BusinessDay 18 Jul 2018 by BusinessDay

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news you can trust I **WEDNESDAY 18 JULY 2018 I vol. 15, no 98 I N300

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ureau of Public Enterprises (BPE) on Tuesday discloser that most of the Distribution Companies (DISCOs) are technically insolvent. Alex Okoh, BPE Director General disclosed this during an Continues on page 38

The Nyesom Wike interview

Pg. 20/21

In this exclusive interview, Wike reveals why Nigerians should turn out enmass to vote in the 2019 general election, among other important issues. Grab a copy of BusinessDay today.

Owe NBET N800bn

20 Years

0.30% 14.14%

0.02% 14.21%

Ethiopian, Qatar Air in talks with FG on national carrier project …new airline to be unveiled today IFEOMA OKEKE

President Muhammadu Buhari meets Roland Pirmez, regional president, Heineken Africa, Middle East and Eastern Europe region, in Amsterdam, Netherlands.

Continues on page 38

BusinessDay to launch State of States 2018 at Governors’ Awards, Thursday July 19 TELIAT SULE

Banks are biggest NSE index movers in past year inancials have been the major sector behind the rally in stocks over the past year. Despite the

10 Years

thiopian Airlines Enterprise, Africa’s biggest airline, said it’s in discussions to back the Nigerian government’s plans for a new national carrier. Tewolde GebreMariam, Ethi-

MARKETS

Emeka Ucheaga and Abdullateef Eniola-Giwa

5 Years

0.04% 13.67%

DisCos are technically insolvent, says BPE KEHINDE AKINTOLA, Abuja

fgn bonds

...Stanbic, GTB, FBNH others add 2,355 points to ASI bruising equity prices have received this year, the All Share Index still has a one year return of +12.04 percent. BusinessDay analysis showed

that out of the top 10 biggest index movers during this period, 5 were banks. These banks were Stanbic IBTC (3rd), GTBank (4th), FBN Holdings (5th), Zenith

Bank (6th) and Ecobank Transnational Inc (8th). The five banks added a total of Continues on page 38

he 2018 State of States Report will be launched at Abuja on Thursday, July 19 2018 at the dinner/gala for this year’s States Competitiveness and Good GovContinues on page 38

Inside

How the African Continental Free Trade Area can impact local businesses in Nigeria

Pg. 2

2 BUSINESS DAY NEWS EXPLAINER

How the African Continental Free Trade Area can impact local businesses in Nigeria Omobola Adu, Emeka Ucheaga & David Ibidapo

o far, 44 out of 54 African countries have signed for the establishment of an Afr ica Continental Free Trade Area (AfCFTA) which would make it one of the largest free trade blocs in the world today. Nigeria and South Africa are among the 10 nations which are yet to sign the AfCFTA for numerous economic and political reasons. However, recent reports show that Nigeria is on the verge of signing this historical pact which will transform intercontinental trade in Africa forever. A poll initiated by the Federal Government of Nigeria on the benefits or otherwise of signing the AfCFTA revealed that 78 percent of businesses surveyed from a total 512 companies across the 6 geo-political zones believe that signing the agreement will bring about a positive effect on businesses in Nigeria. Here is how the implementation of the CFTA can likely affect local businesses in Nigeria. What is the AfCFTA? The AfCFTA is a movement by African heads of states to put in place a single continental market for goods and services with free movement of people and investment in order to expand intra-African trade which accounted for a mere 10.2 percent of African trade in 2010. The agre ement sig ne d in March 2018 by 44 African nations implies that African countries will be committing to removing 90 percent of tariffs imposed on goods and services, while the remaining 10 percent will later

be phased in on certain identified “sensitive items”. The goal of AfCFTA is to bring together all 54 African nations into a single market with a total population of more than one billion people and a combined Gross domestic product (GDP) of $3.4 trillion. How will the CFTA benefit local businesses in Nigeria? Estimates from the United Nation’s Economic Commission for Africa (UNECA) suggest that intra-African trade could increase by 52 percent in 2022 following the full implementation of the agreement. With a single continental market for goods and services and a combined population of over one billion people in Africa, Nigerian businesses are expected to gain as the level of exports could rise due to an open access to markets previously unavailable to them. Bongo Adi, economist at Lagos Business School opined that opening up the barriers to trade through the AfCFTA will help enhance trade as there are many things that Africans can trade with each other. ‘‘Nigerian traders are settled and well established in most African countries, therefore, by signing the AfCFTA, it will enable them make Nigeria the country of choice for the importation of finished goods for retailing in these African nations. These traders will leverage their networks and already established contacts to get best prices for products to stock their shops. This sudden demand for Nigerian products all over Africa through these traders will push non-oil exports in Nigeria higher in years to come,’’

NNPC 7 gas projects’ dream bumps against reality of power sector illiquidity FRANK UZUEGBUNAM

lliquidity in the power sector is seen as the biggest threat to the 7 Critical Gas Development Projects (7CGDP) recently unveiled as an integral leg of the gas development strategy designed by the Nigerian National Petroleum Corporation (NNPC). The strategy is designed to leverage the full potential of Nigeria’s gas reserves to help meet the target of generating at least 15 gigawatts (GW) of electricity by 2020. “The domestic gas market is quite a commercial market but as at today, there is a problem of liquidity in the power sector. To deliver 15GW of electricity to power the entire country, it will mean that all the liquidity issues will have to be resolved and once the power sector becomes stable, there is enough liquidity in the system to pay for the gas that is being delivered,” said Austin Avuru, chief executive, Seplat Petroleum Development Company, one of the joint venture (JV) partners involved in the project, which currently controls about 30 per cent of domestic gas market. The power sector is seen as the main catalyst for demand of natural gas in Nigeria. “It is crucial that the gas fiscal regime includes sufficient incentives to enhance the commercial attrac-

tiveness to ensure the realisation of the 7 CGDPs as this will support supply and sustainability for the producers and offtakers,” said Victor Sodje, managing director, Newcross Exploration and Production, one of the JV partners for the project – a company that aims to deliver about 500 MMscf/d to 600 MMscf/d in the long term into the domestic market. The 7 CGDP are all targeted at ensuring domestic energy security and securing enough volume of gas to deliver into the domestic market. The overall target is to deliver 5Bscf/d of gas into the domestic market. Experts say that volume will meet all Nigeria’s needs of about 15GW of electricity, all the heavy industries, cement, fertilizer feedstock and others. What is currently being delivered into the domestic market is about 1.2Bscf/d, which will rise to 3.5Bscf/d by 2020 and ultimately to 5Bscf/d. “The sustained availability of gas is expected to drive growth in domestic gas consumption mainly for the delivery of more gas to enable the government’s power generation capacity target of about 15GW, stimulating the industrial sector of the economy, stimulation of gasbased industries such as Fertilizer, Petrochemicals, and Methanol with Nigeria as the African regional hub for these industries,” said Sodje.

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ECONOMICS

Economists, IMF inflation predictions at odds with history …as data show campaign spending unlikely to spur inflation David Ibidapo, Emeka Ucheaga & Omobola Adu

he consensus view of the economists polled by BusinessDay is that inflation will trend higher in the second half of the year largely due to campaign spending. However, historical data dating from the late 90s shows that inflation typically declines in the years preceding an election. Inflation in Nigeria is currently 11.61 percent and Central Bank of Nigeria is expecting inflation to hit single digit sometimes later this year. However, a number of economists including the IMF forecast inflation will remain at double digits till year end largely due to increased campaign spending as the contest for public office heats up before the general elections next year. BusinessDay inflation analysis shows that in 1998 before the 1999 election, inflation declined from 10.2 percent in Jan 1998 to 7.9 percent by Dec 1998. In 2002, before the 2003 general elections, inflation also declined from 18.9 percent in Jan

2002 to 12.9 percent by the year end. In 2006 inflation more than halved from 17.9 percent in Jan 2006 to 8.2 percent in Dec 2006. In 2010 the trend reversed for the first time as inflation rose from 12.6 percent at year beginning 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 December. Deeper analysis on campaign spending revealed that official campaign spending for the elections begins about 3 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 sizable currency devaluation in the country which throws into question the

impact campaign spending actually had on inflation. 1n 1999, dollar rose 321 percent against the Naira and in 2015 dollar 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 at EcoBank 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 added. Electoral expenditure for the 1999 general elections by INEC was estimated at N1.5 billion. This increased to N29 billion in 2003 elections and further grew to N45.5 billion in 2007. By 2011 election, electoral expenditure was N111 billion while in 2015 elections, total electoral expenditure declined to N85 billion. Continues on wwwbusinessday online.com

L-R: Abubakar Bawa Bwari, minister of mines and steel; Abdul Samad Rabiu, chairman, BUA Group; Vice President Yemi Osibanjo; Aminu Waziri Tambuwal, governor, Sokoto State, and Atiku Abubakar Bagudu, governor, Kebbi State, at the commissioning of BUA’s Kalambaina Cement Plant yesterday in Sokoto.

Osinbajo commissions BUA’s $350m Sokoto plant ODINAKA ANUDU & BALA AUGIE

…charges cement makers to produce concrete for roads

igeria’s vice president Yemi Osinbajo on Tuesday commissioned BUA Group’s 1.5 million metric tonnes Kalambaina cement plant in Sokoto State, which gulped $350 million to build. The ultramodern plant is blessed with huge limestone deposits and is proximate to Niger Republic, which enhances its export potential. Construction at the cement plant started three years ago when BUA engaged Sinoma at the height of foreign exchange crisis and began production in March this year. Speaking at the commissioning of the plant, Osinbajo said the cement factory is a demonstration that Nigeria has vast potential, which investors should explore. According to him, the National Infrastructure Master Plan recommends that Nigeria needs to spend $3 trillion to bridge the infrastructure gap as well as five percent of GDP annually.

“Nigeria now produces over 40 million MT of cement, more cement than any other country in Africa. Nigeria’s huge market size, low per capita cement consumption of 125kg and estimated housing deficit of 17 million are key drivers,” Osinbajo said. He appealed to cement makers to cut prices while also considering producing more of concretes for road construction, stating that now is time for Africa’s most populous country to commence building roads with concretes. “We can revolutionalise road construction by simply deciding that we can build roads with concretes. I have no doubt that this will boost employment generation and boost economic growth,” he stated, adding that a road has been completed in Ogun with concretes, while the Apapa road is being rehabilitated with concretes. “We have built a 32 megawatts multi-fuel captive power plant and a coal mill. To put this in perspective,

this new plant will be generating more power than is currently generated by the entire Sokoto State,” Abdul Samad Rabiu, chairman and CEO of BUA Group. According to Rabiu, the plant will run on coal, heavy oils or a mixture of both, and the use of coal is expected to save over 70 percent of energy costs compared with 15 million litres of fuel oil per month or 40 tonnes or even 20 trucks of fuel that could have been used per day. He said at least 2,000 direct and 10,000 indirect jobs are required to get the plant running, adding that the $1 billion Obu Cement Complex in Okpella, Edo State, commissioned in August 2017, will be completed by end of this year. He said by the time the Okpella plant is completed by end of the year, BUA’s total production capacity will hit 8 million MT and would give 35 percent of the entire volumes produced in Nigeria.

Wednesday 18 July 2018

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BUSINESS DAY

Wednesday 18 July 2018

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BUSINESS DAY

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Wednesday 18 July 2018

NEWS

DMO to list N10.69bn FGN Sovereign Green Bond on NSE CYNTHIA IKWUETOGHU & JONATHAN ADEROJU

ebt Management Office (DMO) will list N10.69 billion fiveyear tenor Federal Government Sovereign Green Bond at coupon rate of 13.48 percent on the Daily Official List of the NSE on Friday, July 20, as stated by the NSE. Green bonds are fixed income, liquid financial instruments used to raise funds dedicated to climate mitigation, adaptation and other environment-friendly projects. This provides investors with an attractive investment proposition and an opportunity to support environmentally and socially sound projects. Nigeria had their sovereign green bond rated December 2017 by Moody’s investor service, rating it “GB1” (Excellent), the highest possible rating. The GB1 grade is supported by a full allocation of proceeds to renewable energy and afforestation projects that qualify under Nigeria’s domestic green bond guidelines and international green bond taxonomies, including the Green Bond Principles and Climate Bond Initiative’s (CBI) Climate Bond Standard.

The projects financed through the green notes will also support the country’s national commitments to the Paris Agreement on Climate Change. The government has received pre-issuance assurance from an independent verifier (DNV GL) that the green notes are compliant with the CBI’s Climate Bond Standard Version 2.1. The issuer expects to receive a formal certification letter from the CBI. According to Moody’s, Nigerian authorities have adopted a clear internal process and formal set of administrative policies designed to manage the segregation and tracking of green bond proceeds. This includes the creation of a centralised Green Bonds Proceeds Account held at the Central Bank of Nigeria, and individual subaccounts for specific environmental projects. By creating a new market for climate finance through green bonds, governments can help build a more resilient future in the face of a changing climate. Sovereign green bonds also represent another way for governments to play their part in moving towards a green economy. FGN Bonds are debt securities of the Federal Government of Nigeria (FGN) issued

by the Debt Management Office (DMO) for and on behalf of the Federal Government. The FGN has an obligation to pay the bondholder the principal and agreed interest as and when due. 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, and as such it is classified as a risk free debt instruments. In December 2017, the federal government through the DMO raised as much as N10.69 billion ($29m), making Africa’s biggest oil producer to become the first on the continent and fourth in the world after Poland, France and Fiji to issue a security that raises funds for environmental projects. In December 2017, the DMO issued the maiden FGN Green Bond, which is also the first to be issued by an African sovereign. “In preparation for Africa’s maiden sovereign green bond, the Government of Nigeria has put in place a comprehensive governance structure and framework that is aligned with the country’s domestic green bond guidelines and international best practices,” says Rahul Ghosh, a Moody’s senior vice president.

‘We shall not mortgage development, law, order for political patronage’

do State governor, Godwin Obaseki, has reiterated that his administration shall not mortgage law, order and the development of the state for political patronage. Thegovernoralsomournedthe electrocution of a Junior Secondary School (JSS) 3 student of Eyaen Secondary School as well as a girlchild who died due to flooding at the five-junction axis of Benin City. Commissioner for Communication and Orientation, Paul Ohonbamu, disclosed these after anextra-ordinarysessionoftheState ExecutiveCouncil(EXCO)meeting, in Government House, Benin City, the Edo State capital. He said the state government is focusedondevelopingthestateand willnotbedistractedbytheanticsof jobbers, spoilers and opportunists, calling on the people to be wary of their antics as the election season approaches. According to him, “The chairman-in-council and Governor of Edo State, urges Edo people to be focusedondevelopmentandnotto bedistractedbytheanticsofjobbers andspoilersofgoodwill.Heresolved thatthepositionoftheseopportunists is well known, and they will not be negotiated with. “The governor holds tena-

ciously to the social contract with the people. He will not negotiate his duty to the people, to suit the desires and wishes of individual interests whether within or outside the political party. The governor maintained that as the political season approaches, development of the state will not be determined by the interests of few individuals, urging the people to hold steadfast to their faith in government and the commitment to sustainable, inclusive development.” Onthedeathofthegirl-child,he saidthegovernorissaddenedbythe incident, adding, “The Chairmanin-council regrets the death of a girl-child in the five-junction axis of Benin City, due to flooding. In the process of repositioning the State Emergency Management Agency (SEMA), he said the state government is setting up call centres, to ensure fast response to emergencies, in the coming days.” He added, “EXCO also mourned the electrocution of a Junior Secondary School (JSS) 3 student of Eyaen Secondary School, which happened on Thursday, July 12, 2018. EXCO has ordered immediate investigation to determine the culpability of any individual or organisations in the incident.” He said the state government

has initiated the pilot phase of the government’s grassroots development roadmap, with the inauguration of Ward Development Committees in Uhunmwode and Orhionmwon Local Government Areas.

Naira maintains gain as CBN injects $210m into FX market HOPE MOSES-ASHIKE

entral Bank of Nigeria (CBN), on Tuesday, injected $210 million into the inter-bank foreign exchange (forex) market, which helped to boost liquidity and lift the value of the naira. The apex bank offered $100 million to authorised dealers in the wholesale segment of the market, while the Small and Medium Enterprises (SMEs) segment got $55 million, and $55 million was also allocated for invisibles such as tuition fees, medical payments and Basic Travel allowance (BTA). The nation’s currency on Tuesday appreciated marginally across segments of foreign

exchange market. Naira gained 0.04 percent to close at N361.70k per dollar on Tuesday, as against N361.85k traded the previous day at the investors and exporters forex window, according to data obtained from the FMDQ. The local currency strengthened by N1.00k at the Bureau De Change (BDC) segment of the market as it closed at N360 per dollar compared with N361/$ traded since last week Wednesday. At the CBN official window, naira remained stable at N305.80k per dollar, while it firmed 0.01 percent to close at N361.54k per dollar on Tuesday from N361.56k/$ traded on Monday at the Nigerian Autonomous Foreign Exchange Fixing

(NAFEX). Isaac Okorafor, CBN’s acting director of corporate communications department, confirmed the figures and restated the apex bank’s resolve to continue to intervene in the interbank foreign exchange market, in line with its pledge to sustain liquidity in the market and maintain stability. Okorafor, in a statement, maintained that the continued forex intervention was to ensure that the bank met genuine customers’ requests in various segments of the market. It would be recalled that last Tuesday, July 10, the CBN intervened to the tune of $210 million, to cater for requests in the wholesale segment of the market.

Delta lauds US-based Ubulu-Uku union for rehabilitating hospital, awarding scholarships

elta State government has commended sons and daughters of Ubulu Uku, in the Diaspora in the Aniocha South area of the state for their support to the government’s developmental efforts in making life more meaningful to the people of the area. The government’s commendation came in the wake of successful inauguration and connection to national grid of a 33kva transformer worth over N10 million for the smooth running of the General Hospital Ubulu-Uku and a scholarship award to indigent undergraduates from the community by the Ubulu Uku USA Association. President of the Association, Mike Eboka, said his group was deeply worried at the sorry state of the hospital, which had not been functioning maximally for some time hence the decision of the

Ubulu Uku USA to intervene. He lamented that referrals to the hospital has been on steady decline as the hospital could hardly attend to patients due incessant blackout, a development that made the Ubulu Uku Association in the United States of America to decide to lift the hospital with the provision of the transformer. This, Eboka assured, will lessen the burden posed to the management of the hospital and the people of the community who have had to seek medical services far away from their settlement. Medical director of the hospital, Patrick Ekeruche, thanked the Ubulu Uku USA for the gesture saying the state government was happy and appreciated the public spirit of the Union in collaborating with the state even when members are based outside the country. He said the provision of

electricity transformer would help improve the services rendered by the hospital as the prevailing power outage was almost turning the health facility moribund Ekeruche urged other Community Associations to emulate the kind gestures of Ubulu Uku USA and explore ways of partnering with the state government to deliver services to the people as government alone could not meeting all the developmental needs of the people. Meanwhile, the union has also declared Miss Nancy Odinakachukwu from Akpama Quarters in Ogbe part of Ubulu Uku, Aniocha South Local Government Area of Delta State, as the receipt winner of this year’s annual Ubulu Uku Union, USA (UUU USA) Incorporation sponsored educational scholarship award.

