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Election postponement: Buhari, APC NEC meet to review strategy ... As PDP alleges sabotage TONY AILEMEN, Abuja & CALEB OJEWALE, Lagos

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s the decision by the Independent National Electoral Commission (INEC) to shift the date for the 2019 elections continues to elicit reactions, President Muhamamdu Buhari will today meet with the National Executive Committee (NEC) of the All Progressives Congress (APC) to map out strategies in reaction to the development.

BusinessDay gathered that the meeting will also involve all members of the Board of Trustees of the APC in what is regarded as a gathering of the party’s think tank.

Top officials of the party had been meeting at various levels to map out further actions in response to several issues thrown up by the postponement, espeContinues on page 4

Inside Understanding the economy of Nigeria’s 36 states – Ondo & Osun

Parties defy INEC, resume campaign today P OWEDE AGBAJILEKE, Abuja, & OLUFIKAYO OWOEYE, Lagos

olitical parties in Nigeria said they would defy the Independent National Electoral Commission (INEC) and resume campaigns today.

The country’s two main po-

Investors weigh risks of election postponement

litical parties, the ruling All Progressives Congress (APC) and the main opposition People’s Democratic Party (PDP), as well as the Coalition of United Political Parties (CUPP), said they would proceed with their

campaigns despite a directive

by INEC. This is as investors are pricing in the heightening political risks occasioned by the postponement of the election by INEC few hours to commencement.

Mahmood Yakubu, INEC chairman, had announced at a press conference on Saturday that despite postponement of the presidential and parliamenContinues on page 4

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Monday 18 February 2019

Nigeria inflation shrugs off election spending risk for sixth straight year LOLADE AKINMURELE

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ever has election campaign spending triggered an increase in inflation since 1999, but Abuja’s monetary authorities have made critical interest rate decisions with the dodgy hypothesis in mind.

When the Central Bank of Nigeria (CBN) said at its last monetary policy meeting that concerns over an upside risk to inflation from election spending formed part of why it held rates at a record-high, it left a sour taste in the mouth of a few economists.

The said economists argued that election spending has never presented a significant risk to inflation and were surprised that the CBN would base such a critical decision – as setting the benchmark lending rate in an economy where the real sector is starved of cash – on an unfounded theory.

The correlation between election spending and inflation is indeed weak at best, if historical data is anything to go by. Sadly, the economy has been made to bear the brunt of a dodgy hypothesis that has now faltered six years straight.

An inflation report by the National Bureau of Statistics (NBS) published Friday only served to further expose the baseless hypothesis.

The NBS reported that annual inflation slowed to 11.37 percent in the month of January, from 11.44 percent in December 2018, to the surprise of many who expected a price uptick on the back of election campaign spending.

For Wale Okunrinboye, head of research at Lagos-based fund manager, Sigma Pensions, it was no surprise. His team had predicted a decline to 11.3 percent in January, when the consensus estimate of 10 economists polled by BusinessDay was for an increase to 11.49 percent.

“We expected a moderation, so I won’t say (the decline in inflation) was surprising,” Okunrinboye said.

He hopes the latest report ends the weak hypothesis of election spending and inflation.

“The data is clear: inflation in Nigeria is always and everywhere a supply-side or cost-push issue. You will need to go way back to see any evidence of demand pull inflation here and I daresay it’s statistically insignificant,” Okunrinboye added.

The wide perception in Nigeria is that in periods of an election, campaign spending leads to an increase in money supply thereby triggering demand-pull inflation where there is too much money chasing few goods.

It was partly due to the need to neutralise that increase in money supply from the build-up to the 2018 elections that the CBN decided to keep interest rates high. This way, excess money supply is mopped out of the system and exchange rate gains are protected.

However, historical data puts paid to the theory. Never has election spending led to a rise in inflation since 1999.

BusinessDay inflation analysis shows that before the 1999 election, inflation declined from 10.2 percent in January 1998 to 7.9 percent by December 1998.

Before the 2003 general elections, inflation also declined from 18.9 percent in January 2002 to 12.9 percent by the year end.

In 2006, inflation more than halved from 17.9 percent in January to 8.2 percent in December. In 2010, the trend reversed for the first time as inflation rose from 12.6 percent in January to 13.7 percent at year end.

In 2014, the downward inflationary trend during the campaign year was once again observed as inflation fell 40 basis points from January to

Continues on page 4

February 23 polls: INEC needs to stay on course ISAAC ANYAOGU

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igerians will recall that when this Commission was appointed in November 2015, we promised Nigerians two cardinal things.

First, we shall work hard to consolidate the improvements

that it could not make in three years.

The INEC boss essentially recapped what he said in his speech.

In the speech, he said, “We began the planning quite early, with a Strategic Plan (SP), 3 Strategic Programme of Action (SPA) and an Election Project Plan (EPP).

“In fact, the

ANALYSIS

made in the management of elections in Nigeria,” Mahmood Yakubu, INEC chairman told stakeholders on Saturday after postponing the presidential polls.

“Secondly, we shall always be open, transparent and responsive.

We have strived diligently to keep these promises in very trying circumstances,” he said.

Three years in the saddle, the INEC boss has conducted enough elections to learn how to speak like politicians. “We have strived diligently to keep our promise” is not the same as “We have kept our promise”.

On a day Nigerians expected action, Yakubu offered a litany of excuses.

One important question asked at the stakeholders’ conference by a representative of a political party is what preparations the commission was going to make within a week

plan for the 2019 general elections was ready in November 2017 and we subsequently issued the timetable and schedule of activities for the elections over one year ago on 9th January 2018.

“We carefully followed the timetable and implemented 13 of the 14 activities as scheduled. We kept to the timeframe and have not missed the date fixed for any single activity.”

This explanation is akin to a student who failed a test justifying his failure by insisting he read all the recommended textbooks.

Yakubu said in preparations for the 2019 general elections, the commission has come face-to-face with the realities of conducting such an extensive national deployment of men and materials in a developing country like Nigeria.

“It is said that elections constitute

Continues on page 4

Yakubu Gowon, former Head of State (l); Boubakar Adamou, ambassador of Organisation of Islamic Corporation (2nd l), and Mahmood Yakubu, chairman, INEC (r), and others, during the world press briefing at the National Coalition Centre Abuja.

Pic by Tunde Adeniyi

2019 budget, new minimum wage, other bills suffer setback as NASS postpones resumption OWEDE AGBAJILEKE, Abuja

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opes of passing the N8.83 trillion 2019 budget, new National Minimum Wage and other economic bills suffered serious setback as the National Assembly on Sunday announced the postponement of its resumption earlier billed for Tuesday, February 19.

The apex legislative chamber will now resume on Tuesday, February 26, 2019.

BusinessDay gathered that the shift in the resumption of plenary was not unconnected with the Independent National Electoral Commission’s postponement of the Presidential and National Assembly elections by one week. About 60 serving senators are seeking re-election.

Mohammed Sani-Omolori, Clerk to the National Assembly, who confirmed the postponement on Sunday, said the development became necessary following postponement of the Presidential and National Assembly election rescheduled for Saturday.

“This is to inform all distinguished senators and honourable members that resumption of plenary session earlier scheduled for Tuesday, February 19 has been postponed to Tuesday, February 26 due to the postponement of the national elections,” Sani-Omolori said in a statement.

“All distinguished senators and honourable members are expected to resume plenary session by 10 a.m. on February 26 please,” he said.

While the House of Representatives approved N30,000 new minimum wage as against N27,000

contained in the bill sent to it by the Federal Government, the Senate is yet do so, having referred it to relevant committees for further legislative action.

However, in line with parliamentary rules, the lower legislative chamber is expected to forward its passed version to the upper legislative chamber for adoption.

Also, the House of Representatives has concluded second reading on the 2019 Appropriation Bill while the Senate is yet to do so.

BusinessDay gathered that other economic bills awaiting approval from both chambers of the National Assembly include Petroleum Industry Governance Bill, Petroleum Industry Fiscal Bill, Petroleum Industry Administration Bill, Stamp Duty (Amendment) Bill, among others.

Diaspora Nigerians sent $277bn home in 14 years …continue to support the economy IHEANYI NWACHUKWU

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igerians in Diaspora have in the past 14 years supported the local economy with cumulative remittances in excess of $277.3 billion, BusinessDay checks reveal.

The leading countries worldwide by value of migrant remittances into Nigeria are United States of America, Switzerland, Germany, Russia and China, according to analysis by the Global Knowledge Partnership on MigrationandDevelopment(KNOMAD) and PricewaterhouseCoopers (PwC).

Trends watch on the migrants’ remittance inflows from 2005 to 2018 shows Nigerians in Diaspora sent an estimated $25 billion in remittances to the country in 2018.

In 2005, it was $14.64 billion; 2006 ($16.93 billion); 2007 ($18.014 billion); 2008 ($19.203 billion); 2009 ($18.368 billion); 2010 ($19.745 billion); and in 2011, it was $20.617 billion.

Further check reveals that in 2012, Nigerians in Diaspora sent home $20.543 billion; in 2013 they sent $20.797 billion; 2014 ($20.806 billion); 2015 ($21.158 billion); 2016 ($19.679 billion), and in 2017, total

remittances stood at $22.001 billion.

The World Bank predicts growth in sub-Saharan Africa to rise to 3.4 percent due to improved investment in large economiesandcontinuedrobustgrowth in non-resource intensive countries.

The $25 billion sent home by those in diaspora represents 6.1 percent of Nigeria’s GDP, according to PwC Nigeria in its recently released report titled ‘Nigeria Economic Outlook-Top 10 themes to watch out for in 2019’.

The record level of Diaspora remittance to Nigeria in 2018 “translates to 83 percent of the Federal Government budget in 2018 and 11 times the Foreign Direct Investment (FDI) flows in the same period,” PwC Nigeria noted in the report by Andrew S. Nevin, partner and chief economist, and Omosomi Omomia, senior industry associate.

“Nigeria’s migrant remittance inflows were also 7 times larger than the net official development assistance (foreign aid) received in 2017 of $3.359 billion,” it said.

Global foreign direct investment (FDI) flows fell by 19 percent in 2018.

However, 2018 FDI flows to Africa increased by 6 percent, from $38 billion to $40 billion, the report said.

South Africa grew by 446 percent; Egypt by 7 percent. Nigeria, on the other hand, fell by 36 percent (to $2.2 billion) and was overtaken by Ghana with $3.3 billion.

“Election uncertainty coupled with lacklustre execution of policy reforms impacts FPI and FDI inflow. Key drivers for the market from first-half of 2019 will be commodity prices, exchange rate movement and stability; and inflation rate,” PwC said in the report.

“In 2018 we predicted a moderate increase in foreign portfolio investment (FPI) and a slowdown by half-year (HY) 2018, driven by uncertainty ahead of the elections.

We expect FPI growth in half-year 2019 to remain low and lower than pre-2018 level.

“We expect FDI flows to be dampened by lacklustre implementation of policy reforms. Key risks to foreign investment include: declining interest rate differentials as advanced economies continue to tighten policy rates; political instability following the 2019 elections; unfavourable investment climate; and broad macroeconomic instability,” it further noted.

•Continues online at www.businessday.ng

Monday 18 February 2019

BUSINESS DAY

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4 BUSINESS DAY NEWS Parties defy INEC, resume campaigns...

Continued from page 1 tary elections from February 16

to February 23, there would be no more room for political campaign or collection of the Permanent Voter Cards (PVCs).

INEC is estimated to have lost N6.23 billion as a result of the election postponement, according to SB Morgen Intelligence report.

Similarly, total cost of polling agents for a one-day election is about N42.7 billion, which has also been lost, while the impact on the GDP is estimated at N191 billion. This brings the total cost on the economy to N239.93 billion based on a $1/N360 exchange rate.

“INEC cannot go contrary to what the law says. Everyone knows that campaigns can only be suspended 24 hours to an election, I will continue with campaigns on Sunday (yesterday) because if we don’t campaign, people will not come out and vote,” Adams Oshiomhole, APC national chairman, was quoted to have said in an interview with the BBC Hausa Service.

“We will tell the people what happened has happened. Let them come out and vote for the president.

For one week, if we didn’t talk people will forget, we will campaign,” he said.

The CUPP, comprising 51 of the 91 registered political parties

C002D5556

including PDP, said on Sunday that the directive by Yakubu offended the provisions of the Electoral Act, which stipulates that political campaigns should end 24 hours to the polls.

In a press statement signed by Ikenga Ugochinyere, CUPP spokesperson, the opposition parties said they would end their campaigns by midnight of Thursday, February 21, a day to the rescheduled February 23 presidential and National Assembly elections.

“In view of the provisions of the Section 99 of the Electoral Act, the over 51 member parties of the Coalition of United Political Parties (CUPP) hereby direct all members to return to the campaigns fields and recommence campaigns and end by midnight of Thursday, 21st February, 2019 as required by law,”

L-R: Kayode Akinkugbe, 2nd vice president, Association of Issuing Houses of Nigeria (AIHN); Oscar Onyema, CEO, Nigerian Stock Exchange (NSE); Chuka Eseka, president, AIHN, and Ike Chioke, 1st vice president, AIHN, during the closing gong ceremony at the NSE in Lagos, Friday.

Pic by Pius Okeosisi

Election postponement: Buhari, APC NEC...

Continued from page 1

cially plans by the main opposi-

tion Coalition of United Political Parties (CUPP) to resume campaigns, BusinessDay Villa sources revealed.

To this end, the meeting which is expected to be attended by President Buhari from 11.00 am is expected to come up with resolutions on further actions ahead of the rescheduled Presidential and National Assembly elections coming up on Saturday, February 23, across the country.

Meanwhile, the main opposition People’s Democratic Party (PDP) has disclosed that intelligence reports available to it have established the postponed Presidential and National Assembly elections were deliberately sabotaged by President Buhari and the APC. In statement released Sunday afternoon through the party’s official twitter handle, @OfficialPDPNig, the party stated that contrary to simulated stance by the Buhari Presidency and Adams Oshiomhole, chairman of APC, “fresh facts have confirmed that the FG and the APC have been sabotaging the Independent National Electoral Commission (INEC) in a well-orchestrated plot to engineer a staggered presidential election”.

BusinessDay, meanwhile, also gathered that the APC NEC meeting will review the cost of mobilising the party’s officials for the botched election and how to raise more money for the rescheduled election.

Adams Oshiomhole, APC national chairman, had lamented bitterly about INEC’s last-minute decision to shift the election which was said to have unsettled the party

and caught it unawares.

Oshiomhole had noted that apart from the inconveniences suffered by the political parties, the huge cost of mobilising members as well as the psychological trauma will be difficult to compensate for.

BusinessDay also gathered that the party is not happy with information from the APC grassroots supporters as feelers and feedback from its members from the field show that the party may not have made much success of the election if it had held as scheduled last Saturday.

Members are attributing it to the backlash from the party primaries where a lot of strong party stalwarts abandoned the party for “greener pastures”.

Some of the strong stalwarts who have managed to remain in the party are also said to be unhappy about the funding arrangements as many are said to be using their personal funds to run the party’s affairs, especially at the state level.

“We are coming to Abuja to discuss these issues and many others.

We are just lucky that the election was postponed and l hope that we will learn from the shortcomings so that we will not be disgraced at the polls come next Saturday,” said one of the party officials who preferred not to have his name in print.

The PDP statement alleging sabotage said some individuals working on behalf of the APC in collusion with some of INEC’s staff, engineered actions that affected the distribution and delivery of INEC sensitive materials to designated locations, thereby frustrating the electoral process.

“We also have details of how a hired a team of data hackers cor-

rupted the voters register, with a view to cause mass confusion and voters suppression on the election day,” PDP claimed.

The party stated that many registered voters with PVCs would have arrived their polling centres on election day only to discover that their names have disappeared from the register in their units supposedly as a consequence of the digital manipulation of the voters’ register.

PDP’s statement also indicated intelligence available to it details how agents of the Buhari Presidency infiltrated the distribution system and ensured that sensitive election materials did not arrive at the designated locations, with the view to stall elections in several states of the federation. This, it says, was in addition to deliberate swapping of sensitive election materials between different states and LGAs so as to muddle up the process and stall election in affected areas.

“In some of states like Edo, sensitive materials did not arrive at their designated points on APC interruption,” PDP claimed.

PDP identified Amina Zakari, a high-ranking INEC official alleged to be a relative of the president, to have played a pivotal role in the election sabotage.

If elections had been conducted with the said logistical challenges, the end-game was to have a staggered election “where the Presidency can use security agencies to subvert the will of the people at the polls”, the party claimed.

This, it said, would have been executed by suspending elections in opposition strongholds to enable the government deploy security agents in securing victory for the incumbent. A simultaneous, nationwide election, as it appears, would make this less possible.

the statement said.

“Section 99 (1) of the Electoral Act provides that public campaigns shall end 24 hours prior to the day of polling. It is therefore wrong to expect that political parties will stop campaigns on 14th February for polls that will open on 23rd February. It is unlawful and statutorily wrong to curtail the clear intendment of this Section of the Electoral Act which is clear and unambiguous.

“Campaigning until 24 hours prior to the day of polling is a statutory right of parties and cannot be taken away, curtailed or abridged by any executive fiat. INEC cannot on its own accord limit the period of campaigns as it is regulated by law,” it said.

The CUPP directed members to continue campaigns, focus on voter re-mobilisation and ensure that its adopted presidential candidate and standard bearer of the PDP, Atiku Abubakar, is elected and declared winner of the presidential election.

On the impact of the postponement on the market, some analysts say the shift in the elections may have negative effect on the market when trading starts today. Some are, however, optimistic the market will sustain its recent gains.

The market has been up 6.8 percent in the past two weeks, its longest stretch in over a year.

In 2011, the presidential election was postponed from April 9 to April 16. The shift was announced in the early hours of Saturday, April 2.

BusinessDay analysis shows that despite the postponement, the market rallied by 1.23 percent from

Monday 18 February 2019

the April 4 to April 15, 2011, the last trading day preceding the election.

In 2015, a week to the commencement of the elections, INEC announced a shift in the date of the presidential election from February 14 to March 28. Analysis of the data also shows that the market gained by 1.96 percent between February 6, a day before the announcement, and March 27, the last trading day before the election.

Based on the above historical data, some analysts do not see any major shift in the market reaction to the postponement.

Ayodeji Ebo, MD Afrinvest, doesn’t expect a sharp reversal of the past gains in the stock market but predicted that the market may slow down today to gauge direction.

“If we see any major sell-off this week, this should present interesting opportunities for investors who missed out in the cycle early this month,” he said.

Speaking earlier in a BBC Hausa Service interview, Rabiu Kwankwaso, a campaign director of the Atiku Abubakar Campaign Organisation, was also quoted as saying since the election has been postponed, parties and candidates should be allowed to continue with campaigns.

“From now to one week, there is no reason we will suspend the campaign because the law clearly states that campaigns should be suspended 24 hours to an election,” Kwankwaso said.

“Nobody ordered them to postpone the election. Now that they postponed the election, we will have the chance to go and campaign,” he said.

Nigeria inflation shrugs off election...

Continued from page 2

December of that year.

And, more recently, inflation slowed to 11.44 percent in December 2018, from 15.13 percent in January.

Deeper analysis on campaign spending revealed that official campaign spending for the elections begins about three months before the election, according to INEC rules.

When this new insight was investigated on the inflation chart, the results appear to be inconsistent in terms of inflation direction in months of increased campaign spending. While in 1998, 2007 and 2014 inflation trended downwards, there was a slight uptick in inflation in 1999 and 2015.

The years in which inflation had an uptick also coincided with years of dollar scarcity and sizeable currency devaluation in the country, which throws into question the impact campaign spending actually had on inflation.

In 1999, dollar rose 321 percent against the naira and in 2015, it rose 21 percent against the naira.

“There is no established relationship between inflation rate and pre-election spending in Nigeria,”

Omotola Abimbola, a fixed income and currency specialist, told BusinessDay. “Inflation tends to be driven by major devaluation in exchange rate, investment repatriation of foreign investors due to political risk. However, Nigeria currently has stable exchange rate, surplus current account balances, and favourable oil price environment. Therefore, we may likely not see a major shock to inflation,” he said.

Electoral expenditure for the 1999 general elections by INEC was estimated at N1.5 billion. This increased to N29 billion in the 2003 elections and further grew to N45.5 billion in 2007. By the 2011 elections, electoral expenditure was N111 billion, while in the 2015 elections, total electoral expenditure declined to N85 billion.

Although total electoral expenditure seems to be exorbitant, it is very miniscule when compared to the total money supply in the country which CBN currently estimates to be around N24 trillion. Even if election spending reaches N600 billion, it will only account for less than 2 percent of money supply and less than 0.2 percent of GDP.

February 23 polls: INEC needs to stay on...

Continued from page 2

the most extensive mobilisation of men and materials that any country could undertake in peacetime. The challenges of doing so even under the best of circumstances are enormous,” he said.

While this is true, the INEC boss was given everything he needed to execute the assignment. In October 2018, lawmakers approved N234.5 billion for INEC to conduct the 2019 general elections. Initially, the sum of N189 billion had been approved by the Senate Committee based on

INEC’s request. An extra N45.5 billion was tacked on to avoid the very situation the Commission is giving to excuse its incompetence.

All the state security apparatus were at his disposal, the police and military forces were mobilised for the election and the nation was practically shut down for the elections.

With losses over $10 billion to the economy, in saner climes, the INEC boss would have tendered his resignation.

•Continues online at www.businessday.ng

Monday 18 February 2019

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General T.Y. Danjuma and the other generals with nine lives Bashorun J.K Randle

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ext of Dimka’s broadcast was as follows: “Fellow Nigerians, This is Lt. Col. B.S. Dimka. I now explain why we the Young Revolutionaries of the Armed Forces have found it necessary to overthrow the six-month-old government of Murtala.

On the 29th July 1975 the Government of General Gowon was overthrown. Some of the reasons given for the change were: a. Corruption b. Indecision c. Arrest and detention without trial d. Weakness on the part of the Head of State e. Maladministration in general and a host of other malpractice(s).

Every honest Nigerian will agree with me that since the changeover of government there has not been any physical development in the whole country generally. All we have is arbitrary dismissal of innocent Nigerians who have contributed in no less amount to the building of this great nation. A Professor was arrested, detained, dismissed and later taken to court on an article which every honest Nigerian will agree that all the points contained in that article were 100% truth. The sad point about it all is that those who initiated the retirement or dismissal exercise are the worst offenders.

You will be informed about the ill-gotten wealth in my next announce-

ment. The acting General Manager of the Nigerian Airways was invited to the Dodan Barracks and detained without trial. The people of this country have been living in a state of fear.

The Armed Forces promotion exercise is still fresh in your minds. Whatever reasons they have for the promotion one can only say that they are ambitious. They in fact took over power to enrich themselves.

We are convinced that some of the programmes announced for a return to civilian rule are made to favour a particular group. To mention only one.

Maitama Sule is a politician. But has been appointed Chief of Commissioners for Complaints. This is to prepare him for the next political head at all cost.

How many of you know that Maitama Sule is on a salary of N17,000 p.a.?

In view of what I have just said and a lot more which time will not permit me to mention, we the Young Revolutionaries have once again taken over the Government to save Murtala from total disgrace and prevent him from committing further blunders and totally collapsing the country before he runs away in the name of retirement to enjoy the huge fortune he got through bribe which he has now stored outside this country. I believe that charity should begin at home. Please stay by your radio for further announcements. We are all together.”

He went off the radar and it was not until a week afterwards that he was apprehended on his way to Abakaliki in Eastern Nigeria.

Perhaps what the film sought to imply was that if Dimka’s coup d’état had succeeded, it would have led to the third attempt on the life of T.Y. Danjuma in one day!! Definitely a candidate for the Guinness Book of Records.

What is however more likely is that

the film producer had placed a totally different occurrence, (when shortly after the junior officers – Major Lawan Gwadabe; Major John Madaki and Abdulmumini Aminu had arrested the then Head of State, General Muhammadu Buhari on 27th August 1985 were incensed when they found themselves marooned. The senior officers took over much to the chagrin of the junior officers who were plotting to stage another coup immediately. Fortunately, they were pacified.

Even more startling was the cameo roles allotted to both then Colonel Dotun Gbadebo (now the Alake of Egbaland) who was the Principal staff officer to Major-General Tunde Idiagbon and Chief Joe Obuseh who was the Director of the National Security Office (NSO).

They both confirmed that Buhari had been warned that a coup d’état against him was in the offing and that the brain behind it was Major-General Ibrahim Babangida. Buhari was very cool and calm. He insisted that he would rather lose his position than arrest the coup plotters and risk the inevitable bloodshed that would follow.

Regardless, Professor Vera Halpin quoted her colleague Professor Flora Kaplan of Columbia University as having insisted that it was actually after the coup d’état of 31st December 1983 which toppled the civilian regime of Alhaji Shehu Shagari and installed Major-General Muhammadu Buhari as Head of State with Major-General Tunde Idiagbon as his number two (Chief of Staff, Supreme Headquarters) that the junior officers (led by Major Mustapha Jokolo) who along with Major Sambo Dasuki had crafted the coup d’état were left out in the cold and were cooling their heels in the corridors of Dodan Barracks (the powerhouse of the military government). They were

‘

General Olusegun Obasanjo (the Ebora of Owu) has survived so many death threats that he must have lost count

so pissed off by being excluded from political positions that they were ready to strike again. It was the quick intervention of the new Chief of Army Staff, Major General Ibrahim Babangida that saved the day.

What was spellbinding was that each of the generals featured in the film would qualify as having nine lives – General Johnson T. Aguiyi-Ironsi escaped death in the Congo several times before he was assassinated on 29 July, 1966. General Yakubu Gowon would have been executed by the coup plotters on January 15th 1966 but for the fact that instead of sleeping in the room booked for him at Ikoyi Hotel, Lagos on his arrival from the course he had just completed in U.K., he spent the night with his girlfriend, Miss Edith Ike in her flat in Ikeja. He is still alive at the age of 84 years.

General Robert Adeyinka Adebayo also escaped death on 29th July, 1966 in the melee of the counter-coup because he chose to stay with his uncle, Architect Olumuyiwa in his private house on Awolowo Road, Ikoyi instead of the hotel room booked for him. He lived to the age of 89. General Olufemi Ogundipe would have been shot by mutinous soldiers in the turmoil following the assassination of General AguiyiIronsi if he had insisted on becoming the Head of State rather than let the most senior northern officer, Colonel Yakubu Gowon take over. As for late General Murtala Muhammed he had several encounters with death at the war front (1967 to 1970) before he was assassinated on 13th February 1976.

Note: the rest of this article continues in the online edition of Business Day @ https://businessday.ng Randle is Chairman/Chief ExecutiveJK Randle Professional Services Chartered Accountants

Consulting: Beyond role reliance on work experience

Jude Adigwe

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e cannot rule out the role of experience in the execution of projects – it minimizes errors and waste of time. It serves as a vital resource that helps one navigate similar or seemingly similar territories. That said, it is important to point out that it depends on the quality of the experience in question. How deep and broad is the experience? This necessarily is not about the years of experience but the richness of the engagements had. As mentioned in a previous article, it really does not take much to have lengthy experience given the fact that a host of factors besides competence could keep one on a job. So, the breadth and depth of experience matters more. If this comes with length, splendid!

Many a time, it is assumed that all it takes to consult is lengthy experience in a given field. I agree but on the condition that the experience (which is deep and broad) thoroughly equips one with the requisite tools to consult. If this experience is short in depth and breadth but long in length then it is best complemented with a few other qualities. These qualities (i.e.

capacities) would make the difference. Being a professional in industrial-organizational psychology and human resource management, this piece will be restricted to organizational matters.

The capacity for research is central to consulting. No two organizations are exactly the same hence the need to treat each organization uniquely. When presented with organizational challenges, it is normal to rely on experience(s) to serve as a guide in addressing those challenges however it is expected for one to go a step further to do some research to ascertaining the underlying issues from different people who are representative of the categories directly (and indirectly) connected to the issue at hand. Research ranges from simple to complex. Sometimes, all it takes is a simple interview of selected individuals within (and perhaps outside the organization). Other times, it might require iterations between theories (guiding the research) and data being obtained in the course of engaging key individuals who ought to be representative. Research transcends methods for collecting data and statistical tools for analyzing them. A proper understanding of the rationale behind the use of these methods and statistical tools makes a huge difference -- mere possession of data is different from possession of the right data. Keep in mind that meticulously analyzing the wrong data does not make it right. The capacity for quality research is very key because it enhances the process of obtaining the right information which in turn guarantees quality solution(s) to organizational problems.

Also, the capacity for insight and balanced

judgement cannot be dismissed. Given the nature of organizations, one cannot fully address inherent problems if one does not possess the capacity to see beyond the surface.

There is need for a profound understanding of prevailing issues. Beneath the issues evident to everyone are usually deeper issues that only one with insight can unravel. Those deeper issues are the reasons why consultants are highly sought. The need for balance is key too. Upon understanding the real issues, it is important to maintain balance in analyses and judgements reached. Sentiments should not dictate the process(es) and outcome(s) because of the far-reaching consequences.

Furthermore, it is important to possess a capacity for strategic thinking. The capacity to see and always be mindful of how consultancy impacts the overall performance of organizations is indispensable. This means it is important to think each step of the way how each decision and action to be taken would impact the organization. How strategic are options before me? Which would yield a more positive impact? It is crucial to emphasize that strategic thinking also entails industrial considerations -- would this action lead to not just better performance within the organization but better performance in the industry the organization plays in. Thinking in terms of cost-benefit is also strategic.

In addition to the aforementioned, I need to say that the capacity for teamwork is very essential. As a consultant on organizational matters, you cannot ride solo. You need to work with others. Departmental heads, line managers, employees have a better grasp of their organizations better than you do hence

you need them as you navigate through with a view to understanding what the deeper issues are. Engagements should be both formal and informal. The essence of informal engagements is to build rapport which is very essential to understanding underlying issues.

It takes time to trust and open up to another -- if this process is forced and artificial, the probability of obtaining inaccurate information becomes higher. Like I hinted earlier, the goal is not to simply possess data rather to possess accurate data. Can they trust you with the sensitive information you seek?

Lest I forget, remember that as you consult studies on successful organizations (in more advanced countries), you need to keep in mind that culture is a distinguishing factor.

Culture plays a role in the way businesses are done the world over hence the need to consider best fit over best practice. This is not to promote mediocrity rather it is to guarantee feasibility. Standards can still be pursued while promoting best fit.

Consulting for organizations is noble because it is aimed at improvement of organizational performance. That said, we must not lose sight of the fact that it transcends mere possession of work experience -- being exceptional as a consultant entails quality experience as well as some other capacities which may or may not be acquired from experience on a job or jobs.

Adigwe is a certified Human Resource Management (HRM) professional and an Industrial-Organizational Psychologist. He is the Human Resources and Administration Manager at Sharemind Lagos. adigwejudeobi@gmail.com

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Unfinished business for the next president: Tackling regional disparity

Patrick Atuanya

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n 1712, Peter the Great declared the new city of St. Petersburg as the capital of Russia, thus displacing Moscow as the seat of government.

It remained Russia’s capital city until 1918, when by Lenin’s decree Moscow was restored to its ancient primacy as capital.

Somewhat like oil producing Russia, Nigeria has also built 2 modern cities, Lagos and Abuja. The latter built from scratch as the showcase capital.

However like much of Russia in recent past if you travel just 100 kilometres out of either city centre (Lagos or Abuja) in any direction, one is confronted with a depressing landscape of poverty and abysmal infrastructure.

Both cities largely built with massive Federal investments, sport relatively superior transport and other infrastructure, like schools, hospitals, malls, housing, municipal services, and so on and thus are often a magnet for private businesses/capital and

jobs that come with it.

The two cities in the South West (SW) and North Central (NC) regions of Nigeria have also managed to somewhat positively influence adjacent states like Ogun or Nassarawa.

However beyond these two cities, large swathes of the country especially those in far flung regions (North East, North West, South South and to some extent the South East) and away from the economic activities generated by Lagos and Abuja, often find themselves mired in poverty and unemployment.

Most of these regions with little or no Federal investments on the scale of Lagos or Abuja are often plagued by militancy (SS), Insurgency (NE), Insecurity, Kidnappings (NW).

For the next President (whomever it may be), there needs to be a concerted effort to tackle this problem in a bold and systematic manner and provide economic linkages between Nigeria’s vastly divergent regions to arrest a widening regional disparity that threatens the country’s stability.

One part of the puzzle would be to fix Nigeria’s collapsed rail infrastructure and provide a boost to poverty stricken parts of the country.

A turnaround of the railways should be private sector led akin to what was done in telecoms, as opposed to Governments current tinkering which is inadequate and largely ineffectual.

Ayo Teriba, CEO of Economic Associates, a risk analysis and research firm, reckons that much of the harvests in the North still rot from a lack of transportation to markets,

while most inland cities and trading activities have declined as the rail lines stopped functioning.

The regional disparity is revealed in stark numbers.

All major economic indices that deal with access to finance, power supply, education and employment all point to the fact that the Northern states are generally worse off than the south.

Seven of the ten largest state economies are in Southern Nigeria, while the population living in Southern Nigeria is more likely to have completed primary school than its counterparts in northern Nigeria, according to data from the National bureau of Statistics (NBS).

Lagos State has the highest net primary school completion ratio in Nigeria, at 70.6 percent, while less than 10 percent of the populations in Adamawa, Taraba, Yobe and Bauchi in particular have completed primary school.

The same trends persist in Secondary school attendance rates.

Average income per head was about $2,000 in 2018, however the Northern States income per head of $990 is about half the national average.

Most financial services institutions are concentrated in the South, with Lagos State alone home to over a quarter of Nigeria’s financial and insurance sector workforce.

Lagos State residents have the highest electricity supply per capita in the country, at 163 watts per capita, while power supply per capita in the

‘

For a Nigerian version of the Marshall plan to succeed however, there first has to be assembled a capable, largely apolitical bureaucratic team, willing and able to carry out the reconstruction and reform programs that such a plan would entail

north-east states is particularly dire, at less than 20 watts per capita.

Borno State, which is home to the militant group Boko Haram, has the lowest per capita power supply in the country at seven watts.

In a sense a Marshall Plan for disadvantaged regions of Nigeria should be contemplated.

The Marshall Plan, the historic U.S. aid initiative to speed Western Europe’s recovery after World War II, is legendary for its vision and accomplishments.

The $13.2 billion the United States dedicated to the Plan from 1948 to 1952 would be worth about $135 billion in today’s money and it helped to expedite economic recovery and buoy morale in France, Italy, the United Kingdom and West Germany, following the war.

For a Nigerian version of the Marshall plan to succeed however, there first has to be assembled a capable, largely apolitical bureaucratic team, willing and able to carry out the reconstruction and reform programs that such a plan would entail.

Lately there seems to be an absence of big thinkers in Government, who are looking at the big picture and proffering bold solutions that would change the trajectory of the country.

It is hoped that governance for the next President will not be business as usual.

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

Lunar New Year sales in line with expectations

Dan Steinbock

C

hinese Lunar New Year can be seen as a barometer for Chinese private consumption, due to gift-giving and family reunions. Consequently, both holiday data and its international coverage are of great interest.

Here’s the bottom line: During the Lunar New Year holiday in early February, Chinese retail and catering businesses generated a record over 1 trillion yuan ($148 billion).

Sales by retail businesses rose 8.5% from a year earlier.

Here’s how the data has been reported internationally: “the slowest increase since at least 2011” (Bloomberg), “Cooler pace of [sales] growth added to evidence the economy is slowing” (Reuters), “China’s lunar new-year spending growth slowest since 2005” (Financial Times).

A dramatic plunge in Lunar New Year sales would indicate that China’s ongoing rebalancing is failing - and yet, that’s not the case.

Shifts in retail sales

One of the key reasons for retail pessimism in international media is that holiday spending appears to have hit profits of foreign high-end companies, such as Apple, Swatch Group and luxury car makers.

But what’s so surprising about that? Good times drive consumer nondurable and durable goods, while uncertainty undercuts the sales of relatively more expensive consumer durables (e.g., cars, appliances, furniture), and over time even cheaper nondurables (e.g., clothing, food, and clothing).

Other observers have lamented that auto purchases are in contraction for the first time in almost three decades. Inevitably, the Trump administration’s unilateral tariffs on U.S. car imports are weighing on Chinese consumers. Last year GM’s car sales were down 10%, Ford fell 37%, Tesla had to cut prices for Model 3 in China and Jaguar Land Rover temporarily closed a factory.

U.S. tariff wars have contributed to the gains of China’s domestically- manufactured models, which grew some 3.9% last year and made up more than nine of ten cars sold in January. And in the absence of tariffs, Japanese Toyota is expanding in China. Sales of the Japanese carmaker’s vehicles surged 14%, while Volkswagen held its ground.

In the 1970s and ‘80s, Japanese carmakers beat U.S. giants because the former offered smaller, more fuel-efficient and affordable models. Today, Japanese and European producers push attractive hybrid vehicles.

Trump’s America does not take climate change seriously; China, Japan and Europe do.

Until spring 2018, global prospects still looked positive and expansion in the U.S. and Europe had momentum. It was the White House’s new protectionism that undermined the promising future, as evidenced by the Baltic Dry Index. It rose to almost 1,800 until July 2018. After the Trump White House began to implement its tariffs against China, the Index has plunged to less than 600 – lower than amidst the 2008 global crisis.

Consumption on track Like their counterparts in the West, Chinese consumers are now more costconscious as they should be, thanks to tariff wars. But it does not follow that Chinese rebalancing toward consumption and innovation is falling.

Despite international negative hoopla, Chinese GDP growth in 2018 was broadly in line with expectations since the beginning of the year, as even World Bank has acknowledged.

Much of international media mistakes secular, long-term trends with cyclical, short-term fluctuations. So the deceleration of Chinese growth is portrayed as secular slowdown. In reality, deceleration reflects the eclipse of the intensive phase of industrialization, which heralds a shift to post-industrial society, and deleveraging, which will make that transition more resilient.

In the early 19th century, England experienced its “growth miracle.” In the late 19th century, US growth accelerated. As these countries began to move toward postindustrial services, growth acceleration gave way to deceleration. That’s the norm with in-

dustrializing economies. Similarly, a decade ago, China still enjoyed double-digit growth.

But today growth is slowing relative to its past performance.

Chinese consumption is a different story, however. In 2018, it contributed 76% to GDP growth. Retail sales, the key component of consumption, rose 9% from one year earlier, down from 10.2% in 2017. Yet, both figures were 2-3% higher relative to overall GDP growth.

In other words, China’s structural rebalancing toward consumption and innovation remains on track. That’s why most analysts see consumption as the largest driver of the Chinese economy in the 2020s.

Recently, Chinese economy has accounted for some 30-40% of global growth, thanks to Chinese consumption. If and when U.S. tariff wars penalize that consumption more, global growth prospects will be undermined accordingly.

That’s the not-so-secret secret of the ongoing tariff wars. Due to its importance to global economy, China fuels growth prospects of many other economies. Consequently, unilateral tariff against China will penalize global economic prospects.

• The original commentary was released by China Daily on February 14, 2019 Dr Dan Steinbock is an internationally recognized expert of the multipolar world economy. He is the founder of Difference Group and has served at the India, China and America Institute (US), Shanghai Institute for International Studies (China) and the EU Center (Singapore).

For more, see www.differencegroup.net/

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Monday 18 February 2019

The Lekki-Epe expressway

T

he Lekki-Epe Expressway, built in the 1980s during the administration of Lateef Jakande and when the axis was just a rural settlement, became one of the busiest and congested roads at the turn of the 21st century. Then, workers and school children had to begin their journey as early as 4am to have any hope of getting to their work places or schools in Victoria Island or Marina by 8 or 8.30 am. Commuters and motorists along the route groaned in pains for many years until the Lagos state government, in 2006, heeded their call and concessioned the reconstruction and enlargement of the 49.4 kilometre road (and the building of a 20 km coastal road) to the Lekki Concession Company Ltd. (LCC) on a build, operate and transfer basis. The government justified the Public Private Partnership deal as a strategic partnership with the private sector to ease the discomfort of Lagosians and boost the economic prosperity of the Lekki-Epe vicinity especially as the road will serve as the gateway to the proposed Lekki Free Trade Zone, new model cities and residential accommodations, business centres and financial and tourism hubs. Guarantee was provided and work began in 2008.

