BusinessDay 18 Aug 2020

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news you can trust I **TUESDAY 18 AUGUST 2020 I vol. 19, no 630

Nigerian borders remain closed 1 year after, 4 months to AfCFTA ... businesses paying the price

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FG seeks to calm nerves as preliminary Q2 GDP numbers show significant dip Unlike many other countries, Nigeria has little fiscal room

Revenues slide 65% in first half 2020 Onyinye Nwachukwu & Cynthia Egboboh, Abuja

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t is looking like the closure of Nigeria-Benin Republic border is now forever, as the Federal Government remains adamant after shutting out Continues on page 29

Inside

Nigerians face tortuous travel experience as government, airlines benefit from P. 2 ‘evacuation’ flights

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L-R: Oluwatoyin Fayinka, special adviser to Lagos State governor on transportation; Abisila Idukoya, representative of Bolt Taxi Company; Babajide Sanwo-Olu, governor, Lagos State; Fredrick Oladende, commissioner for transport, and Tola Odeyemi, representative of Uber Taxi Company, during a news conference after a stakeholders meeting by E-Hailing Drivers and Private Owners Association, in Lagos. NAN

iger ia’s second quarter (Q2) Gross Domestic Product (GDP) figures are to reveal a significant dip in economic growth, as the pandemic lockdown and a debilitating dollar shortage inflict misery on Nigerians and their businesses.

It is almost a deja vu for Africa’s biggest economy which is now on the brink of its second economic recession in four years but the Federal GovernContinues on page 29

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news

Cocoa: Nigeria’s highest agric export at risk as adverse weather threatens output CALEB OJEWALE

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ast year, Jide West through his company JK West Farms Limited planted 30,000 cocoa seedlings on 20 hectares of land in Obafemi Owode area of Ogun State. Today, he has lost more than 70 percent of the cultivation, whereas he still has 30 hectares of land still available for him to cultivate, and seedlings sitting in nurseries.

Like West, many cocoa farmers across Nigeria are having a tough year as adverse weathers, a factor out of their control to some extent, is making them stare helplessly at financial losses if the rains do not start falling again, and in good proportion too. For many, irrigation, which should have come their rescue, has never really been put in place.

“Cocoa will be affected (this year) because it needs a lot of water for the pods to grow and be of sizeable amount, then all the seeds become well developed,” West says, who is now looking to explore irrigation as a way to save what is left of his investment.

In the first quarter of this year, Nigeria exported cocoa products worth N55.9 billion, a 70 percent increase

from N32.8 billion within the same period last year. However, the gains may not be sustained by the end of this year, and possibly eroded as farmers lament the impact of adverse weather conditions.

For cocoa to thrive, its productivity depends on how much rainfall is available during the season, although when in excess this could also lead to Blackpod disease, according to Oladokun Bolawa, a cocoa sustainability/value chain consultant in a phone interview with BusinessDay. “Anytime there is water available, sunlight and conditions favourable to cocoa, it will produce,” Bolawa states. However, the first of those, which is water, has been insufficient this year.

“At this time we ought to have had substantial rainfall and expecting the first break, but that has not happened,” Bolawa says, noting, “If it goes on like this till the end of the year then definitely there will be fall in production.”

Bloomberg had last month reported a drop in the output estimate for the 2020 main crop by 18 percent, attributed to the spread of the fungal black pod disease caused by heavy rains in the country’s main growing areas.

FIRS, NIPOST feud over stamp duty heightens calls for clarity in MDAs’ roles Cynthia Egboboh, Abuja

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he continued feud between the Federal Inland Revenue Service (FIRS) and the Nigeria Postal Service (NIPOST) on whose responsibility it is to collect stamp duty charges has once again shown lack of collaboration, overlapping mandate and vested interests among agencies of government.

Those who know and are closely monitoring the issue are now calling for clarity in the functions of government Ministries Departments and Agencies (MDAs), which should be working in a coordinated manner in the interest of the ailing economy.

Tope Fasua, CEO, Global Analytic Consult, describing the development as unfortunate and Nigeria system of governance as patchy and overlapping, says it lacks collaboration and proper coordination, which has led to creation of various parastatals without detailed mandate.

Finance Act, 2020, provides that, “Notwithstanding the provisions of the Stamp Duty Act, electronic receipts or electronic transfer for money deposited in any bank or with any banker on any type of account, to be

accounted for and expressed to be received of the person to whom the same is to be accounted for of amounts from N10,000 upwards shall attract a singular and one-off duty of the sum of N50.

“Provided that money paid into one’s own account or transferred electronically between accounts of the same owner by the owner within the same bank shall not be chargeable to duty.”

The NIPOST over the years has been known to be responsible for collecting stamp duty. According to Section 4 (1) of the Stamp Duty Act. 2004, “The Federal Government shall be the only competent authority to impose, charge and collect duties upon instruments specified in the Schedule to this Act if such instrument relate to matters executed between a company and an individual, group or body of individuals.”

But the Finance Act, amending the Stamp duty Act substituted, “Federal government” for “Federal Inland Revenue Service”.

According to Fasua, “The clash is not only between NIPOST and FIRS but a lot of parastatals in Nigeria as well as between the tiers of government. www.businessday.ng

Students of Senior Grammar School across the nation started their West African Senior School Certificate Examination (WASSCE) yesterday.

Dollar squeeze chokes Nigeria’s economy with recession looming

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igeria’s foreigncurrency shortage is squeezing life out of Africa’s biggest economy, and as in 2015, recession beckons with its attendant pain and misery.

According to Bloomberg, banks won’t honour card payments, foreign investors can’t get their money out and manufacturers are unable to import vital raw materials as output hurtles toward a second contraction in four years.

BusinessDay investigations also show that emerging GDP data for Q2 point to an inevitable economic contraction of frightening proportions. And as was the case in 2016, the failure of monetary policies is worsening the impact of Covid-19 on the country.

Dependent on oil exports for half of its revenue, the Nigerian government’s coffers have emptied after crude

prices plunged in the wake of the coronavirus pandemic.

There’s little prospect of a respite any time soon: it needs oil prices of $70 per barrel and production of 2 million barrels a day to balance its budget, but prices are hovering around $40 and OPEC curbs have restricted the nation’s output to about 1.4 million barrels a day.

The evaporation of foreign income forced the central bank to halt weekly interbank foreign-currency sales since March. Now, the effects of the dollar shortage are seeping through to the economy and inflicting pain on Nigerians and their businesses.

“A lot of the members can’t access the amount of dollars they need from the banks,” said Eke Ubiji, executive secretary, Nigerian Association of Small and Medium Enterprises. “That is constraining business.”

The International Monetary Fund predicts Nige-

ria’s economy will contract by 5.4% this year, the most in four decades. The latest official job figures put the second-quarter unemployment rate at 27.1%, the highest in a decade.

Lenders including Guaranty Trust Bank plc, Nigeria’s biggest by market value, have cut the amount of foreign currency customers can spend on payment cards abroad to a mere $100 a month from $3,000.

Rules on what companies do with the dollars they receive have also been changed, said Emeka Mgbeahuru, who runs Tropitec Limited, an importer of agricultural equipment from Italy and China with distribution links across west and central Africa.

“When you source your own dollars, they won’t let you pay in cash into your account and won’t let you transfer to your suppliers,” Mgbeahuru said by phone

from the southeastern commercial hub of Onitsha.

Many banks are following a template they used when they went through a similar contraction in 2016, which was to cut customers’ foreign payments and wait for crude prices to recover before raising the limits.

Central Bank of Nigeria spokesman Isaac Okorafor didn’t respond to a call and messages seeking comment.

“The challenge with dollar liquidity is an industry-wide problem,” said Bridget Oyefeso-Odusami, a spokeswoman of Stanbic IBTC Bank Plc, which cut its customers’ card spending to $500 monthly.

The shortage of foreign currency is forcing some companies to consider closing down, said Ubiji.

“If that happens, it has a ripple effect, which is loss of jobs,” he said. “We wish the situation changes for the better.”

Nigerians face tortuous travel experience as government, airlines benefit from ‘evacuation’ flights

… pay up to N1m for one way tickets to US, Europe …International flights to resume August 29 Iheanyi Nwachukwu & Ifeoma Okeke

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ederal Government and its partner airlines may find it difficult to give up the fortunes they are making from frustrated Nigerian travellers to various parts of the world, especially Europe and the United States, despite the challenges they face getting to their destinations as the country’s airspace remains shut.

Although, Hadi Sirika, minister of aviation, in his Twitter handle @hadisirika Monday, stated, “Glad to announce the resumption of international flights from the 29th of August, 2020. Beginning with Lagos and Abuja as we did with the domestic flight resumption.

Protocols and procedures will be announced in due course. We thank you for your patience.”

But, since the past five months, the country’s airspace had been shut to international travellers in a bid to curtail the spread of COVID-19, but the Federal Government had allowed for special flights, one of which is the evacuation flights.

Checks by BusinessDay show that people have been travelling out of the country, as scheduled commercial flights are simply dubbed ‘evacuation.’ The exorbitant airfares for ‘evacuation’ flights have forced some Nigerians to leave for Cotonou, Togo and other neighbouring countries, seeking affordable tickets to fly out.

Various travel companies have since launched private charter evacuation flights from Lagos to London, Europe and USA. These charter flights cost between $3,000 and $5,000.

With the black market exchange rate hovering between N475 and N477 to a dollar, passengers have had to pay as high

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as N1.4 million to N2.3 million for a one-way flight.

While other countries have opened their airspace to international flights, Nigeria has continued to delay as the airlines and government benefit from exorbitant amounts charged for evacuation flights.

Ethiopia Airlines, Emirates and top charter flight operators appear to be the greatest beneficiaries of commercialevacuation flights with several evacuation flights carried out through these airlines with the aid of the government.

As fewer airlines conduct these evacuation flights, passengers are subjected to tortuous travel experiences where airlines have to connect to various countries, and some passengers could stay as long as seven hours inside the aircraft at connecting countries waiting for take-off time.

Experts say this can only happen when passengers have @Businessdayng

very limited choices and are desperate to travel.

Checks further show that the government’s facilitated evacuation flights cost $2,000.

With the current exchange rate of N477 to a dollar, passengers have had to pay N954,000 for a one-way evacuation flight.

However, aviation stakeholders have continued to wonder why the government has failed to open the airspace while the elite fly in and out of the country.

According to the checks, airlines pay between 35 percent and 40 percent of a ticket cost as taxes and charges that come under the guise of statutory levies in addition to other charges. These agencies at the airports are –The Federal Airports Authority of Nigeria (FAAN), Nigeria Civil Aviation Authority (NCAA) and Nigerian Airspace Management Agency (NAMA), among others.

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news Here’s experts’ advice on what to do when AMCON takes possession of assets CHUKA UROKO

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ssets, mainly buildings, seized by the Asset Management Corporation of Nigeria (AMCON) generally have long shelf life or stay long on the market for reasons, experts say, have to do with legal, economic or bureaucratic factors.

In the last 10 years of its establishment, the corporation has made recoveries from delinquent or defaulting debtors authorities of the corporation estimate at N1.1 trillion as at the end of the first quarter of 2020.

This figure, according to Ahmed Kuru, the corporation’s managing director/ CEO, is an improvement, by about N100 billion, on the N1 trillion disclosed by the corporation in the corresponding period in 2019, with cash accounting for about 60 percent of the recovery, while non-cash assets about 40 percent.

Recently, the corporation, following a court order of Justice Oluremi Omowunmi Oguntoyinbo of Federal High Court Nigeria, Lagos division, took possession of a company building in Victoria Island,

Lagos, over an indebtedness of N470 million.

This action has raised concerns and people are asking what the asset management corporation would do next after taking possession of an asset as many of the assets it had seized in the past are still there scattered all over choice locations in big cities, especially Abuja, Lagos and Port Harcourt.

Though Kuru explains that some of the debtors are in agreement with them to repay their loans by instalment while others are in court, Tayo Odunsi, CEO, Northcourt Real Estate argues that people do not want to buy AMCON seized assets for other reasons.

“A M C O N s t i g mat i s e s properties with the markings they put on them, which scare buyers. Only predatory investors are attracted to stigmatised properties. My take is that they should give such properties to managers instead of leaving them on the market for too long,” Odunsi advises.

Assets seized by the corporation are, when necessary, disposed of by selling them to interested and eligible buyers who submit bids by downloading relevant documents

from AMCON website or collecting forms from a sales agent. This comes with some bureaucratic challenges that delay buying and selling.

Gbenga Olaniyan, CEO, Estate Links Limited, however, advises that seized properties should be given immediate valuation with realistic forced sale values put on them with the target being to sell somewhere between the open market value and forced sale value.

According to Olaniyan, the best practice for toxic assets worldwide is for them to be put up on auction, as AMCON needs to team up with professional auctioneers to get the highest bidders for these assets as several of them stay too long on the market with the current practice of sale by private treaty.

“The unoccupied assets need to be managed. AMCON should outsource to facility managers to prevent them from decaying. For plots of land that cannot be sold quickly, joint ventures can be entered into where the developer pays a premium (earning immediate income) and then AMCON can earn income from the units ceded to them when sold after development,” Olaniyan says.

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ICPC, NUC move against illegal degree awarding schools Felix Omohomhion, Abuja

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ndependent Corrupt Practices and other related Offences Commission (ICPC) has said it would start clamping down on illegal degree awarding institutions as well as tackle the problem of sexual harassment in tertiary institutions in Nigeria.

The decision was reached with the management of the National Universities Commission (NUC) during a courtesy visit to ICPC’s headquarters, Abuja, a statement by the anti-corruption commission said on Monday.

The executive secretary of NUC, Abubakar Rashid Adamu, who led the delegation to ICPC, according to the statement, lamented that schools that award higher degrees within six months and Doctor of Philosophy (PhD) degrees in less than one year had become common in Nigeria.

He also said that NUC

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had found institutions w h e re a ca d e m i c p ro j ects and thesis were on sale for N3000 per copy, adding that another disturbing scenario was the influx of graduates with fake degrees from foreign institutions into the National Youth Service Corps (NYSC).

Adamu also revealed that fake institutions from Benin Republic and Uganda were now recruiting students from Nigeria.

According to him, “ICPC had re-enforced the belief in Nigeria that corruption can be fought in a more civil and knowledge based manner. You have helped us by weeding out fake degree mills in time past ; we need your assistance in tackling illegal universities in the name of foreign universities with centres in Nigeria.

“We have them from Benin Republic, sometimes they award degrees in six months, while our degrees in Nigeria run for four years and above. @Businessdayng

We also have a case of a university in Uganda which recruits only from Nigeria and South Sudan.

There are also universities from Ghana that rent twobedroom flats in Lagos and award PhD degrees in six months.”

Chairman of ICPC, Bolaji Owasanoye, said that the Commission would partner with NUC to tackle the menace stressing that it was fraudulent for people to parade fake degrees.

Owasanoye said that ICPC was already handling about 12 cases of sexual harassments in tertiary institutions adding that a conviction was recently secured against a professor in Obafemi Awolowo University.

He also urged NUC to help domesticate anti-corruption studies developed

by ICPC through its AntiCorruption Academy of Nigeria (ACAN) in tertiary institutions curriculum, which had already been embedded in secondary school curriculum.

Tuesday 18 August 2020

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We will help SMEs fast-track Nigeria’s economic recovery - Access Bank MD …improves COVID-19 resilience with $93m syndicated loan agreement HOPE MOSES-ASHIKE

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ccess Bank’s group managing director, Herbert Wigwe has said the bank is committed to helping Nigerian businesses weather COVID-19 pandemic and set a course for recovery.

Wigwe made this known after the bank secured loan support worth up to $50 million from the International Finance Corporation (IFC).

According to Wigwe, the funds will, “Help Access Bank plc increase its liquidity to several Nigerian small and medium-sized enterprises (SMEs) navigating the economic challenges of COVID-19.

“In Nigeria, SMEs contribute over 45 per cent of national GDP, account for about 96 per cent of businesses and 84% of employment. Access Bank, therefore, recognizes the importance of SMEs to economic stability and is going the extra mile to ensure that such businesses are adequately financed to weather these testing times. IFC’s funding will not only enable us to extend financial relief to our clients across all sectors during the pandemic but beyond the COVID-19 crisis as well. Our partnership with IFC will help Nigerian businesses weather COVID-19 and set a course for recovery.”

The funds from the loan, made through IFC’s global COVID-19 ‘Fast-track Financing Support Package’ will enable the bank to provide increased trade financing and working capital lending to their business clients experiencing disrupted cash flows,

Bank’s footprint in the retail segment as well as increasingly support local Micro, Small, and Medium-size Enterprises, thereby supporting job creation in the Nigerian economy. The need to boost capital is extremely important today in the context of the negative socio-economic impact of COVID-19, hence, the $93.8 million Tier-II capital eligible loan will help us continue to sustainably support businesses that need finance.

These businesses will be able to continually provide essential products and services thereby achieving sustainable and inclusive growth.

“The transaction is evidence of Access Bank’s commitment to facilitating economic growth and development in Nigeria and Africa as well as creating business opportunities for all stakeholders including women, across its entire value chain.

We are truly inspired and we remain committed to our goal of being Africa’s gateway to the world,” he said.

Linda Broekhuizen, chief investment officer at FMO, said: “Once a very small player in the Nigerian financial services sector, Access Bank has become the largest bank in Nigeria with a wide array of financial services, including some very exciting gender finance work. We have been proud to support the team at Access Bank all those years, during good times and more challenging ones, like today. We are grateful for the opportunity to support our partners at Access Bank again, helping them weather the impacts of COVID-19 and the international oil crisis.”

supporting business activity and preserving jobs.

Reiterating Wigwe’s comments, Eme Essien Lore, IFC country manager for Nigeria, said, “It is crucial to support smaller businesses to keep the wheels of Nigeria’s economy turning during today’s unprecedented economic challenge. IFC’s longstanding partnership with Access Bank means together we can move much-needed funding to businesses that need it most, helping them remain in business and retain their employees.”

IFC’s $8 billion global COVID-19 fast track facility, launched in March 2020 to support business activity and preserve jobs in the face of COVID-19, has so far invested almost $400 million through this facility in Africa.

Meanwhile, the bank has announced the signing of a Subordinated Syndicated Loan Agreement totalling $93.8 million with the Dutch development bank (FMO), the French private sector development bank (Proparco), and leading investment firm, Symbiotics.

The tier-II capital facility was structured as a “10 years non-call 5 years” subordinated debt instrument, benefitting the bank for a period of 5 years.

According to Wigwe, the facility will enable the bank to continue on its strategic path to becoming Africa’s gateway to the world even after the unexpected simultaneous surfacing of the two ‘Black Swans’ in 2020: COVID-19 and the international oil crisis.

“This deal is in line with our strategy to deepen Access

Edo assures business-friendly policies

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do State government has assured the business community of friendly policies to sustain the inflow of investments amid the coronavirus pandemic, in line with Governor Godwin Obaseki’s Making Edo Great Again (MEGA) manifesto.

Head, Edo State Investment Promotion Office (ESIPO), Kelvin Uwaibi, said this during a breakfast meeting with the Edo International Business Forum and members of Edo Business Community, in Benin, the state capital.

He assured the business community of the Obasekiled administration’s commitment to engaging and partnering with stakeholders to implement investmentfriendly policies and guarantee the security of lives and property in the state.

“As a responsive government, we are not resting on

our oars and we will continue to provide necessary tools and support that would translate into greater opportunities with the overall aim of ensuring sustainable economic and social development of the state.”

He urged the business community to continue believing in the administration and take advantage of the various policies within the framework of the governor’s progressive agenda.

While restating his confidence that the business community will sustain its contributions towards creating an environment that is safe and secure for business and leisure, he promised that Governor Obaseki would continue partnering with the business community to develop the economy of the state.

Speaking earlier, president of Edo International Business Forum (EIBF ),

Florence Omere, commended the state government for her efforts at stimulating the growth of Micro, Small & Medium Enterprises (MSMEs) in the state and making Edo State a priority and preferred destination for foreign investors.

She noted that despite the Covid-19 pandemic, the Edo State Investment Promotion Office (ESIPO) still worked actively to interface and allay the fears expressed by actors in the business community.

“I must commend the Edo State Investment Promotion Office. I recall we received messages of hope when the lockdown was tough. We also attended virtual meetings organised

by ESIPO.” This, she said, demonstrated the commitment of the state government in ensuring that businesses in the state prosper.

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Low Insurance Penetration in Nigeria: Increasing cases of Cyberattacks in the

beyond awareness creation wake of the Corona Virus Pandemic

BY: TEMITAYO OLANIYAN

By Olaniyan Temitayo Awareness, a term used to describe a state of knowledge and understanding of a situation or phenomenon, is the increasingly linked Since the advent of internet being and the web or in proffered as the solution to low insurance the 20th century, one of the challenges thatpenhas etration in Nigeria.

Many consider it the messiah continued to get the attention and stayed on the for the sector. thenations question remains if only front burner forBut many and businesses is awareness is ever enough to develop the increasing level of cyber threats. the Justindusas the try to a state its key stakeholders desire? internet and web continues to evolve so has cyber Despiteincreased its numerous potentials vast array threats and evolved at aand rapid pace. of opportunities for growth, the Nigerian insurance industry has continued to grapple with These cyberattacks usually take the form of many challenges that have cyber causedharassment, its contribuidentity theft, hacking, tion to national Gross Teller Domestic Product (GDP) spamming, Automated Machine skimming, to remain and abysmally andtechniques of course, slowed phishing manylow other being its development.

Toptheir of these challenges is low exploited to achieve objectives. penetration - one of the metrics (the other being The number of rising of breaches, sadly, Insurance Density) usedcases to measure the level of continues to be rise. In sector. the United States, development of on thethe insurance despite the massive budget for theand 2016concerned Elections, While many industry watchers it is still being alleged Russia, through stakeholders have beenthat quick to point accus-a well-coordinated cyberattack, helped Donald ing fingers at the low level of awareness on the Trump the election.

In 2019 also, British benefitswin of insurance, it is important to note that Airways’ system was challenges breached, plagugiving there existsecurity other fundamental hackers of its website access to over 500,000 ing the industry. Proffering awareness creation customer details.toThis consequently made as the panacea lowhas insurance penetration the Office (ICO) fine canInformation be said to beCommissioner’s a cosmetic approach – awarethe record fine of £183m. nesscompany creationaalone yields low impact, thus the necessity of a more holistic review of the issues More recently, on the of July 2020, Twitter in order to improve the15th fortunes of the industry. found itself in an embarrassing situation when its security system was breached; giving hackers Nigeria versus other African climes access to accounts of highly influential people The statistics worrisome and indeed including U.S. are former Vice President, Joe unforBiden, tunate for the Nigerian insurance industry.

With Bill Gates, Elon Musk, and many others to a populationaofbitcoin over 200 million more than perpetuate scam.

Theand situation has half of that comprising of young people who made Twitter to face several backlashes on social can engage in economic activities, the media and also lose the confidence of industry millions should of users.not be in its current circumstance.

To put things in perspective, with a total gross

premium of aboutofN400bn (US $1.1bn) in 2018, The frequency such breaches goes on to comparedhow withsophisticated nominal GDPand of prolific N129.1trn, the highlight hackers insurance industry was able to contribute only are becoming.

According to a report

by RiskBased 0.31%, while its counterparts other ofclimes Security, “Within the first nine in months 2019 contributed 16.99%breaches in Southreported Africa; 6.69% in there were 5,183 with 7.9 Namibia; 4.76% exposed. in Lesotho; 2.83% in to Kenya; and billion records Compared the mid2.44% Swaziland, reported statista.com. year ofin 2018, the totalasnumber of by breaches was up 33.3% and the total number of records exposed more than doubled, up 112%.” It is instructive The Issues to that these data breaches to feed Thenote Nigerian Insurance market isoccur surrounded identity theft which often givesthe criminals by fundamental issues thattimes demand atteninformation they need Interestingly, to take over someone’s tion of all stakeholders. the issues identity for financial gain. are not farfetched.

They have all one way or the other been highlighted as being impediments to

Aside perpetuating the actissues of hacking forfrom financial the sector’s growth.

The range low gain, criminals also carry out attacks for political capital of operators, limited human capacity, lack or socialinreasons.

They out hacks of trust the sector andusually lack of carry enforcement of by to access information that can damage thetrying compulsory classes of insurance. or expose the theirNational intended target(s).Commission A classical Evidently, Insurance example thisbe is the breach Mossakthe Fonseca (NAICOM),ofcan seen to beattackling issue where an anonymous revealed of low capital following itsindividual directive to players in information to a German newspaper named May 2019 to significantly increase their paid-up Süddeutsche Zeitung in 2015 in order to expose share capital. Consequently, Life Insurance unover 200,000 tax havens involving wealthy derwriting firms with minimum paid-up share individuals, firms and public official in about capital of N2 billion (US $5.4m) would have to 200 countries.

shore up to N8 billion (US $21m). General Insur-

anceoutbreak underwriting firm would(Covid-19) have to shore up The of coronavirus has not their led capital from N3 billion (US $8.2m) to N10 only to managing the health crisis, but has billion (US $27m), and and Composite Insurance also subjected individuals businesses around firms would have towith theirthe capital fromincrease N5 billion the world to coping sporadic in (US $13.7m) This to N18 billion has (USreached $49.4m).

Reincyberattacks. situation a record surance firms would have to shore up from N10 billion (US $27.4m) to N20 billion (US $54.9m).

Certainly, this recapitalization exercise had be-

This is also a compulsory insurance cover required by law. All buildings with more than 2 floors under construction are to be insured by the owner or the contractor to cover liability against construction risks. Despite the penalty of N250,000 or three years imprisonment or both, enforcement in this regard also has been very weak.

The reality is flagrant disregard for the provision as stated Section 64 of Insurance Act of 2004.

come necessary considering the current economic realities. It will no doubt also enhance the capacity of the insurance firms to underwrite big tickets transactions. The firms would also have enough capital to invest for expansion and technology – an area the industry is yet to fully take advantage of.

In the same vein, the Chartered Insurance Institute of Nigeria (CIIN), has continued to push for enhanced skill and capacity of insurance professionals in the industry. Also, to tackle lack of trust by the general public in the sector, operators have embarked on a rebranding campaign aimed at improving the image of the industry which would therefore boost public confidence.

However, this article seeks to dwell on the inadequate enforcement of the 6 classes of insurance in Nigeria as the major contributory factory for low penetration. The Nigerian InsurPhoto credit: freepik ance industry, without any iota of doubt, is in a desperate needtimes of enforcement ofundiscerning at least the high in recent causing many compulsory insurance.

These include: individuals classes to lose of millions of Dollars around Motor Thirdincluding Party Insurance, Group the world, Nigeria.Employee While it may be Life Insurance, Health Carehow Professional Indemdifficult to know for sure many attacks are nity, Insurance of Buildings Construction, happening, many new casesUnder are being recorded Insurance every day.of Public Buildings and Employers Liability Insurance.

According to varonis.com, in the United States, The very sluggish rate of penetration is because a research by the University of Maryland the laws as study contained in the respective Acts are estimated thatenforced. people are being hacked every not effectively 39 seconds – on an average of 2,244 times a day.

