producers and industrial operators remain competitive in today’s very dynamic marketplace.” ““As a company, we believe

that more efficient power plants means more power available on the grid to respond to the growing energy needs of the African continent. As a result, we are always focused on solving our customers’ most complex problems with customized and innovative solutions that help optimize operational performance” said Elisee Sezan, general manager, GE’s Power Services business for Sub-Saharan Africa. Part of GE’s Fleet360 platform of total plant services solution, the new 6B Repowering Solution incorporates advanced F and H class technology to elevate the machine’s performance to leading levels for its class. The repowering consists of a full “flange-to-flange” upgrade of all major components, including the combustion system, hot gas path and compressor, and it transforms the 6B unit into a GE 6F.01 gas turbine, which is also available as a new unit. The new 6B Repowering upgrade, which fits into the existing 6B footprint, can advance performance in both gas turbine and combined-cycle operation.

L-R: Olajumoke Ilori, principal, State Senior High School, GRA Ikeja; Olufunmilayo Onadipe, tutor-general / permanent secretary, education District VI, Lagos, and Steve Babaeko, CEO, X3M Ideas, at the commissioning of the Senior Secondary 3 block /Administrative block renovated by X3M Ideas as the agency’s 6th year anniversary Corporate Social Responsibility project in Lagos.

Sigma Pensions empower beneficiaries of late contributors

igma Pensions Limited, one of Nigeria’s leading Pension Fund Administrators as part of its Corporate Social Responsibility (CSR) has donqated some relief materials to beneficiaries of late officers of the Nigerian Prison Services (NPS) Nafisah Muhammad Buba, head business development division, North, said these relief items were to create a revenue stream for families of Nigerian Prisons Services (NPS) officers who lost their lives during service to their country. Sigma pensions took this CSR initiative to Adamawa, Borno and Yobe state where beneficiaries were empowered with complete grinding machines and stands. Nafisah who handed over these items to the beneficiaries

said: “Sigma Pensions is doing the CSR to maintain existing relationship with (NPS) and also to give back to the host community by empowering some residents in the North East.” “The families who we are empowering are officers who paid the ultimate price in the line of duty. These individuals lost their lives in an attempt to serve their Country and the result is that their families, the beneficiaries of the CSR, are now without their bread winners.” She further said Sigma Pensions did not just extend a hand to only its pensioners but also extended this gesture to the beneficiaries of other families who are not registered Sigma pensions’ members. She added: “The beneficiaries of this initiative are families of officers of NPS who lost their lives as a result of the Insurgency

in Borno, Yobe and Adamawa state. This was an opportunity for us to be socially responsible as an organization and empower host communities around us and create a decent livelihood for families of officers who have served our country.” Sigma Pensions Limited (RC 606338) was incorporated in August 2004, with the sole objective of undertaking the business of Pension Fund Administration in Nigeria according to the Nigeria Pension Reform Act (PRA 2014) and is regulated by the National Pension Commission (PenCom). Sigma Pensions currently has above 700,000 registered members. They are a High Performance team one committed to doing business the right way whilst creating exceptional value to all their stakeholders at all times.

Infinix launches Intelligent Smartphone Note 5 Stylus

nfinix Mobility a premium smartphone brand, has proven once again its commitment to bringing the most cutting-edge technology and stylishly designed mobile devices to consumers with the introduction of its latest device note 5 Stylus. Partnering with Google, NOTE 5 Stylus is yet another Android One smartphone with intelligent software experience and will be available for preorder from September 10 – 15 and available in-store across all our exclusive stores from September 17. “At Infinix, our mission is to keep innovating and integrate the most advanced technology and trends into our products. That’s why we partnered with Google once again to launch

NOTE 5 Stylus. With the NOTE 5 Stylus, consumers will experience the latest technologies, such as capturing stunning photos with the 16MP AI lowlight selfie camera and 16MP AI rear camera, showing their creativity with the amazing XPen, interacting with the world with the Google Assistant and many others. We are confident that the NOTE 5 Stylus will bring consumers intelligent smartphone experience to a whole new level and allow them to stay ahead of the crowd,” said Benjamin Jiang, Managing Director of Infinix Mobility Limited. The Note 5 Stylus is designed for consumers that seek selfexpression, featuring AI cameras for stunning images. The device is equipped with an upgraded

16MP AI low-light selfie camera with f2.0 aperture. With its intelligent pixel technology, the device always supports high quality selfie images whether night or day. Its 16MP rear camera also captures more light with its larger pixels and bigger f1.8 aperture at a speed that is up to three times faster with multiple scene recognition ability. This new feature enables consumers to capture amazing pictures in all occasions. The XPen is another highlight of this device and creates new and innovative ways for consumers to express themselves. It is an awesome digital pen that allows consumers to showcase their creativity. With the versatile XPen, consumers can edit screenshot images instantly, sketch doodles or even jot down notes during meetings.

L-R: Oluwafemi Adebayo, logistics /customer safety manager, Guinness Nigeria Plc; Udensi Emea Oji, deputy corps commander, representing Edo Sector Commander, FRSC; Adebayo Alli, site director, Guinness Benin Plant; Regional Logistics Manager, East, GN Plc, Magnus Amaechi, and Kyrian Okolo, assistant corps commander/HOD, training department, FRSC, during Guinness Nigeria 2018 Transport and Safety week in Benin-City

L-R: Tolu Ajayi, First chair of the body, Senator Olu Adetunmbi, chair of the occasion and Chief Mrs Sinatu Ojikutu, a special guest and patron.At the patrons evening of the association of Nigerian Authors, Lagos chapter, From left, Dr Tolu Ajayi, First chair of the body, Senator Olu Adetunmbi, chair of the occasion and Chief Mrs Sinatu Ojikutu, a special guest and patron, at the patrons evening of the association of Nigerian Authors, Lagos chapter.

L-R: Gbenga Aiyeremi, president, Workbay; Dayo Oyeniran. project director, Tush Awards; Steve Babaeko, CEO, X3M Ideas Group, and Seun Apara, CEO MME Africa at the Tush Awards Youth Conference held August 31 at The Landmark Event Center, Lagos.

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INTERVIEW Brazil mulls massive investments in Nigerian market, Ricardo Guerra de Araujo, Brazilian new Ambassador to Nigeria is excited to discuss a series of bilateral relationship and negotiations between his country and Nigeria particularly in the areas of agriculture, military, trade, among others. Guerra de Araujo says Brazilian companies are very keen in investing in the Nigerian market, but want institutional framework to protect their investments. “One of the bilateral agreements we are trying to negotiate with Nigeria now is on cooperation facilitation of foreign investments,” he says, speaking to Onyinye Nwachukwu, BusinessDay’s Abuja Bureau Chief in this first exclusive interview since his arrival to the country in June. Brazil also stands ready to share with Nigeria some experience about ranching to help check farmers-herdsmen clashes that have claimed so many lives in the country, he adds. Excerpts…

e understand that Nigeria is discussing an agriculture package with Brazil. Can you update us on this? The package that we (Brazilian side) is negotiating with the Nigeria side is the package of $1.1 billion that will be entirely financed by the Brazilian government with credit guarantees by the Brazilian insurance companies and also the Islamic bank is also going to support this financing structure. The idea is to make this agriculture package available to the Nigeria government. Like I said, the whole project cost is $1.1 billion and will be divided in three tranches, the first one is $380 million. If you add up the inputs- fertilizer, seeds, services and so on it will amount to $420million for the first tranche, the second tranche, $343million and the third, $343 million, totaling $1.1 billion for the whole project cost. And the idea is to get machinery, equipment, but also fertilizer, seeds, pesticide, training, project management itself because we don’t just want to export machines which is what some others do, they export the machines and then you have to take care of them and deal with them before any training or any information on how to maintain the machine and so on. But from the Brazilian side, we want to do help Nigeria to develop the whole value chain from the export of the machines to the training, to the maintenance of these machines. The idea is not only to export these agricultural equipment but to assemble these machines here in Nigeria. There is a big Brazilian exporting manufacturer that is already looking for a place where we could open a factory, I guess they probably spotted one in Bauchi state. There is need to assemble these machines there and of course help Nigeria to create jobs because they would have to hire people to assemble these machines, to operate them, and also regularly maintain them. The good thing about this deal is that one, the Brazilian equipment is much better in quality though they are more expensive. Again, the whole package is not restricted to just selling goods, but we are also selling services, we are also assembling the machines here in the country to create local jobs especially among the youths. We have already created a lot of jobs in Brazil especially in the private sector. We have to train the young people first of all to assemble these machines and then to operate them which you cannot learn quickly, but need a training program to put this in place. So this is basically the very broad lines of the idea that is being cooked now between the two governments. So there are impacts for different sectors. The whole idea of this assembly part is to build this CKD which is Completely Knocked Down, so the equipment will not arrive the Nigeria market ready to be used. Brazil wants to cooperate with Nigeria hand in hand and to arrive at this sort of complete value chain process that does not limit only to export machines but you go deeper and we provide the finance, insurance, we provide the training, we provide maintenance and

everything, we bring in Brazilians to live in Abuja for 3, 4, 5 years so they can train the Nigeria side to operate these machines and then to commercialize the products for which these machines are going to be used and seeds and the new crops will be commercialized in the domestic market. The discussions are not yet concluded. Are there timelines? The Nigerian side wants to implement this as quickly as possible. The Nigerian government is in a hurry as they have election next year. The idea is to launch the first phase between August and September, the first import will take place in a very short time. Of course there are terms that should be negotiated especially the best interest rate which the Brazilian banks will be comfortable with to come on board and will also be feasible for the Nigerian side, so this is most of what is going on, most of this is negotiation is on the interest rate to finance this $1.1 billion. At the beginning the Nigeria side wanted to import $10 billion and we said what, hold on let’s start with maybe a less ambitious package whose financing is not complex to do, if the first part goes well then we can go deeper and negotiate a more comprehensive package. But bear in mind that the idea is to work with the Nigerian side hand in hand and to provide not only goods but also services covering the whole value chain, so these machines will be useful, not just import machines and after one or two years the machines will be lying somewhere because nobody to operate or maintain them. So, this will be a different project and much more comprehensive. Is the Bauchi plant ready since the machines are going to be arriving soon like you mentioned? Yes, but it is still depending on these negotiation process but the idea is to bring in parts of this machines in a short time, maybe this September or October, so the first tractors will be in operation before the end of the year, that is the whole idea. Can you speak specifically on how is the project going to be funded? Brazil has a development bank – the EXIM that will provide probably a great part of the financing and then other private banks will also come on board to make financing available for the entire project. Of course the most difficult part is to build this credit guarantee structure because when the Brazil EXIM Bank finance, we need to back it up. So this credit guarantee structure is another part of the negotiation that is taking place right now between the two governments. As I mention to you, there is a Brazilian insurance bank that is probably coming on board, Islamic Bank is probably going to come on board to provide credit guarantee. The Islamic Bank is very interested in the Nigerian market, keeping the market working, they are keen in growth through economic diversification with more investment in agriculture, infrastructure and so on and so forth. So the whole projects has already to be approved by Economy Council. Recently, I was invited to come to the Council which

is presided over by the Vice President, with the ministers, the governors in attendance, and this whole bilateral project was approved at this level. Now what is going on is getting details, credit guarantees and so on and so forth to tidy up the whole package and put it in place in a short time. So that’s the idea in a nut shell but we will continue to share ideas and information with you because BusinessDay is a very important, very serious daily paper and we will be more than happy to cooperate with you to inform the general public about what is going on. Can you talk us through your resumption here? I arrived here beginning of June, and I will be here as the Brazilian Ambassador probably for three or four years. One of my missions here is to deepen the bilateral cooperation with Nigeria in the economic field and agriculture is certainly as one of the field among many other important fields. One week after I arrived here in June, I was called to be part of the official visit of the foreign affairs minister Onyema to our country. He was received by the Brazilian president as at that time, then he went to Sao Paulo state which was the biggest city in Brazil just like Lagos in Nigeria. During this bilateral meeting, we, our finance minister discussed cooperation in agriculture, justice. We are trying to negotiate with the Nigerian side, a bilateral agreement on transfer of sentenced persons meaning Brazilians that are imprisoned here and also Nigerians that are imprisoned in Brazil. We want to negotiate this bilateral arrangement so that we can exchange prisoners so the Nigerians that are sentenced in Brazil prisons can come back and finish their sentences here in Nigeria, and vice versa. This is one of the agreements we are trying to negotiate.

In the field of defence, there are a lot of things going on. Very recently, the Brazilian side sold this jet aero planes called super tucanos to the Nigeria defence ministry. It was huge a deal of about $500,000 and these air planes are designed to be very useful to fight guerillas, terrorist groups and I guess the idea is to use these air planes to fight the Boko Haram in the North East of the country. The planes were not bought directly from Brazil but from the US because the Embraer which is the major Brazilian aeroplane company is associated with US Company. So the 12 air planes were sold through this associate of the Brazilian economy Embraer in Arizona. Ofcourse there are other negotiations on the pipeline like the Nigerian side is very interested in this astrous system which is rockets that are very expensive but the Nigeria side wants to buy this for its defence system. So this is another deal that is on the pipeline between the two countries and of course there is other deal which probably we are going to be negotiating in the future which is this air transport aero plane to transport troops and the Nigeria side also showed some interest in acquiring this kind of air plane that is produced by the Brazilian industry. So this is just to mention a few negotiations between the ofcourse the Brazilian national defence college and that of Nigeria, there are a lot of exchange. Every year there are Nigeria officials that go to Brazil for training and there Brazil officials that come to Nigeria to run a year or two years course, so this is a very long standing and effective exchange of experiences between high military officials from both countries. And of course the Nigeria is also interested in importing other military equipment from Brazil, drones, helicopters. Brazil will export helicopters but would also train Nigerians to pilot, manage the helicopter. In a nut shell these are the most important areas we are negotiating with Nigeria now, in agriculture, defence, which are the two most promising areas of bilateral cooperation besides of course all the other things that are going on. Other field, I would say, is the bilateral agreement of cooperation facilitation of invest-

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INTERVIEW but seeks protection mechanism - Envoy ments. In the past, Nigeria and Brazil signed a lot of bilateral investment agreements to foster and protect foreign investments in the country. Brazil has this new model of bilateral investments that we want to negotiate with Nigerian government and this is also one of the bilateral agreements in the pipeline. There are other areas of the cooperation that the Nigerian side is also very much interested, like cattle rearing for instance, which is a big issue in Nigeria and Brazil is a number cattle rearing, meat exporting country in the world now, so we probably can share with Nigeria some experiences about ranching, cattle rearing and so. What experience can Nigeria learn from Brazil when it comes to cattle rearing, livestock keeping and so on? We have been doing this for the last 100 years, so the experience that we can share with Nigeria is how the institutional frame work can help. First of all, you have to set the institutional framework, ah a law establishing ranching, limiting the frontiers for cattle rearing, how the ranchers and cattle rearers, can they do their business without causing conflict. Cattle rearing does not mix with farming and there shouldn’t be conflict, maybe this is one of the areas that we can share with Nigeria our own experience. Are there discussions on that yet? There are some discussions, but of course we cannot interfere in the internal political discussions about ranching or not ranching because I know this is a very sensitive and delicate issue in Nigeria. What we can do is to advice on what we did but in the whole internal domestic process of establishing laws, we cannot intervene, it is up to the Nigeria legislators to do what they think is best for the country, then we can share our experience in this field. Another area of importance is school feeding, we have a very bad experience in this area too, and the Nigerian side has always demonstrated a lot of interest in acquiring and sharing how the Brazilian government did it, and been doing it for the past 30- 40 years very successfully like cattle rearing, agriculture and other things in general. This is another promising areas of cooperation between the two countries and of course there are other things like social policies. We have this social programmes for the poorest people in Brazil and those families go to social centers to get money from the government with conditions that they have to prove that their children are regularly going to school and they also have to prove that they have their vaccines, so these are the two conditionalties for this social program in our country. There are other things going on, but basically these are the main deals and cooperation programmes that are going on between the two countries. Of course there is also interest from the Nigerian side to cooperate with Brazil in the fight against corruption. Like Nigeria, Brazil and many other countries, corruption is a real problem and Brazil has been sending a lot of people to prison because they were on trial and proven that they were receiving money illegally including our former president, he is in prison now, he was tried and sentenced to 9 years in prison because of corruption problems that he had during his government. The fact is that we also have a lot of corruption issues like Nigeria and as far as the fight against corruption is concerned. How huge is the military equipment market in Brazil? It’s a huge market, we have the companies that produce these aero planes that you can see on my table, and it is not just aero planes, like I told you we also export rockets and astrous

programs and system, ammunitions and there are also trainings, which are very important in factoring this whole picture of the military. So it is a huge market, I cannot give you numbers but I know that while in Nigeria, it is one of the promising bilateral areas that as an ambassador I would to develop in the next few years alongside agriculture and other economic sectors. How about the trade relationship between Nigeria and Brazil? Up to 2014-2015, Nigeria was among the ten most important trade partners of Brazil in the world mainly because of Nigeria’s export of crude oil and gas. Between 2008, 2014, 2015, Brazil accumulated a trade deficit of almost $50billion with Nigeria. In 2014, the bilateral trade between Nigeria and Brazil was almost $10 billion, which placed Nigeria as among the 10 most important trade partners of Brazil globally. Of course since 2014, 2015, this bilateral trade has been coming down basically because oil prices have slumped, and Brazil decided to import from other sources. Now the bilateral trade is more balanced and is now around $1.5, $2 billion. The balances is still favorable to Nigeria. Historically the balance of trade has always been favorable to Nigeria, if you take from 2000, 2001 up to 2018, the trade balance has always been favorable to Nigeria, majorly because of Nigeria’s export of crude oil to the Brazilian market. Nigeria exports this light crude oil, which we call the sweet crude oil. It is mainly what Brazil imports from the world because this is the kind of oil that is most adequate to the Brazilian refineries because it is high quality, very expensive and top brand. So trade was very unfavorable to Brazil for the most of the last 10 years, now it is more balanced as it is almost 5050 percent. What Brazil exports to Nigeria is semi-processed, semi-manufactured goods like sugar, coffee, basically. We have experienced some market excess with Nigeria and Brazil will like to export more meat, more poultry, more coffee, and more rice to the Nigeria market. But the government has been protecting this market so as to foster domestic production and producers, so these are another negotiations that are going on, how we can improve market access to Brazilian products. What I have been recommending to my own government is that Nigeria is never going to open up their market for

meat because you also produce this domestically so you have to protect the local producers, but one option to negotiate with them is environmental tariff quotas. In this case, Brazil will sit down with the Nigerian side every year to negotiate a tariff quota to export meat, say 60,000 tons, 70,000 tons, 80,000 tons, to complement the local production. It will be a win-win situation, I know it is important to the Nigeria government to allow the import substitution of normally meat, poultry, rice which is essential product to the Nigeria local producers, but the problem of this is that Nigeria is not very competitive in these sectors, so the cost of producing rice, meat is very high, and at the end of the day what happens is that the Nigerian consumer is going to pay more. So the whole problem is to find a balance on how you foster local production and also don’t penalize the consumers because they want to pay lower price for a higher quality and a better product, so you really at some point have to find a balance. This is another issue that we are trying to negotiate, market access which is another important issue between the two countries. Are there partnerships between the Nigeria and Brazilian businesses?Yes I mentioned before of the Brazilian company that is going to assemble tractors and import equipment into Nigeria probably somewhere in Bauchi state, this is one idea. The Brazilian oil company was also present in Nigeria for many years since the 1990’s but for internal reasons the Brazilian company – petrobras - is selling all of their assets and withdrawing from Nigeria, not because of Nigeria, but for an internal problem, the is withdrawing from the whole Africa countries. The companies are selling assets everywhere in order to make cash flow. During the last 20, 10, 15 years, the company spent a lot money, sometimes, not in a very legal way and now they have to make cash flow to restore the financial health of the company. But there are also other Brazilian companies that are thinking of coming to invest in Nigeria in the field of furniture, car parks, and many other fields. Again, investments are important, but in order to attract Brazilian companies like any other company, you need first of all to negotiate with the Nigerian government on the institutional framework to protect the foreign

investments that will be coming to invest in the Nigerian market. That is why one of the bilateral agreements we are trying to negotiate with Nigeria now is this bilateral agreement on cooperation facilitation of foreign investments, this a very important institutional framework that is still lacking between the two countries, with this, Nigeria would attract more of Brazilian investments to its market and vice versa. We have to see this investment process as a two way thing, Brazil is investing here and Nigeria investing in Brazil. Dangote companies is the biggest conglomerate in Africa continent, he will probably have some interesting investment in Brazil and I heard he was very interested in making investments in the North East part of Brazil in the sugar cane business. I’m not sure if he was looking for produce sugar production, or ethanol. I heard that he was thinking or willing to make a huge investment in this sugar cane production in the North East part of Brazil, so as you can see that it is a two-way process and that is why the bilateral agreement to protect investments on both side is very important and we really need to move in this area and try to conclude this agreement as soon as possible. Is that the only challenge you see for Brazilian businesses coming into Nigeria? It is one of the main challenges, we need this, like the Nigerian companies need an institutional framework so they can protect their investments too. They need to be sure that once they have made their investments, for instance, it is not going to be damaged by the local government partially or completely. Therefore, the investment protection mechanism is a guarantee for the investors that their investments will be protected throughout. This is major but not the only one challenge. Ofcourse, there are other challenges like how the institutions, legal institutions function in the country, the quality of the labour qualifications, whether the local labourers are qualified to do certain jobs, the size of the market in Nigeria is not a challenge because you have a big market. This is very important because like we want to set up this factory in Bauchi state to assemble tractors, we will also need qualified labor force to do the job, maybe we will have to train these people between 18 to 25 years old to do the job, and it is huge challenge. It is not difficult, but you do need to invest in labour qualification and training before thinking about investing in a country in setting up a factory, so these are basically the other challenges beside the institutional framework. Energy is also big issue in Nigeria, because you lack infrastructure and energy. When you set up a factory, the first thing you need is electricity, regular electricity and not electricity that comes and goes, this is another issue. I know that the federal government has been putting in a lot of effort to tackle this problem and also how to make Nigeria independent and have more autonomy in this area like other countries in Africa did. South Africa did that very well, Kenya has already solved this issue of energy but Nigeria is still lagging behind and still have to make huge effort to bridge this gap compared to many other Africa countries. Electricity and transport are the two infrastructure loopholes that the Nigerian economy still has to tackle in the nearest future.

BUSINESS DAY

Monday 17 September 2018

CityFile

NDLEA arrests 7 over psychotropic substances

even persons have been arrested by the National Drug Law Enforcement Agency (NDLEA) in Kogi for dealing in and possessing 23.94 kilogrammes of substance suspected to be Indian hemp and psychotropic substances. Idris Bello, commander of the agency in Kogi State told journalists in Lokoja that the suspects were arrested across various locations within the state. According to Bello, two of the suspects were arrested on Okene Lokoja road by the NDLEA operatives, with 66 bottles of Codeine syrup and 40g of Rohypnol, concealing the substances in bottles and packaged in Indomie cartons inside a luxury bus and being conveyed from Enugu to Abuja. He also said four other suspects were arrested around some flash points within Lokoja metropolis. Bello warned peddlers of hard drugs and psychotropic substances to stay away from the state, warning that the command would spare no one but arrest and prosecute those involved in any such illegal deal. He urged residents of the state to always provide useful information that could help in ridding the state and of illegal drugs. According to him, most crimes are perpetrated under the influence of drugs, adding that once the use of illegal drugs is curtailed, the rate of crime in the society will reduce drastically. Bello stated that the suspects would be charged to court as soon as investigation into the cases is concluded. Speaking with newsmen on his alleged involvement in the deal, one of the suspects, name withheld, said that he took to to selling Indian hemp because of hard time. The suspect, who claimed to have been in the illegal business for more than four months, was arrested with Indian hemp weighing 1.4kg and 50g pack of Tramadol capsules, diazpam and assorted spirit drinks. The 40-year-old suspect with a wife and two kids said he found it difficult to feed his family which left him with no other option than to sell hard drugs. “I have been in this business for over four months. Hardship led me into this. There is no job anywhere. He said he got inspiration from some company workers who developed interest in taking Indian hemp and Tramado. Meanwhile, the agency has destroyed 110,542 tonnes of cannabis in Ondo State. Muhammad Mustapha, the CEO of NDLEA during the exercise in Akure, lamented that drug trafficking and abuse were not abating. Mustapha, represented by Femi Oloruntoba, his chief of staff, said the “magnitude of drugs coming out of the farmlands was not a thing of joy.’’ Ondo State remains one of the six states in the country where cannabis is cultivated in large quantities. “As a result of cannabis plantations, it is becoming increasingly difficult to find virgin forests. The agency has invested a lot of resources to seize this magnitude of drugs. I commend the commander, officers and men of this command for a job well done. “This quantity of drugs, weighing 110,542 tonnes, is frightening and demands more reflections,” he said. Mustapha also said the use of cannabis remains high in the state because of availability and affordability. He, however, added that abuse of tramadol and cough syrup containing codeine rampant in other states was not common in the state. Haruna Gagara, the Commander of the NDLEA in the state, also disclosed that one tonne of cannabis was seized in August alone. Gagara said no fewer than 200 suspects were also arrested, while some had been convicted. He said collaboration with the community was part of strategies used to sensitise the people against the cultivation of cannabis.

Motorcyclists wade through the flood street at Amakom-Oko village, near Asaba in Delta State on Friday.

NAN

Flood claims 53 lives in two northwest states ADEOLA AJAIKAYE

he National Emergency Management Agency, (NEMA) says 53 lives have been lost to flood in Katsina and Kaduna States, while 30 others were missing in the last four months. Ishaya Chonoko, north west zonal coordinator of the agency released the figures at the weekend, giving a breakdown which showed that 51 deaths were recorded in Katsina, two in Kaduna State, with 30 persons confirmed missing in Jibiya, a border town in Katsina State. The floods, according to Chonoko, occurred between May 3 and September 8, affecting 29 local government areas (LGAs) of the two states.

A total of 12, 041 persons and 262 houses, he said, were affected in Katsina State, while 3,775 houses and 7,929 farmlands were destroyed in Kaduna. Chonoko listed the affected areas in Kaduna to include Abubakar Kigo road, Tudun wada, Malali, and Ungwar Rimi in Kaduna North. Others are Barnawa in Kaduna South; Karatudu, Narayi, Rido village, Gonin gora and Sabon Tasha in Chikun; Hayin Na’iya, Rafin Guza, Hayin Dan- Mani and Kawo in Igabi local government areas. Areas affected in Katsina included Malumfashi, Kafur, Bakori, Kusada, Kankai, Rimi, Musawa, Daura, Baure, Maiaduwa, Dutse – ma, Batsari, Kaita, Zango, Sandamu, Kurfi and Faskari local government areas.

According to the coordinator, relief materials including blankets, corn, rice, mattresses, cement and detergents have been distributed to the victims. He attributed the flood to blocked drainages, construction of structures along water channels and illegal mining along river banks, According to him, the disaster occurred days after the agency, SEMA and the Kaduna State Environmental Protection Authority (KEPA) had issued an alert that the states were likely to experience flash flooding. He, however, expressed confidence that the Kaduna government would made adequate arrangements to cater for potential Internally Displaced Persons (IDPs) in the flood-prone areas.

Police killing sparks protests in Bayelsa community Samuel Ese, Yenagoa

here were wild protests by the youths of Ogu community, near Yenagoa, the Bayelsa State capital, following the killing of one Mavie George, allegedly by the police. The angry youths, it was gathered, burnt personal belongings including car of one Ifeanyi said to have alerted men of the state anti-crime security outfit, ‘Operation Doo-Akpo’ on his grouse with the deceased which led to the death. Residents and visitors to the community,

it was further gathered, were not spared the backlash as many of them fled the community for safety. A source told CityFile on Friday that the late George and Ifeanyi were neighbours, but following a sharp disagreement between them, the latter brought in operatives of the state anti-crime security outfit who chased the former for possible arrest. However, as George fled to avoid arrest, a trigger-happy policeman allegedly opened fire on him and he eventually died from the injuries sustained from the gunshot. The identity of the trigger-happy police-

man was not known as at press time. It was, however, believed he was among those stationed at a T-junction called Four Road in Obogoro community, about four kilometers from Ogu community. The source said the residents of the community especially non-indigenes now live in fear of possible attacks by youths in protest against the untimely death of Mavie. Efforts to get Asinim Butswat, the police public relations officer, to speak on the incident failed as he neither picked his call nor replied a text message sent to his mobile telephone number.

Man nabbed for selling fake drugs YOMI AYELESO, Akure

ecurity operatives in Ondo State have arrested a man, Olowolayemo Ifetayo, for allegedly selling fake drugs. The state government had vowed to deal decisively with quarks, fake and counterfeit drug dealers. Wahab Adegbenro, the state commissioner for health, said that the government was seriously concern about the lives o the citizens and would not allow anybody to toil with them.

Adegbenro added that the government would also prosecute those operating hospitals under the guise of patient medicine stores and endangering the lives of residents. The commissioner who was represented by Dipo Durojaye, acting permanent secretary, ministry of health, after a monitoring by the task force on counterfeit and fake drugs in Akure, the state capital. He urged the residents to be careful where they seek medicare, saying there are accredited facilities where they can get good treatment

when the need arises. Ifetayo, who was arrested during the monitoring, was paraded before reporters. Various control and banned drugs and injections, including Enagin, were reportedly found in his possession. He had allegedly been administering drips, transfusing blood with wrong instruments, injecting his victims with banned and dangerous injections and using medical wastes in an unlawful manner. Ifetayo was handed over to law enforcement agents for prosecution.

Monday 17 September 2018

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This is M NEY A daily guide to your Personal Finance

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How managing your mental health could enhnace your productivity Lanre Olusola

he 10th of September was recognized globally as World Suicide Prevention Day, but what does this mean for Nigeria? How ready are we to tackle suicide and other mental health challenges that are currently increasing in our society today? According to recent medical studies, about 64 million Nigerians suffer from one form of mental disorder or the other, with recent research from the World Health Organization (WHO) showing that Nigerians are the most depressed in Africa. The WHO also reports that around 450 million people globally currently suffer from some form of mental disorder, thus, placing mental disorders among the leading causes of ill-health and disability worldwide. The statistics show that 1 in 4 people in the world (including children) will be affected by mental or neurological disorders at some point in their lives. Nigeria’s minister of health, Prof. Isaac Folorunso Adewole noted that in 2016, there was a 59% increase in demand for mental health services at the Federal Neuro-Psychiatric Hospital, Yaba. Considering also that a majority of us spend a huge percentage of our time at work than anywhere else, the importance of the work environment to the general wellbeing of the employee, the employer and the organization can neither be overemphasized nor ignored. Scientific research shows that

mental illness is the leading cause of sickness absence at work. A staggering 70 million work days are lost each year due to mental health problems in the UK, costing employers approximately £2.4 billion per year as a result of decreased productivity. Understanding how the world works and with the environment we are in, it is safe to say this reflects the situation here in Nigeria or probably worse. Over 21 Million Nigerians are living with one form of mental health challenge. And according to WHO, only 20 percent of these Nigerians have access to any form of treatment whatsoever. A greater percentage will remain in hiding mostly due to ignorance and the stigma attached to mental health issues. One of the major fac-

Work-related strain, lack of appreciation, unfair organizational practices, job insecurity and layoffs, interpersonal problems, and so on may also trigger mental health disorders or a breakdown

tors identified as contributing to mental health challenges is work place stress; others include stress caused by family and societal pressures. Scientific research has shown that 85 percent to 95 per cent of Dis-Ease is caused by Stress. For example In a 2017 study of 500 cities carried out by UK-based dry cleaning company Learjet, Lagos, Nigeria was listed as the 3rd most stressful city in the world after Baghdad, Iraq and Kabul, Afghanistan (2 cities ravaged by war and terrorism). Some of the factors considered in assigning the rankings included traffic levels, infrastructure, pollution levels, finance, citizens’ wellbeing, public transport, percentage of green spaces, financial status of citizens including debt levels, physical and mental health, and the hours of sunlight the city gets per year. All things being equal, it can be said that Lagos is actually the most stressful city in the world. The rate of sadness, unhappiness, and depression in our environment (real and virtual) has increased astronomically. Another study showed that only approximately

9% of the workforce in Lagos is fully engaged, present and productive at work. In Lagos, most commuters spend averagely 6-8 hours in traffic every day. People wake up daily at 4am and do not get back home till 11pm at which time they are unable to relax or spend quality time with family. By the time they get home, they are drained psychologically, emotionally, mentally and physically and the same goes for when they arrive at the office after being in traffic for hours and the vicious cycle continues. Research statistics have shown that over 2.5 million residents of Lagos state have one form of mental health disorder or the other, representing an average of more than 14.1 percent of the total population. Data from different countries around the world indicate that mental health problems are a leading cause of many employees dropping out of work. In the Netherlands, around 58% of work-related disabilities are related to mental health. In the UK, it is estimated that around 30–40% of the sickness absence is attributable to some form of mental illness. Mental health prob-

lems have an impact on employers and businesses directly through increased absenteeism, negative impact on productivity and profits. In addition, they impact employee morale adversely. Work-related stress is a major cause of occupational ill health, poor productivity and human error. Work-related stress could also manifest as heart disease, back pain, headaches, gastrointestinal disturbances or various minor illnesses; as well as psychological effects such as anxiety and depression, loss of concentration and poor decision making. This means increased sickness absence, poor performance in the organization and a possible increase in accidents due to human error. Stress is the adverse reaction people have to excessive pressures or other types of demands placed upon them. There is a clear distinction between pressure, which can be a motivating factor, and stress, which can occur when this pressure becomes excessive. Work-related strain, lack of appreciation, unfair organizational practices, job insecurity and layoffs, interpersonal

problems, and so on may also trigger mental health disorders or a breakdown. However, the good news is that most of the mental disorders are treatable. According to a research by Harvard University Medical School, untreated mental illness costs the United States a minimum of $105 billion in lost productivity each year. One of the reasons why mental health issues go untreated in employees is because health coverage plans of most companies cover all major physical ailments, but not mental health problems, which receive little or no attention from employers especially in Nigeria. Some steps to address mental health issues in the workplace: 1) Develop policies and procedures surrounding matters linked to workplace health and safety. 2) Allocate time, appropriate resources and funding to bring about sustainable change. 3) Identify risk factors and ensure an action plan is put in place for improving mental health in the organization. 4) Encourage onsite physical activity programs, as well as private or group coaching, mentoring and mental health awareness programs to create awareness and build resilience. 5) Give employee mental health the same priority as physical health and safety Although, effective mental health services are multidimensional, the workplace is an appropriate environment in which to educate individuals about, and raise their awareness of mental health problems. As the saying goes: “Health is Wealth”, and we must realize that there is no complete health without mental health. Lanre Olusola is recognized as a premier Life, Mind, Emotions and Behavioral Change Coach working with individuals and organizations to transition from where they are, to where they desire and are designed to be.