However, since then, like most things Nigerian, the concession has ran into several problems notably delays and agitations over the payment of tolls at three

designated gates in less than 25 kilometres. Work on the road has since stopped at the Abraham Adesanya end of the road and the entire concession agreement has collapsed with the Lagos state government revoking the concession and paying off the concessionaires.

Meanwhile, buoyed by the expansion of the road, many housing estates, private houses, a university and businesses have sprung up along the axis. It can be said that many people and businesses are escaping the busy and congested Victory Island and Ikoyi and even Lagos mainland to the Lekki peninsular axis. Consequently the road has got very busy. In addition to all the developments planned along the axis, the Dangote refinery is being built along the corridor. The presence of Dangote refinery has attracted other related businesses such as Progress Maritime limited, OBAT Oil and Eko Resort and many other businesses to the area. The effect is that the road got very busy that the traffic gridlock of past years has returned with vengeance. Perhaps, due to design failures (for instance the king-sized roundabouts along the roads have become the greatest causes of traffic gridlocks), the congestions along the road are now unbearable such that a journey of 20 minutes could take 4 hours or more on a bad day.

It is not difficult to see that the road has become a huge problem even before take-off of the refinery, the Lekki Free Trade Zone, the proposed airport and many other

businesses along that route. The expected development and prosperity cannot happen where there is no ease of movement along the corridor. Sadly, the promised coastal road that should have helped to reduce the traffic on the road has remained only a dream.

This is, in many ways, the Nigerian story. Governments are incapable of planning for future developments and even if they claim to plan, the plan remains only on paper and bears no connection with reality. In 2006, the Lagos state government developed an Integrated Rail Transport System to link the major population and activity centres in Lagos state. Seven lines including the 26 kilometre Green line that will run from Marina to the Proposed Lekki Airport was planned. Due to lack of funds, the government decided to start with the 27 kilometre Blue Line from Okokomaiko to Marina via Iddo.

The contract was awarded, and work started since 2008 and was supposed to have been completed in 2011 and other lines begun. But, till date, the Blue Line is yet to be completed and the others lines remain only plans on paper.

It does not take rocket science to know that the Lekki Epe Expressway is grossly inadequate to handle the volume of activities that will come with the opening of the Lekki Peninsular axis to both human and commercial activities. It also does not require rocket science to know that the best way to take away the traffic is either by construction of

another road, in this case, the long talked about coastal or a tram-train built still along the expressway.

But no, such things never happen in Nigeria.

The Lagos state government has gone about town citing inability to attract private partners and investors as one of the reasons for the delay in the completion of the blue line. But why would the government expect any rational thinking investor to invest his/her money in a public infrastructure project in a highly combustible and uncertain policy environment like Nigeria’s?

Coincidentally, it was the Lagos state government that arbitrarily aborted the last such investment (the concessioned Lekki Epe Expressway). By buying back the concession, the Lagos state government sealed its fate; made it very difficult or impossible to attract private investors to partner government in infrastructure provision.

Since government, by its actions, have signalled to investors that it alone can provide the infrastructure needs of the society, it must not complain of paucity of funds to do what is absolutely necessary to make life worthwhile for the people. The removal of some roundabouts and construction of a flyover bridge at Ajah are just mere tokenisms that cannot solve the problem of traffic gridlock on the expressway. Can the Lagos state government learn to be proactive and not always reactive, waiting for problems to arise before solutions are thought?

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Buhari’s Vietnam

Too many challengers Southern exposure

Boko Haram, Nigeria’s jihadist group, is regaining strength

The battle for Libya’s southern frontier

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Gunmen have made a fortune there as mercenaries, smugglers and robbers

An old-fashioned counter-insurgency strategy is failing wild-eyed Nigerian soldier looks into the camera: “We don’t have adequate weapons,” he says. “We can’t just be wasting our lives.”

Nigerian opposition activists, who have circulated the video widely, say it shows soldiers fleeing an offensive by Boko Haram, the bloodthirsty jihadists terrorising north-eastern Nigeria, in December. Army officials say the footage is from 2014, the nadir of their fight against the militants.

Few believe the official line.

Muhammadu Buhari, Nigeria’s president, came to power in 2015 promising to defeat Boko Haram.

His inauguration was followed by military success. Insurgents were expelled from towns they had captured and forced into the bush. But this was followed by three years of stalemate that is now beginning to look like defeat.

Unable to gain full control of the often impassable forests and swamps that shelter the jihadists, Nigeria’s generals took a leaf from the counter-insurgency manual America used during the Vietnam

T

he internecine fighting in Libya is often reduced to east versus west: Khalifa Haftar, the warlord who controls the former, against a United Nations-backed government in the latter. But this year’s most important fighting is some 600km south of the capital, Tripoli. Last month General Haftar sent his Libyan National Army (lna) to pacify Fezzan, a vast expanse of desert plagued by ethnic and tribal feuds. It has already taken the town of Sabha, home to perhaps one-fifth of the area’s population. Now it is fighting for a bigger prize 200km to the

war, when it fortified “strategic hamlets” to separate farmers from guerrillas. Nigeria’s version was to gather people into “garrison towns” surrounded by earthen ditches and guarded by the army.

Meanwhile Boko Haram and its offshoots were left to gather strength. Last year they attacked army bases and garrison towns.

In December they seized Baga, a town by Lake Chad, including a military base. The jihadists were only dislodged from it two weeks later. In January the jihadists twice raided Rann, near the Cameroonian border, killing at least 60 civilians. Many soldiers abandoned their posts. The un says 60,000 people have fled their homes in the past three months.

Shoddy equipment has left garrisons in small towns vulnerable to attack. After Boko Haram killed at least 44 soldiers in the town of Metele, survivors produced a video decrying the state of the Soviet-era tanks they had been given to defend the base.

The rustiness of Nigeria’s army is not for lack of money.

The former president, Goodluck Jonathan, allocated billions of dollars for buying weapons. But much of that money was stolen.

Sambo Dasuki, Mr Jonathan’s national security adviser, has been charged with fraud and is accused of diverting $2.1bn from an arms fund. He denies it. Prosecutors allege that much of the money was used to buy votes for Mr Jonathan and the then-ruling People’s Democratic Party ahead of the election in 2015.

Under Mr Buhari the government has again showered cash upon the armed forces, some from unusual sources. In December 2017, for instance, the government took $1bn from Nigeria’s excess oil account, a rainy-day fund, to pay for war. But it has provided little oversight of how the money is spent and many suspect that the theft has continued.

The army’s ineptitude has coincided with the rise of Islamic State West Africa Province (iswap), a faction of Boko Haram aligned with Islamic State.

It is said to have been behind most of the recent raids. iswap has focused on military targets and proved adept at picking out vulnerable ones to attack. Alex Thurston of Miami University says the raids help it build momentum, as it often steals supplies and weapons from the bases it attacks.

The army’s setbacks in the north-east are hurting Mr Buhari’s campaign to win another presidential term in elections on February 16th. Although his repeated claims that Boko Haram has been defeated have always rung hollow, many voters will now see them as evidence that their president is worryingly out of touch.

south-west: the Sharara oilfield.

Before going offline in December it pumped 315,000 barrels per day (b/d). That was about a third of the country’s output, which had been at a five-year high. Then the tribesmen tasked with guarding the facility took it over to demand better pay. The closure mothballed the nearby “Elephant” oilfield, which relies on Sharara for electricity. That took another 73,000 b/d out of production.

After brief skirmishes the lna says it has retaken the field. It promises to let the Tripoli-based National Oil Corporation resume control and restart production.

But it will still hold the territory around the field. The lna already controls the Sirte basin, home to most of Libya’s oil reserves, and the coastline near Ras Lanuf, where its export terminals are located. Last summer it seized those terminals and tried to redirect their revenues to a rival oil company in Benghazi.

It backed down after America Continues on page 15

Monday 18 February 2019

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The battle for Libya’s southern

The resurgent left

Millennial socialism

A new kind of left-wing doctrine is emerging. It is not the answer to capitalism’s problems

A

fter the collapse of the Soviet Union in 1991, the 20th cent u r y ’s i d e o l o g i ca l contest seemed over.

Capitalism had won and socialism became a byword for economic failure and political oppression. It limped on in fringe meetings, failing states and the turgid liturgy of the Chinese Communist Party. Today, 30 years on, socialism is back in fashion. In America Alexandria Ocasio-Cortez, a newly elected congresswoman who calls herself a democratic socialist, has become a sensation even as the growing field of Democratic presidential candidates for 2020 veers left. In Britain Jeremy Corbyn, the hardline leader of the Labour Party, could yet win the keys to 10 Downing Street.

Socialism is storming back because it has formed an incisive critique of what has gone wrong in Western societies. Whereas politicians on the right have all too often given up the battle of ideas and retreated towards chauvinism and nostalgia, the left has focused on inequality, the environment, and how to vest power in citizens rather than elites (see article). Yet, although the reborn left gets some things right, its pessimism about the modern world goes too far. Its policies suffer from naivety about budgets, bureaucracies and businesses.

Socialism’s renewed vitality is remarkable. In the 1990s left-leaning parties shifted to the centre.

As leaders of Britain and America, Tony Blair and Bill Clinton claimed to have found a “third way”, an accommodation between state and market. “This is my socialism,” Mr Blair declared in 1994 while abolishing Labour’s commitment to the state ownership of firms.

Nobody was fooled, especially not socialists.

The left today sees the third way as a dead end. Many of the new socialists are millennials. Some 51% of Americans aged 18-29 have a positive view of socialism, says Gallup. In the primaries in 2016 more young folk voted for Bernie Sanders than for Hillary Clinton and Donald Trump combined.

Almost a third of French voters under 24 in the presidential election in 2017 voted for the hard-left candidate. But millennial socialists do not have to be young. Many of Mr Corbyn’s keenest fans are as old as he is.

Not all millennial socialist goals are especially radical. In America one policy is universal health care, which is normal elsewhere in the rich world, and desirable. Radicals on the left say they want to preserve the advantages of the market economy. And in both Europe and America the left is a broad, fluid coalition, as movements with a

ferment of ideas usually are.

Nonetheless there are common themes. The millennial socialists think that inequality has spiralled out of control and that the economy is rigged in favour of vested interests. They believe that the public yearns for income and power to be redistributed by the state to balance the scales. They think that myopia and lobbying have led governments to ignore the increasing likelihood of climate catastrophe.

And they believe that the hierarchies which govern society and the economy—regulators, bureaucracies and companies—no longer serve the interests of ordinary folk and must be “democratised”.

Some of this is beyond dispute, including the curse of lobbying and neglect of the environment.

Inequality in the West has indeed soared over the past 40 years. In America the average income of the top 1% has risen by 242%, about six times the rise for middle-earners.

But the new new left also gets important bits of its diagnosis wrong, and most of its prescriptions, too.

Start with the diagnosis. It is wrong to think that inequality must go on rising inexorably. American income inequality fell between 2005 and 2015, after adjusting for taxes and transfers. Median household income rose by 10% in real terms in the three years to 2017.

A common refrain is that jobs are precarious. But in 2017 there were 97 traditional full-time employees for every 100 Americans aged 2554, compared with only 89 in 2005.

The biggest source of precariousness is not a lack of steady jobs but the economic risk of another downturn.

Millennial socialists also misdiagnose public opinion. They are right that people feel they have lost control over their lives and that opportunities have shrivelled.

The public also resents inequality.

Taxes on the rich are more popular than taxes on everybody. Nonetheless there is not a widespread desire for radical redistribution.

Americans’ support for redistribution is no higher than it was in 1990, and the country recently elected a billionaire promising corporate-tax cuts. By some measures Britons are more relaxed about the rich than Americans are.

If the left’s diagnosis is too pessimistic, the real problem lies with its prescriptions, which are profligate and politically dangerous. Take fiscal policy. Some on the left peddle the myth that vast expansions of government services can be paid for primarily by higher taxes on the rich. In reality, as populations age it will be hard to maintain existing services without raising taxes on middle-earners. Ms Ocasio-Cortez has floated a tax rate of 70% on the highest incomes, but one plausible estimate puts the extra revenue at just $12bn, or 0.3% of the total tax take. Some radicals go further, supporting “modern monetary theory” which says that governments can borrow freely to fund new spending while keeping interest rates low.

Even if governments have recently been able to borrow more than many policymakers expected, the notion that unlimited borrowing does not eventually catch up with an economy is a form of quackery.

A mistrust of markets leads millennial socialists to the wrong conclusions about the environment, too. They reject revenue-neutral carbon taxes as the single best way to stimulate private-sector innovation and combat climate change.

They prefer central planning and massive public spending on green energy.

The millennial socialist vision of a “democratised” economy spreads regulatory power around rather than concentrating it. That holds some appeal to localists

like this newspaper, but localism needs transparency and accountability, not the easily manipulated committees favoured by the British left. If England’s water utilities were renationalised as Mr Corbyn intends, they would be unlikely to be shining examples of local democracy. In America, too, local control often leads to capture. Witness the power of licensing boards to lock outsiders out of jobs or of Nimbys to stop housing developments. Bureaucracy at any level provides opportunities for special interests to capture influence. The purest delegation of power is to individuals in a free market.

The urge to democratise extends to business. The millennial left want more workers on boards and, in Labour’s case, to seize shares in companies and hand them to workers. Countries such as Germany have a tradition of employee participation. But the socialists’ urge for greater control of the firm is rooted in a suspicion of the remote forces unleashed by globalisation. Empowering workers to resist change would ossify the economy. Less dynamism is the opposite of what is needed for the revival of economic opportunity.

Rather than shield firms and jobs from change, the state should ensure markets are efficient and that workers, not jobs, are the focus of policy. Rather than obsess about redistribution, governments would do better to reduce rent-seeking, improve education and boost competition. Climate change can be fought with a mix of market instruments and public investment.

Millennial socialism has a refreshing willingness to challenge the status quo. But like the socialism of old, it suffers from a faith in the incorruptibility of collective action and an unwarranted suspicion of individual vim. Liberals should oppose it.

Continued from page 14

and the eu threatened to impose sanctions and stop buying Libyan oil. With Iran under sanctions and Venezuela in chaos, though, General Haftar may come to view that as an empty threat. The un hopes to organise elections and a constitutional convention this year (though it had the same goal in 2018). General Haftar’s control of oil resources gives him leverage over the rival government, which barely controls Tripoli.

The lna insists this is not a power grab, but rather an effort to rid southern Libya of foreign mercenaries. Hundreds of militants from neighbouring Chad are fighting in the area and preying on locals. The mayor of Sabha describes his town as “under occupation” by foreign militias. Yet the lna is not entirely made up of Libyans, either. It fights alongside militiamen from Darfur, mostly offshoots of the Sudan Liberation Army, a rebel group that splintered after it struck a peace agreement with the government in Khartoum in 2006.

Few of these foreigners have ideological affinity with any of Libya’s warring sides. The country’s vast desert provides an ungoverned space in which they can hide and regroup—and make money. Benghazi’s main jihadist militia pays a recruitment fee of $3,000 per foreign fighter, according to the un. Others follow the Fezzan’s long and lucrative tradition of smuggling. A litre of subsidised petrol that costs 10 us cents in Libya fetches ten times as much in Chad. Since the overthrow in 2011 of Muammar Qaddafi, Libya’s dictator, smugglers have made money moving people as well as fuel, taking them north to the Mediterranean and onwards to Europe. Drugs are big business, too. Foreigners now take a cut, either trafficking goods and people themselves or, more often, intercepting convoys and demanding payment.

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Air strikes in the desert

France is propping up a strongman in Chad Emmanuel Macron sees Idriss Déby as a bulwark against jihadists

I

driss déby, Chad’s president, knows better than most how threatening a Toyota pickup truck can be. In 1990 he seized power after leading 300 of them on a dash through the desert to capture N’Djamena, Chad’s capital. Three years earlier, as army chief, his converted battle-wagons smashed through Libyan lines to end the “Toyota War”. So when three pickup convoys carrying Libya-based rebels were spotted 370 miles into Chadian territory last week Mr Déby had every reason to fret.

Help was at hand. For three days French warplanes strafed the convoys. Chad’s ar my scooped up the survivors; it claimed to have captured 250 rebels. Chad serves as the headquarters of Operation Barkhane, France’s counter-jihadist mission in five former colonies in the Sahel. In a region that has become fertile territory for Is-

lamists seeking a foothold after the collapse of Islamic State in Syria and Iraq, France sees Mr Déby as a bulwark.

Yet Mr Déby is also a repressive autocrat who has squandered Chad’s oil wealth and beggared his people. He changed the constitution to stay on until 2033 and has won

a series of dodgy elections.

Emmanuel Macron came to power in 2017 promising to end “Françafrique”, the decades-old policy of propping up African strongmen to serve French interests. He visited Burkina Faso, hoping to atone for France’s role in the escape of Blaise Compaoré, the president toppled in

a revolution in 2014. Aiding Mr Déby looks to some like a return to old tricks—though France insists that its forces answered a legitimate request from Mr Déby to foil a coup.

France gave military support to three of Mr Déby’s predecessors. French logistical support also helped Mr Déby beat back rebels who reached N’Djamena in 2008. Yet even when the rebels were shelling the presidential palace itself, France hung back from the direct military intervention seen last week. That the last resort has now become the first response shows how much Mr Macron’s moralising has hit the buffers of African realpolitik.

Not only is Mr Déby viewed as indispensable for Operation Barkhane, but there is little prospect that a replacement would be any better. “The

French have never believed that countries like Chad improve and they don’t believe they are susceptible to democratisation,” says Richard Moncrieff of the International Crisis Group, a think-tank. So why risk the downfall of a strongman who serves French interests? Moreover, France can still demonstrate the benefit of its military muscle to African leaders that China, for all its financial might, cannot match.

France’s help should ensure Mr Déby’s survival, for a while at least. Still, France’s intervention is not without its risks. Opposition parties were horrified.

Strikes and protests against Mr Déby could yet coalesce into a popular revolt. Should Mr Déby suffer the same fate as Mr Compaoré, a new Chadian leader with genuine popular legitimacy might be inclined to look on France with a jaundiced eye.

Tired of winning

Another shutdown, shut down

The federal government will remain open, thanks to the art of the retreat

D

“

eals are my art form,” President Donald Trump once wrote. “I like making deals, preferably big deals. That’s how I get my kicks.” They are also how he gets kicked. As The Economist went to press, Mr Trump appeared poised to sign a spending bill that averted another government shutdown, but at further cost to his reputation as an ace negotiator.

Late last year Mr Trump initiated the longest government shutdown in recent history because Congress would not approve the $5.7bn requested for his border wall. After watching his approval ratings drop a few points, he agreed on January 25th to reopen the government for three weeks—without funding for his wall—to give a bipartisan group of lawmakers time to hammer out a compromise on border-security spending.

Both sides, being familiar with the president’s earlier writings, staked out maximalist positions. Mr Trump insisted on his $5.7bn. Democrats wanted to cap the number of beds available for undocumented immigrants arrested

within the United States (as opposed to while crossing the border) at around 16,000 per day—well below both current levels and what the administration wanted.

The number of beds matters because of a “bed mandate” that requires America’s immigration police to fill all the beds in immigration detention centres that have been paid for by Congress. The pool of people who are eligible for deportation from America under this administration is far greater than the number of people these places can warehouse, so the more beds there are,

the more can be detained for deportation later. The agreement provides funding for more than twice as many beds as Democrats wanted. But it includes around $1.3bn for new physical fencing along the southern border—not just less than Mr Trump demanded, but less than then $1.6bn Democrats offered him just before the shutdown.

Mr Trump initially grumbled that he was “not happy” about the deal. Sean Hannity, a Fox News personality who is among Mr Trump’s strongest backers, called it “a garbage compromise”, while Mark

Meadows, who chairs the hard right House Freedom Caucus, said he could not imagine Mr Trump “applauding something so lacking.”

A few days later the spin had changed. Laura Ingraham, a Hannity-ish pundit, spun the modest amount of wall funding as a victory, because Nancy Pelosi, the House majority leader had initially said she would not give Mr Trump a single dollar for his wall. Mr Trump tweeted that the funding provided by Congress “will be hooked up with lots of money from other sources …Will be getting almost $23 billion…Regardless of Wall money, it is being built as we speak!” What those other sources might be, or where the figure of $23bn comes from, is a mystery.

The president could yet declare a national emergency at the border and direct Pentagon funds to wall-building. But the White House would almost certainly be sued, and anyway many conservatives quail at the prospect. After all, what would stop a future Democratic president from doing the

same thing and filling Texas with solar panels? And if the wall is, according to Mr Trump, already being built, then why declare an emergency? Still, if the deal allows Mr Trump to claim victory, while continuing to thump Democrats on immigration, that may be optimal for him.

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Lafarge pledges support for trade partners’ business growth

Pg. 19

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

CONSUMER GOODS

Coca-Cola Nigeria sales volume drops amid intense competitive pressures OLUFIKAYO OWOEYE & SEGUN ADAMS

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oca-Cola HBC the bottler of The Coca-Cola Company in Nigeria said its sales volume in Africa’s largest economy has continued to decline amid a competitive environment.

In its 2018 full year result released Thursday, Group volume increased by 4.2 percent, in emerging markets, the volume also increased by 4.3 percent with growth in all countries except Nigeria.

In developing markets, volume grew by 8.8 percent driven by Poland, Hungary, and the Czech Republic.

According to the results, it recorded lower volume in Nigeria due to intense competition in Sparkling segment which comprises the trademark Coca- Cola and the Coca-Cola Zero variants, Water, while Juice and Energy delivered positive results.

Highlights of the result

show the second year of FX-neutral revenue growth above its 4-5% target range, as it marches towards the company’s 2020 margin targets.

Established and Developing segment countries improved price/mix at a higher rate than in 2017.

Emerging segment price/ mix growth was up 2.4%, a moderation from prior years due to the cycling of 2016/17 price increases in Nigeria and lower Premium Spirits sales in Russia.

Giving an outlook into the 2019 market, the company said it expects volume growth in all segments, continued improvement in FX-neutral net sales revenue per case, input cost headwind in low single digits FX headwind of €50m at current favourable spot rates, and another good year of FX-neutral revenue growth and profit margin expansion.

Zoran Bogdanovic, Chief Executive Officer of CocaCola HBC AG noted that the company delivered an impressive result.

L-R: Agnes Lutukai, head , department of professional practice, KPMG; Mathew Akinlade, president, Nobel Shareholders Solidarity Association; Tola Adeyemi, partner/head, audit services, KPMG, and Okechukwu Usim, consultant physician/cardiologist, Reddington Hospital, at the KPMG Audit Pic by Pius Okeosisi Committee Seminar in Lagos yesterday.

“In 2018 we delivered another very good performance with revenue growth above our target range and another step up in margins. Strong volume growth in all our segments was helped by a record number of new product launches, whilst price/mix improved

MARKETS

for the eighth consecutive year. This growth supported margin progress, which we delivered while increasing our investment in marketing” he said.

In recent times, the Nigerian Carbonated Drink market has seen several new entrants challenging

for market share in a space once dominated by two arch-rival Pepsi and CocaCola. The introduction of Bigi-Cola, RCola, seems to have tightened the race for market share and has seen a shift by consumers to cheaper and bigger new brands in the market.

It would be recalled that Coca-Cola Nigeria recently announced the 100 percent acquisition of Chi Limited.

The company had earlier acquired a 40 percent minority stake in the juice making company and expressed interest in increasing ownership within three years.

AIRLINE CATERING

Axxela earns favourable credit rating from GCR Newrest ASL grows revenue by 38% in 2018 ISRAEL ODUBOLA

A

frican rating agency, Global Credit Rating Co. (GCR) has assigned Axxela Limited, a pioneering private sector developer of natural gas distribution in Nigeria, national scale issuer ratings of BBB+ in the short term and A2 in the long term, with the outlook confirmed stable.

GCR based its consideration on three key factors.

First, Axxela, formerly Oando Gas and Power Limited, has the largest gas distribution capacity in Nigeria and remain a key player in the natural gas distribution market.

Secondly, Axxela has viable collaboration with technical partners, long-term arrangement and strategic partnership.

Lastly, GCR’s decision is influenced by several gas infrastruc-

tural development the company is undertaking which are expected to be delivered in shortmedium term.

The ratings are valid till September 2019.

Reacting to the rating, Bolaji Osunsanya, Chief Executive Officer of Axxela Limited, positioned that the new ratings are pivotal to the on-going diversification plans of the company on gas supply and trading and development of power and pipeline infrastructures.

“As we implement dynamic and focused strategy of developing high yield portfolio investments across the gas and power value chain, we are pleased with our favourable initial rating which will bolster investors’ confidence in our daily and mid-long term operations”, Osunsanya remarked.

“With an upturn in gas exports and industries requiring a

cleaner, cost-efficient and environmentallyfriendly energy source, natural gas is now at the fore of global energy conversations”, Axxela Boss added.

According to him, the ratings reflect the efforts of the financial industry to support the progress of the gas and power sector in Nigeria.

A BBB rating reflects an opinion that the issuer has the current capacity to meet its debt obligations but faces more solvency risk than an A-rated issue and less than a BBrated issue if business, economic or financial conditions change measurably.

Axxela Limited operates as a natural gas distribution network. The company changed its name to Axxela Limited in 2017 from Oando Gas and Power Limited. The company was incorporated in 2001, and is based in Lagos, Nigeria.

OLUFIKAYO OWOEYE & GBEMI FAMINU

N

ewrest ASL Nigeria Plc formerly known as Airline Services Limited, on Thursday announced results for the full year ended 31st December 2018.

Figures from the result show that the airline catering company’s revenue surged by 38% from N3.92 billion in full-year 2018 to N5.42 billion in the corresponding period in 2018.

Profit Before Tax also increased by 285% from N392 million in the full year 2017 to N1.51 billion in the corresponding year 2018, despite the increase in tax figures from N5.3million in 2017 to N21.42 million in 2018, the company’s Profit After Tax stands at N1.49 billion in 2018 as against N386 million in full-year 2017. While the Cost of Sales also increased by 43 percent from N1.3 billion in 2017 to N1.86 billion in 2018.

The company whose major activities includes the provision of catering and related services to interna-

tional airlines operating the Nigerian Aviation industry also recorded an increase in its various revenue segments.

Buoyed by a 45 percent increase in revenue from N3.08 billion in 2017 to N4.46 billion in 2018, the Lounges operations also recorded 27 percent surge from N375 million in 2017 to N475 million in 2018, revenue from Duty-Free shops also increased by 8.6 percent from N138 million in 2017 to N151 million in 2018. The company, however, witnessed a decline of 8.6percent in its restaurant’s segment due to the emergence of new fast food outlets in the food industry.

The company also recommended a dividend of 20 kobo as compared to a dividend of 0.18 kobo last year. This represents an 11% dividend growth. This is however subject to shareholders’ approval at the company’s Annual General Meeting scheduled for 16th May 2019.

It would be recalled that in 2017, Newrest ASL Nigeria Plc, sold its Rwandan sub-

Edited by LOLADE AKINMURELE (loladeakinmurele@gmail.com) Graphics: CHINEDUM ONYEMA

sidiary, ASL Rwanda Limited., which was formed in 2013 as a major springboard to the East African economy.

The company closed trading on Thursday, at N6.25 with its one year return up by 36.90%.

Airline Services Limited (now known as Newrest ASL Nigeria) was incorporated as a private limited liability company on December 6, 1996. The company became a public limited liability company on February 26, 2007, and was listed on the Nigerian Stock Exchange on July 25, 2007.

Newrest ASL’s principal services are the provision of catering services to international airlines operating in the country. The company also operates VIP lounges at the Muritala Mohammed International Airport (MMIA) Lagos and the Nnamdi Azikiwe International Airport Abuja. In addition, its subsidiary, Newrest ASL Oil and Gas Logistics Ltd, provides oil and gas catering and logistics services to companies operating in the oil and gas sector in the country.

18

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COMPANIES & MARKETS AWARDS

Unity Bank bags CBN Development Finance Award ISRAEL ODUBOLA

U

nity Bank Plc has received the ‘2018 Best Participating Bank in the Central Bank of Nigeria’s Development Finance activities award’ in Jigawa State, Northwest, Nigeria.

The recognition came at the Dutse Bankers Forum organized by the CBN bringing together financial stakeholders in Jigawa State including CBN, Representative of Chartered Institute of Bankers (CIBN) North West Zone, NIRSAL, 16 Commercial Banks in Jigawa State, the Controller of Prison Service, Jigawa State and Turaki of Dutse who represented the Emir of Dutse.

Receiving the award, the Unity Bank’s Regional Manager, Dutse, Mustapha Idris Baba commended the CBN for the recognition accorded the Bank which is “testament to the Bank’s growing franchise as a retail bank of choice as well as its deep rooted financial inclusion strategy in Jigawa State’’.

Coming barely two months after the Bank won two highly coveted award;

namely, the Central Bank of Nigeria (CBN) 2018 sustainable banking award for ‘Sustainable Transaction of the Year in Agriculture’ and Presidential Award in recognition of the Bank’s participation under the Anchor Borrowers Programme, this award confirms the rising profile of Unity Bank Plc as a leader in Agricultural financing.

Commenting on the development and other exceptional achievements recorded by the Bank in the recent past, the Managing Director/Chief Executive Officer of Unity Bank Plc, Tomi Somefun said the awards are strong indications of the success of Unity bank’s business model which underpins the resilience, endurance, robustness and viability of the brand to sustainably deliver exceptional financial services to individuals, groups, and organizations across segments.

According to her, “the bank is committed to financial inclusion by deploying technological edge to enhance electronic convenience for all its customers”.

The Executive Governor of Jigawa State, Mohammad Badaru Abubakar, represented by the state’s

L-R: Oladapo Olayemi, head, department of obstetrics and gynaecology, University College Hospital (UCH) Ibadan; Jesses Otegbayo, incoming chief medical director, UCH: Sina Oladokunn, specialist in IVF, and Temitope Alonge, incumbent chief medical director, UCH, at the opening of UCH Low Cost IVF Centre, in Ibadan, Oyo State.

NAN

Accountant General, Alhaji Haruna Ahmed-Amin, while commending Unity Bank for its focus in driving financial inclusion in the state, used the occasion to call on all Banks operating in the state to come up with tangible offers for their teeming customers by developing financial services products that will enable them penetrate the

rural population and the farmers, thereby reducing dependence on public sector deposits.

At the Annual Dutse Bankers Forum, Unity Bank was also recognized for emerging winner of the 2018 Dutse Bankers Forum football competition held as part of the activities marking the event.

Unity Bank Plc has over

CEMENT

W

ith understanding of difficult business operating environment in Nigeria, Lafarge Africa has pledged to lend helping hands to business growth of its trade partners as it recently rewarded its high performing trade partners for excellent performance in the year 2018.

Such support from the giant cement manufacturer is appreciated as most SMEs in Nigeria find it difficult to break even in a challenging economy.

The company’s customer appreciation awards which held in three cities including Gombe, Ibadan, and Enugu, celebrated customers who distribute Lafarge Africa’s range of products from Ewekoro and Sagamu in the South West, Mfamos-

The Bank has leveraged its extensive rural branch network, e-channels and technology to facilitate on lending schemes to several thousands of un-banked smallholder farmers in rural Nigeria to provide access to finance for staple crops and livestock production, under Central Bank of Nigeria funded Anchor Borrowers Scheme.

CONSUMER GOODS

Lafarge pledges support for trade partners’ business growth Daniel Obi

the years distinguished itself in providing Agricultural development finance solutions, and has leverage comprehensive suite of product propositions to activate viable participation in most government intervention schemes and support for key policy initiatives aimed at accelerating growth and transformation of Nigeria’s Agricultural economy.

ing in the South-South and Ashaka in the North East of Nigeria.

According to a statement, prizes given to outstanding customers include 11 tonne trucks, 5 tonne trucks commercial tricycles and an all-expense paid trip to Saudi Arabia, among others.

“The 2018 awards is a major landmark as it coincides with Lafarge Africa’s 60th year of sustainable business practice in Nigeria.

The company which pioneered commercial cement production in Nigeria, started operations in 1959 (then as West African Portland Cement Company, WAPCO) and has played a significant role in building homes, offices, roads, bridges, monuments and cities across Nigeria”.

At the Awards Ceremonies, the company reiterated its commitment to support the business growth of its

trade partners. Speaking at the South East awards, the Commercial Director, Lafarge Africa, Gbenga Onimowo, commended distributors for their contribution to the growth and success of the company’s business in the previous year.

“As partners in progress, we will work closely with all our partners to ensure their business grows in a very sustainable manner. We will also support our customers with tools and training initiatives to develop their human capacity as well as their business processes,” he stated.

On his part, the Country Chief Executive Officer, Lafarge Africa, Michel Puchercos who was in Gombe for the awards, expressed appreciation to all the distributors for their remarkable performance in keeping the Lafarge range of products as one of the top brands in the market.

“For your commitment to results through the years and in 2018 in particular, Lafarge Africa says a big thank you and we look forward to a more fruitful year in 2019.

Your efforts have helped the company maintain its market position and the brand continues to enjoy the trust and respect which it has built with Nigerians over the years.

This year, we are set to change the way we do business by empowering our customers to become partners. To achieve this Lafarge Africa has embarked on a business Nigeria transformation project which is aimed at improving operating efficiencies and interactions with our customers for a mutually beneficial relationship. Our new strategy has started to deliver results and we are on a new path of profitable growth” he said.

Kimberly-Clark sets to build new factory in Nigeria IFEOMA OKEKE

K

imberly-Clark has announced decision to build a new factory in Nigeria. The company has seen strong growth in demand for its products from consumers in recent years.

It is with that in mind that Kimberly-Clark will be opening a new factory with enhanced technology and capabilities, one that can better serve its consumers.

In a statement issued by the organisation, KimberlyClark also confirmed that it will be closing its current factory in Lagos, Nigeria, in quarter two of 2019, whilst it is in the process of building the new factory.

This decision was made following a strategic review of its business model with the objective of increasing presence and further investments in Nigeria in the near future. Regrettably, the decision means that for now, some 60 permanent

employees have been made redundant.

Kimberly-Clark remains fully committed to the Nigerian market, where it will expand its commercial team and open an additional office in Lagos during 2019.

“Kimberly-Clark and its well-known brands, including Huggies and Kotex are an indispensable part of life for consumers across the country. Every day, our brands are used by consumers to enhance their health, hygiene and well-being.

“As a respected company with established relationships in Nigeria, we are aware of the impact this closure may have and of our responsibilities towards our workforce. It is a responsibility we take very seriously and we are working to ensure our employees are supported as much as possible during this difficult time,” the company stated.

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L-R: Abiola Allen, programme director, Crime Prevention and Community Safety; Olukayode Amund, VC, Elizade University; Michael Ade-Ojo, founder, Elizade University; Femi Folawiyo, assistant inspector general of police, (Training) representing the IGP; Wale Olaoye, group MD, Halogen Security; Wale Adeagbo, chief operating officer, Acedemy Halogen, and Omololu Adegbenro, registrar, Elizaade University, at the graduation ceremony of the Nigerian Police Officers trained in Crime prevention and community safety facilitated by Acedemy Halogen in partnership with Elizade University and Association of Forensic Intelligence and Crime Analysts (ACFICA) in Lagos.

L-R: Halima Aliko-Dangote, executive director, Dangote Industries Limited; Omobolanle Victor-Laniyan, head sustainability, Access Bank; Aigboje Aig-Imoukhuede, chairman, Africa Initiative for Governance, and Suleman Ibrahim, team member, sustainability, Access Bank, at the dinner event on the launch of Africa Business Coalition on Health in Addis Ababa.

L-R: Aladetoyinbo Ogunlade, Deji of Akure; Erhumu Bayagbon, head, public relations, Airtel Nigeria; Yahaya Abubakar, Etsu Nupe, and Muhammad Ibrahim, regional operations director north-west region, Airtel Nigeria, during the presentation of ‘Leadership Brand of the Year’ award to Airtel Nigeria in Abuja.

L-R: Olawale Musa, Lagos State Traffic Management Authority (LASTMA); Wale Olaoye, group managing director, Halogen Security Company Limited; Abdurrazaq Balogun, executive secretary/CEO, Lagos State Security Trust Fund (LSSTF) and Bajulaiye Adegboyega, executive secretary, Lagos Neighborhood Safety Agency (LNSA), during the official opening of a one-day training on Pre & Post Election Security in Lagos State for Lagos Security personnel at the Academy Halogen, GRA Ikeja, Lagos.

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22

Monday 18 February 2019

BUSINESS DAY

CITYFile

Flood: NMetS cautions against blocking canals, building on waterways

T

he President, Nigerian Meteorological Society (NMetS), Clement Akoshile, has cautioned Nigerians not to block drainage channels or building on water right of ways to avoid flooding.

Akoshile gave the advice in Lagos, saying it was important for the people living in both areas prone to flooding and areas experiencing drought or little rainfall. ‘‘Those areas prone to flood will still experience flooding in spite of the weather predictions. So, people staying in those areas should not think that because of the expectation of smaller duration of rain, there will be no flooding. ‘‘Those in the far north that are not experiencing much rainfall may still experience flooding. This is because the land there is hard that it cannot soak up water immediately, during and after rainfall.

“They should be careful not to block the drainage channels as water still finds its level,” he said.

Akoshile said there was the need for people to be cautious in an environment that had the propensity to flooding to avoid casualties and destruction of property.

He said that government should not allow people to build houses on plain areas where rain water would easily wash away houses.

NMetS leader said that Nigerians must also imbibe proper waste disposal methods to stop garbage entering the drainage channels and blocking them.

He said that preventing the refuse from entering the drainage channels should start from the living areas and commercial centres.

Defilement: Lawyers advocate severe punishment

O

gedi Ogu, a Lagos-based lawyer, has advocated for severe punishment for those who defile girls and parents who accept out-of-court settlement.

Ogu emphasised that attempts to effect an out-of-court settlement by families of a defiled girl with suspect’s family should be made an offence on its own.

He noted that defilement of under-age girls were on the increase; therefore all possible avenues to curb the menace should be exploited.

The legal practitioner said that any offender found guilty of the offence should face the appropriate punishment provided by law.

“Appropriate punishment should be given to offenders and the issue of attempt on settlement by family of the victim and the suspect should be made an offence on its own,” Ogu said.

He, however, urged victims’ families to speak out and avoid been intimidated by the society.

Also, Helen Ibeji, the coordinator of the Girl Child Foundation, an NGO, advised that certain cultural practices that encouraged molestation and defilement of the girl child be abolished.

She suggested that certain mechanism be put in place to monitor traditional practices inconsistent with the constitution and such traditions be declared null and void.

Ibeji also encouraged parents to make out time out of their busy schedules and monitor their children especially the girl child who is more vulnerable.

“Parents should ensure that their girls’ does not dress indecently. This exposes the girl child to the attack of sexual molestation.

Many people will say dressing doesn’t matter, but it does matter,” she said.

Ibeji, however, urged government to provide transition centres where girls especially those defiled by their relatives could be rehabilitated.

“Victims should not live under one roof with the same man who violated them. A victim must be separated from the offender.

“At the transition centre victims will pick up their lives and start all over but not in the glaring eyes of their violators,’’ she said.

Lagos State governor, Akinwunmi Ambode (m); National Female Cricketer (NCF), Timi Seaman (4th l); President, Nigerian Cricket Federation, Yahaya Ukwenya (3rd l); Chairman, Lagos State Cricket Association, Kofi Sagoe (2nd l); Chairman, Lagos State Sport Commission (LSSC), Kweku Tandoh (4th r); National Female Cricketer (NCF), Hannah Ayoka (3rd r); Vice President, Nigerian Cricket Federation (NCF), Uyi Akpata (2nd r); Ambassador to Namibia and Chairman, Anambra State Cricket Association, Chuma Anosike (r), and others, during the ICC Cricket World Cup Trophy Tour to the Lagos House, Alausa, Ikeja.

Ekiti: Community protests killing of farmer by suspected herdsmen YOMI AYELESO

T

he people of Ayegbaju Ekiti in the Oye local government area of Ekiti State have protested against the alleged killing of a farmer, Elijah Ogor, by suspected herdsmen.

Ogor, in his 30s hailed from Benue but was residing in Ekiti, where he was engaged in farming.

He was last week allegedly killed on his farm, located between Ayegbaju and Ido Ekiti communities after his attackers had allowed their cattle to destroy his farm.

The aggrieved protesters at the weekend blocked Ifaki-Ayegbaju and Ayegbaju-Oye highways and prevented vehicular movements in and out of the town.