They have on the Covid-19 pandemic Motor Thirdlatched Party Insurance thereport urge for people the world to Aand recent released by around the Nigerian Insurers seek information to setthat baits impersonate Association (NIA) states ofand the over 12 milorganizations sending out phishing emails lion vehicles onby Nigerian roads, only 2.5 million and genuine then lure people Many, to clicking have insurance. due tomalicious one realinksorand to steal sensitive son the files, otherallowing prefer tothem purchase fake insurinformation oradata.

In some cases, they take ance policies at cheaper rate. The government overallthe individual’s computer system andhave then and relevant law enforcement agencies a ransom paid. They emhave astart roleto todemand play. It’s that about time all be stakeholders also become in exploiting vulnerabilities bark on moreexperts aggressive drive towards the enin weak cybersecurity frameworks of companies forcement of the third party insurance for motor vehicles.

With the provision of a N1 million Third This has led to stakeholders embarking on Party property damage limit liability cover to the public enlightenment campaigns to sensitize holder underonsection 68 toofbethe Insurance Act individuals the need wary of phishing 2003, benefit greatly and emailsinsured as well motorists as corporate organizations onthe the incessant verbalaexchanges on our roadssecurity in the need to setup more resilient cyber event of accident are bound to furtherdata. reduce as frameworks to protect customers’ Since number of insured vehicles increase. The NIA has greatly improved on the usage of www.askniid. org the portal that captures all genuinely insured

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vehicles in the country. The portal is also being used to verify the authenticity of certificates issued, but a significant proportion of the vehicles plying our roads are yet to be captured, thus necessitating more aggressive enforcement. Ensuring most vehicles are genuinely insured will not only grow the revenue of the industry but also that of government through licensing fees whilst ensuring safer roads.

Employee Group Life Insurance By law, Employers with a minimum of 5 employees, are required to take life insurance policies in favour of employees for a minimum of three times the annual total emoluments.

Section 9 (3) of the Pension Reform Act 2004 requires that, ‘In addition to the rates specified in sub-section (1) of this section, employers shall maintain life insurance policy in favour of the employee for a minimum of three times the annual total emolument of the employee.’

Unfortunately, theinternet enforcement of this has the use of the remains thelaw primary not been wholistic, making several organizations method for communicating and staying relevant totoflout it, except those at who mostly require teeming customers these times, then cermore tificates compliance forcyber government must beofdone to fortify securitypatronsystems. age.

Organisations must establish a more robust internal system as well. Hospitals, schools, and

even online who rely on the internet to Insurance of portals Public Buildings meet obligations must particularly on top of Section 65 of the Insurance Act 2003beexpressly managing states that:the obvious risk. Else, they fall victims.

Additionally, and must (1) ‘Every publicindividuals building shall beemployees insured with a also be sensitized to the danger of cybersecurity registered insurer against the hazards of colrisks fire, andearthquake, educated to remain lapse, storm andvigilant flood.’ against fraudulent emails. This measure particularly (2) “Public building”, in this sectionis includes a important because thea mistake on one staff tenement house, hostel, building occupied by can compromise the entire security system a tenant, lodger or licensee and any building toof an organization. necessary, staff should which members ofWhere the public have ingress and be trained regularly tipseducational to decipher aggress for the purposeon of these obtaining fraudulent links files. orphishing medical emails service,and or for the purpose of and recreaTipsorlike watchingofout for spelling errors, mail tion transaction business. withtosense urgency that they must Inusually addition the of above, theand section further click on link so as to lose on something and states thea penalty ofnot non-compliance to the law, many more. which is N100,000 or one year imprisonment or both.

Only a very few owners and occupiers of The government has a huge role to play in curbing these public buildings to legislations this provision; this menace.

Already,adhere there are that while some are not even aware breakcriminalize cybercrimes and inthey someare cases with ing the law. very stiff penalties when an individual is found Usually, accidentsinternet occur, workers visiguilty ofwhen committing fraud inor Nigeria, tors building do by notinvestigating get compensated bebut of wethe must do more and making cause there is no cover.

Insurance of Buildings under construction

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Health Care Professional Indemnity This is also a compulsory insurance policy required by the National Health Insurance Scheme (NHIS). As stipulated in Section 45 of the National Health Insurance Scheme Act of 1999, health care providers shall take out professional indemnity cover from an insurance company.

This, of course, is aimed at providing protection for the professional against liabilities that may arise from neglect, error, omission etc. while discharging his or her duties.

Despite all efforts of NAICOM and NHIS to ensure all medical professionals are covered under this policy, we still have practitioners that do not comply with this law.

Employers Liability Insurance As required in the Employee Compensation Act of 2010, all employers are expected to make a contribution of 1% of the total monthly payroll not later than the last day of each month into the Employee Compensation Fund in order to provide adequate compensation to employees or their dependents in the event of death, injury, disability, or diseases arising out of or in the course of employment.

One of the issues being encountered by the Nigeria Social Insurance Trust Fund (NSITF) is nonremittance of the statutory contribution.

Conclusion Awareness creation is vital, but beyond being aware, enforcement remains a potential key driver of patronage. No doubt the Nigerian Insurance Industry has shown appreciable those liable to face the fullsome wrath of the law.

Under the Cybercrime 2015 internet progress over the years,Actconsidering thathackers the or internet fraudsters found guilty of unlawfully sector from 2005 to 2018 grew its premium inaccessing a computer orN400 network, come from N75 billion tosystem the over billionare a fineisofstill upatolotN10 million a term of inliable 2018.toThere of room foror improveimprisonment of 5 years.

Enforcing will ments and all hands must be on deckthis if it law must be good with starting point. catch-up its counterparts.

The sector is in dire need of strict enforcement due the to the awareness of cybersecurity ofAlso, at least six low compulsory classes of insurissues and risksthe in Nigeria, the government should ance.

Perhaps enforcement of the various do moreastostipulated protect in itsthe citizens hackers penalties variousfrom Acts would embarking campaigns. bebya good start. Iton willenlightenment spread the insurance penIndividuals and small Nigeria must etration like wildfire intobusinesses the nooks in and crannies be periodically sensitized as many are still very of the country. Travel Insurance that is strictly oblivious the potentials risks andasfall easily enforced byof some European countries a preinto their requisite fortraps. issuance of visa for instead leads to queues of potential travelers requesting for this Cybercrime is an act that must be reduced to its category of cover they would ordinarily notthe barest minimum.

There is nohave gainsaying that taken. adverse effects of the incessant cyberattacks is not The time to start acting is now and the govern-but only hurting individuals and organizations, ment must lead with will on matter. also the economy as airon whole.

All this hands must be on Stakeholders in the theconsciousness industry mustofdouble and, deck to arouse stakeholders inonsome cases, before redirectit gets theirout efforts towards the menace of control while advocacy, collaboration exthe government mustand as aenlightenment matter of urgency ercises to not just the general public, but this educate and sensitize its citizenry. time, to drivers of these initiatives - the law enforcement agencies, political influencers and social elites. These stakeholders must be made change agents that are well informed before any meaningful growth can be made in the sector.

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Lebanon: A nation brought to its knees The country was already reeling from an economic and financial crisis before the massive port explosion David Gardner

I

t took 15 years of sectarian carnage in Lebanon’s 1975-90 civil war to destroy Beirut, and 15 years more to rebuild it. It has just been laid waste again in barely 15 seconds. The Lebanese have endured wars and invasions, occupation by Israel and by Syria, air strikes and car bombs. And now this.

Tuesday’s gigantic explosion in the port of Beirut shredded vast swaths of the heart of the city. The civil war left a number of shell-shattered hulks, like the old Holiday Inn, to scar the skyline of a rebuilt Beirut. This cataclysm has wrecked buildings all over the centre, shoreline and east of the city. At least 150 dead are accounted for, with many more expected, and some 5,000 wounded.

Municipal authorities reckon 300,000 people have lost their homes.

While conspiratorial speculation persists about an attack, the likely cause is more horrifyingly banal. Some 2,750 tonnes of highly combustible ammonium nitrate — used to make fertiliser and explosives — was stored in Hangar 12 in the port, and probably set alight by a fire and blast in nearby Hangar 9.

Some Beirutis well inland from the explosion at first thought it was car bombs, perhaps related to a verdict that was due this week from an international court at The Hague, where four members of Hizbollah, the Iran-backed Shia paramilitary movement, were tried in absentia for the 2005 assassination of former premier Rafiq Hariri, by a huge truck bomb on Beirut’s waterfront.

But the second blast, blowing in windows and doors all over town and filling the streets with dazed and bleeding injured, was vast. And no car bomb makes the mushroom cloud that struck

terror into all who saw it.

Beirut has had more than its share of trauma. Before Hariri, the prime minister who reconstructed postwar Beirut, was killed, Rene Mouawad, the president who was supposed to reunite Lebanon at the end of the civil war, was blown up by a huge car bomb in November 1989. In 1982, president-elect and Christian militia leader Bashir Gemayel had a building brought down on him.

Throughout the civil war, Saudis and Syrians, Iraqis and Libyans, Iranians and Israelis used Beirut as their address of choice to communicate by car bomb. Alarmed western powers led by the US and France blundered in, soon to be truck-bombed out: 241 US marines and 58 French paratroopers were blown up in 1983 near the airport in suicide attacks by Hizbollah, which also destroyed the American embassy on Beirut’s Corniche. But there were no mushroom clouds.

As the din of traffic chaos and roaring electricity generators kicking in for almost hourly power cuts is replaced as the city’s ambient noise by the ubiquitous sound of crunching glass that carpets the inner city, it is hard to imagine how Beirut bounces back from this. Or how Lebanon avoids becoming a failed state.

Enraged protesters pelted the justice minister with water bottles on Thursday and stoned the motorcade of Saad Hariri, the former prime minister who was forced to resign last October. When French president Emmanuel Macron visited a shattered neighbourhood of Beirut on Thursday, Lebanese paused from cleaning up debris off their streets to vent their fury with their leaders, chanting: “We want the fall of the regime,” the popular slogan used during mass protests last year that forced the resignation of the previous government.

“A corrupt political class, subservient policymakers and cronies have

generated an unprecedented misery, an economic, banking, and financial meltdown,” says Nasser Saidi, a former economy minister and vice-governor of the central bank after the war. “Their endemic corruption, criminal negligence and incompetence have now delivered the Horses of the Apocalypse disaster on Lebanon and the Lebanese.”

When the guns fell silent in 1990, most militias in the shape-shifting conflict between and within Christian, Sunni, Shia and Druze communities had their own makeshift ports. Then Beirut port was rebuilt, becoming the busiest in the east Mediterranean. The project embodied by Rafiq Hariri, a Sunni leader backed by Europe and the Gulf, was to turn Beirut into the capital market and services entrepôt of the Middle East, with its city as regional playground and port as gateway to the Levant.

That vision ignored the dark side of Lebanon — from huge wealth disparities to the endemic corruption and feudal pattern of the sectarian dynasties dominating its politics. It all but evaporated with Hariri’s death, almost certainly ordered by Syria and Iran. And what little remained of it was vaporised this week.

From the 19th century, well before the fall of the Ottoman Empire, Lebanon played an outsized part on the Arab scene. Lebanese Christians, often in alliance with Muslims, were at the heart of the pan-Arab revival, from the printing press to the academy, from nationalism to medicine. Muslims and Christians made a national pact that brought Lebanon independence from France in 1943. Now, Lebanon as the mythic phoenix from the ancient Phoenician coast always able to re-emerge from its ashes is looking crushed.

First, the country is collapsing from a compounded debt, budget, banking, currency and economic crisis. Lebanon is bankrupt. According to the finance ministry, its banking system has lent 70

per cent of its assets to the government, either directly or through the Banque du Liban, the central bank. Lebanon defaulted on its foreign debt in March, for the first time. But total losses in the banking system including the central bank are reckoned by the government to be roughly two and a half times the size of an economy shrinking too fast to measure.

A third of Lebanese are jobless and half live below the poverty line. The Lebanese lira has lost 80 per cent of its value since the crisis erupted with a revolt against the political elites last October. Hyperinflation is near. The middle class is sinking into poverty and the poor are being pushed into destitution. Even before the explosion, the IMF forecast a 13.8 per cent fall in Lebanese gross domestic product this year.

Second, the hollowing out of Lebanon’s institutions by sectarian leaders who treat the state as booty is almost complete. Hizbollah, bolstered militarily by Iran and its battlefield success in Syria’s civil war salvaging Bashar al-Assad’s regime from a mainly Sunni rebellion, has consolidated its power. In 2016 it installed Michel Aoun, leader of the largest Christian party, as president, and two years later, in alliance with the Aounists and rival Shia Amal movement, won a parliamentary majority ostensibly legitimising what it had won by force. With its powerful bridgeheads in the security services, it is a state above the state.

Third, Lebanon is host to an estimated 1.5m Syrian refugees, roughly one in four of the population.

Fourth, as if that were not enough, the Covid-19 emergency, though on official figures less deadly for now than in most neighbouring countries, has squeezed any remaining life out of the economy.

‘

From the 19th century, well before the fall of the Ottoman Empire, Lebanon played an outsized part on the Arab scene. Lebanese Christians, often in alliance with Muslims, were at the heart of the pan-Arab revival, from the printing press to the academy, from nationalism to medicine

FT

Learning to think analytically is the only immunity during an infodemic

W

e live in infodemic times. Misinformation, “fake” news, financial scams and hate speech are examples of harmful online content infecting millions. Broadly categorised as information disorder disease propagated through social media. Many are infected, some recovered and sadly many literally died. The World Economic Forum rated “massive digital misinformation” as a main threat to civilised society. The World Health Organisation: “we’re not just fighting an epidemic; we’re fighting an infodemic [that] spreads faster and more easily than this [COVID-19] virus.”

Infodemics occur when populations are bombarded with excess information about an issue or problem that obscures solutions, disrespects facts and clouds the truth. Gullible consumers of content are the victims in this information war, the only weapons in the counter offensive are facts aligned with logical and critical thinking (analytical thinking). The Economist magazine described cyberspace as “the world’s most lawless battlefield.”

Populations could be segmented into “educated” and “uneducated”. The ability to think clearly and critically, to look for facts (or establish the facts) and think for oneself in logical transparent steps: these are the defining traits of the genuinely educated. The memorisation of information and obtaining a certificate confirming that achievement do not make a person truly educated. Thinking critically, logically, with respect for and a bias for facts, an understanding for example of the difference

between correlation and causation. This is not just the domain of lawyers, philosophers or news analysts on television.

In my online content research analysis work and interventions to help consumers of internet content, I use a system of online content classification that broadly (with sub-categories) divides content in cyberspace in two categories: 1.

Analytical content; 2. Non-Analytical (ordinary) content. All analytical content in cyberspace has passed through the filter of critical and logical thinking. Claims, hypothesis or speculations made in analytical content are supported with some form of credible evidence. Non-analytical content does not provide credible evidence to support claims and does not display critical or logical thinking, this is unverified content. Most non-analytical content is generally harmless when the content does not make important claims.

In a 2015 paper, Simon Cullen of Princeton University and his co-authors concluded that “the ability to analyse arguments is critical for high-level reasoning, yet previous research suggests that standard university education provides only modest improvements in students’ analytical-reasoning abilities.” David Epstein’s book released last year, “Range: Why Generalists Triumph in a Specialised World” reveals some fascinating information. Epstein describes a study of students from departments as different as the English department is from the Neuroscience department of a top American university. Students were given 20 questions that tested conceptual/analytical thinking abil-

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ity applicable in the real world. Results showed students with high great point average (GPA) in academics did not necessarily perform well: there was no correlation between GPA and broad conceptual/analytical thinking.

The conclusion: “…traits that earn good grades at the university do not include critical ability of any broad significance.” Most students confuse value judgements for scientific conclusions. In one particular question testing students’ ability to separate correlation from evidence of causation, the students performed poorly. Epstein notes, “almost none of the students in any major [academic subject] showed a consistent understanding of how to apply methods of evaluating truth learned in their own discipline to other areas.”

During interviews of candidates for analyst positions in prestigious consultancy firms, a typical test would contain a statement and a question with answer options. For example: the statement “the USA has 150,000 COVID related deaths and the UK has 50,000 COVID related deaths,” which of the following is a logical conclusion from the preceding statement?

Answer options could include (a) a person is more likely to die from COVID in the US than in the UK (b) the UK has the pandemic in control better than the USA (c) the USA has a greater population than the UK (d) the USA carries out more COVID tests than the UK. Thinking analytically reveals none of the conclusions (answers a,b,c or d) can be logically drawn from the statement preceding. All answers from (a) to (d) are facts that can be

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Uyiosa Omoregie

confirmed when more information is provided.

However, only two conclusions can be drawn: (1) Both the USA and UK populations have thousands of COVID related deaths (2) the USA has more deaths from covid than the UK: the absolute number of deaths is greater in the USA. No other conclusion can be supported solely by the preceding statement. To conclude, for example, that the situation with COVID in the USA is worse than in the UK, we need to move from absolute numbers to relative numbers: number of deaths per entire population or deaths per million population. This is analytical thinking.

Omoregie is a certified management consultant and a fellow of the Institute of Management Consultants He can be contacted at uyiosaomoregie@yahoo.co.uk

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Bravo Zulu to Akinwumi Adesina!

As he survives emotional torment and “rules” outside the rules STRATEGY & POLICY

MA JOHNSON

W

orries may linger for a long time, but joy comes in the morning.

The time has come for us to rejoice and celebrate an illustrious and indefatigable Nigerian for keeping the flag of our nation flying, and for making Africans proud.

He is none other than Akinwumi “Akin” Adesina, the President of the African Development Bank (AfDB).

He was the first Nigerian to helm the AfDB. Most Nigerians are enormously pleased, and excited that Akinwumi “Akin” Adesina has been exonerated and cleared of corruption allegations by the AfDB independent review committee of three members headed by former Irish president, Mary Robinson.

Akin, the charismatic speaker, welldressed diplomat, technocrat, and outstanding agricultural economist was cleared of all 16 charges alleged by whistle-blowers against him. Can the employment of a friend and a parley with China generate whistle blowing? Yes, a parley with China could be regarded as an immoral activity by some powerful elements in the bank. Some of us know that a lie cannot go far because it has no leg.

Akinwumi Adesina’s exoneration confirms the Yoruba proverb that the truth shreds a lie of twenty years in one day.

The AfDB which has its written own rules, is a regional multilateral institution owned by African countries but has the US as the second major investor with 6.6 percent shares, after Nigeria with 9.3 percent of the total shares. The President of the AfDB, Akinwumi Adesina, was accused of impropriety by a group of employees referred to as “whistle-blowers.”

Most organisations have one set of explicit or understood regulations or principles mostly written, governing their conduct or procedure within an area of activity. Written rules are known by all and sundry and anyone who wants to succeed must not only understand the mechanism of the organisation but also, play by the written rules. Unfortunately, there are also unwritten rules.

Unwritten rules are what I refer to as “rules” outside the rules. Unwritten rules are known only to a few in most organisations, and are applied on discretion by power brokers when someone is to be elevated or when the person’s reputation is to be damaged. When someone’s reputation is to be destroyed, unwritten rules may be applied. Often these “rules” are borne out of envy, wickedness, machinations, and triviality by some individuals or groups that can be referred to as cabals or power brokers in any organisation.

In any organisation, you either belong or recognize power brokers and know how they operate. When anyone runs afoul of unwritten rules in any organisation, he or she would have to seek divine intervention, acquire political clout, and/ or apply backdoor diplomacy amongst others as a survival strategy.

Some allegations of corruption leveled against the President AfDB led to an inquiry on him by the Bank’s Ethics Committee. He responded both to accusations of violations of the AfDB statutory rules and to the most numerous objections concerning its governance, its choice of collaborators and its management style.

In response, Adesina accused his critics of “questioning the integrity, leadership and honesty of 16 African presidents and ECOWAS”, who gave him their support. Adesina was also reported to have gotten the unanimous support of the Executive Council of the African Union consisting of 55 Ministers of Foreign Affairs. He was cleared by the Ethics Committee. But some members from powerful nations on the board of the AfDB, particularly the US, were not satisfied with the Ethics committee report. It was then I knew that Akinwunmi

Adesina would be subjected to “rules” outside the rules.

Akinwunmi “Akin” Adesina, the 8th President of the AfDB, previously served as Nigeria’s Minister of Agriculture and Rural Development. A job which he performed to the best of his ability and to the admiration of many Nigerians. At the time Akinwumi Adesina went through emotional torment, Nigeria was, and is still solidly behind him.

President Muhammadu Buhari says Nigeria will stand by the AfDB President.

“I didn’t say because you were a People’s Democratic Party (PDP) minister, and I belonged to the All Progressives Congress (APC), so I would withhold my support. I will remain consistent with you, because no one has faulted the step I took on behalf of Nigeria,” President Buhari said.

That remarks from the highest level of government in Nigeria is very encouraging and pleasing.

Nigerians and other African leaders rallied support for Adesina who is completing his 5-year tenure but is entitled to another term. In fact, Nigeria’s former President Olusegun Obasanjo in a letter to former presidents of African countries had extolled Adesina’s work at the AfDB saying he has “performed very well in his current position over the past 5 years and taken the bank to greater heights.”

Even the bank’s Board of Governors said that it did not request for a fresh investigation and that it has not ordered Adesina’s resignation. The bank’s Ethics Committee decisions were challenged and rejected by the US Treasury Secretary, Steven Mnuchin. So, the AfDB had to order a new independent probe of Adesina. This is now history.

We are in an age where anything can happen. I agree with those analysts who say that the open rejection of the AfDB’s Ethics Committee and the call for a fresh “independent” probe erodes the independence of the bank’s corporate governance structure and raises doubt about the bank’s internal mechanisms.

I admire the President of AfDB, Akinwunmi Adesina, for his outstanding contributions to the development of Africa, and Nigeria in particular. He is an

‘

I am of the view that no nation, no matter how powerful or influential should have veto power over the destiny of African countries. But Africans have allowed foreign countries to have domineering shares in the Board of Governors of the AfDB

achiever who creates support for African governments and the private sector at a time when most countries in the continent face fiscal challenges. Looking at the Mary Robinson panel’s report, the AfDB President’s panache, splendid performance, actions and character, I am convinced beyond measure that Akinwumi “Akin” Adesina deserves a Bravo Zulu.

I am of the view that no nation, no matter how powerful or influential should have veto power over the destiny of African countries. But Africans have allowed foreign countries to have domineering shares in the Board of Governors of the AfDB. “It is sad and disappointing to note that in almost all the regional and sub-regional organisations in Africa, a great number of member states do not pay their dues,” according to the former President of Nigeria, Shehu Shagari in his book Beckoned To Serve.

What Akinwunmi Adesina went through is international politics designed and orchestrated by a powerful block in the board of the AfDB. That was responsible for the concern raised by wellmeaning Nigerians and a few analysts. But the game of brinksmanship exhibited by President Buhari, ex-president Obasanjo and other African former leaders as well as subtle diplomacy behind the scenes by the AU have yielded positive results.

Most importantly, Akinwunmi Adesina did his best and as the coast is clear for a second term in office, he must bear in mind: “rules” outside the rules of the AfDB. He must cleverly play the game with all stakeholders particularly the powerful nations on the board of the regional bank.

So, what is the lesson learnt? For Nigerians aspiring to take plum jobs at the national and international levels, they must be above board. And realize that there are “rules” outside the rules, which could be applied or misapplied anytime. I join numerous well-wishers to wish Akinwumi Adesina the best and God’s speed in his re-election bid for a second term in office and future endeavors. Thank you!

Johnson is an author and a retired naval engineer who has passion for African development and good governance

Blasphemy, security and the economy

C

onsisting of at least 250 ethnic groups and about 500 languages, Nigeria is a potpourri of various identities that has the outlook of a marriage of strange bedfellows. It shows in our diverse, and often contradictory, legal systems. Nigeria runs three criminal legal systems, the Criminal Code, the Penal Code and Sharia. These contradictions are pulling the country in different directions. The lack of central identity has served to dampen any attempt to forge a nationhood.

A brief look at the beginning. The amalgamation of a weakened Fulani caliphate up north, with different forest kingdoms in the south-west and Niger Delta, and an acephalous Igbo ethnic group in the south-east may have had its perks, but the creators of this union did it for their own economic reasons, and even the man who was behind it, Fred Lugard, did not really think that the union would survive this long. However, the average observer can be forgiven for thinking that if the union survived a civil war as was fought 50 years ago, it could as well survive anything.

With each passing flare up however, this theory is tested and stretched thin. The recent uproar following the sentencing to death of a singer in Kano on account of alleged blasphemy is yet another flashpoint. Last week the Kano Upper Shari’a Court sentenced 22-year-old Yahaya Sharif to death by hanging. This sentence has not been carried out because Sharif still has the right of appeal to the Supreme Court, which is under the common law

system and does not recognise blasphemy as a crime. I expect that Mr Sharif will appeal and win as well, but the damage has been done.

The damage was in the deep ethno-religious blowback that followed. In the North, there was vocal support for the sentence, in the South, the verdict was roundly condemned, showing that mistrust is high. This has grave implications for the future of Nigeria, to any neutral observer, it could as well be two different countries.

Like it or not, Nigeria is a violent state, and this was evidenced by an arson attack on Sharif’s family house, giving a distinct threat of violence if the verdict went otherwise. Nigeria’s foundation was steeped in violence and the setting up of its armed forces was hinged on the need to coerce indigenous people to bend to the will of the colonialists. But what is even more troubling is the formation of country that has a largely Muslim conservative north and a somewhat socially liberal Christian South.

Northern Nigeria has seen some of the worst riots with religious undertones. In 2002, an attempt to hold the annual Miss World event in Nigeria led to a riot in some northern cities that claimed at least 200 lives between 20-23 November. Two years earlier, Kaduna had already seen violent Christian-Muslim clashes. Many inhabitants had a strong sense of injustice because none of the perpetrators had been prosecuted afterwards. Moreover, the riots had caused Christians and Muslims to concentrate and isolate www.businessday.ng

themselves in separate districts.

While these are pointers to a deeply divided state yet to attain nationhood, we need to ask ourselves why it is mostly the south who take on liberal causes. Protests both online and offline about injustice and bad governance have been largely done in the south. The kidnap of about 200 girls in Chibok, Borno state by Boko Haram in 2014 led to massive protests that began in Southern cities.

In the case of Sharif, most people leading the outrage on social media against the judgement are Southerners. There have been some prominent Northern Muslims who have spoken up against the sentencing, and they have been subjected to violent threats as well. The existence of these moderate Muslim Northerners proves that the North is not a monolithic murderous empire, and so we need to understand how these trends determine security and economic outcomes.

Next year, Nigeria would sit atop lists of the worst place to do business, or the worst place in terms of security, or worst place for human rights and the rule of law, and people will wonder how it happened, and claim that the lists are not well researched, or racist. But consider, if you were a non-Nigerian investor, and you hear that someone is being killed for expressing an opinion, would you want to come and invest in such a country?

When foreigners ask questions about risk in Nigeria, they ask questions about gangs of people

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Cheta Nwanze going to burn down a man’s house because of his opinions, bandits operating with impunity, and an Islamist insurgency in which the government punishes people who protest, and grants amnesty to people who take up arms against the state. And they don’t ask localised questions, they ask about NIGERIA. These kinds of things that I’ve mentioned in the previous paragraph raises Nigeria’s security premium, because in simple terms the more risk you factor into a place, the larger the amount you spend on mitigating that risk, which in turn affects the cost of doing business. At a point, it becomes clear that any perceived profits are not worth the aggravation of these ridiculously high costs, and when you throw in the fact that the long-delayed unemployment data shows that Nigeria’s real market is not more than 50 million people, then investors begin to move away from Abuja/Lagos to places such as Accra, Kigali and Nairobi.