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INTERVIEW ‘Towntalk is bringing more strategic and data-driven approach to elections’ Tomiwa Erinosho and Disun Vera Cruz are co-founders of Towntalk, a political technology firm that uses technology to improve decision making with regard to electioneering campaigns and business. In this exclusive interview with INIOBONG IWOK, they discuss how the firm’s operations could shape electioneering and campaign process in the country. Excerpt:

ould you throw more light on the focus of Towntalk? Towntalk is a political technology company. We believe that we are bringing a much more strategic and data-driven approach to elections. We are taking a data approach to electioneering and this stems from the fact that elections are becoming increasingly difficult to manipulate in Nigeria, in Africa. As a result of this, there has to be strategy employed. What has always happened in the past is that the highest spender tends to believe he will win, but now we have to realize that the highest spender will not always win. Most campaigns now have no strategy and we believe that we can bring in that in electioneering in Nigeria, adopting a more strategic and data-driven approach to developing narratives to our clients. How would you compare the preparations towards elections in the western societies and what we have seen in Nigeria over the years? I think the first thing we have realised is that the current role technology plays in elections is concentrated on opinion and polling. And around the world, even in Nigeria, we have seen that polls are not a true representative of the people and they don’t take into account the demography and ideology of the people; it is static, and the way the people do things. The polling has not been able to provide solutions to this over the years. It does not take into account human ideology, dynamics of human being. Also poll-

We would be able to tell as events change. Maybe close to the election we can say; we don’t deal with conjecture.

ing is done at certain time; several events would have happened that may change the voting pattern. That is why the use of data comes in which our firm is trying to provide. Electioneering has changed and evolved in Nigeria significantly over the years. In Nigeria now, unlike in the past, we have seen more transparency in the electioneering process. The introduction of the Permanent Voter Card, unlike in the past, has made the process more technologydriven and transparent, but it has come with its problems, which is the issue of vote buying. We are at a stage in our democracy where we are addressing the problems coming up in the polity. Nigeria is still an infant democracy; we believe that at some point we would need to adopt a more strategic approach to dealing with issues. We have made a lot progress in the last fifteen years, but we believe with use of technology we can make more progress as the years come.

We have seen polls predictions failing in some elections across the world. How does your firm guarantee that the data gathered are reliable? Polls fail because they could be static; anybody can come up with poll because certain persons would win or lose. Polls fail which says that our approaches may not be perfect. We have internal process of checking our sources of information; we have sources of getting information, and we have our own in-house checks. Do they have history of providing information? We make sure everyone is verified. We take information in one place and make sure it corroborates another source. This puts us in a unique position. In the western world, a lot of the polling companies have vested interest in the events. This often drives them. But our method is different. Even the blind can see if there is no bias because it is transparent.

How do Towntalk operations differ from those of similar firms abroad? We are a technology company; we are trying to objectify our job on elections in Nigeria. We are not in the business of political conjectures. Our approaches are data-driven. Through this we can tell the candidates their risk and chances during elections. But this is event driven, and time bound, events happen that could change the behaviour patterns of people before elections. These events have different impact on the people and the populace. We have been able to provide advice not just to our clients but to the whole electioneering process. Can your firm predict the likely outcome of next year’s presidential election? We can’t say who would win the presidential election because it is a continuous process. Our strategic approach takes account of the dynamics of human being which changes over time.

The method Towntalk is using in its research appears elitist. How do mid-level politicians also benefit from your work? That is not true; we use data-driven approach in our work which is international standard used in the electioneering process. When doing this, we use models; we look at the changes in the conduct of elections. We add value to politics and electioneering process in Nigeria through our work. We are adopting internal approaches in our work. We may be young Nigerians, but we are passionate about the country. I have lived in the UK for many years and been around the world for fifteen years. We don’t believe in conjectures approach and we are here to add value to Nigeria and the general public. In this clime, due to poverty status of the electorate, they are prone to compromises. This is why we hear about vote-buying and all that. How can your work help to check such frauds? One of the by-products of our analysis is to analyse how it affects the states, and if we are able to predict how elections would happen in states we can help provide information to INEC and say this ward is volatile and uncertain, you need to make sure you put these resources to check vote-buying; do this in this area, which would help the whole electioneering process.

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ECONOMY

NSE 30 firms record profit growth amid sell off …Banks, Oil and gas remain outperformers

BALA AUGIE

he most capitalized firms in Nigeria have continued to grow profit and margins in the last six month amid a precipitous drop in share prices since the start of the year. This means firms are still in an advantageous position to reward shareholders in form of dividend payment, but a sluggish economic growth could f o rc e ma nag e r s o f corporates to reduce dividend pay outs and plunge large chunk of earnings into the business to fund future expansion plans. The s ell offs re corded in bellwether

Monday 17 September 2018

P.E

SHORT TAKES 57.1

The Purchasing Managers Index (PMI) of the manufacturing sector of the economy grew at 57.1 index points in August compared to 56.8 recorded in the month of July. The Central Bank of Nigeria (CBN) on Friday released the PMI reading for August, which shows a 17 consecutive month of expansion. The Purchasing Managers’ Index (PMI) is an indicator of the economic health of the manufacturing sector. The headline PMI is a number from 0 to 100. A PMI above 50 represents an expansion when compared with the previous month. A PMI reading under 50 represents a contraction, and a reading at 50 indicates no change. The further from 50 is greater the level of change.

$350 million stocks across sectors switched to higher gear last week as the Nigerian Stock Exchange All Share Index (ASI) plummeted by 5.02%. NSE 30 Index has returned -17.83 percent since the start of the year, according to data from the Bloomberg Terminal. Following the bullish run that spilled into January where the ASI recorded an impressive return of 15.95 percent, the equity market has gone southwards due to sundry factors. The selloff was brought on by trade wars between China and the United States (U.S), rising yields in the U.S due to two successive rates hike by the Fed, and investor fretting about a contagion effect amid turmoil in emerging Continues on page 31

Seplat Petroleum Development Company Plc, said on Wednesday August 29 that its $350million 9.25% Senior Notes due 2023 were listed and admitted to trading on the International Securities Market of the London Stock Exchange. The Notes were issued on March 21, 2018 and listed on the Euro MTF market of the Luxembourg Stock Exchange The unaudited half year (H1) financial results for Seplat Petroleum Development Company Plc for the period ended June 30, 2018 as released by The Nigerian Stock Exchange shows the company grew revenue by 160 percent to N104.794billion, from N40.317billion in the corresponding H1 period of 2017.

47.7% The annual report of PZ Cussons Plc for the year ended 31st of May 2018 reported a double digit drop of 47.7 percent in the after-tax profit on Friday, hit by a surge in the net finance cost of the company by 434.1 percent. The expected uplift in trading did not materialise, while competitive pressure increased for the company as PZ Group posted a Net finance cost of N651.72 million, 434.1 percent from the Net finance income of N195.09 million posted in the last fiscal year in 2017.

BusinessDay MARKETS INTELLIGENCE (Team lead: BALA AUGIE - Analyst: DIPO OLADEHINDE, ENDURANCE OKAFOR, BUNMI BAILEY Graphics: SAMUEL IDUH )

BMI provides in-depth analysis and data on industries, companies, stocks, currencies, fixed income/credit, economics, regulation and factors that influence investor’s decision-making Email the BMI team patrick.atuanya@businessdayonline.com

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Markets Intelligence ECONOMY

Investors selloff Multinationals after MTN repatriation sanctions …Banks, Multinationals lose N563 billion since August 29 EMEKA UCHEAGA

ix of the largest multinational companies listed on the Nigerian Stock Exchange (NSE) have seen their market capitalization drop by N158 billion after MTN repatriation scandals incited a market panic. The six affected multinationals are Nestle, Unilever, Guinness, PZ, Lafarge Africa and Total. Investors fearing that other multinationals may be next began selling down on NSE multinationals which caused their stock prices to return an average of -7.57 percent over the two week period, enough to beat down the market capitalization of the top 6 multinationals from N2.1 trillion on August 29 to N1.95 trillion on September 13. On 29 August, CBN sanctioned four banks for illegally repatriating funds on behalf of MTN and ordered the telecommunications provider to return $8.1 billion into the country. This morphed to be one of the biggest contagion selloff as multinationals have now lost N158.2 billion while 10 of the largest banks have lost up to N405.6 billion in market capitalization since the repatriation saga began according to data compiled from Bloomberg. Thus, bringing the total market loss for banks and multinationals to over N563 billion. The biggest losers by percent change in share prices among the multinationals since the sanction announcement is Lafarge Africa

who have seen their share price decline by as much as -18.82 percent, leading to a market cap loss of N41.6 billion. Nestle was the biggest losers by market capitalization as its stock market capitalization lost around N80.8 billion since August 29. Nestle share prices have returned -6.4 percent since August 29 as investors have chosen to wait at the sidelines till the uncertainty fades. Other losers include PZ (-10.0%), Unilever (-6.4%), Guinness (-2.22%) and

Total (-1.2%). There is also the possibility that the selloff may be as a result of foreign investors seeking to repatriate their profits while they can before similar issues as MTN happen to them. Robert Omotunde, head of research at Afrinvest Securities Ltd told BusinessDay that “what we have observed in the market is that foreign investors who invest in Nigeria prefer to invest in multinationals that also operate in their own coun-

tries. The familiarity helps investors better understand the companies they are investing in”. Foreign investors make up the top 10 largest shareholders in most of the six affected multinationals with the foreign parent company typically owing the majority of the stocks issued. It is not unlikely that this MTN repatriation saga will negatively affect future portfolio investments in NSE companies.

NSE 30 firms record profit growth amid sell off Continued from page 30

markets (Argentina and Turkey). Further, the political uncertainty in the build up to the forthcoming election, the sluggish economic growth since the country exited a recession, the harsh regulatory environment that saw punitive punishment meted on MTN over alleged illegal repatriation of dividend and heavy tax fines forced investors to flee the equity market . Despite the aforementioned tough and volatile macroeconomic environment, Nigerian firms, notably banks, have been able grow earnings while turning each Naira invested in sales into higher profit. The cumulative net income of NSE 30 firms grew by 11.75 percent

to N680.36 billion in June 2018 from N611.97 billion the previous year. Of course banks remain the star performer as the cumulative net income of the 8 quoted lenders among the NSE 30 increased by 17.30 percent to N442.46 billion from N377.18 billion the previous year, according to data compiled by BusinessDay. Lenders’ cumulative average net profit margin, a measure of efficiency, increased to 24.12 percent in June 2018 from 21.15 percent as at June 2017. Zenith, GTbank, Stanbic IBTC, and Zenith Bank, profit margin outperformed the industry’s average. Investors in the oil and gas industry also flourished amid vagaries in the macroeconomic

environment with growth in profit and margin, thanks to an uptick in crude oil price since January. The cumulative net income of the six oil and gas firms quoted among the NSE 30 spiked by 75.23 percent to N38.51 billion in June 2018 from N16.53 billion as June 2017. See Table. Cumulative average net profit margin increased to 9.0 percent from June 2018 from 6.44 percent as at June 2017. However, the consumer goods industry has been faltering in tandem with sluggish economic growth albeit there was an increase in margins, as Guinness Nigeria, Unilever Nigeria, and Nestle Nigeria recorded growth at top and bottom line.

The cumulative net profit margin of the nine consumer goods firms of the NSE 30 declined by 2 percent to N65.33 billion in the period under review while net margins moved to 5 percent in June 2018 from 4 percent the previous year. Dangote Cement and Lafarge Africa saw cumulative average net profit margin reduce to 11.15 percent in June 2018 from 20.15 percent the previous year. “As the valuation of Nigerian assets gets more attractive compared to its emerging market peers, we recommend a gradual accumulation of fundamentally-sound stocks, particularly those with a consistent dividend payment history,” said analysts at CSL Stock Broker Ltd.

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LegalPerspectives With Odunayo Oyasiji Protection offered the minority shareholders by Companies and Allied Matters Act (CAMA)

ajority will have their way while the minority will have their say. It seems we operate in a world where the majority is favoured and the minority at best can only be heard. The situation in a company setting where we have shareholders and the board of director is not different as decisions are based on the majority rule. Usually, decisions are arrived at after voting. The Companies and Allied Matters Act (CAMA) determines the type of majority that will be acceptable i.e. whether simple majority or two-third majority. Furthermore, the majority rule is enshrined in the ancient and highly celebrated English case of FOSS –v- HARBOTTLE (1843) 67 ER 189 – where a wrong is done against a company by the majority it is only the company that can bring a claim to remedy the wrong. Going by the tenets of this rule, no claim will definitely be brought as far as the majority represents the voice of the company. This rule is codified under section 299 of Companies and Allied Matters Act. Are the minority left without any remedy where there is a wrongdoing? No. Section 300 of CAMA stands as an exception to the majority rule (FOSS –v- HARBOTTLE). The exceptions provided are1. Section 300 (b) of CAMADoing by ordinary resolution what should be done by special resolution- Resolutions refers to decisions taken in a meeting. A resolution is regarded as ordinary resolution if it is passed by simple majority e.g. 13 people voted in favour while 12 people voted against. A resolution is a special resolution if same is passed by not less than 75% of the voters. CAMA stated that the articles of association of a company can provide for how a resolution should be passed (whether special or ordinary) as long as the act is silent about it. Examples of the resolutions that must be passed by special resolution as provided in the act are- alteration of the memorandum of association, alteration of the articles of association, reduction of the authorized share capital, changing the company’s name, resolution on winding up

of the company by court, making the liability of the directors to be unlimited, re-registration of unlimited company as company limited by shares, re-registration of a private company as public company and vice versa, etc. If CAMA or articles of association of a company stipulates that an action should be done by special resolution (or vice versa) and same is not followed then the minority can institute an action. • When there is an act or omission which affects the individual rights of the minority shareholders as members of the company- Example of this situation is where they are being denied their rights as a member of the company e.g. the right to vote, right to receive notice of meeting. • Where fraud is being committed on the company or the minority shareholder and the directors are not taking steps to remedy the wrong- This can happen in a situation where the majority are dealing with the properties of the company in such a way as to unfairly dispossess the company of same to their own advantage. A good example of this situation was seen in the case of YALAJU AMAYE –V- AREC (1990) 6 NILR 290- in this case, the directors withdrew a lot of money from the account of the company and even came up with forged board resolutions meant to change the signatories to the accounts of the company. The minority shareholders were allowed to sue to remedy the wrong.

• Entering into a transaction that is ultra vires or illegal- Example of this situation came up in the case of YALAJU AMAYE –V- AREC (1990) 6 NILR 290 where the board appointed new directors despite the fact that the articles of association of the company does not give such power to them. • Where a meeting cannot be called early enough to address the wrong done to the company or minority- this situation can occur where an irreversible damage is about to be done and waiting for a formal meeting to be held will not address or remedy the wrong as the deed would have been done. In this situation, it will be wise to allow the minority to institute an action to quickly remedy the situation before things get out of hand. • Where the directors are likely to benefit or they have benefitted from the dereliction of their duty- this is straightforward. In a situation where the directors who are the ones responsible for the day to day running of the business of the company are deliberately in breach of their duties to the company so as to attract benefits to themselves. It is certain that they will never take steps to remedy the wrong as they are the wrongdoers. Therefore, the minority can take steps to seek redress on behalf of the company. • Where it will be in the interest of justice- this exception is a creation of the Supreme Court of Nigeria in the case of Edokpolor & Co Ltd v Sam-Edo Wire Industries Ltd (1994) 7

S.C. 119. The Supreme Court of Nigeria stated that the minority can seek remedy when it will be in the interest of justice regardless of whether the situation falls within the ones earlier discussed above. This can only be determined on case by case basis. This has also provided a leeway for minority shareholders to seek to protect their interest. In the light of the above, the minority shareholder is empowered to institute three categories of actions in court i.e. a personal action in a situation where the matter is about his/her personal right as a shareholder, a representative action where the matter affects him/her and other shareholders (he can institute an action on behalf of himself and other affected shareholders), a derivative action where an action is brought by minority shareholder in the name of the company to remedy the wrong done to the company. However, in the case of a derivative action the shareholders affected must first apply for the leave of courtat this stage the minority must prove the grounds for wanting to institute the action in the name of the company. In conclusion, the minority is not left out in the cold. There are steps the minority can take to seek redress on behalf of themselves and the company. An efficient use of this power will go a long way to put the majority in check and keep companies alive. Legal Nuggets Highlight of the amendments

to the Companies and Allied Matters Act as in the bill that was passed by the Senate – 1. A single person can form a company instead of the minimum of two people. 2. The consent of the Attorney General of the Federation is no longer needed to register a Company Limited by Guarantee. The new rule is now publication in 3 national newspapers and the acceptance of objection from the public. 3. Annual General Meeting is not mandatory for any company with a single shareholder. 4. Meetings done electronically in accordance with the articles of association of a private company is now permitted. 5. Small companies are private companies with turnover not more than 120 million as against 2 million under the existing Act. Also, the net value of the company should not be more than 65 million as against 1 million. 6. Minimum share capital for private company is now 100 thousand. (no longer 10 thousand) and 2 million for public company. 7. Records of company and statutory books can now be in electronic form. 8. Shares can no longer be issued at a discount. 9. It is optional for a company to use company seal. 10. Register of transfer of shares can now be in electronic form. 11. Derivative action can now be against a company and its subsidiary. 12. Limited partnership and limited liability partnership are now recognized. 13. Administrators of a company can now work to rescue it instead of winding up. 14. Insolvency practitioners now need to obtain the permission of CAC to act in that capacity. 15. Scheme of merger provision as in the Investment and Securities Act was incorporated into the bill. 16. Provision of Administrative Proceeding Committee to provide opportunity for people alleged to be in breach of the provisions to be heard. Appeal can be made to the Federal High Court if the outcome of the proceedings is unsatisfactory.

Send your comments and questions to odunayoolumayowa@gmail.com.

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Monday 17 September 2018

Start-Up Digest

In association with

How Gbenga Ogunbiyi is digitalising marketing BUNMI BAILEY

benga Ogunbiyi is the senior partner at PPC Digitals, a start-up agency that renders services in digital marketing. Gbenga and his co-founder Tosin Adefimilola- were inspired to establish PPC Digitals in 2015 after completing a course on digital marketing. While undertaking the course, both entrepreneurs saw a business opportunity and decided to leverage on it. “We wanted to learn digital marketing, which was the new cool then, and, after the training, we saw an opportunity to create a business. We got our first clients before we launched in 2015,” he says. “This positive line spurred us to register our domain PPC.ng (meaning: Pay Per Click marketing). You pay only when there is an engagement on your ads in September 2015. “While we were developing the platform, we got a gig from a popular FinTech firm in Victoria Island through a colleague we formerly worked together at a top e-commerce firm. We launched a search and display advert for their end of the year marketing campaign in 2015 tagged ‘Everything Goes Mobile’ and ever since, we

Gbenga Ogunbiyi

have not looked back,” he adds. Gbenga started PPC digitals with N70, 000, an amount that was obtained from his first client. He states that the initial capital was used in registering the business domain, purchasing the hosting for web and acquiring a business

How to invest in yoghurt production JOSEPHINE OKOJIE

ith the growing middle class in Nigeria who are sensitive about their nutrition, yoghurt is one of the dairy products which are highly demanded. However, Yoghurt production is a neglected area, but statistics show that 98 percent of Nigeria’s dairy needs, including milk, are imported into Nigeria. According to operators in the dairy industry, the nation grapples with about $1.3 billion import bill for dairy products for a population of over 170 million people. This shows the huge opportunity in the subsector for potential investors. With strong population growth, particularly amongst children and young people, consumption of milk products has been on the increase in recent years. Yoghurt continues to be one of the more dynamic categories in packaged food, in trendy and flavoured formats that is widely available. Some companies have invested in the processing of milk into several products such as ice cream, ghee, powdered milk and yoghurt, among others. Aliko Dangote, president of Dangote Group, who is also a dairy maker, stated that only two percent of the country’s dairy needs are

met by local companies. With dollar scarcity and roadblocks to importation in the country, yoghurt production is a sure bet. Yoghurt is a healthy source of milk, and capacity to produce a low-sugar brand for the aged and diabetic as well as a moderately sugar type for other classes is an advantage. Producing yoghurt could cost between N2 million and N10 million, depending on the type of equipment used and their sources. The major raw materials used to make yoghurt include: Milk, milk powder, stabilisers, sugar, flavour, colour, among others. Also, Yoghurt production requires major machinery such as motorised stainless steel mixer, incubator, pasteuriser, filling machine, UV Lamp, transfer pumps, PH Meter, shrink wrapper and weighing machine. Some of the machines are imported into the country, but many of them are fabricated locally by the Federal Institute of Industrial Research Oshodi in Lagos or Projects Development Institute Enugu (PRODA). Local fabricators can also help. According to FIIRO, return on investment is 46.1 percent, while return on equity can go as high as 115 percent. Payback period is 34 months and 19 days, while breakeven point is 51.8 percent.

name from the Corporate Affairs Commission. “The initial start-up capital was the fund we realised from our first set of clients. The first person paid N70,000 while the other one did not pay up till now. However, he connected us to a paying real es-

tate client and that is life,” he says. He notes that the firm has grown tremendously owing to its ability to assist a lot of MSMEs scale up their businesses and advertise their products using various digital tools. “We have helped a lot of small and medium enterprises (SMEs) scale and increase the awareness of going digital to improve their businesses and help move people away from the street through training, equipping them with the needed skills set,” the young entrepreneur says. “Recently we got nominated for the ‘.NG Awards’ by Nigeria Internet Registration Association (NIRA) for the ‘Startup Company of the Year 2018’. Even though we did not win, it gave us the needed impetus to keep doing what we are doing, as the world is watching us. It can only get better,” he states. The young entrepreneur notes that most start-ups fail after five years of survival owing to too much emphasis on profitability at the early stage of the business. “If the founder’s motivation is strictly on the profit and not on the passion, it might have a ripple effect on the business if money fails to come in,” Gbenga says. “You can only have a business when you solve a problem and your customer feels satisfied. Because we are in the business of solving people’s problems, which

might change from time due to human dynamism, the business needs to evolve to stay relevant and afloat,” he explains. He identifies that knowledge gap in digital marketing is the major challenge confronting the business, adding that it is very difficult for most business to patronise digital marketers because they lack the understanding of what it is. “The biggest challenge confronting us is the dearth of knowledge in digital marketing. If clients don’t understand what we do, they find it difficult to do business with us.” He notes that the business is now educating people for free to address the issue. “As a remedy to the above problem, we educate people on digital marketing for free during our anniversary and the end of the year,” he says. He also says that the huge infrastructural gap and lack of skilled employees, among others, are challenges facing the business, while calling on the government to invest in infrastructure and upgrade the country’s curriculum to meet industrial standards. On his advice to other entrepreneurs, he says, “Believe in yourself. Nobody believes in you if you don’t believe in yourself. Start small, think big. Think, grow, pursue excellence and evolve.”

LCCI tasks FG to create right environment for MSMEs JOSEPHINE OKOJIE

he Lagos Chamber of Commerce and Industry (LCCI) has charged the Federal Government to pay closer attention to the micro, small and medium enterprise (MSMEs) sector of the economy and provide an enabling business environment for the growth of the operators. The charge was given by Babatude Ruwase, president of LCCI , during the chamber’s SME 2018 annual seminar, with the theme, ‘Positioning the MSMEs for Development and Global Competitiveness’ in Lagos last Wednesday. “We join other stakeholders in calling on government to refocus attention on the non-oil sector where the SMEs participate more. I strongly believe that SMEs is the most viable platform for realising our made in Nigeria aspiration,” Ruwase said. “This requires dedicated and sustained intervention in the sector through various reforms and policies,” he said. He stated that with the right policy environment and provision of needed infrastructures, Nigerian entrepreneurs would fully contribute to the growth of the economy.

He noted that the government had demonstrated a good level of sensitivity to the plight of the MSMEs, adding however, that the operators were still faced with a number of issues ranging from limited access to finance, high cost of credit, multiple taxation logistics problems amongst others. Similarly, in his key note address, Abiodun Oladapo, chairman, SME group, LCCI, said that despite the fact that government had created a lot of agencies and quasi government organisation with mandate to provide calculated direct interventions and assistance to support entrepreneurial activities, much more still needed to be done to grow the sector. “If entrepreneurs are given an enabling and conducive business environment, the MSMEs can significantly transform Nigeria into a sustainable and enviable economy,” Oladapo said. “If gladdens my heart to note that entrepreneurship initiatives are yielding the desired result such that a large number of private organisations have started to key into it. We need to position our MSMEs for development and global competitiveness,” he added. The latest report by the Small and Medium Enterprises De-

velopment Agency of Nigeria (SMEDAN) shows that the MSMEs sector has 37.1 million operators that have created 84 percent of the country’s total jobs and contributes 48.5 percent to GDP. According to Yinka Fisher, Lagos coordinator of Small and Medium Scale Enterprises Development Agency of Nigeria (SMEDAN), the Federal Government was addressing some of the challenges facing MSMEs operators in the country. Fisher urged MSMEs to adopt positive attitude towards doing their business and should not be weighed down by the country’s infrastructural challenges.

Start-Up Digest Team ODINAKA ANUDU Editor

odinaka.anudu@businessdayonline.com 08067478413

Reporters Josephine Okojie Angel James Joel Samson Graphics

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Start-Up Digest Omolola Onabanjo: Helping Nigerians find right ICT accessories JOSEPHINE OKOJIE

ver the last de cade, Nigeria has experienced an ICT boom and Omolola Onabanjo, chief executive officer of LollyP Accessories, a start-up business that sells ICT gadgets in Lagos, has positioned himself to tap from this opportunity. Omolola’s love for mobile phones inspired him to establish LollyP Accessories in 2011 while still an undergraduate. She started by buying blackberry phones from various stores in Ikeja and selling them in school, making a margin from each sale. T h e g ra d u a t e o f O l a b i s i Onabanjo University says that the patronage from friends and course mates was very high, making her see a good business opportunity. “I was buying and selling phones to my friends back then in school and making a little margin. The demand from friends and course mate was on the rise, so I decided to establish LollyP Accessories to meet up with the demand,” she says. “I was getting patronage on a daily basis from referrals from my course mates and friends, but I could not meet up because it was capital intensive to store phones. So, I decided to focus on the acces-

Omolola Onabanjo

sories instead. “Once a new phone is launched, I try to find out its weakness and then begin to stock their parts. For example, for blackberry, I realise that the battery shelf life is low so I had a lot of blackberry batteries in stock,” Omolola says. “I also realise that there was high demand for power bank be-

ANDE West Africa launches Ghana entrepreneurial ecosystem snapshot JOSEPHINE OKOJIE

he Aspen Network of Development Entrepreneurs (ANDE) West Africa has launched the entrepreneurial ecosystem snapshot of Ghana. According to a statement made available to BusinessDay, the snapshot captures the current state of Ghana entrepreneurial ecosystem. “Though Ghana is one of the largest economies in West Africa, a variety of gaps still pervades its entrepreneurial ecosystem. Some of these gaps are a lack of collaboration among actors and access to relevant information, mismatches in investment size supply and demand, poor access to markets, excessive cost of physical infrastructure, and limited access to finance among others,” the statement states. “Despite these challenges, the small and growing business (SGB) sector is actively driving the country’s economy. According to Ghanaian government data, small and medium-sized businesses account for 70 percent of Ghana’s gross do-

A cross section of startups.

mestic product,” the statement adds. ANDE conducted this entrepreneurial ecosystem snapshot to identify organisations that actively support entrepreneurs in Ghana and the kind of support they provide, the statement says. The organisations include; investors, capacity development providers, business development support providers, professional service providers and government agencies, amongst others. ANDE first conducted an entrepreneurial ecosystem snapshot that focused on Accra only in 2017 but has now expanded on the work done in the capital city to include an overview of the entrepreneurial ecosystem in ten regions in Ghana. The snapshot shows that organisations that support entrepreneurs in Ghana primarily focus on agriculture and that the top impact objective is typically capacity development, the statement states. Also, it shows that the most-used financial instrument in the ecosystem is equity and the top nonfinancial support available in Ghana is access to networks and partners.

cause of the poor power supply in the country. So, I had a lot of power bank in stock and there was a high demand of it from students,” the young entrepreneur states. Omolola tells Start-Up-digest that he started his business with no capital. “To be candid, I started my business with zero capital. The strategy I used then was to help

some of my friends and my course mates who wanted to buy or sell new or used smartphones, laptops and some other gadgets at a commission,” she explains. “From ever y commission made, I saved a little and, in 2011, I had enough to establish my business,” she adds. The young entrepreneur says her business has been able to scale up since starting and has done delivery in 30 states across the country. She notes that social media has helped him tremendously to grow his business since starting. “Thank God for social media and e-commerce platforms such as Jumia and Konga, amongst others. My business has amplified since the invention of these platforms. They have really enhanced the growth of my business and helped me survive even without a physical outlet yet,” Omolola says. “I run my business 100 percent online and through online referral I get offline orders and at the moment we have been able to deliver to 30 states so far in the country,” she says. Omolola says she sources most of the accessories from manufacturers directly and also from international online stores. She adds that he plans to expand his business by having a store and representatives to sell the gadgets in each higher institution of learning across the country.

“One of my plans is to have an offline outlet very soon, which is going to major in varieties of accessories to gadgets. Also, I plan to have campus representatives across various universities that sell my products. I have already done that with my alumni but I am currently working towards other university as well,” she says. It has not all been rosy for Omolola as the business has suffered trust issues. The entrepreneur says it has been very challenging convincing clients that she offers excellent service owing to high rate of fake social media accounts set up to dupe people. She notes that the business is gradually addressing the issue by telling clients to pay on delivery. She also identifies lack of finance as another major challenge facing the business and logistics. She states that logistic time has taken longer hours owing to the poor state of road infrastructure across the country, while calling on the government to improve on Nigeria’s road infrastructure and create access to finance for startups. On her advice to others, Omolola says, “Never stop building meaningful relationship with customers and other people in your industry. Choosing to instead view competitors as potential partners and collaborators can positively impact your business in a big way.”

LCCI announces big changes for Lagos International Trade Fair ISAAC ANYAOGU

head of its November 2 -11 Lagos International Trade Fair, the Lagos Chamber of Commerce and Industry (LCCI) says it wants replicate the ambience found in international fairs by moving booking process from physical registration to online, banning loud speakers and carnival dancing and introducing marquee tents in place of wooden ones . Gabriel Idahosa, vice president and chairman, Trade Promotions Board of LCCI, in a visit to BusinessDay’s Apapa office last Wednesday, along with Segun Alabi, head corporate communications and Sola Oluwadare, assistant trade promotion manager, said that after 31 years of organising the Lagos International Trade Fair, the chamber has evolved into an enterprise, adopting a constant theme, which will henceforth be, ‘Connecting Businesses, Creating Value’. “We have redesigned the website to allow for online booking as no physical bookings will be allowed. When you book online, you are guaranteed a space along with the facilities, which you can see on a map,” Idahosa said. Elaborating on the other big changes planned for the fair, Idahosa said henceforth exhibitors

will not be allowed to bring loud speakers and erect dancing stages. “It begs the question, is it a trade fair or a carnival? If I come to international trade fairs in London, Dubai or even Kenya, is that the same kind of ambience I will see?” Idahosa said announcements will only be made from a public address system and every exhibitor will have an opportunity to make one in order to advertise its products or services. The next big change, according to vice president, is that wooden tents will mostly be replaced with marquee tents, which measures about 25ft by 90ft and eventually aim for total elimination of wooden tents in future events. This would prevent hawkers

Gabriel Idahosa

and other unauthorised people have access to the fair, explained Idahosa. Oluwadare said that the decision to switch to online bookings has opened up new opportunities for the fair including more foreign participation. He said exhibitors from China and Japan and about 17 other countries in Europe, Africa and other parts of the world have expressed interest to participate. “We have also divided the stands by sectors. So once you make bookings online, you will exhibit your product or service in the designated area,” said Oluwadare. LCCI said it is expecting over 2,000 exhibitors from Nigeria and outside the country and expects to receive about 500,000 visitors. The visitors would include school tour groups, government ministries and department officials, and the general public. Alabi explained that elaborate preparations have been made to ensure that there is adequate coverage of the International Trade Fair through the creation of a Media Centre to be prominently located at a strategic location on the grounds for effective coverage. “The Media Centre will have laptops with internet connections so that journalists can write their reports and send in for publication right there at the stand,” Alabi said.

BUSINESS DAY

Monday 17 September 2018

Start-Up Digest

‘Billion-dollar businesses are emerging from Nigerian tech ecosystem’ Keturah Ovio-Onoweya is the chief executive of Qeturah.com and Usanii, two tech start-ups that are supporting the growth of made-in-Nigerian brands. A Software Engineering graduate of Nottingham Trent University, UK, the 26-year-old Keturah worked for Grabit, a South-East Asian tech company, where she was exposed to so much information that gave her confidence to found Qeturah.com. A multiple award-winning entrepreneur, Keturah started with just $200, which she used for domain purchasing and hosting. Today, over 150 brands and independent sellers all over Nigeria are on her platform. She spoke with ODINAKA ANUDU, Start-Up Digest Editor. What is Qeturah all about, and what motivated you to set it up? eturah is a Lagos-based social enterprise dedicated to promoting made-in-Nigeria brands and businesses through online and offline platforms and partnerships. Primarily, we are an online marketplace that makes it easy for anyone, anywhere, to discover and shop for quality made-in-Nigeria brands and products made by independent sellers scattered all across Nigeria. We make it easy for local brands to compete in the global online marketplace. Living in the Diaspora for many years, I just never could find an easy way to buy anything that identified me as African or reminded me of home. When I did find, it was either ridiculously expensive or not much variety or both. I was sitting in my room one day and thought, ‘Why can’t I build a platform that makes the buy and sell easy? After all, I am a software engineer and I’ve got the skill-set to quickly build suchlike platforms and test the market.’ That was all it took, a little ‘Aha’ moment that has now turned into a fully functional business that is helping over

Keturah Ovio-Onoweya

150 brands and independent sellers all over Nigeria. I noticed that you have another platform called Usanii. What is it all about and why and when did you found it? Usanii was birthed from Qeturah. When we started, we tried selling art (premium and street) on same platform but quickly realised this was a terrible idea as, firstly, you can’t sell art together with shoes, bags, and clothes. Secondly, you can’t sell premium art and street art together. It just diminishes the value of the premium art. We

couldn’t find an aggregated platform that one could go to, to discover, collect and learn about unique African artists and their works. Usanii was ideated to be the online resource to discover, collect and learn about unique African artists and their artworks. Usanii was founded in July 2016 and we held a group art exhibition for three contemporary artists – Dimeji Alabi, Baruwa, and Emmanuel Dudu at the British Council Nigeria office in Ikoyi. We wanted to start building momentum office and then take it online.