L-R: Paul Agboola, consultant psychiatrist, NeuroPsychiatric Hospital Abeokuta; Joyce Onafowokan, special adviser to Lagos State governor on social development; Oyinade Adegite, head, corporate communications and external affairs, Guaranty Trust Bank (GTbank), and Maimuna Kadijat, psychiatrist, Pinnacle Medical Services, during the 8th Annual Autism conference sponsored by GTBank at MUSON Centre, Lagos, yesterday.

Wednesday 18 July 2018

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Wednesday 18 July 2018

BUSINESS DAY

10 BUSINESS DAY

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COMMENT SMALL BUSINESS HANDBOOK

EMEKA OSUJI Dr Emeka Osuji School of Management and Social Sciences Pan Atlantic University Lagos. eosuji@pau.edu.ng @Emyosuji

uring the last few weeks, we tried to make the point that bad loans constitute a tear in the fabrics of the well-being of a financial institution. Naturally, wear and tear is an unavoidable consequence of the use, effluxion of time and the operation of any system. What is not natural is the courage to tackle the wear and tear in a timeous manner to restore the object on which the tear is inflicted. Overtime, the wise men of the ages past have given us a hint as to the possibilities that follow our action or inaction whenever a tear occurs. According to them, we ought to very quickly mend the object of any tear. They summarized the wisdom in the adage: a stitch in time saves nine. Truly, this adage is of general application. A stitch made in time will surely save much trouble, whether it is on a piece of cloth or on the human body. Are we not told that early detection of cancer is fundamental in the survival of the patient? Essentially, there are two steps to effectively resolve any challenge. The first thing is to identify the challenge and accept that it does exist. This is the work of research, or diagnoses

EMMANUEL UNAEGBU Unaegbu is an environmental protection and sustainable energy expert and writes from Abuja Twitter: @emmalysis

hat Nigeria is a country blessed with abundant natural gas resource is not in doubt. In fact Nigeria’s gas wealth has made many analysts conclude that Nigeria should change the dynamics from being an oil producing nation to a gas producing one. Nigeria has the most proved gas reserves in Africa and is ranked ninth most proved natural gas reserves in the world. In 2016, Nigeria had over 5,400 billion cubic meters (bcm) of proven natural gas reserves, with a 50/50 distribution ratio between associated gas and non-associated gas. Nigeria is also a major global exporter of gas. In 2016, Nigeria exported 25.3 bcm of natural gas as Liquified Natural Gas (LNG) representing 7.2% of global LNG export, making it the fourth largest LNG exporter in the world only behind Qatar, Australia and Malaysia, and again the largest LNG exporter in Africa. Even with such impressive export records, overall LNG production and investment in Nigeria for local use is non-existent. But on a global scale, Nigeria is ranked 19th LNG producer in the world with 42.5bcm. With the country’s huge export, this rating means that Nigeria exports most of

Wednesday 18 July 2018

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Delinquency, Bad Loans and a Stitch in time if the challenge is of the medical dimension. When we have identified the issue, the next step is to apply whatever recommended or approved solutions to the challenge. After a cancer has been discovered, chemotherapy follows. According to medical reports, chemotherapy has three possible outcomes that may follow its administration. First, it could shrink the cancer completely out of existence.The treatment of cancer by chemotherapy sometimes destroys the cancer cells, so much so that doctors can no longer detect them anymore in the patients’ body. At that point, the cancer has lost its power to regenerate. Second, the cancer may be kept from spreading by slowing the growth of the tumours. The third scenario is that the cancer is not cured or slowed but continues to spread. Here chemotherapy fails. In all of these, the key determinant of the efficacy of the chemotherapy, or the lack of it, is the time the treatment started and the stage of the cancer. The earlier the cancer is detected and treated, the more efficacious the administration of chemotherapy. So it is with bad loans. They must be determined, acknowledged and properly managed, if they are to be controlled and prevented from destroying the institution. The action must be timeous. Pretending that a bad delinquent loan is good is self-deceit. It may even create more problems, particularly for those who may decide to earn and accrue interest on loans that waved them goodbye. We had elsewhere shown how such acts could damage the repayment rate and enhance delinquency ratio. There are a number of steps that an effective microfinance institution must take to avoid the

Lenders must ensure that they lend only to those that value them and their funds. They are more likely to want to pay back if they can afford to do so. Lenders should also not be shy of stepping back to correct errors detected in the loan structure. This error may be in the client selection process or the size, interest rate or repayment timing destructive effects of toxic loans. First, we have to recall that delinquency is almost always a result of poorly designed and implemented loan making procedures. Let us begin by assuming that the loans are procedurally and technically sound. Thereafter, all delinquency must be managed along the following strategic lines: There is one important point that lenders tend to miss when granting loans. That point is whether the client really values the loan granted him. Many factors drive a man to pay back a loan. One of them is how much he values the loan for the immediate benefit it brings and the fact that the lender remains a source of future loans. The hope of borrowing again is a tonic for repayment. It means

the loan is valued. The main driving force behind loan repayment by clients is the hope that they may get future loans from the lender. This means they value the loan service as to keep the channel open. Clients do not value loans that are ill-timed or poorly delivered. Elements of poor packaging include ill-timing, insufficiency for the felt need and generally poor terms of the loan. This implies that a loan must be made to suit the needs of the client to enhance its value and therefore repayment possibility by the borrower. The foregoing is the reason we advise microfinance institutions (MFIs) to desist from granting loans to the wrong people. These are the non-poor enterprises that borrow from MFIs just to meet emergencies but which the lenders now mistake for their core clients. Granted that these clients allow MFIs to make large loans to a single obligor, which is more attractive than the myriads of small loans for several reasons, the clients have the deposit money banks as alternative loans sources. They therefore do not value the loans very much. Lenders must ensure that they lend only to those that value them and their funds. They are more likely to want to pay back if they can afford to do so. Lenders should also not be shy of stepping back to correct errors detected in the loan structure. This error may be in the client selection process or the size, interest rate or repayment timing. Borrower selection is an important instrument for preventing bad loans from happening. Naturally, every lender must have a target market that is clearly defined. This helps to eliminate and streamline the borrowers. Once clients have been properly selected, the lender must ensure that the loan

structure is repayment-friendly. Certain loans are not repaid because they are not so structured. They just cannot be paid unless restructured. But lenders must accept the possibility of restructuring loans as a matter of course in their trade. Work Out arrangements are a fact of the lending life. Poor management information system among the MFI has acted as energizer the growth of bad loans. It is impossible to manage loans away from delinquency, or out of it, if we are not fed with the most precise of information on our loans. Poor financial capacity has served as a brick wall against appropriate investment in this strategic resource. The quicker loan officers become aware of due and uncollected payments the better they can deal with the issues promoting such a situation. We have written quite a bit on the subject of Portfolio Reports. Suffice it to say that loan officers are duty bound to review their portfolios on a daily basis to throw up delinquent and potentially delinquent relationships. Because beliefs become thoughts which become words that become actions and then habits, it is important that lenders set out very early to educate clients on what standards they intend to keep in relationships. They must be told in clear language that delinquency is not acceptable and they should respect their contracts with the lender. Loan review meetings are usually some of the worst places loan officers can find themselves. However, the regular and open discussion of delinquent accounts should be encouraged across the industry.

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LNG utilization in Nigeria: The Greenville LNG approach the gas it produces and utilizes very little. In fact, the LNG produced at the Nigeria Liquefied Natural Gas facility in Bonny Island is completely exported. But ‘via positiva’, this facility is a massive foreign exchange earner for the country. On the other hand, a major problem is gas flaring. According to NNPC, about 10 percent of gas produced in 2017 by oil firms was flared. In same year, the country lost an average monthly income of N25 billion as a result of flaring. This is not taking cognizance of the loss of income from global carbon credits and indirect revenue (including tax) that are accruable from increased economic activities drive by improved supply of power. Interestingly, back in 1979, the Nigeria government understood the dangers of flaring and tried to address the issue by promulgating the Associated Gas Reinjection Act. The Act set a target of January 1, 1984 to end gas flaring but was not achieved. Following this, several other dates were set. And in 2003, the Energy Commission of Nigeria under the National Energy Policy, set 2008 to end gas flaring, yet this unsustainable practice continues unabated. But with the Gas Master Plan and the Gas Flare Commercialisation Programme, the FG has set a flare-out target for 2020. Just two

years away and ten years ahead of the United Nations “Zero Routine Flaring by 2030”. The UN target was launched in 2015 by the former Secretary General of the UN, Ban Ki-moon and a host of other endorsers. Though this timeline may not be achieved, the FG 2020 flare-out plan is anchored on a private sector led strategic framework which is unlike the old practice of top-down directive. It is upon this that Greenville Oil and Gas Company Limited, otherwise ‘Greenville LNG’, the pioneer LNG Production and Distribution Company for local use, anchors its LNG project. As a forward thinking company and with an aim to improve gas utilization in Nigeria, Greenville has made a foreign direct investment of over $500 million in the first phase of its LNG project with the gas plant located at Rumuji, Rivers State. The pioneer project comprises of 3 trains with total capacity of 2,250 metric tonnes of LNG per day in the first phase. In the second phase, 2 additional trains, with total capacity of 3,000 metric tonnes daily is planned bringing total capacity to 5,250 metric tonnes per day. Greenville has a mission to ‘bridge the natural gas supply gap, to promote economic activities and social development and revive moribund industries across Nigeria.” Specifically, Greenville was established to develop the natural gas infrastructure in Nigeria

including LNG production &distribution. The gas produced at the Rumuji plant is planned for 100% use within Nigeria. To achieve this, the company has carved a niche to deliver LNG to locations underserved by gas pipeline infrastructure using a virtual pipeline system. This virtual pipeline system replaces physical pipelines which are susceptible vandalism and take huge capital and long time to construct. The promoters of Greenville LNG are the former owners of ASCA bitumen with a long history of hydrocarbon logistics across Nigeria and West African region. Greenville LNG has on ground three hundred (300) specialised cryogenic LNG fueled trucks to improve access to clean and affordable fuel- LNG - to power plants, industries and its LNG refuelling stations strategically located across the federation. The 25 metric tonnes trucks are equipped with GPS tracking devices to ensure that gas is delivered on time, every time.By using LNG fueled trucks, Logistics Company can save 35% in transport cost as comparison to using diesel fueled trucks. It is important to mention that LNG transportation using cryogenic trucks is very safe. And Greenville LNG tankers are double walled to meet with National Fire Protection Association (NFPA) standards for LNG. To encourage consumption of LNG for transportation, Greenville

is currently constructing LNG refuelling stations at Rumuji, Shagamu, Kakau, Ikpoba-Okha and KortonKarfetoserve its trucks and third party LNG vehicle users. Importantly, Greenville’s innovative approach is to offer ready to use facilities for storage, regasification and power generation at consumer’s location. The aim of which is to ensure affordable, reliable and clean power generation and revive industries that are power starved. With this innovative approach, Greenville is improving gas utilization, contributing to reduction in gas flaring, creating value added employments, reducing the disbursement of foreign exchange for diesel importation (thus saving Nigeria scarce foreign exchange),supporting the attainment of greenhouse gas emission reduction as targeted in the Nationally Determined Contribution, contributing to economic growth in Nigeria through general resuscitation of power starved industries in Nigeria, ensuring delivery of clean fuel for power generation and promoting economic growth in the country. In the final analysis, the Greenville project is a winning, sustainable development project for Nigeria.

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The rebellion of the godson: The end of Ortom’s honeymoon with Akume MARTIN IHEMBE Ihembe is a Political Scientist with research interest in political development. He can be reached via 08023688848

he forgoing is an excerpt from Akin Osuntokun’s brilliant piece entitled, The Rebellion of the Godsons, published in Thisday sometime in 2015. In that piece, Akin did a synopsis of godson rebellions against their political godfathers since Nigeria’s democratic rebirth in 1999. While Akin’s cursory glance only mentioned the rebellions without necessarily looking at the core issues even though it was implied, I intend to utilize his line of argument to explain the ugly scenario that is currently unfolding in Benue state between the estranged and rebellious godson, Governor Samuel Ortom, and his political godfather, Senator George Akume, who himself had cause to rebel against his godfather, unknown to him that pretty soon, he will also be paid with the currency of ingratitude by his godson. We will return to this shortly. Having assumed the status of a quintessential “city boss” reminiscent of the American Tammny Hall in New York, Senator George Akume, the generalissimo of the APC in Benue state was the oracle that needed to be consulted in the 2015 gubernatorial election if the anointed godson of his erstwhile rebellious godson – the then Governor, Gabriel Suswam – was to be defeated. After Suswam used his influence as the garrison commander of the PDP in Benue state to unilaterally hand Tarzo the party’s ticket which Ortom and several other contenders keenly vied for, a visibly aggrieved and des-

TILMAN EHRBECK Tilman Ehrbeck is a Partner at Omidyar Network

ver the past decade, the push for financial inclusion has united governments, companies, technology entrepreneurs, and nonprofit organizations in dozens of countries on every continent — and with remarkable success. In 2011, only 51 percent of the world’s adults had a formal bank account. By 2017, as the World Bank recently reported in its new Global Findex data, we’ve reached 69 percent — that is 1.2 billion more people who are now connected to the modern economy. As more people in emerging markets gain access to the formal financial system — fuelled by the increased penetration of the mobile phone and associated digital financial services — the pace of financial inclusion is accelerating. At this rate, we’re on track to reach universal

If there is any character trait the Nigerian godsons have contributed to the culture of politics, it is rebellion and brimstone ahead of 2019, and a trait the Nigerian godsons have conperate Ortom hurriedly courted and As 2019 approaches, I botched impeachment move believed tributed to the culture of politics, it is reconsummated a union with Akume’s hear the city boss and to be instigated by him against his rebellion.” However, I wish to differ a bit. APC which earned him the party’s bellious godson (even though it’s been While such conclusion by Akin ticket ahead of leading contenders generalissimo of the APC denied), it should be expected that the appears to have absolved city bosses like Emmanuel Jime, Professor Steve in Benue state has already inept governor whose approval rating like Akume, Chris Uba and several Ugba, Joseph Waku etc. It is important steadily on the decline on account of others, I would argue that these rebelto note that Ortom did not get the shopped for his preferred ispoor performance in office is going to lions were a creation of the greedy APC ticket because he had some impressive programmes he intended to candidate… Now that the stop at nothing to ensure he comes out and overbearing city bosses whose victorious now that the battle line has persistent demand on their political implement after election which others before him did not. He was favoured people of the state have felt been drawn. Unfortunately for Ortom, godsons necessarily triggered the reeven if he succeeds in neutralizing his bellions. If in doubt, please ask Rashidi by the city boss because he appeared the pains of voting an inept godfather, he still has the people of Ladoja, Chris Ngige, or Sullivan Chime to be the only candidate that would be leader into power without Benue to contend with having failed to narrate their experience with their a loyal puppet of Akume. Simply put, Ortom was meant to hold the coveted being told, I am sure they to deliver on public goods against the godfathers. wishes and aspirations of the people. That we have stagnated in our efoffice of the Governor in trust for his will ask the right questions The sad thing about this ugly epi- forts to forge a liberal political order godfather. This is exactly the nature is that, as the personality conflict which engenders economic prosperof “political machine” as practiced at come 2019 in order to avoid sode over who controls the commanding ity, political development and social some cities in the United States, where mortgaging their future for heights of the state ensues, nobody progress is largely a result of our willthe city boss selects a candidate who seems to be concerned with its ramifi- ingness to accommodate clientelisdoes his bidding upon assuming ofanother four years cations on governance which ab nitio, tic politics of godfatherism without fice. As it turned out, Ortom acted as a loyal lackey until his recent rebellion which consequently brought an end to the honeymoon. While it difficult to establish the root cause of the feud between the two given the cult like nature of godfather/ godson relations which is conducted in secrecy, the “Molette” episode in Ibadan, readily gives us an insight on how best we can understand the modus operandi of such relations. Just like the erstwhile garrison commander of Oyo politics (late Chief Lamididi Adedibu) kept requesting for a fair share of the state’s security vote from Rashidi Ladoja, a say in government decisions with respect to political appointments and other demands, all of which impinge on governance, so also it is (or should we now say was) between Ortom and Akume. These city bosses of the Fourth Republic are worse than the “ten percentiles” of the First Republic if you ask me. While both the rebellious godson and his godfather would not be bold enough to stand in public and acknowledge the existence of such a clientelistic relation, which runs contrary to the rules that govern the operations of formal institutions in

a liberal democratic order, there is an extent to which this can be kept in secret given the actions of Akume and Ortom in recent time. For instance, Governor Ortom recently embarked on a major cabinet shakeup just about when his relationship with his godfather had terribly deteriorated. Unlike the previous cabinet reshuffling he did in March 2017 which only moved political appointees (Commissioners) from one ministry to another and appointed new ones, this time around he retained some appointees he believed to be his trusted allies and fired those that were “foisted” on him by his godfather. This is the first major rebellion the godson made public which sent a strong message that he can, in fact, rock the boat not minding the consequence. In a move that suggest he was not done with his godfather yet, the godson went ahead to fire the head of Benue Internal Revenue Service (BIRS) – an agency I was told the city boss considers to be his “okra garden” – last week Tuesday. That agency too was manned by Akume’s associate, Mrs Mimi Orubibi. With Akume threatening fire

was never on the priority list of both actors and the retinue of inept clients (political appointees) currently serving their pockets in Ortom’s administration. Again, while the people of the state are being brutally murdered by the Fulani herdsmen without respite in sight, those they elected to protect them are only concern with who controls the levers of power for personal and group aggrandizement. We’ve seen this movie before between Barnabas Gemade whose influence saw Akume to electoral victory in 1999, and how Akume rebelled against him by paying back with the currency of ingratitude. We’ve also seen how Akume supplanted his godson (Suswam) in 2007 who also rebelled against him when Akume became overbearing. Now Ortom whom he supplanted in 2015 has rebelled again. What this clearly says is that there is every possibility that any vote for another candidate anointed by the city boss in Benue state will still produce another rebellion. Given these unpalatable outcomes in Benue and other states of the Nigerian federation, I am in agreement with Akin who averred that, “if there is any character

resistance. While I agree that this is a process nearly all evolving political societies passed through, including the already industrialized ones (see Patrons, Clients and Policies edited by Herbert Kitschelt and Steven Wilkinson), it is disheartening that ours has to be detained in this state for too long as we sit back and remonstrate on new media without taking steps to put an end to this madness. As a nation, the sooner we realize that resisting and getting rid of this graft called politics of godfatherism, the better for us. As 2019 approaches, I hear the city boss and generalissimo of the APC in Benue state has already shopped for his preferred candidate. That he fell apart with his rebellious godson Ortom who has grossly underperformed does not mean the people of Benue should approve his choice again. Now that the people of the state have felt the pains of voting an inept leader into power without being told, I am sure they will ask the right questions come 2019 in order to avoid mortgaging their future for another four years.