Cheta Nwanze is the lead partner at SBM Intelligence and heads the company’s research desk.

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The role of African banks in the post-COVID economic recovery

Rafiq Raji

A

frica has surprisingly not been as badly hit by the coronavirus pandemic as probably feared by many.

The same cannot be said of its various economies. Predominantly informal, preventive measures to curb the spread of the virus shut a lot of Africans out of their means of livelihood. Palliative measures to soften the negative wealth effects have not been strong or far-reaching enough in most countries. Add to that, many complain they are yet to receive anything from their governments. Those who did get something suffered the toil of long queues or the humiliation of being seen to be needy. There have also been tales of corruption around the procurement and distribution of these welfare packages.

For the very poor, incomes have literally been lost. And even those still with jobs worry about how long they would be able to keep them. Many have exhausted their savings, and as lockdowns are being eased, are welcomed out of weeks in isolation at home to news of job losses. Firms are not totally to blame. As they could not do much business, since lockdowns meant no custom in most cases, a lot are having a hard time fulfilling their obligations. Cost-cutting has become a necessity. Many are also not able to make payments on their bank loans.

Some governments are intervening,

but would hardly be able to do much with their own means constrained as well. Banks can help. But they would need the support of their respective governments.

Tough times African banks, like others elsewhere around the world, are caught in the crossfire. While they were able to still service their customers through online channels during the various lockdown periods, the rush to bank venues when the restrictions were eased in many African countries point to the necessity of their brick-and-mortar infrastructure.

So even as the pandemic has forced global banks to lean more on technology, with indications that the changes would endure, it is precisely the hard infrastructure of African banks that would be crucial to a post-pandemic recovery on the continent.

It is not totally a bad period for African banks. Big ones are recording increases in deposits. This is not surprising. Predominantly cash-backed welfare initiatives around the continent are necessarily being channeled through banks, with some recipients choosing to put them in their savings accounts instead. Still, there is almost a consensus that banks would not be able to make as many loans as they did during normal times for a little while. Except in a few cases, almost all would maximise their exposure limits on government securities. And in countries where there are regulatory caps on such exposures, it would not be at all surprising if they are relaxed, as governments look to the markets for much needed cash.

Like elsewhere around the world, the continent’s banks would likely spend a great deal of the remainder of the year restructuring existing loans.

KCB Bank, Kenya’s biggest, had already restructured about a $1 billion worth of loans by mid-May. Some are also being surprisingly empathetic towards their

customers. South Africa’s ABSA Bank is allowing a significant number of its customers some leeway on their loan repayments, for instance. And from Nigeria, Kenya to South Africa, banks are holding off on layoff plans, opting to cut salaries instead. Some have done this owing to government pressure, however.

Some regulators are also being accommodative, dropping minimum capital requirements and reducing the amount of funds banks need to park with them as reserves. A number of African central banks have also ramped up loan guarantee schemes, adding incentives like cap on losses for banks, to induce participation and uptake.

Defaults have started to rise. Standard Bank, one of Africa’s largest, is already gearing up for a significant surge. Others around the continent are doing similarly. The impairment effects would hit them differently. Big ones like South Africa’s Standard Bank, Nigeria’s Access Bank, and Kenya’s KCB Bank should be able to easily shake off the losses. Smaller ones would probably have a hard time. These would need help from their respective governments.

In general, however, there is not much concern that a banking crisis is at hand in any of the continent’s markets. As previous crises instigated stronger capital measures, most are in good stead to weather the current challenges.

That said, there are those with peculiar challenges that would probably be exacerbated by the negative economic effects of the pandemic.

That is not to say there should not be cause for concern. The major global credit rating agencies have downgraded most of the key names, in part because of their respective sovereign’s diminished status, with negative outlooks in tow. This is not unique to the continent, however. Almost all sovereigns and banks around the world have either been downgraded or tagged with

‘

Despite these challenges, they must aid the post-COVID economic recovery. Their businesses depend on it.

They should target labourintensive sectors like agriculture, agro-allied industries and manufacturing as Nigeria’s Zenith Bank has announced it would

negative outlooks.

Restructure, accommodate, save jobs Amidst all these challenges, banks are also the channel through which any recovery in the various African economies would come about. They have to make new loans. They clearly also have to lend at lower rates. Voices are already becoming louder in this regard. South African banks were recently urged to reduce the interest rates on their loans, for instance. And even in Kenya, where an interest rate cap law was repealed not too long ago, banks would likely face pressure to take a cue from the prevailing sentiment of the need for greater accommodation. Loan defaults, thinner margins, and greater provisions would almost certainly be the lot of African banks over the next twelve months.

Despite these challenges, they must aid the post-COVID economic recovery.

Their businesses depend on it. They should target labour-intensive sectors like agriculture, agro-allied industries and manufacturing as Nigeria’s Zenith Bank has announced it would. They should restructure the loans in their books like Kenya’s KCB Bank and Nigeria’s First City Monument Bank are already doing. They should not only participate in the loan-guarantee schemes being set up by their governments, but actively promote them to their customers. Difficult as it is, with relatively meagre returns for their troubles, African banks must make a deliberate effort to help small and medium-sized businesses this time around.

Article was first published in the Q32020 issue of African Banker magazine “Dr Raji is chief economist at Macroafricaintel.

He was previously an Africa Economist at Standard Chartered Bank, London, UK. (Twitter: @ DrRafiqRaji)”

From Trump’s TikTok mess to technology war against China

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s the US economy is expanding trade wars, which will derail global recovery, the Trump White House is targeting Chinese innovators thus fostering US national champions under the pretext of national security.

In the early 2010s, an aspiring Chinese internet entrepreneur Zhang Yiming launched ByteDance, while developing a video sharing platform. After success in China, he began to internationalize TikTok. To avoid conflict in national jurisdictions, Zhang had TikTok and its Chinese version Douying run on separate servers. TikTok’s data collection is similar to that of major US social media and certainly less intrusive than Facebook’s.

By August, Douying had over 500 million active users, while TikTok surpassed 1 billion users worldwide in barely four years. To manage the global concern, Zhang hired a Disney executive to head TikTok and oversee its parent ByteDance.

Backed by the largest US and Japanese financial giants, the parent was valued at $75 billion; the most valuable startup worldwide.

Recently, President Trump has signed two executive orders banning US “transactions” with TikTok and WeChat, Tencent’s highly popular social media and trendsetting mobile payment app, which has over 1.5 billion active users. In turn, TikTok is moving ahead to sue the Trump administration.

Meanwhile, US Secretary of State Mike Pompeo has offered his new vision for a “clean” internet, presumably in the name of “national security.” As US-based critics quickly warned, Pompeo’s vision is not a plan to “clean” but to techno-ethnically “cleanse” a China-free internet. Similarly, his Indo-Pacific strategy aims at a

China-free Asia.

The quest for ‘full-spectrum dominance’ In Kafka’s Trial, the key character is arrested “without having done anything wrong.” Among Chinese corporates, a similar series of nightmares began two years ago with the arrest of Huawei CFO Meng Wanzhou in Canada, on a provisional US extradition request.

The Trump administration has escalated the US-Sino tensions to an unprecedented level, undermining four decades of strategic trust in barely four years. Yet, US tech war against China and pioneer innovators in Europe and Japan is of older origin.

After World War II, the US still dominated advanced technology worldwide. But after postwar recovery, Western Europe became competitive.

By the 1980s, Japan dominated particularly consumer technology until it was compelled to sign the Plaza Accord that paved the way to its secular stagnation.

In conventional economics, developing economies are seen to trade primary commodities in exchange for developed countries’ manufactured technology. Yet, such trading has not been characteristic of US trade with China. Rather, US trades primary commodities for Chinese technology. Even today, the “Phase 2” trade talks hinge on Beijing’s purchases of US soybeans.

In the name of “national security,” the US has enacted a highly restrictive control system that restricts “dual-use technology” exports to China and many other countries. Behind the façade, many non-US CEOs see it as a non-economic instrument to prolong strategic advantages the US no longer enjoys in commercial competition.

In the 21st century, no single nation can any longer control entire technology ecosystems. Yet,

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that’s the Trump administration’s goal, due to the Pentagon’s quest for “full-spectrum dominance.”

In that view, the world, particularly new technologies, is seen as a “battlespace,” which must be subject to US dominance.

Non-economic efforts to regain strategic advantage in 5G era Until recently, US firms lagged behind international competition in the fifth-generation mobile technology generation (5G), which is a case in point.

Historically, the US dominated the analog 1G into the 1980s. With deregulation and liberalisation, that edge faded. When internationalisation intensified in the digital 2G era by the early ‘90s, Brussels introduced the GSM standard, which fueled the rise of the Swedish Ericsson and Finnish Nokia. Along with Korean challengers, the European leadership prevailed through the 3G digital broadband in the 2000s.

For years, Microsoft had tried to bully and buy the hugely successful Nokia. In 2010, to the Finns’ surprise, an ex-Microsoft executive Stephen Elop, touted by Nokia chairman Jorma Ollila (who also chaired the Anglo-Dutch Shell), was made Nokia’s first non-Finnish director. Elop had a controversial record of restructuring stints. In four years, the “Troian Horse” (as the Finns named him) bankrupted the 150-year old company, which was then sold cheaply to Microsoft.

In the 2010s, the still faster 4G saw the rise of Chinese innovators (e.g., Huawei, Alibaba, Tencent, Xiaomi) and Indian IT service giants (e.g., Tata, Infosys, Winpro). As rivalry began for the internet-pervasive 5G era, US companies no longer dominated the new platform, except for Apple, which had offshored most of its production (and the iPhone was too costly for mass use

https://www.facebook.com/businessdayng

Dan Steinbock in developing economies). Accordingly, concerns grew in the White House and Pentagon.

The TikTok story in the US is the latest variant of an older story.

Cloned innovations, imposed dominance In the past, Chinese multinationals, like their European and Japanese precursors, imitated technology leaders in the West. Today, they excel in innovation. Some projected the trend already in the 2000s.

US companies remain competitive internationally, but are no longer the only innovators.

Half of US R&D goes to eroding defense contractors relying on cozy supplier networks. As a result, American companies increasingly imitate their foreign counterparts in commercial competition.

That’s not a sign of American weakness, but of the rise of new global competitors.

Note: The rest of this article continues in the online edition of Business Day @https:// businessday.ng Dr. Steinbock is an internationally recognised strategist of the multipolar world and the founder of Difference Group.

He has served at the India, China and America Institute (USA), Shanghai Institutes for International Studies (China) and the EU Center (Singapore). For more, see https:// www.differencegroup.net/ A version of the commentary was published by China Daily on August 14, 2020

@Businessdayng

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Tuesday 18 August 2020

BUSINESS DAY

EDITORIAL Publisher/Editor-in-chief

Frank Aigbogun editor Patrick Atuanya

2021: Imperative of participatory budgeting Shunning inputs from target beneficiaries renders any budget a waste

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

Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

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ederal and state governments have started the process of preparing the 2021 budget. One common feature of the budgeting process in Nigeria is that politicians decide what to include in the budget, without getting the required input from the target beneficiaries - the masses. The result is that community participation is non-existent both at the federal and state government levels with glaring consequences such as misplaced priority, project duplication and abandonment.

Since the return of democracy in 1999, efforts at participatory governance have never received the full backing of the ruling class, because it is perceived as a threat to their collective interests. One important aspect of governance where citizens have continuously been alienated is on budgetary issues. Budgeting in Nigeria is seen as an exclusive preserve of the executive arm of government, especially as it concerns budget preparation and implementation, with the legislature participating during the appropriation and audit stages. The only opportunity given to citizens to participate in the pro-

cess is at the public hearing sessions.

A budget is the principal instrument of fiscal policy used to encourage stable growth, sustainable development and prosperity in the economy and is a key instrument for macroeconomic management.

The budget is also a tool for the implementation of social, political and economic policies and priorities which impact on the lives of the population. As a planned course of action, a budget depends heavily on information, analysis and projections.

Hence, a successful budget must be a product of a process that is based on sound and quality information, rigorous impact analysis and an effective feedback mechanism to internalise lessons of past budgets.

Why is participatory or inclusive budgeting important? It is important because the resources collected, be it taxation or petroleum royalties being used by federal, state or local governments belong to the people. There is no development that is not peopleoriented, hence the need to carry the target beneficiaries along in the conceptualisation, articulation, approval, implementation, monitoring and evaluation stages. Unfortunately, this is not the case in Nigeria.

A recent study by the Depart-

ment for International Development (DFID) on the budget and budgeting process in Nigeria revealed that thirteen (13) states have no information on their budget for public consultation. Adamawa, Akwa Ibom, Bauchi, Bayelsa, Borno, Edo, Imo, Rivers, and Zamfara states have no mechanisms for the public to be involved in any phase of the budget process.

Participatory budgeting’s root lies in a radical democratic project led by the Workers’ Party in Porto Alegre, Brazil in 1984. Since then, the idea has spread around the world in several waves. First was Brazil then Peru where the national constitution was amended to require all municipal-level governments to use participatory budgets.

Following were such countries as Argentina, Ecuador, Uruguay, Venezuela, Spain, Italy, Portugal, and the United Kingdom, the United States.

(Chicago), India, Indonesia and South Africa. Today, participatory democracy is no longer a localised phenomenon but rapidly expanding across the world. It is also attractive to major international donor agencies like the World Bank, European Union, and USAID, because of its emphasis on citizen empowerment through participation, improved

governance, and better accountability.

One advantage of inclusive (participatory) budgeting is that it entails the community deciding the projects needed for it to develop. Once the projects are identified and appropriated, targets are set on how to achieve the objectives. For this to be achieved there must be cohesiveness and mutual understanding. Governments should institute consultative meetings to ensure efficient and effective implementation of the annual budgets, while the constituencies should serve as units of input.

Furthermore, the process should be institutionalised to pave the way for a bottom-up approach in the budget process and to guarantee participation of all stakeholders. Budget public hearings should be decentralised and brought closer to the people.

The inability of citizens to make input into annual budgets denies them the opportunity to state their needs and to hold the government accountable for not implementing those needs. And without opportunities for citizens’ active participation particularly citizens from marginalised and vulnerable groups, budget systems would only serve the interests of powerful elites who have dominated the political scene since independence.

HEAD, HUMAN RESOURCES Adeola Obisesan

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

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Tuesday 18 August 2020

BUSINESS DAY

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13

14

Tuesday 18 August 2020

BUSINESS DAY

COMPANIES&MARKETS

More pain ahead for Nigerians as Inflationary Pressures Mount

...Lagos’ annual N4.6trn loss to traffic congestion set to worsen on third mainland bridge closure OLUFIKAYO OWOEYE & MERCY AYODELE

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he recent closure of the ever-busy third mainland bridge which would last for sixmonths and increment in transport fare announced by the Lagos-State Bus Services (LBSL) will aggravate the pain already inflicted by the double-whammy of the pandemic and economic slowdown.

“The metropolis (Lagos) loses about N4.6trillion on an annual basis due to traffic congestion,” Bismarck Rewane, chief executive officer, Financial Derivatives said.

That’s more than triple of the state’s annual budget.

“The closure of the bridge will further reduce labour productivity, increase revenue losses and widen price differential across markets” Bismarck added.

The recent increase in the price of premium motor spirit popularly called petrol an-

nounced by the Petroleum Products Pricing Regulatory Agency, (PPPRA), the agency saddled with the responsibility of monitoring and regulating the supply and distribution and determine the prices of petroleum products across the country, will worsen the surging food inflation, thereby impacting the purchasing power of already cash-strapped households in the country.

Nigeria’s June inflation jumped 12.56percent, accelerating for the 10th straight month as restrictions on access to foreign exchange and continued border closure drove up prices. Inflation figures have been well above the Central Bank’s target of 6-9percent for over five years.

According to the approved new retail price for petrol for the month will vary between N140.80 and N143.80 per litre price band. The new price arrangement replaces the previous price band of N121.50 and

N123.50 per litre announced by the agency for June 2020.

“After a review of the prevailing market fundamentals in the month of June, and considering marketers’ realistic operating costs as well as practicable, we (PPPRA) wish to advise a new PMS (premium motor spirit) pump price band of N140.80N143.80 per litre for the month of July 2020 the new retail price band for premium motor spirit (PMS), popularly called petrol, for June 2020,” the agency noted in a release.

Emeka Nwadike, a Lagosbased financial expert noted that the recent pronouncement would further make the life of Nigerians miserable.

“Some of these announcements are not coming at the right time” he said. “Governments across the globe are coming up with policies and stimulus to reduce the impact of the pandemic and revive the economy to avoid further job losses, but the contrary

is the case here in Nigeria,” he lamented.

It would be recalled that the Federal Inland Revenue Service announced a 6percent stamp duty charge on tenancy and lease agreements. The new 6percent stamp duty is for tenancy above 21 years while 7-21 years lease attracts 3percent while less than 7years tenancy is below 1percent.

In what could further stifle the operations of carhailing businesses, the Lagos State government introduced a new fee for service entity permit provisional license. Under the new law, operators must pay N10million for every 1,000 e-hailing taxis with the annual renewal of N5million.

“This licensing fee will not present a problem for larger e-hailing operators but it will raise the barrier of entry for newcomers,” a driver who craved anonymity said.

L-R: Sherif Idi, CMO/cofounder, TAJBank; Ali Nuhu, nollywood Actor; Hamid , COO/Founder TAJBank, and Uzee Usman, Nollywood Actor, at a courtesy visit made by the critically acclaimed thespians to the bank’s headquarters in Abuja.

MARKETS

From US to Eurozone, now U.K, virus spurs record GDP slump in Q2 MAYO DEJI-OMOTAYO

...outlook for Q3

he Great Lockdown is now single-handedly responsible for what could possibly be the worst economic downturn since the Great Depression of the 1930s with far worse economic implications than the Global Financial Crisis of 2008.

Advanced economies from the Eurozone to the US and more recently, the U.K, have slipped into COVID-19 induced recessions in Q2 2020, recording double-digit contraction rates as high as over 30% in the case of the US for instance, marking the deepest recessions in decades and the first contraction in many years for most as a result of strict lockdown measures to contain the spread of the virus.

With economic events unfolding in line with IMF predictions of a shrinkage of the global economy in 2020, this recessionary trend is expected to continue and become more apparent in more countries in Q3.

The IMF forecasted advance d e conomies w ill shrink by 8% in 2020 and the ripple effects are expected to reflect in a 3% contraction in emerging markets and developing economies, given the peculiar interrelation between advanced economies and the rest of the world.

The 19-member bloc that shares the Euro currency experienced a fall of 3.6% in GDP in Q1. Spain, Italy and France’s GDP rates dropped by 5.2%, 4.7% and 5.8%, respectively, during that period. These countries were amongst the first to experience the recessionary trend as they were hit by the first wave of the pandemic earlier than others, after it began in late 2019. The US followed with a contraction of 4.8% in

Q1 which was the first contraction in 6 years and the largest drop in over a decade it entered recession in the second quarter as the contraction deepened to 32.9%.

The UK also officially entered a recession with an alarming 20.4% in Q2, representing the worst quarterly shrinkage since records began in 1955 and the first one in about 11 years. The UK has now fallen into the deepest recession of any major world economy as industries most exposed to government lockdown measures to contain the pandemic — services, production and construction — saw record drops.

The road to recovery is envisioned to be long and gradual. There is much economic scarring to heal from.

The resulting collapse of oil prices and economic recessions in trading partner economies, has spill over effects on the Nigerian economy which the IMF forecasts to contract by 5.4 percent in 2020. The finance minister, Zainab Ahmed, however expects a fragile recovery in the first quarter of 2021 in line with IMF predictions.

Nigeria has been badly hit by the virus with government revenue expected to plunge by 80 percent this year.

Crude oil makes up about 90% of the nation’s export earnings and forms more than half of government revenue. Government revenue is expected to fall in response to lower oil prices and make up even less of the already low contribution of about 8% to GDP. The global stock market crash of over 20% in February 2020 also has its implications for the nation. The current economic conditions have led to rising uncertainty levels, a fall in private investment and lower remittances.

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COVID-19: Cititrust Holdings commended by Oyetola for supporting Osun Govt IFEOMA OKEKE

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ititrust Holdings Plc, a leading financial and investments services provider in Africa, has been commended by Adegboyega Oyetola, the Osun State governor, for its support for the state’s COVID-19 containment efforts.

Oyetola in a letter dated August 6, 2020, which he personally signed, expressed the appreciation of the government and people of the state to the management of the company for the far reach-

ing support it provided for the state, especially during the period of the COVID-19 lockdown.

Cititrust, through its special COVID-19 Support Initiative, provided food items worth millions of naira to the Osun State government during the period of the nationwide lockdown to mitigate the impact of the lockdown on residents of the state.

The company also extended similar gestures to Lagos State Government through the Onigbongbo State Constituency, in addition to monetary donations to Health

Emergency Initiative, a nongovernmental organisation, for the purchase of medical equipment, and to the CBN COVID-19 Response Account.

The letter by the Osun State governor reads, “I bring to you, warm greetings from the good people and Government of the State of Osun. On behalf of the good people and Government of the State of Osun, I wish to acknowledge your kind contribution towards cushioning the effect of Corona virus pandemic in the State.

“It will be placed on record that your contribution

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has really gone a long way in assisting the 21- Man Osun State COVID-19 Committee, which was set up to cushion the effect of the lockdown and restriction of movements placed on citizens across the State occasioned by the Pandemic, achieve its set objectives. Your kind gesture has given us hope that we can rise above all odds towards advancing our development as a people in the face of daunting challenges.

“In the same vein and for the avoidance of doubt, your intervention, as a major stakeholder in this challeng-

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ing period, has really boosted our morale towards facing the surge headlong.

“While I am thanking you once again for your timely and kind intervention, please accept the assurances of my best wishes and warm regards.”

Reacting to the development in a statement, on Sunday, Yemi Adefisan, the Group Chief Executive of Cititrust Holdings Plc, said the company has continued to make greater investments in its Corporate Social Responsibility initiatives with a view to providing continued @Businessdayng

support for the government in all the countries it operates across Africa until the COVID-19 pandemic is defeated.

“Cititrust Group will continue to support sovereigns and sub-sovereings in providing support to the vulnerable and less priviledged in the society on a quarterly basis until the effects of the pandemic is reduced to a manageable level,” Adefisan stated.

He expressed appreciation to the Osun State government for deeming it fit to acknowledge Cititrust’s contribution to the fight against COVID-19 in the state.

Tuesday 18 August 2020

BUSINESS DAY

15

property&lifestyle New FHA team gets Building is an extension of land and ministerial mandate complete ongoing shouldn’t be subject to VAT - Tax experts tohousing projects CHUKA UROKO

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building, whether residential or commercial, is an extension of land and, therefore, should not be subject to value added tax (VAT), tax experts have told government tax authorities.

They explained that since individuals cannot own land, as land belongs to the government, VAT cannot be charged on land, pointing out that the Federal Inland Revenue Service (FIRS) demand for VAT is backed by their policy and not any existing law.

These views were expressed at a Webinar hosted by Fine and Country West Africa with the theme, ‘Controversial Interpretation and Application of Real Estate Tax Provisions and Policies’ as they relate to VAT and Stamp Duty.

“The distinction made by the Finance Act 2019 on applying VAT to residential leases varies with the FIRS policy in the sense that it only applies to individuals and not corporate bodies. It is important that we encourage growth in the real estate sector because of its capacity to contribute significantly to our GDP,” Taiwo Oyedele, Head of Tax and Regulatory Services at PwC, noted.

Oyedele also faulted the

disposition of the Lagos State government which arbitrarily charges stamp duties regardless of whether corporate bodies are involved or not.

In Nigeria generally, Capital Gain Tax (CGT), Stamp Duty and VAT are taxes applicable to real estate, with stamp duty, in particular, representing government’s attestation to private real estate transactions. Good governance and social services are the expected benefits that should accrue to tax payers.

Government representatives at the Webinar disagreed with Oyedele’s views, saying that there is rationale in charging VAT on buildings because, according to them, value has been added to the piece of real estate. “It is also important that stamp duty is charged on prop-

erty because it provides protection to the parties involved in the transaction, ”explained Matthew Gbonjubola, Director, Tax Policy at FIRS. Continuing, Gbonjubola argued, “if you are selling bare land, VAT is not charged but whatever value you have added goes along with the principle of VAT and so you pay VAT on the value added.”

He explained that the principle of capital allowances as concessions made on land and VAT are applicable to building alone. Lolade Ososami, Partner at Udo Udoma & Belo Osagie, agreed but to the extent that only the development that goes into land is subject to VAT. She pointed out, however, that having charged VAT on the services that go into the

project, charging VAT on the finished product is not appropriate in view of the housing deficit challenges. “Finished buildings should not be VATable, only the services that go into the building should be VATable,” she stressed.

Ojikutu Olawale, Deputy Director of Lands at Lagos Lands Bureau, explained the rationale for applying Land Use Charge (LUC) on a vacant property, pointing out that LUC is a consolidated charge comprising ground rent, tenement rate and neighbourhood improvement charge.

In all of this, Oyedele advised that government should provide options that will ensure there are no conflicts with the tax authorities and will also not subject parties to the slow

pace of the judicial system.

Option one, he explained, would involve ultimately paying VAT on the services rendered by a developer and not on the finished product, by engaging the developer to construct on the buyer’s behalf while the second option will be to accumulate the VAT receipts paid on goods and services utilized throughout the project and submit same to the tax authorities as “Input VAT”.

He called for a deliberate real estate policy as the answer to the question of policy deficiency. He said that, “ultimately taxation is how we share in the prosperity of the people and of businesses.”

Earlier in her opening remarks, Udo Okonjo, CEO/ Chairperson, Fine & Country West Africa, had outlined the objectives of the discussion which, she explained, was an attempt to provide stakeholders with a clearer understanding of Tax and Statutory Charges, as are applicable to real estate in Nigeria.

Okonjo noted that “clarity and confidence for real estate investors/purchasers and stakeholders, in relation to accurate statutory/regulatory position and the attendant implication on their respective transactions, is the starting point for all solid investments.”

Nigerian hosts on Airbnb commence accepting guests as economy gradually reopens Endurance Okafor

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head of planned full resumption of activities across sectors of the Nigerian economy, and the reopening of international airports in October, hosts on Airbnb, an online marketplace that connects travellers with local hosts, are seeing traffic in apartment reservations.

A survey by BusinessDay shows that Nigerian hosts who suffered revenue losses from not accepting guests coupled with the slow down in bookings in the last four months due to COVID-19 are beginning to open their doors to guests.

“Airbnb shows us statistics and from what I can see, there is a lot of traffic as guests are making their bookings ahead of time, ” Catherine Odo-

more, a host on the online platform who just welcomed her first guest since the pandemic said in Lagos.

According to her, while the price of a single room apartment dropped from about $45 per night in January 2020 to $36 in April, the recent surge in demand will take the price back to its initial position.

“I stopped accepting guests when coronavirus entered Nigeria, even though we normally do a background check on our potential guests, I didn’t want to take chances and the case was the same for a lot of my friends using the platform, ” another Airbnb host who didn’t want his name to be mentioned said.