One of the protesters, who identified himself simply as Adeleye, told newsmen that Ogor was shot at point-blank range by his assailants and that he died on the spot.

“All we want is justice. How can any Fulani cattle rearer go to someone’s farm and destroy it and still go ahead to kill him? This is unjust and callous.

“This issue must be investigated thoroughly and whoever was involved should be prosecuted accordingly and without delay.”

It was learnt that immediately the death of the young farmer was reported to the Seriki Fulani in Ekiti State, Abashe Adamu, he directed the task force of the Ekiti State chapter of the Gan-Allah Fulani Development Association of Nigeria (GAFDAN), to swing into action.

The association was said to have consequently,combedAyegbaju-Ido-Iludunexpansive farmlands and arrested a man, identified as Umar Abubakar Sanda, in connection with the death.

Confirming Sanda’s arrest on Friday in Ado Ekiti, the secretary of GAFDAN in Ekiti, Toyin Ibrahim, said: “We got information from the Seriki Fulani that a farmer was killed in Ayegbaju.

“Our taskforce, comprising virtually all the ethnic groups in Nigeria moved into that bush and arrested Umar Sanda “At the point we saw him, he was holding a rifle and with live cartridge inside.

“We queried the rationale behind the carrying of firearm which contravened Ekiti State anti-grazing law but he gave no reason. He was just raising issues that would make him look innocent “The reason why we suspected him was that two other people were with the deceased when he was shot, they escaped from the scene and the description they gave showed that the

suspect was involved.

“As a law-abiding group, we immediately took Sanda to the police station at Ido Ekiti where he was detained.

“Part of our mandate in GAFDAN is to arrest cattle rustlers and errant herdsmen, who destroyed farmlands or commited other offences against our host communities.”

Ibrahim appealed to the Ekiti government to empower the group to be able to carry out the mandate of ensuring harmonious relationships between farmers and herders.

He said the group would also support the security agencies to reduce senseless killings by errant herdsmen.

When contacted, the police public relations officer of the Ekiti State command, Caleb Ikechukwu, confirmed the incident, saying that suspect had been arrested in connection with the killing.

“We learnt a farmer was killed on his farm.

The suspected killer had been apprehended and brought to the police.

“He is presently being detained in our custody and once we conclude investigation, we will charge him to court,” Ikechukwu stated.

Killing of farmers by suspected herdsmen has been rampant in Nigerian communities in recent years.

Work on 50Km Ochon-Ikom road near completion

T

he Federal Controller of Works, Cross in River Bassey Nsentip, says the rehabilitation of the 50 kilometres Ikom–Iyamoyong road in Obubra local government area of the state is nearing completion.

Nsentip stated this, weekend, in Calabar, at the end of the inspection tour of the road project being handled by the China Civil Engineering Construction Company (CCECC).

“The project which was awarded in 2009 was part of the 330 kilometres of road marked for rehabilitation by the federal ministry of power works and housing.

“The work on the road is already at a 71 per cent level; however, the contractor has been asked to stop work for now and resume immediately after the general elections.’’

He said the road was in a terrible state of disrepair before the project was restarted, adding that it took up to five hours instead of two to move from Calabar to other parts of the state

because of the bad road.

According to Nsentip “the Federal Government is handling the entire stretch of this road including the bridge component.

“Work is taking place in three sections: from Ogoja to Mbok junction, from Ikom to Iyamoyong and from Akpet to Odukpani which has just been awarded.

“The Federal Government is working on this road so that people can move to Akwa Ibom, Abia and wherever they are going smoothly and steadily.

The bridge at Ikom was built during the colonial era and is weak and obsolete because of its head roof which does not allow articulated vehicles with high pay load to cross. So, the government decided to build a new one to prevent catastrophe in future. he said.

Similarly, the director, federal highways, South-south zone, Godwin Eke, said the reconstruction of the road was important to

open up the area.

Eke said road development was good for the economy because contractors would employ the locals who had families and the monies would trickle down to boost the economy.

“We don’t have any problem with the quality of the road and it is expected to last for more than 15 years but this depends on the usage.

“Most times people cut through the roads to lay pipes without permission and do not properly reinstate them.

“The weakness comes from there and, therefore, it is not about constructing beautiful roads but proper usage for the road to last.

“We also have the issue of overloading even though we have specifications for vehicles that should ply these roads, enforcement has been a challenge”, he said.

Some of the residents of the Ochon community along the road applauded the federal government for the rehabilitation work.

Monday 18 February 2019

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BUSINESS DAY

23

Odunayo Oyasiji

By corporate commercial department of perchstone & Graeys

Review of the 2018 Nigerian code on corporate governance

C

Background orporate Governance is the system by which companies are directed and controlled, giving due consideration to all stakeholders of the company, to facilitate effective and prudent management for the protection of shareholders’ interest. Codes such as the SEC Code (2003) for public companies, the CBN Code (2014), issued for banks and discount houses, PENCOM Code (2008) issued for licensed pension fund operators, the NAICOM Code (2009) issued for the insurance industry and the Code for the Telecommunications industry (2016), are sector specific corporate governance codes, applicable to only the affected regulated sectors. The Financial reporting Council (FRC) in 2016 released a draft of the National Code of Corporate Governance with the aim of providing a set of corporate governance standards applicable to the private sector, consisting of Public companies and the categories of private companies listed in the 2016 code. The draft 2016 code was criticized as being in contrast with existing corporate legislations and sector-based codes of corporate governance. It was consequently suspended by the Minister of Industry, Trade and Investment.

In a bid to standardize the practice of good corporate governance in Nigeria, the FRC has now released the Nigerian Code of Corporate Governance 2018 (“the Code” or “NCCG”) which sets out the principles of corporate governance which companies are expected to adopt.

The NCCG is yet to come into force. Its aim is to resolve the challenges of applying the multiple sectoral Codes which are distinct in their application as they are industry specific.

Structure of the NCCG The Code is divided into seven parts and contains twenty-eight (28) Corporate Governance principles, with attendant practices recommended for the implementation of each principle. The

objective of the Code is to promote the adoption of corporate governance best practices by Nigerian companies, improve public/investor confidence which will ultimately boost trade and investment in the Nigerian economy.

The NCCG in its introductory paragraph states that the FRC has been authorized to ensure corporate governance in both the private and public sectors. It therefore appears that the Code regulates all private and public companies without distinguishing the categories of private companies, unlike the 2016 draft Code which was applicable to public companies and those private companies, which are either related parties to public companies or regulated by authorities other than the CAC (Corporate Affairs Commission), and the Federal Inland Revenue Services (FIRS).

In addition, the NCCG makes no reference to the not-forprofit sector, unlike the 2016 draft Code, which generated controversy particularly regarding the regulation of religious institutions.

Key principles of the Code 1.

The Board The Code advocates for best practices and international standards by providing that the MD/CEO is not expected to be a member of the com-

mittees responsible for key issues such as remuneration, audit, or nomination and governance.

In respect of the importance of the Non-Executive Directors on the Board, the Code states that the Non-Executive Directors should represent a strong independent voice on the Board, in character, judgment and accordingly be free from relationships or circumstances with the company, its management, or substantial shareholders which may or appear to impair their ability to make unbiased judgment.

The Code also provides that the Board of Directors should monitor performance at management level by facilitating external independent evaluation of the Board every three years. It goes further to say that the Board should ensure that such independent professional evaluation be obtained as set out in the company’s governance policies.

Internal control system The Code provides that every company should establish an Internal Audit Function (IAF) and the purpose of the IAF should be clearly defined in an internal audit charter approved by the Board. Where a company fails to establish an IAF, it is expected to disclose the reason for its failure in its annual reports with clarifi-

cation on how effective risk management and internal control were achieved without the IAF. In addition, it also recommends that external auditors of companies are to be retained for no more than 10 years, and external auditors who have exceeded ten years are expected to cease to hold office at the next Annual General Meeting after the Code comes into effect. It also places an obligation on auditors to report any violations of the law by the company to the audit committee or the Board.

The Code also advocates for an effective whistle blowing framework for reporting any illegal or unethical behavior to minimize the company’s exposures.

Compliance The Code gives room for flexibility in its compliance by allowing companies to adopt the ‘apply and explain’ approach as opposed to the ‘comply and explain’ approach which encourages application of all principles of the NCCG and requires entities to explain how the principles are applied. According to the Code, this requires companies to demonstrate how the specific activities they have undertaken best achieve the outcomes intended by the corporate governance principles specified in the Code. Therefore,

the principles of the Code can be applied flexibly to suit peculiar circumstances, in so far as the intention of the Code is met.

Conclusion The new NCCG is commendable to the extent that it has taken steps to set out corporate governance principles and best practices in a single document. However, it does not manifestly solve the challenge of having multiple codes which appear to remain applicable in the different sectors; seeing that the Code does not clarify whether the NCCG will supersede; where it is in conflict with the provisions of existing sector specific codes.

It is also commendable that the Code has a wider application, as it mentions that it would generally be applicable to both public and private sectors, thus not creating any distinction or classification for the private companies to which the Code applies.

The FRC is yet to publicly declare the effective date of the Code. However, what is more important is that the FRC puts in place an effective mechanism for enforcement and compliance with the Code once effective, in order to achieve sustainability of our corporate entities, which good corporate governance practice seeks to promote.

24

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Monday 18 February 2019

Live @ The Exchanges Top Gainers/Losers as at Friday 15 February 2019 GAINERS Company

Market Statistics as at Friday 15 February 2019

LOSERS Opening

Closing

Change

Company

SEPLAT

N580

N619

39

PRESCO

N60

N66

6

NESTLE UNILEVER

NB

N80

N83

3

MRS

DANGCEM

N191

N194

3

CCNN

JBERGER

N25.5

N26.5

1

UACN

Opening

Closing

Change

N1590

N1565

-25

N47

N43.5

-3.5

N23.15

N20.85

-2.3

N22

N21

-1

N9.6

N8.65

-0.95

ASI (Points) DEALS (Numbers)

6,177.00

VOLUME (Numbers) VALUE (N billion)

Stories by Iheanyi Nwachukwu

the main driver of the overall increase in FX turnover, with a MoM increase of 462.93percent ($7.84billion). The increase in FX Spot was attributed to FX inflow for investments in the higher yielding FGN fixed income securities.

Conversely, FX Derivatives recorded a MoM decrease of 42.34percent ($3.95billion), driven mainly by a 44.89percent decline in MemberCBN FX Swaps turnover, while turnover in FX Futures also declined by 35.66percent.

In January, the 31st Naira-settled OTC FX Futures Contract (NGUS JAN 30 2019) with total open contract of $515.09million matured and was settled on FMDQ, while a new 12-month Futures contract (NGUS JAN 29 2020) with a notional principal of $1billion and futures price of $/N364.65 was listed on the OTC Exchange.

In January 2019, the Nigerian Naira appreciated against the US Dollar at the I&E FX Window, gaining 97 kobo to close the month at $/ N363.03 (from $/N364 recorded in December 2018). However, relative to January 2018, the Naira has depreciated by N3.03 ($/N360 in January 2018).

Similarly, the CBN Official Spot rate appreciat-

ed by 25 kobo to close at $/N306.75 (from $/N307 recorded in December in 2018). The $/N rate at the Parallel market appreciated by N2 to close at $/N361 (from $/N363 recorded in December).

Total T. bills (including OMO bills) outstanding recorded a MoM decrease of N160billion to close at N2.58trillion as the CBN continued mopping up liquidity via its OMO auctions to curtail build-up of inflationary pressure. FGN Bonds remained flat at N8.26trillion as at January 31, 2019.

Furthermore, the split in sovereign debt between long and shortterm debt as at January was 76:24 (long versus short term), close to the target ratio of 75:25 outlined in the Debt Management Strategy (20162019).

Monthly Trading Intensity in the T. bills and FGN Bonds markets decreased marginally from 0.49 and 0.09 in December 2018, to 0.46 and 0.08 in January respectively, as the 12.77percent rise in T. bills and FGN Bonds outstanding did not result in similar or higher growth in turnover.

T. bills within the 6-12 months maturity bracket remained the most actively traded in January 2019, accounting for 44.57percent of the total FI market turnover.

Weighted average yields on short, medium and long-term maturities on the sovereign yield curve decreased by 0.80ppts, 0.07ppts and 2.18ppts respectively in January 2019.

Yield spread between the 3-month T. bill and the 10-year FGN Bond decreased by 217 basis points (bps) to close at 3.18ppts in January 2019 (1.01ppts in December 2018) Turnover recorded in the Repos/Buy-Backs segment of the Money Market was N2.45trillion in January 2019, representing a 27.39percent (N920billion) MoM decrease from N3.37trillion recorded in December 2018, and a 31.78percent (N590billion) YoY increase from the turnover recorded in January 2018.

Furthermore, Unsecured Placements/Takings closed the review month with a turnover of N49.95billion, representing 11.68percent (N6.60billion) MoM decrease from N56.55billion recorded in December 2018, and a YoY decrease of 58.58percent (N70.66billion).

Average Overnight (O/N) NIBOR decreased by 6.20ppts to close at 19.09percent in January 2019 from 25.29percent reported for December 2018, indicating an increase in liquidity in the inter-bank market.

12.200

Transcorp Hotels proposes N1.14bn full year dividend payout …has till May 18, 2020 to meet up shares free float requirement

T

T

808,646,079.00 6.486

MARKET CAP (N Trn

FMDQ: Fixed income, currency market turnover decreases by 14.85% to N15.08trn urnover in the Fixed Income and Currency (FIC) market for the month ended January 31, 2019 was N15.08trillion, representing a 14.85percent (N2.63trillion) decrease month-on-month against N17.71trillion recorded in December 2018, and a 28.78percent (N3.37trillion) year-onyear (YoY) increase, according to FMDQ OTC Securities Exchange monthly report released last Friday.

The Treasury Bills (T. bills) and Foreign Exchange (FX) market segments remain the major drivers of turnover in the FIC market, jointly accounting for 78.69percent of turnover in January and higher by 2.21 percentage points (ppts) from their contribution to turnover in December (76.48percent).

Total FX market turnover in January 2019 was $14.91billion, representing a 35.36percent ($3.89billion) monthon-month (MoM) increase from the turnover recorded in December 2018 ($11.01billion).

The increase in FX turnover in January was attributed to 150.61percent and 0.61percent rise in Member-Clients and Inter-Member trades “which was only marginally offset by the 27.55percent decrease in Member-CBN trades”.

Contrastingly, turnover at the Investors & Exporters (I&E) FX Window in January 2019 recorded 22.42percent ($1.11billion) and 26.86percent ($1.41billion) MoM and YoY decreases respectively to close at $3.84billion from the $4.95billion and $5.25billion recorded in December and January 2018 respectively.

FMDQ analysis of FX turnover by product type showed that FX Spot was

32,715.20

he directors of Transcorp Hotels Plc have recommenced the payment of a dividend of 15kobo per share amounting to N1.14billion for the financial year ended December 31, 2018. This is a remarkable increase when compared to 12.45kobo per share that amounted to N947million the company paid in 2017.

Transcorp Hotels Plc has released its financial report for the year ended December 31, 2018. The results at the Nigerian Stock Exchange (NSE) show that the company reported revenue of N16.47billion in 2018 as against N12.96billion in 2017. The company is engaged in the hospitality industry; particularly the rendering of hotel services.

Transcorp Hotels Plc maintains controlling interests in the following companies, referred to as portfolio companies – Transcorp Hotels Calabar Limited; Transcorp Hotels Port Harcourt Limited; and Transcorp Hotels Ikoyi Limited.

Gross Profit increased to N12.24billion in 2018 as against N9.52billion in 2017. Profit Before Tax (PBT) increased to N5.18billion in 2018 from N3.16billion in 2017; while profit after tax (PAT) stood at N3.87billion in 2018 from a low of N2.63billion in 2017.

At N6.10per share, Transcorp Hotels Plc market capitalisation is in excess of N46.362billion on shares outstanding of 7,600,403,900 units.

Following a successful IPO, the company was in January 2015 listed on the Nigerian Stock Exchange.

The shares of the company have continued to be traded on the floor of the Exchange.

The Nigerian Stock Exchange in its X-Compliance Report, a trans-

parency initiative of the Exchange which is designed to maintain market integrity and protect the investors by providing compliance related information on all listed companies tagged Transcorp Hotels Plc as a company operating “Below Listing Standard (BLS)” because of its deficiency in free float.

Free float represents the portion of shares of a company that are in the hands of public investors as opposed to locked-in stock held by controllinginterest investors. Transnational Corporation of Nigeria Plc, the parent company of Transcorp Hotels Plc owns 6,344,100,000 units of the shares in the company, representing 83.47percent; while the Ministry of Finance Incorporated owns 837,900,000 units of shares of Transcorp Hotels Plc, representing 11.02percent. Transcorp Hotels Plc has just 6percent of its shares in the hands of the public and the NSE gave it till May 18, 2020 to meet up the regulatory requirement.

Companies listed on The Exchange are required to maintain a minimum free float for the set standards under which they are listed in order to ensure that there is an orderly and liquid market for their securities. The free float requirement for companies on the ASEM Board is a minimum of 15percent of issued and fully paid up shares while that of the Main Board is a minimum of 20percent of the issued and fully paid up shares.

Companies listed on the Premium Board are also required to have a free float of a minimum of 20percent of issued and fully paid up shares or the value of its free float is equal to or above N40 billion on the date The Exchange receives the Issuer’s application to list.

Monday 18 February 2019

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This is M NEY A daily guide to your Personal Finance

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BUSINESS DAY

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• Savings • Travel • Debt & Borrowing • Utilities • Managing your Tax

Forget about recession, it’s for losers The Solid Wealth Messenger

Grace Agada

T

he recession they claim was over some years ago, still exists. On a daily basis, businesses are dying, shrinking and being taken out of the game.

While you may still have not recovered from the impact of the last recession, there are rumors that another one is coming – and you must be ready for it. With the masses succumbing to fear and a lot of other business owners taking themselves out of the game, how do you ensure that your own business stays protected? Is it possible to surmount the political hassles, the poverty that hovers over the land, and the financial limitations that raise its ugly head every now and then? Yes you can. I’ve come to tell you to forget about what you hear on TV or what you read in the newspapers about how the economy stinks – it only stinks for losers. Not only would you survive, you will also thrive.

It always saddens me to see how hard-working business owners with strong dedication, commitment, and passion, end up with nothing to show for their years of hard work because of recession and all its evils. Even sadder is the fact that the people that get hit the most are the most hard working and dedicated business owners who are still struggling at the bottom of the pyramid. The local small-business owner has a peculiar challenge. He is not like

Objectives • Solid wealth • Groomed Heirs • Undying legacy and Name • Rich relationships • Personal development • Healthcare Planning • Giving.

the “big guys” and multinational companies, who can afford to throw a bunch of money on vague branding, wasteful marketing, unproductive sales drive regardless of ROI and doing marketing just to please shareholders. YOU are a real business owner with real business battle scars in the trenches of the real world. In fact, any small business owner that tries to mimic what the big brands are doing is guaranteed to fail.

As a real business owner, your budgets are tighter, resources are limited, expectations for results are higher, and your risk of failure is bigger. The reality is that a loss of even the most little financial resources hit you hard as you are required to hold every naira accountable for increased profits.

What can you do in a world that has recession as a regular visitor?

First, you must agree that recession is not the enemy and Government’s own management inefficiencies may never end. The true enemy is the fundamental flaws in your Business. What Recession does is to expose the fundamental flaws in businesses that were always there. These flaws are replete in many businesses today.

Recession can be your helper rather than your foe. However, if you stay stuck in the ordinary, doing business as usual, stick with weak customers that will bail out on you during recession, go to the market with generic products and services, and maintain a vague claim of superiority, then the recession will hit you – hard.

If you will reorganize and focus on fixing the fundamental flaws in your business, you will thrive Secondly you must understand that everything in life follows a predictable pattern; every time the economy grows, we see a crash and recession follows.

Prices go up and come down, and the stock market rises and falls.

The sun will rise tomorrow morning like it did today. To think that there will be no more recessions is to live in denial. So you need to always be prepared.

Next, you have to refuse to join the people who use recession and the economy as an excuse not to do well. Most businesses perform poorly not because of recession but because of broken systems within the business structure. Recession on its own has no power over you and your business in fact it can be the springboard that launches you to the biggest wealth opportunity of your life.

The reward for courage in the times when everyone else is afraid is massive A large percentage of people became millionaires during and immediately after the great depression. History is replete with people who have made fortunes during recessions. Some of them include: Bill Hewllett and Dave Packard-HP Company; Colonial Sanders now KFC; and W. Clement Stone.

These people and many more saw opportunities when everyone else saw impossibilities.

There is a stream of wealth that is flowing around town and it flows to the people who know how to attract it.

To surmount recession, you need to develop your business immunity systems. As individuals, we understand that if we have strong physical, physiological, and psychological immune systems, we can stay healthy and strong, ward off diseases, delay the aging process, and protect

‘

It is time to think like a “Street Fighter,” have clever, shrewd and effective business and marketing strategies that will launch your business to new heights even on the wings of recession

our ability to perform. We are aware of the common dangers of a weakened or poorly functioning immune system and a good number of us consciously eat green leafy vegetables and fruits to boost our immune systems.

Your business is no different it has its own immune system and there is a need to keep your business’s immune system healthy, strong, and protected. If your business is poorly nourished, inadequately invested in, and permitted to become weak and vulnerable, a lot of terrible things can happen. Businesses with weak immune systems get sick, have stayed sick, and some have died since the last recession.

There are about five major immunity systems that your business needs to have in other to survive long term. These five immunity systems are available for download by sending the SMS “Immunity” to 08101860042 To compete against recession, earn 6-figure or 7-figure income, overcome seasonal income swings, and eliminate weak customer disadvantage, you need to raise your immunity against evil forces. It is time to think like a “Street Fighter,” have clever, shrewd and effective business and marketing strategies that will launch your business to new heights even on the wings of recession.

Grace Agada is a Senior Wealth Advisor and Author with extensive experience in wealth creation, wealth preservation and wealth transfer.

26

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Nigerian manufacturers source 57% of inputs locally but challenges abound ODINAKA ANUDU

N

igerian manufacturers are facing challenges in sourcing raw materials locally, despite that domestic input sourcing is 56.6 percent, according to data from the Manufacturers Association of Nigeria (MAN).

“Right now, there is not much local material sourced locally— even in oranges,” Peter Njonjo, president of West Africa business unit of Coca-Cola, told BusinessDay after his firm acquired Chi Limited.

“This is down to the fact that we don’t have largescale agricultural projects that can competitively produce some of them here,” he said of Chi’s input sourcing, in an exclusive interview.

He explained that on the dairy side, the situation was not different.

“It is a lot more longer term, because you need to have the animal with the right yield in terms of milk, which can survive in the

L-R: Ibi Ikpoki, economic officer, Trade and Economics Section, Delegation of the European Union to the Federal Republic of Nigeria and to the Economic Community of West African States; Babatunde Paul Ruwase, president, Lagos Chamber of Commerce and Industry (LCCI); Filippo Amato, counsellor, Head of Trade and Economics Section, Delegation of the European Union to the Federal Republic of Nigeria and to the Economic Community of West African States, and Muda Yusuf, director-general, LCCI,during a courtesy visit of the delegation to LCCI in Lagos recently.

Nigerian environment.

“So, there are many challenges that we will have to overcome. But one of the things that we have to do is to work with government and private sector in some of these projects. We also have development partners that we can work with to finance some of these projects,” he added.

FrieslandCampina WAMCO sources some of

its raw milk from herders in Oyo State, South-West Nigeria, but this involves huge financial investment, BusinessDay understands.

Even at that, only a small percentage of raw milk is sourced from the company’s five milking plants in Oyo State.

Chi Limited uses oranges, pine apples, flour, raw milk, and cocoa, among others, as inputs, but most

of them are imported.

Utilisation of local raw materials by manufacturers stood at 56.6 percent in the first half of 2018, down by 4.12 and 9.1 percentage points from 60.72 percent of the same half of 2017 and 65.7 percent of the prece0ding half respectively, MAN says.

Millers such as Flour Mills of Nigeria, Honeywell and Chagoury are willing to add 10 percent of cas-

sava flour to their wheat, but issues around quality, standards and availability of locally available crops are hurting the plan. The Federal Government had made a policy on High Quality Cassava in 2013, encouraging millers to add five to 10 percent of cassava to their wheat, but the policy is not practicable owing to quality issues.

Olalekan Saliu, secretary, Flour Milling Association of Nigeria, told BusinessDay that much of the cassava flour in the market was not of industrial standards, but that millers are still buying up the industrial grade cassava flours from big processors like Thai Farms.

“Much of the cassava flour produced by the smalland medium-sized processors is of low quality and does not meet industrial requirements, but we are still buying what is available from processors with industrial grade cassava flour,” Saliu said.

The situation also extends to the steel sector, where even scraps of sheets are not always available.

More so, ores are equally

scarce.

Jude Abalaka, managing director of Tranos Contracting Limited, a manufacturing and engineering solutions provider, said that quality and availability were two key issues that must be worked on to put Nigeria on world’s manufacturing map.

“There are some raw materials that cannot be found yet,” he said. “For example, common types of stainless steel are 304 and 316. Getting to the market, the seller may not know that steel has grades. So, after telling him what you want, he will offer something else.”

He said that quality was interwoven with availability.

Latest data from the Manufacturers Association of Nigeria (MAN) show that local sourcing declined from 60.72 percent in the first half of 2017 to 56.6 percent in the same period of 2018.

MAN attributes the fall to two factors.

“This may be adduced to the general sluggishness of the economy and a renewed ability for importation of raw-materials considering the tranquillity in the foreign exchange market.”

investment and employment in the sector.”

MAN says it recommended, in one of the meetings of the Presidential Industrial Policy and Competitiveness Advisory Council, an anti-smuggling task force for surveillance, urging the government to put in place necessary modalities to ensure smooth take-off of the task force this quarter.

“There is need to further empower the Nigerian Customs Service and other law enforcement agencies to effectively protect our borders against these nefarious activities,” MAN prescribes.

The body wants the deployment of appropriate border surveillance technology and improvement of the logistic arrangements at the borders in terms of vehicles, communication equipment, cameras, and drones, among others.

It further recommends strengthening of the Nige-

ria Customs database to effectively capture all recorded issues of smuggling, counterfeiting and cloning activities in Nigeria, while calling for the promotion of public enlightenment campaign through the media to educate the general public of the dangers and negative implications of products counterfeiting on the economy. “ It i s i m p o r t a n t t o strengthen the legal and regulatory framework with stiffer penalties,” MAN suggests. It urges the government to work-out of a process of returning smuggled, counterfeited and cloned goods to the originating countries rather than destroying them and wasting the nations scare resources.

“We must continue to engage the governments of countries on trade data sharing neighbouring and prevention of inflows from trade malpractices.”

Textile hubs in Kano, Kaduna, Lagos now event centres — MAN ODINAKA ANUDU

S

muggling has turned textile hubs in the main cities of Kano, Kaduna and Lagos into solitary camps and event centres, the Manufacturers Association of Nigeria (MAN) says.

“The hitherto manufacturing hubs in Kano, Kaduna and Lagos are now solitary camps with most of their factory sheds now used as event centres and warehouses to store smuggled textile materials,” MAN, which is an association of over 2000 manufacturers in Nigeria, says in its review of 2018 performance of the sector.

Nigeria had over 180 textile mills in 1980s, which employed more than one million Nigerians. Some of the mills were United Nigerian Textile Limited (UNTL), Aswani Textile,

Afprint, Asaba Textile Mills, and Edo Textile Mills. These firms disappeared in 1990s as they were unable to compete in an atmosphere of smuggling and unbridled importation. Most of what are described as textile firms in the country today are fashion and design shops.

According to MAN, its position on smuggling and other trade malpractices such counterfeiting and product cloning has been affirmed by the closure of virtually all the textile manufacturing firms in the country, due largely to volume of smuggling of textile materials into the country.

It states that the damaging effects of smuggling and other trade malpractices were heavy on the manufacturing sector in 2018 “Apart from smuggling, today, unscrupulous Nigerians and foreigners also take well-selling Nigerian

products to Asia, mass produce and dump them into the Nigerian market,” the association says.

The body admits that this has been a huge challenge to manufacturers as

market shares, sales and profits dwindle in the circumstance.

“Of course, these trade malpractices are responsible for sub-optimal utilisation of existing capacity, low

L-R: Chiji Eke, investor relations manager, Nigeria, EB5 Capital; Oluwatoyin Akomolafe, president, Nigerian-American Chamber of Commerce (NACC); Akpan Hogan Ekpo, immediate past director-general, West African Institute for Financial and Economic Management; Joyce Akpata, director-general, NACC; Temi Dada, senior investment analyst, EB5 Capital (R); at the NACC 2019 February Breakfast Meeting held in Lagos recently Hotel, Victoria Island, Lagos recently

Monday 18 February 2019

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real sector watch

How Tranos emerged as Nigeria’s manufacturing giant ODINAKA ANUDU

I

Jude Abalaka

He adds that the firm has worked with one of the major multinational corporations involved in power devices and appliances.

Tranos employs about 160 workers in different cadres and over 98 percent of them are Nigerians, which is a clear testament of the manufacturer’s local content mien.

Tranos sources over 50 percent of its raw materials locally and designs products to suit the demands of the local market.

How easy has it been for the solutions provider to source local inputs? Abalaka responds that it has been fulfilling but challenging at the same time.

“It is not very easy because sourcing of materials locally does not imply they are being produced locally.

“One of the challenges is the standard of the product, example of which is the sheets. Getting specialised items like stainless steel is difficult,” he notes.

Local input preference is gaining traction in the manufacturing sector, with utilisation of local raw materials standing at 56.6 percent in the first half of 2018, according to the Manufacturers Association of Nigeria (MAN).

Companies like Tranos are responsible for this.

However, some manufacturers worry about the quality of locally available inputs.

Abalaka believes that quality and availability are two key issues that must be worked on to put Nigeria on world’s manufacturing map.

“There are some things that cannot be found yet,” he says. “For example, common types of stainless steel are 304 and 316. Getting to the market, the seller may not know that steel has grades. So, after telling him what you want, he will offer something else.”

He says that quality is interwoven with availability.

Tranos is investing a lot in research and development (R&D) and has an engineering segment, which finds solutions to clients’ issues and ensures they are solved within the shortest possible time.

“For example, we sell special generators to telecoms.

The R&D of that system took about 42 months.”

He points out that the company had to do a lot of iteration as the best components and engines were selected from different customers. He further explains that till now, power generation systems are still being created and developed for telecoms, though it is fuelled by LPG gas at the moment.

“R&D is a regular part of our work because whatever will be produced in two years must have been worked on earlier,” he discloses. Abalaka believes that Tranos offers a number of solutions to the Nigerian market.

“Although Tranos started with oil and gas, it has now diversified. So, currently, we make products for generator companies such as soundproof enclosures; packaged sub-stations for power distribution; diesel generators to battery cabinet, to distribution boards for telecoms companies, and various other

have switches and sockets ‘ ...we for domestic and commercial markets and also warehouse racks, accessories for solar panels, and many other things

‘

ndustrialised economies such as the United States and Germany were built on manufacturing innovation.

Ford Motor Company, for instance, built cars and developed infrastructure of dealerfranchisers, gas stations and better roads to support its vehicles in the 1910s and 1920s.

Firms such as Siemens, Opel and Bayer created value for the German economy, employed thousands of workers and developed infrastructure to aid future firms.

In Nigeria, some companies are replicating this model, even though they are silent and unsung.

One of such companies is Tranos Contracting Limited, a manufacturing and engineering solutions provider.

This company was founded 11 years ago by a young entrepreneur, Jude Abalaka, who has now become one of the pioneers of Nigeria’s industrial revolution. Before Abalaka founded Tranos, he had established an older company with friends, with a view to providing oil and gas services.

Since 2008, Tranos has become a known name in innovation, with the company producing special generators for telecoms companies.

In December 2018, the firm developed a new line of switches and sockets, making it the first Nigerian company to manufacture them. The switches and sockets were designed to meet the demands of any form of device connection— whether UK or US standards.

“We decided to build something that can work without an adaptor, both for the US-made devices and UK devices,” Abalaka said at a press conference in October 2018.

Tranos’ specialised products and services are in high demand today by multinationals and large enterprises.

Speaking in an interview with BusinessDay, the managing director says roughly 11 percent of 25,000 functional base stations in Nigeria run on Tranos’ power solutions.

“We have generators scattered all over the country,” he says.

things,” he enumerates.

“Now, we have switches and sockets for domestic and commercial markets and also warehouse racks, accessories for solar panels, and many other things. Therefore, we produce various things which can be done because of the in-house design and development that we have. We are able to use our resources for a wide range of markets simply because we know how to listen to the customer and develop solutions based on our capabilities.”

He, however, explains that Tranos has two groups of products which fall into business-to-business (B to B) and business-to-consumer (B to C) categories. Up till December 2018, the company was mainly B to B, even though B to C was done but mainly on special requests.

The company has been able to source financing from the Bank of Industry (BOI), reinvestments and shareholder funds.

Every manufacturer in the country is saddled with different kinds of challenges.

For Tranos, the big issue is the supply chain, which starts from availability of raw materials to the logistics of getting the goods across from the supplier. It also involves clearing of goods, local deliveries, bad roads and sometimes foreign exchange availability.

Currently, the firm’s capacity utilisation, which fluctuates from time to time, is 50 percent.

Tranos takes training and capacity building of staff members very seriously, says Abalaka.

“For us, training is a continuous thing, and I believe that most people come to work and try to put in their best. So, to an extent, the quality of their functions is to the best of their knowledge, which means it is in the interest of the company for people to know as much as possible to increase productivity.”

He adds that such training goes beyond the classroom, as it may involve spending time with colleagues or supervisors.

He further notes that the company liaises with foreigners and other organisations on training, depending on what is being learnt.

Tranos’ products have

been adjudged efficient and effective, because its team put in a lot of effort before producing goods.

The managing director says unlike many firms in the country, Tranos does not see Chinese firms as competitors.

“We do not compete with low quality products, not even with the Chinese market.”

So far, the company has managed to survive Nigeria’s economic vicissitudes, owing to value-creation.

“Our focus on creating value for customers is key, because value creation for customers is giving them something they need, which will keep bringing them back to you,” the MD states.

Although the economy is down, the company’s valueadding capacity has kept customers returning, Abalaka says.

He believes that valuecreation is foundational for the firm’s survival as well as other issues such as trained and motivated personnel, and facilities.

The MD says that Tranos and other private sector players are only asking the government to come up with policies that will protect their investments.

“As a commercial entity, we don’t necessarily want government to do things for us, but looking at it from the perspective of policy direction, I think that some policies do not necessarily work in our favor, especially with regard to raw materials.”

One example is the duties on some imported raw materials which were increased to enable local manufacturers of those inputs to have a competitive advantage. Unfortunately, this hasn’t produced the desired results, as there are issues with local availability of such raw materials, he explains.

“So you either have to wait, or you import and pay higher duty rates. Also, there is a question of price competitiveness. Imagine that we want to start making cable trays and using pregalvanised steel, which in places like Asia and Europe have fixed prices per ton. In Nigeria, if you want to buy from producers directly, you have to wait for five to six months because the demand is not that much.

28

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NAICOM confirms Ikuomola as ED Technical at Anchor Insurance

T

L-R: Sam Egube, director, Sovereign Trust Insurance Plc (STI); Bimbo Oguntunde, director, STI; Olaotan Soyinka, managing director/CEO, STI; ‘Biodun Adedipe, lead consultant, BAA Consult and Oluseun Ajayi, chairman, Board of Directors, STI at Sovereign Trust Insurance Plc’s Transformation Retreat held in Lagos recently.

Inclusive insurance key to fight against climate change Stories by Modestus Anaesoronye

I

nclusive insurance is important in addressing the effects of climate change as it affects agriculture, small and medium and enterprises that are exposed to risks in the environment According to experts from Micro insurance facility, risk management and insurance are vital for building the resilience that underpins the sustainable development agenda. According to them, inclusive insurance has the potential to be a significant weapon in the fight against climate change, which is one of the main drivers of both daily impacts and major disasters.

Inclusive insurance can also play a crucial role in national risk reduction strategies - of course, it is not the only tool to increase climate

disaster risk resilience, but it is an important one which does not always get the recognition it deserves.

Some insurers are already offering agricultural insurance and disaster risk management (DRR) to smallholder farmers in developing countries who are highly exposed to climate change. These include index-based crop and livestock insurance, and practical DRR programmes such as hazard vulnerability assessments and contingency planning. Some are also partners in the G7’s InsuResilience initiative, which aims to provide 400 million people with climate risk insurance by 2020, and the InsuResilience Investment Fund, which has so far benefitted more than 17.5 million people worldwide.

Investment for climate impact mitigation, adaptation and resilience is also key.

With the insurance industry managing around a third of

the world’s investment capital, approximately $30 trillion, it has pledged to double its green and climate-smart investments to at least $84 billion, confirming its significant role in supporting low-carbon technologies and climate-resilient tools and mechanisms.

Available data show it’s the poorest and most vulnerable who suffer most. In the decade to 2014, 89 percent of storm-related fatalities were in lower-income countries. A World Bank report finds that climate change threatens to push an additional 100 million people into extreme poverty by 2030.

According to the OECD, economic impacts of climate change may cause a reduction of up to 3.3 percent in global GDP per year by 2020. Only half of the $160 billion global losses from ‘natural’ catastrophes in 2018 were insured. In the developing world, only 10 percent of climate-related

risks are covered. And it’s not just the immediate impacts of an extreme weather event or catastrophic crop failure which need insurance cover.

Longer term, hidden risks from climate change include food insecurity, malnutrition, illness, job losses and poor economic growth.

No wonder that climate change is - forgive the pun - a hot topic for the insurance industry. That’s why the Microinsurance Network (MiN), in partnership with the International Association of Insurance Supervisors (IAIS) and Access to Insurance Initiative (A2ii), is organising three Consultative Forums in 2019 devoted to finding insurance solutions to help bridge the protection gap. The Forums will explore challenges on the supply side for developing and emerging economies such as transaction costs, lack of suitable products, data limitations and regulatory barriers.

he National Insurance Commission (NAICOM) has approved the appointment of Ikuomola Adebisi Adeleke as the executive director, Technical of Anchor Insurance Company Limited, just as it has ratified the appointments of Fasanmi Anthony Olajide and Olubukola Koyenikan as the General Manager, Marketing and head, Enterprise Risk Management respectively of the company.

A letter from the Commission which conveyed the approvals and was signed

by Leonard Akah, director , Governance, Enforcement and Compliance, stated in part that the Commission was pleased to convey the approval for the appointments of the officers after carefully reviewing the company’s application and the supporting documents.

Adebisi Ikuomola who was the group head, Technical of the company before his appointment as executive director in September, 2018 by the Board of Directors subject to NAICOM’s approval, started his insurance career in 1989.

He joined Anchor Insurance Company Limited in April, 2011 after working with different insurance companies and brokerage organizations in different technical capacities.

He holds an HND in Business Administration from Akwa Ibom State Polytechnic and an MBA in Marketing from Ladoke Akintola University of Technology. He is an Associate of the Chartered Insurance Institute of Nigeria.

Fasanmi Olajide is a rounded insurance practitioner with long years of experience in insurance underwriting and broking concerns.

He joined the company in May, 2018 from Staco Insurance Plc where he was assistant general manager, Brokers/Branch Operations.

He holds a B.Sc and an

Ikuomola Adebisi Adeleke

MBA from Abubakar Tafawa Balewa University and the Lagos State University, Ojo, respectively. He is an Associate Member, Nigerian Institute of Management, Nigerian Council of Registered Insurance Brokers and Chartered Insurance Institute of Nigeria.

Koyenikan Olubukola who joined the company in

Fasanmi

August, 2018 holds a B.Sc degree in Economics from the Lagos State University and an Advanced Diploma in Accounting and Business. She is a member, Association of Certified Chartered Accountants (ACCA) and an affiliate of the Certified Institute of Risk Management (IRM – UK).

She joined the insurance industry in 2014 as an Internal Auditor and Compliance Officer at Standard Alliance

Monday 18 February 2019

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BUSINESS DAY

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Insurance industry to see changes as pricing, distribution face disruption Stories by Modestus Anaesoronye

T

he insurance ecosystem is undergoing transformation and innovation like never before and what we have seen is only the beginning. From distribution to pricing, product development to underwriting claims servicing to compliance — no part of the insurance value chain is safe from change.