Usanii has been kept under wraps for a while now as I do not have the bandwidth (time) to run two companies. I am, however, looking towards partnerships with individuals, organisations, or better still, all the above and finding a CEO who can run Usanii whilst I concentrate on Qeturah.com. You won the Enterprise Challenge Award and are a beneficiary of Tony Elumelu Foundation. How much was handed to you and what has changed in your business since you got the money?

Both organisations offered cash prizes, trainings, mentors, and access to a wide network Tony Elumelu Foundation provided $5,000, business training, mentoring for one year with a seasoned entrepreneur in Nigeria. Enterprise Challenge provided $10,000, a day mentorship with Sir Richard Branson, chairman of Virgin Group (Virgin Atlantic); four free upper-class flights and paid expense to the UK British Council, business training boot camp in Nigeria, business training and networking in the UK at Oxygen Startups, all-expense paid trip for a business training at the Branson Centre of Entrepreneurship, South Africa, and further support till date. With TEF grant, I was able to conduct market research and validate my business concept. So, when the Enterprise Challenge came about, I had a proof of concept to show the potential of my business and what impact it could have on people at large and in our economy. With the Enterprise Challenge grant, I was able to hire more people, build a better product (online platform) with sophisticated functionalities, strike more strategic partnerships and grow.

What do you see in Nigeria’s online business and tech entrepreneurship? I see a lot of growth potential. I believe billion-dollar businesses will emerge (are already emerging) from the Nigerian tech ecosystem and I’m glad to be part of it. I believe tech is Nigeria’s new oil, so it’s time for investors and government to give attention to the serious boom about to happen, or rather is happening. You must have challenges. What are they? Finding the right talent with good work ethics took me a while, but I’m currently happy with my team. Being a woman in tech and commerce, it can be quite daunting in a sea of men to stand tall and be taken seriously, especially as we live in a society that does not really encourage women to make much of themselves or have daring aspirations in life. What advice will you give to upcoming entrepreneurs? Never give up. Ideas are worth exploring. Don’t let anyone shut down your idea. Your ideas and dreams are valid irrespective of who you are and where you’re from. Even if you fail, you would have learned something.

Atlanta Leadership & Business Impact to hold conference

Investing in cucumber, watermelon production

he Atlanta Leadership and Business Impact, an international conference leadership organiser based in the United States, is set to hold its annual leadership conference. According to the organisers, the conference is aimed at discussing the discovery and dynamics of operational capacity of leadership for people across all walks of life as well as opportunities in global wealth creation. The event, which started about five years ago, will have in attendance people from different parts of the world. The main point of discussions will focus on leadership, growing an idea into a

business, project presentation, case studies as well as global studies on why businesses fail. It is expected that CEOs, presidents of companies, professionals, consultants, start-ups, head of departments and political leaders will be in attendance. The conference is schedule to hold on December 21st through to 23rd, 2018 at the Hyatt Hotel, 2999 Windy Hill Road, Marietta Ga 30067, Atlanta, United States. Key speakers are Selina Haris, CEO, Financial Broker and Advisor, Harold Hagan, CEO, Atlanta Custom Broker, Ajayi Aiyesa, founder, Fixdride.com and Clarance Daveport, forex and investment expert, among others.

JOSEPHINE OKOJIE n spite of the present challenges in the Nigerian economy, opportunities still abound locally in key sectors such as the agriculture and manufacturing. Cucumber and watermelon production in Nigeria are one of those opportunities that still needs to be explored. Nigeria has comparative advantage in the production of vegetables with huge demand locally and internationally. Apart from huge demand for consumption, cucumber serves as by product for the cosmetics industry in the production of facial toners, body lotion and other beauty products.

It can be grown across the 36 states of the federation including the Federal Capital Territory. It takes an average of three months to grow cucumber and watermelon. More water is required to grow cucumber than watermelon and both vegetables can be grown everywhere. National demand for vegetables is put at 5.13 million metric tonnes, according to data obtained from the Federal Ministry of Agriculture and Rural Development

Tips for one hectare The soil must be tested to know the soil condition. Cucumber does not grow well with soil areas that are highly acidic. There are additives that neutralises PH value in a soil. The next step is to get quality seeds. “Seeds are very important in cucumber production because of climate change it is good to look out for varieties that can produce in both drought and wet sea-

son,” Afioluwa Mogaji, CEO, X-Ray Consulting Limited told BusinessDay. Varieties such as Murano, Darina and Pickings can produce in both dry and wet season. An average of 700kg of NPK and urea are needed per hectare to achieve optimum yield. Also, the market timing should be well understood and the peak period for cucumber is September when the demand is very high and prices are very attractive. According to Mogaji who is popularly called AfricanFarmer cucumber requires less water application during the vegetative stage and more water during the fruiting stage. He stated that Watermelon production and water application is the reverse of cucumber.

BUSINESS DAY Harvard Business Review

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Monday 17 September 2018

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How to talk to a grieving customer MEGAN DEVINE

“

’m calling on behalf of my partner. He died, and I need to close his account.” When Matt drowned in a fast-moving river, it fell to me to cancel his credit cards, close out the utilities at his apartment and manage his cellphone account. With one notable exception, the person on the other end of the phone gave the same reply: “Ma’am, we need to speak to the account holder. We aren’t authorized to give any information.” People die every day, but companies often have no policies in place for dealing with death. And ineffective and insensitive responses from customer service reps don’t just affect those making the calls. They have real-world effects on your business. Surely we can treat

each other better than this. One exchange I had stands out in my mind. Shortly before he died, Matt had been hiking in the Rocky Mountains. He called from a ridge overlooking the valleys below. His voicemail message said, “Hey — it’s me. Calling from 9,000 feet above you. It’s so beautiful here, and I wanted to say hi. I love you.” I called customer service, and the rep asked how they could help. I told them the story, how I couldn’t bear to have Matt’s last message erased. The rep’s voice softened. “I’m so sorry,” he said. “What an impossible thing to live through.” He paused, then continued, “Messages do get erased after 60 days. There isn’t anything I can d at isn’t the answer you wanted.” The rep remained calm and kind as I started to cry. He offered suggestions for how I might

record the voice message, thereby preserving it before it was erased from the server. He told me again how sorry he was for my loss, wished me well, and we ended the call. I felt like I’d spoken to a real human, one who genuinely cared. And I told everyone about it. Kindness and acknowledgment was all it took to make me a lifelong customer. I have a few ideas about how leaders can start the discussion with their customerfacing employees. First, your company needs to clearly articulate what its response should be when a request to close or transfer accounts has been made in the event of someone’s death. Map out all the possible circumstances that could precede such a request and come up with different response paths.

Second, educate your reps on the key words a caller or writer might use to indicate they’re in emotional pain. Then, give reps an appropriate script for the situation. Finally, seek out grief experts on answers to questions you may have. Losing a loved one is so painful and isolating. Your customers may forget a lot as their lives move forward from their loss, but they’ll always remember how your company treated them. All it takes is one kind response to change everything.

(Megan Devine is the author of “It’s OK That You’re Not OK: Meeting Grief & Loss in a Culture that Doesn’t Understand.”)

How to get high-potential employees interested in leadership development programs KRISHNA SAVANI AND XI ZOU

ow can leaders and human resources departments motivate professionals to enroll in leadership development programs? Given how political and business leaders are celebrated in modern society, many HR managers might assume that highlighting the possibility of becoming a leader would motivate employees to engage in leadership development. We tested this idea in our current research. We presented employ-

ees with a description of a leadership course. However, there were two versions. Participants who saw a course description fo-

cusing on “becoming a leader” thought that the course would be more challenging and difficult, compared to those who saw a de-

that how you frame leadership education can affect people’s interest in pursuing it. Although we did not ask people to explain their responses, we believe that a course focused on “becoming a leader” can discourage people from taking it, because it’s not clear how this would be achieved. On the other hand, “learning leadership skills” seems both reasonable and doable. scription focusing on To motivate people to “learning leadership engage in leadership skills.” And they were education, particularly less interested in sign- those who have never ing up for it. had any previous leadThis finding suggests ership training, organi-

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zations should consider reframing the goal of the course as a chance to learn. Doing so may also help students better grasp and retain the material.

(Krishna Savani is an associate professor and co-director of the Cultural Science Institute at Nanyang Business School, Nanyang Technological University, Singapore. Xi Zou is an associate professor and co-director of the Cultural Science Institute at Nanyang Business School.)

Monday 17 September 2018

Harvard Business Review

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MondayMorning

BUSINESS DAY

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Why U.S. Grocery chains need more (and better) store-Brand Products MARCEL CORSTJENS AND RAJIV LAL

he U.S. grocery industry has reached an interesting and uncertain crossroads. In 2017, German discount grocery retailers Aldi and Lidl announced plans to open hundreds of new stores across the United States. One does not have to look very far to recognize the threat posed to competitors like Walmart, Target, Costco and Kroger by the German hard discounters. The UK grocery market shows what could happen: Aldi and Lidl have 13.1% market share in the UK today, having grown more than 50% over the last five years.

Will U.S. grocers fare any better? The answer may lie in whether they learn from the experience of the French grocers. In France, hard discounters have a 12% share of the grocery market, almost as much as they do in the UK. However, in the UK, the market share of Aldi and Lidl is expected to continue to grow, whereas in France, it’s already declining. How did smaller French retailers fight them off? Through the savvy use of private-label products (also called white-label goods or store-brand products). Private-label products are essential to the profit margins of hard discounters. The advantages are threefold: cheap products, good quality and customer

convenience; a shopper can get what they need in under 30 minutes. The downside is that there is less choice, little customer service to speak of and less-attractive stores and displays. Hard discounters win by only stocking products with a very high rotation.

To fight back against the hard discounters, French grocers realized they would have to improve their use of private-label products. This meant that they had to cut prices while improving quality — not an easy task. Yet by offering affordable goods of rea-

sonable quality, French supermarkets have been able to regain market share. U.S. retailers are far behind in terms of their private-label product offerings, which will be a huge challenge in the fight against Aldi and Lidl. To catch up,

U.S. grocers will have to quickly make up for lost time. Supermarkets will have to change the way they display, promote, and merchandise private-label goods. They will also have to commit to this private label strategy in an increasingly uncertain food retail business. The experience of French grocers shows that it’s not impossible to beat hard discounters at their own game. But it also is noteworthy that France’s experience is the exception, not the rule.

(Marcel Corstjens is a professor of marketing at INSEAD. Rajiv Lal is a professor of retailing at Harvard Business School.)

Understanding why we overreact at work yourself the following questions: What kinds of people make me feel anxious, angry, sad, or happy? What do I like or dislike about them? And who in my past do these people remind me off? How are they similar or different? Discovering the ghosts of past is the first step toward not letting them interfere with life in the present.

MANFRED F. R. KETS DE VRIES AND KATHARINA BALAZS

irk was puzzled about what just happened. To the best of his knowledge, he had only asked Jerome, a recently hired senior executive, to deal more proactively with some of the company’s clients. But Jerome had suddenly become angry, defensive and stalked out of his office. Jerome, for his part, was also confused. Why had he reacted like that? After calming down, Jerome realized that Dirk reminded him of his overbearing father. His overreaction was almost exactly what he had done in fights with his father, too: getting angry and storming away. This “erroneous” interpersonal connection was first described

by Sigmund Freud in his famous Dora case under the name of “transference.” Trying to understand this unsuccessful therapeutic intervention with his patient, he came to realize that its reason lay in

his failure to recognize the transfer of emotions held by Dora for a person from her past onto Freud himself. If you have ever had an emotional reaction to someone which was clearly too intense for

the situation, you have most likely experienced a transference reaction. As transference reactions are essentially a reliving of the past, the reaction they trigger is often inappropriate, and even bizarre, in the

context of the present. Reflect on patterns of behavior that have gotten you into trouble, and where you feel that your judgment has repeatedly been poor. To help you in analyzing what has happened, ask

Brought to you courtesy of First Bank Nigeria

(Manfred F. R. Kets de Vries is an executive coach, psychoanalyst, and management scholar. He is the Distinguished Clinical Professor of Leadership Development and Organizational Change at INSEAD in France, Singapore, and Abu Dhabi. Katharina Balazs is an executive coach and an associate professor at the European School of Management (ESCP) in Paris.)

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Nigeria will tread cautiously on ECOWAS monetary integration project – Emefiele ONYINYE NWACHUKWU, Abuja

igeria will tread cautiously as it works with other member states of the Economic Community of West African States (ECOWAS) on the proposed creation of a Monetary Union and adoption of a single currency for the sub-region by year 2020, Godwin Emefiele, governor of the Central Bank of Nigeria (CBN) said on Thursday. Emefiele said this amid concerns that ECOWAS member states are progressing slowly on the project, particularly in the achievement of the conditions that will ensure the monetary integration project happen. He was speaking at the 52nd meeting of the committee of governors of the central banks governors of member states of the West African Monetary Zone (WAMZ) hosted by the CBN at its Abuja headquarters. Eighteen months to the September 2020 deadline to attain the proposed monetary integration and single currency project of the ECOWAS region, none of the mem-

ber states has consistently achieved all the led down convergence criteria required for the programme to take off. To achieve a common monetary integration programme required each member country to comply with a set of four primary and six secondary convergence criteria to ensure a stable macroeconomic environment. Those criteria were set in November 2002 by the forum of finance ministers of the WAMZ who decided to facilitate the harmonization of fiscal and monetary policies and introduces those two sets of conditions to drive the effective the establishment of the MU and adoption of a single currency proposed as Eco. The Primary Criteria include; Budget Deficit/GDP ratio (excluding grants) of less or equal to 4 per cent; Inflation rate of less or equal to 5 per cent; Central Bank Financing of Budget Deficit of less or equal to10 per cent of previous year’s Tax Revenue; as well as Gross External Reserves of greater than or equal to 6 months of imports cover. The Secondary Criteria include; Prohibition of new arrears and liquidation of all

outstanding ones; Tax Receipts/GDP ratio of greater or equal to 20 per cent; Salary Mass/Total Tax Receipts ratio of greater or equal to35 per cent; Public Investments financed from internal resources/Tax Receipts ratio of greater or equal to 20 per cent; Positive Real Interest Rates; and Real Exchange Rate Stability. According to recent progress report read by Ngozi Egbuna, Director General of the West Africa Monetary Institute (WAMI) at the meeting, only three of the ECOWAS countries have made remarkable progress, meeting three out of the four primary and compulsory convergence criteria as at today. The Gambia, Guinea, Nigeria attained three criteria each. While the Gambia missed the fiscal deficit criterion, Guinea slipped on the gross eternal external criterion and Nigeria missed the inflation criterion. Ghana and Liberia achieved two criteria each, Ghana missed inflation and fiscal deficit criteria while Liberia missed inflation and Central Bank financing criteria. Sierra Leone met one

criterion- the gross external reserves. Raising concerns on the inability of member states to meet those target many years after, CBN governor Emefiele told the gathering that Nigeria is still committed to the sub-regional economic integration programme, but will progress with caution. “For us to achieve a sustainable economic monetary integration programme, there is need for all of us to follow meticulously the programmes that we set for ourselves as individual counties to ensure that we are really ready for this union,” Emefile stated. “Nigeria being the largest economy in our sub region, in terms of population and growth strength is committed to ECOWAS integration program, but will proceed with a lot of caution to move in the right direction.” “This is due to the fact that our heads of government have insisted that 2020 remains sacrosanct which also means that a lot of work must be done to ensure that as we embark on this journey, it will be sustainable,” he stated.

Monday 17 September 2018

Nigeria moves up 5 steps on ‘Where to Invest in Africa’ ranking BUNMI BAILEY

frica’s biggest economy has improved in the 2018 ranking of the 10 best places to invest in Africa, moving up five steps to the eighth position from the 13th position in its 2017 ranking, according to Rand Merchant Bank’s (RMB) a subsidiary of South Africa’s FirstRand Bank Limited 8th edition of ‘Where to Invest in Africa’. The report which ranks 53 African countries provides a means by which to assess the most appealing of African investment destinations. The investment index does this by overlaying macroeconomic fundamentals with the pragmatics of doing business on the continent. The ranking is based on two key considerations; the economic activity in terms of market size and growth as well as the business environment. According to the report, Nigeria dropped out last year in the top-10 where to invest list for the first time in 15 years. The report stated that Nigeria jumped back into the Top 10 due to improved macroeconomics, supported by recovering oil prices and

production and favourable demographics attracting Foreign Direct Investment (FDI). Johnson Chukwu, CEO, Cowry Asset Management Limited said, “for the period of 2017, the basis for the assessment would have been a 2016 fiscal year where Nigeria was in recession. For the 2018 assessment, they used 2017 period where the economy recovered to 0.83 percent growth rate so that must have been the reason why it moved back to the top ten list.” Nigeria was in recession for five consecutive quarters but returned to positive growth of 0.72 percent in the second quarter (Q2) 2017 from -0.67 percent in Q1 2016, according to National Bureau of Statistics (NBS). But there are views that the latest Central Bank of Nigeria (CBN) fine on MTN, Africa largest telecommunication network could kick Nigeria out of the top ten list in the following year. “The MTN situation would affect its overall business environment rankings, but that will probably only be reflected in next year’s global surveys that we use to get to our conclusions.

Monday 17 September 2018

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BUSINESS DAY

Explainer

Is China capturing Africa with debt? STEPHEN ONYEKWELU

here was outrage during the week ending September 07, when Zambia, the landlocked southern African nation allegedly lost ownership of ZNBC, its broadcasting corporation, was about to lose ZESCO, its utility company and the national airport to China due to loan repayment default. While these claims were eventually denied by the government, it re-ignited a conversation that has been seething in the minds of keen observers of China’s trade, investment and aid practices in Africa. Some have directly or indirectly alluded to a new form of colonisation, though this time not from the West but the East. As at 2014, Nigeria was the sixth country on the list of third world countries that had received aid from China. It received the sum of $3.1 billion. This amounts to N1.1 trillion. In the last three years, Nigeria has received $6 billion for infrastructure, which amounts to N2 trillion. The combined figures is put at about N3 trillion, and when divided by 198 million, considered to be the country’s population at the moment, every Nigerian owes China about N15, 000.00. Nigeria has also accepted the Chinese Yaun as a reserve currency, which will begin to compete with the US dollar.

What do all these mean? Some critics have argued that China’s Belt and Road initiative, modelled on the Silk Road, was a giant “debt” and akin to “neo-colonialism.” Early this year, Rex Tillerson, then secretary of state of the United States of America stated that “Chinese investment does have the potential to address Africa’s infrastructure gap” but at the same time acknowledged that “its approach has led to mounting debt and few, if any, jobs in most countries” even as it “encourages dependency using opaque contracts, predatory loan practices, and corrupt deals that mire nations in debt and undercut their sovereignty, denying them their longterm, self-sustaining growth”, a story published August 31, by Foreign Policy, a magazine that seeks to connect the dots among places, people and politics, outlined. Loan galore Presidents and ministers from across Africa convened in Beijing for the seventh Forum on China-Africa Cooperation, a lavish pageant designed to showcase China’s engagement with African nations. At the last FOCAC, Chinese President Xi Jinping pledged a massive $60 billion in commercial loans to Africa, a sum that far outstrips U.S. lending and investments. Since the first FOCAC in 2000, China has grown from bit player in Africa to the

Xi Jinping, China president

source of nearly $200 billion in trade. From 2001 to 2011, China also committed $75 billion in aid to the continent, about 20 percent of the $404 billion total that the Organization for Economic Cooperation and Development’s Development Assistance Committee calculated for the period. The United States promised somewhat more—$90 billion in the same period— but Chinese aid is more sought after. Unlike Western assistance, which comes mainly in the form of out-

Apapa Customs commits to 48 hours cargo clearance, collapses re-examination AMAKA ANAGOR-EWUZIE

s part of its drive to promote the federal government’s ease of doing business policy, Abubakar Bashir, Area Controller, Apapa Command of the Nigeria Customs Service (NCS) says the command is out to ensure 48 hours cargo clearance at the port. He says that, under his watch, the command has stopped the practice of reexamining containers. Bashir assured stakeholders in the industry of 48-hour cargo clearance system once they were sincere with their declaration at the points of entry. Speaking during a stakeholders meeting involving importers and exporters at the Apapa Area command in Lagos, Bashir pledged his unrelenting commitment to addressing the challenges facing importers and stakeholders in the import sector. According to him, “If you declare your goods with ut-

most sincerity and pay your duties, I assure you that your goods will be cleared in less than 48 hours. We want you to improve your sincerity of purpose. We are here 24/7 to identify areas where we can collaborate to make Nigeria a better place,”. He said this was part of his administration’s effort to key into the President Muhammadu Buhari administration’s agenda of creating a conducive environment for businesses to thrive in Nigeria. Bashir noted that the meeting was convened to acquaint stakeholders with the Time Release Study, which is a scientific approach to measure the time a container arrives and leaves the port, carried out in conjunction with the World Customs Organisation (WCO). According to him, Nigeria ranks low in terms of trade across the border, saying that the TRS would go a long way to take the country up the ladder. Operators in their various comments during the meet-

ing raised the alarm over the inputs of alerts charged by the NCS, adding that the sector was already plagued by myriads of challenges. The Apapa Area Controller promised that under his watch, there would be transparency in all operations to ensure seamless conduct of business at the port. “We are ready to support you as long as you do the right thing; and if otherwise, we will intervene because we want to protect and safeguard the lives of Nigerians,” Bashir said. He observed that Nigeria Customs function is to coordinate with other agencies of government under legislation as regards to implementing the laws relating to import and export. “If we discover that the activities of business owners are not in line with terms of import and export, we are certainly going to intervene in that declaration to ensure that the security of Nigerians is assured as well as the economy of the country.

right transfers of cash and materiel, Chinese assistance consists mostly of export credits and loans for infrastructure (often with little or no interest) that are fast, flexible, and largely without conditions. Thanks to such loans, the International Monetary Fund estimates that, as of 2012, China owned about 15 percent of sub-Saharan Africa’s total external debt, up from only 2 percent in 2005. McKinsey & Co. also reckons that, as of 2015, Chinese loans accounted for about

a third of new debt being taken on by African governments. Debt trap? China has been accused of using debt to capture African economies, through murky loan practices. The word is debt-trap. Debt traps are circumstances in which it is difficult or impossible for a borrower to pay back money that they have borrowed. These traps are usually caused by high interest rates and short terms, and are a hallmark of a predatory lending. However, is China bent on annexing African economies or are African economies failing to seize opportunities China trade and investments can bring. According to the African Development Bank, Africa needs $130 to $170 billion worth of new infrastructure annually – from trains to power stations. The continent will also face additional costs due to climate change of $20 to $30 billion per year. But African countries are not large or rich enough to pay for this by themselves – they need external help, and in particular loans. Most African governments are not irresponsibly burdening their citizens with debt. There is only one African country with external loans that are equal to or larger than the size of its economy – the successful Mauritius – in contrast to the U.K. and France, which have debt-to-Gross Domestic Product (GDP) ratios of well over 100 percent. Although in the case Zambia, the outrage from

civil society organisations is on the lack of transparency from government over many key questions, including repayment, contracting obligations, project feasibility, value for money and loan security. This lack of transparency makes it impossible to have a clear account of the implications of this borrowing for the public finances. What needs to be done? Loans from China do need improvement. In particular, the current Chinese policy of requiring that every loan should go to a project that is built by a Chinese company, known as “tying”, needs to change. China is not alone in the practice of “tying,” some Japanese loans are tied too. Loans from the United Kingdom used to have similar terms, until a scandal in 1988 demonstrated that tying overseas finances to domestic business creates massive conflicts of interest. African governments need more leeway to make sure they prioritise the most profitable projects that their citizens need and in a manner they want – for example, using local materials and labour. African governments also need to conduct more due diligence of companies. For instance, some Chinese companies are used for infrastructure projects despite being on the World Bank’s blacklists for corruption. Indeed, African countries seem to be stuck between a rock and a hard place; unable to access favourable loans from others, and tied to loans from China.

Attack on HSBC exposes your hypocrisy, Atiku tells Presidency …Says Nigeria risks second recession under Buhari INNOCENT ODOH, Abuja

ormer Vice President and 2019 Presidential hopeful, Atiku Abubakar, has condemned the Presidency over its attack on the credibility of HSBC for predicting that Nigeria’s economy will plunge into deeper crisis if President Muhammadu Buhari is re-elected in 2019. The presidential aspirant under the platform of the People’s Democratic Party (PDP) in a statement issued on Sunday by his Presidential Campaign Organisation, said that “it is with amusement that we read the statement by the Buhari administration condemning HSBC, the world’s largest bank, simply because HSBC gave a verdict that Buhari’s reelection would spell doom for Nigeria’s economy. “It is at once comical and pathetic that the Buhari government’s statement called HSBC corrupt. It seems they are unaware that some of

the record 12 trillion worth of debt which the Buhari administration has saddled Nigeria with is actually funded from HSBC, which is the world’s largest bank.” The Wazirin Adamawa, noted that when the Buhari government was taking money from HSBC, the ever begging Buhari administration did not know that HSBC was corrupt. He added that it was after the HSBC told the truth about the Buhari government that they knew that the HSBC is keeping looted funds. The Presidency in a statement had called HSBC “A bank that soiled its hand with millions of US dollars yet-to-be-recovered Abacha loot.” But Atiku mocked the Presidency, saying that they forgot that their principal, Muhammadu Buhari said: “Abacha did not steal”. “So if Abacha did not steal, how could HSBC keep recovered Abacha loot? When you tell so many lies, you begin to contradict

yourself,’’ Atiku said. He said further that Nigeria under Buhari has been adjudged as the world headquarters for extreme poverty by the World Economic Forum and the World Poverty Clock as well as the British Prime Minister, Theresa May. “Are these people also corrupt?” Atiku asked. “Only last month, the National Bureau of Statistics revealed that our second quarter GDP growth rate was lower than our first quarter GDP growth. Another quarter of negative growth and Nigeria will enter a second recession under the Buhari administration. “The same NBS published in December 2017 that 7.9 million Nigerians lost their jobs in 21 months under Buhari’s watch. “These are the things that the government should be focused on and not to haul infantile insults at the world’s largest bank,” Atiklu said in the statement.

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OPEC oil production grows by 278tb/d on crude from Nigeria, others - Lead …Nigeria’s active rig count falls by 5.71% m-o-m STEPHEN ONYEKWELU

he Organisation of Petroleum Exporting Countries’ (OPEC) OPEC-15 crude oil production increased by 278 thousand barrels per day (tb/d) on crude grades from Iraq, Libya, Nigeria and Saudi Arabia, according to its monthly oil market report for September. OPEC’s crude oil production averaged 32.56 million barrels per day (mb/d) in August. But production declined in the Islamic Republic of Iran, Venezuela and Algeria. Nigeria’s crude oil production increased marginally by 4.54 percent monthon-month (m-o-m) in August, from 1.651 mb/d to 1.725 mb/d. In Libya, crude oil production grew by 38.20 percent, from 670, 000 tb/d to 926, 000 tb/d. Iraqi crude production increased by 1.93 percent from 4.559 mb/d to 4.649. Saudi Arabia’s crude oil production moved by 0.36 percent from 10.363 mb/d to 10.401 mb/d. However, Nigeria’s active rig count fell by 5.71 percent, month-on-month, from 35 active rigs in July to 33 active rigs in August. In July, Africa’s largest crude producer had seen

its active rig count increase by 9.38 percent, from 32 oil rigs in June to 35 in July, according to OPEC’s August Monthly Oil Market Report (MOMR). Rig count is a function of the level of exploration, development and production activities occurring in the oil and gas sector. A drop in active rig count means oil exploration and production activities in Nigeria have decreased month-on-month. July’s active rig count growth was attributed to “an atmosphere of expectation that the Petroleum Industry Governance Bill (PIGB) was going to be signed into law. Oil prices have been stable in the last six months or so. Then there is First E&P Limited that received a final investment decision (FID)” Wumi Iledare, professor of petroleum economics and member of the PIGB drafting committee told BusinessDay, on phone. However, this progress is being rolled back since Muhammadu Buhari, president of the Federal Republic of Nigeria withheld assent to the PIGB, because he claims his powers as petroleum minister will be whittled down. Nigeria’s active oil rigs had remained static at 32 since the first quarter of the

year. In 2015, Nigeria had recorded 30 oil rig counts. In 2016, it decreased to 25, and later to 28 early 2017. Other OPEC members such as Algeria have increased the number of their active rigs from 45 oil rigs in July to 49 in August, Angola still has four, Ecuador from 8 to 10 active rigs but Equatorial Guinea still has one. Active oil rigs in Gabon fell from four to three, Iran still boasts of 61, Iraqi’s fell from 59 to 57, Kuwait 50, Libya moved from 5 to 8, Qatar 9, Saudi Arabia has the highest with 152 rigs up from 148, the United Arab Emirates moved from 55 to 57, and Venezuela currently fell from 70 to 69 rigs.Contrary to the Federal Government’s target of increasing crude oil reserves, Nigeria recorded a decline of 961.47 million barrels in the four years to 2016 on the back of low investment in exploration by oil companies. Nigeria’s oil reserve decreased to 36.247 billion in 2011 from 37.200 billion recorded in 2010, while in 2012 there was relative improvement to 37.139 billion but went down again to 37.071 billion in 2013. In 2014, it stood at 37.448 billion before sliding down to 37.062 in 2015 while in 2016 it stood at 37.453 billion.

‘Dogara’s return to PDP courageous’ OWEDE AGBAJILEKE, Abuja

he Peoples Democratic Party (PDP) has welcomed the Speaker of the House of Representatives, Yakubu Dogara back to its fold. According to the party, his return is a courageous response to its call on compatriots to rally with it and rescue the country. The main opposition party described the decision of Dogara to dump the ruling All Progressives Congress (APC) for the Peoples Democratic Party (PDP) as a patriotic and nationalistic move that demonstrates that he is a statesman committed

to the progress of the nation. It would recalled that last week, Dogara’s constituents in Bauchi State had purchased a PDP nomination and Expression of Interest forms for him to seek reelection. A statement by Kola Ologbondiyan, PDP National Publicity Secretary, pointed out that the Speaker’s return signifies victory for the party both in Bauchi State and at the Federal level. The party spokesperson stressed that Dogara’s electoral value will contribute immensely to the return of PDP to power at all levels. “Dogara’s move is reflective of the wishes and aspi-

ration of his larger constituency and in tandem with the determination of Nigerians across board to rally on the platform of the repositioned PDP to vote out the incompetent, divisive and corrupt APC administration, which has caused untold harm to our nation in the last three years. “The PDP states that Dogara has continued to conduct the affairs of the House of Representatives with the highest level of commitment, resulting in a very productive legislature under his leadership, despite the unmitigated efforts by the Buhari Presidency and the APC to distract him.

Edo teachers to begin indefinite strike on Friday IDRIS UMAR MOMOH, Benin

ollowing the failure of the Edo State Government to meet up its demand, after a 21-day ultimatum, the State chapter of the Nigeria Union of Teachers (NUT) has vowed to commence an indefinite strike on Friday. In a communiqué, dated September 6, 2018 signed by

Pius Okhueleigbe and Moni Itua, chairman and acting secretary and made available to newsmen in Benin-City, expressed their dissatisfaction for not meeting up with its demand. “The State Wing Executive (SWEC), of the Nigeria Union of Teachers, noted with dissatisfaction, the nonresolution by Edo State Government of any of the issues

that gave rise to the 21-day ultimatum. “The union magnanimously gave another sevenday extension period ending on the 13th of September, 2018 to Edo State government, to meet the union’s demands failing which, Edo state public school teachers will commence an indefinite strike action with effect from Friday 14th, September, 2018”, the statement stated.

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BUSINESS DAY

NEWS Smart buyers go bargain hunting as stock prices... Continued from page 1

eries is a buy at its current price.

It is not surprising that we are seeing this recovery in the stock,” Olowoporoku said. “The fair value of the stock in itself has not changed, irrespective of the level it has dropped to.” Nigeria consumer goods index has dropped 23 percent year to date. Chapel Hill Denham analyst Philip Anegbe on Friday upgraded the recommendation on Dangote Cement Plc to buy from hold, with the target price raised to N270.87 from N267.14, implying a 29 percent upside. Dangote Cement had 9 buys, 8 holds, 0 sells previously, according to Bloomberg data. Other sectors like upstream oil and financials may also offer value. Even as oil prices approach precrisis levels of $80 per barrel, it has had little impact on Seplat, the country’s largest indigenous Oil and Gas Company. Brent crude price was as high as $79 per barrel as at 2pm Friday, the highest since December 2014. Seplat’s stock price has tanked 23 percent to N606.7 per share by the end of trading, Friday, from a 2018 peak of N785 in March 14 2018. The stock price has moved in sharp contrast to the company’s earnings growth. Seplat posted a profit after of N14.84 billion in the first half of 2018, representing a 276.05 percent surge from a loss of N8.43 billion during the same period last year. Guaranty Trust Bank (GTB) was bid up 5.46 percent on Friday to

N34.7 per share. Nigeria’s largest bank by market capitalisation is down 39.5 percent from a peak of N57 as at January. That is despite the fact that GTB’s net income increased by 14.23 percent to N95.58 billion in the half year period to June 2018 from N83.67 billion as at June 2017, while its net margin increased to 42.17 percent in the period under review from 39.08 percent the previous year. At this pace, the tier one lender could book full year profit of about N190 billion, yet the market isn’t pricing that in the stock. While the activities of value hunters continue, stockbrokers are worried that market volatility remains because of the utterances of the political class which casts doubt before foreign investors on the economy’s future. “Shall we tell President Buhari that the fingered enemy of the Exchange is the government of Nigeria through its political and economic activities that unleash anguish on many investments? Every stock market mirrors and responds to the happenings in its political, economic, and social space. Any market that operates at variance is a voodoo,” Sola Oni, CEO, Sofunix Investment told BusinessDay. Stock trading data show a huge 64.68percent decline in foreign transactions for the month of July to N36.17 billion as against June level of N102.41billion. As at January, it was N166.39billion, according to recently released figures at the Nigerian Bourse.