He explained that even though some of his industry colleagues who use the platform as their only source of income were willing to accept

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guests during the lockdown in Nigeria, ”there were no reservations due to the restriction on both local and international movement.”

To flatten the COVID-19 curve in Nigeria where over 48,000 cases have been confirmed since the virus first entered the country on February 28, the Federal Government enforced a five-week lockdown in Lagos, Ogun and FCT, and closed both local and international airport while ensuring full compliance with the compulsory nationwide curfew of 10 pm to 4 am.

Following the hardship suffered by many households, especially the most economically vulnerable who depend on their daily earnings for survival, the federal government on May 4 began to gradually reopen its economy.

“Our bookings in April were all cancelled,” Kelvin Oyamedan, a co-owner of two properties on Airbnb in Abuja said in a tweet.

According to Karen Xie, an associate professor of service analytics at the University of Denver’s Daniels College of Business, Airbnb saw cancellations of 85 percent of existing bookings. ”COVID-19 put a pause on travel,” he said.

While Nigeria resumed its local flight on July 28,

players in the hospitality industry are optimistic that it will reopen its international airport even before the scheduled date in October.

Before COVID-19 pandemic, Nigeria’s hospitality industry was expected to leverage its hotel room capacity of 7,940, the secondlargest in Africa after Egypt and the growing Airbnb sub-sector to post an estimated annual growth above 4percent in 2020 but with the outbreak of the virus, the projected growth now seems too ambitious.

Analysis of the 2019 data by the Airbnb showed that Nigeria reported the fastest growth of 325percent over the past year with effective locations at Ibadan, Abuja and places in Lagos like Lekki County Apartments, Mixta Apartments, Urban Shelter Apartments, Lekki Gardens Apartments and many more as high yield accommodations.

According to the Californian-based property company, the platform has continuously enjoyed rapid growth in Africa. The number of guests who use Airbnb annually in Africa more than doubled over the past year from 572,000 to 1.2 million.

The figures show a 5th

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straight year of strong growth from a base of just 6,000 listings and 22,700 guests in 2012-2013.

But Nigeria’s position as the largest economy in Africa is yet to rob off on the country’s Airbnb industry which has in the last five years lagged its peers in terms of market size.

While South Africa, Morocco and Kenya are top on the ranking as the countries with the largest Airbnb markets in Africa, Nigeria is only able to occupy the fifth position, a recent report by Airbnb shows.

Checks by BusinessDay revealed that the fear by Nigerians to use their debit cards to make online reservations, the lack of trust that the advertised apartments online will be the reality on the ground coupled with security challenges are some of the particular issues that are daunting the growth of Airbnb in Nigeria.

Originally called AirBed & Breakfast, Airbnb operates as an online marketplace, connecting travellers with local hosts. The platform enables people to list their available space and earn extra rental income. It enables travellers to lease or rent short-term lodging including vacation rentals, apartment rentals, homestays, hotel beds or hotel rooms. @Businessdayng

HARRISON EDEH, Abuja

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he newly inaugurated executive management team of the Federal Housing Authority (FHA) has been given ministerial mandate to ensure the completion of federal government’s ongoing housing projects across the country.

Babatunde Fashola, Minister for Works and Housing, who gave the mandate in Abuja on Thursday at the inauguration of the team, hoped that the trust and confidence reposed in them by the federal government would be well kept in the discharge of their duties.

“Mr. President has chosen well because the team members have the requisite skill and experience needed to move the FHA forward,” he noted.

The new executive management team of the FHA has Olugbenga Ashafa as Managing Director/Chief Executive Officer while Abdulmumuni Jibril is Executive Director, Business Development and Maurice Ekpeyong is Executive Director, Housing Finance and Corporate Services.

The Minister who took time to analyse the positive qualities of the appointees, stated that the combined effort of the trio would form a strong team that would actualize the aim of the current administration of providing affordable housing which is being addressed at various fronts.

While explaining that the Act establishing the FHA sets out clear responsibilities for the organisation, he urged the management team to work assiduously to ensure that the challenge of housing gaps in Nigeria is addressed.

The minister noted that through the Federal Government housing projects, people were empowered at the grassroots by way of strategic and planned maintenance. He also urged the management team to commit to developing new estates in urban centers in order to address the housing needs which are greater in urban centers.

“We don’t interfere in what parastatals do but we will intervene if we see you veering off”, he said.

Earlier in his remarks, Sam Egwu, chairman, Senate Committee on Housing, enjoined the members to work as a team so as to realize their mandate while assuring them of support by the National Assembly.

Responding on behalf of the team, Ashafa expressed gratitude to President Muhammadu Buhari for the trust and confidence reposed in them by the appointment.

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Tuesday 18 August 2020

BUSINESS DAY

EDUCATION Weekly insight on current and future trends in education

Primary/Secondary

Higher

Human Capital

Public, private Varsities, others may reopen before September ending - Senior Govt Official Education officials and authorities of Public and private tertiary institutions in the past weeks to ascertain and determine the preparedness in keeping with the required due protocols for resumption.

According to our source: “Subsequently upon the institution’s presentation to the enabling authorities, on their readiness to reopen, several monitoring visits were embarked upon out by representatives of the presidential task force on COVID-19 and Federal Ministry of Education.

“The entire private institutions are ready as I am talking to you right now. The public Varsities as you know are on strike. The government is at the moment seeking a quick possible ways to end the crisis before it and the Academic Staff Union of Universities

MARK MAYAH

I

f signals emanating from the Federal Government is strictly adhered to, the nation’s Varsities as well as other tertiary institutions will reopen for academic activities before September ending.

A top government official in the Federal Ministry of Education Abuja, who didn’t want his name in print, told BusinessDay exclusively that most of the universities, Polytechnics and colleges of Education had met all necessary requirements based on fact findings, visits, monitoring and consultations, that necessitates their reopening.

According to our source, “Series of meetings were held between Federal Ministry of

President Buhari

(ASUU), before announcing reopening.

“The presidency had directed the Education Ministry as well as National Universities Commission (NUC), to liaise with Ministry of Labour and Employment, at finding a lasting mode of ending the protracted strike, “The source said.

When asked to confirm the development towards reopening of tertiary institutions, the minister of state for Education, Chukwuemeka Nwajiuba, told our Correspondent that the Federal government, ‘’ will in a couple of days inform the Nigerians when the nation’s tertiary institutions are billed for reopening.”

Nwajiuba, who said that the government is at the moment still discussing with various stakeholders, said as soon it’s done with its con-

versation, universities and other tertiary institutions will reopen.

The minister gave the assurance that Varsities will reopen at some point when it is safe to do so, adding that the presidential task force was already working on it.

On the protracted strike by ASUU, the Minister assured that the ongoing strike will not linger upon resumption as it would be resolved before classes begin.

Nwajiuba, however reiterated that government will not reopen school until it receives ‘’a clean bill” from the presidential task force on COVID - 19.

The minister said: “I have met with owners of private tertiary institutions in the country and during the meetings, they demanded that the schools be reopened.”

Administrators, teachers, students excited about school resumption

• JSS 3 students resume Monday

• Says government’s action commendable

SIKIRAT SHEHU, Ilorin

SIKIRAT SHEHU, Ilorin

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he Federal Government’s directive for schools to reopen for the exit classes to take their examinations has received commendations from stakeholders.

School authorities, teachers and students were exited as some schools visited by our correspondent in Ilorin, the Kwara State capital, expressed happiness and lauded the government’s decision.

Speaking to BusinessDay on the level of preparedness for the West African School Certificate Examination (WASCE), on Friday, Elizabeth Akinola Afolayan, the Principal of St. Anthony Senior Secondary School, Ilorin, expressed happiness for the development, saying they are good to go.

“We are all happy. The students’ turnout is impressive.

We are fully prepared to have our WAEC examinations. We have mounted hand wash basins and arranged our hall for all students to observe social distancing.”

“Kwara State government gave us 250 face masks for students. We thank them, and we seek for provision of adequate facilities so that other students can resume. I pray God will help us put an end to Covid-19,” she said.

Also speaking, Ayo Abdullateef Ishola, English teacher at the school, expressed delight over the resumption.

He says: “I feel elated. Students staying at home is not encouraging, but at the same time, governments have to be careful because Covid-19 is not yet over.”

Babalola Samuel, a student, said he was happy to be back to school. “I am very happy, we have been staying at home, no thanks to the pandemic, but now we will face our studies squarely and do our exams.”

In her response, Lawal Sidikat Taiye, Principal of Queen Elizabeth School, Ilorin (Se-

nior Section) posits that “We are good to go for the WAEC examinations because all the conditions laid down by the COVID-19 Technical Committee have been complied with.

We have hand sanitizers, buckets, soap water, etc and our students have been observing social distancing.”

She says that 140 students would write the exams and that the school had decided to make use of the class rooms because the examination hall cannot accommodate that number with social distancing.

“So we will use six of our class rooms, which will give us 25 students per classroom. Not quite long ago, the honourable

Abdulrahman Abdulrazaq, Kwara State Governor www.businessday.ng

We won’t tolerate exams malpractices, Kwara tells principals, parents

Commissioner for Health was here with us and she expressed satisfaction with what she saw on ground.

Taiye, explained that the school was running tests on the SSS3 students, which would determine whether the remaining students would resume or not.

“As you can see, we are compliant, as Queen Elizabeth school has adequate class rooms that will accommodate social distancing.”

The principal advised the schools that don’t have facilities to improvise by seeking alternative to comply with the rules to cope with the situation. “About 144 nose masks were given to us by the government for students and on my own part as an administrator, I got enough nose masks and face shields for my staff that will take part in the examinations. I commend the government.”

Similarly, at Saint Bananas School Ilorin, Rafat Abdullah, VP academic, said both teachers and students were happy to be back to school. “We have been given face masks and had been distributed to the students. We have started lessons as proper arrangements have been put in place to ensure we adhere to Covid-19 preventive measures,” she said.

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he Kwara State Government announced to the school authorities and parents that it would not tolerate examination malpractices under any guise, warning that anyone caught in the crime would be punished.

The government, however, urged school authorities and parents to encourage students to prepare very well for the upcoming examinations rather than look forward to a system that aids and abets cheating.

“As we all know, the examinations will start on the 17th August, 2020. You should all go back home and relay this warning to all your invigilators.

“Secret invigilators and intelligent officers will be everywhere to ensure compliance. Not only that, antiCorruption agencies would be moving round without notice. Anybody caught aiding and abetting examination malpractice or involved in any form of sharp practices will be punished according to the law of the land,” said Fatimah Ahmed, the state Commissioner for Education and Human Capital Development at a meeting of the All Nigeria Confederation of Principals of Secondary Schools (ANCOPSS), propri@Businessdayng

etors of private schools and the leadership of the Nigeria Union of Teachers in Ilorin, according to a statement by Yakub Ali-Agan Press Secretary, Ministry of Education and Human Capital Development The warning came as schools prepare for senior and junior school certificate examinations that begin later this month.

Ahmed reminded the principals and parents that the Abdulrahman Abdulrazaq had to pay N30.5m penalties imposed on the state following WAEC’s blacklist of 165 Kwara schools over rampant examination malpractices in 2019.

The commissioner added that the new administration would not condone such behaviour under its watch, saying the break occasioned by COVID-19 pandemic will not be an excuse to allow students to cheat during the forthcoming examinations.

“I know you are respected and responsible gentlemen and women who will not be ready to ruin your career for any amount. I therefore plead with you all to protect your names and the future of our children,” Ahmed said.

The commissioner informed that the administration is investing so much in education, infrastructure and prompt payment of wages amid dwindling resources.

Tuesday 18 August 2020

BUSINESS DAY

17

EDUCATION Ogun SUBEB Set to Understudy Oyo Education Reforms • As Oyo SUBEB partners with SGB on Quality Education REMI FEYISIPO, Ibadan

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ollowing the creative and innovative ways Better Education Service Delivery for All (BESDA) is being executed , Ogun State Universal Basic Education Board (OgunSUBEB) is to understudy the Basic education reforms of the Oyo State Universal Basic Education Board (OYOSUBEB).

This was revealed when a team from OgunSUBEB paid a working visit to the Executive Chairman, OYOSUBEB, Nureni Adeniran.

BESDA is a Universal Basic Education Commission (UBEC) initiative, funded by World Bank to ensure out-ofschool children return back to school and are retained in schools.

Receiving the visitors from Ogun State, Nureni Adeniran enjoined the team to ensure they create a cordial working relationship with other relevant Ministries, Departments and Agencies in Ogun State, to achieve the aim of taking children off the streets, just as it is being done in Oyo State.

“With the transparency

Seyi Abiodun Makinde, Oyo state Governor

of the board, public schools have witnessed transformation. BESDA was established to cater for out-of-school children in the state, while we provide instructional materials and training of teachers and non-teaching workers.

We have had a cordial working relationship with all relevant stakeholders in the implementation of BESDA”,

he said.

Adeniran further expressed the Board’s readiness to guide OgunSUBEB in the right path, by providing essential details on how to achieve Better Education Service Delivery for All in the neighbouring state.

He further revealed that Oyo State’s approach under the leadership of Seyi Ma-

kinde is delivery of free basic education to all children, and making it qualitative and exciting for them.

Adeniran added that on the list of decisions of the Board is to instil the Omoluabi ethos of the Yoruba culture in each child. This, he believes, will preserve the identity and values of the Yoruba culture.

Speaking earlier, the Director, Planning Research and Statistics, OgunSUBEB, Remi Balogun, thanked Nureni Adeniran for the privilege to understudy the success of OYOSUBEB in the area of Better Education Service Delivery.

In another development, the Senior Special Assistant to Governor of Oyo State on Sustainable Development Goals, Kunle Yusuff has pledged to collaborate with OYOSUBEB on providing quality Education for public pupils in Oyo State.

He said this, while presenting Students’ Edition of the Global Goals for Sustainable Development which would be distributed at no cost to pupils in Primary 4, 5 and 6.

The texts would be part of their curriculum and learning materials for social studies and basic science.

Dufil prima’s scholarship to deepen academic aspiration of indigent but extraordinary children KELECHI EWUZIE

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etermined to cushion the financial constraints indigent but extraordinarily gifted children face in Nigeria, Dufil Prima Foods Plc, has kicked off the search for children who will qualify for the scholarship grants at the Indomie Independence Day Awards (IIDA) IIDA is a national award event that identifies, celebrates, and rewards the exemplary accomplishments of children who have shown uncommon courage and determination in precarious situations. The award encourages excellence and diligence in children.

Tope Ashiwaju, group Public Relations and Events Manager, Dufil Prima Foods, says kick-off of the 13th edition will start from August 2020 and run till third week in September,2020.

According to him, “This year’s edition of the award will mark the 13th year of the noble initiative which has impacted the lives of many Nigerian children. In typical fashion, three winners will be rewarded with one million naira worth of scholarship each from three award categories: physical, social, and intellectual bravery.”

The physical bravery category will acknowledge kids who saved lives or by their actions prevented extensive damage to property or oth-

Adamu Adamu, education minister www.businessday.ng

ers at great personal risk.

The social bravery category will celebrate kids who work against social evils such as child marriage, illiteracy, and environmental concerns in a sustained manner, while the intellectual bravery category will recognise children with innate intellect who have performed remarkably well despite their physical, mental, emotional or financial limitations.

Ashiwaju noted that the initiative is the corporate social responsibility of the Indomie brand adding that the search exercise will explore various locations in the country to gather true stories about heroic children who are 15 years and under; who have at one time or the other performed exceptional acts of bravery and heroism.

This year, two search agencies, Mark Analytics & Amp; Research Services Ltd and BanahGrace Researc Agency has been engaged to comb

the country to seek out young heroes for recognition.

The field search exercise will last for seven weeks to give ample time for the search process which will take place in 12 states spread across Nigeria. The states include Lagos, Ondo, Akwa Ibom, Bayelsa, Abia, and Anambra which represent the southern region while Kano, Jigawa, Kogi, Nassarawa, Taraba, and Gombe represent the North.

The initiative, Ashiwaju said, is in line with the core values and deep-rooted beliefs of the company, adding that, “Every child possesses an innate ability to achieve greatness. This is something we develop and encourage as a brand even during this Covid-19 period.”

“We strongly believe in this initiative. This is one of the ways we sow into the future of Nigeria because when you support the Nigerian child, you are invariably investing in the future of the country.”

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‘Collaboration among school administrators ‘ll fix investment challenges in e-learning’ Kelechi Ewuzie

S

chool owners and stakeholders in the education sector are racing against time to tackle the current reality of the new normal in the sector occasioned by the ravaging impact of coronavirus pandemic that has disrupted the global economy.

But amid this challenge, stakeholders in the sector say this pivotal industry can leverage technology across various levels to find home grown solutions to teaching and learning for millions of Nigerian children.

The experts, who spoke at the second edition of TOSSEtech dialogue webinar event organised by Edumark Consult with the theme, ‘Education and Technology: The Future is Here’ said the challenge facing education across the country is the lack of robust investment in technology.

They observed that the inability of some proprietors of educational institutions to see the venture as a business and incorporate technology into it, present a major drawback in creating solutions, solving problems and making impact.

Juliet Chiazor Ehimuan, country director, Google Nigeria, who emphasised on the theme, said the rise in technology has helped to expand our knowledge in every areas of life, transformed the way we live our lives, democratise the way we access information and the internet.

In her paper entitled, ‘Digital Transformation is the New Normal’, Ehimuan who was the Guest Speaker, said with technology, we can begin to expand our thinking and the way it can be used to transform education.

She emphasised on the ways technology can be used to enhance teaching to in-

clude; self-directed learning and remote instruction, productivity enhancement and workplace readiness.

According to her, “Selfdirected learning and remote instruction allow us to customise learning, engage students beyond classroom and break barriers. Every business is looking at how to increase productivity and cost with technology. We can have virtual campuses where the number of students is unlimited, with that, we can save cost.

“Workplace readiness ensures that students have job ready skills set. There is an interplay that can be mutually beneficial preparing for the jobs of the future”.

For these solutions to be reliable, Ehimuan said there is a need for reliable telecoms infrastructure and for rural areas to have access to portable devices.

The Google Nigeria country director, further stress the need for collaboration among administrators and invest in e-learning and skills development, as well as reach out to other relevant stakeholders.

“Technology is the present and future, collaboration is key. Education is next in line to level growth, we can work together to be ahead of the game, “she said.

Speaking at the opening ceremony, Yinka Ogunde, director of Edumark Consult, said the country has found itself in a situation where technology must be fully utilised, adding that during the first edition of the programme held last year, the possibility of the impact of technology in terms of teacher /learners relationship was being discussed.

According to her, “When we held the first edition, we were talking about the possibility of technology and teachers not seeing their students when they are learning.

UNILAG Senate writes Buhari, Minister, NUC over sack of VC MARK MAYAH

T

he Senate of the University of Lagos has raised a three man panel, all professors, to Abuja, with a letter on the position of the Senate on the crisis rocking the institution.

Three copies of the letter, with a mandate to be personally delivered, were also dispatched with the panel, one for president Muhammadu Buhari, visitor to the university, one for the minister of Education, Adamu Adamu and the third for the Executive Secretary, National Universities Commission (NUC) This is happening as the governing council says more top officials of the University @Businessdayng

are said to be investigated for alleged financial recklessness by management, which consumed the university’s vice Chancellor, Oluwatoyin Ogundipe last Wednesday.

The pro-chancellor and chairman, governing council, Wale Babalakin(SAN), told Journalists in Lagos that others indicted for corruption in the institution would soon be served the comeuppance of their actions.

The Council on Thursday last week, named Theophilus Soyombo(Prof), as acting vice Chancellor of the institution while workers and unions of the Varsity conducted a solidarity rally alongside Ogundipe on the campus, with the sacked leader claiming to still be in charge.

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Tuesday 18 August 2020

BUSINESS DAY

‘Tough love’ and mediation help secure Formula One dominance Toto Wolff shook up the Mercedes racing team after convincing Daimler to commit more resources Samuel Agini

W

ho could imagine Mercedes w i t h o u t To t o Wolff? The Austrian has led the Formula One racing team to such dominance that securing this year’s constructors’ championship would be enough to overtake Ferrari’s record for consecutive titles.

Not even the strangest F1 season in memory — a result of coronavirus — would undermine the significance of extending the Silver Arrows’ six-year winning streak. The achievement would be sweeter still if star driver Lewis Hamilton can defend his title to match the record seven titles won by Michael Schumacher.

“Other team leaders spend 50 per cent of the time worrying about the balance sheet, Toto spends 100 per cent of his time on racing,” says one rival. “That said, it’s not easy even with that to win six in a row.”

While F1 struggles to shake off accusations that Mercedes’ grip on the podium makes for a boring spectacle, German carmaker Daimler, which controls the team through a majority shareholding, can now worry less about any lingering impression that its vehicles are for taxi drivers and older men.

Much of that is down to a peerless performance on the track, which helped to drive revenues at the F1 team to £338m in 2018 from £115m in 2012.

Not that the Mercedes team principal, chief executive and part-owner is ready to accept all the plaudits.

“There [are] not one or two superstars. In our team, in our structure, there are 2,000 superstars,” Mr Wolff says.

The 48-year-old and his Scottish wife Susie, a former racing driver, have built a £355m fortune that belies the difficulties he says he faced at the age of 15, when his father died from a brain tumour.

Searching for the words as he summons painful memories, Mr Wolff says the “scars and demons” left by the loss of a parent can trigger “superpower” within a child.

Having been forced to give up his ambitions as a racing driver, Mr Wolff instead plunged into an investing career that began with technology companies in 1998.

But an investment in HWA, a German company that developed Mercedes-Benz cars for the DTM racing series, was just one interest that hinted at a future return to motorsport.

It came when he bought a stake in Frank Williams’ racing team in 2009, though he only became executive director in 2012.

Their achievements included an initial public offering in 2011 and the Oxfordshire team’s first Grand Prix victory in eight years.

“I gave my heart to Williams,” says Mr Wolff. “I will always remember that when I got the offer to join Mercedes . . . I was really struggling with the decision.”

It all started with coffee. Wolfgang Bernhard, then on the Daimler board, asked Mr Wolff to assess why Mercedes had failed to win an F1 world championship since 2009 despite boasting the racing talents of Schumacher and future winner Nico Rosberg.

Mr Wolff was direct. Winning in F1 requires serious resources.

Convincing the Daimler board of that fact was critical.

Within weeks of receiving his report in 2012, Daimler invited him to its headquarters in Stuttgart to meet the then management board chairman Dieter Zetsche, who asked him to run the team. The late Niki Lauda, the three-time world champion and fellow Austrian, had already joined as chairman of the operation.

While Williams still struggles to compete with the sport’s wealthiest players, Mercedes has the budget to compete at the top with Ferrari and Red Bull. Adding to the appeal was Daimler’s www.businessday.ng

willingness to make a 30 per cent stake in the racing team available for Mr Wolff to purchase.

As at Williams, he wanted skin in the game.

In January 2013, Mr Wolff was appointed managing partner, following a season in which Northamptonshire-based Mercedes finished fifth.

“He was lucky they had quite a large budget,” says Bernie Ecclestone, the former F1 supremo, who attributed Mr Wolff’s success to running the team like a business, hiring well and making sure staff did what they were supposed to do.

But the appointment stoked tensions with Ross Brawn, who led the predecessor to the Mercedes team — when it was still known as Brawn GP — to its last championship victory.

Going up against the F1 veteran — a near-peerless technical expert with a bulging trophy cabinet — was a sign of Mr Wolff’s willingness to shake up Mercedes.

Trust with the former Mercedes team principal broke down. One sticking point was that Mr Wolff hired Paddy Lowe as the team’s technical director, further encroaching on Mr Brawn’s remit. By the end of 2013, Mr Brawn was gone and so was his chance of sharing in the six seasons of glory that would follow.

“I must admit that it was very difficult for him,” concedes Mr Wolff.

Although it might have looked like Mr Wolff and Lauda had connived to oust Mr Brawn, power battles strained their own relationship, particularly in 2013, when they clashed over the

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division of their responsibilities.

“Niki and I were always our own bosses. We ran our companies and had our own perspectives,” says Mr Wolff.

Daimler was so concerned that it called a board meeting.

But Mr Wolff says he and Lauda met quietly beforehand, settled their differences and defused the situation with a handshake in front of the board.

The pair seized the first of Mercedes’ six consecutive crowns after finishing second to Red Bull in 2013. Their success continued after Mr Ecclestone departed in 2017 when Liberty Media, the US group controlled by billionaire John Malone, completed its $8bn deal to acquire the racing series.

Internal friction has been a constant feature of Mr Wolff’s tenure. A believer in “tough love”, the Mercedes principal soon became mediator to his drivers, who clashed on the track and jousted in press conferences.

Rosberg quit after winning his sole championship in 2016, just five points ahead of his teammate Hamilton in a championship that went down to the final day of the season.

Rather than allow the acrimony to fester, Mr Wolff and Hamilton settled their differences in the kitchen of the Mercedes boss’s Oxford home. Hamilton has not lost a world title since.

Managing Mercedes’ star driver has become more complicated over the years, particularly following the killing of George Floyd by a Minneapolis police officer in May. While protesters against racism and police brutality gathered @Businessdayng

in the US, the UK and beyond, F1 remained silent. Hamilton accused the industry of being complicit.

“We have been — all of us — guilty of being silent for way too long,” says Mr Wolff.

After discussing Hamilton’s views, Mercedes decided to paint its car black this season, convincing sponsors to agree and Daimler to adopt a change of livery after decades of racing in silver. Mr Wolff wants to increase the proportion of its minority ethnic and female staff from 3 per cent and 12 per cent today.

“We don’t want this launch of the black livery to be a PR stunt.

We don’t want to join companies that feel it is the flavour of the month to speak up against racism,” says Mr Wolff.

His next challenge will be to retain his leading driver, who is yet to renew his contract, which expires at the end of this season.

Mr Wolff has also had to deal with speculation about his own future, heightened by a personal investment in Aston Martin, which is entering F1 next year following a £500m rescue led by Lawrence Stroll, owner of the Racing Point F1 team.

With F1 set to introduce a budget cap and a fairer split of its revenues among the teams next year, the greatest test of Mr Wolff’s stranglehold on the sport is yet to come.

Three questions for Toto Wolff If you were not a CEO what would you be?

An investor.

Who is your leadership hero?

Ray Dalio [founder of hedge fund Bridgewater Associates] for his management principles; Warren Buffett [chief executive of Berkshire Hathaway] for the value-based investment model; Ola Kallenius [chairman of Daimler] for his pragmatism; Dave Brailsford [British cycling coach] for marginal gains theory; Luca Cordero di Montezemolo [former chairman of Ferrari] for his taste; Frank Williams for his resilience; Jim Ratcliffe [founder of Mercedes F1 sponsor Ineos] for thinking big; Sergio Marchionne [the Canadian-Italian chief executive who saved Fiat from bankruptcy] for toughness.

What was the first leadership lesson you learnt?

How to read a balance sheet and a profit and loss statement.

Tuesday 18 August 2020

BUSINESS DAY

19

London walks: gardens and green therapy in Dulwich and East Dulwich From pretty Dulwich Village, to the Picture Gallery and the park, this rural corner of south-east London is perfect for a summer stroll Jennifer Thompson

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he eponymous hero of Charles Dickens’ first novel The Pickwick Papers chose to see out his days in Dulwich in a house with “a large garden . . . situated in one of the most pleasant spots near London”.