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Moving from financial access to health financial access by 2020, a goal set by the World Bank, which is an important success milestone. Access to basic financial services, such as a bank account, credit, and insurance, is a crucial step in improving people’s social and economic outlook. As we move forward, however, we must concentrate on what comes next: Shifting our focus from creating access to improving financial outcomes for the hundreds of millions who have been excluded until now; making sure that people can use financial instruments to better weather economic shocks and invest in health, education, or in a business. Even in the developed world, where access is nearly universal, a large cohort of people are not well served by the existing financial system. Many people who have transaction accounts but whose incomes are low or irregular, rely on expensive solutions, such as payday lending, check-cashing services, or informal moneylenders, to lead

their financial lives. Globally, account inactivity remains stubbornly high. About one in five accounts around the world are sitting idle. The reality is that access alone does not truly solve people’s financial struggles and set them up for long-term success. There is a difference between financial access and financial health. The Global Findex has provided a valuable metric and a goal for us to strive toward: Ensuring everyone has access to financial mechanisms that many of us take for granted. But using these services must be affordable, and most importantly, fit people’s financial contexts. Promoting financial health means designing products and services that are relevant and address the real challenges that people face. Across ages, genders, income levels, and backgrounds, consumers have very different attitudes toward technology, levels of financial literacy, and appetites for risk. What works for a single

mother in India, may not work for a cocoa farmer in Brazil or a microentrepreneur in Nigeria. The obstacles are real. Increasing adoption among underserved consumers demands new approaches. Companies will need to employ cutting-edge human-centered design, the latest insights in behavioral science, and culturally-specific distribution — while pioneering new business models. While no easy feat, several entrepreneurs around the world are already showing promising results leveraging these new approaches. The rise of neobanks is a good example. The digital-only, mobile-first banking experiences give consumers more personalization and smarter tools, often at dramatically lower costs. Neobanks can overcome many of the legacy and infrastructure costs of brick-and-mortar banking. They can take advantage of digital channels for distribution and marketing, while riding on the rails of

smartphone proliferation and digital payments. They also offer the opportunity to “re-skin” a traditional bank for new languages, cultural contexts, and market segments. As companies bring these and other new models to market, their success will depend on a policy environment that fosters innovation as well as consumer protection. Success will also rest on listening to consumers to understand their unique financial needs, values, and behaviors. The world has made incredible progress by uniting across public and private sectors toward universal financial access — a feat we will achieve sooner than could have been imagined just a decade ago. Let’s pursue the next challenge — widespread financial health — with the same unity of purpose, consumer-centric innovation, and focus.

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Wednesday 18 July 2018

EDITORIAL PUBLISHER/CEO

Frank Aigbogun

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

Bashir Ibrahim Hassan

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

Wanted: Emotional and social intelligence in the Presidency

n the wake of the killing of over 100 citizens in Plateau State June 22 -24, President Muhammadu Buhari visited the state to sympathise with the people. He ended up doing the opposite. President Buhari spent time alternately playing the victim on the matter of the frequent herdsmen/farmers’ clashes and praising his regime for alleged success in security management. In a statement released by his spokesperson while on the trip the president blamed climate change and desperate politicians for the killings. “We know that a number of geographical and economic factors are contributing to the longstanding herdsmen/farmers clashes,” the statement said. “But we also know that politicians are taking advantage of the situation. This is incredibly unfortunate.” Addressing the people at the government house in Jos, the president was quoted as saying “Nobody can say that we haven’t done well in terms of security, we have done our best, but the

way this situation is now, we can only pray.” This is insensitive. His remarks amounted to spitting on the bodies of the then unburied victims. But the worst was yet to come. Two or three days later, the presidency went totally berserk comparing deaths under PDP’s 16 year rule to the deaths in Plateau. The presidency released what it termed “A quick checklist of some savage and brutal killings in Nigeria during PDP rule, between 1999 and 2015, for which no national mourning was declared.” Worse, on an earlier visit to Taraba in March, still in connection to the killings by the so-called Fulani herdsmen in the state, the president was busy comparing deaths. “As a president, I have sources of getting intelligence on happening across the country and so I should not be expected to always go out to the field to make noise and insult the sensibility of Nigerians before it would be known that I am taking action against the killings. There were more killings in Mambilla (Taraba) than Benue and Zamfara states. I chose to visit Taraba first, but I will be going to Benue

and Zamfara after I return from Ghana to also condole with the people,” he had said. Equally, while discussing with a group of Benue elders whom he had summoned to the presidential villa to discuss the incessant killings in the state – all attributed to marauding Fulani herdsmen, the president admonished them to “in the name of God accommodate your countrymen”. What his statement simply means is that the problem arose because of the failure of Benue and other states to accommodate the herdsmen. Therefore, herdsmen must be accommodated for peace to reign. We refuse to accept that these are normal ways of communicating or commiserating with people who have gone through such excruciating trauma. A president who was elected to protect the lives of all citizens and has repeatedly failed to do so cannot come to tell a people that lost over 200 lives in coordinated attacks that lasted several hours without the intervention of security personnel just an hour away that he has tried his best and that there is nothing more

he can do other than resorting to prayer. A president who has failed repeatedly to act even as his citizens are being mercilessly killed and eviscerated cannot turn round with all authority asking the defenceless victims to “accommodate their killers” for peace to rain. It is not normal that a president who has completely failed in his duties to protect the lives and property of the citizens who elected him to perform exactly that function will turn round to begin a game of comparing numbers of deaths with previous administration to present his administration in good light. We cannot accept as normal behaviour the penchant of this president to constantly play one segment of his people against the other or one citizen against the other. It is time to accept that there is a significant problem with the mindset of the president and his horde of advisers. They are severely deficient in emotional and social intelligence and need help else they will plunge this country into an avoidable crisis and leave its people deeply divided and suspicious of one another.

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Wednesday 18 July 2018

DAY

BUSINESS

COMPANIES & MARKETS

BoI to distribute N250bn Afrexim loan at single digit interest rate

Pg. 14

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

Revenue from energy underpins Transcorp’s profit margins ...net income surges 161% in HY’18 BALA AUGIE

ransnational Corporation of Nigeria (Transcorp) Plc has utilized every Naira invested in revenue in generating higher profit as margins surged, thanks to contributions from the energy business. The stellar performance means the company with interest in hospitality, oil and gas, power and Agriculture has surmounted the headwinds brought on by lower oil price and devaluation of the currency. Analysts are of the view that the company’s investment in the power sector is beginning to trickle down to the bottom line (profit). They added that the conglomerate’s additional power generation will bolster future sales and magnify shareholders’ earnings. For the first six months through June 2018, Transcorp’s net margins improved to 20.17 percent from 12.17 percent as at June 2017. The growth in margins

were largely driven by a 65.31 percent increase in revenue from energy sent out to N 29.79 billion in the period under review as the firm’s diversified revenue base continues to underpin earnings. Revenue from energy sent out make up 53.15 percent of total sales. “They have the Sapele Power Plant and there has been an improvement in generation capacity that is contributing to revenue growth,” said Johnson Chukwu, managing director and CEO of Cowry Assets Management. In Septemer 2012, during the privatization of Nigeria’s national power assets, TranscorpPlc won the bid for the Federal Government of Nigeria’s distressed power generating company, Ughelli Power Plc – operator of Ughelli Power Plant. The $300 million investment was part of strategic investor Heirs Holdings’ commitment to USAID’s Power Africa initiative. In November 2015, TranscorpUghelli Power Limited and Ughelli Power

L-R: Segun Omosehin, council member, Chartered Insurance Institute of Nigeria; Yeside Oyetayo, rector, College of Insurance; Abimbola Babalola, head, Market Surveillance and Investigation, Nigerian Stock Exchange(NSE); Bola Adeeko, head, Corporate Services Division (NSE); Funmi Babington-Ashaye, president/chairman of Council, CIIN; Richard Borokini, director general, CIIN; Alatise, council member, CIIN and Jide Orimolade, Council Member CIIN during the closing gong ceremony at the Nigerian Stock Exchange in Lagos

Plc merged, and Transcorp Power Limited was born. The merger harmonized the management and operations of Transcorp’s power business for greater efficiency. When Transcorp took ownership of the 1000MW capacity plant in 2013, our mission was to take it from generating only 160MW of power daily, back to produc-

Maersk Line decries NPA suspension, says it has four holding-bays AMAKA ANAGOR-EWUZIE

aersk Nigeria Limited has decried its suspension by the Nigerian Ports Authority (NPA) over alleged lack of holding-bay for empty containers. Recall that NPA had on Friday suspended the shipping services of Maersk Line, Cosco Shipping, APS and Lansal shipping companies for 10 days for not having functional holding bays for their empty containers. But in an advisory issued by Maersk to its customers on Monday, the company said it has four functional holding bays in Lagos with a storage capacity of 8,150 Twenty-foot Equivalent Units (TEUs).

“It is misguiding for the NPA to suspend Maersk Nigeria Limited for failing to acquire and operate holding bays for empty containers as Maersk Nigeria Limited operates four holding bays within the Lagos environ with a storage capacity of 8,150 TEUs which is more than 50 percent of the discharge average. Maersk Nigeria Limited has complied fully with this directive and has followed the call-up protocol for use of the holding bays stipulated by the NPA,” the company said in a statement issued by Bolaji Akinola, its spokesperson. “Nigeria as an import dependent nation will certainly see imported containers discharged in the country in volumes and in line with the tenet of international trade. With

limited infrastructure and other alternatives for evacuation of imports, return of empties, and return of full exports, it is challenging for these containers to be adequately handled which results in the congestion of the access roads,” the company said. Maersk also disclosed that it was in dialogue and consultation with relevant authorities and “we expect the steps we are taking together with Nigerian Ports Authority (NPA), will reassure them of our storage capacity”. It added, “As an active and abiding corporate organisation, Maersk Nigeria Limited will continue to work in full cooperation with all relevant authorities in Nigeria and to offer sustainable services and operations to its valued customers.”

ing at its full 972MW capacity. Today, Transcorp Power has increased its generating capacity by 525 percent, and plans to grow it to over 3,000MW in the next five years. Transcorp’s net income surged by 161.26 percent to N10.87 billion in June 2018 as against N4.16 billion the previous year.Operating profit

otherwise known as EBIT spiked by 82.17 perccent to N17.34 billion in the period under review from N9.52m billion the previous year. The conglomerate has reduced exposure to financial risk as evidenced in an improved leverage ratio and reduction in debt. Debt to equity (D/E) ratio fell to 95.20 percent in June

2018 as against 117.20 percent as at June 2018. T h e c o n g l o m e r a t e ’s time coverage ratio is 3.44 times earnings.In other words, the firm’s operating income can over interest expense. Transcorp’s share price gained 1.23 percent as of 2:00 pm Monday, valuing it at N52.43 billion.

DHL to help MallforAfrica deliver Africanmade products to global market

HL, the world’s leading internat i o na l e x p re s s services provider has announced its partnership with e-commerce giant, MallforAfrica’s new platform, Marketplace Africa, to help online retailers bring African-made products to the US and global market. The site offers items from the continent’s most talented designers and artisans from a variety of categories including fashion, body care, handbags, jewelry and home décor. U n t i l t o d ay , A f r i c a n craftspeople have been isolated from global customers due to distance, fear of not receiving overseas payments, and complex shipping requirements. Customers who wished to purchase products directly from African artisans faced obstacles regarding acces-

sibility of items, authenticity and validation of the product, uncertainty of delivery, high delivery costs, and payment security. Marketplace Africa was created to help artisans sell on a global stage and simplify the ability to buy directly from African craftspeople a n d s ma l l e nt e r p r i s e s. Powered by MallforAfrica’s award-winning patented ecommerce platform and payment system, MarketplaceAfrica.com’s global consumers can now shop directly from African businesses of all sizes and have the products shipped to their home with confidence. DHL will manage all logistics services as their e-commerce delivery solutions are designed with small businesses in mind and provide the speed of deliver y that customers expect. With the world’s

leading logistics company behind it, Marketplace Africa will provide craftspeople and customers order verification, fast delivery, and shipment labeling and packaging services. Suitable delivery costs also keep products affordable. Hennie Heymans, CEO for DHL Express Sub Saharan Africa adds, “We are thrilled to be a part of this innovative e-commerce solution for African artisans. DHL is a facilitator of global trade and if we can improve connectivity and accessibility to global markets for local business, this will go a long way in helping small businesses grow. We’ve been in Africa since 1978, so have seen first-hand, the huge opportunities that crossborder trade offers to local businesses. This is truly an exciting time for African businesses.”

BUSINESS DAY

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Wednesday 18 July 2018

COMPANIES & MARKETS

BoI to distribute N250bn Afrexim loan at single digit interest rate …targets SMEs HARRISON EDEH, Abuja

he Managing Director, Bank of Industry, Olukayode Pitan has said that the $750m (N250bn) syndicated loan facility which the bank received from the African Export-Import Bank would be disbursed to Micro, Small and Medium Enterprises at single digit interest rate. Pitan said this during an interview with our correspondent at the sidelines of the AFREXIM Bank Annual Meetings held in Abuja. He said the loan to be given to entrepreneurs in Nigeria for a period of between five and seven years, would enable the bank bridge the funding gap for MSMEs which he estimated at about N700bn. Pitan explained that the N250bn is the single largest syndicated facility to be received by a development finance institution in Nigeria, adding that a total of 16 banks

financed the deal. Some of the banks that provided the fund are Africa Export-Import Bank, the ECOWAS Bank for Investment and Development, and British Arab Commercial Bank Plc, among others. He said, “There were 16 international banks that took park. Four Nigerian banks that were based in the UK were a part of it. “This money is medium term, which is three years and the interest is very good when you look at the rate Nigeria usually borrows. “The idea is to support industries. What this loan allows us to do is, it gives additional N250bn depending on the exchange rate that is used, between N230bn to N250bn to deploy to the industrial sector. We have done our own study. “There is gap in the funding of industrial sector, to the tune of N704bn. This is our way to reduce that gap.” He said the fund would be

given to companies operating in the creative industry, manufacturing and gender based businesses. This, he noted, would help reduce the unemployment rate in the country and create wealth for small and medium scale entrepreneurs. He said, “We are looking at small, medium and large enterprises. We are looking at enterprises or companies that have a focus in using local raw materials, companies that generates that generates employment and bring down their cost of borrowing. “This loan will be deployed at less than ten per cent interest per annum. We are looking at the creative industry, light manufacturing, mining, gender business etc to promote Nigerian industrial sector.” “We are working with the Central Bank of Nigeria is that the loan we will give to Nigerian businesses will be a longer term loan of between seven to eight years for the industrial sector.”

Palm kernel oil, Ofada rice processing clusters boost agro economy in Ogun RAZAQ AYINLA, Abeokuta

group of investors within the Abeokuta Chamber of Comm e rc e, In d u st r y , Mines and Agriculture (ABEOCCIMA) are now contributing to the economic growth of Ogun state through operations of palm kernel oil and Ofada rice processing clusters owned and controlled under the initiatives of the Chamber. The Chamber, whose investments cover agriculture and agribusiness, small-scale processing of farm produce, micro, small and mediumsized enterprises, exports, among others, decided to venture into palm kernel oil and Ofada rice clusters, providing equipment and logistics for members who process palm kernel into oil and locally produced Ofada rice into edible one. Speaking at the annual general meeting and swearing in of new president of the Chamber - Akinola Lawson in Abeokuta recently, Wasiu Olaleye, the

outgoing president, declared that the palm kernel oil cluster is an emerging business hub which supplies industries where the fast moving consumable goods are produced and also exports to other West African countries such as Republic of Benin and Togo. He said that the palm kernel oil cluster came into being having succeeded with Ofada rice production and processing which enjoys reasonable support from DfID-PERL, Bank of Industry and Bank of Agriculture, decided to woo processors and initiated a cluster at the Ogun State Technology Incubation Centre where raw palm kernels are processed, supplied and exported to other countries. He noted that wealth and thousands of jobs were created and would be still be created to boost Ogun state and Nigeria economies, but requested government at all levels to support the cluster to grow by providing needed incentives such as credit facilities, waivers on processing activities and machines, among others.

He added “The Chamber is working out modalities to ensure adequate supply of electricity to the cluster as operators are presently depending on generators for their production.” Also, Rahman Maku, executive secretary of ABEOCCIMA, explained that possible partnership was being sought from the relevant government and international agencies to assist in the processing of palm kernel oil in terms of human capital development, incentives, and waivers in order to ease processing, supplied and exports of palm kernel oil to other West African countries. Reeling out activities and achievements of the Chamber for the year 2017/2018, the executive secretary revealed that 36 new firms were inducted as members of the Chamber in the year under review, joining 166 earlier members, whom the Chamber said, would also contribute to the economic growth and development of not only Ogun state but also Nigeria.

L-R: Mary Ikoku, publisher, Working Moms African Magazine; Shirley Hill, founder Shirly Hills Foundation; Sam Ikoku, CEO, Nakachi Consulting; Susan Chilagor, and Stephanie Ape, Nollywood Actress, at the 4th Edition of working Moms Start Business Seminar in Abuja.

CBN begins disbursement of lower currency denominations to reduces scarcity Akinremi Feyisipo, Ibadan

he Central Bank of Nigeria (CBN) says it has commenced the disbursement of lower currency denominations into major cities in the country to ease accessibility and consequently address the dearth of the denominations in circulation. The lower denomination banks notes like N200, N100, N50, N20, N10 and N5 have been scarce in recently times causing hiccups in transacting business especially among traders and customers. Priscilla Eleje, acting director, Currency Operations Department, CBN said the development was to address the

dearth of the lower denominations in circulation, noted that the apex bank has commenced disbursement in Abuja and being extended to Lagos, Kano, Enugu, Onitsha, Ibadan, Yola, Gombe, Katsina and Jos. Eleje who was represented by Olufolake Ogundero, deputy director of the bank, at the public sensitization and enlightenment campaign in Iibadan assured economic agents such as the marketers, merchants, shopping malls, supermarkets that the bank will continuously inject huge volumes of the bank notes into circulation. The development, according her, is to ease difficulties being encountered by the traders and customers occasioned by the inadequate circulation of the lower denomination banks

notes. She added that the bank recognizes the important role markets play in economic transaction hence the need for ease accessibility of the lower denominations to carry out economic transactions. According to her, the objective of the CBN’s intervention was principally to ease accessibility and consequently address the scarcity of the lower notes. Eleje however hinted that “it is a criminal offence punishable by six months imprisonment or a fine of N50,000 or both to sell, spray or mutilate the banknotes. It is also a criminal offence which attracts five years imprisonment without an option of fine for anybody to counterfeit the naira. Naira is our pride as a country. So respect it.”

Access Bank commitment in CSR attracts Euromoney Excellence Awards HOPE MOSES-ASHIKE

ccess Bank Plc. has emerged winner of the 2018 Euromoney Awards as “Africa’s Best Bank for Corporate Social Responsibility”. This prestigious award was presented in recognition of the Bank’s unwavering commitment to embedding sustainability into its core busi-

ness strategy as it carries out its business operations. Speaking at the presentation ceremony which held in London U.K. on July 11th, 2018, Access Bank CFO, Seyi Kumapayi said the award validates the Bank’s continuous efforts and commitment to the sustainable development of Nigeria’s financial industry. “Access Bank is honoured to be recognized as Africa’s Best Bank for Corporate Re-

sponsibility,” Kumapayi said. “This serves as a testament to the Bank’s resolute efforts in financing sustainable economies in the societies in which we operate. As such, we believe the net impact of our business activities must be positive to accelerate our drive towards the achievement of the sustainable development goals and the development of a resilient and vibrant economy across Africa.”