Patrick Ezeagu, chairman, Association of Stockbroking Houses of Nigeria (ASHON) noted that “There is clear and present danger if the trend continues. As the current worrisome operating environment that characterizes our financial markets deepens, we appeal to the political class to moderate their activities and utterances by acting in such a manner as will engender investors’ confidence in the Nigerian economy and by implication our capital market. This becomes compelling as we approach general elections next year.” “It is an unassailable investor-behaviour that bad news triggers market panic and investors over-react to such news. As the country’s economic barometers, the securities markets in Nigeria have continued to reflect investors’ apprehensions to instability in the political and economic landscape through all their indices. This has largely accounted for the inability of our market to fully recover from the effects of the 2008 financial crisis, notwithstanding the efforts made by the regulators and operators to fully revive the market,” ASHON said. Stockbrokers say the general sentiment in the Nigerian market remains weak, and the rally may not last as there is no fundamental news driving the movement. The benchmark all share index is down 25 percent in six months. “Investors will go back to their cautious stance once the price is driven up a bit and look for other stocks that have dropped to an extremely attractive point and pick on it,” Olowoporoku of Vetiva Capital said.

L-R: Abubakar Suleiman, CEO, Sterling Bank plc; Yaw Nsarkoh, MD, Unilever Nigeria plc; Folasade Kilaso, director, Sterling Bank, and Yemi Odubiyi, ED, corporate and investment banking, Sterling Bank, at the second edition of the Sterling Leadership Series held in Lagos on Friday.

Citing tough environment, Nigerian crude... Continued from page 1

turning to cash-settled swaps to speculate on prices and eke out

a profit. So far in the arrangement, 8 million barrels of oil have been exchanged, according to data compiled by Bloomberg. The terms of the deal allows oil buyers to exchange a fixed price for a floating one published by SP Platts, the company that issues prices used to settle physical crude trades, and make a profit from the difference. “We are entering a very crucial period for the oil market,” warns Paris-based International Energy Agency (EIA), an energy think tank, who in its latest oil market report, said the global oil market was entering a tight period characterised by increasing supply outages from Venezuela and Iran and limited capacity to meet outages, which could drive prices beyond buyers tolerance level. “The point about spare capacity is that, having been idle, it is not clear exactly how much, beyond what is

widely thought to be ‘easy’ to bring online, will be available to coincide with further falls in Venezuelan exports and a maximisation of Iranian sanctions,” the IEA cautioned in a report released September 13. The swaps, used to hedge or speculate on prices, are based on a basket of four Nigerian grades: Qua Iboe, Bonny Light, Forcados and Bonga, which are among the largest export grades from the Nigeria. SP Platts in a June report warned that Nigerian crude grades which are light and low in sulphur would see intense competition for markets in Europe and Asia from shale producers who are turning on the taps, producing crude grades with similar properties. Nigeria has an uphill climb already as the United States, last week upstaged Saudi Arabia and Russia to become the world’s largest crude oil producer. US output reached nearly 11million barrels per day and the EIA forecasts that the country’s oil production will stay ahead of Russia

and Saudi Arabia through 2019. “It’s an historic milestone and a reminder: Never bet against the US oil industry,” Bob McNally, president of Rapidan Energy Group, a consulting firm told CNN. He attributed the US oil production feat to technological improvements, “supported by ample capital to invest, and the ingenuity of American oil drillers.” But this increased output will need to find markets in Europe and Asia where refiners are increasingly becoming spoiled for choice. “For Nigeria, apart from internal risk, another risk is competition from similar crude grades and this will keep growing as new light crude grades enter the basket,” Andrew Bonnington, director, Strategic Market Engagement for Europe & Africa at Platts said at the company’s Lagos Oil and Energy forum held recently, S&P Global Platts is including new light crudes in its basket from which oil prices are benchmarked thereby resetting the balance of global oil prices as this enhances trade on these crude grades.

How multinationals are jettisoning Nigeria since... Continued from page 1

ago, the promise of Africa’s big-

gest economy has turned to peril as international companies drawn to Nigeria by the prospect of a population bigger than Ghana, Kenya and South Africa combined are retreating while those staying behind are either downsizing or cutting cost due to economic challenges facing the country. Nigeria’s corporate tribulations began in 2015 when tumbling oil prices battered the mono economy, which reliedoncrudefortwo-thirdsofgovernment revenue as government inertia and its controversial policies helped inflict more woes on the economy. Capital controls and restrictions on currency trading backed by President Buhari made matters worse as foreign direct investors started tip toeing out of the harsh economy realties that suddenly hit them while Portfolio investors including Aberdeen Asset Management Plc and Ashmore Group Plc, which together oversee about $450 billion of assets, retreated from Nigerian markets. “2015 and 2016 were difficult times for Nigeria and FX restriction played a role although the experienced foreign direct investors would prepare for such scenarios,” Rafiq Raji, chief economist at Macroafricaintel Investment told BusinessDay. Bismarck Rewane, CEO of economics consulting firm Financial Derivatives explained to BusinessDay that if the economy improves the international companies will surely comeback as everything depends on economic prospects. BusinessDay analysis took a closer look at those international companies who have completely shut down their operations in Nigeria and the reasons why they left. Tiger Brands international Limited South African largest food company, Tiger Brands pulled out of its struggling Nigeria Venture in 2015, following an unfruitful $181.9 million acquisition of a 63.35 percent stake in Dangote Flour Mills (DFM), a Nigerian company that produces flour, noodles and pasta, and is partly owned by Africa’s richest man, Aliko Dangote. Tough economic conditions in Nigeria, which include the devaluation of the naira and the fuel crisis in May and June 2015, meant that the company could not meet its customers’ demands on time as their stock which was trading around N9 in 2013 fell to N1.23 by the end of 2015. “Hindsight is always a perfect science! At the time, it was the right decision but we could not have anticipated the global economic circumstances which would impact the business. The challenges which have faced DFM include significant over capacity in the industry, the impact of low oil prices and the devaluation of the Naira against the US Dollar, and could not have been foreseen,” Chief executive officer, Tiger Brands Limited, Peter Matlare explained in 2015. Tiger Brands which they later increased its stake to 70 percent in Dangote Flour Mills; racked up billions in losses and was forced to mothball some of its mills. It soon changed the company’s name from Dangote Flourmills to Tiger Branded Nigeria Ltd. Unfortunately; a name change didn’t bring the change the market wanted to see. CEO of Tiger Brands Limited explained that Tiger Brands had made significant investments but the company continued to struggle with losses, which brought the board of Tiger Brands to consider options of either further recapitalization or finding alternative options, the board subsequently settled for alternative

options. By the end of 2015 in order to save over 3,000 jobs that were at risk, Africa’s richest man Aliko Dangote was forced to buyback the company at a nominal value of N1 by initiating a “repurchase Share Sale Purchase Agreement” for a company he had he initially sold for about $200 million. “Tiger Brands Limited will sell its shares (3,283,277,052) to Dangote Industries Limited for a nominal amount ($1) in consideration for Dangote Industries Limited injecting N10 billion in January in the form of a convertible (at lender’s option) shareholders’ loan,” the Share Sales Purchase Agreement (SSPA) stated. The then-outgoing CEO stepped down at the end of 2015 after eight years atthehelmafterfinancialresultsproved the investment was a grave mistake. Tiger brand’s investment in Deli Foods (49 percent), makers of Digestive and Crackers also went awry. They had also written down N3.5 billion. Brunel services plc In 2015, a Dutch stock exchangelisted staffing agency Brunel international pulled out of Nigeria because of the “continuing feeling of corruption and bribery,” its chief executive, Jan Arie van Barneveld, was quoted to have said. “The security risk and bureaucracy make it almost impossible to guarantee the quality of our services and the safety of our workers in Nigeria in the future,” Van Barneveld was quoted to have said by Dutch News. The decision to shut down was a huge blow to Nigeria, as the personnel service provider Brunel is headquartered in Amsterdam and has offices in more than 40 countries worldwide; “In Nigeria, we had the feeling that we were being constantly cheated and bribed,” van Barneveld chief executive of Brunel services said in his newspaper interview. Truworths International Ltd Next in line was South Africa based clothing giant Truworths International; which closed its two remaining Nigerian stores at the south-eastern cities of Enugu and Warri in January 2016 over stringent regulation of stock imports and foreign exchange controls as rising costs made it too difficult for the South African retailer to operate in Nigeria. “The clothing company struggled to get stock into Nigeria and cash out of the country,” CEO Michael Mark was quoted to have said as at that time. “Truworths’ dollar rental bill also soared as the rand weakened against the US currency,” said Mark, CEO of Truworths International Ltd. According to the CEO, the regulations were always making it extraordinarilydifficulttogetstockintothestores. “Obviously everyone gets excited about Nigeria because of its size, but I think they’ve taken an incredible strain with internal problems in the country politically and then there are the issues with their oil,” Mark said. Further investigation showed the problem is just Nigeria as Truworths continued expansion in other African countries like Kenya, Botswana and Ghana; “The stores in countries bordering South Africa are doing well and in Ghana its O.K.,” Mark said. “It’s just Nigeria that’s not profitable and we would go back there if everything changes. This is not a permanent thing, we will see what happens.” Iberia Airline Plc Spanish national carrier, Iberia Airline withdrew its services from Nigeria in 2016. Sources claimed the decision to withdraw was based on the huge financial difficulties the airline faced based on the Central Bank of Nigeria’s FOREX policy which prevented airlines from repatriating

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Stakeholders weary of Telco’s dominance... Continued from page 1

ground in bridging the nation’s financial exclusion gap.

The source however disclosed that the Vice President promised that efforts will continue at ensuring the Telco’s have opportunity to drive financial inclusion in a country that has about 40 percent exclusion rate. “Stakeholders may be afraid that the Telco’s who are dominating the market share in their telecommunications industry will also begin to make more profit and generate more revenue in mobile money functions,” a financial inclusion analyst who pleaded anonymity said. Dolapo Ashiru, a Lagos-based stock broker said with the right regulation Nigeria can attain and overtake the heights of Safaricom with M-Pesa in Kenya, or in Ghana noting that the mentioned countries have structural and efficient institutions that allows Telco’s to drive financial inclusion, unlike Nigeria where the reverse is the case. Responding to stakeholder’s fear of Telco’s dominating the fintech space through mobile money, Ashiru said “a communication company like MTN Nigeria is already bigger than most banks in terms of turnover and profitability. “There is also an argument for rural telephoning but a combination of MTN, Airtel,9mobile and GLO already rakes up about 140 million subscribers and they have the capacity to do more, so there is reason for concern,” Ashiru said by Phone. BusinessDay’s analysis of Nigeria’s peers who are driving financial inclusion through the Telco led model shows that the telecommunication company with the largest customer base and infrastructure also generates the highest revenue while also having dominance of the industry. Kenya’s mobile money market for example has five players among which are; M-Pesa, Airtel Money, T-Kash, Equitel Money and Mobile Pay. Safaricom controls the lion’s share with 83.08 per cent of the market, Equitel 16.36 per cent and Airtel 0.56 per cent. Telkom Kenya has 1,581 base stations, some of which are leased, while Airtel has 1,548. Combined, however they are not close to Safaricom which has 4,000 base stations. East Africa’s biggest mobile-network operator, Safaricom Plc, developed one of the world’s first mobile phone-based money transfer ser-

vices, and says 88 percent of its almost 30 million customers now use it. This is not different in Ghana, as figures from the country’s National Communications Authority (NCA), revealed that between 2012 and 2017, MTN Ghana has been the consistent market leader by number of subscriptions. Across the five-year period, the company’s market share rose to 47.5percent in 2017; Vodafone Ghana’s market share also rose from 21 percent in 2012 to 24.1 percent in 2017. While Airtel Ghana and Tigo Ghana experienced marginal changes in market share, falling 0.37 percent and rising 0.71 percent respectively. This also rubbed off on the mobile money market share of the country, as MTN Ghana has the highest percentage, followed by Vodafone, Tigo and Airtel. Yewande Adewusi a Lagos-based financial inclusion consultant said there are different schools of thought on how mobile money should work in Nigeria due to its peculiar challenges but if the country is looking at how to maintain monetary system stability or still maintain financial inclusion with the right oversight then the banks and Telco’s should work together to drive it. “A lot of factors make mobile money difficult to work in Nigeria, for example there are some rural areas that don’t have gsm network so even if Telco’s drive mobile money there will still be problem of availability,” Adewusi told BusinessDay. Adewusi noted that Nigeria is a huge market and it is very obvious that what the country has been doing previously is not working. “However, moving forward it should be a combination of Telco’s working together with banks or we should allow the Telco’s have their own licenses which will be regulated through Special Purpose Vehicle (SPV) by the CBN.” The recent meeting by the government, telecom companies and the financial institutions came after the country’s mobile operators; MTN, Airtel, Globacom and 9mobile announced their commitment towards deepening of financial inclusion to at least 90 million customers in the next 30 months on the condition that they are given a level playing ground to perform mobile money functions. At the meeting which was held on September 4 2018, the Telco’s said it is overly possible to significantly reduce Nigeria’s financial

How multinationals are jettisoning Nigeria since... Continued from page 45

proceeds made in Nigeria back to their parent countries. Iberia airline left in May 2016, citing “very difficult operating circumstances and dwindling passenger numbers.” Though the national carrier of Spain attributed the decision to the dwindling passenger traffic on the route, findings by BusinessDay indicated that the problem was largely as a result of the foreign exchange scarcity with many foreign airlines unable to repatriate their funds to their home countries. United Airline Plc United Airlines, a Chicago-based American airline pulled out of Nigeria in 2016 over difficulty in recovering monies made from tickets sales, due to Nigeria’s foreign exchange policy. According to United Continental Holdings Inc., operators of the airline, the daily route from Houston to Lagos had not met target for years but was kept alive because of its importance to Texas-based customers.

“Since last fall, we have not been able to repatriate revenue sold locally in Nigerian currency and therefore we had to essentially suspend these sales which makes the route unsustainable as about half of the revenue generated by the route comes from Nigeria point-of-sale,” United spokesman Jonathan Guerin said in a statement to Today in the Sky in 2016. Some of the difficulties included a restriction by the government on the amount of money that can be moved abroad after the global slump in oil prices depleted the government’s U.S. currency reserves. Etisalat Abu Dhabi’s Etisalat terminated its management agreement with its Nigerian arm as Mubadala Development Company of the United Arab Emirates, the company’s largest shareholder, pulled out its investment and headed out of the country. Mubadala, an Abu Dhabi Government-owned investment and development company, controlled about 70 percent of the shares in Eti-

exclusion rates by 50 percent if the telecommunication operators with a wider subscriber base than the total banked population are allowed to drive mobile money penetration. However some other analyst said financial inclusion can only grow if driven by Telco operators who have large numbers of subscribers on their networks. A survey by BusinessDay showed that the Telco led model in African countries reported tremendous progress owing to the already existing large customer base of the Telco’s. Kenya has about 60 percent mobile money service penetration, while Ghana has about 40 percent service penetration, and Nigeria with a lot more population numbers, remains at 1 percent, largely due to its bank-led model. Ghana’s decision to have a Telco led model resulted in a 73 percent increase in registered mobile money customers in just one year, according to World bank data, and has helped lift financial inclusion rates in Ghana to 58 percent in 2017 from 41 percent in 2014. This was not different for Ivory Coast which has experienced a mobile money revolution. As a result, there are now more adults with mobile money accounts of 24.3 percent than with bank accounts of 15 percent. In fact, Ivory Coast has the fifth highest rate of mobile money accounts in the world behind Kenya (58 percent), Somalia (37 percent), Uganda (35 percent), and Tanzania

(32 percent), according to Brookings Institute, a highly regarded, nonprofit public policy organization based in Washington, DC. Kenya also improved to 81.6 percent financial inclusion rate in 2017 from 74.7 percent in 2014, Ivory Coast improved to 41.3 percent from 34.3 percent and South Africa increased marginally to 69.2 percent from 70.3 percent. “It is safe to say that Nigeria is playing catch-up when it comes to achieving inclusion and must look to learn from success stories like Ghana and Kenya if we are to achieve our goal of 80 percent inclusion by 2020,” said Gbenga Adebayo, Chairman of the Association of Licensed Telecom Operators of Nigeria (ALTON) centered on Financial Inclusion. Umar Garbar Danbatta, Executive Vice Chairman of NCC in May this year told BusinessDay that security challenges on the telecommunications infrastructure in Nigeria is a contributing factor in holding back the licensing of Telco’s for mobile money services. Ayo Akinwunmi, Head of Research, FSDH Merchant Bank said that the issue of the insecurity and the high unemployment rate in Nigeria are factors contributing to the slow progress of financial inclusion in the country. “A lot of banks that are located in these areas where there are high levels of insecurity are already shutting down. If there is peace there will be more bankable adults,” Akinwunmi

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said. According to figures by Nigerian Communications Commission (NCC), the country’s telecommunications industry has a reach of 86 percent of the country, with 162.3 million customers (the single largest customer base of any industry in Nigeria). This makes the industry till date, one of the most thriving sectors in the country and analysts say it has the capabilities to drive inclusion, including technology, infrastructure, and distribution network and subscriber base. Meanwhile, Nigeria’s Telco’s industry players have a combined presence in 773 local government areas across the country further emphasizing their ability to reach especially hard to reach areas of the country. The communication service providing companies in Nigeria also have about 1,000,000 unique agents already in place selling airtime across the country, and analysts say this can quickly be converted to establish mobile money agent networks which can help reach out to the unbanked Nigerians especially those in the rural areas. According to London based Group Special Mobile Association (GSMA), “from a regulatory perspective, one basic requirement for mobile money to succeed is to create an open and level playing field that includes non-bank mobile money providers such as Mobile Network Operators (MNOs).”

L-R: Fidelis Ayebae, chairman, NEM Insurance plc; Nonso Okpala, MD/CEO, VFD Group, and Tope Smart, chairman, NIA, at the investiture of Smart as the 23rd chairman of the Nigerian Insurers Association (NIA) in Lagos.

salat along with Etisalat UAE mobile, with Emerging Markets Telecommunications Services (EMTS, promoted by Hakeem Bello-Osagie, owning the remaining 30 per cent. “All UAE shareholders of Etisalat Nigeria have exited the company and have left the board and management,” then chief executive of Etisalat International Hatem Dowidar told Reuters in an interview. Nigerian regulators intervened to save Etisalat Nigeria from collapse after talks with its lenders to renegotiate a $1.2 billion loan failed. InterContinental Hotel Group In early 2018 news broke out that UK based InterContinental Hotels Group (IHG), operator of InterContinental Hotels brand had withdrawn from Nigeria four years after it opened its first hotel. Unlike its other hotel business in sub-Saharan Africa such as South Africa, Mauritius and Zambia; its Nigeria business was hit by uncertainties such as West African Ebola health crisis in 2014, the uncertainty of the Nigerian general elections in 2015, the crash in oil price, the

eventual Nigerian recession in 2015, as well as the devaluation of the naira and ensuing fiscal crisis. “The U.K company’s 358-room hotel in Lagos, Nigeria’s commercial capital, will no longer operate as an InterContinental-branded property as of January 18,” IHG’s director of African operations Simon Stamper, said in an emailed statement on January 17. In May 2017, a Nigerian court ordered one of the lenders to the N30 billion ($83 million) InterContinental hotel, Skye Bank Plc, to take over the property from its owner Milan Group over debts of $29.8 million and N3.8 billion. IHG continued to manage the property, which then went into receivership. The receiver for InterContinental Hotel in Lagos, Messrs Kunle Ogunba &AssociatessaidinJanuary,“thehotel’s revenue cannot sustain IHG’s charges of almost N40 million monthly without further borrowings as further borrowings based on the peculiar circumstances of the hotel is foolhardy as the hotel is currently indebted to two banks inexcessaggregateofover$100million.” Over the years, InterContinental

Hotels Group PLC has been battling with a backlog of debt. As at June 2017, the group’s long-term debt and capital lease obligation for the quarter that ended in June 2017 was $2,106 Million. These debts have been issued over a period of 3 years. Conclusion Current president Muhammadu Buhari, a former military strongman in the 1980s who came back to power via an election in 2015 is seeking for reelection in next year’s general election. Since taking the reins of office in three years ago, the President has presided over one of the most difficult periods in Nigeria’s economic history. Economic growth has been caged under the 3 percent barrier as the country was only able to manage growth of 2.79 percent in 2015, -1.58 percent in 2016. 0.85 percent in 2017 and an average growth rate of 1.73 percent so far in 2018 compared to an average of 7.4 percent real growth managed between 1999 and 2014 far above the 0.61 percent growth averaged between 2015 and 2017, according to data obtained from the National Bureau of Statistics (NBS).

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2019: Ambode cautions supporters against involvement in crisis

â&#x20AC;Śas Sanwo-Olu promises environmental reforms JOSHUA BASSEY

agos State governor, Akinwunmi Ambode, has reportedly cautioned his close supporters and aides to steer clear of the power tussle over his second term ambition, as he was not ready to fight the leadership of his political party. According to a source close to the Government House at Alausa, the embattled governor upon return from Abuja last week told his aides he would respect the position of the All Progressives Congress (APC) if the leadership insisted he dropped his second term bid. He was said to have also cautioned his supporters against joining issues with the leaders of the party, as he would remain ever grateful to Bola Tinubu, national leader of the APC and former governor of Lagos, who brought him (Ambode) into politics and gave him the opportunity to serve as the governor of Lagos. Meanwhile, a former principal officer of the La-

gos State House of Assembly, who lost re-election in the 2015 election, has said that Ambodeâ&#x20AC;&#x2122;s case has been closed, as he (Ambode) has been told in clear terms he would not return to Alausa as governor after May 29, 2019. The former House member said the governor has offended too many people, many of whom have agreed to his exit from the State House. This is as Babajide Sanwoolu, leading governorship aspirant on the platform of Lagos State chapter of APC on Sunday at a well attended ceremony rolled out his blue-print if finally elected next governor of the state, promising to immediately restore fully the glory of Lagos and the poor environment which he said had become the source of serious anxiety to Lagosians. Party stalwarts at the event, which held at City Hall on Lagos Island include James Odunmbaku (Baaba Eto), Sunny Ajose, former head of service and vicechairman, Lagos West APC; Abdulai Enilolobo, Gbenga Ashafa, Kaoli Olusanya, De-

mola Seriki and Tola Kasali. Others are James Faleke, Rotimi Agunsoye, Lola Essen, chairman, conference 57; Wahab Alawiye, former Lagos Island local government chairman, and former member, Lagos Assembly; Tayo Ayinde, DG, campaign organisation for Sanwo-Olu, who was also chief detail to former governor, Tinubu, among others. Sanwoolu, who will be contesting the APC direct primary slated for the end of September with the incumbent, who is also his party member, Governor Akinwunmi Ambode, vowed also to relieve residents of Lagos of the persistent gridlocks and hiccups that had made life brutish and nasty for them all. This was just as the governorship aspirant, a three-time commissioner in the state paid glowing tributes to past and present leaders in Lagos, including Herbert Macaulay, Akintoye Ajasa, Adeniyi Jones, Mobolaji Johnson and Lateef Jakande, noting that Lagos had been blessed since inception with innovators and visionaries, describing Bola Tinubu, as a celebrated tactician.

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Obaseki urges policymakers to prioritise tech-focused youth empowerment programmes

he Governor of Edo State, Mr. Godwin Obaseki, has charged policymakers on technologyfocused skills empowerment programmes that groom youths in specialised technical fields such as digital skills and core artisanal vocations to enable them contribute to national development. The governor, who said this in commemoration of the African Day for Technology and Intellectual Property marked every September 13, stressed the need for robust programmes to harness the energies of youths in the fourth industrial revolution, which thrives on the knowledge economy. He added that “though a lot of young people lack jobs, there are actually opportunities for skilled labour if youths, even graduates, can be retrained, through well-thought-out, immersive programmes to deploy their theoretical knowledge in exploring the uncharted opportunities in skills-oriented vocations.” He argued that it is pertinent to arrive at these innovative solutions to unemployment because of the urgency of the task to transform the Nigerian economy into a thriving, solution-driven industrialised country. According to him, “As we mark the African Day for Technology and Intellectual Property, it is important to stress the need to expand the industrial base by coopting educated but unemployed university graduates to solve the problems of paucity of skilled labour. We stand a better chance of having innovative solutions to problems when these set of people bring their diverse sets of skills in unlocking the opportunities for skilled labour. He said that the Edo State government has already started this with the aggressive drive to train and retrain job seekers for opportunities in different vocations, equipping them with in-demand skill set through its EdoJobs initiative. “Much as we have done a lot to train secondary school leavers, we are also keen on retraining university-educated job seekers on new skill areas to enable them tap into the opportunities being created in the state, especially as we require specialised skills in the quest for industrialisation,” he said.

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NEXIM seeks partnership with Katsina govt on agricultural export ONYINYE NWACHUKWU

he Nigeria Export Import Bank (NEXIM) is seeking partnership opportunities with Katsina State government inorder that would drive its economic diversification efforts and as well promote/ develop exportable agricultural products in the State. This is part of the bank’s nationwide export diversification campaign, Managing Director of NEXIM, Abba Bello said

during a courtesy call on the Katsina State Governor, Aminu Bello Masari. At the meeting, Bello informed the governor that a one billion naira facility has been set aside per state to support the export value chain in the 36 States of the Federation and the FCT. The money was set aside under the Export Development Fund which aims to prepare, facilitate and support exporters to penetrate global markets. Bello stated that the scheme which is tailored

in line with the One State, One Product Project is aimed at customizing products in the state and to assist exporters to access the facility which comes at a single digit interest rate. The funding project is part of the Bank’s drive to promote the Federal Government’s agenda of economic diversification as contained in the Economic Recovery and Growth Plan (ERGP). Bello further observed that although the one billion was inadequate, the portfolio could be in-

creased with time to give room for expansion and that N500 billion is also available to eligible exporters under the CBN Non-Oil Export Stimulation Facility (NESF). Bello called on the State Government to consider harnessing and exporting of Sesame Seed, a thriving agro product in the State which has high demand in Asian Countries. In his response, the Governor thanked the Managing Director and observed that the visit by the NEXIM officials was

timely and apt, coming at a time when the State was in the process of developing a model to drive the exportation of agricultural products from primary production and across the entire value chain. The Governor emphasized on the need for value addition before export which will provide jobs to the teeming youths. The Governor also identified Hibiscus Flower as a major export product from the State in addition to the proposed Sesame Seed.

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NIS plans safety migration sensitization in Anambra EMMANUEL NDUKUBA

he Nigerian Immigration Service (NIS) in collaboration with the Anambra state government is planning a seminar to sensitize the youths on safe travel. Miriam Audu, Comptroller of NIS in the state stated this when she received members of the Correspondents’ Chapel of Nigerian Union of Journalists(NUJ) Anambra state council paid her a courtesy visit in Awka on Thursday. She said the seminar in collaboration with the state Ministry of Youths and Entrepreneurship, adding that the establishment was working to dissuade youths from undertaking illegal journeys to overseas countries in search of greener pastures. She warned youths in the state that if they let themselves to be lured to travel through unapproved routes, they may lose their lives in the process, even as she affirmed that the establishment had much roles than just issuing international passports to members of the public. “Other jobs we do include checking immigration and emigration. We have officers who monitor migration and immigrants, including the data and statistics of immi-

grants in Anambra, and also check their activities too. “I can tell you that lots of people are trying to come into Nigeria illegally and we have been fining and charging some of them to court. NIS is also working with sister security agencies in the state to ensure adequate protection of residents’’. ,” Audi said. On those seeking international passports from the command, Audu said such is usually obtainable only in areas where large volume of commercial activities could be found. “Anambra is known for the large volume of business happening here, and I think this place is only second to Lagos. Lots of people come here to seek passports, to renew or replace lost ones. “This is a state where you can see an 80 year old man, and he has his passport and clutching it closely. Many people in this state have relatives overseas, and that is the reason for the large number of people you see here,” she said. Emmanuel Ndukuba, Chairman of the Correspondents’ Chapel commended the establishment for its effective operation in the state, adding that journalists in the state would partner with the establishment to enhance its operations in the state.

CBN moves to sanction S/Africa’s recession could boost erring BDC operators foreign inflows in Nigeria HOPE MOSES-ASHIKE

he Central Bank of Nigeria (CBN) said on Thursday that it is determined to sanction Bureau De Change (BDC) operators for poor compliance with the guidelines. This is coming as the outcome of several on-site examinations of BDCs in the past by the regulator, have consistently revealed poor compliance with the guidelines. The observed lapses/infractions include failure to maintain basic accounting records, failure to submit annual audited accounts to the CBN, failure to stamp customers’ international passports with the amount of foreign exchange (FX) sold, and failure to comply with Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) requirements – policy/procurement manual, designation of a compliance officer, Suspicious Transaction Reports (STRs) reporting to Nigerian financial Intelligence Unit (NFIU), training, display of AML caution notice, among others. “We are determined to apply these sanctions ro-

CBN engages with banks to withdraw mutilated naira notes for destruction …addresses dearth of lower currency denomination in Lagos HOPE MOSES-ASHIKE & UDOLA MOKWUNYE

he Central Bank of Nigeria (CBN) on Friday said it is engaging with the deposit money banks (DMBs) to withdraw the mutilated currency notes in circulation for destruction. Priscilla Eleje, director, currency operations department, disclosed this at the weekend at the public sensitisation and enlightenment campaign on direct intervention on lower denomination banknotes at Tejuosho market in Lagos. “We have engaged the banks, the Central Bank is expected to issue fit notes not just mint, fit notes into circulation and take out the unfit notes, Central Bank cannot take out the unfit note if the DMBs do not bring them to us so we are engaging with the DMBs to bring every mutilated notes as you called them and we destroy them and give them fit note in exchange so that is our engagement with them and we are getting to that sooner than later”, Eleje said. In recent time, there has been inadequate circulation of the lower denomination banknotes and the difficulties encountered by economic agents such as

the marketers, merchants, shopping malls, and supermarkets, among others, despite huge volume of the banknotes injected into circulation on annual basis. Eleje, noted that one of the key objectives of the Apex bank as enshrined in the CBN Act, 2007 (section 1) is the issuance and management of legal tender currency in Nigeria. The CBN recognises the important role markets play in economic growth, hence the need to ensure accessibility to lower denominations to carry out legitimate economic transactions. “It is in recognition of this that the management of the Bank approved the direct disbursement of N200. N100, N50, N20, N10, and N5 denominations to market associations, merchants, shopping malls, stores, supermarkets, toll gates, among others in exchange of higher bills. The disbursement which commenced in Abuja had been extended to Lagos, Kano, Enugu, Onitsha, Ibadan, Yola, Gombe, Katsina, Jos, Port-Harcourt, Minna and Umuahia. The framework for the disbarment of these denominations stipulates that it would be made through the respective deposit

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money banks (DMBs) of the beneficiaries. She said the beneficiaries must ensure that their accounts are funded before any withdrawal could be made on their behalf. The banks are expected to incorporate the demands of their merchants and market associations in their request to CBN when making withdrawal or deposit. However, the banknotes are to be delivered to the association at no extra cost and the market associations are not expected to add any cost to their members. In order to guard against possible abuse or diversion of these banknotes, the CBN has developed a monitoring framework to ensure the judicious utilisation of the funds disbursed. Eleje explained that the exercise consists of on the spot checks to the premises of the beneficiaries after receipt of disbarment as well as mystery shopper approach to shops, markets and tollgates. “Any beneficiary found to violate the procedure would be delisted”. “When the objective of the intervention is met, it will principally ease accessibility and consequently address the dearth of these denominations in circulation.

bustly in a new sanction regime”, Aishah Ahmad, deputy governor, CBN, said, in Lagos at a two-day sensitisation forum for BDC operators, organised by Travelex Nigeria limited. The National Risk Assessment (NRA) conducted in 2016 to assess Nigeria’s Money Laundry/ Terrorism Financing (ML/TF risk showed that BDC sub-sector rated high risk. Represented by Mustapha Haruna Bala, head, BDC coordinating group at Other Financial Institutions (OFIs) department, she outlined some of the challenges in supervising the BDCs to include large number and proliferation of BDCs in the face of limited supervisory resources, lack of full automation of the regulatory submission and analysis process, and limited knowledge and skills among operators among other challenges. Stakeholders see the need for cash-less approach to the weekly allocation of FX to BDcs – that is partial electronic/digital payment. They also see the need for more inter-agency collaboration on intelligence sharing and capacity building for BDCs.

BUNMI BAILEY & EMEKA UCHEAGA

outh Africa’s entry into recession could bring in new investments to Nigeria, according to economists. South Africa which is Africa’s most developed economy fell into a recession in after the economic growth declined for the second consecutive quarter this year. Economists now tip Nigeria to benefit from the impending decrease in foreign investments into the South Africa due to its poor economic performance. “New investments that are meant to be going into Africa may now be going to Nigeria,” said Bismarck Rewane, managing director, Financial Derivatives Company. In 2009, during the last economic recession in South Africa, foreign investments into the country fell from $9.9 billion in 2008 to $7.6 billion in 2009. This led to a marginal growth in Nigeria’s foreign inflow which then moved from $8.2 billion in 2008 to $8.6 billion in 2009. “Now that one of the biggest economies in Africa which ought to attract the bulk of foreign inflows funds is in recession, investors will shift their attention to another big African frontier market

which is Nigeria. The largest population in Africa has been able to maintain positive growth for the last one year and this makes the country a better alternative for foreign investments seeking to enter Africa than South Africa,” Ayo Akinwunmi, Head of Research, FSDH Merchant Bank said on phone South Africa unexpectedly fell into its first recession in almost a decade. It went into recession after its economy shrank by 0.8 percent in the second quarter of the year, according to recent official data. The main reasons behind the contraction in the second quarter were slowing agriculture, transport and trade sectors, according to Statistics South Africa. In particular, the agriculture market fell back by 29.2 per cent, taking 0.8 per cent off GDP. “The recession in South Africa may still leave many investors sceptical about investing in Nigeria. Nigeria is only just recovering from a recession and still growing at a slow pace. This will not be too encouraging to foreign investors. If two of the biggest economics in Africa are struggling to grow, investors may be reluctant to bring funds into the continent,” Akinwunmi added.