Some insurers and regulators are using sandboxes, labs, start-up accelerators and strategic investments to seek future solutions to how insurance is done. Most are sitting on the side and hoping they

can muddle through.

The Fourth Industrial Revolution has brought about immense technological advancements.

Robots and artificial intelligence compete with the human labour force. The industry is evolving with advancements in technology, bringing benefits across the whole value chain, including distribution and sales, underwriting, claims, solutions and services, and operational processes.

It is a challenge for insurers to innovate from the inside to drive business growth. The main challenge is to identify where internal innovation comes from.

Some organisations are setting up labs to innovate from the inside, which sit

outside of the day-to-day running of the business and look at the business from an outside perspective. Others are investing and partnering with tech start-ups, and other institutions.

Meanwhile, country regulators are looking at how regulation must change to cope with insurance of the future with several setting up sandboxes to help new companies.

An independent report, giving an overview of what insurers and regulators are doing to future proof insurance- written in a non-techie way by a long-standing insurance analyst are expected soon, according to experts who communicated this dream.

Insurance as tool for sustainable development

T

he importance of insurance as tool for sustainable development cannot be over emphasized when you consider the role of insurance in risk management. The world is full of risk and man is regularly confronted with both manmade and natural catastrophes that keep on frustrating man’s effort towards achieving set goals.

Without a means of contending with these risks, man could easily be wiped away or destabilized to the extent that growth and development becomes almost impossible.

Both at individual or

corporate levels, risk management are inevitable if there must be growth and development, and where growth occurs without risk management the chances are that these growths could be wiped away easily.

When societies or individual household attain certain level of development, the next level of challenge is how to sustain this growth so that that standard is maintained. So, getting to the top of the ladder may really not be that big deal, the big deal could be how to remain on the top so that you do not fall to the ground.

When people or societies have acquired wealth or

assets, they require protecting these assets and properties so that they continue to create value along the line of usage. This therefore emphasizes the role of risk management in achieving sustainability, by making sure that men or society do not lose their hard earned wealth either as result of natural catastrophes or man-made causes. And where it happens, the insurance company will be there for compensation.

Sustainable development (SD) is a process for achieving sustainability in any activity that uses resources and where immediate and inter-generational replication is demanded.

Sustainable development coincides with further economic growth and human development in the developed economy (and society) for finding the means of continual development beyond economic development. As such, sustainable development is the organizing principle for sustaining finite resources necessary to provide for the needs of future generations of life on the planet. It is a process that envisions a desirable future state for human societies in which living conditions and resource-use continue to meet human needs without undermining the “integrity, stability and beauty” of natural biotic systems.

Niger insurance restructures, pays about N2bn claims

N

iger insurance restructures, pays about N2bn claims Niger Insurance Plc is undergoing a massive restructuring exercise which cuts across all departments and levels in the entirety of the organisation.

This exercise, according to the company, is aimed at better position-

ing the company for higher performance in the ever evolving insurance industry in Nigeria, and re-establishes it as a company of first choice.

Niger Insurance, a company that transacts all classes of insurance business has an asset base in excess of N23.2 billion unaudited accounts as at December, 31st 2018. It has also paid claims

in excess of N2 billion within same period.

The result of the restructuring exercise is expected to be unveiled to the public soon, a source in the company said.

However, while this exercise in ongoing, the company assures its ever growing clientele of continuous delivery of quality insurance services.

Hope you made the right choice in your Valentine gifts?

T

he World on Thursday February 14th celebrated the Valentine’s Day, where gifts of different kinds were exchanged. People in different capacities showed love with gifts to friends and loved ones in celebration of St. Valentine.

In most people’s minds would be, what kind of gift was better to present to a loved one which will be appreciated? If you had given the wrong gift, you can as well replace it with this. So if you are looking for a gift that will remain indelible in the minds of your family and loved ones, get a life insurance.

It is no doubt that no amount of love you show your family today with material gifts would linger for so

long when you are gone than the kind of gift that gives them many years of Valentine, even if you are gone.

Take a life insurance policy that will provide for your family and take care of their needs when you will not be there, and certainly they will not forget you. Now, ask yourself this question?

“Would my death leave anyone in a financial burden?” If your answer is “yes”, it may be time to get serious about shopping for a life insurance. It can offer peace of mind, ensuring that your debts or loved ones would be taken care of in the event of you not being around.

Some of the life insurance from which you can choose is term life insurance. Term life insurance is very straightfor-

ward. When you choose this type of coverage, you pay for a specific duration of time.

During that period, your chosen beneficiary receives the benefits of your policy in the event of your death.

Saint Valentine’s Day, commonly shortened to Valentine’s Day is an annual commemoration held on February 14 celebrating love and affection between intimate companions. The day is named after one or more early Christian martyrs named Valentine and was established by Pope Gelasius I in 500 AD. It is traditionally a day on which lovers express their love for each other by presenting flowers, offering confectionery and sending greeting cards (known as “valentines”).

30

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Monday 18 February 2019

Access Bank Rateswatch Market Analysis and Outlook: February 15th – February 22nd, 2019

KEY MACROECONOMIC INDICATORS GDP Growth (%)

2.38

Q4 2018 — Higher by 0.57% compared to 1.81% in Q3 2018

Broad Money Supply (M2) (N’ trillion)

27.07

Decreased by 14.38% in Dec’ 2018 from N31.79 trillion in Nov’ 2018

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

22.72 23.29

Decreased by 1.54% in Dec’ 2018 from N23.08 trillion in Nov’ 2018 Increased by 10.93% in Dec’ 2018 from N2.1 trillion in Nov’ 2018

Inflation rate (%) (y-o-y) Monetary Policy Rate (%) Interest Rate (Asymmetrical Corridor) External Reserves (US$ million) Oil Price (US$/Barrel) Oil Production mbpd (OPEC)

11.37 14 14 (+2/-5) 42.88 62.68 1.79

Decreased to 11.37% in January 2019 from 11.44% in December 2018 Raised to 14% in July ’2016 from 12% Lending rate changed to 16% & Deposit rate 9% February 13, 2019 figure — a decrease of 0.68% from February start February 15, 2019 figure— an increase of 1.19% from the prior week January 2019 figure — a increase of 2.99% from December 2018 figure

COMMODITIES MARKET

STOCK MARKET Indicators

NSE ASI Market Cap(N’tr)

Friday

Friday

15/02/19

08/02/19

32,715.20 12.20

31,529.92 11.76

Volume (bn)

0.81

0.72

Value (N’bn)

6.49

12.21

MONEY MARKET NIBOR Tenor

Friday Rate

Friday Rate

Change(%)

Indicators

15/02/19

1-week Change

YTD Change

(%) Energy 3.76 Crude Oil $/bbl) 3.76 Natural Gas ($/MMBtu) 11.72 Agriculture Cocoa ($/MT) (46.87) Coffee ($/lb.)

Cotton ($/lb.)

Sugar ($/lb.)

Wheat ($/bu.)

Metals Change Gold ($/t oz.)

Silver ($/t oz.)

(Basis Point) Copper ($/lb.)

(%)

62.68 2.58

1.19 0.00

(2.76) (15.58)

2299.00 102.30 71.65 12.55 510.25

1.59 (1.68) (1.70) (1.34) (0.92)

18.75 (21.43) (7.55) (18.13) 17.70

1316.24 15.65 278.95

0.40 (0.76) (1.19)

(0.10) (8.96) (14.90)

(%)

(%)

15/02/19

08/02/19

OBB

15.83

18.67

(284)

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

O/N CALL 30 Days

17.50 16.04 12.48

19.42 16.64 12.20

(192) (60) 28

Tenor

(15)

1 Mnth 3 Mnths

12.03 12.21

11.58 12.24

45 (3)

6 Mnths 9 Mnths 12 Mnths

13.69 16.65 17.42

13.97 16.71 17.44

(28) (6) (2)

90 Days

12.99

13.14

FOREIGN EXCHANGE MARKET Market

Friday

Friday

1 Month

(N/$)

(N/$)

Rate (N/$)

15/02/19

08/02/19

15/01/19

Official (N)

306.75

306.70

306.85

Inter-Bank (N) BDC (N)

361.65 0.00

361.73 361.49

364.84 363.50

Parallel (N)

362.00

361.00

362.00

Friday

Friday

Change

(%)

(%)

(Basis Point)

15/02/19

ACCESS BANK NIGERIAN GOV’T BOND INDEX

Indicators

BOND MARKET AVERAGE YIELDS Tenor

Friday

Friday

Change

(%)

(%)

(Basis Point)

15/02/19

08/02/19

3-Year 5-Year

0.00 15.43

0.00 14.90

0 53

7-Year 10-Year 20-Year

1 4.68 14.64 14.54

14.72 14.76 14.65

(4) (12) (12)

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

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

08/02/19

Index

Friday

Friday

Change

(%)

(%)

(Basis Point)

15/02/19

08/02/19

2,762.37

2752.52

0.36

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

8.91 5.57

8.88 5.55

0.35 0.29

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

12.45 -43.26

12.05 -43.63

0.40 0.37

TREASURY BILLS (MATURITIES) Tenor

Amount (N' million)

Rate(%)

Date

91 Day 182 Day

3,384.18 10,000.00

11.3102 14.4753

13-Feb-2019 13-Feb-2019

364 Day

140,000.00

17.6385

13-Feb-2019

Global Economy In the US, retail trade fell by 1.2% in December 2018 in contrast to a growth rate of 0.1% witnessed in November. This has been the sharpest fall in retail trade recorded since September 2009 according to the US Census Bureau. Retail sales, excluding automobiles, gasoline, building materials and food services, dropped by 1.7% in December after an increase of 1% in November. Elsewhere, in the Eurozone, trade surplus narrowed to €17 billion, following a fall in exports in December. According to European Statistical Office, imports increased to €159.5 billion while exports fell by 2.5% to €176.5 billion. Imports to the EU rose mainly from the US (3.9%), China (5%), Russia (16%), Turkey (9%) and Norway (13.3%), but declined by 1.4% from Switzerland. Exports growth slowed to the US by 8%, China (6.2%), Switzerland (4.2%) and Norway (6.1%), but dropped to Russia and Turkey (0.8%) and (9%) respectively. In a separate development, the Office for National Statistics confirmed UK January inflation rate at 2-year low of 1.8% from 2.1% in December. The resulting rate is due to a slowdown in the cost of electricity, gas and other fuels. Year-on-year, cost of clothing and footwear fell to 1.3% compared to 0.9% in December. Prices slowed for housing, water, electricity, gas and other fuels by 1.1%; transport by 3.2% and restaurants and hotels by 2.6%. On the other hand, prices increased at a faster pace for food and non-alcoholic beverages 0.9% compared to 0.7%; and miscellaneous goods and services by 0.2% compared to 0.1%.

Domestic Economy Real Gross Domestic Product (GDP) advanced to 2.38% year-on-year (y-o-y) in Q4 2018, relative to the growth of 2.11% y-o-y in Q4 2017.

The economy’s performance was slightly constrained by crude oil, which contracted by 1.62% y-o-y in Q4 2018, compared to growth of 14.77% and 11.20% in Q1 2018 and Q4 2017 respectively. Average daily oil production was recorded at 1.91 million barrels per day (mbpd), lower than the production volume of 1.95 mbpd seen in the same quarter of 2017. The non-oil sector increased by 2.70%. The momentum was driven by information & communication (13.20%), transportation (9.48%), arts & entertainment (4.18%), agriculture (2.46%) and manufacturing (2.35%). The real GDP grew at an annual growth rate of 1.98% for full year 2018 compared to 0.82% in the previous year. In a separate development, the Consumer Price Index (CPI) which measures inflation rose by 11.37% year-on-year in the month of January 2019, which is 0.07% points lower than the 11.44% recorded in December 2018. The food index increased by 13.51% (year-on-year) in the reference month, slightly lower than 13.56% recorded in December, thus indicating declining pressure in the prices of food items. The core sub-index, which excludes prices of farm produce rose slightly by 0.1% to settle at 9.9% in January 2019 from last month’s figure of 9.8% year-on-year. During the month, the highest increases were seen in the prices of fish, bread and cereals, vegetables, meat, fruits, potatoes, yam and other tubers, oils and fats, soft drinks.

Others are domestic services and household services, tobacco, major household appliances whether electronic or not, medical and dental services, garments, narcotics, cleaning, repair and hire of clothing, carpet and other floorings.

Stock Market The bulls dominated the nation’s stock market last week on renewed buying interest in fundamentally sound industrial, consumer goods and oil & gas stocks with historical evidence of dividend payment. The All share Index (ASI) expanded by 3.76% to 32,715.20 points from 31,529.92 points the preceding week. Similarly, Market Capitalization increased by 3.96% to N12.2 trillion from N11.76 trillion the prior week. Positive macro indicators such as the Gross Domestic Product figures and January

inflation data are likely to have also contributed to the rise seen in the market. This week, market volatility will likely continue as investors and fund managers reposition their portfolios, with eyes fixed on the political space as the outcome of the all-important Presidential and National Assembly elections comes out.

Money Market The direction of money market rates trended th downwards for the week ended February 15 2019 due to inflow from retail refund, bond coupon payment of N47 billion and Net Open Market Operation (OMO) of about N123 billion. Short-dated placements such as Open Buy Back (OBB) and Over Night (O/N) rates declined to 15.83% and 17.50% to 18.67% and 19.42% respectively the previous week. Call rates also dipped to16.04% from 16.64% the prior week. Longer-tenured interbank rates, such as the 90-day NIBOR declined to 12.99% from 13.14% the previous week. This week, market is still expected to remain liquid on the back of OMO maturities of N500 billion expected to hit the system.

Foreign Exchange Market The naira depreciated marginally against the green-back across most market segments monitored last week. At the official window the naira lost 0.02% to close at N306.75/$ compared to N306.70/$ the prior week. Likewise, at the parallel market the naira closed lower by N1 at N362/$ from N361/$ the previous week. In contrast, Investors’ and Exporters window, it gained 7 kobo to settle at N361.64/$ from N362.71/$ the previous week. The weakening seen across most markets comes amidst continued intervention by the monetary regulator to provide liquidity to the FX market.

This week, we envisage the naira will trade sideways across all windows.

Bond Market The bond market remained bullish this week driven by demand across select trading instrument predominantly the jul2022, feb2028, mar2036 and apr2037 maturities.

Yields on the ten- , seven- and twenty- year debt papers closed at 14.68%, 14.64% and 14.54% from 14.72%, 14.76% and 14.65% respectively the previous week. The Access Bank Bond index edged up by 9.85 points or 0.36% to finish at 2,762.37 points from 2,752.52 points the previous week. This week, the market is expected to sustain the buying interest barring any impactful news.

Commodities Oil prices climbed last week spurred by OPECled supply cuts and a partial shutdown of Saudi Arabia’s biggest offshore oil field. Bonny light, the Nigerian benchmark crude gained 74 cents to settle at $62.68 a barrel, 1.2% up from the prior week. In a similar vein, gold prices rallied against a falling US Dollar as world stock markets slashed earlier gains and new data showed US retail sales slumped. Gold prices increased 0.40% to $1,316.24 per ounce last week, while silver prices settled lower by 12 cents, or 0.8%, to $15.77 per ounce on the back of weak demand. This week, we expect the price of oil will trend higher as OPEC and some non-affiliated suppliers including Russia are withholding supply in order to tighten the market and prop prices.

For precious metals, prices are likely to tilt higher as subdued growth outlook and dovish comments from most major central banks continue to spur increased safe-haven buying.

MONTHLY MACRO ECONOMIC FORECASTS Variables

Feb’19

Mar’19

Apr’19

Exchange Rate (Interbank) (N/$)

364

364

365

Inflation Rate (%)

11.5

11.55

11.6

Crude Oil Price (US$/Barrel)

60

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

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BUSINESS DAY

Watchlist

Zenith Bank earns more from fees, commission income than peers

P.E

SHORT TAKES 2.38% In the fourth quarter of 2018, Nigeria’s gross domestic product grew by 2.38% in real terms year-on-year. This represents an increase of 0.27% points compared to the fourth quarter of 2017. This implies that the annual growth rate of GDP in 2018 is 1.93%.

BALA AUGIE

D

ata gathered

by Markets and Intelligence shows Zenith Bank Nigeria Plc has deployed technology in generating fees and commission income compared to peers.

For instance, from December 2013 to 2017, Zenith Bank realized N345.01 billion in fees and commission income, this compares with Guaranty Trust Bank’s commission income of N216.12 billion, United Bank for Africa (UBA); N271.11 billion, First Bank Holdings Plc, N291.76 billion; and Access Bank, N207.08 billion.

Analysts say lenders

31

will have to invest in latest technology that will help underpin non-interest income as a precipitous drop in yields have put an halt to free money.

A cross section of experts interviewed by Markets and Intelligence are of the view

$2, 140.08 million

that banks will see improvement in full year fees and commission income. They expect the trend to continue in 2019 since interest income on loans and advances are ebbing because lenders have refused to turn on the tap on lending.

Banks and companies are increasingly tapping into Nigeria’s digital potential as the economy recovers.

Mobile phone subscribers in the nation almost 200 million people reached 162 million in September, according to the Nigerian Communication Commission.

Nigeria’s gross domestic product grew 2.38 percent in the last quarter of 2018 compared with 2.11 percent in the same quarter a year before, the National Bureau of Statistics said on Tuesday.

Slow loan growth and low yield environment has been a clog in the wheels for banks as margins were pressured while interest income reduced.

To further exacerbate the already anaemic position of players in the industry is the uncertainties surrounding the just concluded election and the vagaries of global macroeconomic headwinds such as the trade spate between China and the United States and the incessant hike in rates by the Unit-

ed States Feds that forced foreign investors to dump developing and emerging market stocks.

For the first nine months through September 2018, 13 largest banks made N384.47 billion in fees and commission income, which is 55.87 percent of cumulative noninterest income.

Combined non-interest income of N687 billion is 30.69 percent of cumulative interest income of N2.23 trillion as at September 2018.

“Interest income has reduced across banks in third quarter of 2018 and what has supported gross earnings in the period under review was non-interest income. The major driver of non-interest income was fees and commission income,” said Ifedayo Olowoporoku , equity research at Vetiva Capital Management Limited.

“Stronger commercial activities have driven commission income and we see surge in non-interest income drive gross earnings,” said Olowoporoku.

The total value of capital importation into Nigeria stood at $2, 140.08 million in the fourth quarter of 2018.

This represents a decrease of 25.05% compared to Q3 2018 and 60.24% decline compared to the fourth quarter of 2017.

2.70 % The non-oil sector grew by 2.70% in real terms in the fourth quarter of 2018. This represents 1.25% points higher than the growth recorded in Q4 2017, and 0.38% points higher than the growth rate recorded in Q3 2018.

BusinessDay MARKETS INTELLIGENCE (Team lead: BALA AUGIE - Analyst: Dipo Oladehinde, ENDURANCE OKAFOR, BUNMI BAILEY Graphics: FIFEN FAMOUS)

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

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Markets Intelligence

Nestle uses assets to generate higher sales than peers BALA AUGIE

I

t is difficult running a financially healthy company amid a tough and unpredictable macroeconomic environment.

But Nestle Nigeria has defiled all odds as it utilized its assets in generating higher revenue than peers as revealed in the third quarter filing of firms. An example from the table shows Nestle turns over assets at a faster pace.

For every Naira in invested in assets, Nestle generated N1.26 in sales, while Flour Mills, Nascon Allied Industries, Dnagote Sugar, and Dangote Flour generated asset turnover of N0.65, N0.64, N0.63, and N0.61 respectively.

Nestle’s return on equity (ROE) and net margin of 65.10 percent and 15.13 percent are the strongest in the industry.

Guinness Nigeria, Honeywell, and P Z Cussons have very low asset turnover as they struggled with sluggish sales while an low consumer purchasing power hindered customer from meeting their obligations.

Revenues of consumer goods firms in Africa’s largest economy has been shrinking as they are unable to hike price of key products in 2018 to fend off inflationary

pressures.

Nigerians are getting poorer, which means they aren’t opening their purse string.

According to a recent World Bank data, 92.10 percent of Nigerians live at below $5.50 a day. The reality is that most people cannot afford to buy a packet of Spaghetti or proteins.

Nigeria with a population of 180 million people has 87 million people, nearly half its population, in extreme poverty; as high inflation environment continues to erode discretionary income.

The cumulative average net profit margin of the 13 firms under our coverage fell to 3.91 percent in September 2018 from 4.67 percent the previous year.

Nigerian Breweries recorded its first quarter loss in decades, albeit stiff competition from rival company- International Breweries- contributed to the beer makers’ woes.

Other challenges bedevilling consumer firms are: insecurity in the northern part of the country, decrepit infrastructure, high incidence of smuggling, counterfeiting locally manufactured products, and the menacing grid lock at the Apapa Ports have made it practically difficult for firms to make profit or bolster margins as amid sky high cost of production.

5 subnational bonds offer risk premiums greater than 2.5 percent

D

ebt instruments are in a hierarchy of risk with the Federal government bond at the top of the ladder and sub-national bonds and corporate bonds following. As at Friday, 5 sub-national bond returned 2.5 percent in excess of the risk-free rate as a form of compensation for investors who tolerate the extra risk.

Investors are in the business of searching for investment vehicles that compensate for risk taking.

More risk incurred should often promise more reward, else, there

is no reasonable argument for an investor to allocate funds to that vehicle.

BusinessDay analysis of FMDQ daily quotation list at the end of trading on February 15, 2019 shows a total number of 5 sub-national bonds with risk premiums greater than 2.5 percent. Thus, at a higher risk of default, these bonds offer the highest return potential compared to instruments of the same maturity.

Bayelsa, Ekiti, Oyo, Plateau, Cross River state government bonds offer valuation yields above 2.5 percent of the corresponding FGN bond rate of the same maturity. The highest of which is

‘

Nigeria is in an interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the same credit quality

‘

IFEANYI JOHN

the Oyo state 7-year bond which has a valuation yield of 19.91 percent and a risk premium of 4.01 percent.

Plateau and Cross River 7-year currently yields 18.87 and 18.67 percent respectively with risk premiums of 3.04 and 2.98 percent.

Bayelsa 10-year and Ekiti 7-year complete the list with valuation yields of 15.72 percent add 19.00 percent with risk premiums of 2.75 and 2.53 percent.

The 5 state bonds have a total outstanding value of N39.49 billion and an average coupon rate of 16.4 percent.

The FGN Bonds are considered as the safest of all investments in domestic debt market because it is backed by the ‘full faith and credit’ of the Federal Government of Nigeria. Thus, a higher yield on bond instruments above the FGN bonds typically means higher risk of default on interest payment.

Nigeria is in an interest rate environment in which longterm debt instruments have a lower yield than short-term debt instruments of the same credit quality. An inverse yield curve predicts lower interest rates in the future as longer-term bonds are demanded, sending the yields down.

The risk-return spectrum is the relationship between the amount of return gained on an investment and the amount of risk undertaken in that investment. The more return sought, the more risk that must be undertaken. Investors will look to find vehicles that compensate the most for the risk taken.

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33

In association with

Meet Nigerian entrepreneurs who designed May, Obama’s outfits Josephine Okojie

N

i g e r i a’s f a s h i o n industry has been growing tremendously in recent years.

Fashion entrepreneurs are bringing in new innovations, designs and dexterity into the industry.

Recently, two entrepreneurs designed the outfits of British Prime Minister Theresa May and former United States’ president Barack Obama. This brought them into limelight and also showed the world that talents abounded locally. Here are the two entrepreneurs that made Nigeria proud.

Emmanuel Okoro When it comes to fashion, Em-

manuel Okoro, founder of Emmy Kasbit, knows it best.

He is one of the country’s most promising designers and was behind the custom-made Akwete jacket won by Theresa May during her visit to Nigeria in August 2018.

Ever since then, the designer has become a force to reckon with in the Nigerian fashion industry.

Emmy Kasbit brand was born out of a passion to clothe men and women in an unconventional manner.

The brand’s aesthetics is defined by clean and architectural cuts and has placed an emphasis on reinterpreting and reinventing vintage looks in a contemporary way.

It emerged as one of the top five finalists at the Lagos Fashion & Design Week Fashion Focus 2017 and since then, has been showcasing its collections at the Lola Faturoti

Emmanuel Okoro and Theresa May wearing the jacket he designed

LFWD. The brand also won a $13,900 cash grant, and business mentoring from Ijeoma Ogbechie, an expert in finance who is currently a vice president at Bank of America Merrill Lynch and founder of Avivere, a fashion e-commerce start-up.

Taking inspiration from his family and Nigerian heritage— particularly his father and the looks he wore in the 70s in Nigeria—Emmanuel’s aesthetic is

largely guided by his roots. As the brand continues to grow, Emmy Kasbit remains a pillar of the Nigerian fashion scene.

Lola Faturoti Lola Faturoti is a Nigerian-born, New York-based fashion designer with extensive experience and international exposure.

She is known for her modern silhouettes, innovative prints, and vibrant colours. She is a fashion entrepreneur who built

her brand from scratch, achieved widespread press coverage and sales without significant start-up funding.

Her designs are recognised internationally and have been featured on the pages of The New York Times, UK Daily Telegraph, WWD, Vogue, Elle, Harper’s Bazaar, Essence amongst others.

Her inspiration is mainly drawn from her roots, and she rose to fame in New York when she made a dress to celebrate Barack Obama’s election as President of the United States.

The dress had these bold Yoruba words, ‘Oluwa gba President Barack Obama,’ meaning ‘God Bless President Barack Obama.’

Since then, her collections are sold worldwide in high-end department stores and boutiques, including Bloomingdales Dubai, IF Boutique NY, Harvey Nichols Hong Kong, Harvey Nichols Ryhadh, Sugar Italy, Loveless Japan, and Joyce Boutique Hong Kong, among others.

Faturoti, who hails from Ondo State, went to school in London before moving to New York in the early 1990s.

Her fashion journey began from childhood when she helped her grandmother, who was also a fashion designer. That played a major role in defining her personal style.

She currently has over 10 years of experience in clothing design.

How Total rewarded three entrepreneurs with N12m at Startupper Challenge MICHEAL ANI

T

otal, a French multinational integrated oil and gas company that focuses on both the upstream and downstream sector of the economy, has empowered three entrepreneurs with a combined sum of N12 million to enable them to grow their business ideas.

The empowerment programme, which is couched in its ‘Startupper Challenge’, is part of the firm’s corporate social responsibility. It started two years ago and is aimed at supporting and transforming young start-ups with innovative ideas to ensure that such ideas come into reality, the firm said.

“The ‘Startupper Challenge’ is in line with our CSR that is focused on promoting local content and entrepreneurial drive of young business, which we believe in turn will have a ripple effect on our economy and the society at large”, Bunmi Popoola, executive general manager for the oil and gas firm, said.

The 2018/2019 edition of the firm’s Startupper Challenge kicked off around October 8th last year across 55 countries, with an online campaign followed by a

moderator stage that saw 15 entrepreneurs proceed to the finals.

The 15 entrepreneurs went through different processes like a boot camp where they received industrial training to assist them to work on their thoughts. Thereafter, they faced a jury of 10 members which they pitched their business ideas to.

Three winners out of the 15 finalists were then selected after a painstaking selection by a 10man panel of judges who selected the business ideas of the winners based on innovation, social impact and financial viability.

After the jury of local experts selected the winners of the 20182019 Startupper of the Year by Total Challenge in Nigeria, they were presented with their awards at an official ceremony held on February 13 in Lagos.

The first winner, Ogunbanjo Olumide, whose business idea focused on Argo data Network was rewarded with N6 million.

Argo data Network promotes organic farming via communitybased beekeeping, providing farmers with free beehives. His company deploys natural techniques to keep the bees within the ecosystem.

The second entrepreneur, Obaoye Justus, who was rewarded

with the sum of N3.6 million focuses on Cardio Automobiles Service Technology.

His Cardio automobile business is an on-demand automobile service technology which aggregates automobile maintenance demands through mobile devices and thereafter facilitates their fulfilment through select offline services performed by competent and vetted mechanics.

Ijir Aondosoo, who runs a business known as ‘My Waste My Energy’, finished third. This business converts rice husk waste to an energy source and provides a sustainable form of domestic energy, reduces environmental degradation and deaths associated with respiratory diseases.

Nigeria records 93,000 deaths annually due to smoke from firewood. He got N2.4 million.

These young entrepreneurs received financial support of up to N12 million to develop their projects.

They will also receive personalised support and coaching from Passion Incubator and a communications campaign to publicise their projects.

The firm also, in order to promote gender equality by empowering the women, created the top female entrepreneurial category

to reward especially the best female start-up that partook in the challenge.

Omotosho Oghenekevwe, with her business idea ‘ Isabiwork’, emerged the winner of the Top Female Entrepreneur award, which is a new addition to the 2018-2019 Challenge to support women in business.

‘Isabiwork’ is an app which helps customers easily locate the nearest artisan or service provider in their location, thereby bridging the digital divide between artisans and their potential customers.

The 2018-2019 Startupper of the Year by Total Challenge held simultaneously in 55 countries— 37 of which are in Africa, 11 in the Asia-Pacific and Middle East region, 4 in the Americas, and 3 in Europe — reaffirms Total’s commitment to social and economic development in host countries worldwide. By helping innovative young entrepreneurs to realise their projects, the Challenge strengthens the local social fabric.

The second Startupper of the Year by Total Challenge received nearly 50,000 entries, of which more than 15,000 were fully completed. In all, 825 finalists presented their projects to a jury of experts, with 165 winning prizes.

The first prize winner in each country will see their project presented to the international grand juries that will pick the six grand winners from all 55 countries.

The first edition was done in 2015 and was run in about 34 different African countries that produced 102 people This edition started around October 8th last year with entrepreneurs below 35 years of age who have business ideas that are not more than 2 years The three winners will represent Nigeria in Paris.

Start-Up Digest Team Odinaka Anudu Editor

odinaka.anudu@businessdayonline.com 08067478413

Reporters Josephine Okojie Bummi Bailey Gbemi Faminu Joel Samson Graphics

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Start-Up Digest

Oladapo Omitogun: The social change agent Stories by ODINAKA ANUDU

O

ladapo Omitogun is the team lead of Cathy, which stands for ‘Catch Them Young’. Cathy is a youth-led social enterprise involving a team of leading professionals, volunteers and social change agents who support and help underserved communities in Nigeria.

Also known as Cathy Youths Innovation Enterprise, the organisation runs community innovative projects, vocational and employability skills programmes, sex and moral education, career development and civic responsibility initiatives for the young generation to enable them have a secure and better future. Oladapo holds Bachelor of Science degree in Economics from Tai Solarin University of Education and has five years of experience in social entrepreneurship, human rights and civil liberties.

He has assisted and supported over 100 businesses to improve their online campaign and brand positions.

The idea behind Cathy came up in Sango Otta, Ogun State, when Oladapo was with his best friend and project partner, Arogundade Kehinde Aminat.

“We were both discussing how the poor educational system in Nigeria has affected the unemployed youths and how most secondary school students and girls especially in Ota, Ogun State, drop out of school for factory jobs,” he tells Start-Up Digest.

The discussion generated ideas that led to the set-up of this outfit in November 2017.

“After the idea came up, we pitched and secured a partnership

Oladapo Omitogun

with the Ogun State Ministry of Education to train public secondary school students on vocational and entrepreneurial education,” he explains.

“We had some friends who came up to show interest in supporting our mission. We also got a drive from a Global Goodwill Ambassador, Jude Ediae, a wellrounded professional and humanitarian who also believed in what we were doing and prompted us to keep on moving,” he recalls, stating that this pushed the team into looking out for more partnerships and sponsorship support.

One of the key targets of Cathy is to empower young people with 21st century skills needed by the industry, to enable them get good jobs and become useful citizens.

Cathy targets the young, secondary school students, the unemployed and disengaged youths

and the girl-child.

The entrepreneur says that one impressive thing about Cathy is that most of its support comes from the hearts of volunteers and social change ambassadors, as well individual organisations and community bodies.

Oladapo explains that the organisation has achieved so much despite not getting any external funding support.

Cathy has partnered with the Ogun State Ministry of Education to sensitise and train the young ones on vocational and entrepreneurial skills at underserved public secondary schools.

It has empowered over 500 public secondary school students on vocational, entrepreneurial, sex and moral education programmes. It has also trained 150 unemployed youths on employability, entrepreneurial and civic

responsibility initiatives.

“Out of the 500 students we trained, 23 have started business, supporting their parents and 34 out of the unemployed youths have improved their confidence and interview skills,” he says.

He further states that those that have started their business also benefited from Cathy’s digital marketing class, learning ways to improve their business and ensure customer loyalty.

“We have also ensured a mentorship support system for the trained ones and we follow up with them,” he says.

He discloses that Cathy has run projects within Otta, Ipokia and Abeokuta communities of Ogun State, as well as Ajegunle, Ikorodu and Oshodi underserved communities of Lagos.

“We haven’t gotten any donor funds or grants from any international organisation, government or foundation yet,” he says.

He says that Cathy plans to partner and extend its activities beyond Lagos.

“Since the inception of the idea, we have seen interested volunteers from Anambra, Lagos, Oyo and Abuja, asking to work together with us,” he notes.

“Although we have done training programmes in Ikorodu and Ajegunle part of Lagos State, we are currently applying for grants and seeking publicity and sponsorship and will start extending our projects to the other states where we can effect change,” he discloses.

One of Cathy’s fortes is to improve the education system. Oladapo observes that he has seen cases of youths living in underserved communities who cannot afford to pay their education fees, adding, however, that part of what Cathy offers is a vocational and

entrepreneurial programme that will build their self-reliance skills and reduce their dependence on white collar jobs.

The body runs career motivation and employability skill acquisition programmes with the help of experienced motivation and human capital development experts, he says, adding that they empower youths to complete selfassessments and then develop personal plans of action to reach short and long-term goals.

“We put them through towards mastering the skills the employers are looking for and create sound curriculum vitae (CV) that may bring them interview invites,” he explains.

“We also connect them to companies that need their skills and also teach them how to job hunt and obtain job interviews with employers.”

What is Cathy’s plan for 2019 and beyond?

“For the year 2019 and beyond, we will be putting more of our efforts on creating great social innovative ideas that can effect community change and improve the Nigeria educational system,” he responds.

“We intend to increase female participation in schools and in socio-economic activities,” he adds.

“We will be looking out for more volunteers and social change ambassadors interested in what we do. We will also be happy to receive partnership and support from individual sponsors, organisations, governments and international aids,” he says.

He further says that a lot needs to be done to establish social innovative projects that will help reduce and sensitise Nigerian youths to become great social change ambassadors and contribute towards nation building.

Boost for entrepreneurship as Skool Media sets up tech experience centres in Lagos

S

kool Media has established technology experience centres for teachers and students in Queens College, Federal Science and Technical College (FSTC), both in Yaba, as well as in Federal Government College, Ijanikin, Lagos.

Skool Media is Nigeria’s information and communications technology innovative company.

At the official opening ceremony, Moses Imayi, project director, Skool Media, said the organisation paid special attention to quality education.

He said quality education was Skool Media’s core passion, adding that computer-based learning would enable and equip young men and women to become globally competitive.

“In today’s world, we have robots servings in places like Japan,” he said.

“One must have right skill to be

globally competitive,” he added, stressing that Skool Media had invested about N500 million in setting up centres of this nature in the six geopolitical zones across the federation.

“We are confident this project will be successful as Nigeria has the right potential to produce quality individuals who can hold their own globally.”

Imayi said Skool Media’s expectation was to invest in the future of the Nigerian children and equip them to be at par with peers across the world.

He listed some of the core 21st century learning skills that would be addressed at the tech experience centres to include coding, Google digital skills, information literacy using key search engines, soft skills-EQ, team building, creative thinking and complex problem-solving. Others were: personal branding, creative writing, public speaking workshops,

gamification, hackathons, summer bootcamps, student competitions, Ideation Day, digital innovation workshops, and meetups, among others.

Sonny Echono, permanent secretary, Federal Ministry of Education, said that ICT delivery in unity schools was done with the aim of redefining the teaching and learning processes so as to give the students the leverage to compete with their counterparts all over the world.

“The honourable minister of education, Mallam Adamu Adamu is committed to the realisation of nothing short of excellent ICT education in our schools,” he said.

“Skool Media came in with the aim of extending the frontier of not only ICT education delivery but also to use the ICT skills in solving problems prevalent in our world today.”

The permanent secretary, who

was represented by Abubakar Isah, director of ICT at the ministry, expressed confidence that the use of the centres would enhance students’ technology experience, promote design thinking and help in elaborating project-based learning in schools.

Ogochukwu Ufoegbune, director/principal, Federal Science and Technology College, Yaba, said increased collaboration among the management, PTA and the project coordinators had led to the re-equipment of the school’s ICT tools with regard to provision of laptops, internet services and for teaching and learning.

She said that the school needed more classes to be equipped with projectors and laptops.

She pledged that the school would make best use of the experience centre provided by Skool Media.

At Queens College, Yaba,

T.F.O. Yakubu-Oyinloye, director/ principal, said access to quality ICT-enabled education had become imperative for the future of the students.

“Queens College is the flagship of girl’s education in Nigeria. We believe this project will foster modern learning skills in our students and make them creative, intelligent and forward looking to assignments that will inspire them more,” she said.

At the unveiling ceremony, OAU Essien principal, Federal Government College, Ijanikin, commended Skool Media team for its continuous support for the development of education in the country.

She noted that more needed to be done to ensure sustainability of the on-going project.

In addition, School Media would be providing four units of standing air conditionera (AC) to support the school hall.

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Start-Up Digest

Sanni Sheriff: Entrepreneur tapping opportunities in catering industry items in the country and low purchasing power of consumers.

He also says epileptic power supply in the country is a very big challenge confronting his business as it has shot up his cost of production.

“Our business has grown tremendously since we started and we have even opened another brand of business. Our target client is corporate bodies and everybody who are interested in

Josephine Okojie

S

anni Sheriff is the founder of Sannikayz Kitchen Limited. He is a caterer with vast experience in event services and currently runs a mobile restaurant in Lagos.

An engineering graduate of the University of Lagos, Sanni started his journey as an entrepreneur in 2011 when he began his mobile restaurant business on campus as an undergraduate.

The demand for his services was very high and after the undergraduate study, he established Sannikayz Kitchen in 2014.

Sanni is a recipient of so many awards, including the Under-30 Achievers Awards in 2013, and Creative Man of the Year by the University of Lagos Engineering Society Awards. He is the Best Entrepreneur in 2014, nominated as Sheraton Entrepreneur of the year at the African Youth Choice Awards in 2014 and the Most Promising Enterprising Youth at the Nigerian Achievers Awards in 2015.

Sanni started his business with just N10, 000, an amount he spent

our services,” he says.

“We have been serving the corporate class since January and it has really been adventurous. We have customers in Access Bank, Stanbic IBTC, Investment One, Integrated Supply Chain, Akintola Deloitte, PWC , just to mention a few. We have also acquired more assets. With support from family, friends and investors, the business is now worth about N5 million,” he adds.

Sanni Sheriff

on registering his business name, printing banners and invoice.

With referral from family and friends, he was able to break even.

“I was also inspired by my dad who operates a marine engineering services firm. He always wanted to grow his business and add more value to the brand and himself. This also drove my

passion for rendering services to people,” he says.

He currently has three staff members and over 20 part-time workers who also work with him, especially at weekends when demand for his services are high.

The engineer-turned-caterer has not had it all rosy as he contends with high prices of food

Moses Imayi, projector director, Skool Media; Abubakar Isah, director of ICT, Federal Ministry of Education, and O.A.U Essien, director/principal, FGC, Lagos, interacting with students of the college at the commissioning of students and teacher’s technology experiences centre powered by Skool Media in Lagos recently

Business Opportunity

Making millions from cassava production & export Desmond Okon

T

he Federal Government intends to discourage importation of some items that can be easily be produced in Nigeria, including cassava, rice and wheat products. At the same time, it encourages those interested in local production and export to develop the local manufacture of these crops. The government has paid attention to the development of agriculture and other non-oil exportable products. Cassava production, processing into chips & pellets, industrial starch, ethanol, garri, cassava flour and foo-foo are still very lucrative agro- industrial projects.

Every hand should be on deck to encourage cassava production either through provision of funds or through encouragement of production for export market.

Here is the potential.

Cassava is an important annual food grown throughout Nigeria.