Wednesday 18 July 2018

BUSINESS DAY

Wednesday 18 July 2018

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BUSINESS DAY

COMPANIES & MARKETS Grooming Microfinance Bank targets 3m credit clients by 2020

Business Event

...commissions Ibadan office. Akinremi Feyisipo, Ibadan.

rooming Microf i na n c e Ba n k Limited has set a target of reaching an additional three million credit clients by 2020, having provided loans for over five million people especially women since its inception in 2006. Godwin Nwabunka, chairman, Board of Directors, who disclosed this at the official commissioning of the bank office at Ibadan said “Grooming Centre is strongly committed to promoting financial inclusion in Nigeria, expanding its outreach, and positively impacting the lives of its clients, the economically active poor, who remain the focus of its operations” While saying that the bank have branches in 23 states of the country noted that

Grooming Centre believes that it’s collaboration with the World Bank Group under the Universal Financial Access initiative provides a unique opportunity to achieve this mission”. According to him, It must be noted that worldwide, an estimated 2 billion working-age adults have no access to formal financial services delivered by regulated financial systems [Global Findex 2014]. In West Africa, only 35 percent of adults have a bank savings account that is not fully utilized due to the inefficiency of public banking and payment services (AfDB 2013). The Chairman of Grooming Centre said they are in partnership with the World Bank Group (WBG), plans to bring safe access to transaction accounts and electronic instruments that store, send and receive payments for over 2 million unbanked individuals

in Nigeria. The Centre’s commitment to theWorld Bank Universal Financial Access by 2020 initiative aims to promote the positive experience of refined financial inclusion in Nigeria. He said that the UFA2020 envisions that adults worldwide — women and men alike — will be able to have access to a transaction account or an electronic instrument to store money, send payments and receive deposits as the basic building block to manage their financial lives. He said that the UFA2020 initiative is focusing on 25 countries where 73 percent of all financially excluded people live. These countries include Bangladesh, Brazil, China, Colombia,Cote d’Ivoire, DRC, Egypt, Ethiopia, India, Indonesia, Kenya, Mexico,Morocco, Mozambique,

L-R: Grace Oshoko, executive assistant, Revival Assembly; Anselm Madubuko, apostolic leader, Revival Assembly; Nike Onwurah, associate pastor, Minister Emeke Ikade, Head of Media, at the Press Conference on Azusa 16 Camp Meeting at Revival Assembly Cathedral, in Lagos.

Delphino Entertainment to harness talents in creative industry Innocent Odoh, Abuja

elphino Entertainment company has said that it plans to use its upcoming picnic event this July to harness the potentials of individuals, who will grace its event this year to socialize, network and empower creative minds in order to boost businesses in diverse ways. Onoja Adole, executive director of Dephino Entertainment, noted in a chart with reporters that the picnic is an

Abuja event that has been happening since 2012, which serves as a united platform for people from every age ranging from kids to adults to the age of 65. He stressed that everybody comes together in a particular location to re-connect, reunite, spend time with family members, friends, business partners, colleague among others. Adole added that it is also an avenue for people to come and socialise, network and be happy, stressing that it is just an open event that people come with their picnic blanket, enjoy good music, refreshments, different

games for children, and also an avenue for networking between individuals, family and also to discuss business plans and ideas and how to pursue them. He said: “Previously we have the light of Davido, Ice Prince, Adekunle Gold, Style Plus, Iyanya, Teckno. in every edition there is always a different form of entertainment, we naturally do not do this because of the entertainment attached to it, but an avenue for people to come out and experienc a nice environment out door and there is no restriction to any kind of fun you want to have”

50 entrepreneurs in Ogun to undergo improved training abroad IFEDAYO OGUNYEMI

imbo Ashiru, commissioner for Commerce and Industry in Ogun State has declared that top 50 of the over 500 technicians undergoing vocational and entrepreneurial training in the state will be flown abroad for improved training. The Commissioner made this known over the weekend while delivering his keynote address at the 2018 Alumni Lecture, Awards and Fund Raising Dinner of the Adeola Odutola College Old Students Association (AOCOSA) in Ijebu Ode, in Ogun east senatorial district.

Ashiru noted that the training of the state government is aimed at improving the skills and productivity of industrial workers and youths in the state. The first batch of 500 technicians are currently undergoing training in courses including automotive, engineering, digital technology, construction, hospitality and catering, beauty and hair dressing at the Technical Incubation Centre, Onijanganjangan, Abeokuta. “The administration launched Ogun State-FTAISA City & Guilds TECHBAC Skills and Entrepreneurship Development programme this year. The programme is in partnership

with Foreign Trade and Investment Service Africa (FTAISA). “It aims to improving the skills and productivity of industrial workers and youths, thereby increasing their employability. The programme is expected to be funded through private sector partnership. The first 50 will be taken abroad for improved training.” Ashiru also enjoined others in the private sector to support the state in improving the technical and vocational education, particularly the eight technical colleges in the state. “There is need to provide modern equipment and upgrade for existing facilities at these institutions.

L-R: Erhumu Bayagbon, head, corporate communications/PR, Airtel Nigeria; Ken Onyeali Ikpe, GMD, Insight Redefini Group and Chioma Okolie, CSR lead Airtel Nigeria when Airtel Nigeria won Innovative CSR Leadership Award on Airtel Touching lives, at the 2018 National Marketing Stakeholders Summits and Awards held in Lagos.

Center L-R: Jide ‎Oguntuase, assistant coach, Rexona XI Street to Stamford Academy; Kennedy Boboye, head coach, Rexona XI Street to Stamford Academy; Haruna Olubunmi, a ‎ ssistant coach, Rexona XI Street to Stamford Academy and Academy Participants, at the ongoing Top 100 Rexona Football Academy selections in Lagos.

L-R: Samuel Oluwatoye, commercial excellence director, Nigerian Bottling Company Limited (NBC); Arinola Ajayi, sub-dean, faculty of engineering, University of Lagos; Nasir Giwa, country general manager, Power and Gas Siemens Nigeria; Frank Umole, director of business development, Axxela, and Wellington Oyibo, director, research and innovation, University of Lagos, during the second edition of Professor Ayodele Awojobi Design Competition held at the University of Lagos auditorium

BUSINESS DAY

SHIPPING

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LOGISTICS

Wednesday 18 July 2018

MARITIME e-COMMERCE

How Bala-Usman repositions NPA for productivity, port efficiency in two years Stories by UZOAMAKA ANAGOR-EWUZIE

n 2016, President Muhammadu Buhariled administration, reshuffled the management team of the Nigerian Ports Authority (NPA). Due to the reshuffling, Hadiza Bala Usman, was appointed as the first female managing director of an important government agency that oversees the nation’s economic gateways, the seaports. NPA is saddled with the responsibility of a technical regulator for the port, under the landlord ownership model that Nigeria runs. This ownership model started after the nation’s port was concession in 2006. Here, the cargo handling business of the port, was removed from the authority, and handed over to private operators popularly known as terminal operators. The various terminal operators, whom the port terminals were concession to, were obligated by the concession agreement to invest in the development of their individual terminals and acquisition of cargo handling equipment to reduce cargo dwell time and ensure timely delivery of cargo to owners. Bu s i n e s s D ay u n d e rstands that upon Bala-Usman’s appointment as the helmsman of the NPA, that there was an immediate need to turnaround the Authority from being service port agency to a landlord agency. At that time, Bala-Usman needed to urgently develop a management strategy to tackle the challenges facing NPA especially areas like reviewing of concession

R-L: Eduardo Du, port division manager, China Harbours Engineering Company Limited; Idris Abubakar, executive director, Engineering & Technical Services (NPA); Hadiza Bala Usman, managing director (NPA); Zhou Shangzhi, deputy general manager, China Export & Credit Insurance Corporation; Huang Xiao Fei, client manager, China Export & Credit Insurance Corporation; Zhang Wenfeng, managing director, China Harbours Engineering Co. (Nigeria) Limited, and Sandeep Parasramka, CFO Lekki Port during the courtesy visit to the Corporate Headquarters of NPA, Marina, Lagos.

agreement and finding lasting solution to poor road infrastructure around the ports in Lagos, which for years, hindered effective movement of cargo. Usman’s two years in office Upon her appointment, Usman quickly moved into action by showing her determination to improve the difficulties faced by port users in the movement of cargo. The NPA signed Memorandum of Understanding (MoU) with Federal Ministry of Works and House for the reconstruction of the Apapa-Wharf access road. The project, which was put at a cost of N4.34 billion, was executed by the NPA in partnership with private operators including the Dangote and Flour Mills. Usman also launched the provisional, final billing and customer portal module of Revenue Invoice Management System

(RIMS). The automated payment platform, according to the authority, was aimed at improving NPA’s service offering, partner relationship, efficient payment method, maximise revenue and eradication loss associated with fraud and revenue leakage. Also, she commissioned the NPA’s Command and Control, Communication and Intelligence Centre. With the centre, the Bala Usman-led management of the NPA was able to put in place a surveillance system that watches all activities taking place at the nation’s seaport, and the centre also serves as an information network center for all the security agencies operating in the Port. That notwithstanding, the NPA went further to improve its marine operations with the acquisition of four new tug boats namely MT Daura; MT Ubima; MT Uromi and

MT Majiya. With the new tug boats, the agency was able to improve its operational efficiency by aiding berthing of vessels, improving their turnaround and limiting the time spent by vessels on Nigerian waters to wait for berthing aids. Industry close watchers, said that key among the achievements recorded by the NPA in the last two years, was the establishment of a level playing field for all port operators. This was made possible by the removal of all bottlenecks that hindered healthy competition in the port industry. For example, the NPA under Usman de-classified port terminals and removed the controversial categorisation of ports as oil and gas. Also, to achieve greater efficiency at the port, Usman started the process for the review of concession agree-

ment; to not only ensure seamless collaboration with private terminal operators, but to also sustain development in the maritime industry. On Federal Government economic diversification drive through non-oil export, NPA recently developed the Standard Operating Procedure (SOP) and established a dedicated terminal to handle export and improve earning of foreign exchange. The dedicated terminals include Ikorodu Lighter terminal for Lagos; Shoreline Logistics Terminal for Calabar Port; Bua Ports and Terminal, which is a warehouse measuring 2.896sqm as well as another warehouse measuring 2.760sqm for Port and Terminal Operators Limited in Rivers Port. NPA further entered into partnership with the Nigeria Customs Service (NCS) to introduce the long awaited Single Window Platform, aimed at simplifying and harmonising formalities, procedures, information and documents between various stakeholders in the supply chain. No doubt, the above listed move restored investor confidence in the port industry as the China Harbour Engineering Company (CHEC) took up the balance of NPA’s equity stake in the Lekki Deep Seaports Project; DP World signed a partnership agreement with Josepdam Port Services and the Tanger Med of Morocco opened discussion for the development of a Greenfield logistics base in Nigerian port. In an effort to improve ship traffic at the Eastern ports of Delta, Calabar and Port Harcourt, the NPA management deployed tug boats, pilot cutters and initiated dredging works of the water channels to aid navigation.

However, there was no doubt that the successful berthing of Floating, Production, Supply and Offloading vessel, Egina (FPSO), was an attestation to the constant infrastructural and operational preparedness of the NPA to serving the port users efficiently. To position the NPA to deliver efficient services, Bala Usman realigned the Authority’s organisational structure to reduce cost and ensure effective business processes; introduced merit driven performance management system to improve employee and organisational productivity and transformed manpower development practices to improve the skill, knowledge and capacity of employee Other achievements of the NPA under Usman include the publication of the tariff regime of the Authority on the website in line with the vision of transparency and accountability; establishment and commissioning of the safety information and operations center at Apapa for the prompt dissemination of information to port users, as well as constant engagement of stakeholders on quarterly basis. Recently, the NPA completed the processes towards the award of contract for the dredging of Warri-Escravos at the cost of N13 billion by Federal Executive Council (FEC); successful concession of terminal B of the Old Warri port and flagged off the construction of the Lekki Deep Seaport. Also, the authority secured the approval of N9.7 billion for the purchase of additional two tug boats for the Authority to further improve safe navigation and operational efficiency at the Ports.

It’s against our business interest to delay containers - APM Terminals

ontrary to insinuations that it deliberately delay cargo in its terminal, the management of APM Terminals Apapa, has said that, it does not delay containers as it works against its business interest. Augustine Fischer, general manager, Government, Stakeholder Relations and Communications of APM Terminals Apapa, stated

this in Lagos on Monday. According to him, the terminal in Apapa is a gateway terminal, and from a business perspective, it makes sense to have high throughput than to store cargo in the terminal. “In fact, we work tirelessly to ensure cargo leaves the port in Apapa as soon as possible to avoid vessels having to wait to berth due to lack of space to discharge

containers,” he said. Fischer also said that in the past year, APM Terminals Apapa has not experienced IT related issues, which affects cargo delivery. He added that there was no protest by any association of freight forwarders at the office of APM Terminals Apapa as insinuated in a newspaper article. Collaborating this view, Godwin Onyekazi,

President of the Nigerian Importers Integrity Association (NIIA), said it was inconceivable that any terminal operator will impose arbitrary charges on its customers or deliberately delay the delivery of containers. He said the challenges in cargo delivery at the ports in Lagos are as a result of poor state of the port access roads and poor traffic

management in Apapa. Onyekazi blamed the new truck call-up system introduced by the Nigerian Ports Authority (NPA) for the worsened traffic situation in Apapa. “The whole of Tin Can and Apapa ports are now in a state of comatose. There is a near total lockdown because trucks are not allowed into the port as much as they should be. Until

this anomaly is corrected, all of us including the terminal operators, importers, exporters, agents and shipping companies will continue to suffer hardship,” he explained. “Government revenue will also continue to suffer while diversion of cargoes to the ports of neighbouring countries and smuggling will continue to be on the increase,” he added.

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Wednesday 18 July 2018

BUSINESS DAY

Tax Issues

Tax deduction on gas flaring expenses: Companies to obtain Minister’s approval ...judgment places taxpayers in an unfavourable position -Experts IHEANYI NWACHUKWU

he Federal High Court of Nigeria (FHC) recently disregarded the judgment of the Lagos division of the Tax Appeal Tribunal (TAT, in the case of Federal Inland Revenue Service (FIRS) or the Appellant) versus Mobil Producing Nigeria Unlimited (Mobil or the Respondent) on the tax deductibility of payments made for gas flaring without the approval of the Minister of Petroleum Resources (the Minister). The decision which was made on March 26, 2018 was released to the public on May 2018. The Tax Appeal Tribunal had, on March 17, 2015, held among others, that the Petroleum Profits Tax Act (PPTA) and the Associated Gas Re-injection Act (AGRA) do not expressly require that a company must obtain Gas Flare Certificate before the expense incurred can be tax deductible. Based on the Federal High Court of Nigeria rul-

ing, payments made in respect of gas flaring without a certificate or a written form of approval from the Minister, are not deductible for Petroleum Profits Tax (PPT) purposes. The Abass Adenijiled team of tax experts at Ernst & Young Nigeria who looked at the implication of this judgment said, “The judgment places taxpayers in an unfavourable position requiring that the Minister’s approval needs to be obtained prior to any claim of tax deduction on the expenses incurred on

gas flaring.” Accordingly, unless the case is further appealed to the Court of Appeals or Supreme Court, taxpayers are required to obtain an approval and certificate from the Minister prior to claiming a tax deduction for the expenses incurred on gas flaring. “While it is unclear whether the case will be appealed in a higher court, the FHC’s judgment should prevail over the earlier ruling of the TAT which favored taxpayers. In practice, some upstream companies in the

Oil and Gas industry simply apply to the Minister and pay the relevant gas flare fees without necessarily obtaining the approval of the Minister to flare the gas,” according to the experts at E&Y Nigeria. “Therefore, it is important that taxpayers obtain approval and the gas flare certificate from the Minister prior to claiming a tax deduction for this expense. This should be the practice unless the Court’s judgment is appealed and reversed by the Court of Appeals or the Supreme Court,” the experts noted.

Recall that between the years 2006 and 2008, Mobil made payments to the Department of Petroleum Resources (DPR) for gas flaring activities describing the payments as “gas flaring fees.” Mobil treated the expense as allowable deductions for tax purposes, which was disallowed by the FIRS. The position of the FIRS was challenged at the TAT. The TAT ruled in favour of Mobil, setting aside the additional liabilities imposed by the FIRS. Following the TAT judgment, an appeal was made by the FIRS to the Court which sought the order of the Court to set aside the Tribunal’s judgment in its entirety. The FIRS in its appeal requested the Court to determine, in setting aside the Tribunal’s judgment, whether: The TAT was correct in holding that the PPTA and the AGRA did not expressly require a company to obtain a gas flare certificate before expenses incurred may be deductible and thereby allowing

Potential for tax controversy is on the rise T

axpayers and tax administrators do not agree on everything; they have different concerns and objectives and don’t prioritize the same risks. Taxpayers and tax authorities alike agree that their world is suddenly rife with uncertainty and that the risks associated with that uncertainty are on the rise. Tax reform in the US, in particularly, is causing businesses around the world to re-evaluate structures and supply chains and causing foreign governments to assess the impact on their tax base. This effort comes even as both work to understand and implement recommendations to prevent base erosion and profit shifting (BEPS) made by the Organisation for Economic Co-operation and Development (OECD) “If taxpayers don’t understand what authorities are most worried about, they might encounter controversy where they aren’t expecting it,” said Gijsbert Bulk, EY Global Director of Indirect Tax. Both taxpayers and tax administrators agree that the potential for tax controversy is on the rise, and avenues to settle these disputes are not optimal. This much is clear from our separate surveys of taxpayers and tax authorities in 2017.