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Osinbajo says FG committed to bridging APC not surprised by Dogara’s credit gap, empowering SMEs defection - Nabena KELECHI EWUZIE

he Vice President of Nigeria, Yemi Osinbajo says the federal government remains committed to bridge the credit gap and empower Nigerians at the grassroots through the Trader-Moni scheme. Osinbajo says the collateral-free loan, which was dispensed through the Bank of Industry, is part of the Federal Government National Social Investment Programme under the Government Enterprise and Empowerment Programme. He stated this while speaking to beneficiaries of the Trader-Moni loan in Gbagi Market, Ibadan adding that more money would be committed to the scheme as soon as the traders began to pay back the loan. Osinbajo says the policy of the Federal Government is to support businesses through the scheme, not just big business but particularly small, mediumsized businesses and mi-

cro businesses. “I came personally to the market to ensure that those who are meant to collect the money are getting it. I want to know how the scheme is going on in Gbagi Market,” he said. He further said that the federal government recognised the genuine contribution of petty traders to aid the nation’s economy, stressing that the loan was a progressive one which would not only help traders to expand their businesses but also change their standard of living. The Vice President was in the market to assess how the loan was being executed and to ensure that all registered traders got the money. Twenty seven thousand petty traders and artisans benefited from the scheme in Oyo State. The programme targets 30,000 petty traders and artisans in Oyo State, with each of the beneficiaries entitled to N10,000. He said that more of such loan would be made available as soon as beneficiaries began the pay

back. According to the scheme, beneficiaries have six months to repay the loan with flexible options of N85 daily or N430 weekly. The Executive Director, Bank of Industry, Toyin Adeniji, said everyone that registered for the loan would get the money. “For now, we have 27,000 beneficiaries but the target is 30,000 in the state. Beneficiaries who pay back as scheduled will have the opportunity to graduate to the next level of the loan. They can graduate to N15,000, N20,000 or even N50,000 levels and beyond. We implore them to use the money for the purpose it is intended,” she said. One of the beneficiaries, Oladunni Aderinto, who sells okro in the market, thanked the FG for the loan while calling on other beneficiaries to pay back as scheduled. Another beneficiary, Adegbite Toyin said traders needed such loan to boost their trade and cater for their immediate financial needs.

... He is a paper weight politician JAMES KWEN, Abuja

he ruling All Progressives Congress, APC says it is not surprised by the defection of Yakubu Dogara, Speaker of the House of Representatives to the main opposition Peoples Democratic Party, PDP. Dogara who remained in APC even when most of his associates in both chambers of the National Assembly dumped the APC was reported to have picked his expression of interest and nomination forms in PDP a day ago. Yekini Nabena, APC Acting National Publicity in a statement reacting to the Speaker’s defection noted that, “it was only a matter of time judging by Dogara’s anti-party antics in the National Assembly where in connivance with the Senate President, Bukola Saraki, he exploited all available avenues to sabotage and undermine the APC-led executive”. Nabena recalled that, “Dogara’s anti-party activities which enabled one of the opposition Party’s sole

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victory in Bogoro Local Government Area (Dogara’s council) during the recent Bauchi South Senatorial bye-election won by the APC is another pointer, among several others”. While describing Dogara as a paper weight politician, Nabena said, “ indeed, all politics is local. As a Party, we empathise with Dogara on his confusion and despair over his bleak political future given the fact that he is not on ground and a political paperweight in his home Bauchi state”. According to the APC spokesman, “in his emergence as Speaker, Dogara was merely used by his political master to achieve their selfish political ends at the time. They have since moved on to pursue their individual political aspirations and left Dogara in the cold. “We would advise Dogara against his ill-advised decision to recontest his House of Representatives seat under the opposition Party he is linked with because a crushing and humiliating defeat surely awaits him.

Delta to establish emergency camps ahead predicted flood MERCY ENOCH

elta State government is set to establish emergency camps in Asaba, Kwale, Ughelli, Sapele and Warri parts of the state ahead of the impending flood that had been predicted by the Nigeria Hydrological Service Agency (NIHSA) Ernest Ogwezzy, the state’s commissioner, Bureau for Special Duties, gave the hint when the National Emergency Management Agency (NEMA) visited him in his office in Asaba. He recalled that the agency had in its preparedness plan, identified possible safe grounds that could be used to set up Internally Displaced Persons (IDP) camps and had also sent memo to the governor, requesting to stock its warehouse with perishable and non-perishable items to be used as relief items to the prospective victims. He said that as a result, the Delta State Emergency Management Agency (SEMA), felt it was expedient to inform all stakeholders in the state to ensure they were on red alert.

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Live @ the Stock exchange Prices for Securities Traded as of Friday 14 September 2018 Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 225,638.18 7.80 2.63 170 6,803,541 UNITED BANK FOR AFRICA PLC 253,075.72 7.40 3.50 142 5,458,403 629,499.70 20.05 2.30 365 51,812,165 ZENITH BANK PLC 677 64,074,109 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 292,546.64 8.15 1.88 193 9,858,903 193 9,858,903 870 73,933,012 BUILDING MATERIALS DANGOTE CEMENT PLC 3,578,506.56 210.00 - 72 742,892 LAFARGE AFRICA PLC. 179,539.96 20.70 - 54 228,849 126 971,741 126 971,741 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 357,009.32 606.70 - 2 13 2 13 2 13 998 74,904,766 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 76,217.41 79.90 - 6 2,803 OKOMU OIL PALM PLC. PRESCO PLC 60,000.00 60.00 - 4 4,504 10 7,307 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 511.20 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,800.00 0.60 - 7 157,518 7 157,518 17 164,825 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 1,058.92 0.40 -9.09 1 198,480 225.71 0.58 - 0 0 JOHN HOLT PLC. S C O A NIG. PLC. 2,111.93 3.25 - 1 100 49,997.03 1.23 8.85 144 17,274,670 TRANSNATIONAL CORPORATION OF NIGERIA PLC U A C N PLC. 29,245.16 10.15 -0.49 62 865,875 208 18,339,125 208 18,339,125 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 33,000.00 25.00 - 11 10,905 165.00 6.60 - 0 0 ROADS NIG PLC. 11 10,905 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 4,079.48 1.57 - 1 3,125 1 3,125 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,900.00 95.00 - 1 1,000 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 11,300.89 45.20 - 0 0 24,014.43 9.00 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 1 1,000 13 15,030 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 2 8,072 2 8,072 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 14,093.09 1.80 - 2 1,100 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 192,534.65 87.90 -0.11 33 1,608,201 INTERNATIONAL BREWERIES PLC. 275,067.58 32.00 - 17 561,574 NIGERIAN BREW. PLC. 739,713.44 92.50 9.99 74 1,641,509 126 3,812,384 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 38,000.00 7.60 -5.00 51 332,765 DANGOTE SUGAR REFINERY PLC 166,800.00 13.90 0.36 47 645,908 FLOUR MILLS NIG. PLC. 77,907.21 19.00 -4.04 88 652,632 HONEYWELL FLOUR MILL PLC 11,022.97 1.39 9.45 46 1,794,794 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 1,158.30 6.50 - 0 0 NASCON ALLIED INDUSTRIES PLC 51,001.69 19.25 -3.75 30 1,247,872 UNION DICON SALT PLC. 3,676.41 13.45 - 1 100 263 4,674,071 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 17,655.10 9.40 - 20 61,715 NESTLE NIGERIA PLC. 1,085,939.07 1,370.00 -2.00 35 310,088 55 371,803 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 1 10 VITAFOAM NIG PLC. 3,439.82 3.30 2.80 23 461,816 24 461,826 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 53,601.44 13.50 - 12 37,447 UNILEVER NIGERIA PLC. 247,035.23 43.00 -8.12 17 231,512 29 268,959 499 9,597,115 BANKING DIAMOND BANK PLC 29,876.90 1.29 8.40 47 3,252,891 ECOBANK TRANSNATIONAL INCORPORATED 330,291.92 18.00 -2.70 20 3,270,155 FIDELITY BANK PLC 47,518.67 1.64 5.13 56 15,016,303 GUARANTY TRUST BANK PLC. 1,022,733.48 34.75 5.46 294 68,708,588 JAIZ BANK PLC 15,616.05 0.53 -5.66 9 946,500 SKYE BANK PLC 9,299.80 0.67 -2.99 91 9,608,469 STERLING BANK PLC. 41,746.11 1.45 -0.69 64 1,755,597 UNION BANK NIG.PLC. 145,603.76 5.00 -0.99 20 222,538 UNITY BANK PLC 10,871.08 0.93 9.41 15 2,209,010 WEMA BANK PLC. 23,144.68 0.60 -3.23 23 3,776,950 639 108,767,001 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 5,544.16 0.80 -1.25 57 4,032,777 AXAMANSARD INSURANCE PLC 24,150.00 2.30 - 5 8,969 CONSOLIDATED HALLMARK INSURANCE PLC 2,240.00 0.32 - 2 900 CONTINENTAL REINSURANCE PLC 14,936.75 1.44 0.70 6 216,500 CORNERSTONE INSURANCE PLC 3,535.08 0.24 - 5 35,900 GOLDLINK INSURANCE PLC 2,411.47 0.53 - 0 0 GREAT NIGERIAN INSURANCE PLC 1,913.74 0.50 - 0 0 GUINEA INSURANCE PLC. 1,964.80 0.32 - 1 500 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 1 500 LASACO ASSURANCE PLC. 2,343.50 0.32 3.23 4 301,276 LAW UNION AND ROCK INS. PLC. 2,749.65 0.64 6.67 10 500,257 LINKAGE ASSURANCE PLC 4,720.00 0.59 -9.23 6 474,364 MUTUAL BENEFITS ASSURANCE PLC. 2,160.00 0.27 - 5 102,548 NEM INSURANCE PLC 15,788.70 2.99 0.34 24 1,491,674 NIGER INSURANCE PLC 2,554.03 0.33 - 2 46,888 PRESTIGE ASSURANCE PLC 1,832.36 0.48 - 0 0 REGENCY ASSURANCE PLC 1,467.13 0.22 - 6 4,065,229 SOVEREIGN TRUST INSURANCE PLC 1,918.39 0.23 - 8 1,106,000 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 3,227.76 0.25 - 1 8,400 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 5 750,090 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 4,000.00 0.25 -7.41 1 2,000,000 VERITAS KAPITAL ASSURANCE PLC 3,605.33 0.26 -7.14 7 1,036,386 WAPIC INSURANCE PLC 4,951.61 0.37 8.11 37 3,049,164 193 19,228,322 MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 3,338.49 1.46 -2.01 15 623,327

15 623,327 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 4,914.00 1.17 - 0 0 7,370.87 0.50 - 0 0 ASO SAVINGS AND LOANS PLC INFINITY TRUST MORTGAGE BANK PLC 5,922.05 1.42 - 0 0 RESORT SAVINGS & LOANS PLC 5,664.87 0.50 - 0 0 2,949.22 3.02 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 7,500.00 3.75 1.35 33 565,362 CUSTODIAN INVESTMENT PLC 32,350.25 5.50 7.27 11 9,862,000 660.00 0.44 - 0 0 DEAP CAPITAL MANAGEMENT & TRUST PLC FCMB GROUP PLC. 32,674.47 1.65 3.13 19 1,982,519 411.91 552.20 - 0 0 NIGERIA ENERYGY SECTOR FUND 1,183.44 0.23 - 5 3,652 ROYAL EXCHANGE PLC. STANBIC IBTC HOLDINGS PLC 427,302.75 42.25 3.05 34 426,574 16,860.00 2.81 0.36 58 1,310,956 UNITED CAPITAL PLC VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 160 14,151,063 1,007 142,769,713 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 0 0 1,065.94 0.30 - 6 260,228 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 6 260,228 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 544.04 0.55 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 9,000.00 6.00 - 5 27,800 17,101.03 14.30 - 14 90,656 GLAXO SMITHKLINE CONSUMER NIG. PLC. MAY & BAKER NIGERIA PLC. 2,244.20 2.29 - 11 118,704 1,070.43 0.62 - 7 106,500 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 411.96 1.90 - 0 0 37 343,660 43 603,888 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 710.40 0.20 - 2 100,000 2 100,000 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 680.40 6.30 - 0 0 381.11 0.77 - 2 1,100 TRIPPLE GEE AND COMPANY PLC. 2 1,100 PROCESSING SYSTEMS CHAMS PLC 1,314.90 0.28 - 0 0 E-TRANZACT INTERNATIONAL PLC 16,590.00 3.95 - 0 0 0 0 4 101,100 BUILDING MATERIALS BERGER PAINTS PLC 1,898.34 6.55 - 4 10,417 19,845.00 28.35 - 4 3,090 CAP PLC CEMENT CO. OF NORTH.NIG. PLC 28,400.92 22.60 -9.96 72 969,564 FIRST ALUMINIUM NIGERIA PLC 633.11 0.30 - 1 10,000 361.24 0.68 - 0 0 MEYER PLC. PORTLAND PAINTS & PRODUCTS NIGERIA PLC 2,364.38 2.98 - 0 0 PREMIER PAINTS PLC. 1,279.20 10.40 - 0 0 81 993,071 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 3,522.64 4.00 - 17 277,978 17 277,978 PACKAGING/CONTAINERS BETA GLASS PLC. 38,997.82 78.00 - 2 400 GREIF NIGERIA PLC 388.02 9.10 - 0 0 2 400 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 100 1,271,449 CHEMICALS B.O.C. GASES PLC. 1,752.39 4.21 - 4 2,306 4 2,306 METALS ALUMINIUM EXTRUSION IND. PLC. 1,803.64 8.20 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 55.00 0.25 - 0 0 0 0 4 2,306 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,440.42 0.23 4.55 19 1,765,535 19 1,765,535 INTEGRATED OIL AND GAS SERVICES OANDO PLC 62,157.06 5.00 - 51 784,246 51 784,246 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 64,907.15 180.00 - 21 17,052 CONOIL PLC 15,197.55 21.90 - 18 51,347 ETERNA PLC. 7,890.08 6.05 - 7 55,200 FORTE OIL PLC. 22,793.42 17.50 - 28 94,611 MRS OIL NIGERIA PLC. 8,701.65 28.55 - 2 200 TOTAL NIGERIA PLC. 64,407.29 189.70 - 11 17,277 87 235,687 157 2,785,468 ADVERTISING AFROMEDIA PLC 2,219.52 0.50 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 18,818.75 1.93 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 541.12 0.46 - 1 1,000 1 1,000 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 3,212.76 5.45 - 1 800 TRANS-NATIONWIDE EXPRESS PLC. 365.70 0.78 - 3 15,900 4 16,700 HOSPITALITY TANTALIZERS PLC 674.44 0.21 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,801.22 3.10 - 0 0 IKEJA HOTEL PLC 4,718.87 2.27 - 0 0 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 0 0 TRANSCORP HOTELS PLC 51,302.73 6.75 - 1 300 1 300 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 5,280.00 0.44 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 302.40 0.50 - 0 0 LEARN AFRICA PLC 848.60 1.10 - 10 124,378

BUSINESS DAY

Monday 17 September 2018

Access Bank Rateswatch Market Analysis and Outlook: September 14 - September 21, 2018

KEY MACROECONOMIC INDICATORS Indicators

Current Figures

Comments

GDP Growth (%)

1.50

Q2 2018 — lower by 0.45% compared to 1.95% in Q1 2018

Broad Money Supply (M2) (N’ trillion) Credit to Private Sector (N’ trillion) Currency in Circulation (N’ trillion) Inflation rate (%) (y-o-y) Monetary Policy Rate (%) Interest Rate (Asymmetrical Corridor) External Reserves (US$ million) Oil Price (US$/Barrel) Oil Production mbpd (OPEC)

24.81 22.28 1.90 11.23 14 14 (+2/-5) 45.23 76.44 1.67

Decreased by 1.41% in June 2018 from N25.17 trillion in May’ 2018 Increased by 0.34% in June 2018 from N22.21 trillion in May’ 2018 Decreased by 1.56% in June 2018 from N1.93 trillion in May’ 2018 Increased to 11.23% in August’ 2018 from 11.14% in July’ 2018 Raised to 14% in July ’2016 from 12% Lending rate changed to 16% & Deposit rate 9% September 13, 2018 figure — a decrease of 0.87% from Sept ember start September 14, 2018 figure— an decrease of 1.70% from the prior week July 2018 figure — an increase of 4% from June 2018 figure

COMMODITIES MARKET

STOCK MARKET Indicators

NSE ASI Market Cap(N’tr)

Friday

14/09/18

7/09/18

32,248.78 11.77

Change(%)

34,037.91 12.43

(5.26) (5.26)

Volume (bn)

0.21

0.16

36.52

Value (N’bn)

3.80

2.10

80.68

MONEY MARKET NIBOR Tenor

Friday Rate

Change

(%)

(Basis Point)

14/09/18

7/09/18

Indicators

14/09/18

Energy Crude Oil $/bbl) Natural Gas ($/MMBtu) Agriculture Cocoa ($/MT) Coffee ($/lb.) Cotton ($/lb.) Sugar ($/lb.) Wheat ($/bu.) Metals Gold ($/t oz.) Silver ($/t oz.) Copper ($/lb.)

1-week Change

YTD Change

(%)

76.44 2.81

(1.70) 1.08

18.59 (8.05)

2307.00 100.40 81.54 12.14 501.00

0.35 (2.67) 0.28 11.79 (1.91)

19.16 (22.89) 5.21 (20.81) 15.57

1206.10 14.22 267.65

0.41 0.49 2.31

(8.46) (17.28) (18.35)

OBB

10.33

3.00

733

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

O/N CALL 30 Days

11.08 11.75 15.01

3.83 3.44 11.76

725 831 325

Tenor

90 Days

15.22

12.58

265

1 Mnth 3 Mnths

13.90 13.86

10.85 11.81

305 204

6 Mnths 9 Mnths 12 Mnths

14.12 14.67 15.19

12.81 13.06 13.14

132 161 205

FOREIGN EXCHANGE MARKET Market

Friday

1 Month

(N/$)

Rate (N/$)

7/09/18

14/08/18

14/09/18 Official (N) Inter-Bank (N)

306.25 359.40

306.20 358.40

306.05 353.34

BDC (N) Parallel (N)

363.00 361.00

0.00 361.00

361.00 360.00

Friday

Change

(%)

(Basis Point)

14/09/18

7/09/18

3-Year 5-Year

0.00 15.24

0.00 15.07

0 17

7-Year 10-Year 20-Year

15.23 15.19 15.45

15.18 15.01 15.29

5 18 15

Indicators

Index

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

(Basis Point)

7/09/18

Friday

Change

(%)

(Basis Point)

14/09/18

7/09/18

2,606.36

2609.81

(0.13)

Mkt Cap Gross (N'tr) Mkt Cap Net (N'tr)

8.42 5.30

8.43 5.33

(0.13) (0.49)

YTD return (%) YTD return (%)(US $)

6.10 -49.35

6.24 -49.19

(0.14) (0.16)

TREASURY BILLS (MATURITIES) Tenor

Amount (N' million)

91 Day

6217.066

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

Change

(%)

ACCESS BANK NIGERIAN GOV’T BOND INDEX

AVERAGE YIELDS Friday

Friday

(%) 14/09/18

BOND MARKET Tenor

Friday

Rate (%) 11

Date 12-Sept-2018

182 Day

4002.523

12.3

12-Sept-2018

364 Day

126085.442

13.5

12-Sept-2018

Global In the US, the annual inflation rate dropped to 2.7% in August 2018, compared to 2.9% reported the previous month. According to the Bureau of Labour Statistics, it is the lowest inflation rate in 4 months and was driven by lower prices in the cost of fuel, gasoline and shelter. Month-on month consumer prices went up by 0.2%, same as last month figure. In a separate development, the Bank of England left interest rates on hold at 0.75% at the September meeting of its Monetary Policy Committee (MPC). The central bank raised its base rate of interest from 0.5% to 0.75% last month. The committee also voted to maintain the stock of sterling non-financial investment-grade corporate bond purchases, financed by the issuance of central bank reserves, at £10 billion and the stock of UK government bond purchases, financed by the issuance of central bank reserves, at £435 billion. The decision came on the premise that the economy will grow in line with stated projections and therefore the current stance of the monetary rate is appropriate and any future increase will come at a gradual and limited pace. Elsewhere in Japan, the cabinet office reported that the economy expanded by 0.7% quarter-on-quarter in June 2018. This is a leap from the contraction of 0.2% the economy faced in the previous quarter. It is the highest growth rate since the first quarter of 2017, majorly on the back of upward revision of business spending and a strong rebound in private consumption. Year-onyear, the economy advanced by 3% after a 0.9% contraction in the first quarter of 2018. Domestic Recently released data by the National Bureau of Statistics, showed Nigeria’s Inflation rate increased for the first time in eighteen months. The Consumer Price Index which measures inflation increased by 11.23% yearon-year (y-o-y) in August 2018, reflecting a 0.09% increase on the 11.14% rate recorded in July 2018. Food inflation notched higher by 0.31% to 13.16% y-o-y compared to 12.85% y-o-y in July. This rise in the food index was caused by increases in prices of Bread and cereals, Potatoes, yam and other tubers, Meat, Vegetables, Fish, Fruits and Oils and Fat. In contrast, core inflation declined to 10% year-on-year in August 2018, from the rate recorded in July at 10.2%. In a separate development, the Central Bank of Nigeria’s (CBN) Business Expectations Survey report for the month of August showed an increase in the respondents’ overall confidence index (CI) on the macroeconomy. According to the report the CI climbed to 21.5 index points relative to 13.6 points in July, buoyed by improvements in volume of total order, business activity, and financial conditions. The businesses outlook for September 2018 also showed greater confidence in the macro economy at 61.6 index points compared to 58.7 points previously. Stock Market The equities market slumped to a 15-month low last week as negative sentiment persisted. The All Share Index (ASI) - the main index that tracks share prices at the Nigerian Stock Exchange (NSE) dropped by 1789.31 points, representing a loss of 5.26% to close at 34,037.91 points. Aggregate market capitalisation of quoted equities also declined by N650 billion to close at N11.77 trillion. Performance gauges in the market were largely weighted down by significant selloffs by foreign investors in search of higher risk-

adjusted returns and weak macro environment evidenced by slower GDP growth in Q2 and rising inflation. This week, the bourse is likely to remain pressured in the absence of positive market triggers. Money Market Money market rates trended upwards for the first time in four weeks due to consistent mop up by the CBN through Open Market Operations (OMO) auction and Primary Market Auction. Short-dated placements such as Open Buy Back (OBB) and Over Night (O/N) rates climbed to 10.67% and 12% from 3% and 3.83% respectively the previous week. In the same vein, longer dated placements also increased. The Call, 30-day and 90-day NIBOR closed higher at 11.75%, 15.01% and 15.22% from 3.44%, 11.76% and 12.58% the prior week. This week, rates may trend lower due to expected OMO maturities of N407 billion. Foreign Exchange Market The naira depreciated against the dollar at the interbank and official market by N1 and 5kobo respectively in the week ended September 14, 2018 to settle at N359.40/$ and N306.25/$ from N358.40/$ and N306.20, in that order, in the previous week. However, the local currency remained unchanged at the parallel market segment at N361/$. The relative stability of the local currency continues to be supported by the apex bank’s foreign currency liquidity intervention. This week, we envisage the naira remaining at prevailing levels on consistent CBN interventions.

Bond Market Average bond yields trended northwards for the third consecutive week. The trend witnessed was due to deliberate increase of treasury bill rates by the CBN which was mirrored by bond yields. Yields on the five-, seven-, ten- and twenty-year debt papers settled at 15.24%, 15.23%, 15.19% and 15.45%% from 15.07%, 15.18%, 15.01 and 15.29% respectively the previous week. The Access Bank Bond index declined marginally by 3.44 points to close at 2,606.36 points from 2,609.81 points the previous week. This week, actions by the CBN on treasury bill rates will determine the direction of bond yield. Commodities Oil prices fell last week as an industry report showed global supplies at a record and Hurricane Florence weakened ahead of its expected landfall on the US East Coast. Accordingly, Bonny light, Nigeria’s crude oil benchmark, slipped $1.32, or 1.7%, to $76.44 per barrel. In contrast, precious metals prices climbed following reports of a potential new round of trade talks between the U.S. and China which put pressure on the US dollar. Gold gained 0.41% to close at $1206.10 per ounce, while silver settled up 7 cents, or 0.5%, at $14.22 per ounce. This week, oil prices are likely to be bolstered by signs that Iranian crude exports are declining at a faster rate than expected, in the run up to November when US sanctions on the country’s oil industry take effect. For precious metals, prices may inch higher as hopes of a swift Brexit deal boosts the sterling and the euro against the dollar

MONTHLY MACRO ECONOMIC FORECASTS Variables

Sept’18 Oct’18

Nov’18

Exchange Rate (Official) (N/$)

360

361

Inflation Rate (%)

11.30

11.32

11.45

Crude Oil Price (US$/Barrel)

76.75

77.00

78.00

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

BUSINESS DAY

Monday 17 September 2018

Live @ The Exchanges Top Gainers/Losers as at Friday 14 September 2018 GAINERS Company

LOSERS Opening

Closing

Change

N84.1

N92.5

8.4

NESTLE

N32.95

N34.75

1.8

N41

N42.25

ZENITHBANK

N19.6

UBA

N7.15

NB GUARANTY STANBIC

Market Statistics as at Friday 14 September 2018

Company

Opening

Closing

Change

N1398

N1370

-28

UNILEVER

N46.8

N43

-3.8

1.25

CCNN

N25.1

N22.6

-2.5

N20.05

0.45

FLOURMILL

N19.8

N19

-0.8

N7.4

0.25

NASCON

N20

N19.25

-0.75

ASI (Points)

32,327.59

DEALS (Numbers)

3,120.00

VOLUME (Numbers)

252,189,106.00

VALUE (N billion)

4.732

MARKET CAP (N Trn

11.802

Global Spectrum Energy Services gets shareholders nod for capital raise Stories by Iheanyi Nwachukwu

he shareholders of Global Spectrum Energy Services Plc have authorized the directors of the company to raise additional capital. The capital raise will to be done through the issuance of preference shares (convertible or non-convertible), ordinary shares or a combination of any of these options whether by way of public offer, rights issue, or in any manner which the directors may deem appropriate, locally or internationally, upon such terms and conditions to be determined by the directors subject to subject to any requisite regulatory approvals. The shareholders gave this approval at the com-

pany’s 11th annual general meeting (AGM) held last week in Lagos. Global Spectrum Energy ServicesPlcis an in-

tegrated Oil & Gas offshore support vessel services company operating in key oil and gas producing areas in Africa. The company’s

range of services covers complimentary maritime security, logistics, energy and engineering services. It is pioneering some of

the leading-edge technolo- ronment, we envisage that gies and innovations in 2018 will provide Global these fields. Spectrum Energy Services The Nigerian Stock Plc with the opportunities Exchange (NSE) had on for growth, investment and Monday, November 27, consolidation”. 2017 listed by introduc“We intend to take adtion, 800million ordinary vantage of the projected shares of Global Spec- growth the Nigerian econtrum Energy Services omy will offer and deliver Plc at N5 per share on its value to you our shareholdMain Board. ers and other stakeholdAt the annual general ers,” Omene said. meeting, the shareholders In the financial year received and adopted the under review, the comaudited financial state- pany reported 36percent ment of Global Spectrum or N289.4million increase Energy ServicesPlc for the in revenue to N1.09billion year ended December 31, as against N801.5million in 2017. They also received 2016 financial year. and adopted the reports of Profit Before Income the directors, external au- Tax (PBT) decreased by ditors, and audit commit- N32.8million or 14 percent tee thereon. to N204.3million, from Speaking to sharehold- N237.2million in 2016. ers at the meeting, Godwin Profit After Taxation (PAT) Omene, chairman, Global decreased by 52percent Spectrum Energy Services or N118.5million, from Plc said “With a stable and N229million in 2016 to conducive business envi- N110.4million in 2017.

NBCC partners COBCOE Connects to enhance trade relations Resort Savings & Loans reports N463.4m full year loss

he Nigerian British Chamber of Commerce (NBCC) has partnered with COBCOE connects as Africa’s first affiliated British chamber of commerce to collaborate with the online business hub in boosting trade relations and connectivity amongst member partners and organisations across the globe. COBCOE Connects which is a digital hub is one of the fastest online business matchmaking platforms seeking to boost trade relations using their online platforms in creating a business world without barriers. This ensures that members and partners signed up are connected within a safe hub with available access to networking and grow their businesses through shared ideas. The trade platform also unites about 15 British chambers of commerce in 10 different countries with over

5,757 companies from different sectors and 301 opportunities to do business globally. The NBCC through this partnership would serve as a regulating body in ensuring that its members and organizations signed up under it are genuine, reliable and trustworthy to be a part of the trade engagements within the platform which is designed to be a reliable mode for ease of business, business development and business growth for prospective clients, business partners and investors. This partnership further highlights the policy drive by the current leadership of the NBCC in embracing the digital age to further enhance trade relations and subsequent

economic growth which is beneficial to its over 350 corporate members in all sectors of the Nigerian economy which ranges from small and medium enterprises to large scale multinational corporations. Speaking on the collaboration, Akin Olawore, President and Chairman of Council of the NBCC stated that, “with the growth and impact of the digital age, the dynamics of trade engagements has been redefined with businesses been urged to innovate and keep up with global trends as the online platform has become a key medium of connectivity and business engagements across varying markets worldwide.” He further stated that “the partnership is part of the policy and engagement efforts by the council in ensuring that partner members are given a platform to network, share ideas and be a part of a global business community.”

esort Savings & Loans Plc has finally released its results for the full year ended December 31, 2015 with a record loss of loss after taxation (LAT) of N463.4million as against N2.988billion

loss after tax in the corresponding period of 2014, representing 84percent decline. Resort Savings & Loans Plc is a primary Mortgage Bank (PMB) authorised to receive deposits and maintain accounts for their custom-

ers for the purpose of providing service, creating mortgage assets and other credit facilities. The company’s trading information at the Nigerian Stock Exchange (NSE) shows market capitalisation of N5.664billion and shares outstanding of 11,329,732,404 units. The share price remains at 50kobo on the Lagos Bourse. The annual report and financial statements of Resort Savings & Loans Plc for the year ended December 31, 2015 released at the Exchange shows the company grew earnings to N1.583billion in 2015, from N1.410billion in 2014. Loss before taxation (LBT) stood at N447.92billion in 2015 as against N2.972billion loss before tax the company recorded in 2014, representing a decline of 85percent.

Monday 17 September 2018

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BUSINESS DAY

FINANCIAL TIMES

Ronaldo: Why Juventus gambled €100m on a future payday

Has bumper growth led to bumper pay for fund managers? Page A11

Page A12

World Business Newspaper

Weber challenges European leaders over Hungarian rights EPP leader says Salzburg summit must follow up on parliament’s sanctions move MEHREEN KHAN

U leaders have been challenged to take up the question of Hungary’s respect for fundamental rights when they meet this week, amid concerns that European governments will block a process that could lead to sanctions against Budapest. Manfred Weber, leader of the EU’s centre-right European People’s party who is running to become European Commission president, said Europe’s leaders needed to take a stance on Hungarian prime minister Viktor Orban’s domestic policies, after MEPs last week “did their job” in triggering a so-called Article 7 process. “The EPP invested more than two hours discussing Orban. But there have been zero minutes in the European Council [where EU leaders meet],” Mr Weber told the Financial Times. “[France’s Emmanuel] Macron, [the Netherlands’ Mark] Rutte, [and Luxembourg’s Xavier] Bettel are all publicly complaining about Orban, attacking him, and defining themselves as his political opponents. But they don’t discuss it,” Mr Weber said. A summit of the EU’s 28 leaders in Salzburg, Austria, this week will bring Mr Orban face to face with other EU leaders for the first time since Article 7 was triggered last week. Hungary’s ruling Fidesz party has slammed the process, calling it a politically motivated witch hunt and an example of Brussels “insulting” Hungarians for their democratic choices. Mr Weber’s call reflects widespread concerns that the Article 7 process will be blocked by EU governments. They need to agree by a four-fifths majority that Hungary is at risk of breaching the rule of law, and then impose any sanctions — such as stripping Hungary of its member

state voting rights — with unanimity. Allies of Mr Orban in Poland and the Czech Republic have said they will stop the process. A similar Article 7 process against Warsaw has been stuck in the European Council since it was triggered in late 2017. EU diplomats said the Salzburg summit was unlikely to address the Hungary question, with migration and Brexit expected to dominate a dinner of leaders on Wednesday night. “Orban will surely be around the table but at this point he’s not on the table”, one official said. More significantly for the fate of Mr Orban, the centre-right EPP will hold a pre-summit meeting in Salzburg attended by Angela Merkel, German chancellor, Sebastian Kurz, Austria’s leader, and the EU’s JeanClaude Juncker and Donald Tusk. The EPP — which has dominated the EU’s upper echelons for the past four years and is the biggest group in the parliament — was split over the Article 7 decision. About 60 per cent of EPP MEPs voted to rebuke Mr Orban, but party insiders warn that the group will not throw the Hungarian out before EU elections next May. “It would be suicide to kick out Orban,” one EPP official said, noting that Hungarian MEPs were on course to become the second-biggest national grouping in the centre-right according to electoral projections. Hungary also retains support from Germany’s Bavarian CSU party and has sympathisers in Spain’s centre-right People’s party. Mr Weber, who is calling for dialogue with Mr Orban, warned that Budapest must not be picked out for special treatment when it came to breaching EU fundamental values. He said that Andrej Babis, the Czech Republic’s prime minister, “says worse things about Muslims than Viktor Orban”.