It is tuberous and has the ability to thrive in poor soils and has considerable resistance to drought. It is also used to refer to the root of this tropical plant. It is botanically called manihot esculenta and also called maniac or tapioca. Cassava is seen as readily available raw materials for small and medium scale industries in Nigeria. Garri is produced from the root of this crop.

Export types Cassava for export includes dry cassava leaves, chips, pellets, cassava meal, flour and starch and ethanol.

All these products can be exported.

Detailed research reports and feasibility studies report on establishment and running of any these aspects of

the project are available and would be given to prospective investors.

Uses Cassava is used mainly for producing animal feed. The dry roots chips and pellets are usually preferred by industrial animal feeds producers in America and Europe.

Alcohol is also extracted from cassava. Textile industries and food industries need starch.

Production Nigeria is a major producer of this tropical crops with output conservatively put at over 50, 000 metric tons.

However, until 1996, cassava and its allied products were on the export prohibition list. From 1996, its ban was lifted. With this policy action, Nigeria exporters were given the opportunity to develop export markets for this product.

Apart from Nigeria, other major tropical developing countries that produce cassava include Brazil, Thailand, Indonesia and Zaire.

Nigeria’s over 60,000 metric tons are almost totally processed and consumed locally.

Export Globally, only 15 percent of total production of cassava is exported, with Thailand being the major exporter of cassava products. As earlier stated, cassava and its derivatives were de-listed from the export prohibition lists since 1996 and any Nigerian can invest and export any processed products. Its export is now encouraged among other food crops for which Nigeria is a major producer by present administration.

Direction of export The direction of cassava export is mainly Europe and North America, with European Union accounting for about 90 percent of the total buyers.

Details of the foreign buyers of industrial starch, cassava chips & pellets and cassava flour would be given to prospective investors on contacting the writer. About 30 percent of cassava production globally is used for starch and other industrial products and only less than one percent is processed into ethanol particularly in Brazil. It is a choice animal feed material because of its high carbohydrate content. It is, however, mixed with protein source such as soya beans.

Europe market overview The Europe is the major importer of cassava for animal production.

Details would be given to prospective investors. Animal production, being the main attraction of Agriculture in Europe, accounted for about 70 percent of total agricultural output. The compound feed formulation is the main attraction for cassava. About 90 percent of the traded cassava in the Europe is from the developing countries, such as Nigeria. Main suppliers are Thailand (about 85 per cent), and Indonesia (about six percent). Sub- Saharan Africa is yet to contribute significantly to world trade in cassava with about three percent recorded in the early part of the millennium.

The principal buyer of cassava in the Europe is Netherlands, (accounting for over 40 percent of total Europe imports); Germany (about 20 per cent), Belgium and Luxembourg (about 13 percent), France (eight percent), U.K (10 percent) and Italy (two percent). Details breakdown would be given to prospective investors the exportable quality standards.

Transportation and handling Transportation and handling constitute high levels of cost of inputs in preparation of cassava for export.

This is due to the bulky nature of the product. This cost could be as high as 50 per cent of total cost.

Proper management of cost reduction programme is, therefore, recommended for those who wish to venture into the export of cassava as reduction of costs will afford better competitiveness. Cassava pellets are usual cheaper to transport and handle than other exportable processed cassava products like industrial starch. The standard of the product is very important.

Quality Feed millers are very critical about quality. Consistency of quality is very important for them to maintain the standards of their products.

Quality is usually in terms of nutritive value. Minimum standard specifications are as follows 70 percent, 70 percent and 62 percent stand for chips, flour and pellets respectively while moisture content is 14 percent. Fiber is five percent and ash, three percent content, for all the three products. Details would be given to prospective investors on contacting the writer.

Chips are normally white or near white, clean, free of mould and foreign matter insect damage and without off odours. Length of chips should be 4-5mm. It should be noted that if quality standard is not maintained, the export project is bound to collapse. Therefore, it must be worked out carefully.

Packaging Packing is done in sacks of cotton, multi-craft paper bags or clean jute bag; pellets should be uniform in shape and size, less fragile and should be compatible for handling, storage and transportation. Pelletizing equipment exists for produc-

tion of pellets. Prospective investors should not be afraid of the quality control because the writer, through years of experience, can guide any investor to success.

The current price of Thailand hard pellets (Nigeria’s equivalent) is as high as 3,500 DM per ton.

The plants and machinery for setting up the cassava chips and pellets, industrial starch and flour are locally available. However, arrangements can be made for foreign machines on request. There are foreign machines from Brazil, South Korea, Japan, and India, among other countries.

Prospective investors would be given the details and would be comprehensively worked out in the bankable feasibility studies report. The raw materials, labour and all other required inputs are locally available.

All other essential details, including accommodation, manpower, production technology, packaging and marketing will be embodied in a bankable and comprehensive feasibility report for prospective investor.

There is another good advantage that is worth mentioning that prospective investors will derive from investing into this project. The export processing zones (EPZs) can provide accommodation to serious investors.

At the same time, they would ensure quality processing of their export products. Details would be given to prospective investors on contacting the writer.

Uba, Godwin Global Trust Consulting, 56, Ishaga Road (1st floor), Surulere, Lagos Tel: 08034494437, 08023664368 Email: ubagodwin@yahoo.com

36

BUSINESS DAY Harvard Business Review

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Monday 18 February 2019

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Yes, sustainability can be a strategy Steve Blank

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n recent years, a growing number of companies around the world have voluntarily adopted and implemented a broad range of sustainability practices.

On the one hand, there are those who argue that sustainability is spreading as a “common practice” and, as such, it may be a necessary condition for survival, but it cannot be a sufficient condition for building a competitive advantage.

On the other, there are those who argue that sustainability can be a strategy that generates a competitive advantage

and therefore results in above-average performance (i.e., “doing well by doing good”).

The arguments on both sides conceptually relate to Michael Porter’s seminal 1996 article

“What Is Strategy?” in which he draws a sharp distinction between operational effectiveness and strategy. He argues that strategy “is about being different” and that “the essence of strategy is choosing a unique and valuable position rooted in systems of activities that are much more difficult to match.”

In a new paper, we find that within most industries, sustainability practices have converged over time. This finding implies that, on average, companies have adopted an increasingly similar set of sustainability practices, raising the possibility that they are becoming

common practices and, as such, are less likely to serve as a strategic differentiator. We also find that there is more convergence in industries where environmental and social issues are dominant, rather than issues of governance.

Our exploratory results confirm that the adoption of strategic sustainability practices is significantly and positively associated with both return on capital and market valuation multiples, even after accounting for the focal firm’s past financial performance. In contrast, the adoption of common sustainability practices is not associated with

return on capital, but it is positively associated with market valuation multiples.

Some sustainability activities are simply becoming “best practices” and so are a necessity.

But the data suggests that some companies are creating real strategic advantage by adopting sustainability measures that their competitors can’t easily match.

(Ioannis Ioannou is an associate professor at London Business School. George Serafeim is a professor at Harvard Business School.)

How recruiters can stay relevant in the Age of LinkedIn Atta Tarki and Ken Kanara

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he era of the specialized Rolodex as the main way to differentiate recruiters is over. LinkedIn killed it. This is not to say that talent acquisition professionals can no longer add value, however. On the contrary, technological change has made it possible for recruiters to make themselves more critical to organizations than ever before. They can do this by following these steps: — HELP HIRING MANAGERS DEFINE STRATEGY. Strong recruiters will play a crucial role as thought partners in conversations with hiring managers, even if that means breaking the

traditional transactional recruiter relationship.

A few minutes invested upfront in such discussions will allow recruiters to focus their efforts from the beginning of a search, target more ideal

profiles and land candidates faster.

— GET THE BEST CANDIDATES TO APPLY. Successful recruiters help organizations by building a repeatable and a scalable formula

for finding and engaging star performers. Recruiters can do this by experimenting with and increasing the efficiency of other sourcing channels.

— SELECT THE BEST OF

THE BEST. The next step is to help hiring managers better understand how to predict job performance. Google’s recruiting team is perhaps the best in the world at this: They help hiring managers understand what categories of questions they should ask candidates and even provide hiring managers with sample questions.

— GET CANDIDATES OVER THE FINISH LINE. Strong recruiters will help hiring managers get candidates over the finish line by helping their companies create a positive candidate experience as well as organizing and managing the interview and offer process.

— EVALUATE. Finally,

(C) (2017) Harvard Business Review. Distributed by New York Times Syndicate

Expertise It’s in our DNA www.firstbanknigeria.com

FirstBankofNigeria

In an ever changing economy, with 125 years of serving YOU, we remain strong, trustworthy, dependable, safe and consistent.

You can be confident that we will continue to deliver innovative banking products and services which seamlessly and conveniently suit your lifestyle needs.

Visit www.firstbanknigeria.com to learn more about us.

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recruiters should evaluate their hiring practices on an ongoing basis and apply an iterative process to continuously improve their methods.

Without establishing this critical step, it is difficult to determine what is working and what isn’t.

CEOs who position their talent-acquisition teams to follow these five steps will gain a significant advantage in attracting the right talent.

(Atta Tarki is the founder and chief executive of ECA. Ken Kanara is the president of ECA.)

Monday 18 February 2019

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Companies are failing in their efforts to become Data-Driven Randy Bean and Thomas H. Davenport

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eading corporations seem to be failing in their efforts to become data driven.

This is a central and alarming finding of NewVantage Partners’ 2019 Big Data and AI Executive Survey, published earlier this month. The survey participants comprised C-level technology and business executives representing very large corporations such as American Express, Ford Motors, General Electric, General Motors and Johnson & Johnson.

Here are some of the results from the survey: Of participants, 72% report that they have yet to forge a data culture; 69% report that they have not created a datadriven organization; 53% state that they are not yet treating data as a business asset; and 52% admit that they are not competing on data and analytics.

Furthermore, the percent-

age of firms identifying themselves as being data-driven has declined in each of the past three years, from 37.1% in 2017 to 31.0% this year.

These sobering results and declines come despite increasing investment in big data and artificial intelligence initiatives.

Of survey respondents, 92% reported that the pace of their big

data and AI investments is accelerating; 88% report a greater urgency to invest in big data and AI; and 75% cite a fear of disruption as a motivating factor for big data/AI investment.

Yet critical obstacles still must be overcome before companies begin to see meaningful benefits from their big data and AI investments. Executives

who responded to the survey say that the challenges to successful business adoption do not appear to stem from technology obstacles. Rather, 93% of respondents identify people and process issues as the obstacle. Clearly, the difficulty of cultural change has been dramatically underestimated.

Chief data and analytics of-

ficers from many of the participating companies commented that senior leaders who strongly advocate for data and analytics within their organizations are incredibly valuable, but more the exception than the rule.

Whatever the reasons for the failure to achieve transformational results from data initiatives, the amount of data continues to rise in business and society. Analytical decisions and actions continue to be generally superior to those based on intuition and experience. Firms must become much more serious and creative about addressing the human side of data if they truly expect to derive meaningful business benefits.

(Randy Bean is chief executive and managing partner of NewVantage Partners. Thomas H. Davenport is a professor at Babson College, a research fellow at the MIT Initiative on the Digital Economy and a senior adviser at Deloitte Analytics.)

Why customer feedback tools are vital for nonprofits Fay Twersky and Fred Reichheld

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recent survey by Stanford Social Innovation Review confirmed a surprising fact. In an era where customer feedback is ubiquitous in the for-profit world, both doers and donors in the social-innovation sphere struggle to systematically understand the preferences and experiences of the people they are seeking to help: the nonprofit customer.

Now, however, in an era of human-centered design, client feedback is surfacing as the right and smart complement to measuring results. This has inspired the William and Flora Hewlett Foundation to join forces with the Bill and Melinda Gates Foundation, the James Irvine Foundation and many other grant-makers in a funder collaborative called the Fund for Shared Insight to create tools that will make it simple and affordable to listen to end users.

Here are two key benefits we’re seeing gained by gathering this

type of feedback.

— HELPING CLIENTS FEEL INCLUDED. An evaluation found that of the organizations that implemented efforts to collect feedback, 63% are making changes to program offerings, 45% are making changes to their

operations to be more respectful of client preferences and experiences and 31% are offering new services. Such changes, based on feedback, effectively give beneficiaries a seat at the decision table, a simple way to bolster their belief in self-advocacy.

— HELPING STAFF DO THEIR

JOBS BETTER. The staff at Epiphany Community Health Outreach Services in Houston began surveying clients in 2017 and what they heard, initially, was sobering: Clients expressed frustration with long waits for help filling out forms to get on county health and public aid

Brought to you courtesy of First Bank Nigeria

and they found staff (themselves stretched and stressed) unfriendly. Today, staff start their day with a morning meeting where they anticipate challenges to come and divide up work accordingly. Staff welcome clients into a sitting area with snacks, and triage them into working groups according to the services they seek. In these groups, staff counselors called “navigators” now check client papers and explain what’s required.

Intentional listening dignifies the lives of those heard. There’s a saying in Talmudic wisdom: The wise person learns from everybody. With feasible tools for gathering customer feedback widely available, this too-often missing measure in social enterprise can make us all wiser.

(Fay Twersky is director of effective philanthropy at the William and Flora Hewlett Foundation and a co-chair of the Fund for Shared Insight. Fred Reichheld is a fellow at Bain & Company.)

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BUSINESS DAY

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Naira remains strong despite election pressure - Gwadabe HOPE MOSES-ASHIKE

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he naira has in over 18 months remained stable at both the official and parallel markets despite mounting pressure from the 2019 general elections, Aminu Gwadabe, president, Association of Bureaux De Change Operators of Nigeria (ABCON) said.

Last week, the local currency appreciated at the Investors & Exporters Forex Window (I&E FXW) by 0.02% to close at N361.65. However, the NGN/USD rate at the Interbank Foreign Exchange market was flattish at N357.10/ USD amid weekly injections of $210 million by CBN into the foreign exchange market via the Secondary Market Intervention Sales (SMIS) of which: $100 million was allocated to Wholesale SMIS, $55 million was allocated to Small and Medium Scale Enterprises and $55 million was sold for invisibles.

However, a report by Cowry Asset Management Limited revealed that at the parallel market and Bureau De Change (BDC) market segments last week, naira depreciated by 0.28% each to close at N362/USD and N359/USD, respectively.

Gwadebe commended the Central Bank of Nigeria (CBN) financial sector reforms, and the contributions of the BDC operators to the current exchange rate stability, as against the common practice of currency devaluations and depreciations across the world at election times. The naira exchanges at N306/$1 in the official market and N358/$ in the parallel market despite the election fears.

Gwadabe said the absence of foreign exchange spikes and volatility before and during the 2019 elections year was a major achievement by the CBN and Federal Government.

He said: “The dexterity of the government policies in ensuring that naria remained

stable in an election year is commendable. Election years, as witnessed during the 2015 general elections, are marred by exchange rate volatility and spikes in the market.”

He disclosed that financial pundits had had in early 2016, speculated that the naira would depreciate to as low as N1000/$. The election period of 2015, he added, witnessed over $100 billion capital flight outside the country. The activities of currency hoarders, speculators and rent seekers reached its peak in 2015.

He disclosed that ironically, the trend in the foreign exchange market during this year’s election showed hope for the economy, sustained exchange rate stability, adequate dollar liquidity, increasing foreign capital inflows and most importantly, a unified and convergent exchange rate of the BDCs and the parallel market.

These feats, he said, are commendable by all standards.

On deepening capacity/ skills of industry operators,

Gwadabe appealed to the CBN to issue Letter of Consent to ABCON proposed training institute. This, he added, is going to boost the current ABCON Management commitment to capacity building for its members to stimulate competency in the sector and make room for better foreign exchange management.

Continuing, Gwadabe also listed factors that led to the current successes in the foreign exchange market. He said: “First, I want to congratulate the leadership of the CBN for a well coordinated, proactive exchange rate management strategies which include creation of several foreign exchange windows to deepen liquidity and price discovery, restriction of foreign exchange on 42 items that can be produced locally, self sufficiency in rice production and continuous partnerships between the apex bank and BDCs, all led to the current exchange rate stability enjoyed in the country”.

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BUSINESS DAY

Chevron, EGCDF commission, handover cottage hospital to state FRANCIS SADHERE, Warri

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he Egbema Community Development Foundation (EGCDF) and Chevron Nigeria Limited (CNL) last week commissioned and handed over a cottage hospital built in Polobubo (Sekelewo) and Oporoza communities, Egbema Kingdom, Warri South West Council Area, to the Delta State government.

The cottage hospital was built through a Global Memorandum of Understanding (GMoU) between Chevron, operator of the NNPC/Chevron Joint Ventures, and EGCDF at a cost of N596 million.

Speaking at the ceremony, the Delta State governor, Ifeanyi Okowa, who was represented by the Chief of Staff, Government House Asaba, Tam Brisibe, commended the management of the EGCDF and Chevron for the project.

Brisibe said the state government had made the health centre one of its centres for the Delta State Health Contributory Scheme, which will provide free health care services to children under five years, pregnant women and the elderly people above 65 years.

He said, “The Delta State government is very happy to be a part of this ceremony.

Development is a partnership; government alone cannot do everything. Today, we

are commissioning this primary health centre, which is being made possible by the partnership between EGCDF and Chevron/NNPC Joint Venture.

“The Delta State government is coming in to provide the necessary support to run this facility. The government of Senator Dr Ifeanyi Okowa is one that undoubtedly has the interest of the people of Delta State at heart.

“The SMART agenda that he (Okowa) came into government with has allowed him to provide health facilities in different parts of the state. It had led him to develop parts of the state that hitherto have not been seeing the presence of government.”

He also promised to look into all the requests the community had made earlier, saying, “This government is a government that has done what other past governments are afraid to do.”

General manager, Policy, Government and Public Affairs, CNL, Esimaje Brikinn, said the takeover of the hospital built by the EGCDF under Chevron’s GMoU was a triumph of partnership.

While thanking the leadership of the EGCDF and the state government for making the cottage hospital part of the Delta State Health Contributory Health Scheme, Brikkin, who was represented by Sam Daibo, noted that the GMoU process would be improved on.

A’Ibom, Delta, Abia top states with highest prices of cooking gas …as average price falls in January Godwin Obaseki, governor, Edo State, signing the Violence Against Persons Bill into law at Government House, Benin City. He is flanked by his Deputy Philip Shaibu (r), and Kabiru Adjoto, speaker, Edo State House of Assembly.

POS transactions in Nigeria rise by 75% in January 2019 BUNMI BAILEY

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igerians started 2019 on a positive note as the volume of Point-of-Sales (POS) activities via mobile devices rose (year-on-year) by 74.8 percent to 28.2 million in January, from 16.1 million in January 2018, a BusinessDay analysis shows.

Data from the Nigeria Interbank Settlement System (NIBSS) also show that the value of POS transactions rose by 46.5 percent to N222.9 billion in January 2019 as against N152.1 billion in the same corresponding period in 2018.

Ayodeji Ebo, MD, Afrinvest Securities Limited, attributed this rise to the increase in the adoption

of POS by the Small and medium sized enterprises (SMEs) as well as the rise in agents providing POS transaction services for cash in major markets.

“In addition, the frequency of errors (by POS machines) has also reduced which has increased the use of POS by customers,” Ebo said.

Also the volume of mobile transfers rose by 54.1 percent to 724,803 in as against 470,442 in periods under review.

Similarly, the value of mobile transfers increased by 28.2 per cent from N20.9 billion in January 2018 to N26.8 billion to this year.

Gbolahan Ologunro, an equity research analyst at Lagos-based CSL Stockbro-

kers, said there had been a sustained increase in the use of digital channels in facilitating payment for transactions.

“It could have been sustained by pre-election spending which tends to support economic activities particularly in printing and media business. This usually dovetails into increased spending as more income is being spent on the purchase of goods and services,” Ologunro also said.

Additionally, the value of transactions on NIBSS instant payment (NIP) platform rose by 42.1 percent to N8.1 trillion in January 2019 from N5.7 trillion in January 2018, while its volume increased by 76.3 percent to 72.3 million in 2019 from 41 million in 2018.

Johnson Chukwu, CEO, Cowry Asset Management Limited, said Nigerians are now recognising the safety, convenience and speed of using electronic payment system than in the past.

“They are now shifting from cash activities to electronic payment systems and if you look at the telecommunications subscription, data subscription and usage, you will see that there is increased penetration or usage of mobile phones,” Chukwu said.

The increased penetration of electronic payment systems is already having an impact on the volume of cheque transactions as it fell by 19.5 percent to 712,191 in January 2019 from 885,166 in the same period of last year.

JOSHUA BASSEY

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il and gas producing states - Akwa Ibom, Delta and Abia, ironically, top list of states with the highest price of Liquefied Petroleum Gas (LPG), also known as cooking gas, though there is a general drop in the price across the country.

Figures released by the National Bureau of Statistics (NBS) on Friday showed that a 5kg cylinder of LPG, which sold for an average of N2,052.79 in December 2018, dropped marginally to N2,039.82 in January 2019.

The NBS on its cooking gas price watch, the price of refilling the 5kg cylinder of LPG decreased by -0.63 percent month-on-month and -6.86 percent year-on-year in the period under review.

The report, which captured price of cooking gas in states, shows the highest average price for refilling

the 5kg cylinder in Bauchi to be N2,540.00; Adamawa and Cross River N2,350.00 and Borno N2,325.00.

According to the report on the NBS website, states with the lowest average price for refilling a 5kg cylinder are Osun,N1,703.57; Ogun N1,700.00 and Enugu N1,672.22.

Also, the average price for refilling of a 12.5kg cylinder went down from N4,332.06 in December 2018 to N4,277.86 in January, showing a decreased of 1.25 percent month-onmonth and 1.16 percent year-on-year in the period under review.

“States with the highest average price for the refilling of a 12.5kg cylinder for cooking gas are Akwa Ibom, N4,850. 00; Abia, N4,761.54 and Delta N4,757.14.

While states with the lowest average price for the refilling of a 12.5kg cylinder are Oyo with N3, 945.00; Lagos, N3,876.00 and Kano N3,866.67.

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41

COMPREHENSIVE COVERAGE OF NATION’S CAPITAL

FCTA CPS: Ogunleye steps in as Uzodinma bows out JAMES KWEN, Abuja

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he Federal Capit a l Te r r i t o r y Minister, Muhammad Bello has approved the appointment of Tony Ogunleye as Chief Press Secretary (CPS) for the

Federal Capital Territory Administration, FCTA. Ogunleye’s appointment follows the retirement from ser vice of the former CPS Cosmas Uzodinma after attaining the mandatory sixty years for retirement.

The new FCTA Spokesman who is an Assistant

Director of Information was until his new appointment the Head of Information in the Education Secretariat.

The 47-year-old indigene of Ekiti State, Ogunleye is a graduate of Mass Communication from the University of Maiduguri in Borno State and is bringing

in a vast on-the-job experience spanning over twenty years.

A recipient of Ministerial recommendation for his outstanding qualities, the new CPS is also a renowned public speaker and has anchored many local and international events for the FCTA.

Capital importation hits $16.8m in 2018 CYNTHIA EGBOBOH, Abuja

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he National Bureau of Statistics (NBS), says the total value of capital importation into Nigeria stood at $16.8 million in the 2018 fiscal year, representing a 37 percent increase from $12.23 million recorded in 2017.

According to the NBS report, a breakdown of the total amount shows that foreign direct investment amounted to $1,194.67 million of the total sum, Po r t f o l i o i nv e s t m e n t amounted to $11,802.27 while other investment stood at $3815.53 of the total capital imported for the period respectively.

A further breakdown of the amount by sectors revealed that sales of shares ($10,425.18), Banking sector ($2,022.76), Financing sector ($1,487.57), Service sector ($1,297.48), Production sector ($670.85), Agri-

culture sector ($289.48), Oil and Gas ($133.51), Trading ($131.56), Telecoms ($114.43).

Others include IT service($53.90), Construction ($53.72), Fishing($53.10), Electrical ($37.38), Transport ($14.83), Drilling ($9,06), Marketing ($7.69), Brewery ($4.81), Consultancy ($4.70), respectively.

The report indicated that the highest source of capital investment include United Kingdom with a total investment of $6007.99, followed by United State with $3579.251 worth of investment, followed by Republic of South Africa with $1,152.724 worth of investment and $937.195 from United Arab Emirates respectively in the 2018 fiscal year.

A quar terly breakdown also showed that a total of $6,303.63 was recorded in Q1, $5,513.55 in Q2, $2,855.21 in Q3 and $2,140.08 in Q4 respectively.

NITDA unveils five new guidelines for development Of IT practice in Nigeria OYIN AMINU, Abuja A delegation of the Cameroon-Nigerian Mixed Commission were in Yaounde over the weekend to on behalf of the Attorney General of the Federation and Minister of Justice Abubakar Malam, congratulate the newly appointed Prime minister of the Republic of Cameroon, Joseph Dion Ngute, who was a member of the Commission.

L-R: Mustapha Ribadu, director, International Boundaries, National Boundary Commission (NBC); Muhammad Bose Ahmad, director-general, NBC; Joseph Dion Ngute, Prime Minister and Head of Government of the Republic of Cameroon, and Lawn Abba Gashagar, Nigeria’s High Commissioner to the Republic of Cameroon.

DFID launches £50m SuNMaP2 to change Nigeria malaria narrative OYIN AMINU, Abuja

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he Department of Foreign International Development, DFID through the Malaria Consortium has launched a 50 million pounce Support to National Malaria Programme – Phase II (SuNMaP 2) to change Nigeria’s malaria narrative.

SuNMaP 2, is a DFID funded bilateral programme with the overall focus on scaling up malaria programme intervention to achieve universal coverage of antimalaria commodities and services for the prevention and treatment of malaria.

Lola Mabogunje, SuNMaP Team Leader while presenting the implementation of the programme in Abuja said unlike SuNMaP, SuNMaP-2 is focused on sustainability and domestic financing of malaria with a total value of £34, 159,017 million budgeted for commodities, additional £12 million for a six years period,

from 28th December 2018 to 16th September 2024 while 2023/24 is for endline assessments.

Mabogunje said the purpose of SuNMaP-2 is to improve the planning, financing and delivery of sustainable and replicable pro-poor services for malaria in supported States as well as strengthened government stewardship at national level and in SUNMAP2 supported states.

She further explained that SuNMaP-2 would help increase sustainable availability of antimalaria commodities, more efficient and equitable malaria prevention and treatment services delivery, better informed citizens and institutions, provide an evidence based learning environment embedded in NMEP and SMEP. “The purpose of SuNMaP-2 is to work with government leadership at all levels to appreciate and fund activities leading to elimination of malaria in both public and private sectors, as part

of the government’s overall poverty alleviation and economic development/UHC agenda”, she stated.

Charles Nelson, Chief Executive, Malaria Consortium Nigeria, Charles speaking further on the benefit of SuNMaP-2, said it would go a long way in changing the malaria narrative because there is a clear statement, as the whole idea is to integrate the malaria programme.

He noted that malaria scourge is one of the most significant health issues, hence the need to reduce the burden significantly in the states, with a huge reduction in child mortality, and then move to elimination in the society.

“This is a programme in support of the government for the elimination of malaria, so it is the government programme that we are supporting so we need support in the states by ensuring they use the resources they are given judiciously and effectively. We need domestic financing bases through the

planning systems which we hope to do at the right time,” Nelson said.

Olugbenga Mukuolu, National Malaria Technical Director and Professor of Pediatrics said, “SuNMaP-2 presents an opportunity essentially. The whole malaria landscape is fund by a mass movement because it is actually a mass movement, it involves government, partners, it involves citizens.

“What has happened is that, the opportunities that Sunmap2 has is that it reduces some of the gaps in Malaria, via intervention.

The approach they have also adopted is that they are hoping to work very closely with the government of the states that will be participating in, in order to guarantee for sustainability. But at the moment it offers opportunities for sustainability to redirect the malaria control to be on track, because in the last two years, we were gradually going off track due to inadequate resources.

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he National Information Technology Development Agency (NITDA) has unveiled five new guidelines geared towards the development of the information technology practice in Nigeria.

Alli Pantami, NITDA Director General stated that the guidelines are to ensure a defined best practice approach, adding that the Agency in 2019 will ensure that violators of the NITDA’s regulatory instruments are appropriately sanctioned.

Pantami said the five guidelines include the rule making process of NITDA, aimed at giving the public a better understanding of all the processes involved in the issuance of regulatory documents by the Agency, create platforms for public engagement in the issuance of regulatory documents and serve as an integral part of the operations of the Agency.

“The Nigeria Data Protection Regulation of NITDA, issued in pursuant to section 6(c) of the NITDA Act 2007, empowers NITDA to issue regulations and monitor the use of electronic data interchange and other forms of electronic communications on all matters pertaining to government, commerce and the private and public sectors. The guideline would form the basis for which personal data of Nigerian citizens will be protected

and managed.

“Guidelines for the clearance of information technology projects for all public institutions, issued in pursuant to section 6(a,b,c) of NITDA act 2007, aimed at critically identifying IT procurements by the federal government and national investments , and stipulate the process that must be followed to prevent waste, engender accountability and ensure investments are used for the development of IT in Nigeria.

“Framework and Guideline for Public Internet Access(PIA) to help maintain appropriate systems and policies to protect Nigerians who use internet services, and the dangers it portends as unscrupulous elements can take advantage of the systems to compromise the cyber security of Nigerians and possibility of misuse of citizens data.

“We are therefore determined to ensure data of citizens are stored and managed in line with the Nigeria data protection guideline of NITDA and other additional requirements stipulated in the guidelines for public internet access, in line with the NITDA act of section 6(a,b,I,m) which empowers the agency to issue guidelines to ensure appropriate systems and practices are in place for the use of information technology as a resource, and to use regulatory policies that encourage investments in IT,” sai Pantami.

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NATIONAL DISCOURSE

BILL OKONEDO

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igeria gained independence from the British 59 odd years ago and the nation touted as having so much potential is still crawling. Almost everywhere you look what stares back at you is poverty, pain, despair, corruption and dashed dreams. Political analysts say the problem is poor leadership. Every four years, political office aspirants come with drums and gongs, brooms and umbrellas, campaigning and promising to make things go right if the people would vote for them. Yet, year after year, for all of six decades now, things only seem to get worse and even worse still.

CHUKA UROKO

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xactly four years ago, the political atmosphere in Nigeria was as charged as it is today.

Politicians were afoot, as they are today, selling themselves to the electorate, telling them how they would make all seemingly impossible possible. And Apapa was one of their ready campaign tools.

Apapa is Nigeria’s premier port city. It has two very busy seaports— Apapa and Tin Can—which account for about 75 percent of all export and import activities in the country.

Apapa’s economy is valued at N20 billion a day, making it the highest business hub in Nigeria.

Amidst this potential, the port city has remained in a sorry state with choking congestion, gridlock and decaying infrastructure. Politicians told residents and businesses in those days that the only solution to these problems was in voting out the sitting government because, according to them, fixing Apapa and making it work was not ‘rocket science’. Four years on, Apapa story has changed from bad to worse with the rot deepening and widening.

Today, this city is as good as ‘dead’.It has lost its soul as desperate businessmen who care for the golden egg and little or nothing about the hen have taken over. Mindlessly, they exploit the resources of the city and leave nothing for the remediation of the environment they have degraded— no compensation for destroyed investments and no recompense for the deprived, dispossessed and dehumanised residents.

Apapa represents a city in static motion. It is a metaphor for a sleeping economy and of failed clueless government. Apapa tells the Nigeria story—a story of paradoxes and contradictions; of a glass cup half full yet half empty; and of a country cutting its nose in order to spite its face. Much of Nigeria story can only be told and

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Mexico budgeted 17.2 percent, 18 percent and 14 percent of their respective 2018 budgets to education, Nigeria’s budget earmarked a degrading 7 percent to education.

According to available data, at the moment over 60 percent of children of school going age are out of school in Nigeria.

It wasn’t surprising that the World Bank recently ranked Nigeria 171 out of 175 for its investment in education, health and human capital development, even behind the Democratic Republic of Congo and just ahead of Zambia. Already, Nigeria has been designated the poverty capital of the world, with approximately six people being thrown into extreme poverty every minute and 8,000 every day.

Very clearly the quality and reach of education in the country needs to be addressed by the leadership.

Regarding housing, an organised, functional and affordable mortgage system needs to be put in place so that as many Nigerians as possible

can own their own homes. To set up structures for facilities like this is the responsibility of worthy leaders, as it would take a big burden off the electorate and raise their quality of life.

It is a shame that basic infrastructure such as electricity function epileptically after so many years, so many promises and so much money expended. Meanwhile, if adequate power is provided, it would enable the vast majority Nigerians to engage themselves in enterprise and be self-reliant.

There is also the matter of the ease of doing business. Our country needs for local and foreign investors to be encouraged set up business here and enrich the environment, creating jobs, wealth and paying taxes.

If processing corporate documents take forever and officials are asking for bribes at every turn and there are too numerous and overlapping taxes, the economy and the masses will be impoverished. A few thoughts for our would-be leaders.

@

A few thoughts for our would-be leaders The trend with the politicians is that once they get into office, they turn the nation’s treasury into a bazaar and the content there-in are treated as spoils of war. You hear of huge sums of money assigned to uplift national infrastructure and at the end of the day there is nothing to show for it.

That frame of mind then trickles down the line and you find so many of our countrymen believing that the only way to get a good life is to steal, cheat and cut corners at every turn.

The politicians loot the treasury in search of financial security for themselves and their families after they leave office, then they can’t walk the streets without continually looking over their shoulders in fear and once night falls, they are consumed by dread because some of those whom they have impoverished have transformed into muggers, robbers and sundry antisocials who rule the night and pose a threat to life and limb.

All Nigerians require is that basic infrastructure be put in place to en-

able them pursue their dreams and have a good life.

Nigeria has 12.4 million deaths per 1,000 population and the third highest infant mortality rate in the world. Nigeria has allocated only 2.9 percent of its total budget to health in the last three years, as against South Africa’s average of 14 percent over the same period.

The Federal Government’s allocation to health was N250.1 billion out of a total budget of N6.06 trillion in 2016 representing 4.13 percent; N303.9billion of N7.44 trillion in 2017, representing 4.08 percent and N356billion in of N9.12 trillion in 2018 which is 3.9 percent of the total.

However, a national health insurance scheme has been taken root but is in its infancy and needs to be fine-tuned so as to better service the Nigerian masses so that they do not need to pay out of pocket when they fall ill. This will take a big burden off the masses if it works well.

While Indonesia, Turkey and

Why solution to Apapa remains ‘rocket science’ heard in the theatre of the absurd.

In other jurisdictions, ports play a substantial role in the economies of metropolitan areas. In Rotterdam, for example, it is reported that port-related activities accounted for 74,000 direct jobs and 13 percent of total metropolitan GDP in 2007. One can only imagine what the figure could be today over 10 years after.

In Shanghai, the number of jobs related to port activities reached 840,000 in 2012, up from 347,000 in 2002. Shanghai’s port accounted for 7.6 percent of the city’s GDP in 2012.

This cannot be said of Nigeria where activities around Apapa ports have forced many residents and businesses out of the port city. Many buildings are empty and depreciating in value with the attendant loss in rental income. Rather than creating jobs, many jobs are being lost in Apapa almost on daily basis because businesses die or relocate to saner environments.

Perhaps, a few samplers can suffice. Property value in Apapa has come down to a point where a buyer can easily get 2,500 square metres of land for as ‘low’ as N150 million and according to Uche Chiejina, an estate manager, house rents have also dropped significantly from N5 million per annum two years ago to between N3 million N2.5 million per annum.

“And that is if you see tenants”,he said.

It is estimated that 40 percent of the entire buildings in the Apapa GRA are empty. On the average, 10 houses are empty on any given street. With an average house rent of N5 million per annum, it means that in one street alone, income loss for the five-year period is about N250 million.

Before now, Wharf Road and Commercial Road were the ‘Central Business Districts’ in Apapa where high net worth firms and banks had

APAPA GRIDLOCK their offices and branches respectively. A walk through these ‘districts’ shows that most of the banks have either relocated or have the number of their branches reduced.

On Wharf Road alone, more than 10 banks and two eateries have shut down their branches due to the pain and difficulty in accessing these branches, leading to loss of substantial customers in the area.

Unity Bank, for instance, which used to have four branches, now has two, Ecobank with eight branches has reduced to four and Access Bank with seven branches also cut down to four.

Eateries like Tetrazini has shut down, Tantalizer with three outlets has reduced to one and the only Mr Biggs eatery in Apapa on Creek Road is now out of the market. Film House Cinema inside Apapa Mall has also shut down.

The point has to be made that a port by itself is no guarantee of a city’s growth but improvement in port infrastructure which should be a priority investment for the government.

Like Nigeria, lack of efficiency in seaport operations was once hindering Brazil’s economic and urban growth.

But unlike Nigeria, Brazil has recognised the need to improve its port infrastructure with US$3 billion allocated to port investments under the government’s Growth Acceleration Programme, and another US$14 billion earmarked for port upgrade works to be carried out by the private sector.

Conversely, in Nigeria, spite of all the revenues that federal and state governments make from the ports, the political will is not there to invest some of this revenues in improving access roads infrastructure in and around the ports.

The Federal Government has very strong presence at the two ports with its revenue collecting agencies which collect money for it in form of import duties and levies by the Nigeria Customs Service (NCS); royalties, rents and dues collected by the Nigerian Ports Authority (NPA); dues and levies collected by the Nigerian Maritime Administration and Safety Agency (NIMASA); certification levies collected by the Standards Organisation of Nigeria (SON), among others.

In 2018, NCS collected a total sum of N1.2 trillion in revenue for the government. It also impounded a total of 5,235 seizures with duty paid value (DPV) of N61.5 billion following its anti-smuggling operations. The 2018 revenue was N164.8 billion more than that of 2017, which was N1.037 trillion.

Altogether, in the last three years, the NCS has generated about N3.1 trillion in revenue and much of these revenues come from its activities at the Apapa ports, yet government is not ready and willing to invest even 10 percent of this revenue into making Apapa what it is supposed to be as a port city.

Besides lack of political will on the part of government to invest in Apapa, vested interests which come in various forms make providing solution to Apapa very difficult if not impossible.

Owners of tank farms scattered all over the port city as well as haulage operators would do everything humanly possible to keep Apapa perpetually down to their selfish advantage.

Inthelast24months,haulagecostin and around Apapa has sky-rocked. Today, transporting a 40-footer container from Lagos to Onitsha costs an importer N1.3 million, up from between N320,000andN340,000beforethecongestioninApapa.Movingthesamecontainer from Lagos to Shagamu which before cost N120,000 to N150,000, is

now N750,000 to N800,000. For an importer to move his goods from Lagos to IlorinnowcostshimbetweenN860,000 and N900,000, up from N220,000 to N260,000 he used to pay, just as transportation of same size container to Abuja now costs N1.3 million to N1.4 million, up from N420,000.

Haulage operators who enjoy these increases are said to resist anything that will change the status quo including the building of a rail track for mass movement of containers in and out of the ports.

Another major hindrance to the solution to the Apapa problem are the activities of securities agencies operating as taskforce for controlling traffic in Apapa. The allegation against these security operatives is that they are there to line their pockets and not to control traffic.

A port operator who pleaded anonymity estimates that security operatives make as much as N150 million from truck owners, given that about 3,000 trucks visiting the port weekly pay as much as N50,000 to fast track access into the port. By the last count, more than 10 checking points from Western AvenuetoApapaPortandmorethan15 checking points from Mile 2 to Tin-Can Island Port manned by security operatives have been identified.

More than anything else, these checkpoints are fueling the gridlock because it is observed that truck drivers negotiate their movement and so all vehicles behind any truck whose driver is negotiating have to wait until that exercise is over and he is given a ‘pass’ afterpartingwithahugesumofmoney.

The general belief is that there is no way the Apapa gridlock will clear within the shortest possible time because of what these operatives are benefiting from the messy situation. Again, it is believed that the gridlock can only be tackled if the oil tank farms are moved out of Apapa because their continued existence means no end to the congestion and gridlock in and around Apapa.

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Why parties must resume campaign ahead of Saturday’s election Zebulon Agomuo

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y the calculation of most Nigerians, the Presidential and National Assembly elections would by now be referred to in past tense; but the postponement, a few hours to the exercise, has engendered discontent and weariness of heart. This is in tandem with the wise words of King Solomon as recorded in his Book of Proverbs that “Hope deferred makes the heart sick, but a longing fulfilled is a tree of life.”