But they don’t agree on everything — taxpayers and tax administrators have different concerns and objectives and don’t prioritize the same risks. And administrators from different countries diverge in their concerns as well. Controversy drivers Until the current transition period gives way to a more predictable system for tax administration, multinationals seem destined to struggle to avoid conflict that results in incidences of double taxation or more. The drivers of controversy will become more apparent with time. Among them are: More transparency, particularly around transfer pricing More aggressive audits Potential for tax controversy is on the rise Efficacy of multilateral alternative dispute resolution

programmes such as advance pricing agreements (APAs) and cooperative compliance programmes. The riskier environment is also prompting leading businesses to refocus their approach to global tax controversy management, even as they struggle to secure and deploy the resources necessary to comply with a rapidly changing digital tax environment. Many tax authorities are developing more sophisticated capabilities to collect and analyze large volumes of data and have made great strides in recent years to share information on a more routine basis. This means more real-time auditing, more demands for information from taxpayers and less time for taxpayers to respond to these demands. Many taxpayers, by contrast, are struggling to keep up and obtain the resources

they need to fully engage with government requirements. The increasingly sophisticated capabilities of tax authorities mean “executives need to have a strategic view and global approach to controversy management,” says Frank Ng, an executive director in our Tax Controversy and Risk Management Services. Focusing on different risks Taxpayers in our global 201718 Tax Risk and Controversy Survey told us they perceive transfer pricing as their top source of risk, followed by indirect taxes. Tax authorities inverted those priorities: they ranked indirect taxes their highest compliance risk, followed by transfer pricing, broadly defined to include goods and services, intangibles and financial services. Taxation of the digital economy was a close third. It stands to reason that tax authorities are so concerned about indirect taxes — they represent a growing share of tax revenue in many countries and currently are equal to about 13.6% of gross domestic product in the European Union. And business shouldn’t lose sight of that, even as they focus on adapting to tax reforms on the income tax side. “The disconnect here between tax authorities and taxpayers has the potential to lead to more controversy, because there

will be an inherent mismatch of resources and priorities,” said Gijsbert Bulk, our Global Director of Indirect Tax. “If taxpayers don’t understand what authorities are most worried about, they might encounter controversy where they aren’t expecting it.” But even among tax authorities, there were split perceptions about sources of risk, and the divergence correlated strongly with the size of a country’s economy, with G20 countries perceiving things differently than those with smaller economies. Both ranked indirect taxes as their top compliance concern, but the proportion was more pronounced in non-G20 countries. By contrast, transfer pricing was also a bigger concern for G20 countries, with the digital economy ranking third. Furthermore, taxation of the digital economy ranked second among non-G20 countries identifying their highest compliance risk. And no non-G-20 countries identified transfer pricing of goods and services or financial services as a top risk; few said transfer pricing of intangibles was their highest compliance risk. Tax risk associated with the digital economy continues to be a main focus in the EU, which released a report on 1 March outlining a collective approach to correcting what it said is a “mis-

penalties for gas flaring to be deductible despite the strict application of the tax laws especially when they are clear and unambiguous; Section 3(2) of the Associated Gas Re-injection Act permits the Respondent to flare gas without the written permission of the Minister in charge of Petroleum; and the TAT was correct in holding that the gas flare penalized by the Respondent qualified for tax deductibility for the sole reason that the Respondent was not sanctioned by the Minister of Petroleum. Mobil responded to the appeal by raising a sole issue for determination on whether the Tribunal was correct in holding that the sums paid by the respondent to the Federal Government for gas flared was wholly, exclusively and necessarily incurred for the purpose of petroleum operations and should be treated as deductible expenses in calculating the respondent’s PPT liability for the relevant accounting periods.

match between where taxation of the profit takes place and where value is created for certain digital activities.” Calls to action Armed with this knowledge, companies now need to take steps to address these issues: Bring your technology up to date. With governments keen to address indirect tax and digital tax administration on the rise, it will be important to have information technology systems current and able to respond to requests from tax authorities in real time or near real time. It will also be important to know where your potential controversies fall on tax authorities’ priority lists. They will be less likely to allocate their scarce resources to unique problems, instead looking to challenge arrangements that could apply to many companies. Adopt a global approach to managing tax controversy. The transparency trend, and the potential for news stories to create reputational risk, suggests that tax controversies should no longer be left to local offices that best know their country’s tax authorities. These have the potential to be global problems, and a controversy with one country could quickly become a controversy with multiple countries. For that reason, a global approach is necessary.

BUSINESS DAY

Wednesday 18 July 2018

INTERVIEW

Wednesday 18 July 2018

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Why I am passionate about PDP, by Wike

in Nigeria. When the Ooni saw it, he marveled that such was in Nigeria. We brought the European Union Ambassador to commission some offices and one of them was being occupied by a UN agency. We brought the British High Commissioner to commission the Rumuokuta Girls Schools to see what the school is now and he was amazed how the place has transformed. We still left one building there to show how the place was and to see what we have done now. He was amazed. I invited those who are running for the presidency in the PDP to come and commission projects and they came: Atiku Abubakar, Ahmed Makarfi and others. They are not coming because I am strong, but on invitation. We even invited opposition strong men; Speaker Dogara, Sokoto governor, Senate president, they came and saw with their two eyes. That is how it is supposed to be. Politics should not be that if you are in one party, you should not see eye to eye with the others. We should go round and see what they are doing too. Governor Ifeanyi Okowa of Delta State was here to commission projects and I have been to his state to commission projects also. If they end up thinking that this man is strong in the party, so be it, but it was not the intention. Your Excellency, you saw what happened in Ekiti few days ago, and many fear for Rivers State. What’s your take on it? This is not the first time. I know them and I know their character. I know what they can do. It did not

start today but it started during the reruns in Rivers State. They sent 40,000 for mere LGA elections, not in the whole state. In fact, it will be worse in 2019. I know them. When a government is so desperate, that government can do anything. This is a government that does not respect the rule of law. How does such a government fight corruption? If I tell you what this government has been doing, as I speak to you, they are using the EFCC to do everything against the state. We are not bothered because in 2006/2007, the Rivers State government took the EFCC to court and the court gave judgment and say, you cannot interfere in the financial transactions of the state. It is only the Rivers State House of Assembly that has such powers. The EFCC took the matter to appeal but they have not been able to set that judgment aside. Because they do not obey the law, they are asking our contractors questions. If they want to turn this country upside down, it is okay. You cannot coerce anybody. If you see the plans they have for Rivers State in 2019, you will marvel. They want power at all costs and when a man wants power that way, he can go to any length. All I am doing is to put my state on notice, so that when that desperation begins, I say, I told you this. Rivers State will be a war zone in 2019 because they are not prepared to do free and fair elections. They know they have nothing to tell Nigerians, they resort to vindictiveness. They did that to Ekiti because the governor has been vocal against their administration. Now, they say, it does not matter what it takes to take Ekiti, even if it takes the governor’s life. See how the then president conceded victory in 2015, but do you think these people will concede victory in 2019? Thank God people have seen what I was saying. When you barricade a whole Government House, where then is immunity? See what the senior police officer (DPO) was saying, why did they leave? It was because there was national uproar. The security intelligence I got is that it is the same thing they will do to me, but I say, good luck. If you want all of us to carry arms, we are ready to do it, to defend this democracy. You cannot push people to the point that anything you want must be so. You cannot do that. You are pushing everybody now to defend himself. If you can do this to a sitting governor, then, you

cause that story has been there over the years. What matters is evidence of what has been put on ground for free and fair elections? Can he say no to the ruling party?

Governor Nyesom Wike of Rivers State in this exclusive interview in his office in Port Harcourt with BusinessDay editors, ZEBULON AGOMUO, JOHN OSADOLOR and IGNATIUS CHUKWU, spoke on his perceived strategic position in People’s Democratic Party; why the All Progressives Congress is desperate to take over the state and the need for Nigerians to show more interest in the electoral process as the country inches towards the general election in 2019. Wike, who strongly condemned the alleged brutality visited on Ayodele Fayose, governor of Ekiti a few days to last Saturday’s gubernatorial election in the state by security agents, said it was unfortunate that such could happen in a democratic setting. He also spoke on other issues: Excerpts: You seem to be the rallying point for the opposition and every top PDP leader comes to seek your attention and support; what is the reason for this because we discover that if you have not spoken on any issue, that matter is not closed? do not think that is the exact situation. Everybody who loves PDP (you may be in PDP just because you cannot be with the other people, but that does not mean you love PDP); you will know that you have a role to play. Since 1999, I was a local government chairman on PDP ticket. I was made chief of staff, minister; and now governor on PDP ticket. Why would I allow the platform that elevated me to where I am to die? That is the same commitment I am talking about. I love PDP and I will do anything to make sure that PDP stays in this country. Part of what we have done is to prove to the whole world that we are doing something. If I commissioned those projects, there would still be doubt. So, we say, everybody come; traditional rulers, ambassadors, members of the ruling party, etc. We brought the Sultan of Sokoto who laid the foundation stone of the Rivers State Traditional Council Secretariat to come back this year to commission it. The logic is if somebody tells him contrary things about that project, he would say, ‘look, I laid the foundation, I commissioned it’. We brought the Ooni of Ife to commission the Cultural Centre. It was about 40 percent done since 2008. Today, it is the best outfit

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The PDP and others have come together under a coalition to say power must change hands. What is the import of this? The opposition groups need cooperation and understanding of certain things. It is allowed in politics. What that means is to say, look, we have the capacity to put all efforts together to remove this bad government. That is good for Nigeria. Coming together to move Nigeria forward is the way to go. Each group would bring their programmes and form a national agenda. We do not want to do it alone but work together so Nigeria can move forward. It should be encouraged further and that is what I stand for. Do you think the developments in Ekiti confirm need for state police and where are we in your Neighbourhood Watch Corps project? Yes, that is the evidence. The House of Reps has met to amend the law to permit state police. A governor is called chief security officer but see how he is being brutalised with flimsy excuse. State police is inevitable. On our own, we have set up the Neighbourhood Watch Corps. I hear they are recruiting but I do not want to interfere. All I said is, as you recruit, the security agencies will have to profile them to avoid recruiting bad eggs as happens in the police. They brief me from time to time. They may roll out in September (2018).

Governor Nyesom Wike

can imagine could happen to the ordinary man? And you can imagine what will happen in 2019. They are recruiting policemen to have the numbers that they will use. To them, if it means killing up to 500 persons just to snatch a state, no problem. They just want Rivers State. They will kill themselves not us. We will not die, they will die. To them, it does not matter the number of lives to be lost. That is no longer democracy. It is just about votes. We are prepared for elections because we know what we have done to the people. They do not have anything to show. The APC Federal Government cannot mention one thing they have done in Rivers State., except use of force. There is no Local Government Area I cannot go to and show what I have done for them. Let them come and show us theirs. They have nothing to campaign here with. The only instrument they have is coercion

I tell Nigerians, do not be intimidated. Everybody has to make sacrifice. The media played a role in 2015, why not now! Have you been so intimidated?

using brutality. We have said, how many people will you kill at the same time? You sent 30,000 policemen to Ekiti. No wonder herdsmen are killing people everywhere because you have posted policemen to Ekiti. See Sokoto killing is now 39 persons. It has never happened before. You have neglected the major function which is protection of lives and property to focus on how to win elections. If you listen to their meetings, it is about how to win here or there. They have trained Special Forces for elections and one of them is the SARS Commander here. I do not know why a government that came to power by vote does not want the people to vote this time again. It appears many Nigerians are now lukewarm as INEC says over 17 million PVCs have remained uncollected; what advice do you have? Nigerians do not need to be aloof. This will play into the hands of those doing badly. People should come out and take

their stand. Vote and insist on your vote. No struggle is easy but every struggle takes life. That is the way to change your country. To go to sleep is dangerous because it allows a bad leader to remain. In Ekiti, they know that under credible elections, the PDP will win. So, what they are doing is causing tension in PDP strongholds and could cause apathy. I tell Nigerians, do not be intimidated. Everybody has to make sacrifice. The media played a role in 2015, why not now! Have you been so intimidated? If I was that kind of persons, I would have caved in by now. They have attempted to take my life, use EFCC, etc, but I am not moved. The task is to not allow a bad leadership to take control. Is the hand of the INEC boss clean? He has not shown us that his hands are clean. I do not want to be carried away by what INEC chairman says be-

How far can you accommodate the opposition; if Amaechi for instance, comes today and say, let’s work together, would you welcome it? That is what will move the state forward. We must remove our personal matters. What is the problem in the state? Nothing! A road was being done and somebody said it was passing through opposition man’s area, and I said, rubbish. The state belongs to all. So, if the minister, if he loves his state, all he should do is support his state. As minister, let him attract projects. It is not good to deny your state of projects. Who will lose, me? When I was a minister I attracted so many projects in education and funds: faculty of law in UNIPORT, Faculty of Sciences and we named it after Claude Ake; funds to UOE, to Bori Polytechnic (now Ken Saro Wiwa Poly), renovation of many schools. I did not relent because the governor and I were not together. Should I allow my state to surfer? No! I say, as a minister, see what I did for my state. You, what have you done for this state? The only thing I can see is bringing soldiers and police to kill and maim the citizens. Apart from that, not one project, not one. Rivers State produces the wealth of the nation but they do not want to see their faces.

In Nigeria, continuity seems to be an issue; what arrangement do you have to develop a crop of men and women to succeed you and continue the agenda? I have always said anybody working with us in the party or administrant knows the vision and the focus. If that time comes, we look at them and look at those that are fit to continue. We would say, can we go along with this person? It is not me. This idea of ‘I must appoint my successor’ is a problem. You are personalising this thing. To say it must be your son-in-law or your son must take over is not the right thing. It is not your property. You are not even looking at somebody who has capacity to add value. I do not have

that kind of plan. We will look at it as a government and as a party. You may bring somebody here tomorrow and he will be the one to fight you. This godfatherism is somehow, it has limitation. It affects development because you must go and take permission for every action. No, I am not party to that kind of thing. That is why I am able to do my work today. The party as a whole should look at those interested and make a choice. It is not my father’s estate and, by the way, what am I protecting? There is nothing like ‘endorsement’. What for, is it a monarchy, from father to son? It is for everybody and if you think you have the capacity, throw in your bid. This idea of waking someone up to come and be governor is bad, it is wrong. That is what we must stop.

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Promote organic farming to protect Nigeria’s ecosystem, FG urged Stories by JOSEPHINE OKOJIE

ue to its strategic role in encouraging biodiversity, safer food production for human consumption without the application of fertilizers, pesticides, and herbicides with toxic substances, which leads to health complications, experts advocate for greater commitment towards organic farming from Nigeria’s government. The stakeholders who spoke during the third National Organic Agriculture Business Summit (NOABS) 2018 in Lagos recently, with the theme ‘Organic Agriculture: Abundant Opportunities for Health and Hospitality Businesses’ said that organic farming helps in keeping the country’s biodiversity. “The foundation of organic farming is to keep the biodiversity and it is also concerned about keeping the integrity of the ecology,” Akin Abayomi, a professor of Clinical Medicine, Nigeria Institute of Medical Research and an organic farmer said. “The ecosystem actually looks over us and if you do not look after them, then we should be ready to pay the price. We have nothing to handover to the next generation unless there is a radical change in the way we currently do things,” Abayomi added. He also said food grown according to certified organic standard is safe for consumption, but conventional crops are grown with synthetic inputs like fertilizer, pesticides, herbicides and others with toxic substances, which is not safe, and consumers are poised to become unhealthy. Nigeria’s role, according to the Abayomi in strengthening organic farming is to create enabling laws that will control the use of genetically modified products in the country.

L-R: Victor Olowe, president, Association of Organic Agriculture Practitioners of Nigeria; Akin Abayomi, professor, Clinical Medicine, Nigeria Institute of Medical Research and Olugbenga Adeoluwa, country coordinator, Ecological Organic Agriculture Initiative (EOA) during the National Organic Agriculture Business Summit 2018 held in Lagos recently.

“The population of Africa is growing so fast that it is impossible not to use genetically modified food to meet its huge demand. But the answer lies in the people if they are willing to accept something that cannot guarantee what can happen to them in the long run,” he added. Akande Fadekemi, programme manager, Agricultural Development Programme (ADP) representing Oyewole Oyewumi, Commissioner of Agriculture, Oyo state said that organic agriculture sustains the health of the soils, ecosystem and people. Since it relies on ecological processes, biodiversity and cycles that adopts local conditions such as crop location, residues and biofertilisers amongst others, it should be encouraged Oyewumi said. “Organic agriculture minimises soil erosion by up to 50 percent through enhancement of soil organic matter which is very instrumental in

maintaining soil fertility and vital for soil fertility,” Oyewumi said. “Organic farming supports substantial levels of wildlife interaction thereby preserving the ecosystem and ground water,” he further said. The governor noted that organic agriculture is the solution to government efforts of reducing diseases and other pathogen-laden food being consumed by its citizenry. Speaking on the standardisation of organic farming, Victor Olowe, a Professor and agronomist in the Federal University of Agriculture, Abeokuta (FUNAAB), said that the association certified organic products for local consumption. Olowe who is also the president of the Organic Agriculture Standard in Nigeria (NOAN) said the institution uses a scheme called Participatory Guarantee System (PGS) to certify production systems, noting that

farmers planning to export their organic produce must seek a third party certification. “Currently, we are making efforts to push through an organic bill at the National Assembly. The bill might spur other farmers to embrace organic farming,” Olowe said. “We have over 5,000 organic farmers in the country now and we are expecting the numbers to keep increasing annually,” Also speaking at the summit, Olugbenga Adeoluwa, country coordinator, Ecological Organic Agriculture (EOA) said that the association has been making efforts to encourage Nigerians to consider organic farming in the country, adding that the drive can only be sustainable if it is demand driven. “We intend to work with every state hosting us to develop a plan to drive organic business in Nigeria and create a road map,” Adeoluwa said.

Mahindra, Springfield Agro collaborate to scale up farm tech in Nigeria

ahindra &Mahindra Limited, the world’s largest tractor maker, along with its channel partners in Nigeria-Springfield Agro and VIP Merchandise Enterprise – are collaborating to create and scale up technologies that will increase agricultural productivity in the country. For years Mahindra has been partnering in the growth story of Africa’s agriculture by offering its range of products in the areas of agriculture, farm technology, mobility and power generation. “ We h av e p a r t n e re d w i t h Springfield Agro and VIP Merchandise to provide end to end solutions to farmers to improve their yield per hectare,” said Arvind Mathew, chief international operations, Maindra said at a media roundtable in Lagos. “We are creating a one stop shop to provide farmers assistance with modern farming technologies and

teach them to adopt innovative farming techniques. “Nigeria is among the largest markets and economies on the African continent and presents very strong growth prospects. We have been working steadfastly with our channel partners – Springfield Agro and VIP Merchandize - to ensure that we deliver innovative solutions to meet the needs of the farming communities,” Mathew said. Mahindra has since expanded its product offerings in the two and three wheeler tractors in the country, he said. Speaking also during the media round table, Tarun Kumar Das, managing director, Spring Field Agro said that Springfield partnered with Mahindra to help address the issues of low mechanistaion use in Nigeria. “Nigeria has a low maintenance culture. So they need tractors that are easily maintained and we believe that Mahindra machines are the right

choice. Springfield Agro and Mahindra have established a strong presence in Nigeria over the last decade to provide solutions in the agriculture and farming space,” Das said. “We have recently commissioned a Mahindra tractor assembly plant in Kaduna State, with a manufacturing capacity of 5,000 tractors and associated agricultural implements. It can produce various ranges of tractors from 25Hp to 80Hp to cater to a wide spectrum of customer needs. Over the years, Mahindra and Springfield Agro have created thousands of satisfied customers in Nigeria,” he added. He noted that scaling up technology in the country’s agricultural sector is necessary to attract youth into the industry, saying that youths are not willing to involve themselves with the drudgery of farming. Das said that over 50 percent of Nigeria’s farming land is being cultivated by hoes and cutlasses which have continued to limited farmers to

increase their production areas. According to him, Mahindra, along with Springfield Agro, launched the Farm-To-Folk initiative in collaboration with the Katsina State government to address some of the country’s mechanisation’s issues in the state. Prakash Vaswani, chairman, Geepee Group said, “boosting local employment is crucial to the economic development and prosperity of the country. We have setup assembly plants in Sango Ota and Kano where we assemble Mahindra two and threeWheelers and generator sets, in turn providing employment opportunities to the local manpower in the regions.” “Also, with our products, Arro and Alfa, we have not only been offering customized and unique mobility solutions for the market, but also delivering employment and entrepreneurial platforms to empower the community to Rise,” Vaswani added.