Banks jump on to the fintech bandwagon Data sharing between financial institutions and tech companies puts consumers at risk RANA FOROOHAR

all me a Luddite, but I have always agreed with former US Federal Reserve chairman Paul Volcker that the ATM has been the most useful innovation in finance of the past few decades. So I will watch this week’s Senate banking committee hearings on fintech with trepidation. The hearings will be the first chance to dig into the Treasury department’s summer

report on the sector, which talks approvingly of data sharing among technology companies and big banks to create efficiency, scale and lower consumer prices. The report puts rather less focus on the systemic risk and predatory pricing that could emerge if the world’s largest technology companies and the biggest banks on Wall Street share consumer data. (Just imagine if your Facebook page had a checkContinues on page A10

An EU leaders’ summit in Salzburg this week will be the first time Viktor Orban will come face to face with fellow governments since Article 7 was triggered © AFP

Malaysian PM to court global investors in US Mahathir looks to reshape country’s image and allay fears over corruption STEFANIA PALMA

ahathir Mohamad, Malaysia’s prime minister, is to meet international investors and manufacturers while on a trip to the US this month in a bid to allay fears over corruption and attract investment to the south-east Asian nation. The meetings will give Mr Mahathir, who took office in May, a chance to reshape investors’ perception of Malaysia, particularly after $4.5bn allegedly went missing from 1MDB, the state investment fund set up by former prime minister Najib Razak. Mr Mahathir, who launched a fierce investigation into 1MDB shortly after winning elections, was keen to say “what is in store to eradicate corruption, improve transparency, balance the books and have better governance”, a person with knowledge of the matter said. In an effort to increase funds’ interest in Malaysia, JPMorgan is organis-

ing meetings between Mr Mahathir and global equity and fixed-income investors in New York, according to the prime minister’s office. JPMorgan declined to comment. Investors approached would be likely to include companies with large emerging market portfolios such as Fidelity and Franklin Templeton, industry insiders said. The US-Association of Southeast Asian Nations Business Council was arranging meetings with US manufacturers with operations in south-east Asia, Mr Mahathir’s office said. “Prime Minister Mahathir will be involved in all these things. They were very specific about who they want to see and it is definitely him,” the association added. Investors have reacted cautiously to 93-year-old Mr Mahathir’s remarkable election victory, largely because of his chequered past as prime minister between 1981 and 2003, and his populist economic policies.

On his first US visit since returning to power, Mr Mahathir, who has sought to quell doubts about his reformist credentials, will also address the UN assembly. Some international investors have been spooked by Mr Mahathir’s cancellation and suspension of megaprojects linked to China and Singapore, raising fears of barriers to foreign investment. Mr Mahathir is likely to address his pledge to review sovereign wealth fund Khazanah Nasional’s large holdings, which have historically squeezed stock market liquidity and raised questions about Malaysian companies’ independence from the state, a person with knowledge of the matter said. Funds are also watching Malaysia’s fiscal deficit, which could come under pressure following calls to reintroduce fuel subsidies and the repeal of the goods and services tax, which has left a RM20.7bn ($4.9bn) hole in government revenue this year.

Fears grow in US south over flooding from Florence Continued rainfall and rising water levels raises the danger for local population JOE RENNISON

ising flood waters are threatening to cause severe damage in the American south in the coming week as the onslaught of rainfall in the region continued on Sunday. Florence, which has now weakened to a tropical depression, hit the coast of North Carolina on Friday, and has led to rivers flooding, with about 800,000 people across North and South Carolina still without power. The estimated number of deaths has reached 14. The weather pattern had moved west on Sunday morning and Florence was about 20 miles from Columbia, South Carolina, according to the National Weather Service. “More people now face imminent threat than when the storm was offshore,” said Roy Cooper, governor of North Carolina. “I cannot overstate it: flood waters are rising. If you aren’t watching for them, you are risking your life.” On Sunday morning Mr Cooper flew with the US coast guard

over the area to survey the damage. “We know that’s going to be a major mission going forward, because this is historic and unprecedented flooding,” said Michael Sprayberry, North Carolina director of emergency management, speaking on ABC’s This Week with George Stephanopoulos. He said the state had received an expedited disaster declaration from the federal government and added that it would be a long-term recovery. Residents within one mile of the Cape Fear river near Fayetteville have been evacuated, with homes expected to flood through Sunday. Officials in the North Carolina riverfront town New Bern tweeted that they had completed water rescues. Church services across the state were cancelled with officials warning that travel on many roads could still be deadly. John Bannon, a lawyer from hardhit Wilmington on the coast of North Carolina, remained trapped with his family and two dogs in a hotel in Raleigh, 130-miles away, unable to go home due to the road conditions.

“We tried to go home but the road was closed,” he said. “I would like to go home but there is a lot more flooding to come.” The family had initially fled to the mountains but moved due to fears of landslides caused by the rainfall. Mr Bannon said he hoped to be able to return home on Monday before flood waters rose further. “The worst part will be in the next few days,” he said. “The level of flooding will be terrible.” More than 20,000 people have been evacuated to more than 200 shelters set up in high schools and churches, unsure when they would be able to leave, or if they would have a home to return to. Further east in Lenoir County, where a man died on Friday plugging in a generator and another was believed to have been killed by heavy winds, chain restaurant Bojangles reopened serving a limited menu to a line of customer stretching out the door. Water crept up from nearby fields, spilling over into the road. “It’s been crazy,” one employee said.

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NATIONAL NEWS

Banks jump on to the fintech bandwagon

China UnionPay kicks off European expansion with UK launch

Continued from page A9 ing account attached. What could go wrong?) Given the deregulatory stance the Trump administration has taken so far, that’s no surprise. But it is alarming, nonetheless. The Treasury paper’s diagrams of the way platforms and banks might share a consumer’s financial information, in order to offer “personalised” products and services, remind me of the complex illustrations of credit default swaps that triggered the 2008 financial crisis. Complexity of that sort always makes me nervous — it leaves so much room for the party with more information to obfuscate. The blending of platform technologies, big data, artificial intelligence and consumer finance is only the latest and most turbo-charged combination of banking and commerce. Prior iterations, enabled by 1990s financial deregulation, did not end well. Take Goldman Sachs’s experiment with aluminium hoarding, that came to light in 2013. The bank had bought up thousands of tons of aluminium and was moving it between warehouses (which it had also bought) in order to control the release of commodity supply. According to some industry estimates, this added between $3.5bn and $5bn in costs to American shoppers over three years. The Cornell University professor whose work first sparked serious media interest in the topic, Saule Omarova, will be speaking at the fintech hearings this week. Her latest research raises questions about whether the blending of big tech companies and finance is in the public interest. “If Amazon can see your bank data and assets, [what is to stop them from] selling you a loan at the maximum price they know you are able to pay?” Professor Omarova asks. It is a legitimate question, given the history of big banks, and more recently, the manner in which large tech companies use data to reap what many believe are unfair advantages. Amazon uses “dynamic pricing” to profit from public sector contracts, Uber employs “surge pricing” to set rates based on customers’ willingness to pay, and Facebook compiles data about users that they have not themselves shared. Google has tracked users even if their privacy settings ought to prevent it. Some people do not worry about any of this. They feel that it is a fair trade to exchange data for convenient goods and services. But it is impossible to know what is fair in these cases. None of us can see inside the algorithmic black boxes of the largest technology companies. It is one thing for a company to know my vacation shopping patterns or what media I like; it is another for them to access my entire financial history, including my investments. Many people already lack confidence in making financial transactions and in personal wealth management. Why else would so many of them still be paying above average fees for such services? Imagine how vulnerable some consumers might be if their bank notices that they have $9,000 sitting in a savings account. How many would respond to a pop-up ad urging them to move their money into a wonderful new higher yielding investment vehicle?

Monday 17 September 2018

World’s biggest payment card issuer challenges US rivals Visa and Mastercard MARTIN ARNOLD AND GABRIEL WILDAU

Victoire Ingabire: ‘[My release] took me by surprise but I hope this is the start of the opening of the political space in Rwanda’ © Reuters

Rwandan leader Kagame releases opposition leader Victoire Ingabire freed along with 2,000 other prisoners TOM WILSON

aul Kagame, Rwanda’s president, has approved the early release of more than 2,000 prisoners, including a leading opposition figure who was jailed in 2012 for conspiring to undermine the government. The administration gave no further explanation for its decision to release Victoire Ingabire Umuhoza, whose detention had garnered international attention. Gospel singer Kizito Mihigo, jailed for 10 years in 2015 after making a song that criticised the government, was also freed. In a short statement on Friday the ministry of justice said the government had approved the early release of 2,140 eligible convicts. “Among them are Mr Kizito Mihigo and Ms Victoire Ingabire Umuhoza, the remainder of whose sentences were commuted by Presidential prerogative following their most recent applications for clemency in June this year,” it said. The release may give opposition members and regime critics some hope that Mr Kagame could be ready to ease his tight grip on Rwandan politics, but some obervers remain

sceptical. Mr Kagame has been praised for transforming the central African nation from a failed state haunted by the memory of a brutal genocide into a thriving economy, but he has done so at the expense of political competition. Several critics who have gone into exile have died in mysterious circumstances and dozens of opposition figures have been imprisoned. In power since 2000, Mr Kagame changed the constitution in 2015 by referendum to allow him to remain president until 2034. He won reelection last year with 99 per cent of the vote and has allowed his ruling Rwandan Patriotic Front to dominate much of the economy. Ms Ingabire returned from exile in the Netherlands in 2010 to take part in presidential elections but was blocked from competing. Two years later she was charged with inciting the population, forming an army to overthrow the government and downplaying the impact of the genocide — in which some 800,000 ethnic Tutsis and moderate Hutus were killed. Last year a pan-African court ruled that Ms Ingabire’s rights had been violated during her trial but Rwanda

ignored the ruling. The court, based in Tanzania, did not order Ms Ingabire’s release but gave the Rwandan government six months to “rectify the harm done.” Ms Ingabire, a member of the Hutu ethnic group, smiled as she was released on Saturday in a green jacket and orange dress, the colours of her FDU-Inkingi political party. “It took me by surprise but I hope this is the start of the opening of the political space in Rwanda”, Ms Ingabire told Radio France International, after she was released. The opposition leader said she had no plans to cease her political activities. “For me prison was a part of the journey and I will continue my struggle”, she said. Many other opposition figures, including Diane Rwigara, who was taken from her home by police after she tried to run against Mr Kagame in last year’s election, remain in prison. “It’s significant that [Ingabire’s] been released, in terms of what [she] represents as a very high-profile Hutu woman leader,” said Phil Clark, a central Africa expert at the School of Oriental and African Studies in London. “But I don’t see it as the definite opening up of the political space.”

Rising obesity in Africa reflects a broken global food system The industry has maximised production and profit at the expense of public health RAJIV SHAH

hen I visited Kigali, Rwanda’s capital last week, I noticed an array of new fast food restaurants downtown. This is not an exception — chains such as Burger King, Pizza Hut and KFC are proliferating across Africa. Meanwhile, obesity rates are skyrocketing across the continent. Eight of the 20 nations with the fastest rising rates of adult obesity in the world are in Africa, according to research by the University of Washington. This has caught the public health community, more used to nutrition problems in Africa related to famine, off-guard. But do not confuse rising obesity with diminished hunger. Although the world produces enough food to feed everyone 1.5 times over, hunger is once again on the rise. Last year, 821m people went to bed hungry each night. In the US, where food production is bountiful, nearly 15 per cent of the population is challenged by hunger; in Africa, where famines are recurrent, it is 23 per cent. Malnutrition, from either undernourishment or obesity, af-

fects nearly half the world. Current food production methods also come with significant environmental costs. Agriculture accounts for 70 per cent of all freshwater use, takes up roughly 50 per cent of the planet’s vegetated land, and is responsible for nearly 25 per cent of global greenhouse gas emissions — more than every car, truck, ship, train and plane combined. Even the good news — living standards rising for billions — is causing public health and environmental problems as food consumption habits change. The UN expects demand for meat, dairy and eggs in Africa to nearly quadruple by 2050. What we are choosing to eat is making us, and the planet, sick. The problems stem from the decision over the past 50 years to maximise production and profit in the food industry, at the expense of public health and natural resource management. The system encourages cereal grains and animal protein production, which if consumed in excess, cause more harm than good. Public and private investment in food and agriculture research largely flows to these food types —

corn, rice, wheat and animal protein — creating further imbalances. For example, subsidies for cereal crops are such that only 2 per cent of US cropland is dedicated to growing fruit and vegetables. Past interventions to address nutritional deficiencies by fortifying “staple crops” with vitamins have saved lives, but have also distorted demand. They downplayed the need to increase the production and consumption of fruits, vegetables and legumes. Instead economic and government incentives led to the proliferation of unhealthy convenience foods in vulnerable places such as south Asia and sub-Saharan Africa. The food production system must now prioritise public and planetary health over purely commercial goals. Global food policies must encourage the production of a diverse range of foods naturally rich in the vitamins and minerals people need to be healthy. One sensible approach would be to limit or end the use of refined and processed products in public institutions. Let us replace them with whole, nutritious foods grown within a reasonable distance.

hina UnionPay, the world’s biggest payment card issuer, is preparing to launch branded cards in the UK, the first step in a wider European expansion plan to challenge its US rivals Visa and Mastercard in one of their key markets. The move comes as UnionPay faces intense competition in its home market from digital payments groups Alipay and WeChat Pay. It is also likely to add to the frustration of its US rivals, which have spent years trying to enter the Chinese market. The Chinese state-controlled group will team up with a UK company as early as next month to start issuing virtual pre-paid cards for British corporate clients to give to their staff for use via a mobile wallet when travelling in Asia. This will be followed by more deals to issue UnionPay branded credit cards elsewhere in Europe as early as December. “In Europe we want to target local customers in the domestic market, not only people travelling to Asia” said Zhihong Wei, head of UnionPay in Europe. Founded under a charter from the People’s Bank of China in 2002, UnionPay has a virtual monopoly on bank card payments in its domestic market, where it has issued 6bn cards — more than Visa and Mastercard combined. The Chinese group has been expanding internationally in recent years, mostly in Asia, and its cards are accepted by more than 41m merchants and 2m ATMs in 170 countries. It first moved into Europe a decade ago to provide access for Chinese tourists and its cards are now accepted by 60 per cent of merchants and ATMs in the region. It has offices in Paris, London, Madrid, Milan, Frankfurt and Budapest, with another set to open in Stockholm. Mr Wei said it did not need a licence for its European expansion plan as its cards will be issued by third parties, such as banks, and its transactions will be handled by payment processing groups. Six years after the World Trade Organization ruled that China discriminates against foreign payment groups, Visa and Mastercard have applied to Beijing for licences to clear renminbi payments but are awaiting approval. UnionPay operates with a business model similar to Visa and Mastercard, earning a commission on each card swipe. The currencyprinting unit of the PBoC is its largest shareholder, with the remaining equity mostly held by state-owned financial institutions. But the rise of mobile payments in China — dominated by Ant Financial’s Alipay and Tencent’s WeChat Pay — has dislodged UnionPay from its dominant position in electronic payments. Beyond the loss of fee income, the group is also losing access to valuable transaction data from consumers who have switched from plastic to mobile phones. However, Mr Wei said UnionPay was regaining ground on its digital rivals with its QuickPass system, which uses Near Field Communication (NFC) chips of the type used at subway turnstiles around the world and contactless card payments in the US and UK.

Monday 17 September 2018

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BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Has bumper growth led to bumper pay for fund managers? Questions raised about CEO remuneration even as profit margins rise CHRIS FLOOD

Tfm has trawled through the annual reports and regulatory filings of nearly two dozen US and European fund managers to shine a light on the salaries of chief executives who together oversee combined assets of more than $10tn. From Larry Fink and Martin Flanagan in the US to Yves Perrier and Maarten Slendebroek in Europe, our analysis yields some surprising findings, not least who wins top billing for the bulkiest pay package. Pay awards to industry leaders varied widely in 2017, a banner year in which earnings for the asset management industry hit new heights after a record increase in annual profits. Only a tiny number of asset managers disclose details of salary awards made to top staff, ensuring that executive pay remains a hugely opaque issue across the investment industry globally. This lack of transparency has helped fuel complaints that lavish rewards for top executives of asset management businesses constrain them from policing excessive pay awards at the thousands of companies where they are large shareholders. Asset managers, however, vigorously deny this criticism. Data for the pay, revenues, profits and assets of UK and European managers that report in sterling or euros have been translated into dollars using average exchange rates over the 12 months to the end of each company’s reporting year. Exchange rate fluctuations mean the growth rates for pay, revenues, profits and assets differ from information presented in the statutory accounts. Mario Gabelli, the majority owner of Gamco, a $43bn New York-listed value focused investment manager that he founded as a research provider in 1976, heads the list of top earners even though he leads one of the smallest companies, measured by assets, in FTfm’s survey. Mr Gabelli earned $69.4m in 2017, a sum equivalent to more than 43

per cent of the company’s operating profits last year. His pay structure is unusual because Mr Gabelli does not take a base salary or cash bonus and instead his remuneration is entirely made up of restricted stock units. But his pay is still more than double the $28m granted to Larry Fink, chairman and chief executive of BlackRock, the world’s largest asset manager. Mr Fink’s base (fixed) salary has remained unchanged at $900,000 since 2014, so the 9.6 per cent increase in his overall pay last year was due entirely to performance-related earnings. Mr Fink is additionally entitled to about $88m in shares that have not yet vested. BlackRock gathered $367bn in new cash in 2017, its best year on record, helped by the growing appetite of investors worldwide for low-cost tracker funds. Mr Slendebroek, chief executive of London-listed Jupiter, registered the largest percentage increase in pay among companies unaffected by leadership changes or merger activity. His base salary was unchanged at £250,000 but the maturation of several long-term incentive plans boosted his overall pay. William Stromberg of Baltimorebased T Rowe Price, and Joe Sullivan of Legg Mason are other top executives that enjoyed eye-catching pay increases. Luke Ellis of Man Group, the London-listed hedge fund manager, appears to have been given a large pay rise but he only took on the top job in late 2016. Tim Wright, leader of the asset management reward practice at PwC, the professional services firm, said that many investment companies registered double-digit revenue growth in 2017 and an improvement in profit margins that led to an industry-wide increase in chief executive pay. “It is hard to argue that this is not justified by the financial performance and improved shareholder returns of the industry in 2017, but clients and customers are asking more questions about executive pay awards,” said Mr Wright.

Marty Flanagan, Mario Gabelli and Larry Fink

Japan’s paper industry pushes sector to replace plastic Oji and Nippon among groups planning to build on sustainability movement LEO LEWIS

apan’s biggest paper manufacturers have set up crack marketing and research units to leverage global movements against disposable plastic and convince the world that a “paperised” future is more than pulp fiction. The specially established divisions will be used to fast-track innovations that represent a paper solution to any given packaging quandary. They will also centralise the sales pitch for paper as both governments and corporations lay out their ambitions to curb plastic bags, plastic straws and other “one use” items. The paper proselytising by Japan’s biggest manufacturers follows a recent pledge by Starbucks that it would stop using plastic straws globally by 2020, and more limited programmes by the likes of Disney and McDonald’s. The absence of similarly eyecatching pledges by Japanese restaurants and retailers, said one

FT REPORTERS

bigger pullback in the reserve currency seen helping emerging markets The performance of the dollar and oil loom as key developments for investors in the coming week. Is the dollar set for another boost or is dollar strength over? Investors eyeing the index that measures the dollar against its major peers are wondering if the currency has entered a new downward phase, a scenario that would give emerging markets some much needed breathing space. The dollar index rose 7 per cent in the 17 weeks post mid-April. But in the last four weeks, it has fallen 1.7 per cent. The market is split on the dollar. The bulls point to robust US data, comparatively weaker growth in other regions, the Federal Reserve’s consistent interest rate path, the continued impact of tax cuts and

trade tensions as reasons why the dollar’s strength is far from done. They also note how Fed governor Lael Brainard, regarded as a dove, has shifted to a hawkish stance by saying that government stimulus over the next two years would provide “tailwinds to demand” that required further gradual rate increases. The bears say not all the data are favourable, citing the August core inflation numbers that were lower than forecast. They also suspect that Donald Trump will tone down his trade rhetoric after the November midterm elections and they remind investors that because of fiscal stimulus the US is running sizeable twin deficits. US economy chart “A budget deficit that’s heading towards $1tn at a rapid pace while the economy’s growing above potential is going to scare the FX market when the slowdown hits, as it surely will,” said Kit Juckes at Société Générale.

ucts industry to switch to milk carton-style containers for shampoo, shower gel and other liquids. Prominent in Nippon Paper’s pitch is a technology that significantly improves the ability of a paper bag to contain the smell of the product it contains — a treatment that could, in theory, make paper more viable for potato chips, breakfast cereal and other foods. Analysts covering the company declare cautious optimism for the “growing business opportunities”. There are, admit Nippon Paper’s executives, substantial hurdles for the paperisation movement, the highest being cost. Even the cheapest paper straw costs around six times as much as the plastic one it would replace — a difference arising from the relative prices of the basic materials involved. Many paper-based containers are also trickier to make than their plastic counterparts: unlike plastic, paper edges cannot be fused together with heat and must be glued.

Insurers look to boost profits with riskier investments Allocations to alternative assets and cash set to increase OLIVER RALPH

US dollar and oil chasing $80 are in focus for investors this week

paper-company executive, could be a source of embarrassment as Tokyo enters the two-year countdown to the 2020 Olympics. Analysts of the sector suspect that the Japanese government may soon step in with subsidies for R&D within the paper sector that would widen the product’s potential uses. Oji Holdings, which ranks among the world’s top five paper groups by sales, has commandeered around 30 executives for its newly formed “Innovation Promotion HQ”. Its heavyweight domestic rival, Nippon Paper Industries, last month established an elite “Paperising Promotion Office”. The department, after years of countless visions of the “paperless office”, proudly comes with its own revivalist slogan: “Let paper do what it can do”. As well as pushing coffee and fast-food chains to accelerate the adoption of paper straws and paper lids, the units will work on convincing the consumer prod-

nsurance companies are planning to take more risks with their investments over the next few years as they look for new ways to boost profits. Insurers invest the money given to them by policyholders, and profits on those investments have traditionally been an important source of income for the industry. But that income has withered since the financial crisis as interest rates around the world have fallen. Insurers are now hoping to reverse that trend by adding more risky assets to their portfolios, according to BlackRock, the asset manager, which surveyed more than 350 executives at insurance companies around the world managing between them $7.8tn. Almost half of them — 47 per cent — said they planned to increase risk in the next year or two. That is a big increase on the 9 per cent who were planning to increase risk this time last year.

Patrick Liedtke, head of BlackRock’s insurance asset management business in Europe, said there was “a significant easing of concern around macroeconomic and market risk, despite continued geopolitical tension”. More comfort with the EU’s Solvency II capital rules — introduced in 2016 — has also enabled insurance companies to take more risk, added Mr Liedtke. Insurers have traditionally invested in government or corporate bonds, but the BlackRock survey suggests they will increasingly target alternative assets such as infrastructure equity and infrastructure debt. Around 40 per cent of them plan to increase their exposure to alternatives, while just 7 per cent are planning to invest less in the area. “Insurers recognise the need to cast the net wider,” said Mr Liedtke, adding that insurers were “increasingly treating private markets as mainstream asset classes, especially private credit, and taking advantage of the opening up of

Chinese markets”. Many insurers also said that they would increase their allocations to cash over the next few years. Although cash is a low risk asset, Mr Liedke says that the insurers need to put more money into it so that they have enough liquid reserves to pay out claims. Many of the newly popular alternative assets are illiquid, so they cannot be easily sold in the event of a spike in claims. The other big trend that emerged in the BlackRock survey was the growing importance of environmental, social and governance (ESG) investing in the insurance sector. More than three-quarters of the insurers had already adopted ESG policies or planned to do so within the next year. Insurers were reacting to pressure from politicians and staff to improve their ESG performance, said Mr Liedtke. “It is now well beyond a marketing exercise,” he said. “It is real and demand will grow.”

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Friday 17 September 2018

ANALYSIS

Ronaldo: Why Juventus gambled €100m on a future payday The Italian club will pay up to €340m for the star striker over the next four seasons in the hope he will turn it into a global brand MURAD AHMED

here are 15 minutes to go. The ball speeds across the penalty area. And Cristiano Ronaldo — arguably the best footballer of his generation who Juventus has just bought for €100m— fluffs his lines, misses his shot and loses the opportunity to score on his home debut for the Italian club. Yet, among the crowd of 40,000 fans at the Allianz Stadium in Turin, Andrea Agnelli, president of Juventus — and the man who signed the cheque — stands to applaud. It helps that a teammate rifles the ball into the net after Ronaldo’s slip, but the real triumph, says Mr Agnelli, was luring the Portuguese striker to the club in the first place. “It was the first time that the commercial side and the sporting side of Juventus came together in assessing the costs and benefits [of a signing],” says Mr Agnelli, a scion of the billionaire family that has owned the club for 95 years. “The opportunity of Ronaldo was thoroughly assessed . . . and it made sense, both on and off the pitch.” On the pitch the team does not need Ronaldo to dominate Italian football. Juventus, the country’s most successful club, has won seven consecutive Serie A league titles. It has, however, fallen short in recent seasons of the Champions League, losing twice in the final of Europe’s most prestigious tournament in the past four years. Ronaldo, in contrast, has won the last three Champions League finals with Real Madrid. Off the pitch, Juventus believes the player presents an unparalleled financial opportunity, described by executives as “the Ronaldo effect”. The Turin club is looking to invert the business model that has prevailed in football for decades. Elite clubs rely on large crowds and lucrative broadcasting deals to convince sponsors to pay to be associated with their teams. Under the new model, the global celebrity of Ronaldo is expected to drag fans and corporate groups to Juventus, with higher broadcasting money to follow. There are early signs the bet is paying off. While in secret talks to

sign Ronaldo, Juventus increased average season ticket prices by 30 per cent. All 29,300 have been sold. On match day the Juventus stadium superstore is doing a brisk trade in Ronaldo replica shirts, costing up to €154.95 — among the highest prices in Europe. For his home debut, fans travelled from all over the world while television networks spent days trailing his arrival in Turin. Juventus ranks 10th in Europe by revenues chart Investors seem to agree that the Ronaldo effect will provide exponential value to Juventus. The club’s share price has more than doubled, raising its market capitalisation to €1.5bn, since July. “Ronaldo brings a level of stardust that is difficult to find in any sports person,” says Gareth Balch, co-founder of the digital sports marketing company Two Circles. “In the sponsorship buyer’s mind, there is a level of irrationality that exists in every human . . . which is that having Ronaldo elevates Juventus into a group of football clubs that it was not in before. If executed correctly, Juventus can really profit from its investment.” Mr Agnelli took over the running of the club in 2010 and set about attracting a new, global audience. He believes Ronaldo is the catalyst for the club to achieve a grander ambition: become the world’s pre-eminent team. That means winning the biggest trophies, while earning more in revenues than any other club. “We will plan, one after the other, the last remaining steps to become number

one,” says Mr Agnelli. Juventus, however, trail well behind the sport’s financial leaders. The quartet of Manchester United, Real Madrid, Barcelona and Bayern Munich earn €150m-€250m more than Juventus in annual revenues. Other clubs, fuelled by rich owners, such as Manchester City, Paris SaintGermain and Chelsea, also generate more income. The club believes Ronaldo can help it climb up football’s financial ladder, betting that his appearance in its famous black-and-white striped shirt will convince corporate sponsors to pay more to be associated with the player and club. Mr Agnelli points to Real Madrid’s “Galactico” policy of hiring marketable superstars such as David Beckham, and PSG’s recent €222m signing of the Brazilian forward Neymar , as precedents. The strategy is not without risk. At 33 Ronaldo is coming to the end of his playing career. A dip in form or a lay-off from injury would damage the team’s prospects. Some argue the short-term imperatives should not be mixed with a club’s long-term commercial strategy. “At Bayern Munich, if they buy a player, it has to fit in from a sports perspective and not from a brand perspective,” says Jörg Wacker, a board member at the German club. “Of course, Cristiano Ronaldo is an ambassador for the brand . . . [but] he was ambassador for Real Madrid. Maybe in five years, he’s gone. For us, the number one focus is the club and not the player.” To sign the striker Juventus agreed to pay Real Madrid a €100m fee over two years, a further €5m in payments that will ultimately be paid to clubs that trained him as a young player, and about €12m in fees to his agent, Jorge Mendes. Ronaldo’s four-year contract provides a salary worth more than €50m a year after tax, according to reports. The remuneration package will also allow Juventus to use his “image rights”, so that the player — who earns an estimated $47m a year in personal endorsements — can also be used in Juventus promotional campaigns. Financial services firm KPMG estimates that, including the transfer fee, amortised over the duration of his contract, Juventus will pay around €340m, or €85m a year for Ronaldo’s services. Juventus revenue sources chart To satisfy financial fair play regulations designed to force clubs to break even, Juventus has offloaded

other players on expensive salaries. But the impact of the Ronaldo transfer, which will be realised in the current financial year, is expected to push the club into a second season of losses. In the year to June 30 2018, Juventus made a loss of €19.2m on revenues of €504.7m, compared with a profit of €42.6m on revenues of €562.7m the previous season.

dustry academic at the University of Michigan. “That’s not to do with the strategy of these clubs . . . it’s entirely to do with the Premier League having global dominance.” Unlike many of its Serie A rivals, Juventus plays to a packed house in a ground that it owns. The club’s modern stadium cost €150m to build and opened in 2011. It is set to increase the €56.4m earned in

Executives believe the Ronaldo transfer will pay for itself over time by counteracting the club’s biggest commercial weakness: playing in Italy. During the 1980s and early 1990s, Serie A was considered the best league in the world. But it has since been overtaken. According to Deloitte, the English Premier League receives €3.3bn a season for domestic and international broadcasting rights. Spain’s La Liga generates €2bn each year from television rights deals. The Italian league, however, makes just €1.4bn a season. Though watched avidly in its home country, Serie A has yet to attract significant international audiences. Followers of Ronaldo on social media. Juventus gained 10m followers in the month of his signing Juventus is gambling that the global adoration of Ronaldo will build interest in the division. But as Serie A is locked into broadcast deals until the end of the 2020/21 season, there is little immediate upside from any surge in viewers for Italian football. “Let’s face it, there are clubs in the bottom half of the [English] Premier League who could potentially pay for the services of Ronaldo,” says Stefan Szymanski, a sports in-

2017-18 from ticket sales including corporate seats. A strong run in the Champions League — Juventus opens with an away game against Valencia on Wednesday — is essential. The club has reached the knockout rounds of the tournament for the past five seasons. Winning it could be worth up to €130m in broadcast rights and prize money. Like some of his peers, Mr Agnelli wants the sport to be rearranged to allow for more money-spinning ties between Europe’s football titans and fewer against local minnows. “The Champions [League] is a difficult and unpredictable competition,” says Massimiliano Allegri, head coach at Juventus. “With Ronaldo, we are far more likely to win it.” Yet, even club executives accept that his arrival cannot guarantee on-pitch success. The real hope in Turin is that Ronaldo will ramp up the value of Juventus sponsorship deals. In 2017, thanks to strong performances in Europe, the club earned more from broadcast rights than Manchester United, the world’s richest club by revenues. Yet, while the English club has struggled on the pitch in recent years, it earned nearly €200m more than Juventus in commercial deals.

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B5 NEWS Osun guber: Police deploy heavy equipment, declare war on vote buying Monday 17 September 2018

he Inspector General of Police, Ibrahim Idris, has ordered the deployment of heavy police equipment and personnel to ensure secured environment for a peaceful and credible election during Saturday, September 22, Governorship election in Osun state. A statement issued on Sunday by Force Public Relations Officer, Jimoh Moshood, made available to reporters noted that the security arrangement will be implemented by Deputy Inspector General Department of Operations (DIG DOPS)

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to be assisted by one Assistant Inspector General (AIG) and eight commissioners of police. Each of the Eight (8) Police Area Commands in Osun State will be manned by a Commissioner of Police. The police have also deployed two police patrol surveillance helicopters, thirty Armoured Personnel Carriers, ten Armoured Personnel Vehicles and three hundred police patrol vehicles to cover the entire state including difficult terrains, the statement said. The operatives of the Force Criminal Intelligence and Investigation Department (FCIID), the IGP Moni-

toring Unit and Intelligence Response team(IRT) are already on ground to gather intelligence, prevent and arrest, investigate and prosecute any individual who engages or attempts vote buying or selling during the election, the statement added. The police also announced that total restriction of vehicular movement in and out of Osun state will commenced from 12- midnight of Friday, September 21, till the end of the election. However, those on essential duties on genuine proven course will be granted passage only. “The DIG, DOPS will lead, implement and coordinate

I am not your leader anymore, Amaechi tells Abe IGNATIUS CHUKWU

he rift between two big friends and leaders of the All Progressives Congress (APC) in Rivers State may have got to irreconcilable level as the leader of the party in the South-South and former governor of Rivers State, Chibuike Amaechi, has issued a statement, denying being leader to the senator he recently installed, Magnus Abe. The minister of transportation who is also President Muhammadu Buhari’s reelection campaign directorgeneral issued a statement in Port Harcourt saying Abe had left the camp that made him and was always insulting him in public. Amaechi, who got Abe from the then All Peoples Party (APP) in the Rivers State House of Assembly (1999 – 2003) into the Peoples Democratic Party (PDP) and into the Governor Peter Odili political family and there to

Commissioner, Secretary to State Government and later senator, said he was reacting to Abe’s latest declaration in Abuja that Amaechi was still his leader. “I am not Magnus Abe’s leader. Abe has long left me and the political family that is largely responsible for his rise and fame in politics,” Amaechi said in a statement released by his media office at the weekend. “How can I be Abe’s leader when he and the minions sponsored by him (Abe), privately and publicly abuse, insult, cast aspersions, etc on me, my wife and members of my family, daily? Is that how a follower treats his leader? “It’s cheap and indeed shameful political sophistry for Abe to stand in the APC secretariat and deceitfully say I am his leader, while all he has done, both privately and publicly in recent times is to undermine me, the APC and desecrate the APC in Rivers State. As a matter of fact, it is

indeed very doubtful if Senator Abe is still in the APC. He mouths APC but his actions belie his words and clearly tell a different story. “A man who wakes up, create an imaginary parallel party executive and went ahead to open an office for the non-existent parallel executive, that has no base and foundation, cannot be said to be committed, in anyway, to the party. As a matter of fact, his actions are obviously targeted at weakening and destroying the party.” “Such a hypocritical, devious character cannot be my follower. I am not his Leader,” the statement concluded. Abe broke up with Amaechi for not endorsing him for governor 2019 or not allowing party members to do the picking. He is seen to be closer to Gov Wike of the PDP than Amaechi as speculations hold that Wike has promised to swing the governorship to him in 2023 should he (Abe) help him in 2019.