By Friday, the Nigerian voters were upbeat, looking forward to the elections to “come and go”. Many had even fixed other programmes for Saturday, February 23, 2019, without any premonition that such engagements would not hold.

The too much noise and promises that came out of various parties and their candidates were so inundating that people were just expecting normalcy to return. Supporters of some parties or candidates, who had expected to see the emergence of their preferred candidates felt castrated by the news of the postponement.

At the moment, morale is very low and needs to be boosted. Many of the electorate who had travelled very far from their places of residence to enable them exercise their franchise are now counting their losses as a result of the postponement. Such people are now in a quandary over their next line of action.

There are cases of some Diasporean Nigerians, who had to return just to perform their civic responsibility to their fatherland.

These Nigerians, who have suffered great losses as a result of the shift in date of the date, are likely to disenfranchise themselves, not possibly by their own fault, but the simple fact that they have to return to their base.

Already, as a result of the seem-

Mahmood Yakubu

ingly “insensitive” manner the postponement was carried out, a good number of people are saying that they would no longer vote on Saturday.

Ambrose Dike, a Lagos-resident, told BusinessDay that he had decided not to step out of his apartment on Saturday.

“We do not respect ourselves in this country. It is the same way government threats the citizens with disdain. This is about the only country where citizens are taken for granted, yet, it is the same citizens that vote these politicians into power. What happened in Nigeria last Saturday can only happen in a banana republic, where anything is acceptable. Even as small as Benin Republic it cannot happen there,” Dike said.

“When you say a people or a country is civilised, you know that by the way things are done. How do you explain that an election that had been fixed for years and for which preparations had been on for over three years now was post-

poned four hours to the exercise?

Is that a country? You see, a nation that has no respect for sanctity of life, it shows in every one of its actions. INEC or whoever manipulated them as people are alleging, did not consider the danger involved in people moving from one state to the other for election in a country where roads are death traps.

“So, no matter whatever it is worth, I am not going to step out of my apartment on Saturday, except I get an internal conviction to do otherwise,” he explained.

It is on this premise that some observers have said that there was the need for parties to return to the streets to cheer up their weary supporters once again.

Obike Amanze, a political commentator, said: “It makes no sense for INEC to insist that parties should not go back to their supporters to awaken them. Don’t forget that what happened last Saturday must have sent many people to slumber; they needed to be awaken or can I say aroused.

We must face it; there is no hiding the fact that many people were discouraged at the turn of events.

“I thought it was the INEC that should even be cajoling these parties, having messed up the process and not to be talking tough. I foresee a situation where these parties would drag the Commission to court. Honestly, I don’t see why an institution that brought us to this sorry state should be grandstanding at the same time. It is unacceptable.”

Recall that electioneering campaigns ended Thursday last week, two days and 48 hours to the election in line with the letters of the Electoral Act. But with the postponement, analysts believe that the INEC may be acting outside its powers to insist that there would be no more campaigns before Saturday.

At the weekend, the Coalition of United Political Parties (CUPP) threatened that its member-parties would resume campaigns today.

They noted that “Section 99 (1) of the Electoral Act provides that public campaigns shall end 24 hours prior to the day of polling.”

They wondered why they would not campaign again from now till an election that comes up on Saturday.

CUPP had also made case that those who were yet to collect their Permanent Voters’ Cards (PVCs), should be given the opportunity to do so within few days. This was overruled by Mahmood Yakubu, INEC chairman.

CUPP is a coalition, consisting 51 of the 91 registered political parties, including the People’s Democratic Party (PDP).

Although, the international bodies had urged cooperation with the INEC, the Commission should also tread with caution at this point in time to avoid overheating the polity.

Following the postponement the United States (US) and the

United Kingdom (UK), in separate releases, had urged all stakeholders in the Nigerian electoral process, to cooperate with the Independent National Electoral Commission (INEC) to finalise arrangements for the 2019 elections next week.

The US Embassy in a statement issued by its Public Affairs Division said the US mission fully supports the joint statement by the heads of the ECOWAS and other international election observation missions on the postponement of the February 16 Nigerian elections.

ECOWAS and other Foreign Observation mission had called for calm and urged support for INEC. “We join in encouraging all Nigerians to ensure a free, fair, peaceful, and credible election by supporting the Independent National Electoral Commission while it finalises electoral preparations this week and by voting in peace together on February 23,” the US statement said.

In its statement, British High Commission also expressed support to the joint statement made by the heads of the international observer missions on the postponement of the 2019 Nigerian elections.

On behalf of the British High Commissioner to Nigeria, Catriona Laing, the Senior Communications Officer of the commission, Tinuke Adelegan, in a release, said: “We recognise the frustrations of many Nigerians, including those involved in the delivery, supervision and observation of the election and those who travelled considerable distances to exercise their democratic right to vote.

“We urge the Nigerian people to be patient, support the democratic process and come out to vote next weekend in the rescheduled elections.

“We urge all political parties to exercise moderation and to preserve an atmosphere of peace and calm to allow elections to take place in a secure environment.”

Presidential Election, the Lawmaker spoke of his abhorrence for political violence in elections.

“Personally, I have a huge investment in my town and in my people , The Achievers University, Owo is the Second largest employer of labour in Ondo State, after the State, I live amongst my people, and their lives matter to me, whatever the party inclinations, I cannot stand to see anyone brought to harm through a direct or indirect act of mine One major goal driving my political activities and business develop-

ment is to bring development to my Community, and a better quality of life for my people, a dream I have worked long and hard for .

“So I shall be grateful to my people if they conduct themselves well during these elections because it is in peace that they can elect the candidates that will represent them well. I also urge them to resist the temptation to be provoked and report any untoward activities around them to concerned authorities, especially the security agencies,” he said.

2019 Polls: Ayorinde appeals for entrenchment of peace IFEOMA OKEKE

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member of the Federal House of Representatives, representing Owo/Ose Constituency in Ondo State, Bode Ayorinde, has urged members of his constituency and the entire Ondo state to eschew violence and work together to entrench peace as Nigerians go to the polls.

In the wake of the announcement for the postponement of elections Ayorinde who is seeking re-election on the platform of his party, the

People’s Democratic Party (PDP), has urged his people to remain calm and trust in God for a better outcome for the party in an atmosphere of peace Ayorinde also urged his supporters not to be provoked or frustrated, but to remain resolute and cast their votes next Saturday for a Better Nigeria for this generation and all future generations of this great country.

He stated that the potential for greatness for Nigeria is huge and stands to be realised when the right people are voted into leadership in

both the Executive and legislative arms of Government in the country.

He said the vote of every eligible voter is the passport to achieving that greatness and a better quality of life for him as a citizen of this country.

He urged the people to make their votes count and pleaded with those in his constituency to exercise their civic rights come Saturday and in the following elections.

Speaking from his residence in Owo where he has come with his family to cast their votes in the

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ISDA chairman, partner at Clifford Chance, FMDQ CEO, others for FMDA workshop MICHEAL ANI

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nternational Swaps and Derivatives Association (ISDA) Africa chairman, Brett Gallie, Matthew Griggs, partner at Clifford Chance, Derivatives and Structured Trades, and Bola Onadele. Koko, managing director/CEO, FMDQ OTC Securities Exchange, have all confirmed their attendance at the Swap & Derivatives Workgroup’s Financial Markets Workshop holding in Lagos.

The event, organised

by Financial Market Dealers Association of Nigeria (FMDA), will hold at Eko Hotels and Suites, Lagos, February 26. It will focus on the theme: ‘Legal Documentation as Driver to introducing New Products and a Healthier Financial Market in Nigeria.’

The association stated that the theme is not only timely and apt, but expected to discuss the standardisation of documentations in Nigeria’s market with the view of boosting the integrity of markets and attract investors’ trust and confidence to the market. The event is expected to commence at 8.30am and end by 2pm.

The opening remarks at the event will be delivered by the chairman, Swaps & Derivatives Workgroup and FMDA president, Samuel Ocheho.

According to FMDA, Gallie and Griggs will be speaking on Market Documentation and the need for Standardisation, while Onadele will speak on the Need for Derivatives in the Nigerian Financial Markets and FMDQ’s plan for product rollout this year.

Partner, Aluko & Oyebode, Olubunmi Fayokun, will be moderating on the topic Transaction Netting in Nigeria – The Way Forward with other renowned panellists, which will also contribute to make the event remarkable among whom are Yinka Edu - partner, Udo Udoma Bello Osagie & Co. and Zeal Akaraiwe, CEO, Graeme Blaque.

The FMDA is an association of licensed deposit money banks operating within the Nigeria financial market, emphasising on regulatory policy engagement/advocacy and professional ethics in the financial markets.

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Killings of 66: Kaduna CAN debunks El-Rufai’s claims ABDULWAHEED ADUBI, Kaduna

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aduna chapter of the Christian Association of Nigeria (CAN) has debunked claims of governor of Kaduna State, Nasir el-Rufai that 66 persons were killed in Kajuru LGA, a suburb of the state on Friday.

The association said the position of the governor was a false alarm that have been made to look like a breaking news, saying the incident happened long before now and not as claimed by the governor.

This was disclosed to our reporter in a telephone conversation on Saturday evening and also in a statement signed by the CAN chairman Kaduna State, John Joseph Hayab and obtained by our reporter Sunday.

The CAN chairman said the statement issued by the senior special assistant on media and publicity to the governor was false in its entirety, saying, “We see this as an illogical intentional, premeditated attempt at steering violence in the state for whatever expected gains.”

According to Hayab in

the statement, “We are aware that the incident happened in the late hours of Sunday 10 February to 12th February, 2019, at about 1:00am at Gindin Gada, Maro Ward of Kajuru Local Government in Kaduna State where unidentified hoodlums went into the village and killed about 11 people in their sleep.

Which lead to reprisals .Two of the suspects were said to have been apprehended and handed over to the Divisional Police.

“It was on the afternoon of the said date of the attack (as contained in the press state-

ment) that the District Head of Kufana, Mr Titus Dauda, and four of his local chiefs were released after their invitation by the DSS State Command on the issue.

“It is disheartening that the media that supposed to be objective and be the true mirror of the society has rather chosen to bow to pea nuts against her code of ethics.”

Meanwhile, the state government had earlier on Friday evening condemning the killing of 66 persons, warning all communities against instigating attacks or reprisals.

A government statement said security agencies had been deployed to the area, while arrests had been made.

According to the statement, the settlements affected include Ruga Bahago, Ruga Daku, Ruga Ori, Ruga Haruna, Ruga Yukka Abubakar, Ruga Duni Kadiri, Ruga Shewuka and Ruga Shuaibu Yau. “Among the victims were 22 children and 12 women. Four wounded persons rescued by the security agencies are now receiving medical attention.”

46 BUSINESS DAY NEWS

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PWC chief economist outlines 4 structural issues dragging Nigeria’s economy ENDURANCE OKAFOR

… says NNPC role as operator/regulator confusing

ttaining doubledigit Gross Domestic Product (GDP) growth for Nigeria seems almost like an athlete who dreams of creating a record by walking from Africa to North America.

The country’s highest quarter growth rate of 2.38 percent since its exit from recession in Q2 2017 is nothing close to Ghana’s 7.4 percent in Q3 2018, and Ethiopia’s 8 percent.

On why Africa’s largest economy lags its peers, Andrew Nevin, chief economist at PWC, told BusinessDay in Lagos on Wednesday that there are a number of structural issues that are preventing the ease of doing business in Nigeria from helping to fasten economic growth.

“One is the fuel subsidy.

We feel it is something for the wealthy and not for a country like Nigeria,” Nevin said. “We understand the logic behind the FX regime, but the truth is that it confuses people, it confuses investors, so they stop investing,” he said.

Foreign Direct Invest-

ment (FDI) inflows into Africa’s largest economy are worsening, according to data released by National Bureau of Statistics.

On year-on-year basis, FDI fell 58.7 percent in Q4 2018 to $156.08 million, from $378.42 million recorded a year earlier.

The long-term investment into the country for the review period represents 7.11 percent or $1.19 billion of the total $16.8 billion capital imported in 2018, close to the same amount the government raised in a single Eurobond issue of $1 billion in February 2019.

Another issue that drags the country’s economic growth as cited by Nevin was the NNPC. “We continue to have problems in the oil industry where we are not able to pass the Petroleum Industry Bill (PIB), so we are not able to really organise investment into that. We have the NNPC playing both the roles as the regulator and as an operator, and that’s confusing,” he said.

After a 17-year struggle

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to pass the PIB which aims to increase transparency and stimulate growth in Nigeria’s oil industry, the House of Representatives passed a version of the bill in 2018, which is the same as the one approved by the Senate in 2017, the Petroleum Industry Governance Bill (PIGB). President Muhammadu Buhari is yet to assent to the bill.

“We have been very adamant about the real estate industry considering it is a very critical sector for growth and employment because it employs a lot of people. Everyone needs a house and the major issue about the real estate sector is that it is still held back by the Land Use Act,” Nevin said.

Nigeria has more than 17 million units of housing demand-supply gap challenge and, according to the Association of Housing Corporation of Nigeria (AHCN), underdevelopment of Nigeria’s mortgage sector in driving homeownership is worrisome as more than 90 percent of home utilises funds from personal savings.

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NRC freight, passenger service lose millions of naira to INEC election postponement MIKE OCHONMA

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uthorities of the Nigerian Railway Corporation (NRC) say it lost huge revenue to the non-movement of passengers and non-haulage of freight along the corridor as a result of Saturday’s presidential and National Assembly elections postponement at the last minute by the Independent National Electoral Commission (INEC).

In a telephone interview with BusinessDay short after the news of election postponement by INEC, Jerry Onche, regional district manager Lagos District, said NRC

cancelled its passenger train service from Lagos to Kano last Friday due to the election postponement so that passengers, which numbers between 300 and 400 on one way trip, would not get trapped in transit while the election was ongoing.

Though Onche declined the estimated revenue loss to the Corporation, inside sources who spoke on condition of anonymity said the estimated revenue loss in terms of freight and passenger movement run into millions of naira.

According to the regional district manager, “Normally, we don’t run mass transit train (MTT) weekends. We do freight on weekends, but

the movement have been truncated as a result of the botched INEC election. The Lagos to Kano passenger train service would have left last Friday if not for the election. We would have carried about 200-300 people from Lagos on the Kano train if it had gone.”

Similarly, speedy attention towards the completion of the Lagos-Ibadan standard gauge rail project, which has been partly hampered by the movement of exhumed water and petroleum pipelines from the Lagos end for some time now, suffered another setback as the scheduled movement of the pipes by the NRC Saturday was put on hold.

BusinessDay checks reveal that the NRC was supposed to move export into APMT Saturday but APMT said it was shutting down operations till Monday due to the elections.

Shortly after the announcement of election postponement, APMT again advised the NRC that they would resume freight movement by Saturday evening.

“We have to recall staff and crew that we asked to stay away. Also, we were suppose to load water pipe for Lagos State this weekend, i.e, the pipes being relocated along the standard gauge route, we suspended it but now we have to do it between Saturday and Sunday,” he said.

Obaseki lauds AU for prioritising travails of migrants

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do State Governor, Mr. Godwin Obaseki, has commended the African Union (AU) for recognising the peculiar travails of immigrants, returnees and Internally Displaced Persons (IDP) across the continent, noting that there was need to bring the

issues to the front burner.

The governor said this in reaction to the declaration of 2019 as the Year of Immigrants, Returnees and Internally Displaced Persons (IDPs) by the AU, in recognition of the difficulty faced by many fleeing conflict, disease and harsh socio-

economic realities prevalent in a number of African countries.

In a statement, the governor hailed the AU for rising to the occasion to make a case for immigrants, returnees and IDPs, who are all victims of a myriad of development challenges bedevil-

ling the African continent.

According to him, “I am very delighted that the African Union declared 2019 the year of immigrants, refugees and IDPs. This aligns with our very dogged fight to ensure we stem illegal migration and human trafficking in the state.”

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Edo ward devt. committees: Expert lauds initiative, endorses bottom-up approach to development

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he Governor Godwin Obaseki-led administration’s creation of ward development committees in identifying and providing tailored solutions to peculiar problems in rural communities in Edo State has been lauded as novel and a participatory approach to governance that will engender robust grassroots-driven development.

A development expert in an interview made the submission with journalists in Benin City, the Edo State capital.

According to the expert, the development model will ensure that projects and development efforts by government “do not fly over the heads of the people, but align with their peculiar needs.”

The development expert, who has done extensive work on development trends in sub-Saharan Africa, Wilfred Aisosa, described the government’s Ward Development Committee as a bottom-to-top approach to governance, aimed at spreading developmental projects and improving the wellbeing of the people.

He noted that governor

Obaseki’s governance style would deepen people-centred development.

“This is a new paradigm in governance, which I recommend for governments across all levels to adopt. Just like what we have seen Governor Obaseki doing, where instead of government imposing projects on people, the people are given the latitude through their representatives in the Ward Development Committees, to submit a list of felt needs.”

He continued, “The only reason why development has remained elusive in most developing countries especially in Africa for decades, is simply because the people are not allowed to make input into projects executed for them.

“So, what you end up doing is having projects here and there, which are not in line with the needs of the people.”

Aisosa added that the approach adopted by the Edo State Government will take governance directly to people at the grassroots, “where the people themselves will decide on the projects they think will benefit them the most.

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NCS reacts to online video of Lagos: Gas marketers lament effect of unlawful killing along Ijebu Ode postponed elections on business chains AMAKA ANAGOR-EWUZIE

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igeria Customs Service (NCS) has reacted to the disturbing online video making the rounds, which depicts the painful killing of a man on Sunday morning at Shagamu interchange along Ijebu Ode. Joseph Attah, national public relations officer of Customs, stated in a statement issued on Sunday that the deceased young man was not a passenger of a bus on transit, but a good citizen who always come to fetch water for Customs Patrol men anytime they return to the base.

“While it is painful and totally unnecessary to lose life in anti-smuggling operations, today (Sunday) at Shagamu interchange along Ijebu Ode, attempt to obstruct lawful performance of duty by passengers of a commercial bus (a white Toyota Hiace) suspected to be carrying bales of used clothing led to the

death of a young man (Godwin) and serious injury of a Customs officer, named Destiny Onebamho,” Attah said.

According to Attah, preliminary finding indicated that it was during the skirmishes and struggle to disarm the officer that the riffle discharged and hit the friend of the Customs (Godwin) who lost his life.

Attah, who assured the public that the Service was already in touch with the bereaved family, said while attention shifted to the dead and the wounded, the passengers who filmed with inciting commentaries boarded their vehicle and left, leaving the wrong impression that it was one of them that was killed.

He however said that while the wounded officer was under intensive care at the hospital, the patrol team had been recalled to the office for further investigation.

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igerian Association of Liquefied Petroleum Gas Marketers (NALPGAM) said on Sunday the postponed general elections by the Independent National Electoral Commission (INEC) had affected their businesses negatively.

Bassey Essien, executive secretary of NALPGAM, told the News Agency of Nigeria in Lagos that the postponement posed serious challenges to members’ multibillion naira investments in cooking gas distribution chains.

He said the hasty action a few hours to the Presidential and National Assembly elections was not good for the economy and business environment.

INEC in the early hours of Saturday, announced the shift of the February 16 Presidential and National Assembly elections to February 23 after the commission had said it was fully prepared for the polls.

The Governorship and State Houses of Assembly as well as FCT area council elections were also shifted from March 2 to March 9.

INEC chairman,

Mahmood Yakubu, at a news conference, attributed the postponement of all the scheduled elections to logistics and operational problems.

According to Essien, like every business, a lockdown of the country without conducting the elections on that appointed day has a colossal negative effect on trading and businesses generally.

“The forced idleness of the day and the financial losses on the day of the postponed elections can only best be imagined, the LPG business also inclusive. “The supply process of the cooking gas distribution chain on a daily basis involves several billions of naira investments and was affected by the postponement of the elections,’’ he said.

Essien said: “If this volume of fund is tied down and is unproductive in a day, you can imagine the losses incurred.

“Even for funds borrowed from the banks, interests are charged on daily basis. Imagine having to pay interest on funds you have been deprived of its usage by the negligence of the system.

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Consultant psychiatrist warns politicians against risk of developing serious emotional turmoil

I

marah, has urged politicians to learn to accept the outcomes of an election in order to avoid developing risk of serious emotional turmoil or mental health challenges.

Imarah, who runs an online mental health counselling service called “Dr, Tomi Haven”, gave the advice in an interview with the News Agency of Nigeria on Sunday in Lagos.

According to her, politicians that lose elections have a higher risk of developing mental illnesses. “Also, politicians who won elections were at risk of developing mental illness.

“We often assume that politicians have accepted the defeat, graciously or otherwise, and have moved on with their lives. You will be surprised to learn that they are often at risk of serious emotional turmoil or mental health challenges.

“They have experienced a unique sense of public humiliation and are likely to strongly internalise it as a sign of personal failure. Just like the rest of us, they are not immune from experiencing symptoms of depression.

“They include low mood, low energy, poor motivation,

loss of interest in pleasurable activities, poor self-esteem, diminished confidence, feelings of hopelessness and helplessness,“ she said.

The consultant psychiatrist said many of the decisions that would be taken in the office were likely to take significant psychological toll on political candidates, especially during the first year of their tenure.

“Dr Ashley Weinberg of the Psychology Department, Salford University, United Kingdom, conducted a 15year prospective study of Westminster Members of Parliament (MPs) in the UK. “His research revealed that many of the MPs had psychological strain, sleep difficulties, exhaustion and persistent fatigue for a year or more after entering office, despite being free of these symptoms before election.

“Nigeria is not immune from these kinds of outcomes; the pressure of the work elected leaders will be taken on is enormous and the lifestyle changes are drastic. Also, the impact of failure on candidates who are not elected is potentially enormous and clinically perilous.

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Insight

The Nigerian Code of Corporate Governance 2018 An ethical approach to the Nigerian Corporate Governance System?

T Abstract

OLAYIMIKA PHILLIPS

Partner, Enterprise and Corporate Governance Practice, Olaniwun Ajayi LP, Nigeria

SIMILOLUWA SOMUYIWA

Associate, Enterprise and Corporate Governance Practice, Olaniwun Ajayi LP

ORETAYO OLAJIDE

Company Secretary/Director, Legal Services Emerging Markets Telecommunications Services Ltd (trading as 9mobile)

he utility of good corporate governance practices cannot be overemphasised in any organisation, as sound processes evincing the principles of transparency, fairness and accountability have become imperative for national and global economies.

Indeed, the benefits of adopting strong corporate governance ethics in a developing economy remain alluring today.

In ensuring sound corporate governance practices in Nigeria, the Financial Reporting Council of Nigeria (FRCN) released the Nigerian Code of Corporate Governance 2018 (the Code), which seeks to, inter alia, institutionalise the highest standards of corporate governance best practices in Nigerian companies, and promote public awareness of essential corporate values and ethical practices that will enhance the integrity of the Nigerian corporate landscape.

Perhaps the most impactful innovation of the Code is its philosophy which takes the “Apply and Explain” approach of implementation. In precis, this approach requires companies to take responsibility for demonstrating how the specific activities they have undertaken best achieve the intended outcomes of corporate governance specifications in the Code as opposed to the mandatory compliance approach adopted by the Nigerian Code of Corporate Governance 2016. This paper therefore examines the Code’s philosophy and how it attempts to alter the corporate governance regime in Nigeria.

The Nigerian corporate governance system, as we know it, focuses primarily on legal processes and structures to ensure compliance, whilst the ethical basis is seen to be absent. The difficulty with legal structures and its compliance mechanisms is that most corporate practices that have previously enraged the public are entirely legal. This paper seeks to explore the role of the Code in shifting the focus from a structural perspective to an ethical perspective, and the viability of the Code in sustaining the ethical values of transparency, fairness and accountability.

Background and Evolution of Nigerian Corporate Governance Corporate governance has a long history which predates the emergence of the modern era of corporate governance.

Indeed, historical accounts show that corporate governance relates back to the times when tribal communities supervised the activities of their individual members to ensure conformity with the tribal norms.1 However, the corporate challenges around the world brought distinct corporate governance issues to the fore, leading to substantial reviews by countries all over the world on the efficacy of their corporate governance practices as well as the need to have efficient codes of corporate governance.

In Nigeria, the historical accounts of the development of corporate governance can be said to be somewhat distorted and confusing owing to the plethora of codes and guidelines which at various periods attained relevance in our nation’s corporate governance

space. Nonetheless, the concept and principles of corporate governance were firmly entrenched in Nigeria’s company legislations as far back as 1968.3 Like other nations, Nigeria made assiduous efforts to enhance her corporate governance structures and practices with the introduction of the foremost Code of Corporate Governance for Banks and Other Financial Institutions, issued by the Bankers Committee in August 2003. It was initiated in response to the financial crisis in Nigeria in the early 1990s and in the realisation that poor corporate governance practices was at the heart of most institutional failures. However, the limited impact of the code was attributed to its restriction to a few corporate entities i.e. those in the banking and financial industry, as well as the issuing authority; being a self-regulatory voluntary association for banks and other financial institutions.

In 2003, the Code of Best Practices on Corporate Governance in Nigeria, (the 2003 SEC Code) issued by the Securities and Exchange Commission greatly impacted the corporate governance scene in Nigeria, as it was the first corporate governance code to be issued by any regulator in Nigeria, and its application was extended to all public companies registered in Nigeria.

The 2003 SEC Code was the outcome of the work of a 17-member committee set up by the SEC in collaboration with the Corporate Affairs Commission, to identify weaknesses in the corporate governance practices in Nigeria as well as fashion out the necessary changes

that will improve the corporate governance practices in Nigeria. However, the provisions of the 2003 SEC Code became grossly inadequate to address the new developments in the corporate scene following its commencement.

This inadequacy resulted in some regulators of specific sectors issuing industry-specific corporate governance codes which took into consideration the prevailing circumstances of the issuance of the codes and the salient provisions peculiar to their respective sectors.

Some of these sector-specific codes included; the Code of Corporate Governance for Banks in Nigeria Post-Consolidation 20066, issued by the Central Bank of Nigeria; the Code of Corporate Governance for Licensed Pension Operators 2008, issued by the National Pension Commission, and the Code of Good Corporate Governance for the Insurance Industry in Nigeria 2009, issued by the National Insurance Commission.

Notwithstanding the foregoing, on 01 April 2011, the SEC issued the Code of Corporate Governance in Nigeria 2011, (the 2011 SEC Code) to address the weaknesses of the 2003 SEC Code, and to improve the mechanism for its enforceability. Specifically, the National Committee drafting the 2011 SEC Code was mandated to identify weaknesses in and constraints to good corporate governance, examine and recommend ways of effecting greater compliance with good corporate governance practices by public companies in Nigeria, and for aligning the 2011 SEC Code with international best practices. In 2014, the

SEC issued the Code of Corporate Governance for Public Companies in Nigeria 2014 which sought to reflect the international best practices not contained in the 2011 SEC Code.

Interestingly, and amidst all these, the Federal Government of Nigeria passed the FRCN Act 2011 into law which establishes a Directorate of Corporate Governance for the FRCN, which is empowered amongst other things to develop principles and practices of corporate governance, and also issue codes of corporate governance and guidelines.7 It was in furtherance of the powers under the FRCN Act that the FRCN issued the three-tiered National Code of Corporate Governance 2016 (the 2016 Code) divided into; (x) the Code of Corporate Governance for the Private Sector; (y) the Code of Corporate Governance for Not-for-Profit entities, and (z) the Code of Corporate Governance for the Public Sector which sought to plug the gaps in the previous codes including the 2011 SEC Code and other sectoral codes in force.

Unfortunately, the series of political controversies which trailed the 2016 Code resulted in its suspension after a short spell of its implementation. Against this backdrop, the Federal Government of Nigeria unveiled the Code to the general public in 2019, which is believed to be a paradigm shift from the codes hitherto applicable to corporate organisations in Nigeria.

Whilst the efficacy of the Code on the principles and practice of corporate governance in Nigeria remains unascertainable, the Code is surely reminiscent of a different approach by the FRCN in the promotion of sound corporate governance principles in a country desirous of beneficial change.

The Nigerian Code of Corporate Governance 2016 and the Menace of box

ticking Generally, the definitions of corporate governance found in common literature tend to share certain characteristics, one of which is the notion of accountability. Narrow definitions however limit corporate accountability to shareholders.8 In its broadest sense, corporate governance has been described as the system by which companies are “directed and controlled.”9 Regardless of the definition adopted, good corporate governance is a key factor which underscores the efficacy and integrity of a company. Thus, a company which possesses the core principles of corporate governance; fairness, accountability, and transparency has the potential of spurring financial growth as well as building investor confidence.

The three-tiered 2016 Code issued by the FRCN was essentially a consolidation and improvement on the different sectoral codes on corporate governance. It is noteworthy that under the 2016 Code, compliance with the provisions of the Code of Corporate Governance for the Private Sector (the Private Sector Code) was expressed to be mandatory.10 Accordingly, all persons, firms, or companies found in breach of any of the provisions of the Private Sector Code were liable to sanctions; personally or otherwise, for such violations.

The legal regime prevalent under the Private Sector Code had the semblance of a commandand-control structure in which public officials establish the law and the market actors either comply or face the penalties for non-compliance. This approach suggests that the primary incentive for compliance by corporate entities is largely driven by the fear of the consequences of non-compliance.12 In a typical rigid system such as was prevalent under the Private Sector Code, the regulator not only establishes the objective to be achieved, but also the means to achieve the objective. The inevitable consequence of such a system is what is referred to as a box ticking exercise.

Unlike ethical values which are universal, legal codes and statutes are largely limited to the climes and the entities to which they relate. For instance, whilst the Board of Directors (Board) or management of a company may be obligated to adhere to the strict provisions of a code or rule due to its applicability to that company or its place of business, such ‘obligation’ may be non-existent in the face of a voluntary or unenforceable code. Thus, the logical result of a slavish obedience to legal codes and enactments, to the detriment of sound ethical values is a situation where individuals are less likely to take personal responsibility for the decisions they make.

A worthy example of such a dire result is the Nigerian financial crisis of 2009 which unfortunately coincided with the global financial crisis of 2008. The failure in the corporate governance of banks and the weak ethical standards amongst top management of banks were regarded as the two main issues which weakened the solvency and liquidity of banks and undermined investor-confidence.14 Investigative reports showed that some banks were engaging in unethical and fraudulent business practices which remained ignored and/or unchecked for reasons including being misled by executive management who were culpable of such practices.

The Boards often did not fulfil their functions and were lulled into a sense of well-being by the apparent year-over-year growth in assets and profits. As aptly put by the then Governor of the Central Bank of Nigeria on the bank failures, “the

banks did not fail; they were destroyed and brought to their knees by acts committed by identifiable people.”16 The rigors of balancing the daily challenges of administering an organisation, with the requirement of strict adherence to the corporate governance codes may be daunting, especially for small companies and start-up organisations whose main priority is often the generation of profit. Therefore, the compliance levels evident in a mandatory regime are often as a result of the fear of the consequences of the sanctions that may be imposed for failure to comply with the respective codes, and not necessarily because of the desire to uphold the tenets of corporate governance. This could result in a subtle substitution of “accountability” for “responsibility.”

Advocates of corporate social responsibility believe that firms should be more accountable to the larger society and should resist the urge to be responsible to its shareholders in the narrow sense as corporate managers who are compelled to respond to shareholders’ interests alone may not maximise social welfare.18 Also, markets alone have been seen to be incapable of adequately regulating corporate conduct. Regulation of corporate conduct does not redress all social harm because these harms are difficult to detect, regulation is difficult to design, and sanctions may be ineffective.

More than ever, companies are enjoined to look beyond the codified requirements, as emphasis should be focused on the spirit behind the corporate governance reforms rather than its letters. As canvassed by a former commissioner of the U.S. Securities and Exchange Commission20, on the lessons learned from the Sarbanes-Oxley Act, “By determining what makes up the moral DNA of the Company, and establishing a culture that puts ethics and accountability first, a company and its Board are less likely to fall into the common trap of mere compliance-where simply identifying a new line of legally acceptable behavior and how to maneuver the loopholes that accompany it, passes for a commitment to reform.”

Increased responsibilities for the Board and other management officials; with attendant consequences for noncompliance can no longer suffice in promoting ethical values in an emerging market like Nigeria where the cost of compliance is often high. Market actors including the shareholders and stakeholders alike have been observed to lend credence to practices that prima facie

ensure compliance with the legal codes at the lowest cost possible. This situation has made the managers of corporations merely responsible to their shareholders to the extent of such compliance, with the ethical values underpinning such practices absent.

A further drawback to the mandatory approach adopted under the Private Sector Code was its inflexible nature, especially in a society populated by firms and corporates of different sizes and types.

The one-size-fits all system is barely effectual as most entities prefer a system that takes into account their individual characteristics before the imposition of corporate governance principles and codes. For example, the requirement under the Private Sector Code for all companies to establish a Nomination and Governance Committee21 might be onerous for a relatively small company with limited director and shareholder base; however, this requirement may not be arduous for a large company.

Notwithstanding the foregoing, a major advantage of the commandand-control structure is that it compels compliance. However, this advantage is not without blemish as companies may choose to absorb the costs of their noncompliance rather than comply with the law. In effect, such non-compliance renders the command-and-control structure ineffective and raises questions about the incentives underlying the structure.

It is not to be presumed here that companies should be free from implementing efficient corporate governance measures; rather, the corporate governance measures and principles implemented by individual companies should be driven by the ethos of every company, as opposed to stringent legal codes. In the event, every regulator must carefully consider the ethos of the society in prescribing rules that ensure that individual companies are transparent, accountable and fair in their dealings. Accordingly, the recommended practices and principles embedded in the corporate governance codes must be geared towards actualizing the true essence of corporate governance;the promotion of sound cultural ethics.

Despite the shortcomings of the unified 2016 Code, it was generally accepted as a step in the right direction given the hitherto absence of a unified code of corporate governance. However, the mandatory compliance approach adopted under the Private Sector Code created significant challenges in its im-

plementation, which resulted in the suspension of the 2016 Code by the FRCN. The Nigerian Code of Corporate Governance 2018: A Shift from the Mandatory Approach In response to the flaws identified in the 2016 Code, the Federal Government of Nigeria recently unveiled the Code, issued by the FRCN, through its’ Directorate/Committee on Corporate Governance, and which seeks to standardize the practice of good corporate governance in Nigerian companies, and induce voluntary compliance with the highest ethical standards across the Nigerian market.

Strikingly, the Code is silent on the companies to which it applies- a major flaw which creates uncertainty in its implementation. However, it is believed that the Code is applicable to all companies as there is no distinction between private and public entities.

Interestingly, a review of the Code evinces a divergence from the approach adopted under the 2016 Code. Unlike the 2016 Code, the implementation of the Code is hinged on an “Apply and Explain” principle23, which assumes the application of all the principles provided under the Code and requires all companies to explain how the codified principles are applied. In other words, each company is charged with the responsibility of explaining how the specific activities it has undertaken; best achieves the intended outcomes of corporate governance specifications outlined in the principles under the Code.

In this regard, where a company regulated by the Code, determines that strict adherence to a recommended principle or practice under the Code may not be in its best interest; it may choose to apply some other practice, or adopt a different approach, as long as it still achieves the central tenets of good corporate governance such as, fairness, accountability, and transparency.

The decision to adopt the “Apply and Explain” approach was made after careful consideration of our existing laws and the practices adopted by other countries with the key objective of making the Nigerian market more attractive for investment activity. Specifically, the FRCN considered the impact of other philosophies including the “Comply or Else” and “Comply or Explain” philosophies, and decided that the “Apply and Explain” approach was more suitable to promote corporate governance in the country.

53

As noted earlier, the grouse against the “Comply or Else” philosophy is that the philosophy is seen as a ‘one-size fits all’ approach making it largely unsuitable for varying Nigerian business models. The cost of compliance may also be burdensome with the danger that the Board and/or management of a company may become distracted by compliance with the Code at the expense of enterprise leading to a box ticking exercise.

As it relates to the “Comply or Explain” philosophy, the FRCN noted that the word ‘Comply’ connotes strict adherence without room for flexibility.

It was noted to also lead to a mechanical response to a code and its recommendations.24 The “Comply or Explain” principle has evolved into different approaches internationally25 however, the language of the “Apply and Explain” principle best conveys the intent of the Code. An “Apply and Explain” approach shows an appreciation for the fact that it is not a case of whether to comply or not, but rather, a consideration of how the principles and recommended practices can be applied to the business.

Under this regime, the Board and/ or management of a Company could come to the realisation that to follow a recommendation under the Code would not be ideal in the circumstances.

Thus, the Board could decide to apply a recommended practice differently or apply another practice and still achieve the objective of the overarching corporate governance principles of fairness, accountability and transparency.

Consequently, it is the responsibility of the companies that are governed by the Code to use the flexibility and scalability provided by the Code to manage their cost of governance.

Balancing the Shareholder Value versus Stakeholder Theory Corporate Governance deals with the decision-making structures of corporations and organisations, and one of its main purposes is to ensure the confluence of otherwise competing interests that are affected by the companies’ activities. The prolonged debate about the true nature of Corporate Governance focuses on the relationship between shareholders’ interests (those of the investors and owners of the issued shares of the corporation) and other stakeholders’ interests (those related to a varied number of constituencies such as employees, customers, suppliers, individuals where the corporation interacts, etc.). This age-long debate is rooted in different theories that support the idea of different legal personalities in a corporation.

In the first instance, the Shareholder Value theory presupposes that corporations must be run in the interests of the shareholders. Accordingly, the primary responsibility of the Board of a company is to act in the best interest of the shareholders by maximizing corporate profit thereby increasing shareholder value. On the other hand, opponents of the Shareholder Value concept, point at various externalities imposed by profit maximizing choices on other stakeholders: on the welfare of management and workers who have invested their human capital as well as off-work related capital (housing, spouse employment, schools, social relationships, etc.) in the employment relationship; on suppliers and customers who also have

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Insight The Nigerian Code of Corporate Governance 2018 sunk investments in the relationship and foregone alternative opportunities; and so forth.27 This theory is otherwise known as the Stakeholder theory.

The proponents of the Stakeholder theory believe that there have been, in the functioning of corporations and financial markets, many cases of foul play and instability as a result of the heavy reliance on the Shareholder Value theory. Instead, they believe emphasis should be placed on the interests of stakeholders, such as employees, local communities, political actors, or on the interest of the society as a whole;28 or rather on the interests of the company as a going concern.29 The basis canvassed for the Stakeholder theory is that companies are so large, and their impact on society so pervasive that they should discharge an accountability to many more sectors of society than solely their shareholders.

The foregoing notwithstanding, the simple consideration that some stakeholders are affected by certain corporate decisions does not necessarily imply that their interests should be taken into consideration, as every action or inaction of a company may affect some stakeholder in the broadest meaning of the term.31 Thus, the two extreme propositions as contained in the two theories are not sustainable if implemented independently of the other. As such, the true objectives of corporate governance are seen to be achieved, where the interests of both the shareholders and stakeholders are taken into consideration in the administration of a company.

Under the Code, there appears to be a convergence of both theories, as the FRCN attempted to balance the interests of both shareholders and stakeholders of the companies in a bid to institutionalise the highest standards of corporate governance. Indeed, Principle 1 of the Code pertinently provides that”…

As a link between shareholders and the Company, the Board is to exercise oversight and control to ensure that management acts in the best interest of the shareholders and other stakeholders while sustaining the prosperity of the Company” The recommended principles under the Code are indicative of the momentum the Stakeholder-Shareholder movement has gained globally in recent times. For example in many countries, employees often employ a dual-pronged approach to the protection of their interests.32 These two (2) approaches include; (i) union activities, and (ii) through their role as shareholders, i.e., via their pension funds, employee share schemes and long-term savings plans. Corporate engagement through their roles as shareholders sometimes referred to as the “stewardship of workers’ capital” seeks to promote workers interests by not only using their status as significant shareholders to pressure management to adopt internationally recognised labour standards, but also to embrace more transparent corporate governance practices.

Where the ethos of the Code is imbibed, the resultant corporate culture will in the long term promote socially beneficial changes in Nigeria.

and fairness in an emerging market as ours and may be regarded as a sheer attempt to legalise morality.42 Further, the novel ‘Apply and Explain’ approach adopted under this Code have been perceived by many to reduce the level of compliance by companies in general- a situation which epitomises the failure of legal structures in the promotion of ethics in corporate governance.