Ogun empowers 3,000 women with Noiler birds

he Ogun state government has empowered 3,000 rural women with 30,000 boiler birds across the three senatorial district of the state in the second phase of its Noiler Empowerment Programme. Speaking during the programme at Ijebuode, Ilaro and Abeokuta, Yetunde Onanuga, deputy governor, Ogun State said that the programme is one of the government way of improving the livelihood of rural women in the state. Onanuga added that the state government embarked on the second phase after the huge success and excellent testimonies recorded in the first phase when 10,000 birds were given out to 1,000 women in the state capital in April. She therefore urged the beneficiaries to make a success of the opportunity to improve their

livelihood and increase protein nutrients in their household as well as contributing to food security in the state. Sh e u rg e d t h e w o m e n o n the need to key into various agricultural programs in the state which according to her is mostly designed for women. Peju Adebajo, commissioner for Agriculture, said that the seven weeks old boiler birds distributed to the women is a cross breed between broiler and layers which makes them stronger and easier to rear just like the local breeds. Three of the beneficiaries, Tope Akinlade from Ogun West, Toiba Osinubosi from East and B i o l a O d e j i d e f ro m C e n t r a l Senatorial Districts thanked the state government for the good gesture. They however urged the state government to extend the program to all the twenty local government and thirty seven LCDA areas of the state.

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How to invest in yoghurt production JOSEPHINE OKOJIE

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

several products such as ice cream, ghee, powdered milk and yoghurt, among others. Aliko Dangote, president of

Dangote Group, who is also a dairy maker, stated that only two percent of the country’s dairy needs are met by local companies.

FUNAAB, C:AVA, others train farmers on global farming practices in cassava cultivation JOSEPHINE OKOJIE

he Federal University of Agriculture, Abeokuta (FUNAAB) in collaboration w ith Cassava Adding Value for Africa (C:AVA II ) Project, Cassava Weed Management Project (CWMP) and Community Based Farming Scheme (COBFAS) have trained over 100 farmers on global best practises in the cultivation of cassava in Nigeria. The training carried out by the Agricultural Media Resources and Extension Centre (AMREC) of the institution with other partners is to support farmers in the production of high yielding varieties of cassava using best agronomy practices, with the aim of reducing yield gap and increasing farmers’ income. Dorcas Adegbite, a professor and director of AMREC, in her address

explained that the training will help boost cassava production in the state, the statement said. Emphasizing the importance of cassava as a major staple crop in Nigeria, Adegbite disclosed that its role in increasing farmers’ income and improving their livelihood cannot be overemphasized. Joseph Olobasola, directordirectorate of University Farms (DUFARMS) representing the vice-chancellor of the institution implored the farmers to utilize the knowledge acquired from the training to boost their production. According to Olobasola, researchers have developed new technologies on cassava and improved agricultural practices that will increase the tonnage of cassava from the usual 12-15 tonnes per hectare to 30-50 tonnes per hectare. The technical session of the training exposed participants to

cassava utilization as an industrial raw material, basic steps in cassava production, derivatives from cassava, cultural operations in cassava production and potentials in cassava production in Nigeria, the statement said. Experts at the training emphasized the need to have e f f e c t i ve w e e d ma nag e m e nt techniques through the use of pre and post-emergence herbicides, while participants were taken through steps in calibrating knapsack sprayer and safety tips in the use of agrochemicals, as well as demonstration of spraying of herbicides. Speaking on behalf of the participants, Joel Ademola Aremu, the Alaye of Iwoye-Ketu, appreciated FUNAAB for bringing the programme to Iwoye-Ketu and lauded AMREC for the support received from the centre.

Expert tells Kogi government to invest in cashew processing VICTORIA NNAKIAIKE, Lokoja

teve Ahaiba, former chairman, Cashew Association of Nigeria, Kogi state chapter have urged the Kogi state government to invest in cashew processing to realise the full potential of growing the crop. Ahaiba said this at a programme organised by the Kogi state Chamber of Commerce and Industry in lokoja recently. He emphasized that the full

benefit of producing the crop is in value addition, calling on the government to drive investments in the subsector and to provide extension agents to train farmers on modern farming techniques to boost production for processing. He called on the government to fulfil its promises of establishing a cashew processing factory in the state, urging them to move pass the talking stage and go into action. “Surely we the private sector has a role to play in all of this. But we

cannot do anything if the policies and the right environment are not provided by the government to drive investments. In the area of research in cashew, we still need to do a lot to help farmers improve their yields per hectare in cashew production, “he said. On security, Ahiaba said the that the farmers and herders conflicts is a big issue, saying that the ranches should be purely driven by the private sector with the government providing the enabling environment.

Wi t h d o l l a r s c a rc i t y a n d roadblocks to importation in the country, yoghurt production is a sure bet.

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

Kwara farmers groan over high cost of fertilisers, lack of irrigation SIKIRAT SHEHU, Ilorin

wara state farmers are currently being threatened by the high cost of fertilisers and lack of irrigation for farming in the state. The farmers on this note have urged the government to assist them in the provision of irrigation facilities to help increase their yields per hectare and encourage youths to engage in farming. Fa r m e r s w h o s p o ke t o BusinessDay attributed the high cost of food items in the state to the high cost of production farmers incurred as a result to the rise in the prices of inputs. Abdul-Fatai Oladimeji, a farmer said “a 50 kg of NPK fertilizer that was formerly sold for between N3, 500 and N4, 000, is now sold at N7, 500 and the insecticide and fungicide that was N8, 000 a tin, is now N18, 000.” “Also on the irrigation problem in the state, we spend more money on labourers that wet the plants, morning and night,” Oladimeji said. Ku n l e A d e w u s i , a u d i t o rgeneral, Perishable Goods Sellers Association, said that most of the farmers did not have access to water, so they use the manual method of wetting their farms, which was very tedious. “The local method is tedious because the farmers go to far away streams to get water for their plants. They usually start the process of manual labour from March to May before the rainy season begins. “The little number of farmers

that can go through the stress are the ones that will supply the tomatoes to the market. So the few supplied will not be enough for the population in Kwara State, which is the reason for the high price,” he said. Ab d u l -Aw wa l Ju ma i da, a supplier and seller, complained of the stress and pain of planting tomatoes in the state, and that was the reason he travels to the north and south-west to get tomatoes. “I travel to the northern parts of the country from December to June, then from July to December, I travel to Osun, Ekiti, and Oyo, to get tomatoes, he said. According to Jumaida, traveling to get tomatoes has lots of gain, but with inherent danger. “Sometimes, our vehicle will develop fault on the way, causing delay for two to three days, which will lead to shortage. “A l l t h i s a r e p u t i n t o c o n s i d e rat i o n i n t h e c o s t o f tomatoes, so from December to June, the cost of a small basket of tomatoes is between N1,500 to N2, 500 and the big basket is between N18,000 to N25, 000 depending on its availability in the market. “By August there will be more tomatoes in the market, till the end of rainy season, it will be very cheap, as many farmers will be rushing to sell their product to avoid wastage. “The bounty season lasts till around November-December when the price of tomatoes will rise again we want government to do something on this,” he said.

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Shonubi’s appointment as CBN deputy governor seen deepening payment system Stories by Hope Moses-Ashike

he recent appointment of Ade Shonubi, managing director of Nigeria Inter-Bank Settlement System (NIBSS) as deputy governor of the Central Bank of Nigeria (CBN), has been seen by stakeholders in the financial services sector as a positive development that would enhance the banking and payments system while growing the economy. President Muhammadu Buhari on June 8 approved the nomination of Folashodun Adebisi Shonubi as the deputy governor of the CBN. “This is a positive development as the deputy governor will bring to bear his experience in the banking and payment industry. There is still a lot of headroom to deepen Nigeria’s payment system especially the mobile money structure. This may help to drive the financial inclusion initiative by the CBN”, Ayodeji Ebo, managing director, Afrinvest Securities Limited said. Shonubi has spent the

last 10 years driving technology and payments in Nigeria. He practically brought NIBSS to the consciousness of the everyday Nigerian with NIBSS Instant Payment (NIP) that transformed how interbank payments are done. The volume and value of the NIBSS Instant Payment transactions increased significantly by 167.3 and 49.7 per cent to 150.5 million and N24.5 trillion respectively, in the first half of 2017 above the 56.3 million and N16.4 trillion in the corresponding period of 2016. The increase was attributed to users’ preference for its quick transfer capacity, according to the CBN’s half year 2017 report. Many experts have contended that the NIP service is the most superior interbank transfer service in the world. As a deputy governor, he would probably push this path by making transfers cheaper, faster and probably create even a free tier. It is well known that NIBSS is planning a N5 per transfer by July and N1 per transfer by middle of 2019. “I expect the appointment of the former CEO of NIBSS to complement

Ade Shonubi, managing director, Nigeria Inter-Bank Settlement System

the skills and experience of other members of the CBN leadership team and by extension should be good for the economy”, Taiwo Oyedele, head, Tax and Regulatory Services, PWC, said. Ultimately, Oyedele said the effectiveness of the CBN should be based on its capacity as an institution with unfettered sound governance rather than depending on any one individual superstar. While Shonubi may

want to strike reconciliatory stance with Mastercard and Visa, it is no secret to anyone in the payments industry that NIBSS has tried all it could to bring them to order. For example, the rule on POS significantly curtailed how Mastercard and Visa wanted to dominate POS payments in Nigeria. As the DG, we may see rules that explicitly forbid local transactions to transverse Visa and Mastercard

network. Additionally, he may also push rules that enforce Naira fees for all internationally branded cards by local banks. Johnson Chukwu, managing director/CEO, Cowry Asset Management Limited, said Shonubi has good experience in settlement and will bring this to bear in the entire settlement industry. Having headed NIBSS for 10 years, Chukwu said Shonubi is in good state to work towards the good of the banking industry. He projected that the new deputy governor would likely be posted to operations department. “He is clearly a proper-fit from the kind of experiences he is bringing on board”, Chukwu added. Concerning electronic fraud in the banking system, Shonubi has led the way against electronic frauds for as long as anyone could remember. Knowing that a dip in confidence could derail adoption of payments, he has initiated several systems for fighting frauds such as blacklisting of fraudulent Bank Verification Numbers (BVNs). The banking industry recorded a decline in the rate of successful fraud incidenc-

es and extent of amount of losses in 2016, compared to 2015, Umaru Ibrahim, managing director, Nigeria Deposit Insurance Corporation (NDIC) said last year. According to Ibrahim, the reported cases of frauds, forgeries and outright theft involving bank staff recorded a huge decline of 48.12 percent from N18.02 billion in 2015 to N8.68 billion in 2016, while the actual losses to the nation’s banking industry dropped by 24.29 percent from N3.17 billion in 2015 to N2.40 billion in 2016. Also, the level of attempted cases of frauds and forgeries declined by N0.329 billion or 11.94 percent from N2.756 billion in March 2017 to N2.427 billion in June 2017. Analysts expect stronger rules with tougher punishment for perpetrators. The way forward for the banking industry is to collaborate with Fintech companies to deliver financial services because Fintechs have taken over financial services up to a third percentage of the population in volume and in value incountries like Kenya and China.

Banks, Fintechs’ collaboration to expand financial services provision

intech companies in emerging markets have shown that with blockchain technology, it is possible to leapfrog to new forms of banking. Banks on the other hand are best placed to continue to influence the future of Financial Services because of their huge branch network, solid reputations, and risk controls, as well as years of customer cultivation and loyalty. This was the position of Austin Okere , founder/ex-

ecutive vice chairman, CWG Plc, the largest ICT Company on the Nigerian Stock Exchange (NSE), at the 2018 Lagos bankers and stakeholders nite organised by the Chartered Institute of Bankers of Nigeria (CIBN), Lagos State branch. Accenture recently released a report which found that investment in Fintech around the world has increased dramatically from $930 million in 2008 to more than $12 billion by early 2015. The Fintechs employ Artificial Intelligence, Big Data and

Machine Learning to glean the credit habits of customers from their mobile usage, and so have mitigated against the risk of default. “The future of Fintech seems bright”, Okere said. In Nigeria for instance 84.6m people, accounting for 47 percent of the population are unbanked. In sharp contrast, mobile phone penetration is very high at 94.5 percent; a perfect set-up for the Fintechs to exploit in their mobile dominated financial services offering. The digitization of retail

payment systems and financial services has become an important economic development priority. It offers the prospect of reaching far more people at far lower costs with the broader range of financial services they need to build resilience and capture opportunities. Okere said the way forward for the banking industry is to collaborate with Fintech companies to deliver financial services because Fintechs have taken over financial services up to a third percentage of the popula-

tion in volume and in value in countries like Kenya and China. Foluke Abdul-Rasaq, a director with United Bank for Africa (UBA), who was the chairman of the occasion observed that a strong banking system is imperative to the economic growth of any country. She stressed that the strength of the sector will depend on the confidence of its practitioners. In his address of welcome, Kola Abdul, Chairman, CIBN Lagos State Branch, said current efforts

from banks to figure out how to deal with Big Data will get sorted soon. I think technology toolkits will continue to improve. “ I think new areas of applications will come through, such as Robotics. Also, one can argue and debate whether Big Data will be a differentiator at all in the future, because I don’t believe it will be in a material way, since the abilities to handle it will become somewhat similar between any two institutions”, Abdul added.

Wednesday 18 July 2018

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Pension Today

L-R: Chris Dieke, zonal business manager, South-East, Premium Pension Limited; Chidi Ezema, head of Service, Enugu State Government; Kemi Oluwashina, executive director, Business Development, South and Strategy; and Paddy Ezeala, regional manager, South - East during a courtesy visit to the Head of Service, Enugu State

BUSINESS DAY

In Association with

L-R: Labaga Jonah, head, Operations, IEI Anchor Pensions Managers Limited; Baror Eric Ivivie, chief compliant officer; Onoru Olufemi, ; company secretary/legal adviser; Glory Etaduovie, managing director/ CEO; . Asheno Iliya, chief finance officer, at the media briefing organised by IEI Anchor Pensions Managers Limited at corporate head office in Garki, Abuja.

How the multi-fund will benefit contributors, investors, government - Expert

he coming on board of the multi-fund structure in the amended investment guidelines for the pension industry in Nigeria,as released by the National Pension Commission (PenCom) has been described as a response to the micro and macro economic developments in the country. According to expert, multifund was a response by the pension sector to the social and economic needs of Nigeria, an emerging economy looking for wealth creation for individuals and empowerment for the larger economy. Multi-Fund Structure, which brings flexibility in the investment and risk appetite of contributors and retirees based on their age and preference, under the Contributory Pension Scheme(CPS) became effective 1st July 2018. Glory Etaduovie, managing director/CEO, IEIAnchor Pensions Limited s a i d t h e P e n s i o n Fu n d Administrators(PFAs) have taken their time to study and understand the dynamics of the amended guideline, so that they could provide the

right knowledge and awareness. He said this is a new phase in the nation’s pension industry because it seeks to address a lot of the burning issues and questions being thrown to the operator’s time without number, on what they are doing with the funds in their hand. Etaduovie said the multifund gives the government and investors in the economy the opportunity and the space to plan for long term funding for infrastructure development. He said the structure offers opportunity for long term funds that can be utilized for investment in infrastructure. “Fund 1 and fund 11 in the multi-fund structure belongs to contributors who have longer time to retire, so the funds in this space could be utilized for infrastructure funding by government and investors, if the necessary models can be put in place, he said. For pension fund administrators, Etaoduovie said the new investment guidelines makes funds available to them to grow their business, expand operations, increase liquidity

and value creation for their shareholders. “The fund offers us opportunity to earn returns on investment, because with segmentation, we now have enough liquidity to create more value for our contributors, he said. “It enables us create employment for more Nigerians, people retain their jobs and welfare of families are improved”.

RC634453

Diamond Pension Fund Custodian Limited 1A, Tiamiyu Savage Street, Victoria Island, Lagos State. Tel: 01-4613753, 2713680, 2713954 Fax: 01-2713955 Email: info@diamondpfc.com Website: www.diamondpfc.com

For the capital market, Etaduovie stated that multifund will create stability in the market, as a lot of funds will come from the PFAs, which will absorb the market from mobile foreign funds. “We have seen in the past where the prices of stocks crashed because foreign equity investors pulled out their funds. Multi-fund will help to bring stability in the market against this kind of develop-

ment, he said. The new investment structure which commenced on 1st July 2018 targetsto transform the country’s pension industry and bring enhanced returns to contributors and retirees based on their risk appetite. “Fund I is targeted at people of 49 years and below who want higher returns, and are willing to take higher risks. Membership into this

fund is strictly based on request. Fund 2 is aimed at people who are aged 49 years and below and still working but are satisfied with moderate returns and levels of risks. Fund 3 targets people 50 years and above but still working and have very low risk appetite. While Fund 4 are retirees who have the lowest risk profile of all categories.” Effective from the date of implementation of the multifund structure, the PFAs shall allocate contributors to various fund types according to the following criteria: membership of Fund I shall strictly be by formal request by a contributor; active contributors who are 49 years and below as at their last birthdays shall be assigned to Fund II; active contributors who are 50 years and above as at their last birthdays shall be assigned to Fund III and Fund IV shall strictly be for RSA retirees only, analysts stated. Pension Fund Administrators (PFAs), mangers of the burgeoning country’s pension are positive that new scheme would carter for individual investment preferences.

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

BUSINESS DAY

Wednesday 18 July 2018

C002D5556

E-mail: insurancetoday@businessdayonline.com

Insurance industry on aggressive 10-year inclusive road map …sets target for firms, regulator Stories by Modestus Anaesoronye

he nation’s insurance industry has set for itself a 10-years inclusive road map, expected to position the sector as major player in the financial services industry contributing meaningfully to Nigeria’s GDP. According to the National Insurance Commission (NAICOM), the road map seeks to establish, develop and maintain a fair, safe, stable and inclusive insurance market for the protection of beneficiaries of insurance contracts, competitive returns to investors and optimal contribution to Nigeria’s economic development. George Onekhena , deputy commissioner, Finance and Administration at NAICOM making a presentation at the recently concluded National Insurance Conference (NIC) organized by the Insurance Industry Consultative Council (IICC) held in Abuja said Nigeria has an abysmally low insurance penetration when compared to its peers and other benchmarks jurisdictions. He said therefore that with necessary and sufficient interventions, the current level of insurance penetration of 0.5 percent can be substantially improved upon. According to him, the vision of

the road which will be launched soon is to be an innovative insurance market in Africa noted for high level of capacity, transparency, efficiency, stability and inclusiveness supporting the economic growth agenda of the country and attaining optimal rate of insurance penetration at all times. “The strategy therefore is to create an optimal regulatory environment devoid of burden, yet facilitating growth of the industry through deployment of relevant industry infrastructure and standards and facilitation of competitiveness, inclusion, operational efficiency and profitability of insurance institution.” Part of the strategy he said include enhancing insurance acceptance and patronage through undiluted compliance with laws and regulation, product and service innovation and prompt claims settlement. Others include riding on the opportunities in increased insurance acceptance, technology enablement and government initiatives to enhance contribution of insurance to Nigerian economy. Onekhena also noted that there are issues to be confronted, which include that insurance is sold not bought, stating of the need for someone sufficiently informed and motivated to convince the buyer on the need for an intangible product.