NLC tasks FG, MTN on payment of $10.13bn KEHINDE AKINTOLA, Abuja

he leadership of Nigeria Labour Congress (NLC) on Sunday called on the Federal Government to ensure recovery of the $2 billion tax arrears as well as the $8.13 billion allegedly repatriated to South Africa from MTN. The Congress, in a statement signed by its President, Ayuba Wabba, also urged the authorities of MTN to comply with Federal Government’s directive by paying the $2 billion tax arrears as well as the $8.13 billion allegedly repatriated to South Africa. “We at the Nigeria Labour Congress hereby urge MTN Nigeria to comply without further delay the directive of the Federal Government to it to pay $2 billion in tax arrears as well as the $8.13 billion it was said to have illegally repatriated

to South Africa over which four indigenous banks have been fined. “We similarly urge the Federal Government to spare no effort in recovering this money as anything to the contrary will send wrong signals to other corporate organisations it had punished for lesser tax infractions. “The need to enforce this order is all the more compelling when it is realised that workers pay taxes they can ill-afford but religiously pay all the same. “It is also worth noting that government’s tax reforms have been skewed in favour of corporate organisations, there is no reason for a default. Afterall, every taxable person is expected to pay his tax as when due. “If companies default, with what is government expected to run the country or conduct its business? “In our view, this inci-

dent does not just directly testify to the Thabo Mbeki Report on Illicit Financial Flows from Africa, it is a major crime against the government and people of Nigeria. On our part, we are not surprised by the unethical conduct of MTN. They are not only engaged in the exploitation of Nigerian workers and turning them into slaves but have extended their frontiers to unwholesome economic exploitation and sabotage. “The questions on every ones lips are: How many times has MTN done this? How many other companies are doing this? “In our Tax Justice Campaign, we relentlessly and assiduously drew the attention of government and the entire citizenry to this humongous crime against the vulnerable people of Africa, especially Nigeria, over 70 million of whom are said to be the poorest in the world.

the security operations, and also supervise the deployment of all Personnel of other Security Agencies under the Inter Agency Consultative Committee on Election Security (ICCES) for the election throughout the 3,764 Polling units/voting points in the 332 Wards and the Thirty (30) LGAs of the State,” the statement said. “The personnel that were already trained and oriented on election security and electoral act on the responsibilities and functions expected of them, comprises the Police Mobile Force (PMF) Units, Counter Terrorism Unit (CTU), the Special Protection

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Unit (SPU), the Anti Bomb Squad (EOD), Conventional Policemen, the Armament Unit, personnel of FCIID, IGP Monitoring, IGP IRT teams, the Sniffer dogs section and the Mounted Troop. “ Four (4) unarmed Policemen and two (2) others from other security agencies will be on duty at each voting point throughout the State. The Police Mobile Force (PMF) headed by the very Senior Officer will provide security at the RAC, Super RAC and Collation centres,’’ the statement added. The police noted that Other security and safety agencies who are members

of Inter-Agency Consultative Committee on Election Security (ICCES) in the State have also been posted to complement the Nigeria Police Force during the election. “As part of additional measures to guarantee a peaceful and credible election, the IGP will on 17th September, 2018 attend a stakeholders and peace accord meeting with INEC Chairman and the FortyEight (48) political parties participating in the election and their flag bearers, INEC officials, election observers and other accredited stakeholders will also be in attendance in Osogbo, Osun State.

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Politics & Policy Monday 17 September 2018

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Oyo 2019: How APC efforts to pick 3 consensus aspirants was shattered AKINREMI FEYISIPO, Ibadan

ome September 24 , eight g u b e r nat o r i a l aspirants on the platform of the ruling All Progressives Congress (APC), in Oyo state will be sluggging it out through indirect primary. The seven aspirants were those who collected nomination and expression of interest forms ahead of the 2019 general election after efforts by Governor Abiola Ajimobi and party leaders to pin down the number of those who will participate in the primary to three failed. Among the aspirants who had purchased the forms are Minister of Communications, Adebayo Shittu, Owolabi Babalola, a medical doctor and former Commissioner for Health in the state during the administration of former governor Abebayo Alao-Akala, Joseph Tegbe, a Senior Partner in KPMG Professional Services in Nigeria and Adebayo Adelabu, a former deputy governor of Central Bank of Nigeria, Others are former Governor Adebayo Alao-Akala, Adeniyi Akintola, a legal luminary and Commissioner for Health, Azeez Adeduntan, an international surgeon and Olusola Ayandele, an Ibarapa East

Local Government-born industrialist who also doubles as Project Director at Integrated Energy Distribution and Marketing Limited. For the past few weeks, there were moves to have three aspirants as the ordained consensus candidates for the primary election billed to take place later this month but before the deadline,the eight have gone ahead to pick the forms. This is coming despite the persuasion and a joint resolution of the governorship aspirants for the 2019 general elections at a meeting, which 21 among them held with APC party leaders at Quarters 81, Government House, Agodi, Ibadan to prune down to three aspirants. It was gathered that the governor had promised to pick three forms after which the aspirants must have met in line with resolution signed by 21 of them and decided on the three consensus candidates. According to sources, as the time the purchase of the form will close, the governor did not purchase the forms which prompted the eight to quickly purchase their forms. The remaining aspirants were likely caught in web. The likes of Isaac Omodewu,the commissioner for lands ,former Head of service,Soji Eniade and Lekan Alli ,Secretary to state govern-

Ajimobi

ment who had shown interest since and been rumoured were likely to be among the consensus candidates could nit make it. Governor Ajimobi at the onset appealed to the aspirants to possibly step down and avoid waste of resources. According to him,it would be wrong to encourage the governorship aspirants to waste N22.5 million on nomination forms without emerging as the candidate. While saying that all the aspirants are qualified and have good credentials, noted that there was need for consensus candidates out of the over 30

....Formerly declares for guber race INIOBONG IWOK

…Says Nigeria risks second recession under Buhari INNOCENT ODOH, Abuja

ormer Vice President and 2019 Presidential hopeful, Atiku Abubakar, has condemned the Presidency over its attack on the credibility of HSBC for predicting that Nigeria’s economy will plunge into deeper crisis if President Muhammadu Buhari is reelected in 2019. The presidential aspirant under the platform of the People’s Democratic Party (PDP) in a statement issued on Sunday by his Presidential Campaign Organisation, said that “it is with amusement that we read the statement by the Buhari administration condemning HSBC, the world’s largest bank, simply because HSBC gave a verdict that Buhari’s re-election would spell doom for Nigeria’s economy. “It is at once comical and pathetic that the Buhari government’s statement called HSBC corrupt. It seems they

among them that would go for the indirect primary. The party shall either select one of the three shortlisted aspirants as the party’s gubernatorial candidate for the 2019 governorship election, or direct that an indirect primary be conducted at which only the three shortlisted aspirants and none of the other aspirants shall participate. “The aspirants irrevocably agree and accept that the outcome of the indirect primary or consensus shall be binding and shall not be contested or challenged by way of appeal, petition or litigation. While commending maturity and commitment of the aspirants towards the selection of the party’s flagbearer, the governor while addressing stakeholders, charged them to continue to work towards the unity and progress of the party. “I want to plead with you again that much as we appreciate competition, much as we appreciate commitment and support for the party, much as we appreciate your willingness to serve the people, our prayers are that all of us should do it in a rancourfree environment”. He stated. “The aspirants have exercised commitment and decency to enhance the unity and progress of the party, goodness and socio-economic development of the state.

I would restore Lagos glory - Sanwo-Olu

Attack on HSBC exposes your hypocrisy, Atiku tells Presidency are unaware that some of the record N12 trillion worth of debt which the Buhari administration has saddled Nigeria with is actually funded from HSBC, which is the world’s largest bank.” The Wazirin Adamawa, noted that when the Buhari government was taking money from HSBC, the ever begging Buhari administration did not know that HSBC was corrupt. He added that it was after the HSBC told the truth about the Buhari government that they knew that the HSBC is keeping looted funds. The Presidency in a statement had called HSBC “A bank that soiled its hand with millions of US dollars yet-to-be-recovered Abacha loot.” But Atiku mocked the Presidency, saying that they forgot that their principal, Muhammadu Buhari said: “Abacha did not steal”. “So if Abacha did not steal, how could HSBC keep recovered Abacha loot? When you tell so many lies, you begin to

of them jostling for the Agodi government house. This called for a meeting penultimate week for a meeting of all aspirants and party leaders. At the meeting ,it was agreed that the aspirants should meet and pick three for primary and feed back the governor and elders of their decisions which they could not reach a compromise. There was a resolution signed by twenty out of thirty aspirants pick three. However, only 20 signed the resolution, while a former governor of the state, Adebayo Alao-Akala, who was at the meeting, did not sign the

resolution. Minister of Communication, Adebayo Shittu, was not part of the meeting and signing of the resolution Among the aspirants that signed the resolutions were Secretary to the State Government, Lekan Alli; Executive Assistant on Administration to the governor, Soji Eniade, who is a former Head of Service; Commissioner for Land, Housing and Survey, Isaac Omodewu; and a frontline journalist, Kehinde Olaosebikan Others included a legal luminary, Adeniyi Akintola, Adebayo Adelabu; a Olasunkanmi Tegbe; a Chief Executive Officer of Costain West Africa Plc, Ayo Karim; and Director, Integrated Energy Distribution and Marketing Limited, Olusola Ayandele; As part of efforts to get things right, another stakeholders’ meeting was held behind closed doors at the APC Secretariat, Oke-Ado, Ibadan, on Tuesday in which a motion was moved and duly seconded that indirect primaries be adopted in Oyo state to elect candidates for the party ahead of the general elections At the meeting, presided over by Governor Abiola Ajimobi, and state chairman of the party, Akin Oke, also emphasised the need to prune down the governorship aspirants and nominate three

contradict yourself,’’ Atiku said. He said further that Nigeria under Buhari has been adjudged as the world headquarters for extreme poverty by the World Economic Forum and the World Poverty Clock as well as the British Prime Minister, Theresa May. “Are these people also corrupt?” Atiku asked. “Only last month, the National Bureau of Statistics revealed that our second quarter GDP growth rate was lower than our first quarter GDP growth. Another quarter of negative growth and Nigeria will enter a second recession under the Buhari administration. “The same NBS published in December 2017 that 7.9 million Nigerians lost their jobs in 21 months under Buhari’s watch. “These are the things that the government should be focused on and not to haul infantile insults at the world’s largest bank,” Atiklu said in the statement.

rontline aspirant for the gubernatorial ticket of the All Progressives Congress (APC) in Lagos State, Babajide Sanwoolu, has vowed to restore the lost glory of the State if elected governor. Sanwoolu who was a former three times Commissioner in the State, stated this yesterday, while officially declaring his intention to contest for the position of the governor, noting that his administration would priorities the welfare of the masses and also restoring the environment which had become a sources of concern to Lagosian. “If elected the next governor of Lagos State, I will immediately embark on full restoration of the lost glory of the State, and make the people the corner stone of government. ‘I will restore the environment that has become the source of anxiety to Lagosian. I will relieve residents of persistent gridlocks and hiccups

that has made life brutish and nasty for all of us”. “Our focal point shall be to provide the greatest good for the people of Lagos State. I have invited you all you all here to take Lagos greater, I declare that I shall be a true party man in the real definition by the worlds and in running and inclusive government according to the ideology and the long term benefit of the citizens,” Sanwoolu said. The governorship aspirant promised to run and inclusive government, and respect the ideology of the APC, while seeking the collaboration and support of stakeholders towards the realisation of his dream. He praised the virtues of past leaders of the State for their visionary effort which had transformed the State and positioned it among the great cities in the world. “There is no way to review the history of Lagos State without placing on record the contribution of Mobolaji Johnson , the first governor the first civilian governor of the State and many others

that led to the development of the great State. “Modern Lagos since the inception of this administration is blessed with innovators and visionary and that is why I must recognise the man that led in the modernization of Lagos and a celebrated tactician National leader of the APC, Asiwaju Bola Tinubu,” Sanwoolu added. Leaders of APC in attendance at the declaration at the City Hall includes; Sunday Ajose, former Head of Service and Vice-Chairman, Lagos West APC; Wahab Alawiye, former Lagos Island LG boss and former member, Lagos Assembly; Cardinal James Odunmbaku, Babajide Sanwoolu, governorship aspirant; Chief Sunny Ajose, Alhaji Abdulai Enilolobo, Senator Gbenga Ashafa, Chief Kaoli Olusanya, Demola Seriki, Tola Kasali, Tayo Ayinde, DG, campaign organisation for Sanwoolu, who was also Chief Detail to former Governor Tinubu; lola Essen, Chairman, Conference 57; Kayode Omiyale, Hon. James Faleke, Hon. Rotimi Agunsoye.

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B12 BUSINESS DAY NEWS Adeosun: PDP asks NASS to probe N11trn sleaze by presidency cabal OWEDE AGBAJILEKE, Abuja

he Peoples Democratic Party (PDP) has asked the National Assembly to immediately open an investigation into alleged siphoning of over N11 trillion by the cabal in the Buhari Presidency, concealed under the supervision of the immediate past Minister of Finance, Kemi Adeosun. The party said its position is predicated on allegations that the Buhari Presidency and the All Progressives Congress (APC), being aware of the former minister’s NYSC Exemption certificate forgery, used her to conduit the siphoning of trillions of naira from the national treasury. The party urges the parliament to probe the books of the finance ministry under Adeosun’s stay as well as the Ministry of Petroleum Resources, which is under President Buhari. This, the party explained, would expose those behind

the N9 trillion fraudulent oil contracts detailed in the NNPC leaked memo, N1.4 trillion fraudulent oil subsidy regime; alleged diverted N1.1 trillion worth of crude oil through 18 illegal companies linked with APC interests, among others. A statement by Kola Ologbondiyan, PDP National Publicity Secretary on Sunday, also insisted that Adeosun must be made to explain how the $321 million (N115 billion) repatriated by Switzerland was allegedly relooted. It would be recalled that the embattled former minister had tendered her resignation letter last week after admitting that her NYSC Exemption Certificate was forged. The statement reads: “Adeosun must also be made to tell Nigerians how a cabinet minister close to President Buhari directly stole $16.9 million (about N7billion) from the returned $321million as non existent legal fees before the fund became an Automated Teller Machine (ATM) for

members of the Presidency cabal and APC leaders. “The former minister should also be made to expose where the pressure that compromised the system for the stealing of over N25 billion National Health Insurance Scheme fund (NHIS) from the Treasury Single Account (TSA) was initiated. “The PDP invites Nigerians to note that President Buhari, as ‘Mr. Integrity’ has refused to order any investigation into huge allegations of corruption and stealing under his watch, particularly those in the petroleum sector, where he directly presides as minister. “Since it has become clear that Mr. President is providing official cover for corruption under his regime, the PDP urges the National Assembly to subject all officials of the Buhari administration to an integrity test, as Nigerians can no longer bear consequences of a pretentious administration run by very corrupt individuals and fraudulent characters”.

Ifeanyi Ubah flags off one family, one footballer project in Anambra

he chairman of FC Ifeanyi Ubah, Ifeanyi Ubah, has flagged off ‘One-family One-footballer’ project in Anambra state. Ubah, who is also chief executive officer of Capital Oil and Gas, said at the event that the project was committed to the donation of one million footballs to African children. Ubah was flanked by the South Korean ambassador and Chinese businessmen at the colourful event on Sunday at Ifeanyi Ubah International Stadium, NnewiOzubulu, Anambra state. He said that football had become a veritable instru-

ment to fight poverty among families of the world and urged families in the state to key into the big business through the initiative of ‘one family, one footballer’ He said that many families of the world had been liberated from poverty because they are lucky to have footballers. Ubah who is aspiring to represent Anambra South zone in the Senate said he had always been passionate about the welfare of youths who, according to him, are the basis of his initiatives and projects. He said his contribution to the growth and develop-

ment of football had become so monumental that no single individual has ever donated one million football to young talents in world history. The senatorial aspirant also donated a car (IVM Fox) and N1 million to the association of people living with sickle cell disorder led by Aisha Edward. Sunday Anaekwe, President, Anambra state chapter of National Association of Private Schools (NAPS) who led over 5000 students and pupils to the event commended Ubah for his passion to better humanity through his various interventions.

Regulation of electronic funds transfer commences October 2, says CBN HOPE MOSES-ASHIKE

he Central Bank of Nigeria (CBN) has fixed the effective date for the regulation of Electronic Funds Transfer (EFT) services in the country on October 2, 2018. Dipo Fatokun, director, banking and payments system department, stated this in circular to all deposit money banks, Microfinance banks, other financial institutions,

mobile money operators, development finance institutions, payment service providers and other stakeholders on the regulation on instant (inter-bank) electronic funds transfer services in Nigeria. The regulation covers Instant Electronic Funds Transfer Services in Nigeria on various payment channels and any payment platform that seeks to provide Instant Electronic Funds Transfer Services in Nigeria.

The sets sets out the rights and responsibilities of all stakeholders to Electronic Funds Transfer under the regulation. In terms of fees and charges, the CBN said, Instant EFT service providers and Sending entities shall apply fees and charges in compliance to the approved Guide to Bank Charges. The Receiving entity shall not earn income on funds transferred. However, statutory levies/charges shall apply.

Court restrains NAICOM from implementing Tier Based capital policy

Federal High Court in Lagos has restrained the National Insurance Commission (NAICOM) from implementing its proposed minimum solvency capital policy scheduled to take effect from October 1, 2018,

pending the expiration of a 30-day pre-action notice. Justice Muslim Hassan, gave the order in a class action brought by some shareholders of insurance companies in Nigeria, challenging the new minimum solvency capital policy proposed by the

NAICOM. At the hearing, counsel to the applicant, Bert Chucks Igwilo, told the court that they had filed and served the NAICOM a pre-action notice on Sept 6. Justice Hassan gave the order and adjourned further hearing to Oct 8.

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NEWS YOU CAN TRUST I MONDAY 17 SEPTEMBER 2018

fivethings

Insight Restructuring Nigeria: Osinbajo is wrong again! GLOBAL PERSPECTIVES

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

n 2016, I wrote a piece titled “Restructuring Nigeria: Osinbajo has gone native” (BusinessDay, 25 July 2016). In the article, I took issue with Vice President Yemi Osinbajo’s well-publicised comment that Nigeria did not need political restructuring, but economic diversification, and that the country must not be restructured “along ethnic lines”. I argued that the vice president’s comments betrayed a failure to recognise the centrality of political settlement to economic development, and an ignorance ofthe nature of the political restructuring of multi-ethnic states around the world. I stressed that Nigeria, as a multi-ethnic state, a fragile one for that matter, could not defy the global trends in political restructuring and, thus, for its unity and progress, must be restructured! Well, I am constrained to take issue with the vice president again on the same subject because, recently, he repeated the hackneyed view on political restructuring. Speaking at a town hall event in the US, he said: “The problem with our country is not a matter of restructuring and we must not allow ourselves to be drawn into the argument that our problems stem from some geographical restructuring. It is about managing resources properly and providing for the people properly, that is what it is all about”. In the first instance, if you take that statement, leaving aside its specificity to Nigeria, it seems strange that anyone would focus on human behaviours and actions– “managing resources”, “providing for the people” etc – and ignore how institutional and governance structures can shape or incentivise those behaviours and actions. Then,when you add the Nigeria context, it is doubly strange – isn’t it? – that any perceptive Nigerian leader would blithely dismiss political restructuring the way Osinbajo did. Unsurprisingly, the vice president’s comments provoked spontaneous reactions. The most hard-hitting salvo came from his “illustrious” predecessor, Atiku Abubakar, who accused Osinbajo of demonstrating “a lack of appreciation of the core tenets of the concept” of restructuring, adding that he “failed to appreciate the connection between Nigeria’s defective structure and its underperformance”. Osinbajo hit back, describing Atiku’s concept of restructuring as “understandably vague” while clarifying his own position. Nigeria, he said, needed fiscal federalism and strong states, including state police, but not geographical restruc-

turing. He listed his legal victories at the Supreme Court, as attorney general of Lagos state, which resulted in the repatriation of some powers to the states. “I have been an advocate of fiscal federalism and stronger state governments”, he said. Atiku replied, taking exception to the description of his concept of restructuring as “vague”, and setting out his own version of restructuring, which included “devolution of powers and resources to the states”. Restructuring, Atiku declared, “is a necessity, not an option”! Truth is, Atiku is right. Restructuring is a defining issue for Nigeria, and when a country faces such a defining issue, it must be laser-focused on it. For instance, the defining issue for Britain today is Brexit, and if there is a general election in Britain tomorrow, it would be dominated by Brexit. In a recent article titled “2019 elections are meaningless if not about restructuring Nigeria”, I argued next year’s elections must be defined by debate on restructuring. All other issues – the economy, corruption, insecurity – that would feature in the elections are rooted in the flawed politico-governance structure of Nigeria, so the country must be restructured. Think of it. All over the world, nations are regularly restructuring and creating new constitutional or political settlements. For instance, a few years ago, Sri Lanka decided that its presidential system wasn’t working and reverted to the parliamentary system. In 1997, the UK concluded that in order to safe-

tlement and rejig its governance structure, despite its obvious defects. Which brings us to Vice President Osinbajo’s views on restructuring. Essentially, Osinbajo is saying yes to fiscal federalism, strong and autonomous state governments, and state police,but no to “geographical restructuring”.But do these views stand up to scrutiny? Well, no; they lack internal coherence.

‘

As vice president, Osinbajo is a product of geographical zoning and political considerations. His constant bashing of political restructuring, therefore, sounds hypocritical and unconvincing

Let’s come back to what the vice president is against – “geographical restructuring” – and focus, for now, on what he supports – fiscal federalism, state police and “strong and autonomous state governments”. First question: How on earth would Osinbajo achieve all these without political restructuring? If fiscal federalism, state police and autonomous state governments do not currently exist in any country, one would think that they can only be created through a political and constitutional settlement,

Thus, at its core, fiscal federalism means significant devolution of functions and resources to the states. But what do we have in Nigeria? The federal government takes 48.5% of all revenues accruing to the country, with 26.72% going to the states and 20.6% to the local governments. Is there any wonder, with such a large federal government share, that some states are mere appendages of the federal government is a supposedly federal system? Most state governments in Nigeria are relying heavily on regressive taxation, borrowing or handouts from the federal government. Surely, the revenue-sharing formula flies in the face of Musgrave’s concept of fiscal federalism. But fiscal federalism is only a subset of federalism, which is about the independence and political autonomy of subnational governments. So, you can’t have deep fiscal federalism without, first of all, having true federalism. Yet, the Nigerian constitution, with a very long “exclusive legislative list”,effectively mandates uniformity by giving so much powers to the federal government. To be sure, the federal government is too powerful, with a behemothic presidency, sheltered in opulence in Aso Rock, and more than 500 overlapping parastatals and agencies, purportedly meeting the needs of nearly 200m people in a huge multi-ethnic, multinational country. It is a joke, and if Vice President Osinbajo thinks this is just about fiscal federalism, then he misses the point. Which brings me to the vice

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through restructuring. So, what exactly, then, does the vice president mean by repeatedly saying “Nigeria’s problem is not restructuring” or “Nigeria doesn’t need political restructuring”? Take fiscal federalism. It would be churlish to say that Osinbajo, a professor and constitutional lawyer, doesn’t know what it means. But if, as I believe, he does, then he has to accept that it can’t be achieved, in its proper sense, without restructuring Nigeria. According to the German-born American economist Richard Musgrave, who introduced the concept, fiscal federalism means that the federal government, given its general oversight role, should be responsible for economic stabilisation and income redistribution, i.e. ensuring all states are treated fairly, while state and local governments should be responsible for the allocation of resources on the basis that they are best able to meet the needs of the people.

president’s antipathy to what he calls “geographical restructuring”. To be honest, it is not clear why he constantly bashes this concept. The truth is that Nigeria already operates, albeit informally, a geopolitical system. Everyone recognises the six geopolitical zones, on the basis of which political considerations, including allocation of political offices, are made. If that’s not some “geographical restructuring”, what else is it? What those of us, led by the elder statesman, Chief Emeka Anyaoku, who advocate a return to regionalism are saying is that the six geopolitical zones, or expanded to 8, as the Middle Belt leaders recently called for, should become the federating units of the country, with political and economic powers and resources devolved to the zones. Note: the rest of this article continues in the online edition of Business Day @https://businessdayonline.com/

71.66 rand

TN’s share price has plunged by more than a third since the crisis erupted late last month and traded 3.3 percent lower at 71.66 rand as of 3:50 p.m. Thursday in Johannesburg. The dispute comes just over two years after the Johannesburg-based company settled a separate, $1 billion fine over improperly registered subscribers levied by the NCC. The same NCC now says it will do all it can to bring about an amicable settlement of the current crisis which has destroyed value for pensioners in both South Africa and Nigeria.

N740bn

So the government in Ghana with a small population of 28 million is spending N740bn on education this year, compared to Nigeria (180 million) which voted only N605bn of its total federal budget of N8.6trn. Whereas Ghana has a better record of releasing virtually all it would earmark in its budget, the case for Nigeria is abysmal. But see how Nigeria spends all it has in petrol subsidy. It is a case of choosing what is important for you and it would seem the government in Ghana has a better understanding of how nations develop.

L guard its union, it must devolve powers to the nations and, so, after different referenda, regional governments were created in Scotland, Wales and Northern Ireland, with significant powers devolved to them. Britain also decided that, based on the principle of separation of powers,it was wrong for judges to sit in the House of Lords, a legislative arm; and, thus, it established a standalone Supreme Court. And, in the US, the American federalism has evolved from the early centralisation to dual federalism or what some call “interdependence and cooperative federalism”. My point is that political settlements and restructuring are common features of the modern nation-states.The phrase “reform or die” is often applied to corporate organisations, but, in truth, a version of it, “restructure or stagnate or disintegrate” can also apply to countries. Unfortunately, Nigeria continues to resist the need to negotiate a political set-

223m

nce Africa’s largest wireless carrier by market value, MTN’s shares have been pummeled by a regulatory crisis in Nigeria where the company is facing $10 billion in claims from authorities. The plunge suggests a zero valuation is being placed on the Nigerian business, according to Morgan Stanley. The drop has seen Nairobi-based Safaricom Plc overtake its Johannesburg-based rival in value even though it has less than a 10th of MTN’s 223 million customers and operates in Kenya, while MTN has units in 21 countries.

$860m

actalis International has agreed to buy an infantformula business from Aspen Pharmacare Holdings Ltd. for 740 million euros ($860 million) as the world’s biggest cheese maker targets the fast-growing Chinese baby-food market. The move will enable the company run by French billionaire Emmanuel Besnier to tap rising demand for baby food in Asia’s biggest economy following the scrapping of its one-child policy around 2016. Chinese consumers have showed a preference for foreign brands in the wake of a scandal that poisoned thousands of children a decade ago. For Aspen, the sale will enable Africa’s biggest drugmaker to focus on its main pharmaceutical operations.

$2bn

eff Bezos and his wife, MacKenzie, have launched a $2 billion fund to help homeless families and create a network of nonprofit preschools in low-income communities. The move catapults the world’s richest person into a rarefied group of billionaire megadonors at a time when his company, Amazon.com Inc., faces growing scrutiny over its rising power and impact on the economy. The Bezos Day One Fund will focus on two initiatives, the billionaire announced. The first will fund existing nonprofits and issue annual awards to organizations doing “compassionate, needle-moving work” to shelter and support the immediate needs of young families.

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: 08034743892. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Anthony Osae-Brown. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.

BUSINESS DAY Monday 17 September 2018

BusinessDay Research and Inteligence Unit

Buhari vs others: what to learn from the 2015 voting pattern

Recent political realignment in the country in the two main political parties, All Progessive Congress (APC) and Peoples Democratic Party (PDP) show a desperation to galvanize supports across boards and seize power come 2019. But to enable us have a good grasp of how 2019 election may play out, an analysis of the 2015 general election, which was adjudged to be one of the freest, fairest and most credible election in the history of Nigeria, will suffice.

he All Progressive Congress (APC), a coalition of T the defunct Action Congress of Nigeria (ACN), Congress for Progressive Change (CPC), All Nigeria Peoples

Party (ANPP) and splitter factions from other political parties snatched power from the the ruling party, the PDP, an unprecedented victory marking the first time in the country an incumbent president lost an election to an opposition party. A look at the numbers will provide insightful answers as to what led to this twist in the nation’s politico-historical narratives.

As at 2015, the total population of Nigeria was put at about 180 million people. While the number of registered voters was 68.8 million (INEC reported 67.4 million during the declaration of the 2015 election result), only about 47 per cent of the registered voters were accredited to vote. More so, of these registered voters, less than half (43.7 per cent) cast their vote; a figure that vividly portray the level of voter apathy – a plague that have imperceptibly eaten deep into the fabrics of the country’s political system – that pervades the election.

2015 IN NUMBERS 2015 IN NUMBERS

Population

Registered Voters INEC

180 million

53%

68.8 million

Registered but didn’t vote

43.7%

voted

3.3%

Accredited but didn’t vote

(measure of voters apathy)

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Geopolitical chart of registered voters relative to votes secured by APC and PDP Presidential election 2015 Vote secured by APC

North East

Vote secured by PDP

South-East

9.1 million

7.7 million

Enu g

Anambra Borno

Ebo ny

2.5 million

ImImoo

2,8 million

Ada

796,588

198,248

Abi a

Bauchi

Gombe

Jigawa

Registered votes

Plateau

South South

North central

Rive r

Ed o

10.1million Kwara

Niger

a Delt Rivers

a araw

17.6million

13.7 million

Kastina

Jigawa

Kano

i 2.4 million

7.1 million

Zamfara

bb do

1.7 million

North West

Ekiti

un Os

2.4 million

Benue

418,590

Sokoto

Ogun

Nass

Kogi

South West

Oyo

10.6million

Plateau

ls ye Ba

Akw Ibo a m

Cros s

4.7 million

1.8 million

Lagos

Kaduna

Statistics from INEC and compiled by Businessday Research and Intelligence Unit (BRIU) research team shows that Lagos state with a population base of over 12.2 million people and undoubtedly the country’s economic nerve centre topped the chart of states with the highest rate of voter apathy in the 2015 presidential election as accentuated by their voting statistics.

1.3 million

e investigation revealed that only 24 per cent of over 5 million registered voters in Lagos state came out to vote on the day of the 2015 presidential election. is means that 76 per cent of the registered voters didn’t vote in Lagos state in 2015 general election.

LAGOS STATE Voting paern

Registered Voters 2015

12.2 million population

5 MILLION 24%

Breakdown

only 24% of the 5 million registered voters came out to vote

76% 76% of registered voters did not vote

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below 40% across

Above 50% across states having between 40% and 50%

Sokoto Kano

43%

Bauchi

Oyo

Osun Ekiti

36%

24%

a Delt

28%

Benue

s yel Ba

Ebonyi

Cross River 38%

Imo

38%

55%

43%

34%

Enugu 40%

Ed o

28%

Lagos

40%

Taraba Taraba

41%

31%

Ondo

49%

Nassarawa

Kogi

41%

45%

Ogun

FCT

a aw

Plateau

34%

34% 38%

41%

47%

40%

Kwara

32%

Akwa Ibom

Rivers

60%

61%

60%

Abia

27%

Anambra

Source: INEC, BRIU

26%

50%

Kaduna Niger

Borno

43%

Gombe

51%

45%

Yobe

51%

Zamfara

Kebbi

Jigawa 56%

Kastina

A da

51%

35%

States controlled by party after 2015 general election APC

Kastina

Bauchi

Plateau

FCT Kogi

ls ye Ba

Rivers

Anambra

Rive

nyi

Akw Ibo a m

Imo

Ebo

Enu

Ed o

Benue

a Delt

Source: INEC, BRIU

Taraba

Cros s

Lagos

Ogun

a araw

Nass

Abia

Ada

Niger Kwara

Ekiti

Borno

ma wa

Kaduna

Oyo

Yobe

Zamfara

Kebbi

Jigawa Kano

Go m

Sokoto

APGA

PDP

Os u

Other states which recorded low turnout of voters relative to the number of people who registered to vote included Borno, Abia, Edo, Ogun, Kogi, Ebonyi, Benue, FCT and Oyo states (see chart below). is does not mean that other states of the federation did not do well in terms of voters turnout. Interestingly, of the 36 states and the federal capital territory, only 9 states – Rivers, Akwa Ibom, Bayelsa, Jigawa, Delta, Sokoto, Katsina, Zamfara and Bauchi recorded more than 50 per cent of total voters who turned out to vote. Four of these 9 states namely Rivers, Akwa Ibom, Bayelsa and Delta states were Niger Delta states, the home base of ex-President Goodluck Jonathan and equally important was that the states were controlled by PDP governors hence they were strongholds of the party. More imperative to this discussion is that Rivers, Akwa Ibom and Bayelsa states were the most politically active in terms of the number of voters pooled relative to their registered voters base. e remaining 5 states were drawn from the North West geographical region (exclusive of Bauchi from the North East), the region where Muhammadu Buhari hails from. Essentially, the large turnout of voters in these states could not be unconnected to the regional political interplay that has permeated Nigerian political scene since the time of the Awolowos, Azikiwes and the Bellos. In the South-South for example, there was massive support for the re-election of Goodluck Jonathan who is from the region. e influence of Bola Ahmed Tinubu, a former governor of Lagos and a pioneering founder of the APC is believed to have helped in no small measure in rallying the South West region for Buhari. It has been suggested that the North West and North East believed that it was time for someone from their fold to take back power following the circumstances that played out aer the death of former President Umaru Musa Yar’Adua, which eventually saw his Vice President, Goodluck Jonathan become president. is death completely altered the zoning equation envisaged by the PDP and saw power move to the minority South-South; an event that the North never wanted to happen considering their body languages and political postures at that time.

Proportion of total voters turnout in selected states

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THE PLAYERS A total of 14 political parties participated in the 2015 presidential election with the All Progressive Congress (APC) and Peoples Democratic Party (PDP) being the main contenders.e APC and the PDP accounted for 96.1 per cent out of the 29.4 million total votes casted while the remaining 12 political parties balanced up the percentage difference; An agelong trend that has made political observers aver that Nigeria is gradually gravitating towards a two party state. at aside, the APC won the 2015 presidential election with 15.4 million votes, ahead of the PDP which secured with 12.9 million votes.

e APC presidential candidate, Mohammadu Buhari won in 21 states, clinching 52.4 per cent of the total vote cast while PDP’s candidate and the then incumbent president, Goodluck Jonathan one in 15 states and the FCT securing to 43.8 per cent of total votes casted. One interesting fact however, stood out. In most of the 15 states, the PDP clinched more than half of the total votes cast. Specifically, over 94 per cent of the votes were secured by PDP in the South East states of Enugu, Anambra and Abia including all the South South states (excluding Edo) of Akwa Ibom, Cross River, Delta, Rivers and Bayelsa states. e highest votes for the APC came from three North West states of Kano (1,903,999 votes) Katsina (1,345,441 votes) and Kaduna (1,127,760 votes).