Though the smokestacks and grime of the Victorian era are thankfully long gone, the writer’s appraisal of this genteel neighbourhood a few miles south of the Thames continues to ring true.

Back in London after several months of lockdown with my family in the north of England, I find it hard to think of a swath of the capital that offers as much green open space, thanks to its glorious park, the playing fields of schools such as Dulwich College and surviving pockets of the Great North Wood, a medieval oak forest whose remnants are the focus of renewed conservation efforts.

Although the area has been swallowed up by London’s suburban sprawl, the qualifying “near” in Dickens’ geography still applies — just. With its Georgian buildings and pretty white wooden signs and fence posts, Dulwich Village likes to cultivate an image of the rural settlement it once was, even if the absence of wellies and real mud spots make this more of an urban fantasy. (Although a neighbour who grew up in rural Wales once told me he sees far more wildlife living here than he ever did back home.)

As a novice gardener who has lived in next-door East Dulwich for several years, I like to draw inspiration from the many lovely front gardens here.

But a stroll to reacquaint myself with the district is always an excellent excuse to avoid dealing with the weeds that have joyfully sprung up in my recent absence. To paraphrase Dickens, just like Mr Pickwick we too can enjoy a walk about this pleasant neighbourhood on a fine day.

The walk This route is 3.7 miles and takes a fast walker around an hour, or if you dawdle a bit, 90

minutes — though that would mean resisting the temptation to wander around the parks and relax for a while.

I start my amble in brilliant sunshine at the bottom of Lordship Lane, the main shopping street that snakes its way uphill through East Dulwich, Dulwich-proper’s chichi sibling.

The Goose Green roundabout is a good place to orientate yourself.

Business seems a tad slower than usual for the shops, pubs and restaurants after lockdown, but a welcome side effect is the abandon with which cyclists are whizzing down a relatively traffic-free high street.

The street art dotted across South-East London collectively known as Dulwich Outdoor Gallery provides splashes of interest. One of the best-known and easiest to spot is the enormous mural next to the East Dulwich Tavern of two men in Regency dress having fisticuffs, by artist Conor Harrington (and not a reflection on what goes on outside the pub on a typical Saturday night).

I bypass my regular temptations of Chener Books, an independent bookseller, and delicatessen The Cheese Block, but do a quick window-browse at Forest, an outpost of the hipster houseplant movement. www.businessday.ng

Heading uphill and turning right on to Townley Road, before turning left onto Calton Avenue, I pass the playing fields of Alleyn’s School.

Public access at certain times is granted — a good option if you’re looking for an open but still quiet spot. A small plaque fixed to the railings records that a family of four was killed here by an air raid in 1940, one of several similar poignant signs in the area.

Further on, the bright red front of Village Books, another great local bookshop, signals the middle of Dulwich Village.

I turn left and make my way down the main street that is marked Dulwich Village, where you can pretend you aren’t in one of Europe’s biggest cities and instead enjoy white picket fences and manicured front gardens.

Passing a large boozer, The Crown & Greyhound, on my left and Pickwick Road on my right, I continue up Gallery Road.

What appears to be a small, cream-coloured chapel here is a former grammar school created to educate poor boys in the 1840s; the red and white coat of arms above the door is a nod to The Dulwich Estate, a charity whose roots go back to 1619 with a bequest from Elizabethan actor, Edward Alleyn.

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I turn onto Dulwich Common and the handsome redbrick buildings of Dulwich College, with its blue-faced clock tower, come into view on the right. It’s worth popping over the road to observe the front gates and façade, more stately home than school.

Turning left onto College Road, I walk down to Dulwich Picture Gallery, one of the area’s star draws. The building, designed by Sir John Soane and opened in 1817, is England’s oldest public art gallery and houses a permanent collection of European paintings: the standouts lining its pinkish-red walls are works by Rembrandt and Gainsborough.

The gallery is still shut but the gardens and café are open.

A lovely shortcut there is to take the tree-lined grove of Lovers’ Walk, which runs between Gallery Road and College Road.

Grab a bench to yourself at the right moment and enjoy the silence, except for the breeze in the trees and the occasional thwump of a tennis ball.

Almost opposite the gallery is one of the nicest entrances to Dulwich Park, with a formal sweep up the road and fauxTudor cottage on the left. I am biased, of course, but to me it is London’s perfect park : formal enough with its scen@Businessdayng

ery, sculptures and beautiful café to feel like a proper outing with friends, but large and relaxed enough to cope with children’s five-a-side tournaments, hordes of dog walkers and — especially at weekends — a multitude of joggers.

The main driveway loop is exactly one mile, perfect for sticking in some earphones and doing a few laps. Its flatness also guarantees that Dulwich regularly appears in rankings of the country’s fastest Parkruns.

If early starts rather than fast finishes are more your thing, my tip is to make it through the gates as early as you can in summer to see the geese graze the lawns undisturbed.

By now, it’s late afternoon and hot, so few are attempting to break a further sweat.

I pause for an ice cream near the set of looping sculptures

by Conrad Shawcross, leaving from the Court Lane exit. Going up Eynella Road, you pass a fine red-brick Victorian library, once a hangout of celebrated Kiwi writer Janet Frame, who called nearby Camber well home in the late 1950s.

Turning left gets you back onto Lordship Lane, thankfully downhill in this direction. Perhaps the plant shop does merit a proper visit — the weeds can wait another day.

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Tuesday 18 August 2020

BUSINESS DAY

Media business EXMAN demands payment of N500,000 pitch fee from companies inviting agencies for business ….Experts advocate innovation, collaboration among media agencies Daniel Obi

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he Experiential Marketers’ Association of Nigeria (EXMAN) has said that organisations inviting experiential marketing agencies for business pitch should prepare to pay N500, 000 as rejection fee to the agencies not selected for the job.

Meanwhile experts at the recent Experiential Marketing Conference also called for innovation and collaboration among members.

EXMAN at its yearly meeting made the resolution that rejection fee be paid to its members after attending a pitch, considering the level of research, creativity and funding that go into the ideas presented to clients. Some members alleged that some organisations use some of the ideas presented at a pitch without giving them credit or paying for it.

EXMAN President, TadeAdekunle said “When you invite 17 or 18 agencies to pitch for a business they will only take one or two agencies and thereafter you will start seeing some of the ideas that some of the rejected agencies have given.

Also, when agencies go for pitch

they incur cost on research, creatives and others.

“So, the association has decided that clients can ask for the profile of the various agencies, and then they can say this agency is good enough to work for us instead of calling 20 agencies to come and pitch.”

He explained further that if organisations write back that they can’t pay rejection fee, no EXMAN member would partake in such pitch, stating that “If corporate organisations champion corporate govern-

ance, then it will be unethical to ask agencies to wave rejection fee.”

He added that members must have informed the association secretariat that they are invited for a pitch and EXMAN would write the client who must have agreed to pay the fee before embarking in the pitch process. However, he stated that members cannot say they don’t want the rejection fee from client, if such happens they would have to face disciplinary committee. “For our

members, the resolution taken here today, you can’t wave that right and say I would not collect rejection fee. The association is saying you cannot wave that right. If you don’t collect it you will face the disciplinary committee of EXMAN,” he revealed.

As part of its programmes for the year, the association had Experiential Marketing Conference a day before its yearly meeting, to chat a way forward for industry players and the marketing world and had large attendance from across the world. The conference which was held August 13 on virtual platform, Zoom, was themed, “Defying Gravity: The Future of Customer Experience Marketing”.

The experts at the conference tasked experiential marketing agencies, others on innovative consumer experience, collaboration and others amid COVID-19.

Ose Osundeko, Group Head Digital Marketing, Fidelity Bank Plc and keynote speaker who spoke on “Using digital to transform the customer experience” said it is imperative for brands to put customers at the centre of what they do and deploy the right strategies in the digital space will further help transform customer experience.

Private sector operator boosts ICT in Asaba as Okowa commissions Westgate Center

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overnor Ifeanyi Okowa of Delta State has commissioned a Westgate ICT Centre in the state capital, Asaba and restated the desire of his administration to continue to provide the enabling environment for investment to thrive. The Westgate Technologies centre has a 600 capacity Computer Based Test (CBT) centre, retail shop, training centre among others, according to a statment.

Okowa who was represented by the Commissioner for Science and Technology, Matthew Itsekiri described the Westgate ICT centre as inspirational while noting that the government is proud to be associated with the achievement of Westgate.

He said the presence of the hub in Asaba will save government the cost of going to Lagos and other parts of the world for standard ICT products.

“We are pleased to have this here, it will save us cost of going to Lagos for ICT products which was not the case before now. As a government, we are

ready to make Delta State a smart city in terms of ICT. I call on private entrepreneurs to support this drive in the development of ICT,” he said.

Chairman of Westgate Technologies Store, Casmir Ezeudu in a remark, said in the statement that the centre will not just sell products but meaningfully contribute to the growth of the host community.

Ezeudu promised that the company will train 2,000 students drawn from public schools in ICT free of charge, and organise technology summit for youths within the host communities to develop their talents.

“Most of our employees will drawn from here.

StarTimes offers subscribers more content, partners Longrich to reward customers

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tarTimes has added more content to the delight of its subscribers.

This is part of its efforts to bring the best of television viewing experience to its subscribers.

The latest additions on StarTimes are top animation channel, DreamWorks, and premi-

um football rights, La Liga. Also, FA Community Shield will air on August 29. This is even as it partners Longrich Shampoo to reward loyal subscribers. Subscribers who visited StarTimes business halls to subscribe Basic, Smart, Classic or Super Bouquets were rewarded with Longrich Shampoo.

Polo preserves nation’s forex, offers Rolex after-sales service in Nigeria’s luxury watch market Daniel Obi

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fter sales service, more than ever before, is assuming a larger part of a consumer’s purchase decision.

This is because it would be expensive for customers to discard, for instance, a piece of high-end jewellery for a new one on account of lack of after sales service.

Often time, some luxury products like time pieces are taken abroad, especially Switzerland for repairs, a development that is not only cumbersome and burdensome but costs the nation the scarce foreign exchange.

Globally, companies who offer convenient after sales service in the countries of their operation are likely to attract more customers on the understanding that a buyer’s journey does not end at the

point of purchase.

It is standard that product maintenance does not only enhance customer experience and create brand loyalty but it ensures the reliability and efficiency of the product.

It also gives the consumer an optimised and long-lasting performance.

Popular maxim agrees that prevention is better than cure, so, by doing frequent maintenance of a product all challenges concerning the equipment can be taken care of which will improve its longevity.

For instance, owning a luxury timepiece is definitely one of the most treasured possessions for its owners. A luxury timepiece is definitely like fine wine—getting finer with age. As with any luxury item, it is vital that it goes through regular maintenance, without which damage could be inevitable. www.businessday.ng

The dilemma for watch owners has always been the complexity of maintaining their pieces and accessing the right support, as most local luxury retailers are concerned largely about selling their

stock rather than the aftersales support.

With this chasm unfilled, luxury watch owners would have to come to terms with the complexity and quagmire of shipping their wristwatches

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to Switzerland for regular maintenance and in the process, incurring international freight costs, additional insurance etc.

In Nigeria, Polo Limited, West Africa foremost purveyor of luxury goods has announced that it is currently offering a Rolex-installed after-sales service to luxury watch owners across Africa with its authentic, international standard and Swisstrained certified horologists.

“Polo Limited offers a wide array of after-sales services including case renewal, polishing, leather straps, battery change, complete overhaul and refurbishment, appraisal and valuation”, the company said.

“For us we are working on making the process seamless for all of our customers.

We are currently employing digital-friendly methods for customers to request after@Businessdayng

sales information, delivery, pickup and payment. We believe our customers share a special connection with their pieces and we are obligated to help them maintain this connection” John Obayuwana, Managing Director, Polo Limited said in a statement.

With over three decades of expertise in Africa’s multibillion dollar luxury industry, and with a wide clientele across West-Africa, Polo Luxury group said it has positioned itself as one of Africa’s most iconic land innovative luxury business conglomerates.

The maintenance of these luxury timepieces in Nigeria

by Polo Limited, will therefore save Nigeria foreign exchange by eliminating the need to send luxury timepieces and jewellery abroad for maintenance, and it will also create a seamless transactional experience for consumers living in Africa.

Tuesday 18 August 2020

BUSINESS DAY

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Marketing & Pr Nigeria’s recruitment industry has benefited from adopting virtual approach, says Foluso Agbaje Foluso Agbaje is the Head of Human Resource at Jobberman, Nigeria’s foremost recruitment platform that helps employers and jobseekers solve their recruitment and employment challenges. In this interview, Agbaje who has experience in Human Resource Management and Management Consulting across various industries including Technology, Telecommunications, Banking, and Professional Services spoke on a number of issues including recruitment, impact of Covid-19 on business. She says in recruitment there is no perfect candidate who will tick all the boxes but to hire right, companies will need to hire candidates who have the critical skills that have been identified for the business. Daniel Obi reports. Excerpts.

A lot has changed lately since the outbreak of the pandemic, most companies have to go virtual. What has the experience been for Jobberman and the recruitment industry? ecruitment has become a predominantly virtual exercise now due to the pandemic. If you had asked most HR professionals in 2019 if they would have ever hired a candidate without meeting them in person the answer would have been a resounding no.

The pandemic has forced companies to find innovative ways to fulfill their hiring needs, depending on advancements in technology with the use of video interviews, group case studies using virtual zoom classes and digital psychometric assessments to name a few. At Jobberman all our internal recruitment has been done virtually over the past 6 months using some of the former mentioned digital tools.

Overall it has been a good experience because of the time and cost saved that would typically have been associated with in-person recruitment. On the other hand, there have been a few painful experiences. For example, having to give up on an interview due to poor internet connection. Having said that, the recruitment industry has definitely benefited on the whole from having a more virtual approach.

Jobberman recently launched a skills assessment product for employers? What is the idea behind it?

The assessment product provides companies with an objective way to find the best candidate for the role. We have a wide suite of tests for various roles and to test different skills sets, and the best part is that the standard tests can be customized to fit unique client requests as an additional service. As the assessments are all done virtually, clients do not have to worry about renting out a suitable test centre.

Candidates also do the assessments from the comfort of their homes at a time that is convenient for them, and the results are instantly sent to your chosen internal contact as soon as the candidate submits the test. A lot of our clients also worry that candidates will cheat if they do the tests at home unsupervised, however the assessments are done with image proctoring technology to ensure that candidates are dis-

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Foluso Agbaje

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jobs listed by our clients through initiatives such as our free online soft skills training and virtual youth events. Employers can then visit our platform confident in the knowledge that the candidates applying for their jobs have the skills they are looking for in their organization.

As the Head HR of Jobberman, you must have interviewed and recruited a number of people.

Let us in on the magic. What’s the interview process like at Job-

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Our job seekers and employers should look out for our ongoing Soft Skills training and our upcoming virtual career fair happening in September

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couraged from cheating. The tests are also timed so it imitates the environment you would have in a regular test centre.

The recruitment industry is a competitive and crowded space!

What’s been the key for Jobberman to amass over 60,000 employers?

Over the past 11 years, Jobberman has worked hard to build a ‘customer-centric’ business model.

We are constantly listening to the needs of our users and we take feedback very seriously. For example, we diligently track our Net Promoter Score (NPS) and our Business Development and Customer Experience teams work hard at the relationship management side of our business. This careful tracking of feedback and relationship management over the years has been useful in ensuring that our product offerings are not only fit for purpose, but also designed to meet all our users’ needs. We also recognize that we have a huge responsibility to ensure that the job seekers and youth that visit our platform and engage with us have the skills to fill the jobs advertised on our platform. For this reason we have invested heavily in our Youth Engagement & Learning efforts to equip the youth of Nigeria for the

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berman? How do you utilize your own tech to discover the best and brightest talent?

To begin with, all our open roles are advertised on our platform with an assessments listing. This ensures that the job is being advertised to a wide pool of talented candidates.

The assessment then helps us to efficiently do an initial shortlist based on skill set. Shortlisted candidates then go through various stages with key stakeholders within our organization.

The key here is that we ensure that anyone coming into our organization is not just a culture fit, but also a ‘culture add’, in the sense that anyone coming in should be bringing the skills and behaviours that we have already identified as critical for our future. For example, a question I typically ask is for candidates to give an example of efforts they have taken towards their self-development in the past 3 months because we focus on self-driven continuous improvement at Jobberman.

What is your favourite Jobberman product add-on for employers?

This would definitely be the Assessment product. The assessment product is one of my favourite Jobberman products because it is designed for the future of work.

Modern-day recruitment literature suggests that to be best placed for the future of work, companies should be assessing the critical skills their organizations need to have the right competitive advantage. This implies that to hire right, companies will need to hire candidates who have the critical skills that have been identified for the business. This is where our assessment product comes in; by using an assessment you can immediately see what skills the applicants have and at what level because the assessment report shows you the level of proficiency the candidate has based on their answers.

What do you wish more HR professionals and recruiters knew about recruiting?

My first wish would be for HR professionals and Hiring Managers alike - there is no perfect candidate.

It is important that when you are looking for a candidate you know exactly which areas you are willing to compromise on for different roles without disqualifying candidates who have potential but don’t tick all the boxes. My second wish that I would like all HR professionals @Businessdayng

and recruiters to know is that recruitment is an art not a science; there is no one size fits all recipe for recruiting for all roles across various organisations. What this means is that you might need to tailor your recruitment strategy for each open role in your organization to ensure that you are getting the best fit.

Industry analysts have said that recruitment will be driven through a mix of human and automated solutions. Do you agree?

Also, what are the challenges in the recruitment industry that need urgent attention?

I definitely agree with this. Artificial intelligence will probably ensure that in a few years only the final stage of the recruitment process is done by a human being.

The current challenge I see in the recruitment industry that needs urgent attention is discrimination based on age and less explicit discrimination targeted at candidates who have career gaps on their CV. This discrimination automatically excludes some candidates in the labour market eg women on extended maternity leave or workers who had to take extended sick leave for example. Recruitment needs to leave this bias behind as we progress towards a focus on hiring for the right fit based on skill and ability, not the notion of what the right candidate looks like on paper.

What should Nigerian job seekers and employers be looking out for with Jobberman?

Our job seekers and employers should look out for our ongoing Soft Skills training and our upcoming virtual career fair happening in September. Soft Skills have been shown to be the skills of the future of work. Soft skills, commonly defined as non-technical skills, enable individuals to interact effectively with others. According to the World Economic Forum, to succeed in the workplace everyone needs to have a good grasp of soft-sKills because these skills are vital to organizations and can impact culture, mindsets, attitudes, and behaviours. The purpose of Jobberman’s Soft Skills training is to equip job seekers with the skills and tools needed to succeed in the workplace during and post-CoVID-19. Secondly, we have our upcoming Virtual Career Fair happening on September 30th, 2020. The career fair is really a chance for us to showcase the various opportunities open to active job seekers.

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Tuesday 18 August 2020

BUSINESS DAY

CEOINterview Interview with Private Sector Leaders

‘If we do not charge commercial rates and the government Fola Tinubu, managing director/CEO, Primero Transport Services Limited, speaks with Osa Victor Obayagbona, news editor, BusnessDay Newspaper, and Desmond Okon, in Lekki, Lagos. In this exclusive interview, Fola talks about his desire to reduce commuters waiting time across Lagos transport ecosystem, giving details on how the N16.5 billion the company raised from the bond market last year was expended and plans to go back to the bond market to raise more this year. He believes that the major solution to transport challenges in the state is to encourage private companies to come in and invest massively, but they will only do that when they see that it is a viable and profitable venture, saying further that one company cannot serve the whole of Lagos, as the logistics and the investment are mind-boggling. He also discloses of the company’s plans to start assembling buses in Nigeria, noting that as long as Lagos continues to develop the infrastructure, “we will continue to invest. But the system must break even and give the operators some sort of profit if you want people to invest.” Excerpt:

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ridlock has become a very big problem to the Ikorodu corridor.

What are you doing in the short-term to overcome the problem, and in the long run, what do you intend to do?

In the long run, once they fix all roads under repairs it will make things a lot easier. In the short run, because they are fixing so many roads simultaneously, it is causing a nightmare for us. They are fixing the road from Mile 12 to Ojota, they are fixing Oshodi to Oworoshoki, they are fixing the Third Mainland Bridge, they are fixing Eko Bridge from Alaka to National Theatre, they are also fixing Costain Bridge, and part of Ikorodu Road is been scraped and re-tarred right now.

Unfortunately, there is nothing we can do; we just have to find a way around it. In the long run, it will be good for business because once they fix all these roads; hopefully, the vehicular movement will be much better. But for now, it is a big nightmare.

Since your daily projection has not been met, how do you augment, especially in the area of training and paying salaries?

It has been a nightmare for us. Like every business, this year has been a very difficult one. If you remember, in March, they asked us to carry 20 passengers in a bus that carries 70 passengers. For those three weeks, our income dropped by over 60 percent. We then shut down for six weeks without any income at all. Since we came back in May, we have been carrying only 42 passengers per bus, which means we are using less than 60 percent capacity. This has a negative effect on our revenue. Our suppliers are suffering because we have not been able to pay them as at when due.

We are working with them and they are working with us. I have to thank our vendors at this point because, without them, we would not even be where we are right now. With regards to staff salary, we have been managing to pay the staff and there has not been any major issue. It is very challenging. There is hardly any business that has not been affected by this COVID-19, and I do not care what industry you are in, everybody has been affected. It is what it is; we just have to find a way to keep afloat until business comes back to normal.

How are you managing your bankers?

Our bankers are Sterling Bank.

Honestly, they have gone way beyond the call of duty. They have helped us a lot. Remember, we went to the bond market last year and we were able to raise N16.5 billion, but we are in the process of refinancing it. We are working with our bankers to refinance and get a single-digit loan through the CBN. God willing, we should be able to resolve that on or before the end of this month, and we will pay off the bond and get a single-digit interest rate of a five to six year term loan, which will reduce our interest expenses and the pressure on our cash flow tremendously.

What is your general overview of Lagos’ transport system since this problem (gridlock) has been there over 40 years?

There will always be traffic in Lagos because Lagos is a very small landmass and the people coming to Lagos increases daily. What Lagos needs is a massive investment in public transport so that we can encourage people to leave their cars at home and use public transport. We have to find a way to make the rail system work, we have to find a way to make sure the waterways work; we have to find a way to make sure the bus services work. But, even if we do, we need to ensure that we charge commercial rates. Because if you do not charge commercial rates and the government does not subsidise, it is a recipe for disaster.

When we were younger, there was LMTS, and then there was LSTCC, they all went under because they were not charging commercial rates and the government was not subsidising. That is part of the problems of Primero also. You cannot eat your cake and have it.

We must have an honest discussion. Let the commuters sit, the government sit and let the operators sit and let us all decide what we need to do. If you do not charge commercial rates and the government does not subsidise it, the system will not survive. Do not get me wrong, I am not advocating for a subsidy, all I am saying is something has to be done. There is no free lunch anywhere; it has to be paid for. The question is who pays for it? That is a political decision, but it is a decision that we all must take if we want public transport to work.

People go all over the world and say ‘oh Fola, it is done this way or that way. I look at them and say we know what we need to do, but it cost money.

You do not pass a social responsibility of a state to a private company.

That is the same problem they have www.businessday.ng

in the oil industry and the electricity industry. You cap the price to make people happy, that is a political decision but then you expect the private companies to augment it; it is a recipe for disaster.

If Primero is a publicly owned company, I can keep on piling losses because at the end of the day, the taxpayers are there to back me up and they can write off the debt at any time, they can raise taxes and pay off the debt. But a private company cannot continue to pile up losses.

Governor Babajide Sanwo-Olu is the first governor to actually sit with us to find out what our problems are and how to find a solution.

After we showed him our books, he approved an increase in fares for us in May this year. If we do not tell ourselves the truth in this country the country will not progress. People talk about dividends of democracy, but you cannot talk to a private company about dividends of democracy.

I keep telling people, this may sound cold, but it is the truth. A bank MD’s number one job is not to look after the populace, an insurance company MD’s first job is not to look after the

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populace, Primero MD first responsibility is not to look after the populace.

That does not mean we should not care about the people and the society we are in. But our number one job is to look after the company that we are entrusted with. We need to ensure the company survives, so that four years, five years, 10 years, 15 years from now, the company is still around.

If, while doing that, we can also do something for society, all well and good.

But the president’s job, the vice president’s job, the senators’ job, the House of Representatives members’ job, the governor’s job, the house of assembly members; job, and the local government chairmen’s job is to look after the populace because they voted them.

That does not take out the social responsibility of companies because at the end of the day, we will live in this society and we have to make sure the society develops. But the MD of a company’s job is not to look after the populace. If you look after the populace and you let your company go bankrupt, everybody is going to blame you because it means you have failed in your job. It is cold, but that is the reality. @Businessdayng

I am not advocating for a subsidy, all I am saying is the system must be put on a solid financial footing and it must be sustainable so that many years from now, the system is around. I’ll give you an example: in May this year, our buses were off the road for about a week or so because of fuel issues.

The Danfos increased their prices almost three times, and people paid N1,500 from Ikorodu to Lagos Island, and that is what will happen if (God forbid) anything bad happens to Primero.

I am very happy with what the Lagos State government is doing, but Lagos State government does not have the financial resources to do it by themselves, they need private companies to invest. It is a very capital-intensive business, and if private companies are going to invest, they have to make some modicum of profit, or at worst, break even.

Some time ago, you said your goal was to reduce commuters waiting time and the gridlock is a major issue. How do you intend to marry these two?

Before the Covid-19, I think we were running about 240 to 250 buses, but when we realised that we were going to be shut down for Covid-19, we camped over 200 mechanics in our yard to fix buses. So, we

Tuesday 18 August 2020

BUSINESS DAY

23

Fola Tinubu

MD/CEO, Primero Transport Services Limited

does not subsidise, it is a recipe for disaster’ have been able to increase our bus rollout, we are now rolling out between 300 and 310 busses daily. I can tell you that out of the new buses that Lagos State is about to give us on revenue sharing basis, 50 of those buses are going to be put on Ikorodu axis and the number of buses on that axis will go up to about 350-360 daily. That will reduce the waiting time. It is a good problem for me to have because what that tells me is that more people want to use our services. The solution to reduce waiting time is for the government to fix the roads, which they are presently doing so that the buses can flow better and we put more buses on the road, and that is exactly what we are going to do.

Itemise the strategies you want to put in place to achieve a world-class service, and looking at engaging female drivers?

I can assure you that we have female drivers right now. We have had female drivers for over three years and we are actively recruiting female drivers because they are patient and not as rough as men when they are driving. We men have this machismo’s attitude when we are driving.

But women are calmer. And, when you introduce women into the midst of men, the men tend to behave better and more civilised than when it is just only them.

We are encouraging more female drivers and we are going out of our way to look for more female drivers.