In the event, the tendency to over emphasise legal compliance mechanisms in any system may result in the substitution of “accountability” for “responsibility”43 without the achievement of the desired goal of true corporate governance.

Ethical Compliance Mechanisms Without compromising the necessity for the operations of organisations to be run in the most economical, efficient and effective manner possible, there is an increasing insistence on the need for organisations to be ethical as well.34 Corporate Governance lies at the very heart of the way businesses are run.

Often related to the administration of a company, it concerns the work of the Board as the body, which bears ultimate responsibility for the business.

Prior to the global economic and financial crisis which started in 2008, evidence from various surveys had indicated that corporate governance lapses were significantly responsible for the collapse of over 70 percent of companies in Nigeria in the preceding two decades. Executive management and the Boards of such companies were alleged to have been reckless with investors’ funds, neglected due processes and took biased decisions, conducts which negate principles of good corporate governance. In all of these instances of failure, the question of ethics or the right behaviour are inherent in every Board decision and action.

The general assumption seems to be that where regulation is based on prescriptions and well written codes, there ought to be stable companies with good practices of corporate governance.

However, this has not been the case as several large scale business failures have been recorded, even in recent past across several jurisdictions.36 This has now put to question the efficacy of codified models of corporate governance, thus necessitating a revisit of ethical and behavioural issues.

The extent to which business decisions reflect ethical values and principles is a key to long-term success. The case for business ethics has been well proven by the costs and impacts of the repeated high profile cases of corporate greed and misconduct, often by senior individuals crossing ethical boundaries as well as ignoring or circumventing the

rules set out in law.37 Therefore, the imperative for ethical practices in corporate governance has arguably never been more important.

The key points of interest in any corporate governance system include issues of transparency and accountability; the legal and regulatory environment; appropriate risk management measures, information flows and the responsibility of senior management and the Board. Whilst most companies have adopted legal compliance mechanisms to address these issues, the key issues of corporate governance from an ethical perspective involve questions concerning relationships and building trusts outside the organisation.

Following the corporate abuses and failures of large corporations such as Enron, WorldCom, Anderson, etc., most companies have realized that trust, integrity, and fairness are crucial to maximizing corporate profit and building investor confidence. Trends emerging, show a new model in which corporate cultures will change in a way that puts greater emphasis on integrity and trust. Such changes would include the diminishing of the single-minded focus on “shareholder value”; the elevation of the interests of employees, customers and their communities, and a resetting of expectations so that investors are more realistic about the returns a company can legitimately and consistently achieve in highly competitive markets.

Efforts should be aimed at curbing behavioural deficiencies rather than enthroning legal processes which have largely failed in addressing reprehensible conduct evident in most organisations. In the event, reputation, culture, and conduct should be instilled at the core of every organisation’s system; with the realisation of profit to play second fiddle to the former in each company’s governance system.

Developing a culture of corporate governance starts at the top, beginning with the Board and the management.

The Board should set values and principles of a company’s culture which should be reflected in the business’s strategy, model, and risk appetite, supported by a demonstration of the conduct that reflects the company’s ideal values. In addition, Boards, management and employees must go beyond the law and internalize the virtues of transparency, accountability, and responsibility. These virtues, which are most useful in the business world, will instill strong moral and ethical standards which will in turn strengthen corporate governance.

The challenge of legalizing morality in today’s society should drive corporations into developing sound corporate cultures that guide the conduct of the members of the organization in a particular manner while doing business.

The Code recognizes the role of business and ethical standards in the protection and enhancement of the reputation of the company as well as the promotion of good conduct and investor confidence, and prescribes recommended practices to be undertaken by each company in the conduct of its activities.

Notably, the Code recommends that the Board should clearly model a top-down commitment to professional business and ethical standards, by formulating and periodically reviewing the Code of Business Conduct and Ethics which should include amongst others that: Directors and senior management of a company should act honestly, in good faith and in the best interests of the Company in accordance with legal requirements and agreed ethical standards.

In addition, the Board of each company is charged with the responsibility for monitoring adherence to the said code of business conduct and ethics to ensure that breaches are effectively sanctioned.41 Notwithstanding the foregoing, we note that this laudable attempt may yet be inadequate in instilling the requisite values of transparency, accountability,

Conclusion Corporate governance has become one of the most commonly used phrases in the current global business vocabulary. From the notorious collapse of Enron in 2001 to the banking failures in Nigeria in 2009, issues of best practices in corporate governance will continue to dominate the discourse in management literature for years to come.

While efforts are continually being made to strengthen corporate governance legislations, a conscious effort must also be devoted towards instilling high ethical standards in each corporate structure. An ethical culture wrapped around the core values of the organisation’s values is beneficial to the realization of true corporate governance at all levels. The Board as well as corporate executives can no longer afford to assume that businesses are not bound by ethics, but rather, by obeisance to the law. As observed with the global institutional failures and the banking crisis in Nigeria, the era of lip service to technical regulations is long gone as most of the practices that enraged the public were in accordance with legal structures.

Therefore, normative primacy must be accorded to sound corporate values that reflect the very ethos of corporate governance-transparency, accountability and fairness. Companies should apply voluntary compliance mechanisms that help develop and build its corporate image and/ or reputation, gain loyalty and trust from all stakeholders including its consumers, and heighten commitment to its employees. These will contribute to sustained stability and growth by promoting integrity, trust, and leadership.

In sum, the approach adopted by the FRCN under the Code is laudable in light of the drawbacks to the rigid approach identified under the 2016 Code. However, in order to actualize true corporate governance under this refined system, Nigerian corporates must embrace the ethical values of transparency, accountability and fairness which underpin the essence of the Code, rather than take the Code as liberty to apply weak corporate governance practices in the interest of maximizing profit. It is firmly believed that where sound ethical values are instilled in any company’s corporate structure, the potential for sustained growth is unassailable.

Finally, despite its potential pitfalls, the likely impact of the Code on the development of Nigerian corporate governance remains one to be optimistic about.

Monday 18 February 2019

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African Minerals Development Centre moves to African Union Commission JOSHUA BASSEY

E

conomic Commission for Africa (ECA) on Friday officially handed over the African Minerals Development Centre (AMDC) to the African Union Commission (AUC).

The centre has been at the ECA since inception in 2012.

The AMDC was endorsed by the 2nd conference of African ministers responsible for minerals resource development in 2011 as an African Union (AU) flagship project whose main aim was to coordinate the implementation of the Africa Mining Vision (AMV).

The AMV was adopted in 2009 by the African Heads of State to ensure minerals contributed to the continent’s economic and structural transformation.

Vera Songwe, executive secretary, ECA, at the handover ceremony, thanked the AUC “for trusting and believing in our ability to host and incubate the AMDC for the last six and half years.

“It is with great pride that we are gathered here to celebrate having a viable AMDC, which is now transitioning into an AU special-

ised agency. This handover is therefore an important milestone. It underscores the concrete programmes, partnerships and prospects that demonstrate AMDC’s role as facilitator of choice, for African countries and their global partners seeking to realize AMV aspirations,” in a statement on Friday.

According to Songwe, going forward, continued collaboration among AMDC’s partners and stakeholders remain vital, as the ECA remained committed to supporting the AMDC’s work.

“Now, we must ensure that AMDC’s work goes forward, as Africa strives to assert its agency in the strategic management of its mineral resources. In so doing, our credibility depends on the extent to which we remain true to Africa’s historic imperative for an AMV paradigm. That imperative applies yesterday, today and tomorrow,” she said.

On his part, the AUC deputy chairperson, Kwesi Quartey, applauded the ECA and partners, including the Canadian and Australian governments, for supporting and nurturing the AMDC to the level that enabled it to sup-

Twenty-two states sold petrol above regulatory pump price in January, as diesel cost higher ISRAEL ODUBOLA & SEGUN ADAMS

T

he average price paid by consumers for premium motor spirit, otherwise known as petrol, exceeded the regulatory pump price of N145 in 22 states in January, according to state-funded data agency, the National Bureau of Statistics (NBS).

Meanwhile, the automotive gas oil (diesel) report released by NBS revealed that average cost of diesel grew 1.59 percent monthon-month and 5.27 percent year-on-year to N225.09 in January 2019 from to N221.56 in December 2018.

The number of states that sold petrol above N145 regulatory pump price increased by three in January compared with 19 states in December 2018.

The average price of petrol in January stood at N145, the lowest price in 14 months since December 2017.

Average price paid consumers for the product contracted by 23.7 percent year-on-year to N145.7 in January from N190.9 in the comparable month of 2018, and also dipped marginally by 0.1 percent in January from N145.8 a month prior.

Oyo, a South-western state, recorded the highest average price at N150.5,

indicating a 24.44 percent contraction from N199.17 in January 2018, and 3.40 percent appreciation over N145.54 reported in the last month of 2018.

Benue reported the second highest average price at N150.09, while Taraba, which sold the highest in December 2018, came third with an average price of N150.

States with the least average prices in January 2019 include Yobe (N144), Bauchi (N144) and Jigawa (N144.20). These three states recorded contraction year-on-year as well as month-on-month bases.

Across regions, the average price in the six geo-political zones of the Federation is above N145 regulatory price, with the North-east recording the highest price at N147.08 and South-South & Southeast having the least price – N145.11.

Taraba, the third-largest Nigerian-state by land area had the largest average price in the North-east at N150 while Yobe sold the least – N145. Kaduna and Zamfara had the highest and lowest average prices at N146.22 and N144.56 respectively in the Northwest. In the North-central, Plateau recorded the highest at N146.42 and Abuja with the lowest at N144.20.

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NBS, UNCTAD differ on country’s FDI inflows MICHEAL ANI

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iscrepancies between figures reported by Nigeria’s statistical agency - National Bureau of Statistics (NBS) - and the United Nations Conference on Trade and Development on Nigeria’s Foreign Direct Investment (FDI) flows into the country have left investors bewildered, wondering the right data to fall on to make informed decisions.

In 2018 for example, data from the NBS say FDI into the country stood at $1.2 billion, a 21.7 percent or ($212.9m) increase from the $981.75 million sticky inflows in 2017.

This figure by is in contrast to annual data released

by UNCTAD, an intergovernmental body that tracks trade, investment, and development issues opportunities in the world, which put Nigeria’s FDI inflows at $2.1 billion for that year.

Both agencies did not immediately reply to phone calls and tweets seeking clarification.

Not only in both agencies’ 2018 reports was there a conflict on data, but BusinessDay has also noticed a

NAMA assures uninterrupted air traffic services in Nigeria’s airspace IFEOMA OKEKE

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anagement of the Nigerian Airspace Management Agency (NAMA) has assured all Nigerians that Nigerian airspace will remain open for all airspace users before, during and after the rescheduled 2019 general elections.

In a statement sent to the media Sunday, Khalid Emele, general manager, public affairs, NAMA, stated that the agency had put in place appropriate contingency measures to ensure safe flight operations within the period as well as possible extension of operational hours of any domestic airport when the need arises.

“We hereby wish to inform the general public that there was no disruption in the provision of air traffic services on Saturday, the 16th of February 2019 in keeping with the agency’s mandate to provide uninterrupted safe, effective, efficient, and economic air navigation services in the country.

“Furthermore, the agency in line with the directive of the Honourable Minister of State (Aviation), Sen. Hadi Sirika had earlier ensured a 24-hour operation at all Nigerian airports on Friday 15th February 2019 to facilitate the transportation of INEC materials nationwide.”

consistent variance since the business paper started compiling data from both sources.

“I suspect both agencies could be using different definitions of FDI,” Charlie Robertson, global chief economist at Renaissance Capital said in a tweet.

“Some countries say that if you buy 20-25% of a company (in the equities market) that means you are in fact a direct investor.”

“Some definitions might include portfolio investment which is less than that.

Sometimes, even loans can be classed as “foreign investment” but I would not do that,’’ Robertson said, pointing out that the solution lay in ascertaining what constitutes an FDI for both agencies.

However, it couldn’t have been that the Geneva-based intergovernmental agency added both portfolio and direct investments as its definition of foreign direct investment. A combination of FPI and FDI values from the NBS sums up to about $13 billion for that year.

If Other Investments as a class is added, the total capital inflows into the country that year become $16.8 billion, according to NBS data.

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55 NEWS

BUSINESS DAY

Adopt new techs to grow the economy, Funke Opeke urges Nigerians SEGUN ADAMS

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ainOne CEO, Funke Opeke, has underlined the need for businesses in Nigeria to adopt new technologies to avoid falling behind the rest of the world in technological advancement.

Opeke made this known at MainOne’s annual tech conference, Nerds Unite, which held recently in Lagos with the theme ‘Accelerating Digital Transformation.’

Nerds Unite 2019, hosted mid-level and top level IT executives, start-up innovators and IT enthusiasts who discussed emerging trends in the IT industry and how they affect Nigeria and Africa.

The event featured IT specialist including Toby Shapshak, ICT journalist and thought leader, Libby Barr; Chief Operating Officer, Avanti Communications, Obinna Ekezie; CEO, Wakanow, Ife Oyedele; CEO, Kobo 360, Deji Balogun, and CTO, Terragon Group, among others.

At the event, IT experts discussed the importance of applying technology to every

facet of life in line with digital transformation agenda of the Federal Government.

The keynote speaker at the event, Toby Shapshak, highlighted reasons why a connected Africa is way to move the continent forward.

He pointed out the peculiar situation of Africa and why it is important for Africa to utilize her strength, innovate and catch up with the rest of the world.

The first session, which was titled “Connecting the Next Billion to the Internet and Beyond to Transform the Face of Africa,” was moderated by Shapshak. The speakers for this session included Libby Barr, COO of Avanti Comm, and Funke Opeke who tackled connectivity in Africa and the use of connectivity and technology to drive development in Nigeria.

According to Opeke, “A connected Nigeria is a more economically prosperous Nigeria. It is a better educated Nigeria, it is a Nigeria where access to social services and health services are able to reach more of our population which in itself adds to more prosperity for Nigeria.”

56 BUSINESS DAY NEWS

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2Baba, The reign

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RACE Live resumes 2019 in style with a living legend and arguably the pioneer of modern day Nigerian music, 2baba. Come Thursday, February 21, at the Terra Kulture Arena, 2baba will take a select audience through his musical journey themed: “2BABA - THE REIGN”.

2Baba The Reign is the fifth instalment in the TRACE LIVE series and promises to be a spectacle. Beyond the awesome sounds, thrilling lights, and enthusiastic fans the Reign will be a standout occasion as it presents a hit catalogue that spans two decades and has seen the artiste evolve from “Plantashun boiz” to 2baba.

Innocent Ujah Idibia, known by his stage name 2Baba, is one of the most decorated Afro pop artistes in Africa. 2Baba is a singer/ songwriter, producer and entrepreneur. He is also credited as one of the key

figures in the rise to global prominence of what has been described as the sound of 21st century Africa.

2Baba, who is also the founder of Hypertek Entertainment, has been able to sway us with dynamic sounds across the spectrums of R&B, Hip Hop, Reggae, Gospel and Afro Pop. He is arguably one of Nigeria’s most sensational artiste and without a doubt the king of the last two decades.

TRACE Live is a new landmark in live music that highlights only the best blend of vocals and musical instruments. The show, which spotlights one artiste and a band, is the biggest live performance show from TRACE, Bolanle Austin Peters and Cabal Entertainment.

TRACE Live with 2Baba is a celebration of 2Baba’s passion, tenacity and consistency; join us at Terra Kulture on February 21, as we stand up for King 2baba!

National Assembly postpones resumption

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he National Assembly has announced the postponement of its resumption scheduled for Tuesday, February 19 to Tuesday, February 26.

The Clerk of the National Assembly, Mohammed Sani-Omolori, made this known in a statement on Sunday.

He said the postponement became necessary following the postponement of the Presidential and National Assembly elections to Saturday, February 23.

“This is to inform all distinguished senators and honourable members that resumption of plenary session earlier scheduled for Tuesday February 19 has

been postponed to Tuesday, February 26, due to the postponement of the national elections. All distinguished senators and honourable members are expected to resume plenary session by 10am on February 26 please,” he said.

The News Agency of Nigeria reports that the Senate on January 24 adjourned plenary until February 19 to enable preparations for the February 16 Presidential and National Assembly elections.

NAN further reports that the Senate did not consider the 2019 Appropriation Bill before it proceeded on the break. It however passed the Minimum Wage Bill through first and second reading.

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n what seems to be a blame game at the KPMG’s audit committee seminar in Lagos last week, the Securities and Exchange Commission (SEC) decried the alarming multiplicity of shareholders association in Nigeria.

Olubukanla Rufai, assistant director, and head, operations directorate, Lagos zonal office, said there were 111 shareholders associations recognised by the commission.

In 2017, she said SEC carried out an inspection of some shareholders’ associations in the different geo-political zones of the country, consequently, the address of a total of 54 associations were confirmed and updated.

The SEC held fully sponsored shareholders’ academy programmes between 2012 and 2014, where papers were delivered and interactive sessions held for representatives of recognised shareholders’ associations.

“This unfortunately may have encouraged unnecessary proliferation of shareholders’ association,” Rufai said. In response, shareholders who were present at the seminar unanimously blamed SEC, asking a question – are you really in control? What role did SEC play in sanitising the associations?

She told the shareholders to foster the protection of investors’ interest through the enhanced scrutiny of the activities of companies by members of the associations.

According to Rufai, SEC

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Monday 18 February 2019

Nigeria’s inflation rate slows by 11.37% in January OLADEHINDE OLADIPO & OLUWASEGUN OLAKOYENIKAN

… as food inflation dips

igeria’s inflation rate rose at a slower pace in January compared with the previous month helped by decelerated food inflation, latest Consumer Price Index (CPI) data by the National Bureau of Statistics (NBS) show.

The CPI measures the composite changes in the prices of consumer goods and services purchased by households over a period.

The nation’s CPI, a measure of inflation rate, stood at 11.37 percent on year-to-year (yoy) basis in January 2019, representing 0.07 percentage points lower than 11.44 percent recorded in December 2018.

According to NBS report released Friday, Urban inflation rate decreased by 11.66 percent from 11.73 percent recorded in December 2018, while rural inflation rate decreased by 11.11 percent from 11.18 percent in December 2018.

On a month-on-month basis, the urban index rose by 0.77 percent in January 2019, up by 0.01 from 0.76 percent recorded in December 2018, while the rural index also rose by 0.71 percent in January 2019, down by 0.01 percent from the rate recorded in December 2018 (0.72) percent.

The composite food index rose by 13.51 percent in January 2019 compared to 13.56 percent in Decem-

N

ber 2018.

This rise in the food index was caused by increases in prices of Fish, Bread and cereals, Vegetables, Meat, Fruits, Potatoes, yam and other tubers, oils and fats, soft drinks.

On month-on-month basis, the food sub-index increased by 0.83 percent in January 2019, up by 0.02 percent points from 0.81 percent recorded in December 2018.

The average annual rate of change of the Food sub-index for the twelvemonth period ending January 2019 over the previous twelve-month average was 13.93 percent, 0.42 percent points from the average annual rate of change recorded in December 2018

(14.35) percent.

In January 2019, food inflation on a year on year basis was highest in Kebbi (16.45%), Delta (16.27%) and Ondo (15.63%), while Plateau (11.83%), Enugu (11.64%) and Ogun (10.99%) recorded the slowest rise in food inflation.

On month on month basis however, January 2019 food inflation was highest in Delta (2.73%), Kwara (2.50%) and Ondo (2.22%), while Anambra, Ekiti, Enugu, Imo, Nasarawa, Osun and Zamfara all recorded food price deflation or negative inflation (general decrease in the general price level of goods and services or a negative inflation rate) in January 2019.

Vaira VikeFreiberga, former president of the Republic of Latvia (l); Ajoke Muhammed, vice chairman, board of trustees, Murtala Muhammed Foundation (r), and Festus Mogae, former president of Botswana, during the 2019 Murtala Muhammed Memorial Lecture in Abuja.

SEC raises alarm over rising shareholders association HOPE MOSES-ASHIKE

@businessDayNG

issued the code of conduct for shareholders’ associations and their members in accordance with the Investment and Securities Act (ISA).

Speaking on ‘new developments: the Nigerian code of corporate governance and new accounting standards,’ Agnes Lutukai, head, department of professional practice, West Africa, KPMG Professional Services, explained that the reason for the code was to institutionalise corporate governance best practices in Nigerian companies.

It promotes public awareness of essential corporate values and ethical practices to enhance integrity of the business environment as well as rebuild public trust and confidence in the Nigerian economy and facilitate increased trade and investment.

Glo, Huawei lift 30 tertiary schools, 150 outstanding students

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n its quest for youth empowerment across Nigeria, telecommunications giant, Globacom, has commenced a scheme under which 150 outstanding students will be rewarded just as 30 tertiary institutions will receive internet routers courtesy of the brand.

According to Globacom, the best five final year students in 30 tertiary institutions across the country will be rewarded with free smartphones loaded with six months data while each of the 30 selected tertiary institutions will also receive five Glo routers loaded with data that can be used for two years free-of-charge for academic research.

Babcock University, Ilishan, Ogun State, became the first beneficiary of the

scheme recently as Iheayichukwu Okoro, deputy vice chancellor (Academics), led other members of the university to receive the routers presented by Globacom for research purposes.

In the same vein, five outstanding final year students of the school, including Dogo Edafe Bawa of Business Education, Olusoji Ifejesu Precious of Accounting Department, Ojutiku Toluwanimi Oluwaseun of Economics, Ajulibe Goziem Benjamin of Medical Laboratory Science, and Anifowose Airat Morolake of Computer Science Department were gifted with Glo/Huawei smartphones.

Olufolahan Faseyitan, Globacom’s regional manager, retail sales, Lagos/ Ogun, encouraged the university community to utilise

the opportunity of Globacom’s week-long data clinic to upgrade to Glo 4G to avail themselves of the experience of new speed of life and also enjoy memorable communication experience on the network.

The availability of Glo 4G in all tertiary institutions in the country, he said, is a confirmation of the fact that Globacom has the widest, most accessible and most reliable 4G LTE coverage in Nigeria.

Dorothy Johnson, deputy human resources director, Huawei, expressed delight that Huawei was partnering with Globacom on the project, saying they also shared the no-limit philosophy of Glo and had resolved to continue supporting efforts to improve subscribers’ experience on the network.

Monday 18 February 2019

FT

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BUSINESS DAY

FINANCIAL TIMES

57

World Business Newspaper

US-China trade talks end with little sign of progress Impasse increases pressure on Trump to delay raising tariffs Tom Mitchell and Emma Dunkley

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S and Chinese trade negotiators will meet again next week in Washington, President Xi Jinping said on Friday, after the sixth round of cabinet-level negotiations ended in Beijing with no sign of substantial progress.

The two sides were meeting after President Donald Trump insisted that far-reaching structural economic reforms had to be part of any “real deal” to end the trade war between the world’s two biggest economies.

Mr Xi’s comments were reported by the official Xinhua News Agency after he sat down with the US negotiating team on Friday, reciprocating Mr Trump’s courtesy meeting with China’s top economic official Liu He in Washington last month.

“China and the US are inseparable,” Mr Xi was quoted as saying. “They both do well or they both get hurt. Co-operation is the best choice.”

According to the White House, Robert Lighthizer, the US trade representative, and Treasury secretary Steven Mnuchin said progress had been made on difficult issues but “there is still lots of work to do”.

The impasse has raised pressure on Mr Trump to delay a scheduled increase in tariffs on March 2 to facilitate a possible make-or-break summit meeting with Mr Xi. If an agreement is not reached

by March 1, Mr Trump said he would raise the punitive tariff rate on $200bn of Chinese imports from 10 per cent to 25 per cent.

According to people briefed on the negotiations, both sides had hoped to at least produce a memorandum of understanding by the end of Friday.

When Mr Lighthizer and Mr Liu held their last round of trade talks in January, the sides failed to come up with a draft document as a basis for further discussions.

Investor uncertainty over the outcome of the talks weighed on stock markets across Asia on Friday. The CSI 300 index of companies listed in Shanghai and Shenzhen closed 1.9 per cent lower, while Hong Kong’s Hang Seng index dropped by almost 2 per cent.

The people briefed on the negotiations added that Chinese officials had promised over recent days to provide a full list of all central and local government subsidies in accordance with World Trade Organization reporting require-

US Treasury secretary Steven Mnuchin, left, with trade representative Robert Lighthizer and Chinese vice premier Liu He in Beijing © Reuters

ments. They would also take steps to ensure that the subsidies did not violate WTO rules.

Mr Lighthizer’s team, however, was sceptical about such promises.

“China’s system is so opaque that you would have to take their word that the WTO notification is complete,” a member of his team said.

US officials were also frustrated that Mr Liu’s team had offered few market access concessions beyond

what Mr Xi spelt out in a speech last April, which focused on modest liberalisations in the financial and automotive sectors.

According to people briefed on the talks, this week United States Trade Representative and White House officials were “livid” about leaks, first reported by Bloomberg this week, that Mr Trump was considering a 60-day extension of the March 1 deadline.

That leeway, if granted, might not be enough to calm investors, some of whom warned that a delay in the decision on trade tariffs would lead to greater uncertainty for companies in China.

“The longer you wait, the more sentiment could deteriorate because corporate investment spending is on pause,” said Ben Luk, a global macro strategist at State Street Global Markets.

Donald Trump to declare emergency Facebook in talks with US watchdog to settle privacy investigation FTC could levy multibillion-dollar fine if it decides social network broke data consent order over wall and sign funding bill Senate majority leader says president will bypass Congress to get money for border barrier Courtney Weaver

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resident Donald Trump will sign a spending bill to keep the US government open on Friday, but also plans to declare a national emergency to bypass Congress and secure funds for his border wall, the White House said on Thursday.

Mr Trump’s decision prevents a government shutdown that had been due to take effect on Friday, but plunges the US into uncharted territory, setting up yet another round of intense legal fights between Mr Trump and his opponents.

Multiple high-ranking Republican lawmakers have warned Mr Trump against declaring a national emergency to build the wall. However, at least one of them — Mitch McConnell, the Senate majority leader — said he had indicated to Mr Trump that he was now ready to support the resolution.

Sarah Sanders, the White House press secretary, said in a statement that Mr Trump “will sign the government funding bill, and as he has stated before, he will also take other executive action — including a national emergency — to ensure we stop the national security and humanitarian crisis at the border”.

The spending bill passed the Senate by a vote of 83-16. In the House of Representatives it passed by a vote of 300-128 — with

more than 100 Republicans voting against it. Mr Trump is expected to sign the bill into legislation and issue his declaration before the end of the day on Friday.

While Mr Trump will avoid shutting down the government for a second time this year — a move that would have put 800,000 federal workers temporarily out of work, again — he is setting himself up for a court battle.

Democrats and critics of the president’s immigration policy have said it would be unconstitutional for Mr Trump to declare a crisis at the border, given that the situation there appeared to be largely unchanged since Mr Trump took office two years ago.

At least one liberal non-profit group, a think-tank called Public Citizen, has already announced it would sue to challenge Mr Trump’s expected move, which it called an “unconstitutional attempt to circumvent the legislative process”.

“If President Donald Trump proceeds to declare a national emergency to secure funding for a racist and needless wall, against the backdrop of Congress’ express refusal to fund such a barrier, it will constitute an outrageous abuse of power,” it said.

Nancy Pelosi, the Democratic House speaker, said she also “may” consider filing a legal challenge to the emergency declaration. “We will review our options,” she said.

Hannah Murphy, Kiran Stacey and Kadhim Shubber

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acebook is in early talks with the US Federal Trade Commission over settling an investigation into privacy violations that could result in a record fine for the technology company, according to several people familiar with the situation.

The US watchdog is investigating whether the social network broke a consent order that it signed with the FTC in 2011, which required it to be clear with users about how their data were being shared with third parties.

According to two people familiar with the talks, negotiations over a settlement have started although no monetary figure has been agreed.

The FTC opened its investigation into the social network’s privacy practices in March last year following the Cambridge Analytica scandal, in which the data of 87m users was improperly

accessed by a third party.

David Vladeck, a former FTC director who oversaw the 2011 agreement with Facebook, said he expected a major financial penalty. “I think it’s highly unlikely the FTC would impose a civil penalty under a billion dollars,” he said.

At the launch of the probe, Mr Vladeck had said each user whose data were misused could be counted as an individual violation. If the company was found to have broken the order, it could face fines of about $40,000 per violation.

This would mean a multibilliondollar fine for Facebook, potentially surpassing the record $22.5m fine paid

by Google in 2012 for misrepresenting privacy assurances to certain users.

The discussions, which were first reported by the Washington Post, could still lead to litigation if the two sides cannot come to an agreement.

Facebook has been mired in a series of public scandals over its privacy practices. In December, the social network

was criticised over the leak of user data to companies that integrate their services with Facebook, such as Microsoft and Spotify.

In some cases these third-party services continued to have access to the personal data related to Facebook users and their friends even after individual partnership agreements with the social network had expired.

Despite the scandals, Facebook reported last month a bumper fourthquarter performance in 2018, with revenues of $16.9bn, up 33 per cent year on year on a constant currency basis and well above analysts’ estimates.

Facebook declined to comment on the talks but pointed to a statement released by the company in July last year. “We are co-operating with officials in the US, UK and beyond. We’ve provided public testimony, answered questions and pledged to continue our assistance as their work continues,” the statement said.

Mexico increases tax cuts for state oil group Pemex

Bailout plan comes as company grapples with falling production and massive debt Jude Webber

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exico will increase the already announced tax cuts for Pemex, the state oil company, as part of a longawaited bailout as it struggles with production in freefall and hobbled by $104bn in debt.

The tax measures, which were increased slightly since they were first announced last month, come on top of a string of other measures

that the company expects will provide it with an additional $5.2bn this year.

Instead of 11bn pesos in tax relief this year, the increase in deductions is now expected to save 15bn pesos, rising to 30bn pesos in future years, Alberto Velázquez, Pemex finance director, said.

The measures also include a 25bn peso capital injection in Pemex that was included in the 2019 budget in December.

The government support —

which it has dribbled as it has become clear that the budget cash injection alone was not going to be enough to help Mexico’s biggest company — also included a 35bn peso pre-payment of pension promissory notes which Mr Velázquez said had kicked off in January.

He noted that the bundle of measures added up to a 36 per cent increase in investment at Pemex in real terms after four years of shrinking investment. “It’s a substantial increase,” he said.

58

BUSINESS DAY

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NATIONAL NEWS

FT The political game behind Amazon’s retreat from New York

UK’s Leading Management Consultants 2019: ratings and analysis

Local politicians accused of overplaying their hand while business despairs

Big names dominate ratings but specialist consultancies also shine

Joshua Chaffin and Lindsay Fortado

Andrew Hill

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W

hen Stuart Appelbaum met three of Amazon’s top executives in Governor Andrew Cuomo’s office on Wednesday, he had no reason to doubt that the retail giant was still coming to New York.

Mr Appelbaum, the president of the Retail, Wholesale and Department Store Union — a frequent Amazon critic — had just spent more than an hour discussing labour issues relating to the Amazon’s plans to build a satellite headquarters in Queens. The gathering had gone well, he believed.

“We left there shaking hands. I said: ‘I look forward to working with you in the future,’” Mr Appelbaum recalled. “If they had any clue that this was going to happen today then they must be the best actors in the country. There was no indication of that in any way.”

Like Mr Appelbaum, many New Yorkers were shaking their heads in the wake of Amazon’s stunning announcement the following day that it was cancelling its investment.

Under a deal championed by Mr Cuomo, the city and state were offering $3bn in tax incentives to lure a company that was to bring an estimated 25,000 jobs and $27bn in tax revenues over the next two decades.

The decision has dealt a painful blow to a campaign begun under Mayor Michael Bloomberg, following the 2008 financial crisis, to transform New York from a city reliant on Wall Street and real estate to one that is also a world leader in technology.

Tech companies such as Google and Facebook are flocking to New York for the same reason that Amazon chose the city in November over hundreds of rivals in an extraordinary nationwide pageant: its abundance of talent.

Still, civic boosters who viewed Amazon’s commitment as a validation were suddenly feeling bereft at its retreat.

“I think it’s going to have a negative impact in terms of the marketing and short-term economic opportunity for New York,” said Kathy Wylde, president of the Partnership for NYC group.

Seth Pinsky, Mr Bloomberg’s former head of economic development, and now a senior executive at RXR Realty, issued an ominous warning: “The opponents of Amazon who are celebrating today would do well to understand that, as hard as the challenges associated with growth are to deal with, the challenges associated with decline are much harder to deal with.”

The disappointment was not confined to the executive suite. Gary LaBarbera, the leader of the Buildings and Construction Trades Council, an umbrella group of construction unions, had been expecting the Amazon headquarters to yield 5,000 jobs for his tradesmen — not to mention many more for work on other developments sprouting nearby.

“The economic multiplier of this is incalculable!” Mr LaBarbera despaired.

The question he and many others were pondering was how the city had managed to squander a prize that was so hard won, and which seemed secure only days ago. There appeared to be culprits in all directions.

Abdel Fattah al-Sisi, Egypt’s president © AFP

Egypt backs constitutional change to extend Sisi presidency MPs also endorse moves to enshrine political role for military in law Heba Saleh

E

gypt’s parliament has voted overwhelmingly in favour of constitutional amendments that could extend the rule of President Abdel Fattah al-Sisi until 2034 and enshrine in law a political role for the country’s military.

More than 80 per cent of MPs in the 596 seat-assembly on Thursday approved the proposed changes, which will now be reviewed by a special committee before being put to a final vote and a popular referendum.

Critics say such sweeping constitutional changes show that Egypt is sinking deeper into dictatorship, while supporters insist they are crucial for cementing stability.

The amendments would extend presidential terms from four to six years and allow Mr Sisi, as an exception, to run again after his current term expires in 2022. A “transitional article” that would give the “current president” the right to two new terms totalling 12

years would also be inserted into the constitution.

The president would be allowed to pick the heads of judicial bodies and to oversee a new council charged with looking after the affairs of judges. Critics fear this may prove a blow to the notion of an independent judiciary.

“These amendments effectively serve to destroy the constitutional separation of powers, concentrating all authority into the president’s hands and solidifying his authoritarian rule,” said a statement by a group of almost a dozen Egyptian human rights groups.

No date has been set for the referendum but it is expected in the first half of the year. With no organised opposition and a tightly controlled press, it is expected the changes will be approved.

Another change would confer a political role for the army to protect the constitution, democracy and the civilian nature of the state code for preventing rule by Islamists. This amendment would formalise the military already considerable influence over public life.

It has not been spelt out how these new

powers would be exercised. Mr Sisi is a former general and defence minister who overthrew his elected Islamist predecessor in a popularly-backed coup in 2013. Since then he has presided over a harsh crackdown against dissent that has targeted mainly Islamists but extended to secular activists at the forefront of the 2011 revolution. But supporters of Mr Sisi, who have clamoured for the changes, say he has brought much-needed stability to the country and should be allowed to continue to complete the mega-projects he has launched such as building a new capital city. Opponents say he is an autocrat who has rolled back freedoms and filled the prisons with dissenters. While a few opposition members spoke out in parliament against the constitutional changes, that could not stop the passage of the amendments in an assembly packed with pro-regime supporters.

Mostafa al-Gendy, an MP who favours the changes, was quoted as saying of the plan to give the army a political role: “I do not want to leave the future of my children to politicians.

NYSE goes to court to halt SEC plan

Stock exchange says scheme ‘arbitrary and capricious’ in petition Nicole Bullock

T

he New York Stock Exchange has gone to court in an effort to block a controversial plan from its main regulator to study the trading incentive schemes underpinning the world’s biggest equities market.

In a petition dated Thursday, NYSE, a unit of Intercontinental Exchange, criticised the scheme planned by the Securities and Exchange Commission to monitor the effects of the complex models of fee and rebates in share trading.

Brokers and exchanges alike use the schemes to attract business.

The SEC’s scheme is “arbitrary and capricious and otherwise not in accordance with law; does not promote efficiency, competition, and capital formation; and exceeds the commission’s authority”, the petition said. It has asked judges to hold the commission’s rule unlawful.

The move represents escalating tension between the regulator and the exchanges that account for most of the daily activity on the US stock market. Under the Trump administration, the SEC has turned aggressively on how exchanges operate, with plans to either examine or test some of the key ways

exchanges earn money, including the model for selling market data to brokers and investors.

In December, the SEC adopted a plan to test the “maker-taker” model under which exchanges pay brokers rebates to post stock quotes and charge to access quotes.

The difference between the two is revenue for exchanges.

Critics of the system have long claimed that it causes conflicts of interest that could drive brokers to exchanges that pay the highest rebates over getting the best trades for investors. Others say maker-taker drives liquidity and tinkering with it could mean higher trading costs.

UK’s Leading Management Consultants 2019: ratings and analysis Big names dominate ratings but specialist consultancies also shine Andrew Hill

T

he largest “universal” consultancies again reap the biggest share of recommendations from clients and peers in the 2019 Financial Times survey of the UK’s Leading Management Consultants.

However, a long tail of more specialised firms, often punching above their weight, continues to garner endorsements, as work related to digital transformation fuels the advisory sector.

The list, compiled for the FT

by research and data provider Statista, collects recommendations from other consultancies and from clients.

The results are then grouped by consulting service (for instance, strategy or innovation) and by sector, from aerospace to travel, transport and logistics.

Firms that are “very frequently recommended” are awarded a “gold medal” in the category, “frequently recommended” receive silver, and “recommended” bronze.The podium can get crowded. Nine golds were

awarded in the financial institutions and services sector, out of 31 consultancies that received “medals” in that category this year.

The overall shape of the list is similar to that of 2018. Eight universal consulting firms — Deloitte, EY, KPMG and PwC, plus McKinsey, Bain, Boston Consulting Group (BCG) and Accenture — received “medals” across at least 23 of the 29 available categories. Deloitte, KPMG and McKinsey again scored gold, silver or bronze in all 29.

he largest “universal” consultancies again reap the biggest share of recommendations from clients and peers in the 2019 Financial Times survey of the UK’s Leading Management Consultants.

However, a long tail of more specialised firms, often punching above their weight, continues to garner endorsements, as work related to digital transformation fuels the advisory sector.

The list, compiled for the FT by research and data provider Statista, collects recommendations from other consultancies and from clients.

The results are then grouped by consulting service (for instance, strategy or innovation) and by sector, from aerospace to travel, transport and logistics. Firms that are “very frequently recommended” are awarded a “gold medal” in the category, “frequently recommended” receive silver, and “recommended” bronze.

The podium can get crowded. Nine golds were awarded in the financial institutions and services sector, out of 31 consultancies that received “medals” in that category this year.

The overall shape of the list is similar to that of 2018. Eight universal consulting firms — Deloitte, EY, KPMG and PwC, plus McKinsey, Bain, Boston Consulting Group (BCG) and Accenture — received “medals” across at least 23 of the 29 available categories.

Deloitte, KPMG and McKinsey again scored gold, silver or bronze in all 29.

A gap then emerges between this Big Eight and the pack — led by IBM and Capgemini, with 14 medals each — reflecting the more specialised nature of some of the other firms.

An Olympic-style medals table approach, in which the number of gold medals decides the ranking position, again gives Accenture the crown (18 golds), followed by KPMG and Deloitte, with 16 and 15 respectively.

A recent survey from the Management Consultancies Association, whose members account for 60 per cent of the £10bn UK consulting industry, is a reminder of the deep penetration of consultants across all sectors of the UK. Some 84 per cent of the businesses polled by the MCA said they employed consultants, with the highest use in financial services (which is one explanation for the number of firms clustered around the biggest honeypot), health and life sciences, and energy.

Unsurprisingly, the next biggest spender on consulting is the public sector, where Accenture, Deloitte, Korn Ferry, KPMG and PwC won gold in the FT/Statista listing. Organisations across public and private sectors polled by the MCA picked efficiency as the biggest challenge for which they seek outside advice, followed by Brexit.

Once again, it seems likely that brand recognition played its part in elevating the largest companies to the top of the FT/Statista table. For the first time this year, respondents were given the chance to name consultancies they would not recommend, with negative marks taken into account in the medal table but not broken out separately.

While the survey does not include qualitative results, parsing the rankings does reveal some movement beneath the relatively calm surface.

Monday 18 February 2019

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BUSINESS DAY

59

FINANCIAL TIMES

COMPANIES & MARKETS

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US founder of Russia-focused private equity firm arrested Michael Calvey denies claims of ‘large-scale’ fraud made by Moscow prosecutors Max Seddon

T

he American founder of Baring Vostok, one of the largest Russia-focused private equity firms, has been arrested in Moscow on charges of “large-scale fraud”, amid a tussle for control of one the country’s banks.