How Nigerians voted in 2015 14 Political parties contested 2015 elections

APC & PDP secured 96.1% of the 29.4 million votes cast in 2015

15.4 million votes

CT +F

es at

at es

Muhammadu Buhari

e tat

no s 12 Candidates Source: INEC, BRIU

1.1 million votes

Goodluck Jonathan

12.9 million votes

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States where APC and PDP showed strong support States heavily contested by APC and PDP 2015 Presidential Election PDP WON 5 APC WON 2

ere were seven states with less than 100,000 votes differential between APC and PDP in the 2015 general election. e PDP won in 􀄕ve of the seven states under

APC 146,399 PDP 157,195

this category – FCT plus Ekiti, Nassarawa, Edo, and Taraba states. On the other hand, APC won in just two: Ondo and Benue states. e successes recorded by PDP were mainly where the

APC 120,331 PDP 176,466

APC

236,838 PDP 273,460

a araw

Nass

Ekiti

Taraba

do Ed o

Lagos

state, PDP won with a wide margin of 78.4 thousand

Benue

Oyo

states save Edo states. Despite being in opposition in Edo votes, the highest margin among the seven states.

FCT

PDP 251,368 APC 299,889

party controlled the machinery of government in those

APC 261,326 PDP 251,368

PDP 286,869 APC 208,469

PDP 176,466

APC120,331

Source: INEC, BRIU

Voting paerns across geopolitical zones e 2015 general election accentuated the obvious fact that the political strength of the APC lies largely in the North West and North East geopolitical zones while the PDP has its stronghold in the South-South and SouthEast zones. For instance, the total votes garnered by the APC in both North West and North East in the 2015 election amounted to 9.96 million, 65 per cent of the overall total it used in winning the election. However, it could only secure 1 per cent and 3 per cent of its total votes polled nationwide from the South East and South-South respectively. Conversely, the PDP secured 37 per cent and 19 per cent (a combined 56 per cent) of its 12,853,162 votes pooled nationwide from the South-South and South East respectively. It secured only 6 and 10 per cents (combined 16 per cent) from the North West and North East respectively. e distribution of votes secured by the two political parties as a percentage of total votes nationwide was somehow similar in both the North Central and South West. APC recorded 16 per cent of its total votes in each of the regions while PDP recorded 14 per cent in the South West and 13 per cent in the North Central. Essentially, this trend makes the situation in the North Central and South West pivotal to the outcome of the 2019 election. Former President Olusegun Obasanjo has withdrawn his support for Buhari describing his administration as an abysmal failure. While Tinubu’s in􀄘uence may have delivered the South West to Buhari in 2015, Obasanjo equally did a lot of underground work for the emergence of Buhari and his open withdrawal of support for the APC-led government could impact the political dynamics in the region.

However, this downside risk could be mitigated with the assumption of an APCled government by governor-elect Kayode Fayemi in Ekiti state. If it wins the upcoming Osun state governorship election the APC will control the machinery of government in all the states of the region and place it in a better position to deliver the region once again for the APC. On the other hand, political and religious tension in the North Central could serve a blow to the APC in the region come 2019. e North Central states of Benue, Taraba and Plateau have been hardest hit by the Fulani-herders conflict with scores of death record on a frequent basis. In January 2018 for example, over 70 people, most of them children and women were slaughtered allegedly by Fulani herdsmen in Benue state. e perceived poor response by the central government in handling the security issues has raised concerns in some quarters that it failed the people. It is worthy to know that part of the reason why Nigerians lost faith in the ability of the Jonathan’s administration was his failure to effectively combat the Boko Haram security challenges of the North East. Consequently, it would not be wrong to say that the inability of the Buhari’s administration to solve the incessant clashes of herdsmen with farmers not just in the core middle belt but in selected states of other geopolitical regions will dampen his prospects of securing large votes in the region 2019.

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MASSIVE DEFECTIONS PROPELLED BUHARI TO VICTORY IN 2015

Voting paerns across geopolitical zones

Breakdown 16%

APC 7,115,199 PDP 1,339,709

North West

APC 2,411,013

46% 46%

ast

E rth o N

16%

APC 2,848,678 PDP 796,588

North central

PDP 1,715,818

18%

65% of the total votes secured by APC nationwide came from both the North West and North East in 2015.

South West

Imo

South East APC 198,248 PDP 2,464,906

APC 2,433,193 PDP 1,821,416

Conversely

South South

Source: INEC, BRIU

APC 418,590

19%

37%

PDP 4,714,725

States with highest recorded votes

10%

Our selection of states with highest recorded votes was based on those states which recorded over 1 million votes in the 2015 presidential election.

13% 14%

Of the 36 states of the federation, 9 states recorded over a million votes. These states are Kano, Kaduna, Rivers, Katsina, Lagos, Delta, Jigawa, Bauchi and Akwa Ibom states.

56% of the total votes secured by PDP nationwide came from both the South South and South East in 2015.

Kano state recorded 2,119,778 votes in the 2015 presidential election, closely followed by Kaduna state with 1,611,845 votes. The North West states of Kano, Kaduna, Katsina and Jigawa recorded a combined 6,204,893 votes, representing 21.4 per cent of the 29 million total votes cast in the presidential election of 2015.

States with lowest recorded votes

In contrast, the three South-South states that featured in this category – Rivers, Delta and Akwa Ibom – secured a combined 3,828,343 votes in the election, representing 13 per cent of the 29 million total votes cast nationwide.

States with lowest votes Ekiti state with only 296,797 votes recorded the lowest amount of votes in the 2015 election. It was followed by the Federal Capital Territory (FCT) with 303,594 votes.

Recorded votes 2015 Presidential election by Regions As 9 states recorded over a million votes

Other states in this category include Ebonyi (343,171), Bayelsa (366,403), Abia (381,697) and Kogi state (414,838).

1,028,892

1,444,378

votes

2,119,778 votes

ina

North West

t as

States with lowest votes in the 2015 Presiential election Jigawa

votes

Bauchi

Kano

Kaduna

1,017,683

rth No

ast

votes

Eki

Imo

Lagos

votes

South East

Rivers Akwa Ibom

South South

1,260,315 votes

1,556,313 votes

366403

Ebonyi

South West

Delta

381697

Bayelsa

FCT

1,424,787

414838

Abia

1,611,845

North central

Kogi

1,011,715 votes

343171

303594 296797

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What does the current voters’ statistics says? As at 26th August 2018, about 16.8 million Nigerians registered newly with about 1.1 million people placing requests for new voters’ card due to wear and tear, lost etc. Of this number, over 3.9 million voters were captured under the 2017 post Automated Fingerprint Identification System (AFIS) while the remainder of 9.7 million is the cumulative Continuous Voters Registration (CVR) for 2018.

Lagos and Rivers states stand out with the highest number of newly registered voters. Over 725,437 and 705,921 voters are registered in Lagos and Rivers states respe tively. Abia and Ogun states came closer with 547,606 and 518,730 voters respectively. is was followed by Enugu and Cross River states, with 516,155 and 507,976 respectively.

As at 2016, shortly aer the 2015 general election, data from INEC showed that there were over 69 million voters captured in the electronic voters registered (EVR). Lagos state had over 5.8 million voters in the EVR, followed by Kano at 4.99 million voters. Other states topping the EVR chart as at 2016 were Kaduna (3.4 million), Katsina (2.8 million), Rivers (2.5million), Oyo (2.4 million), Delta (2.3 million) amongst others. At the bottom of the chart of the 2016 EVR were Bayelsa (663,639), Ekiti (732,059), FCT (1 million), Yobe (1.1 million), Ebonyi (1.11million) etc. However, recent statistics from the electoral body as at 29th August, 2018 shows that the EVR has risen from 69 million to well over 83 million voters. Bayelsa state has shown the highest growth of voters increasing by 50 per cent to 994,054 voters as at August. Cross River state and Abia state followed closely with growth rates of 43 per cent and 39 per cent. Geographically, the North West which is largely held to be the homebase of President Muhammadu Buhari is shrinking relative to other zones. According to our analysis, the growth rate of voters in the EVR in the region stands at only 12 per cent. is is the lowest growth rate among the geopolitical zones of the country when compared with growth rate in South East (29 per cent), South-South (26 per cent), North East (22 per cent), North Central (21 per cent) and South West (17 per cent). Specifically in the North West, six of the region’s seven states – Jigawa, Kano, Katsina, Kaduna, Zamfara and Sokoto – recorded less than 15 per cent growth in the number of voters captured in their respective EVR as at August, 2018. 2

Value is derived from the addition of 2016 EVR and total registered voters as at August 2018. Total registered voters here is the summation of post AFIS/BR 2017 CVR, post AFIS/BR first quarter 2018 and second quarter 2018.

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Monday 17 September 2018

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MASSIVE DEFECTIONS PROPELLED BUHARI TO VICTORY IN 2015

Geographical distribution of newly registered voters In terms of geographical distribution, the South-South seems to be taking more interest in the upcoming election. Over 2.65 million voters have been registered so far in the region, the highest in the country. South West and South East followed closely with 2.33 mi lion and 2.28 million registered voters. Gender-wise, the female folks appear to be quite enthusiastic to vote come 2019. INEC data reveals that an additional 7.4 million females have registered to vote compared to 6.2 million males who registered in the same period. As at the end of the 􀄕rst quarter of 2018, INEC released a report which showed that out of over 8.3 million PVCs that were uncollected in 2016, only about 121,097 PVCs had actually been collected. This leaves over 7.9 million PVCs uncollected as at that date. A critical examination of that reports shows that eight states contributed over half of the total uncollected PVCs with 􀄕ve of these states being in the South West and interestingly APC strongholds– Lagos, Ogun, Osun, Ondo and Oyo states – while the remaining three are Edo, Rivers and Imo states. ere is however a growing awareness among Nigerians concerning the power they wield with the Permanent Voters Card (PVC) they possess. e clamour by concerned stakeholders for Nigerians who have a tained the voting age to register and/or collect their PVC has been gathering momentum in the build up to the election. is is borne partly out of the criticism of the Buhari’s administration regarding security especially as it concerns the farmerherders clashes. Recent data by INEC indicates that the interest of Nigerians to participate in the forthcoming election has heightened. e number of collected PVCs increased from just 121,097 as at end of first quarter to 813,110 by mid-August, 2018. Consequently, the number of uncollected PVCs dropped marginally to 7.46 million PVCs compared to 7.9 million as at end of first quarter. Lagos state retained the number one spot as the state with the highest uncollected PVCs totally 1.38 million. Some states have shown improvement in the number of PVC collected compared with what obtained in Q1. For example, Zamfara state had just 40 PVCs collected as at end of Q1. But by August, it has soared to 35,917 collected PVCs. e same situation played out in Rivers state with PVCs collected rising from 12,835 in Q1 to 158,178 by August, the highest number of PVCs collected so far in the whole country. Geographically, the number of uncollected PVCs in the South West stood at 3.4 million, the highest in the country. at amount is thrice that of the total PVCs uncollected in the entire South-South region and more than 1.5 times higher than the total uncollected PVCs in the whole of the Northern region including the FCT. e reason for this narrative is quite simple: all the states in the South West are among the states that have the highest uncollected PVCs with Lagos state accounting for 17 per cent of the national total.

10 BUSINESS DAY MASSIVE DEFECTIONS PROPELLED BUHARI TO VICTORY IN 2015

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Monday 17 September 2018

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MASSIVE DEFECTIONS PROPELLED BUHARI TO VICTORY IN 2015

Challenges in getting PVC e process for the collection of the PVC has been sauced with widespread complaint of irregularities and deep-rooted inefficiency cross designated INEC offices nationwide. Most voters with temporary voters’ card have been unable to swap it with their PVCs partly because their details could not be found on INEC’s voters’ database. Again, most Nigerians that have moved to a location different from the original place they registered for their voter cards are ignorant of the process to relocate their details to their present place of residence. Besides, there are allegations that INEC officials collect money in other to assist prospective voters to process their registration or search for their PVCs.

Tourtous journey getting PVC

INEC extends registration deadline Logistical problem such as faulty equipments is also top on the list of challenges facing the registration of potential voters and distribution of PVCs in some INEC offices nationwide. In this tumultuous situation, the report came that the deadline for voters registration was the 17th of August. is and many more were factors that were likely going to disenfranchise voters come 2019. Recognizing this trend and yielding to the complaints of Nigerians who cried to the Commission for the extension of process, INEC shied the deadline for registration of voters and distribution of PVCs till 31st August, 2018. However, the electoral body said the collection of PVCs will continue until close to the general elections. Stakeholders have called on INEC as a matter of urgency to put machinery in place to ease the process of registration, transfer and collection of PVCs so a reduce considerably the time wasted in unnecessary queues at PVC registration and collection centres. More hands and equipment should be employed and deployed to make the process run smoothly.

Cross-carpeting: a recurring decimal in Nigeria’s political Decamping has always been part of Nigerian politics especially when a general election period is approaching. It is a tool deployed by egocentric politicians to perpetrate their self-interest. Such actions by Nigerian politicians leave one in awe as to their integrity and foresight to build a formidable Nigeria. It casts doubt as to the role our political parties play in serving as a platform to electing credible, transparent leaders who wholeheartedly subscribe to the visions and missions of their party. Far more important is that decamping or cross-carpeting dictates, to a reasonable extent, the odds to winning the election among the major political parties. Recently, the Nigerian political space was agog with news of massive defections from the ruling APC to the opposition PDP. ere was hardly any newspaper that did not talk about the cross-carpeting spree that happened within the two big political parties – APC and PDP – across geopolitical zones, states and local councils. Unfortunately, that trend will continue till next year 2019 when the election will be held. It’s really no big deal because Nigerians has become accustomed to this sad, incessant occurrence as eletion day approaches. Similar situation played out prior to the 2015 election. During that period, the state composition of governors and the party they belonged to included:

Source: INEC, BRIU

With the coalition between the APC, CPC, ANPP and several splitter parties in addition to the decamping of several top PDP governors such as Rotimi Amaechi (Rivers state), Murtala Nyako (Adamawa state), Musa Kwankwaso (Kano state), Aliyu Wammako (Sokoto state) and Abdulfatah Ahmed (Kwara state) to the APC due in part to internal rancour within the then ruling PDP, there was a fundamental shi in the political equation equilibra of the polity in preparedness for 2015 general election. e decamping opened the door for even more defections from the ruling PDP as senators, house of reps members and other political bigwigs dumped the party and pledged their allegiance for the APC, the party they believed will bring the needed change Nigeria craved for. e incidence partly led to APC winning four of the have states whose governors defected from the PDP. Rivers state was the only exception. Massive cross-carpeting or decamping (whatever name you may deem it to call it) has always been a sign of an impending doom for any political party that does not take concrete step to curtail it. It is a sign of infracture in a political body where the members therein feel unsecured and accordingly seek ways to break free. On the flipside, cross-carpeting could also be because of the egocentrism among politicians who could not get what they want from the existing internal order of the political parties they once belonged to.

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MASSIVE DEFECTIONS PROPELLED BUHARI TO VICTORY IN 2015

5 top decampees in 2015 from PDP to APC that changed everything Musa Kwankwaso Sokoto

Aliyu Wammako

Ada

Source: INEC, BRIU

Either way, the irreversible consequence of unchecked cross-carpeting is that it could lead to a woeful defeat of a political party in a general poll. Consequently, it would not be out of place to say that the defection of the PDP governors, among other factors, secured victory for President Muhamudu Buhari in 2015. e Imo state governor, Mr Rochas Owelle Okorocha corroborated this fact at a valedictory dinner in honour of the then governor of Lagos state and now minister of Power, Works and Housing, Mr Babatunde Fashola. Okorocha said, “Make no mistake about it, without the have governors that joined the APC in 2013, we would not be here today.”

Rivers

Rive

i a

s yel Ba

Cros s

Ebo ny

a Delt Akw Ibo a m

Lagos

Rotimi Amaechi

Taraba

Kogi

Ed o

Ogun

Ekiti

Murtala Nyako

Kwara

On do

Abdulfatah Ahmed

Kano

e decamping opened the door for even more defections from the ruling PDP as senators, house of reps members and other political bigwigs dumped the party and pledged their allegiance for the APC

He concluded by asserting that “…the moment the PDP lost have Governors was the moment it lost the presidency and its planned 60 years in power.” But what has put Nigeria’s political history on repeat mode? What could have sparked the recent mass defection from the APC to the PDP? Basically so much has been going on in the ruling APC which has factionalized the party. e internal acrimony climaxed with the formation of the reformed APC (rAPC) led by Buba Galadima, a former national secretary of the defunct Congress for Progressive Change (CPC). e rAPC alleged that the APC government led by Buhari has failed in delivering its electioneering campaign promises to Nigerians hence the need to cut off from it.

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15 is trend is playing out again even as the 2019 election beckons. Prior to the announcement by the Benue state governor, Samuel Ortom and his Kwara and Sokoto states counterparts, Abdulfatah Ahmed and Aminu Tambuwal respectively of their defection to the PDP, ex-Vice President Atiku Abubakar had equally dumped the APC to PDP, a party on whose platform he emerged as a two time Vice President of Nigeria. While the APC was yet to emerge from these blows, Dr Bukola Saraki, the Senate President who was a former governor of Kwara state, announced that he has le the APC to the PDP. is latter defection caused a bitter stir in the polity. Many observers of the political drama playing out in the country claimed that Saraki had never been a loyal member of the APC since 2015 when he joined forces with the PDP and few other APC legislators to emerge as the Senate president, a position that was not sanctioned by APC, his party. Be that as it may, Saraki remains a major political actor and his decamping to the PDP sent waves of concern in the APC fold. Recently, as if to add to APC list of things to worry about, Saraki declared his intention to contest for the presidency under the platform of the PDP. His coming into the picture among political titans gunning for the Presidency under the PDP platform might stir trouble during the party primaries to elect twhe presidential flagbearer of the party. Should the ruling APC be wary of the series of decamping from its fold to the opposition PDP? Will the APC win the 2019 election given these numerous decampees from its camp especially in states which is adjudged to be Buhari’s stronghold? How probable is it that the PDP can spurn this ugly trend for their success in the poll come 2019? ese and many more are the questions political observers are striving to answer.

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MASSIVE DEFECTIONS PROPELLED BUHARI TO VICTORY IN 2015

Some say that, prior to 2015, the APC had done their homework to come to power by staging the largest coalition of political parties the country has ever seen, it is equally important to point out that things are changing swily. Indeed, things are not the way they were in 2015. e political climate especially in sections of the Northern region where Buhari has its stronghold is evolving. To navigate these muddy waters require drawing up concrete political strategies and building formidable alliances. Consequently, the continuous decamping of its members from the APC fold would not augur well for its success in the forthcoming election. For the PDP, there is need to ensure a transparent internal democratic process to rein in its primaries given the numerous political aspirants jottling for the presidential ticket under its platform. Not only that, there would equally be need for machinery to be put in place for all aspirants to agree that they will respect the outcome of the primaries and stand by whosoever emerges as the party’s presidential flagbearer. A divided house will be ineffectual in challenging the power of incumbency President Buhari currently wields. Some political analyst have gone as far as stating that all aspirants should sign a bond to that effect. Others have averred that for the PDP to successfully defeat Buhari in its stronghold of the North West and North East, it needs to present a charismatic, powerful candidate from either of the zone. Essentially, party faithfuls are calling for the aspirants to be seived, a call that one of the PDP presidential aspirants, Rabiu Musa Kwankwaso has earlier supported. e extent to which that action plan is adopted is a function of the consensus among all the apirants and the party leadership which will be largely dependent on the odds of winning or lossing th election. A close examination of the decampees clearly shows that they were once a cardcarrying member of the PDP with some political watchers calling them “PDP moles within the APC fold”. Nothing changes. It’s all the same game plan to switch allegiance from one party to another for their own sel􀄕sh interest. For example, Atiku was once a PDP member. When he noticed that its life-long ambition of becoming a president will not be endorsed by the APC and with the PDP dangling the juicy carrot to his eyes, he simply packed up his baggage and pitched tent with the PDP.

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MASSIVE DEFECTIONS PROPELLED BUHARI TO VICTORY IN 2015

Where will the battleground be?

he then incumbent president, Goodluck Jonathan who hails from the Christain, minority South keenly contested the 2015 presidential election. He was faced with Muhammadu Buhari of the APC, a strong Muslim contender who accidentally hails from the North. This dichotomy made the election a dicey one as it resurrected the regional politics that has hunted the nation since the time of Obafemi Awolowo, Nnamdi Azikiwe and Ahmadu Bello. This situation made the election predominantly a competition between the Southern and the

Northern region of the country. Unlike the 2015 election where the battle was between two different personalities in all ramifications – religion, party affiliation, tribe, geographical origin, ideology etc. – the upcoming 2019 election is unique. This is because the main contenders in the race for the highest elective position in the country are from the North. Essentially, the battle ground has shifted from between the North and the South to chiefly the North. We adopted this as one

of the parameters in determining the states where the two parties, APC and the PDP, will stage the fiercest battle in the February 2019 presidential election. Previous election results, voters statistics, political happenings in states nationwide, politicians’ utterances and body languages amongst others, are some of the factors also taken into consideration in determining the battleground states come February 2019 when the presidential election will be held.

Kano

Rivers

Being the frontier state in the North West, Kano state has featured prominently in political discourse in recent times. It is no news that Kano state delivered the highest number of votes (2,119,778 votes) nationwide in the 2015 general election. In addition to that, the state has politically active voters which make it a hot cake among the political parties. Besides, two of the top presidential aspirants in the PDP, Rabiu Kwankwaso and Ibrahim Shekarau, both accidentally were two time governors of the state, hails from there. However, Shekarau has decamped to the APC. Kwankwaso, a two-time governor of Kano state and now a senator representing Kano central senatorial district is a strong aspirant on the platform of the PDP vying for the presidency. He has been able to gather many supporters through his interest group, Kwankwasiyya movement. It is believed that part of the reason the PDP zoned 51 per cent of the stake of the state party to him was due to his strong supporter base in Kano state. However, Kwankwaso has not been in good terms with the present governor of the state, Abdullahi Umar Ganduje. Ganduje was a deputy governor under Kwankwaso when the latter was the governor of Kano state between 1999 to 2003 and 2011 to 2015. Nevertheless, should Kwankwaso win the presidential ticket under the PDP platform, there could be a split in votes in Kano state between APC and PDP. But with the recent defection of Ibrahim Shekarau back to the APC, the stage looks set for more drama to unfold itself in the state.

The oil rich Rivers state has added over 705, 921 voters to its EVR in the last two years, just behind Lagos state with 725,437 voters. This could likely balloon the total voters’ base of the state to slightly above 3.2 million voters. Given the political activeness of the state’s voters, political stakeholders in the nation will be on the watch out for the struggle that will ensue between APC and PDP for the heart of the state at the 2019 polls. However, a win for the APC looks slimmer considering the woeful defeat it suffered in the state in the 2015 presidential election where it only secured 4 per cent of the total votes cast in the state. Governor Wike’s unprecedented achievements which many believed have more than rivalled Amaechi’s feat in the state during the latter’s 8 years term as governor plus the fact that Prince Uche Secondus, the PDP’s national chairman, hails from the state are prospects the PDP hopes to build in order to tighten its grip on and determine political outcomes in the state. On the flip side, given the poor presence of the APC in the state and the amount of votes they could secure from the state, the ruling APC do have its work cut out as they would need to woo voters to support its presidential candidate come 2019. Sokoto The caliphate state fell into the control of APC when Aminu Tambuwal became the governor of the state in 2015. The declaration of intention by Tambuwal to run for the presidency has put Sokoto state in the spotlight as a potential hotspot in 2019. The prospect of him securing the PDP presidential ticket will likely pitch him against Buhari of the APC. The likelihood of Buhari gaining support the way he did in the 2015 presidential election has dwindled, underpinned principally by power brokers in the region who many alleged tried to negotiate for the release of Sambo Dasuki, the National Security Adviser (NSA) under Goodluck Jonathan, but Buhari remained recalcitrant to their plea despite court ruling granting him bail. Sambo Dasuki is the son of the late Sultan of Sokoto, Alhaji Ibrahim Dasuki.

Benue Benue state, the food basket of the nation, has been hardest hit from the herders-farmers clashes in the last four years. APC narrowly won in Benue state in the 2015 presidential election with 373,961 votes relative to 303,737 votes secured by PDP. But recent wave of crisis in the state where hundreds of people have been killed and rendered homeless have cast dark cloud over the APC on whether it can secure victory again in the state. Most political analysts hold the view that many Benue people harbour deep-rooted grudges against the central government led by PMB over what they described as a betrayal of trust they reposed on him in 2015 and are therefore determined to punish the APC with their votes come 2019. The defection of the state governor, Samuel Ortom, to the opposition PDP further serves to compound the woes of APC in the state. Ortom’s defection is predicated on what he described as the central government’s insensitivity to the multifarious killings in the state. More so, the control of the internal architecture of the APC by erstwhile governor of the state, George Akume, has equally been adduced as reasons for Ortom’s defection move. It would therefore not come as a surprise, that such killings would be the slogan the opposition PDP will capitalize on to sway Benue voters to support their cause.

Kogi The North Central state of Kogi has been tipped by political analyst to be one of the battle ground in the upcoming 2019 election. The rift between Dino Melaye, a senator representing Kogi West senatorial district and the Kogi state governor, Yahaya Bello, is one factor many claim will find a way of affecting voters’ sentiment and decision on which party to vote for in 2019 presidential election. The governor has received backlash from Nigerians on the role he is playing in witch hurting two of the senators from the state. He has been allegedly fingered in various calamities that has befell Senator Melaye, with the governor denying any of these allegations In recent times, the call for PDP to micro-zone the party ticket to the North West or North Central has received traction. Consequently, the PDP moved to set up a committee to interface with its over 13 aspirants in a bid to trimming them to a lesser number or get them to adopt a consensus candidate. However, PDP’s excessive focus on the strongholds of the APC (which is predominantly the North West and North East) could be an exercise in fertility come 2019. The reason is because winning the APC in their stronghold does not necessarily give the PDP an assurance of victory in the 2019 election. PDP’s move is simply an attempt to slash the APC’s votes in the North West. To many, this will be essentially fruitless! The PDP might be making the biggest mistake if it thinks fielding a candidate from that region will weaken APC’s chances of winning the 2019 election. This is because a candidate that fits into the Northern political dynamics might not necessarily have huge support base in other parts of the country. To put up a great fight with the APC in the election, the PDP might want to solidify its stronghold in the South-South and South-East by concentrating on ways to wrestle votes from the North Central and the South-West (even though the presence of an all APC-led state governments will make this an herculean task in the South West region).

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MASSIVE DEFECTIONS PROPELLED BUHARI TO VICTORY IN 2015

Views From The International Community The future of Nigeria has become a subject of discussion, especially in the international space, in the build up to the 2019 general election. There are apprehensions in the international community on the prospects of the country’s stability during and after the election. Such doubt has grown deeper, raising concerns of the likelihood of Buhari winning the election next year amidst his waning popularity at home. Two international bodies, the Economic Intelligence Unit (EIU), an arm of the Economist Group, and HSBC, one of the world’s largest financial services firm based in the UK, projected the opposition PDP to win the election in 2019. Economist Intelligence Unit (EIU) recently released report detailed the political outlook for Nigeria between 2018 and 2022. The crux of the EIU’s Nigeria political outlook centred on a prognosis that President Buhari will lose the 2019 election amidst internal rancour within the ruling APC where aggrieved members have decamped to the main opposition party, PDP. EIU tilted the power balance to the PDP with a coalition of smaller political parties but was quick to add that the country will continue to grapple with instability thereafter. “Intra-party politics will be chaotic ahead of the poll and we ultimately expect the incumbent to lose the election. The next government is likely going to be led by the People’s Democratic Party, potentially in a coalition with smaller parties, but instability will remain an insoluble challenge.” the report noted. The report further stated that should the PDP win the election, not all those who decamped from the APC will be adequately “compensated” and that even if they were, it would be at the expense of

the “traditional, core PDP members” which could lead to further internal animosity and climax in a situation where aggrieved members turns to reprimand and work against the party – the exact situation that is happening within the APC fold presently. Earlier in July, the multinational financial firm, HSBC, equally warned of the likely negative impact on the economy should Buhari secure a second term victory. “A second term for Mr Buhari however raises the risk of limited economic progress and further fiscal deterioration, prolonging the stagnation of his first term, particularly if there is no move towards completing reforms of the exchange rate system or fiscal adjustments that diversify government revenues away from oil,” the HSBC report noted. This is however not the first time such “doomsday prophecies” has been made. Prior to 2015, it was widely held that the Nigeria federation will break up after the election. Part of the reason that informed this decision was attributed to the utterances from political actors and parties. However, allowing the decision of the Nigerian masses to prevail, Goodluck Jonathan peacefully handed over power to Buhari. That disposition by Goodluck, in itself, doused tensions and restored order nationwide. Therefore, it is not just enough to refute the concerns of the international outfits. The will of the people should be upheld and respected come 2019 as no Nigerian blood is worth spilling in a bid to win power. There have been divergent opinions in the media space and among political debaters on the likely impact of the wave of defections in the ruling party. It has been alleged that while Buhari looks weak enough to match any prospective flag bearer for the opposition PDP, the intense competition and the massive influx of ex-APC members to the

PDP are likely factor that could dampen the PDP’s prospect in the poll come 2019. Analysts believed that while Buhari may have shed some level of supports from the core north, the problem will be whether such lost support could be won over by the opposition PDP who many Nigerians still abhors deep resentment because of the way corruption, nepotism and poor infrastructural drive became the norm during their reign. The problem will not be how to vote out Buhari come 2019; it is rather a question of the quality of the personality the opposition presents to Nigerians to vote for. Already there are accusations and counter accusations among members concerning the lopsided internal politics in the PDP. The defection of two prominent presidential aspirants – Donald Duke and Ibrahim Shekarau – accentuates this fact. Duke stated that he left the PDP because he felt the party has “lost his values and it’s now a shadow of itself.” However, some political watchers averred that Duke’s defection to the Social Democratic Party (SDP) was borne out of the feeling that he might not be able to cope with the kind of big-wigs vying for the presidential ticket on the PDP platform. Whatever is the case, it is important to bore in mind that for PDP to unseat the incumbent president, a divided house will not do much to help their cause. Meanwhile, the call by the national leadership of the APC for the adoption of direct primaries to elect aspirants vying for any elective position have further widen the rift between the party’s top members and puts the ambition of retaining power, come 2019, at unimaginable risk. The absence of a comprehensive register of members is one recurring concerns expressed by members of the APC to be a major stumbling block to the successful adoption of direct primaries.

What the political parties can learn from the recent elections The first governorship election in 2017 was the Anambra gubernatorial election in the South Eastern part of the country. Anambra has always been the stronghold of APGA since the time of Peter Obi, the ex-governor of the state. APGA still holds sway here. In July 2018, election was conducted for Ekiti state and Kayode Fayemi, a former minister for mines and solid minerals under the Buhari’s administration emerged the overall winner of the closely fought election. This makes it the second time Fayemi is emerging as the governor of the state after being beaten to the race by the outgoing governor Ayodele Fayose in the 2014 gubernatorial race. PDP, however, remains strong in Ekiti state. The 2018 Ekiti gubernatorial race which was keenly contested between 35 aspirants saw APC’s Kayode Fayemi win with 197,459 votes, defeating its closest rival, Prof Kolapo Olusola of the PDP who garnered 178,121 votes. Even if the PDP had formed a coalition of all the smaller political parties in the state to ward off any potential threat to it retaining the seat of power in Ekiti states, a win would not have been possible as the APC comfortably secured 51 per cent of the total vote casted in the state. The emergence of APC as the ruling party in Ekiti state has further solidi􀄕ed the APC’s position in the South West though there have been pockets of defections and internal party crisis in some state chapters of the APC. In 2015, Ekiti state was the only party in the South West where the PDP won by a landslide, defeating the APC by 56,135 votes.

However, there is a big issue at hand, one that took a whole new kind of dimension in the recently concluded election in Ekiti. It is the resurgence of vote buying in a manner the country has never overtly witness in his long years of political history. Prior to the election day, it was allege in some quarters that a party was electronically sending supporters about N4,000. e other parties were equally 􀄕ngered in engaging in vote inducement. ey were alleged to have disbursed about N5,000 to voters who could show proof of voting for their candidate. Essentially, we could say that both parties were guilty as charged and the party who outspent the other eventually won the election. Meanwhile, the APC secured a landslide victory in the recently concluded byeelections for vacant senatorial seats for Kogi, Bauchi and Katsina states. e upcoming Osun state election scheduled for 22nd September, 2018 is sure to be a keenly contested position between the APC and the PDP and the former will deploy all it’s got to cement its leadership position in the region. But beyond this, the issue of security of voters on the day of election and the gradual incursion of “vote-buying syndrome” into the local and national polity does not only portends grave danger for Nigeria’s 􀄘edgling democracy but are undoubtedly important factors that will determine the

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MASSIVE DEFECTIONS PROPELLED BUHARI TO VICTORY IN 2015

Meet the presidential aspirants The 2019 election is becoming more interesting as the day rolls by. What is even more fascinating about the whole process is the number of presidential aspirants in the race. Thee PDP presently has over 10 aspirants for the job of the president, the highest so far among all the political parties. While this is commendable for the country’s fledgling democracy, it particularly becomes worrisome when political parties are consciously stifling competition among the aspirants with the exorbitant fee for the presidential nomination form. For the APC, the presidential form is sold at an unbelievable fee of N45 million, an attempt we believe was done to stream line the aspirants along the line of those who can afford it and not base on competence.

PDP’s presidential form was pegged at N12million. With the 15 aspirants under the platform, that amounts to N180 million naira from the sale of just presidential form. Many groups have since kicked against the exorbitant price charged by political parties in the country for the sale of presidential forms. In protest against the high fee, an APC presidential candidate, Mr Christmas Akpodiete sued APC, PDP and INEC to court for what he described as an attempt by the Nigerian political oligarchs to make nonsense of the just passed Not-too-Young-to- Run law, and a calculated move to deprive the Nigerian people their constitutionally guaranteed right to run for public offices in their own country.

MASSIVE DEFECTIONS PROPELLED BUHARI TO VICTORY IN 2015

Muhammadu Buhari

Adama Garba

Dr SKC Ogbonnia

Donald Duke

Fela Adetokunbo Durotoye

Mr Christmas Akpodiete

Remi Sonaiya

Aminu Tambuwal

Ahmed Maka

Atiku Abubakar

Aahiru Bafarawa

Bukola Saraki

Jonah Jang

David Mark

Taminu Turaki

Kingsley Moghalu

Rabiu Kwankwaso

Sule Lamido

Dai Baba Ahmed Note:

Arrangment of aspirants pictures do not indicate BRIU preference