But, our strategy to provide a world-class service is not just the women drivers; it goes back to my earlier argument on finance. We know what we need to do, we know how to do it, but it cost money and that is why I have been advocating that the system must at least break even. We break even either by letting us charge a full commercial fare, or the government says because of the social nature of the business, we don’t want to charge more than XYZ but we’ll do XYZ to subsidise. Unfortunately, Lagos State’s government is not in a position to do much right now because the state revenue has been dwindling due to Covid-19. Even if the government wants to help out, they cannot do much because the government presently have so much that they are dealing with due to Covid-19. They have schools to provide for, they have roads to fix, they have hospitals to provide for, and other issues to deal with and their statutory revenue is going down because the price of crude oil has plummeted. Even their IGR is going down because a lot of companies profit has declined dramatically due to Covid-19.

How has Lagos State government helped Primero?

The most important thing that the Lagos State government has done is to provide infrastructure, which cost a lot of money.

The infrastructure they provided has made it easier for Primero to operate. We are about to start Abule Egba to Oshodi route with two other operators. The state has spent a lot of money to put the infrastructure in place for that axis. Without the infrastructure, we will not be able to do what we are doing. Like I keep saying, we are very bullish about Lagos, we want to invest, and we want to bring in more buses. So, as long as Lagos continues to develop the infrastructure, we will continue to invest.

When the economy improves and things go back to normal will Primero

review back to the normal fare?

You have put the cart before the horse, and I will tell you why. Even now, with this increase, we are still the cheapest on that route and our cost structure is a lot higher than everybody else on that route - the rest of them do not insure their vehicles, but we insure not only our vehicles but also everybody that rides on our buses; they don’t have to clean their vehicles every day. LAMATA sends back our buses to be cleaned if they are dirty; they don’t provide training for their employees, we do. They don’t provide health insurance for their employees, we do. They don’t pay payroll taxes, we do.

Our cost structure is a lot higher.

Even though it is a lot higher than others, we are still the cheapest on that corridor. If our cost structure is higher and we are still the cheapest and you are asking me that if things go back to normal... it does not make sense. That is why I said we should have an honest discussion, let the commuters sit, let the politicians sit, and let the operators sit, you can now argue that you do not want the operators to make more than 5 percent or 10 percent profit or whatever profit margin we all feel is reasonable. But the system must break even and give the operators some sort of profit if you want people to invest.

We went to the bond market to raise N16.5 billion last year, and we are thinking of going back again to raise more money. If we are going to do that, the capital market will only give us money if they are sure we can pay it back. The capital market does not joke.

They want to be sure that whatever they invest in makes business sense.

That is why I have been screaming and yelling since the past four years that the system must be profitable.

N16.5 billion to most industries is a lot of money. In our industry, it is peanuts because of the upfront investment involved. I will give you an example - say a bus costs about $100,000 (roughly). This means each bus will cost you roughly N45 million to N47 million. So, if you are buying 100, that is almost N5 billion and you still have to pay a duty of 35 percent on it, you still have to ship it to Nigeria, you still have setting-up expenses in Nigeria. Before you know it, just bringing only 100 buses, you are talking of over N10 billion. Lagos State, according to World Bank statistics, needs about 7,000 buses on the road daily, going up and down the metropolis.

Right now, with our 434 buses, with Lagos State government 820 news buses, the total number of buses on the road daily in Lagos is less than 2,000 buses. The need gap is huge and that is why if you go to any bus shelter anywhere in Lagos, you will see people queuing waiting for buses. If you want the private sector to come in and invest, you are talking about hundreds of billions of naira. For this kind of money to come into this sector, then you must show clearly how they are going to make profits on their investment.

We can now argue that we don’t want the profit margin in this industry to be more than 5 percent or 10 www.businessday.ng

percent, or whatever profit margin we feel is reasonable. But if you are asking me as a private investor to put 5 billion, 10 billion, 20 billion, 30 billion on the table, you have to show me that I will get some modicum of profit on my investment. Unfortunately, neither the Lagos State government nor the Federal Government has the resources to do all of the required investments by themselves. There is no way we will not have to involve the private sector, and if you want the private sector’s involvement, then the system must be profitable.

What Primero is doing is for the future of public transport in Lagos and Nigeria, because if anything negative happens to Primero (God forbid) no investor is going to go near public transport for 20 to 25 years, we would remain a Danfo/Okada economy. We need to be honest with each other and have an honest discussion around this. If we can get the required investment to come into this sector, the number of jobs that will be created is mind-boggling. Primero has about 1,500 people working on the project on one corridor only.

The Abule-Egba to Oshodi route will create a minimum of 1,000 jobs. The amount of jobs that can be created by this sector is humongous. And all these unemployed youths going up and down in Lagos looking for jobs can be catered for.

The money for investment is there.

The pension funds and the banks are sitting on trillions of naira. But they will only invest if they know that it is a viable business and that is exactly what Primero is trying to show everybody that this sector is viable, and other investors should come into the sector.

I told you earlier that a World Bank study showed that we need 7,000 buses going up and down in Lagos.

I know for a fact that LAMATA’s plan is to have 14 BRT corridors all over Lagos State. The first one is the Lagos to Ikorodu that we are on now, the second one is the one that the governor opened recently which is the Abule-Egba to Oshodi route. There are still 12 more corridors to be built.

The number of people from LASU, Iyana-Oba is massive. The number of people in Alimosho is massive. The number of people in Lekki is massive.

Anywhere in Lagos, there are people that need to be moved from point A to point B. But what has been lacking in the past is we have not been investing on the scale required.

Primero is actually the first company that will bring in 434 buses at one time. But there are other investors with the same capacity or capability that can do that also. One company cannot serve the whole of Lagos. The logistics and investment are mindboggling. So, we need other investors to come into the sector.

You said imported bus now costs $100,000. Have you considered sourcing your buses locally?

We are working on it and it is on advanced stage right now. We have partners we are working with; we want to start assembling the buses in Nigeria. We are working to set up an

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assembly plant with some of our partners and investors because we believe that the assembly plant should be in Lagos or very close to Lagos. Most of the buses initially will be used in Lagos, and we believe we can sell it all over the West Coast of Africa. We would like to be close to Lagos as much as possible, but we are working on that and I can assure you our next set of buses will be assembled in Nigeria.

that is our goal. That is our dream.

What timeline are we looking at?

Actually, if you asked me this before Covid-19, I would have said by the last quarter of this year. But it may be before the first quarter or second quarter of next year because right now nobody can even travel even if you want to go and sign contracts with others, you can’t do anything. I believe God they will open the airspace sometime next month, or October, and business will start picking up again. So, we are looking at probably the first quarter of next year. Worst case scenario, the second quarter of next year if the pandemic permits.

Are you talking to other investors to come into this space?

That is not my job. To be more serious, the Lagos State government is actually talking to about two or three other companies. In fact, on that Abule-Egba to Oshodi route, there is going to be three companies running that corridor, and we are one of them. I believe each of these companies has made a commitment to Lagos State government to bring more buses because the government is giving them some of the new buses to operate on a revenue-sharing basis.

Exactly what they worked out with state I don’t know because I don’t work for Lagos State government. But even we had to make a commitment to the state government that we are bringing more buses on top of the 434 we presently have.

We are already going towards that route anyway. With what Lagos government is doing right now, I know there are about two or three other companies they want to work with to develop the space.

In the next few years, what do you hope to see in your sector, in Primero and Lagos’ transport system?

Our goal in Primero is that we would like to have 2,000 buses picking up 1 million people daily all over Lagos. But even with 2,000 buses, it is not 50 percent of what Lagos State needs. My hope is that there would be at least two or three other operators that have the financial capacity to do maybe, 1,000 or more buses. That way you will have about three companies each one with about 1,000 to 2,000 buses. This will go a long way in addressing the needs of Lagos and we can all benefit from the economics of scale. This is what I am praying to God for, but our goal in Primero is that we would like to have 2,000 buses running all over Lagos and picking up 1 million people daily. That way, we will affect every Lagosian’s life positively.

We may not pick you up, but we will pick your cook, your gardener, your steward, your cleaner, your gateman, your secretary, even your colleagues. So, there is hardly any aspect of Lagos life that we will not touch and

What is your message to Lagosians, especially your commuters?

My message to all Lagosians, especially our commuters, is to understand that what we are trying to do in the long run is in their best interest.

They may not like that the price has gone up, but we are doing everything to make sure that the system is sustainable and we are doing everything possible to ensure that we provide a world-class service for them.

World-class service costs money, and we plan to continue to invest to ensure that Lagosians enjoy our services.

We want Lagosians to work with us and know that the government is there to make sure they are not gouged, that they are not taking advantage of, and we don’t have any intention or plans to take advantage or gouge our commuters. We are a responsible organisation and we plan to be here for a very long time, and if you are going to do that, then you have to do it in a sustainable fashion. But everything we are doing right now is to ensure the survivability of the system and to ensure that in the long run Lagosians get the service that they deserve.

@Businessdayng

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Tuesday 18 August 2020

BUSINESS DAY

FEATURE How new gas code will unlock potentials in Nigeria’s domestic gas market BALA AUGIE

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Mele Kyari

ing closely with the DPR to ensure that the target of the government is attained. This opportunity has provided the right framework for the transportation of gas from the source to the end-user in order to get value,” said Kyari.

He added: “We are happy to have this framework on ground and we are ready to collaborate with all our partners, the gas offtakers, gas producers, transportation companies, shippers, and all those involved in the gas value chain.”

Speaking on the significance of the network code, the minister of state for petroleum resources, Timipre Sylva, said it would help to grow gas infrastructure, expand gas utilisation, curb gas flaring, and provide codes to standardise the gas value chain in line with global best practices.

The Minister said the NGTNC was part of the key reforms insti-

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‘

We will continue to give our support to this process to ensure that the full delivery of this process is achieved.

We commit to working closely with the DPR to ensure that the target of the government is attained

‘

he Nigeria Gas Transpor tation Network Code (NGTNC) is officially up and running.

This marks an important step in making 2020 the year of gas as state-owned oil corporation Nigerian National Petroleum Corporation (NNPC) expects the development to boost Nigeria’s domestic gas market.

Predicated on the need to use the enormous gas deposits in Nigeria to grow the nation’s economy, the NGTNC applies between gas producers, shippers, and their agents.

Its provisions allow a window of six months for legacy agreements to migrate onto the network code while new and intending agreements are expected to align with the new code.

While launching the network code, the Group managing director of NNPC, Mele Kyari, restated its commitment to working with relevant partners and stakeholders in the oil and gas sector to boost delivery of gas to the domestic market.

Kyari said the corporation was at the centre of gas delivery to the domestic market, stressing that it was involved in all the available gas delivery infrastructure in the country either directly or indirectly through joint venture partnership.

The NGTNC was announced in February, but the existing users of the gas network got six months to migrate from existing Gas Transportation Agreements to the network code.

The code is a contractual framework between the gas transportation network operator and gas shippers that specifies the terms and guidelines for operation and use of the gas network. The code aims to provide open and competitive access to gas transportation infrastructure.

Now investors would be assured of best practice in gas transportation and could encourage them to actively look at the domestic gas market.

The Network Code could help harmonize gas balancing arrangements to support the completion and the functioning of the Nigerian gas market, the security of supply and appropriate access to the relevant information, in order to facilitate trade and to move forward towards greater market integration.

“We will continue to give our support to this process to ensure that the full delivery of this process is achieved. We commit to work-

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tuted by the President Muhammadu Buhari Administration to expand domestic gas-to-power, gas-to-industry, gas-to-manufacturing and mitigate the challenge associated with gas flaring in the country.

He noted that the gas codes would go a long way in deepening economic development, improve gas supply, boost liquefied petroleum gas supply, and attract more investment opportunities in the nation’s gas value chain.

“This Code, together with related interventions, will enable improved gas supply to power, growth of Gas Based Industries (GBIs), domestic LNG, LPG and CNG penetration as well as enhance revenue to government and create investment opportunities for our people,” Sylva said.

Department of Petroleum Resources (DPR’s) CEO Sarki Awulu highlighted six major game-changing effects the new code will have in attracting more investment into Nigeria’s pipeline infrastructure.

According to Awulu, the new structure will provide a set of rules that govern the gas transportation system, ensure non-discriminatory access to pipeline system, guarantees secure, available, reliable and safe gas transmission system.

“The code will attract more investors into pipeline infrastructure,” Awulu said.

Awulu noted the new code will ensure cost-reflective tariffs for pipeline services, support the development of matured gas markets and provide mechanism for effective handling of contractual disputes.

“The new code will also support the development of matured gas markets, and provide mechanism for effective handling of contractual disputes,” Awulu said.

Nigeria is Africa’s largest oil producer and a strong member of the Organisation of Oil Exporting Countries (OPEC). With around

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2.5 million crude oil production capacity, the country has huge gas reserves. According to data from the Nigerian National Petroleum Corporation (NNPC), the country has around 202 trillion cubic feet (tcf ) of proven gas reserves plus about 600 tcf unproven gas reserves.

Up till now, this gas had been largely undeveloped with huge chunk flared, and the governmentowned Nigerian Gas Company (NGC) has been a sole operator providing pipeline infrastructure in the Nigerian gas market.

Salihu Jamari, managing director, Nigerian Gas Company (NGC), noted that his company has been upgrading its facilities in expectation of the launch of the network code.

“We are making sure that metering is available at every point in the network. The NGC is very much aware of its role in the implementation of the network code,” Jamari stated.

As far as intentions go, other stakeholders say the new gas code is a fine policy that is long overdue. A lack of transparency in the industry has led to unfair and often discriminatory access to gas transportation network and has deterred investments.

The absence of this framework has hindered local gas use. The natural gas reserves volume of the operated deep-water acreages in Nigeria is about 21 percent of the country’s total reserves of liquid hydrocarbons according to the DPR. Yet the acreages accounted for about 36.08 percent of Nigeria’s total production in 2018. The absence of a uniform code for gas transport hinders investments.

The government in recognition of the potential of natural gas, has put in place various interventions to stimulate gas utilisation and monetisation.

The reforms were initiated to re-position the gas sector and deliver on government’s key aspirations.

These aspirations include developing a viable domestic market; creating new industry out of the old oil industry; capturing economic value; generating as much revenue from gas as from oil; and ending gas flaring by the year 2020.

In recent years, the government has begun the implementation of a nationwide gas infrastructure blueprint aimed at connecting all key supply sources to markets across the nation.

These interventions and other on-going government reforms in the industry had high prospects that could boost investors’ confidence in the country’s gas sector, industry analyst have said.

Tuesday 18 August 2020

BUSINESS DAY

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Tuesday 18 August 2020

BUSINESS DAY

FT

FINANCIAL TIMES

World Business Newspaper

Japan’s GDP decline less severe than US and Europe Economy fares better than some western countries but worse than Taiwan and South Korea Robin Harding in Tokyo

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apan’s economy shrank by a record 7.8 per cent in the second quarter of 2020 as it outperformed the US and Europe but lagged behind neighbouring South Korea and Taiwan in its response to coronavirus.

The figure, which equates to a 27.8 per cent decline at an annualised pace, exposes the consequences of a nationwide state of emergency over Covid-19 in April and May, which put much of the economy into a voluntary lockdown.

Japan’s performance relative to other advanced countries highlights how the effectiveness of a country’s coronavirus response affects the economy, with Japan forced to close schools but able to avoid the strict lockdowns used in Europe.

Masamichi Adachi, an economist at UBS in Tokyo, said the second quarter figures were “devastating but already known from the monthly data”. Analysts expect a big rebound across the globe in the third quarter as countries reopen.

Japan’s state of emergency over Covid-19 led to reduced spending in shops and restaurants © REUTERS

Mr Adachi said the crucial question was what would happen with Covid-19 this autumn.

“The real challenge is the coming months — Q4 not Q3 — and what policymakers are going to do as they go into next year,” he said.

It was the third consecutive

quarter of decline in Japan’s gross domestic product. The economy began to contract after a rise in consumption tax from 8 to 10 per cent last autumn.

The second-quarter decline in Japan’s GDP was comparable to a 9.5 per cent fall in the US

during the same period, or a 10.1 per cent drop in Germany. It was less severe than the drop of more than 20 per cent in the UK, which was late to act but then imposed a severe lockdown.

However, Japan did worse than neighbouring South Korea, where

output fell 3.3 per cent in the second quarter, or Taiwan, where GDP was down just 0.7 per cent.

Both countries managed to control the virus without extensive lockdowns, allowing their economies to function more normally.

A fall in private consumption accounted for 4.8 percentage points of the decline in Japan’s GDP as the state of emergency reduced spending in shops and restaurants, while a large drop in exports accounted for the remaining 3 percentage points.

Business investment was surprisingly strong, however, and contributed just 0.2 percentage points to the overall decline in output. That figure is often revised in updates to the data, but if confirmed, it would suggest resilience in the underlying economy and potential for a strong rebound.

Japan is suffering an increase in infections, with new cases running at more than 1,000 a day, but it has not imposed a fresh state of emergency. The government has passed several fiscal stimulus packages while the Bank of Japan has increased its equity purchases and offered $1tn in cheap loans to support the economy.

Trump moves to allow oil drilling in Arctic wildlife refuge US takes another step to loosen environmental controls ahead of election Myles McCormick

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he Trump administration has moved to allow drilling in ecologically sensitive areas of the Arctic previously off limits to oil producers, in the latest move to scale back environmental oversight of the oil industry ahead of November’s election.

David Bernhardt, the secretary of the interior, on Monday signed off on an oil leasing programme for the Arctic National Wildlife Refuge (ANWR), effectively opening up part of the 19.3m acre protected area in Alaska to drilling for the first time after decades of debate over its protected status.

The area is home to migrating birds, polar bears, caribou and other wildlife, with little human activity, and environmentalists have staunchly opposed efforts to open it up to drilling since it was established as a refuge in 1980. Monday’s decision puts into effect a 2017 law that authorised the development of a 1.56 million-acre chunk of the reserve known as the Coastal Plain.

“President Trump’s leadership brought more than three decades of inaction to an end when he signed the Tax Cuts and Jobs Act of 2017, requiring these vast energy resources be developed contributing to America’s future economic prosperity and energy security,” said Mr Bernhardt.

The move is the latest example

The oil industry has advocated opening portions of the refuge in Alaska up to drilling for decades © REUTERS

of the loosening of environmental controls by Donald Trump’s administration ahead of the presidential election, where candidates have offered starkly contrasting views about the future of American energy. Mr Trump last week announced the rollback of Obamaera methane regulations.

“Politically, leasing ANWR is points on the board for the Trump administration,” said Kevin Book, an analyst at Clearview Energy Partners in Washington DC. “Biden looks like he would play www.businessday.ng

power politics, too, however. So if Democrats sweep in November, ANWR would be in the crosshairs.

Federal powers over federal lands are vast.”

Under the Arctic development plan, the interior department intends to push ahead with two lease sales of 400,000 acres apiece — the first of which could be completed by the end of this year, it said.

Panned by environmentalists for the damage it would create to a sensitive area, they also criticised the encouragement of fossil fuels

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despite their role in climate change.

“This is an egregious intrusion into the sacred lands of the Gwich’in and other Indigenous People,” said Gina McCarthy, president of the Natural Resources Defense Council. “It threatens the heart of the largest pristine wildland left in America.

“The administration’s reckless, relentless boosting of the oil industry will irrevocably damage this cherished place and compound the global climate crisis.”

The move was welcomed by the @Businessdayng

oil industry, however. Frank Macchiarola, vice-president of policy, economics and regulatory affairs at the American Petroleum institute, a lobby group, said the announcement “follows a rigorous environmental review process confirming the oil and natural gas industry’s ability to develop responsibly in the designated areas”.

He added: “The industry has a well-established record of safe and environmentally responsible development of Alaska’s energy resources.”

Industry analysts question how much desire there will be among oil companies to explore in the area given the dearth of current exploration projects in the region in areas where it is already permissible.

“ANWR leasing will test industry willingness to commit capital in size when investors are asking for spending discipline and a fast cash turn,” said Mr Book. “Arctic development is neither of those things.”

Mr Bernhardt said he expected oil production in the area to begin in around eight years and that activity could continue for more than 50 years.

Lisa Murkowski, a Republican US senator representing Alaska, who has pushed for the region to be opened up to drilling, described the decision as “a capstone moment in our decades-long push to allow for the responsible development of a small part of [the area]”.

Tuesday 18 August 2020

BUSINESS DAY

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FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

US stocks inch closer to record high Chinese shares climb after central bank injects cash Bryce Elder and Harry Dempsey in London and Hudson Lockett in Hong Kong

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S stocks edged higher and tested their alltime high again on Monday, after Chinese equities rallied on fresh stimulus measures in the world’s second-largest economy.

Wall Street’s S&P 500 was up 0.3 per cent in lunchtime trading in New York. The benchmark has struggled to surpass its February record in recent sessions, closing on Friday at 3,372 points or 0.6 per cent off its intraday peak.

The tech-heavy Nasdaq Composite, which has been setting records almost daily for the past two months, added 0.8 per cent on Monday.

Maya Bhandari, fund manager at Columbia Threadneedle Investments, said that risks of a resurgence in coronavirus, rising US-China tensions and stalling negotiations for fiscal stimulus in the world’s largest economy were keeping investors in a holding pattern.

“Taking some profit in risk markets is prudent . . . at the fringe uncertainties are growing,” she said, adding that the prospect of a swift economic recovery was slim. “As long as the uncertainty over a second wave persists, we don’t see people returning to pre-crisis behaviours or activity any time soon.”

The S&P 500 closed on Friday within 0.6 per cent of its intraday record © Mark Lennihan/AP

The Vix volatility index, known as Wall Street’s fear gauge, has slid in August to 22.24, its lowest level since February, indicating lower levels of expected market volatility in the same vein as last week’s narrow rangebound trading.

But Goldman Sachs was confident that US shares would eclipse their record level and keep rising.

It raised its end-of-year price target for the S&P 500 from 3,000 to 3,600.

“The S&P 500 level has returned to its pre-pandemic high, but the building blocks supporting the price have shifted

dramatically,” said David Kostin, Goldman’s chief US equity strategist. “Share prices reflect not just the expected future stream of earnings but also the rate at which the profits are discounted to present value.”

The Chinese central bank on Monday injected Rmb700bn ($101bn) of liquidity into the financial system through its medium-term lending facility. Hong Kong’s Hang Seng added 0.7 per cent following the intervention, and the CSI 300 index of Shanghai- and Shenzhen-listed stocks

gained 2.4 per cent.

The gains came despite US president Donald Trump threatening further action against more companies from the country, including ecommerce group Alibaba. Mr Trump had previously ordered Chinese internet company ByteDance to divest the US operations of social media app TikTok within 90 days.

However, the “phase one” trade pact between the US and China remained intact, after a meeting between officials from the world’s two largest economies

scheduled for the weekend was postponed.

Tokyo’s Topix index fell 0.8 per cent after data showed the Japanese economy shrank by a record 7.8 per cent in the second quarter of 2020, which was slightly better than other big global economies but a steeper fall than peers such as South Korea and Taiwan. Australia’s S&P/ASX 200 dropped by a similar percentage, while Seoul’s Kospi index slipped 1.2 per cent.

European equities started the week slightly higher, as further losses for travel stocks were balanced out by gains for sectors such as mining that could benefit from the Chinese stimulus. The continent-wide benchmark Stoxx 600 rose 0.3 per cent, helped higher by London’s FTSE 100 adding 0.6 per cent.

Outbreaks across Europe have prompted the reintroduction of quarantine measures and precautionary restrictions, such as the closure of nightclubs in Spain and Italy. “Covid-19 infections remain an important speed brake on activity,” said Christian Keller, head of economics research at Barclays.

Gold climbed more than 2 per cent to $1,985 a troy ounce and silver was up nearly 4 per cent to $27.34 an ounce.

The yield on US 10-year Treasury notes fell 0.04 percentage point to 0.6687 per cent, as a selloff that pushed it up from about 0.55 per cent at the end of July ran out of steam.

US streaks ahead of Europe in stock market recovery Lack of tech bias in indices of UK, French and Italian equities puts them far behind peers Tommy Stubbington

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he benchmark US stock index, the S&P 500, came within a whisker of its record high last week. But not all indices around the world have been so swift to regain the ground lost because of the coronavirus crisis.

The S&P has clawed back more than 99 per cent of the losses suffered between its precoronavirus high for 2020, which was also its all-time peak, and its low in the March sell-off. Other major indices, particularly in parts of Europe, have lagged a long way behind.

Italy’s FTSE MIB has recovered about 62 per cent of the coronavirus-related losses since its peak at the start of 2020, and France’s CAC 40 roughly 59 per cent. London’s FTSE 100 has recovered about 58 per cent of the value lost.

In part, these imbalances are another symptom of a global

stock rally notable for its lopsidedness. In the US, the comeback has been dominated by huge gains for big tech companies. www.businessday.ng

But remove the likes of Google, Facebook and Amazon, and the recovery looks much less impressive.

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“A lot of this is down to sectoral make-up,” said Guy Foster, chief strategist at wealth manager Brewin Dolphin. “The UK @Businessdayng

has virtually no tech, and Europe doesn’t have that much.”

Stock indices in China and South Korea, which have relatively heavy weightings towards technology companies, have recouped all their losses and pushed on to set further highs for 2020.

Rises in tech stocks are in part a reflection of a surge in numbers of people working from home during governmentimposed lockdowns. But the stocks’ success also highlights the role of central banks in driving the rally, analysts say.

Massive bond-buying programmes have pushed bond yields to record lows. That reduction in long-term interest rates reduces the so-called discount rate, used to calculate the present value of future cash flows.

Fast-growing tech companies are more dependent on future profits to justify their valuations, meaning they benefit more from this shift.

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Tuesday 18 August 2020

BUSINESS DAY

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Tuesday 18 August 2020

BUSINESS DAY

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News Nigerian borders remain closed 1 year...

Continued from page 1

Nigerian businesses from regional trade for one full year.

L-R: Okanlawon Adelagun, executive director, technical; Daniel Braie, managing director; Joshua Bernard Fumudoh, chairman, and Moses Omorogbe, company secretary, all of Linkage Assurance plc, at the 26th annual general meeting of the company in Lagos, yesterday . Pic by Pius Okeosisi

FG seeks to calm nerves as preliminary Q2 GDP...

Continued from page 1

ment, which has little fiscal levers to pull to help stem the rout, is seeking to calm frayed nerves. The impending gloom could bring fresh job losses for an economy already on its knees.

The National Bureau of Statistics (NBS) is due to release the Q2 GDP numbers in less than two weeks, but according to a leading economist familiar with the computations, “the second quarter numbers are obviously negative, but how negative, we still do not know at this moment.”

Nigeria would be joining other major economies in the world in witnessing a major contraction in output for the Q2, but Nigeria’s case has been worsened by years of failure to implement policies to lure investors and private capital which has meant that it entered the Covid-inflicted slow-down like a car already wobbling.

Tunisia’s economy slumped 21.6 percent while the US GDP plunged by a record 33 percent annual rate in the Q2 as coronavirus lockdowns raged. The UK has fallen into recession as GDP tumbled 20.4 percent in April-June.

Japan’s seasonally adjusted gross domestic product in AprilJune fell a real 27.8 percent from the previous quarter on an annualised basis, posting the sharpest drop in the postwar period, according to preliminary data released by the Cabinet Office yesterday.

Unlike Japan and the US, which have deployed massive stimulus to help their economies undergo a V shaped recovery, Nigeria does not have any such fiscal levers to pull.

The Japanese government earlier this year implemented a programme to distribute ¥100,000 ($1,000) per person to each resident of the nation as a coronavirus relief measure.