Funmi Babington-Ashaye, president/chairman of Council, Chartered Insurance Institute of Nigeria(CIIN) being conducted round the floor of the Nigerian Stock Exchange(NSE) by Bola Adeeko, head, Corporate Services of NSE during the closing gong ceremony at the Nigerian Stock Exchange in Lagos

According to him, the level of poverty is a potent restraining factor in the push for financial inclusion. Tangible needs Vs intangible ones. “Insurance institutions may not consider rural and the low income segments financially worthwhile; even if they did they may not find the resources to invest in such ventures. This is more so in the face of impending transition to risk based supervision.” “There may be need to pro-

mote inclusive insurance until it acquires scale, putting stress on financial resources of insurance institutions, otherwise in the light of the above the target set for financial inclusion could be over ambitious.” He however recommends that the industry needs to pay attention to and invest in inclusive insurance markets because of its promise for the future and Government expectations thereof.

“Given a world of increasing complexity and uncertainty, all stakeholders should be open to innovative solutions and productive collaborations” “As the industry is service oriented, the importance of deploying qualified and value adding employees are very high. This should be deliberately managed, while efforts should be geared towards watching out for insurance fraud, Onekhena stated.

Insurance industry fundamentals today are sound, favourable, Babington-Ashaye tells NSE, stock brokers

unmi Babington-Ashaye, the 48th President and Chairman of Council of the Chartered Insurance Institute of Nigeria(CIIN) has assured players in the Nigerian capital market that the nation’s insurance industry has the potential to deliver value to the investment community. Babington-Ashaye who made the remark during the official visit of the Council of the CIIN to the Nigerian Stock Exchange (NSE), and performance of the closing gong ceremony on the floor of the Exchange in Lagos said the industry fundamentals today are sound and favourable. The visit, which is part of activities to mark completion of her tenure as the president of the CIIN, offered her the opportunity to appreciate capital market operators for their immense contributions towards the recapitalization exercise of the insurance industry be-

tween 2005 and 2007. “With the recapitalization exercise, the solvency and capacity of insurance companies to under-

write large risks and meet obligations arising from claims, have improved tremendously. More importantly, more foreign insurance

companies have been attracted to the Nigerian insurance space due to the resultant improvement in regulations and business environment.” Babington-Ashaye further stated that as the economy consolidates on its growth trajectory, insurance industry will hopefully enjoy an unprecedented boom due to the various initiatives of the regulator, the National Insurance Commission (NAICOM) which includes release of guideline on micro-insurance to deepen insurance penetration and to achieve financial inclusion target for the sector, implementation of compulsory insurance and adoption of new risk-based regulatory regime. She however commended the sterling qualities and discipline leadership which the management of the NSE has brought to bear on the governance and activities of the capital market in Nigeria, stating that existing and potential in-

vestors are rest assured that their investments are in safe hands. While also urging all listed entities to faithfully comply with market regulations and reporting practices, in the best interest of all stakeholders. Oscar Onyema, chief executive officer of the NSE who received the CIIN delegation said insurance industry occupy an importation position in the Nigerian Stock Exchange, stating that the healthier they are, the more sustainable the market and the economy at large will be. Onyema who was represented by Bola Adeeko, head, Corporate Services Division, NSE called for synergy and partnership between the insurance companies and the NSE, pointing that there are market initiatives, capacity building and human resource development programmes that will enhance their performance and increase market confidence on their stocks.

Wednesday 18 July 2018

C002D5556

BUSINESS DAY

E-mail: insurancetoday@businessdayonline.com

Expert advises state governments to set aside sinking funds

S ?? L-R: Sola Tinubu, managing director/CEO; scib Nigeria and Co. Limited; Olabode Ogunlana, founder and chairman; Kehinde Olabode, his wife; Titi Lawani, client of scib and founder, Shebah School Magodo; and Feyi Tinubu, wife of the managing director during the 40th anniversary of scib in Lagos

Micro insurance: Playing the numbers game Stories by Modestus Anaesoronye

icroinsurance is all about scale, but as long as big insurance companies focus on risk rate instead of distribution, selling and services, its unlikely microinsurance will grow significantly. The debate around the viability and business case of microinsurance is not a new one, but as moderator Bert Opdebeeck reminded participants in the latest Micorinsurance Network Expert Forum, it is still a hot topic. Opdebeeck - the Founder of Microinsurance Master - was joined by two veterans of inclusive insurance: Richard Leftley, CEO of MicroEnsure and Denis Garand, president of Denis Garand & Associates. The Microinsurance Learning and Knowledge (MILK) Project looked at the business case and client value for microinsurance as far back as 2013, but many unanswered questions remain. Some big insurance players still haven’t grasped that inclusive insurance premiums are very low - in some cases just a few cents a month - so in order to be viable you have to reach a lot of low-income people, which is why low-cost, efficient

distribution is key. For Richard Leftley, mobile is the real driver of growth - before MicroEnsure started working with Mobile Network Operators (MNOs) growth was fairly slow, but now they’re signing up 100,000 new clients every day in India alone through mobile. Even though the premiums are tiny - a maximum of a dollar a month - when you scale that up to millions of clients, the business case becomes compelling. But insurance companies default to the challenge of risk rate and how to price risk, when what they should be looking at is selling, servicing and paying claims quickly, effectively and at low cost. If they don’t, the best product in the world will fail. Companies should focus on providing a really excellent digital customer experience at very low cost - that way they can scale up and make a profit. Distribution, capacity and understanding are more important than risk rate, according to Denis Garand. Risks are predictable - far more important is understanding the context of the risk. If you are a company that doesn’t understand the context of what you’re doing, the risk rate will be much higher. According to Leftley, there are three vital ingredients for scaling up successfully: the need to

be trusted, the need for accessibility and the need for low-cost, efficient payment mechanisms. The reason why MNOs have been so successful as distributors of inclusive insurance products is because their customers have a high level of trust in them, which comes from frequent interaction. Ironically, it is the very lack of interaction between client and insurance company which reinforces lack of trust. Telcos combine trust, accessibility and payment mechanism. Microinsurance takes a different approach to conventional insurance because it is based on serving the clients, said Garand. Traditional insurance companies need to understand they won’t be trusted until they put the clients’ interests first. Moving on to the question of profitability, the experts reminded participants of the KPIs which were developed in the early days of microinsurance which suggest reasonable levels of profitability are attainable. In the Philippines, for example, profitability went down as inclusive insurance grew, but at the same time the absolute dollar profits went up that’s why scaling up is so important, as percentages can be misleading: you have to look at the actual cost and the value of the product. Discussion turned to the role of regulators in helping to scale up inclusive insurance. Garand was very clear - regulation blocks innovation, and many companies are running into rigid regulation because regulators don’t really understand microinsurance. We need a different regulatory approach which allows genuine competition in order to reach more people.

tate governments in the country have been advised to set aside sinking funds to address the issue of pension entitlements owed retired workers in various states. This advice was given by Kemi Oluwashina, executive director, Business Development, South and Strategy of Premium Pension Limited when she recently paid a courtesy visit to the Head of Service of Enugu State, Chidi Ezema. A sinking fund is an account that is used to deposit and save money to repay a debt or replace a wasting asset in the future. In other words, it’s like a savings in which you deposit money regularly that can only be used for a set purpose. A sinking fund is essentially established to ease the process of retiring debt or prevent defaulting on debts. It can serve several purposes but the main purpose is to lower the outstanding principal before it becomes due. “Lack of prompt payment of pension entitlements, especially accrued rights to retiring or retired workers is blighting the successes recorded in the Contributory Pension Scheme in Nigeria” she said. Oluwashina said there is need for state governments in the country to establish

sinking funds to address the problem.” She pointed out that the liability of unpaid pension entitlements will never go away until it is frontally tackled as a matter of urgency, while also highlighting the fact that the real value of unpaid pension liabilities gets eroded with time to the detriment of the retirees who are already passing through untold hardship. “If anything, things only get worse when the liabilities keep piling up”, she said. “Setting aside this special fund is a midway approach to addressing the liabilities.” While Accrued Rights are largely entitlement of workers before the advent of the private sector – driven Contributory Pension Scheme, its late payment by especially, the various tiers of government renders pension administration cumbersome or even impossible. This is because Accrued Rights have to be lumped into Retirement Savings Accounts (RSAs) before lump sum and Programmed Withdrawals could be worked out for retirees. Most, if not all retirees from government establishments for now have their entitlements locked in both the old Defined Benefit Scheme and the new Contributory Pension Scheme.

This backlog of pension liability is more pronounced in most state governments who have neither been making any serious effort to address the issue, nor even keyed into the new scheme by domesticating the Pension Reform Act 2014. For instance, while the Federal Government is making efforts to offset the unpaid Pension Accrued Rights for the period covering May, 2017 to April, 2018 which stand at N97.55 billion, most state governments still struggle with payment of salaries let alone addressing issues of pension. Pension liabilities before the advent of the Contributory Pension Scheme stood at N2 trillion while the scheme has accumulated Funds under Management in excess of N8 trillion since inception in 2004. The visit to the Enugu State Head of Service was to demonstrate appreciation for the efforts being made by the State Government to join the league of states running an unfettered Contributory Pension Scheme. The Head of Service acknowledged the lean resources of the state but said that there must be more creative and professional approaches to offsetting the backlog of liabilities by the various states.

NCRIB calls for adequate insurance by people, government

he Nigerian Council of Registered Insurance Brokers has commiserated with the Government and people of Ogun State for the loss of lives and property due to recent flooding in Abeokuta, the State capital. Shola Tinubu, president of the Council lamented the monumental loss of lives and property occasioned by the flooding in Abeokuta and commiserated with the Governor, Ibikunle Amosun and the people affected by the natural disaster. According to Tinubu, the disaster calls for a rethinking by the government and the

people about risk management and disaster prevention before they occur. Whilst calling on governments to embrace insurance for its citizens as a way of mitigating their material losses when they occur, the President admonished the citizens to individually insure against fire and other perils that covers flooding as government may not be able to adequately compensate them when a loss occurs to their lives and property. The NCRIB President appealed to governments to encourage their Ministries, Departments, and

Agencies (MDAs) to have adequate insurance in place as a way of providing against risks and by so doing free government of compensatory expenditure usually paid to citizens who lose their lives and property due to natural disasters like flooding. Tinubu noted that the NCRIB and insurance brokers will continue to partner with governments and all corporate bodies towards preventing risks and giving insurance advisory services to individuals and institutions in order to aid the growth of the nation’s economy.

BUSINESS DAY

Wednesday 18 July 2018

Leadership SHAPING PEOPLE INTO A TEAM

Know your customers’ ‘jobs to be done’

or as long as we can remember, innovation has been a top priority — and a top frustration — for leaders. In a recent McKinsey poll, 84% of global executives reported that innovation was extremely important to their growth strategies, but a startling 94% were dissatisfied with their organizations’ innovation performance. Most people would agree that the vast majority of innovations fall far short of ambitions. On paper, this makes no sense. Never have businesses known more about their customers. Thanks to the big data revolution, companies now can collect and analyze an enormous variety and volume of customer information, at unprecedented speed. Many firms have established structured innovation processes and brought in highly skilled talent to run them. But for most of them, innovation is still painfully hit-or-miss. What has gone so wrong? The fundamental problem is that most of the masses of customer data that companies create is structured to show correlations: This customer looks like that one, or 68% of customers say they prefer version A to version B. While it’s exciting to find patterns in the numbers, they don’t mean that one thing actually caused another. After decades of watching great companies fail, we’ve come to the conclusion that the focus on correlation — and on knowing more and more about customers — is taking firms in the wrong direction. Instead they need to home in on the progress that the customer is

trying to make in a given circumstance — what the customer hopes to accomplish. This is what we’ve come to call “the job to be done.” When we buy a product, we essentially “hire” it to help us do a job. If it does the job well, the next time we’re confronted with the same job, we tend to hire that product again. And if it does a crummy job, we “fire” it and look for an alternative. Jobsto-be-done theory transforms our understanding of customer choice in a way that no amount of data ever could, because it gets at the causal driver behind a purchase. The Business of Moving Lives A decade ago, Bob Moesta, an innovation consultant, was charged with helping bolster sales of new condominiums for a Detroit-area building company. The company had targeted downsizers — retirees looking to move out of the family home and divorced single parents. The units got lots of traffic, but few visits ended up converting to sales. It was easy to speculate about reasons for poor sales. But instead of examining those

factors, Moesta set out to learn from the people who had bought units what job they were hiring the condominiums to do. The conversations revealed an unusual clue: the dining room table. Prospective customers repeatedly told the company they wanted a big living room, a large second bedroom for visitors and a breakfast bar to make entertaining easy and casual; they didn’t need a formal dining room. And yet, in Moesta’s conversations with actual buyers, the dining room table came up repeatedly. “People kept saying, ‘As soon as I figured out what to do with my dining room table, then I was free to move,’” reports Moesta. He and his colleagues couldn’t understand why the dining room table was such a big deal. But as Moesta sat at his own dining room table with his family over Christmas, he suddenly understood. Every birthday was spent around that table. Every holiday. The table represented family. What was stopping buyers from making the decision to move, he hypothesized, was the anxiety that came with giving up

something that had profound meaning. That realization helped Moesta and his team begin to grasp the struggle potential homebuyers faced. “I went in thinking we were in the business of newhome construction,” he recalls. “But I realized we were in the business of moving lives.” With this understanding of the job to be done, dozens of small but important changes were made to the offering. The architect managed to create space in the units for a dining room table by reducing the size of the second bedroom. The company also focused on easing the anxiety of the move itself: It provided moving services, two years’ worth of storage and a sorting room within the condo development where new owners could take their time making decisions about what to discard. The insight into the job the customers needed done allowed the company to differentiate its offering in ways competitors weren’t likely to copy. The new perspective changed everything. Getting a Handle on the Job to Be Done

c 2017 Harvard Business School Publishing Corp. Distributed by The New York Times Syndicate

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Successful innovations help consumers to solve problems — to make the progress they need to, while addressing any anxieties that might be holding them back. Here are some principles to keep in mind: — “Job” is shorthand for what an individual really seeks to accomplish in a given circumstance. Consider the experience a person is trying to create. What the condo buyers sought was to transition into a new life, in the specific circumstance of downsizing. — The circumstances are more important than customer characteristics, product attributes, new technologies or trends. Before they understood the underlying job, the developers focused on trying to make the condo units ideal. But when they saw innovation through the lens of the customers’ circumstances, the competitive playing field looked totally different. — Good innovations solve problems that formerly had only inadequate solutions — or no solution. Prospective condo buyers were looking for simpler lives without the hassles of homeownership. But to get that, they thought, they had to endure the stress of selling their current homes. It was only when given an option that addressed all the relevant criteria that shoppers became buyers. Jobs are never simply about function — they have powerful social and emotional dimensions. Creating space in the condo for a dining room table reduced a very real anxiety that prospective buyers had. Reducing their stress made a catalytic difference.

BUSINESS DAY

C002D5556

Wednesday 18 July 2018

Abuja light rail passenger service opens Page 31 London travellers gear up for Heathrow hectic Page 30 trip

Flying with children not easiest of tasks Page 30

GE Transportation unveils first TE33A Ukraine locos Page 31

For every Corolla, first impressions are compelling … Combines agility, sporty and responsive performance Stories by MIKE OCHONMA

ith a history dating back nearly half a century, the Toyota Corolla has been almost synonymous with the term compact car, and among the Toyota product range depending on the market including Nigeria where it is the most preferred and commonly used by corporate instiutions, this model has remained one of the most sought after among car freaks. On the road, it is very responsive and quick, and effortlessly generating the power for driving pleasure, smooth and stable performance. Outside and inside, the short-nose proportions highlight the advanced styling nourished with its expansive cabin space that makes it exude a distinctive presence. Corolla owners reflect a story of excitement that grows with every drive experience and thanks to an inspiring combination of agile, sporty and responsive performance with superb fuel efficiency to match. The engines and suspensions systems with compact lightweight engine harnesses advanced technologies to deliver exhilarating performance and outstanding fuel economy and optimizing various suspension components, together with the sure braking performance, helps realize excellent stability, control and ride comfort. Body lean can become evident when taking corners energetically, even the ride is smooth and

easygoing, though not remarkably soft or lavish. Sedan suspensions permit considerable wheel travel, which helps absorb bumps and pot holes. Corolla engines exhibit a refined nature. For most owners, that’s more important than brisk responses to the gas pedal. Toyota’s continuously variable transmission tends to keep the engine at higher speeds much of the time, but acceleration is wholly adequate. Sufficient sound-deadening tones down most engine rumbling. The optitron meters device provide excellent visibility, a drive monitor displays current fuel

consumption, average fuel consumption, cruising range, average vehicle speed and driving time. The design, touch to the hand, and ease of use of the shift lever were all carefully considered to give an excellent operational feel and with the Integrated Steering Wheel Switches (ISWS), you can change the volume seek and mode of the audio system without taking your hands off the steering wheel. In the event of a crash, the airbags help reduce the impact to occupants in a collision with the activation of the SRS driver airbag, front passenger airbag, driver knee airbag, side airbags and curtain shield airbags.

Corolla’s crash safety body is comprised of a high integrity cabin with front and rear crumple zones that help absorb impact energy in a collision. The Disc brakes on all four wheels, ventillated on the front, are standard for all grades, giving sure stopping performance. The ‘wil concept seat’ used in the front seats, helps to reduce injury to the vertebra in the neck in a rear-end collision, even as retension and force limiters on the front seat belts, when sensors detect a strong impact in a frontal collision, pretensioners rewind the seat belts instantly to help assist occupant restraint. In addition, force limiters help to relieve

the force on the upper torso. It would be recalled that the Insurance Institute for Highway Safety (IIHS) rated the 2017 sedan a Top Safety Pick+, while the National Highway Traffic Safety Administration (NHTSA) gave it five stars overall, with a four-star rating for frontal collision and four stars for rollover. Every Corolla comes with LED headlights, automatic emergency braking, lane-departure warning, and automatic high beams. Sedans also contain adaptive cruise control. Across the model range in most local dealerships, there is plenty of in-car technology to assist the driver during every journey and keep everyone entertained. Among them is the entry-level specification the SE variant that fits the Corolla with manual air conditioning to maintain the preferred temperature and a fourspeaker audio system with USB and AUX ports. Music playback can be controlled safely through buttons mounted to the steering wheel and also it comes with more features such as power windows, cruise control and Bluetooth connectivity. The next grades impresses with the push start button, a multi-information display and rear parking sensors as a local accessory. The MacPherson strut front suspension and torsion beam rear suspension are newly adopted to boost excellent driving stability and ride comfort at a high level. Its air condition system with clean air filter has powerful cooling performance to help maintain the cabin at a comfortable temperature.