Michael Calvey was arrested alongside Baring partners Vagan Abgaryan, Phillipe Delpal and Ivan Zyuzin. Also arrested were Maxim Vladimirov, who runs a debt collection firm that Calvey is accused of using to perpetrate the alleged fraud; and Alexei Kordichev, advisor to the CEO of Nordvik Bank.

All are set to be arraigned separately in a Moscow court on Friday to hear charges of fraud related to Vostochny Bank, a top-30 lender that focuses on Russia’s Far East.

Prosecutors said Mr Calvey had cheated Vostochny, in which Baring holds a 52.5 per cent stake, out of Rbs2.5bn and accused Mr Delpal, a member of the bank’s board, of approving the alleged scheme.

Details of the charges against the other defendants were not immediately given.

“Baring Vostok confirms that four employees were detained in the framework of the commercial dispute over the Vostochny Express Bank,” Baring said in a statement. “Law enforcement actions are not directly related to the activities of Baring Vostok and other portfolio companies.”

Vostochny said that the bank continued to operate as usual.

“The Bank provides the necessary assistance to the investigative activities carried out by law enforcement agencies. The circumstances of the investigated criminal case do not affect the current activities of the Bank,” Vostochny said in a statement. “Within the framework of this criminal case, Bank

Vostochny, as the injured party, is counting on compensation for damage caused to the Bank.”

Prosecutors are demanding the suspects be held without bail.

Mr Delpal has denied the charges.

Mr Calvey, a former Salomon Brothers banker who also worked for the European Bank for Reconstruction and Development, set up Baring Vostok in 1994 amid the chaos of Russia’s transition to democracy and capitalism following the collapse of the Soviet Union.

It has been a rare Russian private equity success story by focusing on the local market and hiring Russian managers. The company holds $3.7bn in committed capital and has invested $2.8bn in the Russian market since its founding.

While many foreign investors have sold down their Russian holdings or pulled out altogether over the past decade amid economic headwinds and geopolitical fears, Mr Calvey told the Moscow Times in 2014: “Our instinct is to continue investing when all the investors around us are scared.”

Its major investments included early stakes in tech group Yandex and online bank Tinkoff.

Kirill Dmitriev, chief executive of the state-run Russian Direct Investment Fund, said on Friday that he was prepared to personally vouch for Mr Calvey.

“We know Michael Calvey and the team of Baring Vostok as highly professional investors, committed to the highest ethical standards accepted in the investment community,” Mr Dmitriev said.

“I am ready to provide a personal guarantee for Michael Calvey and believe that he did a lot for attracting foreign investment in Russia and helped many Russian companies to grow and mature,” he added.

New York manufacturing gauge rises for first time in 3 months Mamta Badkar

A

gauge of manufacturing in New York recovered last month from January, when it fell to the lowest level in 20 months.

The Empire State Manufacturing Survey climbed to 8.80 in February, the New York Federal Reserve said on Friday, after having declined the previous two months. That topped economists’ projections for a rise to 7, according to a Thomson Reuters survey.

At the start of the year the gauge fell to 3.90 — its lowest reading since May 2017.

The components of the report were mixed as the new orders subindex climbed but the shipments index fell.

“Manufacturing firms in New York State reported that business activity grew, though like last

month, at a significantly slower pace than much of last year,” the report stated.

The industry has been hamstrung by the slowdown in the Chinese economy, that has been aggravated by the ongoing trade spat between Washington and Beijing, concerns about global growth and strength in the US dollar.

“This is a modest relief after the steep declines of the previous two months, but we can’t be sure that it marks the bottom; the Chinese PMI data point clearly to further declines,” said Ian Shepherdson, economist at Pantheon Macroeconomics.

The figures come ahead of industrial production data due later this morning.

A separate report showed import prices in the US fell for a third straight month, down 0.5 per cent in January.

Skyline of Moscow where Michael Calvey was arrested © Getty

Why investors are scurrying back to Rome Italy’s bond market is like Goldilocks’ porridge: not too hot and not too cold Kate Allen

I

nvestors have been flocking to Italy’s bond sales since the start of this year — a welcome reprieve following repeated bouts of selling in 2018. But the attraction lies in the country’s high and still volatile bond yields — and that is not exactly a vote of confidence from markets.

On the surface, the outlook for sovereign debt sold in the world’s ninth largest economy is improving.

Fears of a political crisis in Rome have ebbed since a budget wrangle with Brussels was resolved late last year, while the end of the European Central Bank’s quantitative easing programme of bond buying in December has not shaken the debt markets as some had expected.

Last week Italy saw €41bn of orders for €8bn of 30-year bonds, a record oversubscription.

“Fears about how the market would digest European government bond issuance in January were misplaced and the same applied to Italy,” said Gianluca Salford, a fixed-income strategist at JPMorgan.

But beneath this lies a more negative picture, say analysts. Italy’s popularity rests on the higher yields its debt market offers after last year’s heavy sell-offs.

Italy’s 10-year bond last week briefly touched 3 per cent for the first time in two months, reflecting a fall in prices. That gave investors a 2.9 percentage point premium over the equivalent German government bond.

These kinds of Italian yields are especially appealing in part because the eurozone’s waning economic outlook means that policymakers have pushed back the timeframe for rises in interest rates. Expectations for the ECB’s first rate rise have shifted from the middle of this year into mid-2020.

That means eurozone sovereign debt bearing a high spread over German bonds have come to look attractive again. In other words, Italy’s bond market is like Goldilocks’ porridge: not too hot, or risky, and not too cold, or safe, but just about right.

“Central bank dovishness is a signal for investors to add risk and yield,” said Adam Kurpiel, head of

rates strategy at Société Générale.

“For now, [investors] can enjoy the sweet spot [and] keep exposure to higher yielding assets like [Italian government bonds].”

He predicted that 10-year Italian debt yields would shrink, taking the gap between them and German yields to 2.2 percentage points, but warned that investors should keep an eye on how new bonds were received by the market “for any signs of investor indigestion”.

Meanwhile, Italy’s borrowing comes at a heavy cost. A year ago, 30year Italian bonds yielded 3 per cent; in last week’s record-breaking sale, the coupon was set at 3.85 per cent.

That means Italy will pay an extra €148m of interest on that bond each year, over and above what the country would have paid had prices remained at levels last seen early in 2018.

Overall, the Bank of Italy estimated in late November that the country would pay an additional €9bn a year in interest costs on its debt by 2020, if yields remained around current levels.

Investor pressure on Barclays and Deutsche Bank to retrench is just the latest blow Why European banks repeatedly fall short on Wall Street John Gapper

N

ear the Bank of England, there is a statue of George Peabody, “American philanthropist and great benefactor of the poor”. He was also a financier who came to the City of London, the world’s undisputed financial centre, and formed a bank with John Pierpont Morgan’s father in 1854.

Wall Street was then a poor cousin to the City in investment banking, but those roles have reversed.

JPMorgan Chase, one of Peabody, Morgan & Co’s successors, now has a market value 10 times that of Barclays and 20 times that of Deutsche Bank. The place for financiers to seek fortunes is New York, rather than London or Frankfurt.

A gulf has emerged in power and profitability between capital markets in the US and Europe since the mid-2000s, when Europe’s banks came close to catching US institutions such as Goldman Sachs and Morgan Stanley. It may become greater still — some of Deutsche Bank’s biggest shareholders want it to cut back its lossmaking Wall Street operations.

Barclays is also under investor pressure. Edward Bramson, an activist who took the opposite journey to Peabody, leaving the UK in 1975 to become a financier in New York, is pressing for it to shrink its investment bank. The latter includes the former US operations of Lehman Brothers, which Barclays acquired after its collapse in the 2008 financial crisis.

If Mr Bramson and Deutsche’s investors succeed, European banks will no longer try to compete headon with big Wall Street firms. They will instead retreat to a less profitable continent, where banks have been restructuring and shedding bad loans since the crisis. By dividing London from Frankfurt and Paris, Brexit is likely to fragment Europe further. Most of the European banks that most please investors have pulled back from volatile and risky investment banking in favour of steadier consumer banking in domestic markets, and investment management. UBS is among the most highly valued European banks, having curbed trading in 2012 to focus on private banking.

Rivals may have little choice

but to follow. Banks like Deutsche expanded in the US at the turn of this century but that business has diminished and has been hard to replace. Their efforts to advance on Wall Street through sheer size and use of highly leveraged capital have been hampered by tighter banking regulation.

US banks have adjusted more easily to advising on mergers and raising capital for companies, helped by old relationships with US multinational corporations. Banks such as Goldman face their own challenges but they have history and roots in the US market on their side.

Deutsche, which ranked among the top three global investment banks after the crisis, has dropped out of the top five.

There is a long history of European banks going to New York and trying to break into Wall Street.

Credit Suisse was a pioneer in 1988 when it bought a stake in First Boston, later assimilating the bank entirely. Deutsche made another advance by buying Bankers Trust, which specialised in derivatives, in 1998. UBS bought the US retail broker Paine Webber two years later.

60

BUSINESS DAY

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Monday 18 February 2019

ANALYSIS

FT

Brexit vote ‘shambles’ blows hole in Theresa May’s authority Leader who has lost control of her party will struggle to win concessions in Brussels George Parker, Jim Pickard and Henry Mance

T Stanley McChrystal: ‘I think I am at peace’ The ‘snake-eating’ general on Trump, war movies — and the Rolling Stone interview that got him fired Janan Ganesh

M

“

y wife will shoot me if I let you see our messy bedroom,” says Stanley McChrystal, as we negotiate the figure-hugging stairs of his Virginia row home. “But I have been shot before.”

America’s most controversial general since Curtis LeMay, that zealous bomber of things, is now a gracious suburban host of 64. “This is my father in Vietnam,” — we are on the landing now, which he could charge admission to as a gallery — “and this is a hand-drawn map of Kabul by British officers from 1842. This is the route they took to Jalalabad. One guy made it out of 15,000. I kept it on my desk in Afghanistan as a reminder. ‘Let’s not be too sanguine.’ ” Or the enemy too sanguinary.

Before he commanded all coalition troops there, McChrystal rewrote counter-insurgency doctrine as head of the US special forces. He joined his soldiers on night raids and tussled with Washington over resources. His spartanness and dissident streak put commentators in the mind of, variously, Martin Luther, a Jedi, Marlon Brando’s renegade colonel in Apocalypse Now and, in the magazine article that exploded his career, a “snake-eating rebel”. It was in the pages of Rolling Stone in 2010 that he, or at least his aides, were seen to disparage civilians as eminent as Joe Biden and Richard Holbrooke. Barack Obama accepted his resignation. “It was good in some ways,” he says now, of not having to retire in the usual way. “I didn’t have a year to dread or mourn.”

Donald Trump, accused of dishonesty by McChrystal, tweeted last month that the retired general has a “big, dumb mouth” and got “fired like a dog”. Odd simile aside (which of our canine friends have been dismissed from gainful employment?), McChrystal seems to prefer this kind of rough-and-tumble to unreflective soldier-worship. “The balance is skewed now,” he judges.

“Trump bringing in generals was a reflexive attempt to leverage that.

Once you start this disdain for civilian government and reverence for the military, you go in a strange direction, like Pakistan. And if going into the military is looked at as a route to going into government, that’s a bad thing.”

Almost as bad, to McChrystal’s taste, are the craft breweries that have transformed the onceterse American beer menu into a Finnegans Wake of compendious choice. And so we are sipping his

favoured Bud Light Limes. One is disinclined to make a fuss when one is drinking out of the official glassware of the 82nd Airborne Division.

Physically, McChrystal is an older, taller Lance Armstrong. The cropped hair, the angular physiognomy and the leanness of frame all promise a certain aerodynamism, as though he himself could be weaponised were the Pentagon to run dry of cruise missiles. Wire spectacles and a plain shirt suggest a soldierly abhorrence of fuss. His one adornment is his West Point ring, as red at its core as the one on General Patton in Franklin Schaffner’s Oscar-drenched biopic. (He is a film nut.) “You get to choose what stone you put in it,” he says. “This is just a cheap garnet. But that’s what my father had in his ring.”

Short work made of the beers, we repair to the dining room, where a former soldier, no older than 30, is catering for us. Snakes being out of season, McChrystal and I each settle down to a deep bowl of chilli, capped with gratings of cheese.

“This smells great,” he says, “and it’s good for me too.” He is half right, and we wade in.

These days, McChrystal runs a consultancy that he walks to each morning. There are ventures into scholarship at Yale. He has a book out, Leaders, a Plutarchian study of bosses with 13 case studies that span Coco Chanel (“I knew nothing about her”) and Abu Musab al-Zarqawi, the mastermind jihadi whose killing he ordered in Iraq.

“But of the 13 people, if I was hiring a CEO, it would be Dr King, by far,” he says, of the civil rights leader, whose management of a fissiparous movement has been less sung than his grandeur of speech.

A convivial semi-retirement, then, but McChrystal was almost hard-wired for action. Born to an infantryman at Fort Leavenworth, near the geographic bullseye of the Lower 48, I wonder if he was always going to be a soldier. “My mother opined to my father that I wouldn’t be,” he says. “She knew I had different interests. I liked to write. She was pretty liberal. A little more out there.

But I never considered anything else. I only applied to one college [West Point]. I didn’t even visit any other ones. I didn’t do due diligence on other vocations.”

It was the special forces that excited him. “In 1965, Robin Moore’s book The Green Berets comes out.

In 1967, the movie comes out. I see that and go ‘Wow’. I see The Longest Day, the Rangers going up Pointe du Hoc. I was thinking, ‘I want to be elite’.” The special forces took a reputational dip after Vietnam (“So

you want to join Speckled Feces?” asked a superior, when McChrystal applied) but they soon recovered their former renown as the pinnacle of uniformed bad-assery.

McChrystal, though he stresses that “special” does not mean “better”, searches for a metaphor to capture their exclusive status.

“Everybody,” he says, “wants to work for the Financial Times.”

Having underestimated the kick of chilli before — a south Asian’s hubris — I am relieved that McChrystal’s version does not trouble the higher reaches of the Scoville scale. There is no loss of masculine face in front of this dead-of-night enemy-slayer. Either side of the bowl are servings of cornbread and cheese sticks, two of those American comfort foods that appear to retain their spell over the citizenry well into and beyond middle age. “My great aunt is from the Deep South and she used to send me cheese sticks to Iraq all the time,” he says. “Each is one is like 8,000 calories.”

The allusion to weight reminds me that McChrystal and I have an idiosyncrasy in common. We eat just once a day, at dinner. As the only other person I know who does this is the singer Sisqó, of “Thong Song” fame, whose availability for Lunch with the FT has not been tested, I have to ask about it.

“I’d always been athletic,” remembers McChrystal. “Then as a lieutenant I started getting a little . . . chunky.” This is the first and penultimate time his statesmanlike growl falters a tad. “I don’t like that. I don’t like the feel of it. I found when I ate one meal a day, I felt good. And at night, I could just enjoy that meal.”

“It means you can pig out at dinner time,” I say, nodding strenuously. It is an epicure’s diet as much as a weight-watcher’s.

“Exactly. I will periodically eat breakfast or lunch with the family, and I will invariably regret it.” He means the breakfast or lunch — barbarous customs, both — not the presence of his wife, Annie, whom he met while at West Point, or their children. Behind him are framed photographs of the family and a trove of historical books.

Titles as epic as Once An Eagle and The Search for Alexander frame his head. The house honours the martial ethos wherever it can. Upstairs is the patch of wall that once bore a framed portrait of the Confederate general Robert E Lee. McChrystal ditched it after the far-right violence in Charlottesville, lest visitors conflate his awe of the man (“Zero demerits at West Point”) with fealty to his cause.

heresa May departed the House of Commons on Thursday after her latest Brexit defeat with a face set in a rictus of fury.

“I’ve never seen her so angry,” said one Conservative MP. A minister summed up the mood succinctly: “Utter shambles.”

The prime minister left Westminster humiliated, with EU leaders wondering whether she retained any control over her anarchic Conservative party.

Mrs May is planning to return to Brussels next week to try to salvage her Brexit deal after it was emphatically rejected by MPs last month in a so-called meaningful vote. But after

Clarke in abstaining during the vote.

“It was an air punch,” said one government member. “But it also sent a signal to Brussels that we have lost control here and we won’t be able to get anything through this House [of Commons].”

A fortnight ago, Mrs May won a series of parliamentary votes by largely uniting her Conservative party, and winning over a rump of Eurosceptic Labour MPs. That coalition crumbled on Thursday. Nearly a quarter of Conservative MPs did not support the government: 67 abstained, and five voted against.

They included the Europhile wing — nine MPs, such as Anna Soubry and Dominic Grieve who want a second referendum — and the larger Eurosceptic arm involving former

Theresa May

the fresh parliamentary defeat, EU leaders will be mulling why the bloc should make concessions to a prime minister whose authority appears shot.

Conservative party discipline broke down just before 6pm, as Mrs May asked her MPs to vote for a government motion on her Brexit plan B which seemed to invite trouble.

That is what she got, as she lost by 303 votes to 258.

Tory MPs wondered why Downing Street found itself in a position where a vote on a politically insignificant, non-binding motion had turned into another public relations disaster.

The motion invited MPs to rubber stamp a Brexit strategy which pointed in two directions at once.

“It was completely contradictory; it invited people to vote against it or abstain,” said one MP. The motion endorsed a Commons vote last month that instructed Mrs May to go to Brussels to agree “alternative arrangements” to replace a contentious backstop plan to avoid a hard Irish border in her withdrawal agreement.

That part of the motion appealed to Eurosceptic Conservatives but was opposed by Europhiles.

The motion also endorsed a second Commons vote last month that rejected a no-deal Brexit. While Europhiles are opposed to such a scenario, Eurosceptics want to keep the option alive.

Given that the motion was nonbinding, MPs who disliked either element saw a chance to have a free hit on Brexit. “Both wings are united in abstaining,” said Steve Baker of the pro-Brexit European Research Group of Conservative MPs. Mrs May could have opted for an inoffensive “neutral motion” exhorting her simply to carry on negotiating in Brussels. Instead, her motion succeeded in uniting arch Eurosceptic Jacob Rees-Mogg and leading Europhile Ken

ministers Dominic Raab and Boris Johnson. Only a handful of Labour MPs voted with the government or abstained.

If there was anger that Mrs May had put herself in this situation, there was fury among some Tory MPs that members of the European Research Group — operating their own “party within a party” whipping operation — had abstained en masse.

The virus ravaging the Conservative party may subside next week — when parliament has a relatively light work schedule and many MPs will be taking a half-term school break — but the fever will return in the final week of February.

Europhiles are preparing to fight back on February 27. They intend to support an initiative by former Labour minister Yvette Cooper that would give parliament the power to stop Mrs May from executing the no-deal Brexit that many Eurosceptics regard as the appropriate “clean break” with the EU. Mrs May has been told by a number of ministers that they will resign to back Ms Cooper’s amendment rather than allow EU negotiations to drag well into next month, given the UK is meant to leave the bloc on March 29.

Some of these ministers are worried about the damage to business: on Monday official figures showed the British economy had its worst performance in 2018 since the financial crisis.

“We are determined that talks [with the EU] can’t continue into March,” said one minister. “We will make sure business is not further devastated. The PM has done her best but we can’t allow the European Research Group and others to take negotiations into March.

“Tonight they have demonstrated their arrogance. It is shameful. It’s time they found themselves another home.”

Downing Street insiders have admitted that they face likely defeat on Ms Cooper’s amendment.

Monday 18 February 2019

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BUSINESS DAY

61

Live @ the Stock exchange Prices for Securities Traded as of Friday 15 February 2019 Company

Symbol

Deals

Current Price

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 190,924.61 6.60 487 77,164,624 UNITED BANK FOR AFRICA PLC 273,595.37 8.00 392 43,291,497 ZENITH BANK PLC 777,063.22 24.75 491 37,511,828 1,370 157,967,949 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 303,315.22 8.45 304 23,489,221 304 23,489,221 1,674 181,457,170 BUILDING MATERIALS DANGOTE CEMENT PLC 3,305,858.44 194.00 137 2,343,031 LAFARGE AFRICA PLC. 113,188.24 13.05 211 4,494,410 348 6,837,441 348 6,837,441 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 364,247.18 619.00 38 63,831 38 63,831 38 63,831 2,060 188,358,442 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,900.00 95.00 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 11,300.89 45.20 0 0 UPDC REAL ESTATE INVESTMENT TRUST 15,876.20 5.95 0 0 0 0 0 0 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 0 0 0 0 0 0 0 0 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 1 150 81,082.35 85.00 14 53,617 OKOMU OIL PALM PLC. PRESCO PLC 66,000.00 66.00 28 557,907 43 611,674 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 511.20 4.26 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 2,160.00 0.72 15 530,536 15 530,536 58 1,142,210 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 767.71 0.29 3 160,000 186.79 0.48 2 10,896 JOHN HOLT PLC. S C O A NIG. PLC. 1,903.99 2.93 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 69,508.06 1.71 463 117,654,591 U A C N PLC. 24,923.22 8.65 69 2,079,222 537 119,904,709 537 119,904,709 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 1 29,205 1 29,205 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 34,980.00 26.50 13 165,800 ROADS NIG PLC. 165.00 6.60 0 0 13 165,800 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 4,365.30 1.68 6 22,287 6 22,287 20 217,292 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 12,683.78 1.62 21 10,812,225 GOLDEN GUINEA BREW. PLC. 242.22 0.89 0 0 GUINNESS NIG PLC 142,374.88 65.00 51 149,888 INTERNATIONAL BREWERIES PLC. 249,280.00 29.00 12 29,992 NIGERIAN BREW. PLC. 663,742.87 83.00 132 2,967,481 216 13,959,586 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 45,750.00 9.15 162 4,601,179 DANGOTE SUGAR REFINERY PLC 183,600.00 15.30 87 3,986,612 FLOUR MILLS NIG. PLC. 86,107.97 21.00 145 5,483,883 HONEYWELL FLOUR MILL PLC 11,102.28 1.40 56 1,766,362 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 0 0 NASCON ALLIED INDUSTRIES PLC 50,339.33 19.00 21 362,824 UNION DICON SALT PLC. 3,676.41 13.45 0 0 471 16,200,860 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 21,599.32 11.50 27 163,281 NESTLE NIGERIA PLC. 1,240,507.03 1,565.00 42 175,896 69 339,177 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 4 35,105 VITAFOAM NIG PLC. 4,982.53 4.78 46 10,791,496 50 10,826,601 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 50,226.53 12.65 73 1,034,008 UNILEVER NIGERIA PLC. 249,907.74 43.50 97 1,334,755 170 2,368,763 976 43,694,987 BANKING DIAMOND BANK PLC 55,353.33 2.39 113 141,623,983 ECOBANK TRANSNATIONAL INCORPORATED 264,233.54 14.40 50 1,516,727 FIDELITY BANK PLC 75,334.47 2.60 217 42,502,831 GUARANTY TRUST BANK PLC. 1,116,913.25 37.95 241 39,484,579 JAIZ BANK PLC 17,973.19 0.61 25 2,128,130 SKYE BANK PLC 10,687.83 0.77 0 0 STERLING BANK PLC. 67,657.48 2.35 345 14,255,241 UNION BANK NIG.PLC. 200,933.19 6.90 27 469,520 UNITY BANK PLC 13,325.85 1.14 45 1,952,359 WEMA BANK PLC. 39,731.70 1.03 119 8,870,746 1,182 252,804,116 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 0 0 AIICO INSURANCE PLC. 5,197.65 0.75 48 3,650,478 AXAMANSARD INSURANCE PLC 21,315.00 2.03 14 94,599,641 CONSOLIDATED HALLMARK INSURANCE PLC 2,276.40 0.28 7 692,345 CONTINENTAL REINSURANCE PLC 19,811.94 1.91 0 0 CORNERSTONE INSURANCE PLC 2,945.90 0.20 6 399,280 GOLDLINK INSURANCE PLC 2,411.47 0.53 0 0 GUINEA INSURANCE PLC. 1,228.00 0.20 1 2,000 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 0 0 LASACO ASSURANCE PLC. 2,343.50 0.32 16 1,702,245 LAW UNION AND ROCK INS. PLC. 2,191.13 0.51 0 0 LINKAGE ASSURANCE PLC 5,600.00 0.70 6 304,400 MUTUAL BENEFITS ASSURANCE PLC. 2,160.00 0.27 12 547,478 NEM INSURANCE PLC 12,937.23 2.45 23 1,517,408 NIGER INSURANCE PLC 1,780.08 0.23 3 226,481 PRESTIGE ASSURANCE PLC 2,691.28 0.50 2 1,800 REGENCY ASSURANCE PLC 1,600.50 0.24 5 492,800 SOVEREIGN TRUST INSURANCE PLC 1,834.98 0.22 9 334,472 STACO INSURANCE PLC 4,483.72 0.48 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 1 2,100 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 7 965,000 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 1 5,000,000 VERITAS KAPITAL ASSURANCE PLC 2,912.00 0.21 17 4,005,500 WAPIC INSURANCE PLC 5,754.58 0.43 33 1,237,797 211 115,681,225 MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 0 0 NPF MICROFINANCE BANK PLC 3,750.09 1.64 12 228,745 12 228,745 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 4,116.00 0.98 0 0 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 0 0 INFINITY TRUST MORTGAGE BANK PLC 5,922.05 1.42 0 0 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 0 0

Company

Symbol

Deals

Current Price

Trades

Volume

0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 8,740.00 4.37 30 446,452 CUSTODIAN INVESTMENT PLC 35,585.28 6.05 26 608,936 660.00 0.44 0 0 DEAP CAPITAL MANAGEMENT & TRUST PLC FCMB GROUP PLC. 47,130.45 2.38 244 49,364,959 ROYAL EXCHANGE PLC. 1,697.97 0.33 13 1,985,078 STANBIC IBTC HOLDINGS PLC 496,666.82 48.50 36 4,709,538 UNITED CAPITAL PLC 21,300.00 3.55 85 2,742,600 434 59,857,563 1,839 428,571,649 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 0 0 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 1,065.94 0.30 5 445,000 5 445,000 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 544.04 0.55 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 0 0 FIDSON HEALTHCARE PLC 7,050.00 4.70 6 24,250 GLAXO SMITHKLINE CONSUMER NIG. PLC. 14,350.52 12.00 58 4,069,473 MAY & BAKER NIGERIA PLC. 4,140.56 2.40 9 220,919 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 1,329.41 0.70 8 180,630 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 0 0 PHARMA-DEKO PLC. 325.23 1.50 0 0 81 4,495,272 86 4,940,272 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 710.40 0.20 0 0 0 0 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 1 20 NCR (NIGERIA) PLC. 648.00 6.00 0 0 TRIPPLE GEE AND COMPANY PLC. 381.11 0.77 0 0 1 20 PROCESSING SYSTEMS CHAMS PLC 939.21 0.20 1 75 E-TRANZACT INTERNATIONAL PLC 12,306.00 2.93 0 0 1 75 2 95 BUILDING MATERIALS BERGER PAINTS PLC 2,391.04 8.25 7 15,300 CAP PLC 22,260.00 31.80 40 830,531 CEMENT CO. OF NORTH.NIG. PLC 276,013.52 21.00 69 990,507 FIRST ALUMINIUM NIGERIA PLC 612.00 0.29 4 1,024,192 MEYER PLC. 286.87 0.54 2 200 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,999.41 2.52 0 0 PREMIER PAINTS PLC. 1,279.20 10.40 0 0 122 2,860,730 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 0 0 3,522.64 2.00 12 619,580 CUTIX PLC. 12 619,580 PACKAGING/CONTAINERS BETA GLASS PLC. 36,147.98 72.30 1 7,759 GREIF NIGERIA PLC 388.02 9.10 0 0 1 7,759 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 0 0 0 0 135 3,488,069

CHEMICALS B.O.C. GASES PLC. 1,577.57 3.79 2 1,570 2 1,570 METALS ALUMINIUM EXTRUSION IND. PLC. 1,803.64 8.20 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 50.60 0.23 0 0 0 0 2 1,570 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 17 1,813,285 17 1,813,285 INTEGRATED OIL AND GAS SERVICES OANDO PLC 74,588.47 6.00 163 9,439,325 163 9,439,325 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 66,349.53 184.00 10 6,132 CONOIL PLC 15,960.90 23.00 21 63,990 ETERNA PLC. 6,194.69 4.75 31 549,532 FORTE OIL PLC. 36,469.47 28.00 70 765,572 MRS OIL NIGERIA PLC. 6,354.80 20.85 10 66,162 TOTAL NIGERIA PLC. 69,601.98 205.00 25 10,099 167 1,461,487 347 12,714,097 ADVERTISING AFROMEDIA PLC 2,219.52 0.50 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 16,576.10 1.70 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 411.72 0.35 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 3,242.23 5.50 3 11,700 TRANS-NATIONWIDE EXPRESS PLC. 295.37 0.63 2 9,250 5 20,950 HOSPITALITY TANTALIZERS PLC 642.33 0.20 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,801.22 3.10 0 0 IKEJA HOTEL PLC 3,762.62 1.81 10 628,397 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 0 0 TRANSCORP HOTELS PLC 46,362.46 6.10 6 5,150 16 633,547 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 223.78 0.37 3 299,500 LEARN AFRICA PLC 1,157.18 1.50 11 175,338 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 0 0 UNIVERSITY PRESS PLC. 1,013.81 2.35 9 679,950 23 1,154,788 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 696.23 0.42 11 483,859 11 483,859 SPECIALTY INTERLINKED TECHNOLOGIES PLC 766.91 3.24 0 0 SECURE ELECTRONIC TECHNOLOGY PLC 1,126.31 0.20 0 0 0 0 TRANSPORT-RELATED SERVICES GLOBAL SPECTRUM ENERGY SERVICES PLC 4,600.00 5.75 0 0 4,089.30 6.45 3 2,600 NEWREST ASL NIGERIA PLC NIGERIAN AVIATION HANDLING COMPANY PLC 5,765.98 3.55 23 558,016 26 560,616 SUPPORT AND LOGISTICS C & I LEASING PLC. 2,963.17 7.33 9 89,795 CAVERTON OFFSHORE SUPPORT GRP PLC 8,309.26 2.48 24 2,666,632 33 2,756,427 114 5,610,187 4,116 620,285,137

BUSINESS DAY

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Insight

Nigeria’s shameful self-isolation on the AfCFTA global Perspectives

OLU FASAN

T

his seems an inauspicious time to discuss a non-election issue. But with the last-minute postponement of last Saturday’s Presidential and National Assembly elections, I would like to discuss another important issue that is also causing Nigeria huge international embarrassment: its refusal to sign the agreement establishing the African Continental Free Trade Area (AfCFTA).

Last week, the number of signatories to the agreement reached 52. Given the African Union has 55member-states, that leaves only 3 who haven’t signed. And who’s among the laggards? Nigeria, of course! The others are Benin and Eritrea.

This also means that Nigeria and Benin are the only two ECOWAS member-states (out of 15) that haven’t signed the agreement.

It’s bad enough that Nigeria, Africa’s largest economy, is in the same refusenik camp as Benin and Eritrea. But it’s unbearably embarrassing as Nigeria led the negotiations for the AfCFTA agreement; its trade minister and chief trade negotiator were the linchpins of the negotiations.

The launch of AfCFTA in Rwanda in March last year was hailed worldwide as an epochal event, but Nigeria, its main architect, was shockingly absent. Put it this way, Nigeria helped Africa create a historic Continental Free Trade Area but won’t join it itself!

Of course, Nigeria’s refusal to sign AfCFTA won’t stop it from going ahead.

As I said, 52 out of AU’s 55 member-states have signed the agreement, and 18 out of the 22 ratifications needed for its entry into force have been received. The remaining 4 ratifications look likely to be secured within the next three months.

What Nigeria’s behaviour means, how-

ever, is self-harm, particularly entrenching its international reputation for having an environment hostile to business and investment. There’s also the continuing shame and embarrassment. Last week, Judd Devermont, Director of Africa Programme at the Washington-based Centre for Strategic and International Studies (CSIS), tweeted: “Nigeria – it’s time to quit dragging your feet and sign (and then ratify) the AfCFTA”. That reflects the perceptionof Nigeria as a Perfidious Albion, an unreliable partner,in Africa’s quest for economic integration.

In November 2017, Ambassador Albert Muchanga, African Union Commissioner for Trade and Industry, gave a speech in Abuja. “We have some people who attempt to be assassins of our progress to establish the Continental Free Trade Area”, he said, before adding: “Let me be clear, none of those people are in this room”. He continued: “Our CFTA critics are from within and outside Africa”; again, adding: “but let me stress, they are not in this room”. I wondered why he kept saying the enemies of AfCFTA were “not in this room”. Of course, they were! Most of the Nigerian officials and business people listening to him were among the “critics” and “assassins” of AfCFTA he was talking about.

But why is AfCFTA so unpopular in Nigeria? Well, at the heart of the problem are three failures: the failure of policymaking; the failure of policy choices; and the failure of political leadership. Let’s start with the policy process.

As the negotiation expert Robert Putnam pointed out, every international negotiation is a “two-level game”, involving pleasing international and domestic audiences. But Nigeria negotiated AfCFTA without engaging with its domestic stakeholders, and then, after concluding the negotiations, tried to “sensitise” them to the outcome. Essentially, it put the cart before the horse.

Some years ago, I represented the UK at the European Union’s Trade Policy Committee in Brussels, where member states meet weekly to discuss and shape EU trade policy, including negotiations.

Before the mandate for any trade negotiation was agreed and throughout the negotiation itself, the UK would engage actively with key domestic stakeholders from all sectors, as well as civil soci-

ety groups, to formulate the positions it would feed into the mandate and the negotiation. Every member state did the same. As a result of securing the buy-in of domestic stakeholders, once a trade negotiation was concluded, the signing and ratificationof the agreement by each member-state were almost automatic. Nigeria’s top-down, government-dominated policy process didn’t allow that to happen with AfCFTA. Of course, in multi-stakeholder consultations, officials must have the skills to deal with heterogeneous interests and arrive at informed positions, without being captured by any vested interest. Given its distributional consequences, trade policy is particularly susceptible to capture.

But the government’s role is to prevent this, by developing a trade policy and a trade negotiating position that reflect its rational and collective national interest.

As the Oxford University don Emily Jones says in her book, Negotiating Against the Odds, “The most fundamental step in preparing for an international trade negotiation is to know your interests”. Are you interested in import-substitution or export-orientation?

This is where the second failure, the failure of policy choices, come in. Nigeria doesn’t know what is rationally in its national interest. It is resisting trade reforms that would increase aggregate welfare and supporting socially inefficient protectionism. Put simply, Nigeria is behaving irrationally: pandering to its protectionist forces at the expense of economic efficiency and welfare gains.

Of course, it’s not surprising that the Manufacturers’ Association of Nigeria (MAN) opposes the AfCFTA. That’s exactly what political economics tells us to expect from import-competing industries.

But why is the government pandering to them? What about the consumers who are being denied the welfare benefits of free trade? What about the productive export sector, including farmers who need foreign markets for their produce?

According to the National Bureau of Statistics, the share of non-oil exports in total export fell from 12.1% in 2015 to 4.6% in 2017. Is that good for export diversification? Last week, BusinessDay reported a government economic adviser who said that foreign countries were rejecting Nigerian major export products and

‘

Nigeria doesn’t know what is rationally in its national interest. It is resisting trade reforms that would increase aggregate welfare and supporting socially inefficient protectionism

blamed this on “trade politics”. How naïve?

Is it rocket science that protectionism provokes tit-for-tat retaliations?International trade is about interdependence, but if you want to be self-sufficient, if you want to be an autarky, then don’t complain if other nations shun your products!

Sadly, there are too many pointy-heads in Nigeria’s government, supposed experts who really don’t know much. For instance, they use the terms “comparative advantage” and “dumping” loosely. But comparative advantage means you can produce something more efficiently, i.e. at lower opportunity cost and better quality, than your competitors, and dumping has a legal meaning in international law, and requires a rules-based trade remedy response. So, saying that AfCFTA would undermine Nigeria’s comparative advantage and increase dumping, smuggling and import surges is sheer ignorance and/ or protectionism. AfCFTA should, in fact, trigger the reforms that would address all those concerns.

Which leads us to the failure of leadership. President Buhari is a mercantilist, who believes export is good, import is bad.

He is instinctively opposed to AfCFTA and ignores evidence of its benefits. Last year, a 3-month “AfCFTA Sensitisation and Consultation” exercise, led to active engagement with 27 groups and 1,751 people. The Nigerian Office for Trade Negotiations (NOTN) also commissioned an independent study which shows that 78% of businesses believe AfCFTA would benefit local businesses. Then, last October, Buhari set up the “AfCFTA Impact and Readiness Assessment Committee”, asking it to report in 12 weeks, i.e. in early January. To date, there’s no report. Obviously, Buhari is avoiding a decision on AfCFTA, preferring to kick it into the long grass.

Yet, AfCFTA won’t go away. Nigeria’s dithering is deeply embarrassing and harming its economic interests. It will suffer irreparable reputational damage if it rejects AfCFTA. After this election, Nigeria must sign and ratify the agreement.

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

Where will the jobs come from?

ECONOMIST

NONSO OBIKILI

B

y the time you read this column the first half of the elections will be over. We may not yet know who won depending on how quickly INEC is able to announce the results.

Regardless, it will be time for the winning candidates to get to work after what has been months of electioneering. High on the list of issues to tackle is the jobs issue.

The jobs problem needs little introduction. But just in case you have forgotten, as at last count we had over 20 million people actively looking but unable to find work.

For context this is more than the entire population of Benin Republic and Togo combined. If you add those who are un-

deremployed, that is those who are doing something but not working near their full capacity then the numbers rise even more.

Staggering. The question then is what are all those people going to do? Can we create enough jobs and where will those jobs come from?

There is a common misconception about job creation that is apparent in the way we have gone about our various job creation initiatives. The assumption is that if you give people skills or give them capital then jobs will be created. As a result, the bulk of the initiatives have been focused on these kinds of initiatives. There has been a plethora of trainings, financing programs, “youth empowerment” schemes and all that. If you are one of the lucky few to participate then you may get some benefits.

To be fair, some of these programs have been shown to lead to some employment benefits for those who benefit. Winners of the Youwin programme for instance were shown to employ more people for longer than similar applicants who did not scale through the competition. The LSETF in Lagos will hopefully do a proper evaluation and the numbers might be similar. Same for the N-Power and GEEP and so on.

Unfortunately, there are two issues. The

‘

If there is no expansion in economic activity, then systematically there will be no expansion in jobs, regardless of how many job creation initiatives are put in place. The first step therefore is to focus on growth

first is a bit easy to grasp. Given the scale of the challenge, over 20 million unemployed and more coming into the labour market, it is not clear that any of these programs are scalable. If the numbers from the youwin program are correct, then it cost $50,000 dollars to create 6 new jobs which isn’t really practical. I don’t know the numbers for LSETF or N-Power so I can’t comment on that but just thinking of the size of unemployed I would be sceptical on their scalability.

The second issue is a bit technical and one that is often ignored by some economists. Just because a program has been shown to create more jobs than a control group, does not mean that in the aggregate it has created more jobs than would have been created without the program. You can observe significantly different outcomes between groups receiving a treatment versus groups who don’t and still have no effects on aggregate. Evaluations typically assume that the treatment is too small to indirectly influence control groups but if you scale these programs up then that condition is unlikely to hold.

So, what should be the path to job creation? We often forget that jobs are but a part of the process of creating value. Or to

use medical parlance, jobs are a symptom of value creation. If there is no expansion in economic activity, then systematically there will be no expansion in jobs, regardless of how many job creation initiatives are put in place. The first step therefore is to focus on growth. Growth is a necessary condition for job creation. But not just growth. Some sectors of the economy are capital intensive and use very little labour, or jobs. Others are labour intensive. As you can guess when talking about jobs you need growth in labour intensive sectors. Finally, given the current low-skilled nature of our workforce, you need growth in labour intensive sectors that use low-skilled workers. Where will that growth come from? Probably only exports, given that demand for most products in Nigeria outside basic food and beverages is very small.

To summarize, to create jobs we need to engineer growth in low-skilled labourintensive sectors of the economy. Without doing that, all the token job creation initiatives are unlikely to move the needle.

Dr. Nonso Obikili is Chief Economist at Business Day.

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