The US sent out 160 million payments of $1,200 totalling $260 billion to its tax payers in April.

For Nigeria, the absence of any meaningful stimulus and the failure to enact inves-

tor friendly monetary policies mean a major and painful economic recession is in the offing.

Minister of state for budget and national planning, Clem Ikanade Agba, somehow corroborated the emerging development when he said late last week that “Nigeria’s Q2 GDP growth is in all likelihood negative, and unless we achieve a very strong Q3 2020 economic performance, the Nigerian economy is likely to lapse into a second recession in four years, with significant adverse consequences.”

Making a presentation to the House of Representatives Committee on Finance at an interactive session on the 20212023 Medium-Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP), Agba said Nigerian economy faced serious challenges in the first half of 2020, with the macroeconomic environment significantly disrupted by the COVID-19 pandemic.

He decried the level of significant medium-term fiscal challenges, especially with respect to revenues, which if not addressed could snowball into a debt sustainability crisis.

The minister stated that the medium-term outlook for Nigeria suggested that fiscal risks were somewhat elevated, largely due to COVID-19 related disruptions, which had exacerbated structural weaknesses in the economy.

Apart from the COVID-19 pressures, global crude oil prices declined sharply, with Bonny Light crude oil price dropping from a peak of $72.2 per barrel on January 7, 2020, to below $20pb in April 2020.

“In effect, the $57 crude oil price benchmark on which the 2020 budget was based became unsustainable,” the minister said.

Another key development in the international crude oil market was the massive output cut

by OPEC and its allies (OPEC+) to stabilise the world oil market, with Nigeria contributing about 300,000 barrels per day (bpd) of production cuts.

According to the minister, “The impact of these developments is about 65% decline in projected net 2020 government revenues from the oil and gas www.businessday.ng

sector, with adverse consequences for foreign exchange inflows into the economy.”

He said Nigeria was exposed to spikes in risk aversion in the global capital markets, which would put further pressure on the foreign exchange market as foreign portfolio investors exited the Nigerian market.

The shortage of foreign exchange has been worsened by a decision of the Central Bank of Nigeria (CBN) to halt its weekly foreign-currency sales since March.

The International Monetary Fund (IMF) predicts Nigeria’s economy will contract by 5.4 percent this year, the most in four decades.

The latest official unemployment figures put the secondquarter jobless rate at 27.1 percent, the highest in a decade.

Agba, who represented the minister of finance, budget and national planning, Zainab Ahmed, at the five-day interactive session, said in response to the developments affecting the supply of foreign exchange to the economy, the CBN adjusted the official exchange rate to N360/$, and more recently to N379/$.

He explained that the disruptions in global trade and logistics would negatively affect custom duty collections in 2020, and that the COVID-19 containment measures, though necessary, had inhibited domestic economic activities, with consequential negative impact on taxation and other government revenues.

As a result, the projections for Customs duty, Stamp Duty, Value Added Tax, and Company Income Tax revenues were recently reviewed downwards in the revised 2020 budget.

Speaking more specifically on the revenue performance from January to June 2020, the minister said FGN’s retained revenue was N1.81 trillion or only 68 percent of target as at end of June 2020.

He said the NLNG dividends, recoveries and stamp duty collected during the period had, however, yet to be booked in the fiscal accounts.

In an effort to check the looming fiscal crisis, the Federal Government has instituted fiscal measures aimed at improving revenue and entrench-

ing a regime of prudence with emphasis on achieving value for money.

Finance minister, Zainab Ahmed, in an interview with BusinessDay last month said she expected Nigeria to exit a shallow recession sparked by the coronavirus pandemic by the first quarter (Q1) of next year, if a N2.3 trillion Economic Sustainability Plan (ESP) approved by the Federal Government was strictly implemented.

The CBN governor, Godwin Emefiele, had sounded similar optimism with a forecast of a -1.03 percent contraction in GDP for the second quarter of 2020.

The Federal Executive Council (FEC) in June approved the immediate implementation of the Nigeria Economic Sustainability Plan (NESP) or stimulus that had an estimated N2.3 trillion price tag.

Given Nigeria’s limited fiscal space, the source of the funds was to be: special Accounts – N500 billion, CBN structured lending – N1.11 trillion, external bilateral/multilateral sources – N334 billion, other funding sources – N302.9 billion.

The plan aims to stimulate the economy by preventing business collapse and ensuring liquidity, retaining or creating jobs using labour intensive methods in key areas like agriculture, facility maintenance, and housing and direct labour interventions and extending protection to the very poor and other vulnerable groups – including women and persons living with disabilities – through pro-poor spending, among others.

Nigeria’s GDP decelerated in the Q1 of 2020 with a 1.87 percent growth compared to 2.55 percent growth recorded in Q4 of 2019.

Fiscal sustainability and macro objectives of government would require bold, decisive and urgent action, according to Agba.

“Government is determined to act as may be required. Thus, key reforms will be implemented with increased vigour to improve revenue collection and expenditure management,” he said.

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It is even more ironic that Nigeria-Benin border is still shut four months to the commencement of the African Continental Free Trade Area (AfCFTA) agreement, which Nigeria is a signatory to, and promises to serve as bulwark for Nigerian firms hit by poor local economic fundamentals.

As a result of the decision to shut Nigeria-Benin border in August 20, 2019, many manufacturers cannot import inputs from West and Central Africa.

Many exporters have shut down Africa-focused operations, hurting foreign exchange earnings badly needed by Africa’s biggest economy. Nigeria earned $823.06 million (N296.3bn) from export to ECOWAS countries and $2.72 billion (N978.21bn) from shipping out products to Africa in the first quarter of 2020. Apart from eroding this in the coming quarters, the closure promises to erode trade, which is already taking a hit from poor economy and government FX restrictions.

In the first quarter of 2020, trade’s contribution to the gross domestic product (GDP) was 16.08 percent, lower than 16.86 percent reported in the previous year. Quarter-onquarter growth of the trade sector stood at –13.79 percent, lower than the quarter-onquarter growth recorded in the fourth quarter of 2019 at 10.90 percent.

“Initially, the closure was supposed to last for one month, but till now it still remains closed. The resultant effect of this is the decline in export to these countries and significant losses for many exporters, as many have closed down some of their production lines since then,” Ede Dafinone, chairman, Manufacturers Association of Nigeria Export Group (MANEG), told BusinessDay at the weekend.

Unemployment numbers released by the National Bureau of Statistics (NBS) on Friday showed the job rate has risen to 27.1 percent in the second quarter of 2020, from 23.1 percent in the third quarter of 2018. Jobs are created by firms such as manufacturers, exporters and traders, but their margins are now badly hit by border closure, COVID-19 and inflation rate, which was 12.56 percent in June 2020.

Though the shut-down enriches farmers and a few agro-based firms, it disfavours consumers and many manufacturers. The price of different 50kg of rice was N18,000 before the border closure but is now N26,000 at Mile 12 Market and N25,000 at Daleko Market, both in Lagos - 39 to 44 percent increase. Eight@Businessdayng

seven million Nigerians are extremely poor, according to the World Poverty Clock.

Okhai Ehimigbai, export manager at Aarti Steel, which exports steel products and zinc ash, said on Friday that his company had stopped export to ECOWAS due to the closure of the land border.

Export to Ghana by sea takes one month now as against two weeks or less through the land borders, he said.

Toki Mabogunje, president, Lagos Chamber of Commerce and Industry (LCCI), said at a dialogue session with Vice President Yemi Osinbajo recently that the closure of the land borders had enormous implications for cross-border economic activities around the country.

“The indications are now that the closure is indefinite.

While we share the concern of government on issues of security and smuggling, we believe that the indefinite closure of land borders is not the solution to the problem,” she said.

The AfCFTA has been postponed to January 2021 from July 2020 on coronavirus concerns. Bismark Rewane, CEO of Financial Derivatives Company, said on Channels TV in 2019 that the AfCFTA would favour Nigeria, Kenya, Egypt and Ghana, among others, but warned that any government that was not effective would fail within the AfCFTA environment.

Analysts say export-oriented companies such as Dangote Cement, British American Tobacco Nigeria, FrieslandCampina WAMCO, De-United Foods Industries, Guinness Nigeria plc, Dangote Agrosacks, Beta Glass, among others, will benefit from the treaty.

“Mostly multinationals and large enterprises are in a better position to gain from AfCFTA because their economies of scale will improve.

They have the big market and the capacity,” Muda Yusuf, director-general, LCCI, said in a telephone interview recently.

However, it is looking like Nigeria is not preparing for the trade treaty as it continues to shut land borders through which goods and services will come in and leave during the AfCFTA. Apart from the shutdown of the border, the Central Bank of Nigeria is increasing the list of items not eligible for FX access, which has a negative implication for trade.

After adding milk to the long list, the number of items not eligible for FX is now 44.

The Nigerian business environment is still tough, with gridlock to Apapa and Tin Can seaports in Lagos delaying goods for weeks. Taxes are still multiple in many states while infrastructure remains a big challenge.

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Tuesday 18 August 2020

BUSINESS DAY

NEWS

Nigeria-S/Africa Chamber of Commerce holds breakfast forum

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he Nigeria-South Africa Chamber of Commerce (NSACC) will be holding its August webinar breakfast forum on Thursday, August 27, 2020 between the hours of 10.am and 12pm.

Frank Aigbogun, publisher/CEO of BusinessDay, according to NSACC, will be the speaker in this month’s edition of the forum.

Foluso Phillips, chairman, Nigeria South Africa Chamber of Commerce will give the opening remarks while Osayaba Giwa-OSagie, the vice chairman of the Chamber will be the moderator.

Udeme Ufot, group MD, SO&U and Wiebe Boer, CEO, All ON will share insights on the topical issue: “The press and the Nigerian economy ‘’ in our ever evolving society.

The executive secretary of NSACC, Iyke Ejimofor, in a statement stated that the event was for all interested parties.

He added that the chairman of the chamber, He further noted that as in previous times, this month’s edition would be educative and insightful.

Ejimofor noted that since the inauguration of the NigeriaSouth Africa Chamber of Commerce in 2000, the bilateral relations between both countries have grown tremendously.

“Through the Chamber activities, many South African firms have indicated interest in joint partnership with Nigerian firms and other forms of economic co-operations with several business establishments in Nigeria.

South African firms or firms with South African participation are active in Nigerian business sectors such as telecommunications, broadcasting, petroleum, banking, hospitality and to mention but a few,” he said.

Nigeria South Africa Chamber of Commerce’s membership covers a wide spectrum of business activities in Nigeria including banking/finance, manufacturing, insurance, advertising, accounting, auditing, management consulting, airline services, engineering, freight, hospitality, health/ pharmaceuticals, oil and gas, property, telecommunication among others.

Naira heads to N480 on black market as dollar shortage persists HOPE MOSES-ASHIKE

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he persistent pressure on the foreign exchange may see Nigeria’s currency heading to N480 per dollar this week on the black market.

The dollar is currently trading at N477, representing a N2.00k depreciation compared to N475 sold earlier this morning on the black market. The weakening in the value of the Naira is due to high demand by end-users amid dollar scarcity.

The market has witnessed dollar shortages since early this year as a result of low oil prices, which accounts for about 90 percent of the country’s foreign exchange earnings and low

inflows from remittances due to the Covid-19 pandemic.

At the retail bureau, the naira weakened by N1.00k as the dollar was trading at N476 on Monday as against N475 traded since last week.

However, the Naira show marginal appreciation or 0.06 percent as the market opened with an indicative rate of N386.10k on Monday morning, at the Investors and Exporters (I&E) forex window according to the data from FMDQ. “Shrinking foreign exchange revenue due to low oil price and production, as well as, drying capital flow and remittances have precipitated an overall Balance of Payments deficit, with implications for exchange rate pressure,” said Godwin

Emefiele, governor of the CBN in his personal statement at the last Monetary Policy Committee (MPC) meeting in July 2020.

Following the outbreak of Covid-19, forex inflows into the I&E window reduced on the back of lower Foreign Portfolio inflows, according to a report by FSDH research.

Foreign Portfolio Investment (FPI) declined to US$57.7 million in May from $2.04 billion in January 2020. The CBN intervention increased from $390 million in January 2020 to $2.48 billion and $2.89 billion in February and March respectively.

The attendant effect of Covid-19 on oil price constrained the CBN’s capacity to intervene further as dollar inflow

dwindled in April.

Following the lockdown and restriction of economic activities in April and May, total inflows to the I&E Window dropped from US$3.19 billion in January to $459.2 million in April and $381.2 million in May 2020, the report noted.

Analysts at the FSDH research said major factors responsible for the decline in foreign investment inflows include uncertainty on the economy especially given the outbreak of Covid-19 which has slowed overall investments.

Other factors include inconsistent policies, declining external reserves in Q1, insecurity and harsh operating environment for Foreign Direct Investment (FDI).

Health, safety remain core of our business - Expand Global GBEMI FAMINU

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xpand Global Industries Limited (EGIL) has restated its commitment to the safety of its staff and environment, as investigations on the fatality on its premises continue. In a recent statement, the company regretted the unfortunate incidence leading to the death of one of its third-party staff and promised to work with the police and the family at this difficult period.

It would be recalled that in 2016, Henkel acquired Expand Global Industries Limited (EGIL).

Since then, Henkel in Nigeria has continuously invested in the improvement of the production tools and the Safety, Health and Environment standards in its Ibadan site.

“The safety of our people is of the utmost priority. It is a part of our day-to-day performance. We takeresponsibilityforthesafetyand health of our employees, customers and consumers, the protection oftheenvironmentandthequality of life in the communities in which we operate. A comprehensive package is provided to our employees. Health and preventive care programmes are applied to safeguard against workplace and general health risks.

“We established a fully equipped medical clinic, manned by a qualified doctor and trained nurses, accessible to all staff on-site including thirdparty workers. Annual medical check-ups are also provided.

EGIL abides by the Nigerian Labour Law without exception.

Working hours are regulated to ensure an adequate rest period.

Since its acquisition in 2016, no fatalities occurred before the tragic one in the Ibadan plant on

28 July 2020,” the statement said.

It further added, “Henkel designs, manages and operates our facilities to maximize safety, promote energy efficiency, protect the environment, and drive Zero Defect quality of our products, eliminate hazards and reduce risks. Henkel continuously improves our integrated SHEQ management system by analysing and managing risks and opportunities both internally and with external suppliers, manufacturing partners and customers. Henkel complies with ISO 9001, 14001, 45001, 50001, and RSPO SSC to meet or exceed all applicable environmental, health, safety and quality requirements”.

It would be recalled that in Oyo State, Henkel donated WAW bar soap to Oyo State government in two separate donations, through the head of the Oyo State Covid-19 Taskforce, as well as, the statechapteroftheManufacturers Association of Nigeria (MAN).

This was done to help support the state government’s effort in the fight against COVID-19 and particularlyforuseinthestate-run isolation and treatment centres.

The company also launched a campaignonradiostationsacross the state to create awareness about the coronavirus.

In Lagos State, the donation was made to nurses in the state in mitigating the challenges of the COVID- 19 pandemic and alleviate the risks associated with their exposure to patients undergoing treatment. The donation was received on behalf of the commissioner of health, Akin Abayomi, by the director, Lagos State Health Service Commission, Olaide Animashaun, and the director, Lagos State nursing services Dorcas Shonibare. www.businessday.ng

L-R: Abisola Olusanya, acting commissioner for agriculture; Olayiwole Onasanya, permanent secretary, ministry of agriculture, and Abiola Ayoade, director agric services, during 2020 Agric YES summer for secondary students flag off in Lagos yesterday.

Stakeholders back NNPC on non-sale of equities in oil assets Olusola Bello

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takeholders in the oil and gas industry have backed the position of the Nigerian National Petroleum Corporation (NNPC) that it would not succumb to pressure to sell off its equities in the joint venture companies to rake in revenue for the government or meet it debts obligations.

They said selling the equities at this material time would amount to losing money to the disadvantage of the Nigerian government and to the benefit of the investors.

According to Wumi Iledare, a former president of the Nigerian Association of Energy Economics (NAEE), with the crashing of oil prices and the Covid-19 pandemic, it would be suicidal for the NNPC to sell it equities in the joint venture companies to raise revenue either to settle debts or for the government.

“At this moment the NNPC would not get value for its money as share prices are collapsing.

It is a wise decision that you are not selling when you are desperate,” he said.

He said it should be realised that the NNPC is holding the equities in trust for the Federal Government who is also representing the people of Nigeria, stating that the NNPC would have to get approval from the Federal Executive Council (FEC) to carry out such sales if at all it must happen, adding that the equity existed before the NNPC Act. Also, Eddy Wikina, a former manager with Shell Nigeria and Exploration and Production Company, said if the NNPC should decide to sell the equities at this moment, it would be at a much lower value, saying that this does not make economic sense.

The NNPC had in one of the webinar series ruled out the sale of its multi-billion dollars equities in oil assets across the country to investors, declaring that this is the wrong time to venture into that.

Mele Kyari, group manag-

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ing director of the corporation, who gave this hint in a keynote address at the 45th anniversary lecture of the Nigeria Association of Petroleum Explorationists (NAPE), maintained that the corporation was proactive bearing in mind the place of oil and gas in the next 40 to 50 years.

Supporting the statement of the NNPC boss, Meyiwa Eyesan, group general manager, corporate planning and strategy, NNPC, declared that the corporation has crashed its cash call debts in the Joint Ventures (JVs) with International Oil Companies (IOCs) to slightly above $2 billion.

The corporation is in JV with Shell, ExxonMobil, Chevron, Eni and Total.

The reduction in JV cash call debts, she declared, was achieved between 2015 and 2020 from $5 billion in 2015 to over $2 billion in five years, paying about $3 billion of the JV cash call arrears.

Meyiwa Eyesan attributed this feat to the efficient business plan put in place by the @Businessdayng

corporation.

Responding to the suggestion that NNPC should shed its financial burdens in JVC commitments, she maintained that the corporation has gained traction to efficiently partner with other oil companies in the country. She pointed out that the NNPC as at today was upbeat with the current plan to open the $2.3 billion domestic gas market and rehabilitate the nation’s refineries.

She maintained that NNPC had decided not do it alone but to go into partnership with the private investors.

“What we have done in the upstream sector is what we are going to replicate in the downstream by going into partnership with private investors” she noted.

According to her, this is going to be seen in the rehabilitation of the old pipelines and the refineries.

“The pipelines and the refineries are open to partnership on Build Operate and Transfer (BOT) bases,” she explained.

Tuesday 18 August 2020

BUSINESS DAY

31

POLITICS & POLICY

We are in the process of rescuing Nigeria - Na’Abba that Nigerians were now poorer and more disillusioned with the state of affairs in the country than at any other period in the history of the country.

“We have had to watch in dismay, shock and disappointment our dear country slide into anarchy. The country is drifting, virtually no sector is working; the rulers seem irresponsible and incompetent,” Na’Abba said.

According to him, “Unemployment is at unprecedented level and the loss of lives is at a dismay level with scores of Nigerians being killed on a daily basis. Our indebtedness has reached an alarming rate with poor state of social infrastructures. The feeling is that of disillusion, and the feeling among Nigerians is that the days are numbered.”

Speaking further, the former lawmaker said the current state

Iniobong Iwok

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former Speaker of the House of Representatives, Ghali Na’Abba has revealed that there were ongoing consultations among some elite politicians toward setting up a new political movement to rescue the country.

In a television broadcast, Na’Abba, who is a co-chairman of the newly formed National Consultative Front, claimed that Nigeria was now a failed state, while describing the current administration as being incompetent and irresponsible.

He listed unemployment, insecurity, economic hardship as some of the areas where the President Muhammadu Buhari administration has failed and proven its incompetence, adding

Ghali Na’Abba

Tribunal sacks Bayelsa governor, orders fresh election within 90 days ‘I’ve instructed my lawyers to appeal Tribunal ruling’ Felix Omohomhion, Abuja

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he Bayelsa Governorship Election Tribunal has sacked Bayelsa State Governor Duoye Diri. The Tribunal gave the verdict at its sitting in Abuja on Monday.

The panel, in a split judgment, held that the election was unlawful due to the exclusion of Advanced Nigerian Democratic Party (ANDP) and its candidate, King George, from the November 16 state governorship election.

The tribunal however, ordered the Independent National Electoral Commission (INEC) to conduct a by-election within 90 days.

The Justice Ibrahim Sirajo-led panel held that ANDP was illegally excluded in the contest.

ANDP had in a petition prayed before the tribunal that it was unjustifiably excluded from participating in the election by the INEC despite the fact that it fulfilled all the statutory requirements.

The tribunal agreed with the party, saying it found merit in the petition. It consequently nullified the election and ordered INEC to conduct a by-election in the state within 90 days.

Recall that two days ago, the tribunal had dismissed as lacking in merit, three other petitions that sought to sack Governor Diri on the premise that his Deputy, Senator Lawrence Ewhrudjakpo submitted forged NYSC certificate to INEC for the purpose of the election.

The dismissed petitions were brought before the tribunal by Alli-

ance for Democracy (AD1), and its candidate, Owei Woniwei, United People’s Congress (UPC), and its candidate, Ibiene Stephen, as well as that of candidate of the Liberation Movement (LM), Vijah Opuama.

The Supreme Court had on February 13 sacked the All Progressives Congress (APC) governor-elect, David Lyon a day to his swearing in on the grounds that his deputy, Biobarakuma Degi-Eremieoyo’s certificates attached to Form CF001, which he submitted to INEC had discrepancies.

Diri of the People’s Democratic Party (PDP), who came second in the governorship election was therefore, declared the winner.

But in a statement signed by Daniel Alabrah, acting chief press secretary to the governor, the state government appealed to the people of the state to maintain their peace, as Diri had instructed his lawyers to appeal the ruling by filing the necessary papers.

The statement also quoted the governor as having “implicit confidence in the judiciary” that he would triumph in the end.

“We trust in the judiciary and we are appealing the judgment. With God on our side, we will get justice.

This is a court of first instance and I have instructed our lawyers to file an appeal. We have a right of appeal even up to the Supreme Court,” he said.

The governor urged members of the People’s Democratic Party (PDP) and his supporters not to panic and to continue to remain calm and law-abiding. www.businessday.ng

of the country was unacceptable to Nigerians, stressing that it had necessitated the current move by political like-minds to come together to form a new political movement to rescue the country from impending collapse and give succour to Nigerians.

“Our political structure has not been able to rise up to the challenge; it is unacceptable. We would initiate a national political action where the citizens would get their basic needs and fulfill their potentials.

“We as Nigerians of conscience have decided to take urgent action to challenge our unfortunate situation. We the National Consultative Front would commonly pursue the task of rescuing the country from collapse. This would be achieved through nationwide consultation and mobilisation,” he added.

Despite Akpata’s victory, reforms must be made now in NBA - Ubani The recent national election of the Nigerian Bar Association (NBA) has been trailed by controversy leading to agitations for reforms in the legal body by lawyers. Monday Ubani, immediate past vice chairman of the NBA in this exclusive interview with INIOBONG IWOK, speaks on the election and the reforms that need to be carried out. Excerpt: What is your take on the recent NBA election? et me be sincere with you, if what we gathered from social media and from the whole NBA is anything to go by, if you conduct that election two or three times Akpata would still emerge.

That is because the majority of the young lawyers’ constituency wanted a change from the issue of having a SAN to a non-SAN as president. Also, the memo that was written by a certain Senior Advocate of Nigeria did not help matters; it makes a lot of them want change. They were ready to vote a non-SAN in that position to carry out some of the complaints of NBA, welfare of lawyers and what people are benefiting from the NBA. So, they now feel it is high time we gave a non-SAN opportunity to see what he can do in the next two years. So, the sentiments of the young lawyers were for Akpata to the extent that if you cancel it and conduct another, he may still win.

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But one of the candidates said the result should be cancelled because it was manipulated?

Akpata winning does not mean that there were no flaws; there were some of them in the system. Especially on the requirement of the law on the publishing of names of the voters before election it was done in a few hours to election, while the law says twenty or more days. Another flaw was the issue of the Diaspora branch; I don’t think the constitution recognised that.

The third one was the removal of the branch names; there was no good reason why they were no more there.

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Monday Ubani

Why were some names omitted? Who pays their practice fees on time? Who pays their branch fees on time? Why were their names removed in the final voting list? There are questions to be answered. The issues would be cleared and challenged if the voters’ names were published on time; but because it was a few hours to the election nobody could raise any objection to that which would have led to correction. And let us be sure that there is no interference in the e-voting process, that there is transparency in the voting process, we must make it hundred percent so that it would remove suspicion whatsoever.

But some lawyers have also complained about the clause that a member must previously hold a position as chairman or secretary of their local branches to contest for NBA national office. What is your view?

Non-state executive aspires; we put that clause there so that when you are aspiring for the offices at the national @Businessdayng

level, you would have knowledge of the working of the NBA. For you to be the president of the NBA; you can’t just come from anywhere without having any idea of the bar. We said you should be a member of the NEC to contest; it was not there for putting sake. You must have an idea of what the position is all about, when you have no knowledge or whatever, what would you do?

Those you want must have some responsibility in the bar before the president can be handed over to them. That is how I understand that clause. If we don’t have a free and fair election in the NBA, then we have no basis criticising and monitoring the national elections, in order to make sure that there is any doubt as to the fairness of the process. We don’t want all the time people go to court after the election. Like almost all the previous elections, we have had that process.

But as for whether Akpata would have won? I think even if it was corrected from what I learnt, the majority of the lawyers were on Akpata, it does not mean the process was without its problems. The other candidates have their supporters who voted for them if the process was hundred per cent credible. But from my own view and like somebody who have been monitoring elections in the NBA over the years, his wining was not a shock like some of other elections that we have had over the years, where people we never expected won. But this one, before the election, fillers indicated that Akpata may carry the day; it does not take away the flaws discovered in the election.

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Tuesday 18 August 2020

BUSINESS DAY

BDTECH

In association with

E-mail: jumoke.akiyode@businessdayonline.com

How Citizen Gate, the Lagos State electronic feedback platform has impacted productivity in MDAs The office of Transformation, Creativity and Innovation, (OTCI) was initially established in 2009 as the office of transformation. In 2015 however, it was re-christened office of transformation, creativity and innovation and saddled with the task of engendering public service reforms including promoting creativity and innovation in the public service sector. In an exclusive interview with Jumoke Lawanson, director general, OTCI, Toba Otusanya, speaks on the CitizensGate app, and other public sector innovations. Excerpts.

Tell us about Office of Transformation, Creativity and Innovation (OTCI)?

TCI was established in 2009 as office of transformation but later in 2015 was rechristened to office of transformation, creativity and innovation. The office has a very strong mandate; the mandate can be broken into two parts- the first part deals with public service reforms, i.e. how do we make public service more effective and efficient through the policy process and people management, the second part of our mandate deals with how do we promote creativity and innovation within the public service. As an office we have introduced several initiatives which include; service Charter, Citizen Gate, Ease of Doing Business, Growth Mindset Initiative and also the establishment of creativity and innovation committees across the public service, all of which is designed to address the two key aspects our mandate.

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In what ways is OTCI addressing bureaucratic bottleneck in civil service?

There are several initiatives put in place to help improve service delivery, for the purpose of this interview I will focus on two. First is the Service Charter, which was launched as far back as 2012, designed as a social contract between MDAs (Ministry, Department & Agency) and the public. Service charter comes with service pledges, service standards and commitment to which citizens are entitled in terms of opening hours of the agency, how long it takes for a particular service to be delivered as well as all the cost associated with the service such that if there is a service failure; citizens have the right to a redress i.e. they can hold the agency accountable. So far, service charter has been put in place in 28 MDAs and 14 general hospitals, we are still looking to scale up this year

Toba Otusanya, director general, Office of Transformation, Creativity and Innovation (OTCI) Lagos State.

to see how many additional agencies we can bring under the framework.

The second area I will be speaking on is the ease of doing business reforms which is also about improving service delivery to SMEs. On the EODB reforms, the objective is to improve how long it takes for citizen to obtain their planning/construction permit as well as registering property. On obtaining construction permit we have done a lot. We have automated the entire process. The entire process can be done online right from completing the application, uploading all the relevant architectural drawings up to the point of making payment. Additionally, we have also removed infrastructure development charge (IDC) for the construction of warehouse. So, all of those reforms are geared towards improving and making it easier for citizens to be able to interact with government, as a matter of fact, the number of days to obtain construction permit has come down from 42days to 28days on average. You

www.businessday.ng

can access the Lagos State Electronic Planning Permit Platform at www. epp.lagosstate.gov.ng.

On registering property, we have also implemented a number of reforms; all our demand notices for fees have been consolidated into a single demand notice for land transaction, which means you do not have to deal with multiple agencies, all the charges are consolidated in one single demand notice and once that single payment is made that completes the payment element of the transaction.

In addition to that, the governor of Lagos quite recently delegated the signing of Certificate of Occupancy (C of O) to six commissioners in addition to himself to fast track the approval process. Also, to obtain a certified true copy, you no longer need a sworn affidavit, this is not required anymore. Furthermore, if you have any issue on land transactions you can use the citizens’ gate portal to file a feedback and get the appropriate redress.

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How has the citizens’ gate project fared so far?

Well, Citizen’s gate is an electronic feedback portal which was designed to bring the government closer to the people, it was launched in 2017 with 22 pilot MDAs but in 2018 it was scaled up to cover all the MDAs. Through the platform, you do not need to come to Alausa Secretariat to interact with the government. In the comfort of your home, offices you can interact with the government whether by accessing the portal through the web www.citizensgate. lagosstate.gov.ng or you download the app either from google play store or apple store. I will encourage Lagos residents to download the app and start interacting with the government, you will be amazed how simple and easy it is to use the platform.

For clarity, when we say feedback it is in four categories. When you go on the citizens gate portal, you can make an inquiry, you can make suggestions on how government can improve services, you can lodge a complaint where services rendered are poor and lastly, if you had a fantastic experience interacting with government, you can commend us and encourage us to do more. Since inception we have received well over 5,000 tickets on the platform and this is expected to go up significantly in the coming months.

What are some of the challenges you face as an agency saddled with the responsibility to promote creativity within the Public Service?

I think the major challenge is the difficulty in changing mindset because the public service is a bureaucratic institution and you have significant number of civil servants that are used to doing things in a certain way.

It is always difficult when you are preaching creativity and innovation; you are telling them to come out of their comfort zone to try new things and new ways of working. However, through the growth mindset initiative launched about 18months ago by

@Businessdayng

OTCI, the rationale is to change the orientation of the public service from a fixed mindset to a growth mindset, coupled with the establishment of the committee of creativity and innovation across the public service, we are beginning to see some level of traction because quite a number of civil servants are starting to come up with multitude of ideas on how to improve the public service.

Which of your achievement are you most proud of?

I will say it has to be the Presidential Enabling Business Environment Council (PEBEC) impact award. This is because I consider it a privilege and honour to be part of a team that over a three year period was able to move Nigeria up 39 steps on the Ease of Doing Business ranking. I think that is something that will stay with me for a very long time.

How will you describe your leadership strategy and style?

I will probably describe it as transformational. The reason being, when I conceive a vision in terms of what needs to be changed or needs to be reformed, I then sit with my team and we work aggressively to achieve that vision. For example, one of the visions I had was to see Lagos State government become a leading institution in terms of professional human resource management and my team and I worked aggressively on that.

Consequently, in 2017 and also 2019, LASG won the CIPM HR best practice award. Interestingly in 2019, apart from winning the HR best practice award for the public sector category, we also won the HR optimisation award. The HR optimisation award cuts across both the public sector and private sector. So, for Lagos State Government to come out on top, beating leading private sector organisations in the process is testimony to the fact that appropriate leadership style and the right team ethos would always yield maximum result.

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news

Higher food prices, PMS hike drive July inflation to 27-month high BUNMI BAILEY & Gbemi Faminu

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onsumer prices in the country rose for the eleventh consecutive month, hitting a record high of 12.82 percent in July, driven by supply disruption to food value chain and hike in petrol price.

According to data from the July 2020 inflation report by the National Bureau of Statistics (NBS) released on Monday, inflation on a month-on-month basis rose by 12.82 percent which was 1.25 percentage points higher than the rate recorded in June 2020 (12.56 percent). The current inflation is the highest in 27 months.

“We are seeing some fundamental pressure in the market’, said Omotola Abimbola, a macro and fixed income analyst at Lagos-based Chapel Hill Denham. “The major contributor to the increase is the lingering disruption in supply chains, forcing prices to soar in the country.

Normally by now, food inflation on a monthly basis should be falling as we begin the early harvest. But this time, it is different.”

Food prices which drove up the inflation, rose monthon-month by 1.52 percentage points to 15.48 percent in July 2020 compared to 15.18 percent in June 2020. The rise in the food index was caused by increases in prices of bread and cereals, potatoes, yam and other tubers, meat, fruits, oils and fats, and fish.

“The rapid acceleration was driven by persistent pressure on food prices, supported by low base effect (year-onyear),”Damilola Adewale, a Lagos-based economic analyst said

The disruption to the food supply chain caused by the closure of the land borders in 2019 played a principal role in the food prices hike. Following the supply cut, demand shot up for locally produced commodities leading to farmers being overwhelmed by demands which could not be met.

In addition to this, the outbreak of the coronavirus pandemic which instigated the need for a lockdown and restriction of movement aggravated the supply of food items into other states, causing scarcity and consequential increase in the prices of food items.

Matuluko Aminat, a rice seller at Daleko market told BusinessDay that the supply of rice has been cumbersome especially since the lockdown, causing scarcity and price increase.

She further added that “under normal circumstances if the price of rice increases, in less than two weeks the prices revert to normal but as it is now, price of rice will continue to increase and there is no hope of it reducing soon” she said.

Upon relaxing the lockdown, the price of Premium Motor Spirit (PMS), also known as petrol increased by 20.4 percent to N148.7 per litre, feeding into transport prices.

Core inflation, which excludes the prices of volatile agricultural produce stood at 10.10 percent in July 2020, down by 0.03 percent when compared with 10.13 percent recorded in June 2020. On month-onmonth basis, the core sub-index increased by 0.75 percent in July 2020. This was down by 0.11 percent when compared with 0.86 percent recorded in June 2020.

L-R: Yusuf Aboki, Nigeria’s candidate for the post of executive secretary of West African Telecommunications Regulatory Assembly (WATRA); Isa Ali Ibrahim, minister of communications and digital economy; Umar Garba Danbatta, executive vice chairman, Nigerian Communications Commission (NCC), and O.Y. Asaju, director, special duties, NCC, during a courtesy visit to the minister in Abuja.

‘$1m business registration, other conditionalities too much for Nigerian traders in Ghana’ …we’re ready to come back home, says traders’ association leader JOSHUA BASSEY

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resident of the Association of Nigerian Traders in Ghana, Chukwuemeka Nnaji, says majority of Nigerian traders in Ghana cannot afford the $1 million and other conditionalities that small businesses are being asked to fulfil to continue doing business in the West African country.

As a result, the Nigerian traders have asked the Federal Government of Nigeria to engage the Ghanaian authorities leveraging the ECOWAS protocol.

Nnaji, who spoke on a radio programme, Political Platform, on RayPower FM (100.5) on Tuesday morning, said if this diplomatic engagement fails to yield the desired result, the traders would be willing and

Future of risk management seen to have no boundaries Hope Moses-Ashike

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he future of risk management is seen to continue to have no boundaries and rapidly dynamic as capacity required to effectively manage emerging risks will continue to change.

Magnus Nnoka, president, Risk Management Association of Nigeria (RIMAN) said this at the association’s membership induction programme recently held in Lagos.

“The risk management approaches of yesterday and today will not suffice for the risk of tomorrow,” Nnoka said.

He urged the risk managers to take advantage of the various training and capacity building programmes including certified risk managers of the association to remain abreast of skill requirements in their profession.

He noted that the risk management is in a new age of catastrophe and increasing uncertainty, faced with major challenges in dealing with natural and technological hazards in an increasingly interdependent and inter connected world.

“We must begin to envision the changing risk landscape that lie ahead of us as well as how we can come to terms with the many ways of managing the inevitable consequences on the society,” he said.

From his perspective, the only way to truly understand the global transformations that are underway – along with their impacts – is to think laterally. In other words, to use “peripheral vision” and approach associated risk management problems creatively.

“As we formally welcome you today (Saturday) into Nigeria’s elite professional association of risk managers, I am very clear in my mind that you have all accepted to lead the rest into the future of risk management that will be characterized by uncertainty,” he said.

“As I welcome you today on behalf of the Board of Trustees, Executive council and entire members of RIMAN, second of its kind in subSaharan Africa, take a moment and reflect on what kinds of risks we would all be facing at the end of this decade,” Nnoka said.

ready to return to Nigeria.

He insisted that the conditionalities put forward by the Ghanaian government were above the capacity of most Nigerian small businesses operating in that country.

According to Nnaji, the conditionalities include payment of $1 million or its equivalent in share equity, employment of at least 25 Ghanaians, and not operating in areas where Ghanaians have their businesses.

“These are too much for us to fulfil. Majority of Nigerian traders in Ghana cannot afford $1 million,” he said on the programme monitored by BusinessDay in Lagos.

He lamented that the registration charge was raised from $300,000 to $1 million, adding, “We have

raised the ECOWAS protocol with the Ghanaian authorities, telling them that we’re West African citizens and should not be treated like other foreigners, but they have insisted that in spite of the ECOWAS protocol, their law is king.”

Nnaji, who painted a pathetic picture of Nigerian traders in Ghana, said their shops and business premises are being locked up despite having business permits.

On what he thinks the government back home can do, he said, “We want the Nigerian government to engage the Ghanaian authorities on the basis of the ECOWAS protocol. But if this fails, we plead with the Ghanaian government to give us some time to pack our loads and go back home.”

The ECOWAS protocol agreed to by the member states in 1979, which are in phases, stipulates the right of ECOWAS citizens to enter, reside and establish economic activities in the territory of other member states.

The first phase deals with the right of visa-free entry; phase two deals with the right of residency, and phase three concerns the right of establishment in another member state.

The first phase has been fully implemented. The second phase, the right of residency, has also been implemented, given that citizens had obtained an ECOWAS residence card or permit in fellow member state. The third phase, the right of establishment, is still under implementation in most member states.

Lai Mohammed, NBC come under fresh attack over moves to choke Nigerian media Daniel Obi, Lagos & Godsgift Onyedinefu, Abuja

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he last is yet to be heard about the controversial National Broadcasting Commission (NBC) Code which raised contentious issues. Among them are nonexclusive right for broadcasting content, advertising issues and the N5 million fine for debatable and ambiguous hate speech offence. The new code gets messier by the day as the NBC board has equally rejected it.

Since the code was unveiled on August 4 in Lagos, the minister of information and culture, Lai Mohammed has come under attacks as Nigerians alleged that he is riding on the back of NBC to silence critics, a plan gov-

www.businessday.ng

ernment couldn’t achieve through other means such as bill by National Assembly against hate speech.

The renewed attacks on the code came as NBC; the orchestrated platform government is using to achieve its aim, recently slammed N5 million fine on Nigeria Info 99.3Fm for alleged violation of the NBC Code on hate speech.

Imposing the fine, NBC cited the unprofessional conduct of the station in handling of its August 10 Morning Cross Fire programme. “The station provided its platform for the guest, Dr. Mailafa Obadiah, to promote unverified and inciting views that could encourage or incite to crime and lead to public disorder”, NBC said.

Reacting, Nigeria Union of Journalists, (NUJ), the umbrella body of all journalists in

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Nigeria has condemned the Code and the fine on Nigerian Info, describing the actions as being at variance with tenets of democracy.

Speaking to BusinessDay, the NUJ president, Chris Isiguzo on behalf of the union asked the government to rescind its decision on the fine and the code. “In a democratic setting, nobody should restrict the people from expressing themselves and any code that restricts the people from free expression is undemocratic”.

He said inasmuch as NUJ condemns and frowns at any foul language or hate speech, government cannot use sledge hammer to kill an ant.

In his reaction, a frontline public relations consultant and CEO of CFO Associates, Charles Igbinidu who described the code as imposition @Businessdayng

on the broadcast industry asked who tried and found Nigerian Info guilty.

Describing the code as single handiwork of the ministry of information and culture under Lai Mohammed, Igbinidu said the code supposed to be put in place by operators in the industry to guide their operations. He warned NBC overseen by Armstrong Idachaba as acting director-general against being instrument of gagging the media.

Speaking on Channels Television Sunrise Daily recently over the hate speech as contained in the NBC Code, Tonnie Iredia, a professor of broadcast management and media law, said the issue of hate speech is a controversial matter and could be subject to abuse.

34

Tuesday 18 August 2020

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Monday 17 August, 2020

Top Gainers/Losers as at Monday 17 August, 2020 LOSERS

GAINERS Company

Company

Opening

Closing

Change

DANGCEM

N136

N135

-1

1.45

VITAFOAM

N5.75

N5.45

-0.3

1.25

UACN

N6

N5.85

-0.15

N2.85

N2.75

-0.1

N3.16

N3.1

-0.06

Opening

Closing

Change

MTNN

N115.5

N117.8

2.3

JBERGER

N15.05

N16.5

UNILEVER

N12.5

N13.75

ARDOVA

N12.75

N13.95

1.2

INTBREW

N11.9

N12.3

0.4

UCAP

DANGSUGAR

ASI (Points)

25,132.67

DEALS (Numbers) VOLUME (Numbers)

3,597.00 161,231,804.00

VALUE (N billion) MARKET CAP (N Trn)

1.845 13.110

Dangote Cement drives NSE’s negative start to new week Soties by Iheanyi Nwachukwu

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igeria’s stock m a r k e t opened the new week on a negative note, dipping by 0.22percent, no thanks to shares of Africa’s leading cement producer Dangote Cement which led the losers’ league.

Gains in stocks like MTNN (+1.99percent); Julius Berger (+9.63 percent); Unilever (+10percent); Ardova (+9.41percent); and Dangote Sugar (+3.36percent) could not reverse the negative close.

In all, investors lost about N36billion at the close of trading, while the negative return year-todate (ytd) increased to -6.33percent.

The value of Nigeria’s listed stocks decreased to N13.110trillion while the Nigerian Stock Exchange (NSE) All Share Index (ASI) decreased to 25,132.67 points as against day open high of N13.146 trillion and 25,199.84 points respectively.

Dangote Cement Plc led the loser table after its share price decreased by N1, from N136 to N135, down by 0.74percent.

BusinessDay had ahead of trade-open this week ad-

H

FTSE 100 Index 6,127.44GBP +37.40+0.61%

Nikkei 225 23,096.75JPY -192.61-0.83%

S&P 500 Index 3,383.76USD +10.91+0.32%

Deutsche Boerse AG German Stock Index DAX 12,920.66EUR +19.32+0.15%

Generic 1st ‘DM’ Future 27,773.00USD -19.00-0.07%

Shanghai Stock Exchange Composite Index 3,438.80CNY +78.70+2.34%

Board of UBA approves audited half year result, interim dividend

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he Board of United Bank for Africa Plc at its meeting which held on Thursday, August 13, 2020 considered and approved the 2020 audited half-year (H1) results and reports and payment of an interim dividend, subject to the approval of the Central Bank of Nigeria.

The bank disclosed this in a notice signed by the Group Company Secretary,

Bili A. Odum and sent to the Nigerian Stock Exchange (NSE).

The Nigerian Stock Exchange and the investing public would be immediately notified upon receipt of the 2020 audited half year results and reports by the Central Bank of Nigeria. The bank’s share price closed at N6.5 on Friday August 14, compared to its 52-week low of N4.40 and 52week high of N9.25

SEPLAT restates commitment to developing Imo communities

F L-R: Akin Akeredolu-Ale, managing director and chief executive officer, Lagos Commodities and Futures Exchange ( LCFE); Rasheed Yussuff, director, LCFE; Richard-Mark Mbaram, technical adviser to minister of Agriculture and Rural Development on Knowledge Management and Communication, and Gbenga Awe, divisional head, Heritage Bank Plc, during courtesy visit of Mbaram to LCFE in Lagos recently.

vised investors to be cautious this week as speculative buyers may choose to take profit on some counters that saw significant price appreciation last week.

In the same vein, United Capital analysts said they expect a mixed performance “as short-term players take profit while seeking bargain hunting opportunities.”

“Also, we believe a bullish catalyst could be triggered by the publication of a strong earnings report from the outstanding tier-1 banking names,” the analysts added.

“Despite the attractiveness of a number of fundamentally sound stocks, we expect the market to remain volatile in the short term amid the persistent uncertainties in the global and macro-economic environment, hence, a cautious trading strategy is advised,” said Lagos-based analysts at Vetiva Capital.

Vitafoam Nigeria Plc came second on the top losers list after its share price moved down from N5.75 to N5.45, shedding 30kobo or 5.22percent. UACN also dipped from N6 to N5.85,

losing 15kobo or 2.50percent.

International Breweries Plc also dropped from N2.85 to N2.75, shedding 10kobo or 3.51percent; while United Capital joined the league of top loser after its share price decreased from N3.16 to N3.1, losing 6kobo or 1.90percent.

In 3,597 deals, investors exchanged 161,231,804 units valued at N1.845billion. GTBank, Zenith Bank, Sterling Bank, FBN Holdings and International Breweries were actively traded stocks.

Heineken Brouwerijen B.V acquires additional 274,542 units of Nigerian Breweries shares

eineken Brouwerijen B.V has increased its stake in Nigerian Breweries Plc. The beer maker in a notice to the Nigerian Stock Exchange (NSE) said Heineken Brouwerijen B.V which is one of its major shareholders, acquired additional 274,542 units.

Global market indicators

Nigerian Breweries Plc is a subsidiary of Heineken N.V. a company domiciled in the Netherlands, the latter having a 55.95percent interest in the equity of Nigerian Breweries Plc, as shown in its halfyear results.

Heineken Brouwerijen B.V, a substantial shareholder (foreign) bought www.businessday.ng

these additional shares of Nigerian Breweries valued at N9.8million in three different transactions from August 11 to 13, 2020, according to the notice signed by Uaboi G. Agbebaku, Company Secretary, Nigerian Breweries Plc. Breakdown of the share dealing by the insider (the

Dutch brewery company established in 1873 by Gerad Adriaan Heineken) showed that Heineken bought 125,964 shares at a unit price of N33.92 valued to N4.3 million; it added 62,339 units at N36.35 per share valued at N2.3 million and 86,239 units at N37 per share, valued at N3.2 million.

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oremost indigenous energy company, Seplat Petroleum Development Company Plc, has reaffirmed its resolve to developing communities in Imo State, where it has operations, and ensuring that more lives are positively impacted in line with the United Nations Sustainable Development Goals (SDGs).

The Chairman, SEPLAT, ABC Orjiako, said this at the weekend when he led a management team of the company in a courtesy call to the Imo State Governor, His Excellency, Senator Hope Uzodinma and leaders of host communities in Ohaji and others, at the Government House, Owerri.

The call, which was aimed at fostering better relationship among stakeholders to drive sustainable development in the State, had Governor Uzodinma laud Seplat’s success story in Nigeria and internationally. He also charged the Seplat Chairman and his team to take advantage of the current shared prosperity model of 3-R, which is the super structure of Rehabilitation, Reconstruction and Recovery of key economic and political institutions in the State and host communities in particular.

“There is a new order. We may not be able to do business as usual in Ohaji where the traditional ruler will not be recognized in decision making and taking of the companies doing business in his community,” Uzodinma stated, urging that SEPLAT should continue to engage the Imo people in the running of the company.

“If the community is good to host your business, the people @Businessdayng

from the community should also be good to be part of the management. If you think they do not have the requisite qualifications, train them to your standard and use them,” Governor Uzodinma said.

In line with the development of key Infrastructure in Imo State, the Governor further urged Seplat to take advantage of a federal government tax relief and embark on the re(construction) of one or two federal roads in Imo State.

Imo State Governor also encouraged Seplat to do more town hall meetings with its host communities, where the needs of the people would be collectively assessed based on global standards regardless of the existing Corporate Social Responsibility (CSR) programmes.

Governor Uzodinma said Seplat will gain more by engaging the traditional rulers and the town union president of the host community on how the company and the host communities can work together, stressing that his administration is interested in establishing a petro-chemical industry and gas fabrication plant that can power a planned industrial layout in Owerri.

Governor Uzodinma, therefore, promised to work with Seplat to ensure that the ANOH Gas Project at Assa becomes a success story.

In his remark, Orjiako agreed with the Governor of Imo State on the development plans, whilst explaining that Seplat is interested in developing the area where the company is located and that the firm places premium on quality of life of the people.

Tuesday 18 August 2020

BUSINESS DAY

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35

Insight

BUSINESS DAY Tuesday 18, August 2020 www.businessday.ng

Oil companies wonder if it’s worth looking for oil anymore

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few dots near the b o tt o m c o r n e r o f the world map in the southern Atlantic, the Falkland Islands were once at the forefront of a new era for the oil industry as companies scoured the planet for resources.

Yet a decade after the discovery of as much as 1.7 billion barrels of crude in surrounding waters, the British overseas territory known for sheep rearing and tension with Argentina looks as remote as ever.

Rather than the next frontier, the project to extract energy risks being added to a list of what companies call “stranded assets” that could cost them huge sums to mothball.

As the coronavirus ravages economies and cripples demand, European oil majors have made some uncomfortable admissions in recent months: oil and gas worth billions of dollars might never be pumped out of the ground.

With the crisis also hastening a global shift to cleaner energy, fossil fuels will likely be cheaper than expected in the coming decades, while emitting the carbon they contain will get more expensive.

These two simple assumptions mean that tapping some fields no longer makes economic sense. BP Plc said on Aug. 4 that it would no longer do any exploration in new countries.

The oil industry was already grappling with the energy transition, copious supply and signs of peak demand as Covid-19 began to spread.

The pandemic will likely bring forward that peak and discourage exploration, according to Rystad Energy AS. The consultant expects about 10% of the world’s recoverable oil resources—some 125 billion barrels—to become obsolete.

“There will be stranded assets,” said Muqsit Ashraf, senior managing director responsible for the global energy industry at Accenture Plc. “Companies are going to have to accept the fact.”

The Sea Lion project in the Falklands promised to be a world-class resource when Rockhopper Exploration Plc found the field in 2010.

Hundreds of millions of dollars later and after enduring a flare up between Argentina and Britain over the legality of the project, the first phase still hasn’t brought any oil to market.

Premier Oil Plc, Rockhopper’s partner, suspended work on Sea

Lion earlier this year, and on July 15 wrote off $200 million of investment because later phases looked unlikely to happen.

Larger companies have also begun voicing that realization for other projects. BP said in June it would evaluate its portfolio of discoveries and leave some undeveloped.

Chief of Staff Dominic Emery already hinted last year at what kind of resources might never “ see the light of day.” Complicated projects could be shelved in favor of fields that are quicker to develop, such as U.S. shale, he said.

The pressure to curb emissions may also prompt companies to leave the most carbon-intensive reserves in the ground, as France’s Total SEacknowledged last month when it took an $8 billion writedown on carbonheavy assets.

The list of projects most at risk includes deepwater discoveries off Brazil, Angola and in the Gulf of Mexico, said Parul Chopra, vice president for upstream research at Rystad.

Canadian oil-sands projects such as the expansion of the Sunrise development in Alberta are also in doubt, he said.

The Sunrise deposit, a joint venture between BP and Husky Energy Inc., has an abundant supply of bitumen—potentially as much as 3.7 billion barrels. Extraction, though, is complicated.

Most oil-sands projects resemble mining operations. The bitumen is dug out of the ground

and processed into heavy crude, which must then be diluted with lighter hydrocarbons before it can be refined into fuel.

Sunrise is more complex and more costly. The deposit is too deep to be dug up, so instead it’s injected with steam to get the bitumen flowing into a well, from where it can be pumped to the surface.

Sunrise was meant to be built in three phases, ultimately producing more than 200,000 barrels of bitumen a day over 40 years.

The first 60,000-barrel-aday stage started in 2015, just as crude prices were slumping amid the first U.S. shale boom.

Since March this year, output

‘‘

Hundreds of millions of dollars later and after enduring a flare up between Argentina and Britain over the legality of the project, the first phase still hasn’t brought any oil to market

has shrunk to around 10,000 a day, net to Husky, amid plunging prices and restrictions on pipeline capacity.

Neither Husky, which runs the project, nor BP have disclosed a timeframe for the next stages of development.

They’ll require crude prices well above current levels, suggesting an expansion isn’t imminent, said Mike Coffin, an analyst at research group Carbon Tracker Initiative. (The think tank has received support from the charitable foundation of Michael Bloomberg, the majority owner of Bloomberg LP, the parent of Bloomberg News.)

Beyond their economic viability, carbon-intensive oil sands also sit uncomfortably with BP’s ambition to become a “net-zero” company by 2050. No new oil-sands projects fit in a world compliant with the Paris climate accord, according to Carbon Tracker.

Husky has said its long-term plans include the potential to expand Sunrise, but declined to estimate timing or the oil price required. A BP spokesman said the company is reviewing oilsands projects.

In the Falklands, there’s still hope the outlook will improve.

Rockhopper has said the challenges aren’t insurmountable, despite the remoteness of the islands and the hostility of Argentina, which fought a war with Britain in the 1980s and still claims sovereignty over the

territory.

It pointed to the involvement of other companies—Premier joined the project in 2012 and Navitas Petroleum LP is in talks to take a stake—to suggest there’s little risk Sea Lion will become a stranded asset.

But a final decision on whether to proceed won’t come until next year at the earliest, according to Premier Chief Executive Officer Tony Durrant. Previous deadlines for final investment decisions have come and gone.

The company declined to comment on whether Sea Lion was at risk of turning into a “stranded asset.”

Sea Lion only needs oil prices in the low- to mid-$40s to break even, but probably requires at least $50 a barrel to secure debt, Rockhopper said. Benchmark Brent crude is currently trading around $45, having slumped by a third this year.

Ultimately, with oil in abundance, doubts about the strength of long-term demand and pressure to eliminate the most carbon-intensive production, it’s a calculation that may become increasingly stacked against projects like Sunrise and Sea Lion.

“Many assets are already stranded from an oil-price cycle perspective,” said Christyan Malek, head of EMEA oil and gas research at JPMorgan Chase & Co. “But when you then add the carbon curve, that takes a bigger chunk out.”

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