Nissan, others back NAJA’s capacity building programme …Toyota, FRSC, NADDC nominated as facilitators

ll is now set for this year’s edition of the annual Nigerian Auto Journalists Association’s (NAJA) capacity building programme with Nissan Motors South Africa as the lead sponsor. In Nigeria, the Nissan brand is under the sole franchise of Stallion Motors Limited. The event takes place at the Golden Tulip Hotel & Events Centre, along airport road, Ikeja Lagos on July 26, 2018. It would be recalled that the annual training programme which aims to refresh and enrich the wealth of experience of the motoring journalists’ reportorial skills in the country was sponsored by Ford Motors Company South Africa (FMCSA) in 2016 and 2017 under

its Driving Skill For Life (DSFL) programme. The Ford brand is imported and marketed in the country by Coscharis Motors. Industry stakeholders supporting the annual programme for this year Includes Nigeria Automotive Design & Development Council (NADDC), Federal Roads Safety Commission (FRSC), Toyota Nigeria Limited, Weststar Associates Nigeria Limited, owners of the Mercedes franchise, Massillia Motors (Mitsubishi), PAN Nigeria Limited (Peugeot) and the Infinity group among others. In a press statement issued by Mike Ochonma, vice-president of Nigerian Auto Journalists Association and head of organising committee, he disclosed that, the major highlights of the day will be the

presentation of critical, but relevant automotive industry related papers by some experienced stakeholders in automotive engineering. During the programme, Aliyu Jelani, director-general, National Automotive Design and Development Council (NADDC) will deliver a paper on ‘’Achieving the 20132023 Nigeria Automotive Industrial Development Plan (NAIDP) under President Muhammadu Buhari’’, How realistic? while Kunle Ade-Ojo, managing director/chief executive of Toyota Nigeria Limited will present a paper on ‘’Achieving full life span of your engine’’ and ‘’Achieving maximum benefit from your car air-conditioned system. Another paper of the day on Tyre Specification & Nigeria Experience’’ will be

presented by Boboye Oyeyemi, Corp Marshal of the Federal Roads Safety Commission, (FRSC). Speaking on the rationale behind the support from Nissan, Parvir Singh, managing director of Stallion NMN in Nigeria says, This sponsorship is a strategic partnership for Nissan, where training and skills development form part of the organisational ethos. In his words, “The most important thing to understand about Africa is that it’s not one country. At Nissan, we’ve learned how important it is to build relationships with customers. Nigeria is important for us because it’s a significant market and it has a large population poised for growth in motorisation. “Skills development is one of Nissan’s core strengths and is fundamental to how we continuously improve

Mike Whitfield

our business. We do not only look at improving as an organisation but place great emphasis on training and capacity building for our stakeholders. it is with this very purpose in mind that we are supporting the Nigeria Auto Journalists Association.” Says Mike Whitfield, Managing Director, Nissan Group of Africa.

30 BUSINESS DAY

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MTRAVEL

Wednesday 18 July 2018

odern

London travellers gear up for Heathrow hectic trip

A Flying with children not easiest of tasks Stories by MIKE OCHONMA

v e r t i m e, s e v e ral concerns have been raised as to what extent parents realise of their responsibility to be in charge of their children throughout a flight and of what impact will the support of fellow passengers to parents traveling with their children be. In our everyday travelling experience, the following salient definitive rulings on how to travel as a family in the air if you want to avoid the risk of attracting scornful looks from fellow passengers on-board should be embraced. Duty of care. It is essential that parents actually parent their children during the long, confined hours of a flight. Basic responsibilities include keeping an eye on them, moderating disruptive or annoying behaviour, pre-empting or soothing tantrums, and meeting boredom with activities and attention. Top on-board parenting nonos include shouting (or swearing) at your children, disciplining with loud, empty threats or, worst of all, plugging into your device and tuning out while your kids run riot and disturbing the peace of other passengers. Clever timings. Well-travelled parents always board last. The lure of a clear aisle and empty overhead locker that comes with family-first boarding is tempting, but hang back. Why make your children stand in a queue or sit on the plane for longer than necessary. Get into your seats as late as comfortably possible, and the novelty and excitement of finally being on-board should prevent the nightmare scenario of bore-

dom setting in before you’ve even left the tarmac. Class consistency. Parents should never turn left and send their offspring right: your children are your responsibility, whatever their age, so travel in the same class of cabin. Neither crew nor other passengers should be forced to help your children; even older teenagers can lack the self-awareness required to be left unsupervised in such a close, intense environment (loud headphones, elbows out, excessive reclining of seats etc). If you can’t bear the thought of slumming it in economy, then bring out for flatbeds for the whole family. Strategic seating. You family is your responsibility, so pay to reserve seats. Sitting apart will disturb fellow passengers if you need to get out of your seat frequently, or try to communicate with a child from afar. Solo passengers should offer to swap even if a seat allocation was paid for as it is likely, they will benefit from a move to a more peaceful place, free of fidgeting and fuss. Only the most insensitive of passengers would refuse to swap, and then overtly complain about an unsupervised child. Space management. Make children aware of their own onboard space boundaries, and ensure they disturb others as little as possible. Don’t let them constantly play with the recline button (it is not generally necessary for small children to recline their seat on a short journey), or put their tray table up and down excessively. Try to keep limbs under control and arms should not hog the armrest nor feet kick the seat in front. Manage your own space too like having snacks, drinks and entertainment easily accessible to avoid frantic scrabbling

in bags or repeatedly accessing the overhead lockers. Device decorum. Tablets are a family-flier’s best friend, so preload devices and relax screen-time rules. Headphones should be worn at all times and be inaudible to neighbours; listening to the tinny, muffled tones of someone else’s viewing is top of the list of irritations suffered by other passengers. If a child is too tiny even for childsafe headphones, then turn the sound off completely. On-board excursions. Children should stay in their seats as much as possible. A parent quietly walking the aisle to soothe a small baby is quite different to an inquisitive toddler running the length of the plane. Of course nature calls, so parents should accompany children to the loo and back. It goes without saying that nappy changes should never be done on the seat, no matter good your Pampers skills. Helping hand. A sympathetic neighbour or kind member of cabin crew can provide a powerful distraction and bring instant relief to a stressful situation. A change of hands or smiling stranger can stun silence on even the most stubborn of tantrums. Be sure, however, that the helper is a willing volunteer and never force your children on unsuspecting passengers. Drunk in charge. It may not be the children that are the most disruptive on the plane. If your flight is host to drunken passengers who are behaving inappropriately, then speak to a member of cabin crew; confronting them yourself might inflame a fragile situation. Do your best. Children can be unpredictable in the most straightforward of scenarios, so flying with a family will always pose challenges.

controversial decision by British lawmakers will make Heathrow Airport the world’s biggest airport in terms of traffic, it has been reported. At the moment, the world’s largest airport is Hartsfield-Jackson Atlanta International Airport, with a capacity of 104 million. The new proposal would increase passenger capacity from 80 million to 110 million by 2030 with the addition of a third runway. This Is the Only U.S. City to Offer Nonstop Flights to 6 Continents Around the Globe The construction of the new runway, according to the proposal, would extend directly over an

extremely busy freeway, the M25 motorway. Many opponents of the plan say the runway and increased air traffic could become an environmental hazard. About 750 homes in the area would be demolished,. However, the plans were approved with an overwhelming majority of 415 to 119 votes. The new construction is expected to cost about £14.3 billion ($20 billion USD). However, without the expansion, Heathrow will reach capacity by 2034. So, the new plans will definitely make it easier for travellers to visit London in the future.

Uber being probed for gender discrimination

b e r Te c h n o l o g i e s Inc. is under investigation by the U.S. Equal Employment Opportunity Commission for alleged gender discrimination on issues such as pay, according to a source familiar with the matter. The probe, which began last August, was first reported by The Wall Street Journal. As part of the probe, EEOC investigators have been interviewing former and current Uber employees as well as seeking documents from its executives, the Journal’s report said. Uber CEO Dara Khosrowshahi promised to change the culture of the ride-hailing company after taking over in August last year from former CEO Travis Kalanick following a series of scandals. The investigators have been seeking information related to

hiring practices, pay disparity and other matters as they relate to gender, the Journal report said. “ We have proactively made a lot of changes in the last 18 months, including implementing a new salary and equity structure based on the market, overhauling our performance review process,” publishing diversity reports and providing training to thousands of employees, an Uber spokesperson said. Last week, Liane Hornsey, Uber chief people officer resigned after an investigation into how she handled allegations of racial discrimination at the company. An EEOC spokesman said complaints made to the commission are strictly confidential and it is prohibited from even confirming or denying the existence of such a charge.

Wednesday 18 July 2018

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BUSINESS DAY

Local and global rail news as it breaks

Abuja light rail passenger service opens … $194m needed to procure 48 coaches

he positive trend for rail freight carriers in Croatia continued in the first quarter of 2018, resulting in an increase in the volume of goods carried and tonne-km. Freight carriers transported 4% more goods compared with the same period last year, and data published by the Croatian Regulatory Authority for Network Industries (Hakom) indicates that new freight carriers transported seven times more freight compared with the first quarter of 2016 and double that in the first quarter of 2017. In the first quarter of 2018, rail freight operators accounted for nearly half of the total freight market in Croatia, achieving 65% more tonne-km compared with Q1 2017, showing a steady growth trend. Their market share measured by tonne-km is 30%, an increase of 2% compared with the previous quarter. Passenger rail transport rose by 3% year-on-year, while passenger-km also increased by 3% over the same period.

MIKE OCHONMA; TONY AILEMEN & JAMES KWEM, Abuja

he first stage of the Abuja light rail network, the first light rail line in the Nigerian expected to reduce the burden of mass transportation within the Federal Capital Territory ( FCT) opened on July 12,. The 45.2km first phase has two lines and 12 stations with connections to the airport and the national rail network. The entire 290km system is being built in six stages by China Civil Engineering and Construction Corp at a cost of $824m, partly funded by loans from the ExportImport Bank of China, which is providing 60% of the funding. The rail which will link all the satellite towns, is expected to reduce vehicular traffics within the FCT as well as economic development. Declaring the facility open for the public, ,” Nigeria’s president Muhammadu Buhari said, “Our commitment to the vision for a modern, integrated rail system for Nigeria is total. The 2nd phase of the Abuja light rail will connect more parts of the city, while our standard-gauge national railway is also taking shape, with the Lagos - Ibadan leg currently under construction. A modern rail service will greatly boost the Federal Capital Territory economy and enhance social life.” To ensure effective service delivery by the Abuja Rail Mass Transit, the Federal Capital Territory Administration, FCTA has concluded an infrastructure soft loan agreement with Exim Bank of China for the supply of 48 coaches, including their maintenance for three years at a cost of $194,008,602.43. Exim Bank would fund the project to the tune of US$157,001,049.89 or 85% of the total amount, while FCTA would bring in a counterpart fund of US$37,007,552.54 representing 15%. Muhammad Bello, Minister

of Federal Capital Territory, who announced this during the official commissioning of the rail project said FCTA has taken delivery of the three coaches meant for initial operations. He added that the Authority is working on Phase ll of the Project to cover a distance of 32.54km from Nnamdi Azikwe Expressway at Garki Area l via the transportation Centre to Gwagwa and from Bazango Station to Kubwa. The Federal Executive Council approved the project in 2017 for construction by CCECC at a cost of $1.3billion and hoped that the Minister of Finance would consider putting this key project in the next borrowing plans. According to the FCT Minister, “the Minister of Budget and National Planning would agree to it, the National Assembly would approve it and that China Exim Bank would fund it as a mark of goodwill for the cordial relationship between our two countries”. The rail tracks, signalling, stations and other infrastructure were completed six months ago and in line with international best

practices, two months were spent testing the rail system without passengers and one month with passengers. “I am pleased to state that the Federal Ministry of Transportation after working closely with our team of Engineers, the Construction Company China Civil Engineering Construction Corporation (CCECC) and the project Consultants, Messrs Transurb Technirail Ltd has granted the Abuja Rail Mass Transit Project (ARMT) (Lot 3 & Lot 1A) Safety Certificate for Commercial Operations. “We have also worked and are working closely with the Nigerian Railway Corporation (NRC) in the implementation of the project and they have granted relevant approvals for operations”, the Minister stated. He explained that the phase 1 of the Abuja Rail Mass Transit commissioned, consists of Lot 1A & 3 with a total length of 45.3 kilometres which cost $823,540,545.87 funded 60% by the China – Exim Bank and 40% by FCTA. According to Bello, “Lot 1A, starts at Idu Industrial Zone via

Croatian rail freight traffic increases 4% year-on-year

Gwagwa-Diedie and terminates at Gbazango Station in Kubwa (18km); Lot 3: runs from Abuja Metro Station via Idu Industrial Zone and terminates at the Nnamdi Azikwe International Airport (27.3km). “Both Lots connect at the Idu Station to enable easy passenger transfer with the National Rail line linking Kaduna and Abuja. He further said, the Abuja rail system is packaged into 6 Lots planned for phased development, based on preferential demand and available financial resources and it is planned to integrate with the National Rail Network when eventually Buhari seeks proper maintenance of $830m Abuja light rail. President Muhammadu charged its operators on the need to evolve good maintenance culture, apparently worried that it could suffer poor maintenance like other rail systems in the country. The Abuja rail mass transit project phase 1, consist of Lot 1A and Lot 3 covering a distance of 45.245km, with low spread consistency.

Exim Bank would fund the project to the tune of US$157,001,049.89 or 85% of the total amount, while FCTA would bring in a counterpart fund of US$37,007,552.54 representing 15%.

GE Transportation unveils first TE33A Ukraine locos

E Transportation unveiled its first nearlycompleted TE33A locomotive bound for Ukrainian Railways (UZ) in Erie, United States, on June 10. The first of 30 12-cylinder 3355kW units should be transported to the Ukraine in a few weeks where the final 10% will be completed. Under the $US 1bn 15-year contract awarded by UZ in February, GE will supply 30 complete six-axle TE33A Evolution

Series diesel-electric locomotives, with further locomotives supplied as kits over a 10-year period. GE will also be responsible for modernising UZ’s legacy fleet and providing maintenance services. The TE33A is claimed to be the first new modern diesel locomotives to haul freight trains in the Ukraine since 1992. Acting head of the UZ board, Yevgen Kravtsov, says the first locomotive was named Trident 1 to rep-

resent the partnership between the Ukraine, GE, and the State of

Pennsylvania. GE Transportation also un-

veiled its new Additive Lab, a $US 1.5m laboratory that creates locomotive parts in a 3D Printer. The goal is to start producing printed locomotive parts to the schedule of one part per locomotive in 2019, 20 parts in 2020, and 1000 parts by 2025. The laboratory, which will employ 15 people, will allow components to be created and combined to reduce cost and increase efficiency of future locomotives.

32 BUSINESS DAY Financial Inclusion

& INNOVATION

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Supported by:

BusinessDay Radio programme; Financial Inclusion Today Aired yesterday by 11:30am on Rhythm 93.7 FM ENDURANCE OKAFOR Theme: can Nigeria attain the CBN goal of 80% financial inclusion by 2020? ith BusinessDay analysts; Patrick Atuanya, Bala Augie, Lolade Akinmurele and Endurance Okafor. Anchored by Lehle Balde In this episode of the radio programme, BusinessDay analysts deliberated on the CBN set target of including 80 percent of Nigerians into the financial cycle. Speaking on what financial inclusion actually means, one of the analysts said financial inclusion basically entails providing access to financial products and services for businesses and individuals. “In Nigeria, our inclusion rate is 42 percent as at 2017 which compares to South Africa’s 75 percent and Botswana 81 percent which tells you that we have a long way to go. One of the reasons why financial inclusion is important is that there is a strong correlation between financial inclusion and economic growth,” one of the analysts explained. “If you see economies that are really growing, you will find that they are also the ones that boast of the highest inclusion examples in Canada, UK, USA, about 90 percent Financial Inclusion and they have a resilient economy so I think It is pretty much important to increase the Financial Inclusion rate in Nigeria because it has huge potential for our economic growth,” the analysts said. The anchor added by saying that financial inclusion is like a big catch word but it is a lot deeper, as it entails access to credit, getting a car note, getting insurance services, getting loans to strengthen businesses, something as simple as having a debit card to perform transactions with. The analysts pointed out that having access to basic financial services in most parts of the world are taking for granted by a lot of people but in Africa’s largest economy, a lot of people do not have access to these services. “When you are cut off from the financial services architecture of your country, you are unable to make progress, in terms of growing your incomes to make that investment that is needed in yourself

or your family. You go to a bank without a credit history for a bank to be able to determine if you are a good person to give a loan to,” one of BusinessDay’s analysts on the show explained. “These are some of the things we want to bring to the floor, who are those responsible for driving inclusion rate; we have the banks, your regulators like the central bank, the commercial banks (deposit money banks), mobile money agents, the fintech companies that are beginning to do some amazing things in terms of finding innovative ways of bringing financial service products to people that are left out of the system,” another analyst said. On the barriers to financial inclusion in Africa’s most populous nation, financial inclusion analyst said one of the barriers to entry is the high illiteracy levels, as a lot of Nigerians are illiterates, considering most of them do not have formal education, so it is quite difficult for this people to use the mobile app and such services. Another barrier outlined was the cumbersome requirements by the financial institutions, as banks require people to bring their utility bills and a lot of people do not have the patience to wait on the banking floors. Some of these people are also not good record keepers, “one of the people we should see coming to the financial net are the women in the rural areas as they constitute a large chunk of the informal sector. Traders in the rural areas who do not have bank accounts; these are the areas in which the government need to look into in order to bring more people into the banking net,” one of the analyst said. Another reason as to why many Nigerians do not have access to useful and affordable financial services and products to carry out transactions that meet their needs is basically due to lack of funds. Meanwhile, the World Bank stressed the fact that the 9 percent of the 2 billion people who do not have access to basic accounts are due to lack of funds. This implies that these services and products are still expensive for low income earners to have access to. If these services are made cheap and affordable for low income earners it will include more people into

the financial net.] Analysis by BusinessDay revealed that the medium and low income earners earn between N10,000 to N20,000. So if a man that earns N20,000 to support his family per month is to open an account that is N1,000 to open and another N1,000 to get an ATM card and the service charges that come per month, he will be unlikely to open a bank account. “Other barriers of CBN attaining its 80 percent set target by 2020 is information as the bankers we talked to explained that the banks are already having accounts for people where they do not have to stress in opening them as it does not require money to open them. Most people do not know about zero accounts, accounts that do not require lot of documentation. Therefore, sensitization, information and education are another set of hindrances in financial inclusion,” one of the analysts on the show said. The long distance of the financial service provider from those that require the services was another hindrance to the set target by the apex bank, this is because the core members of the excluded population find it difficult to move from one local government to another, just to withdraw money. On the way to go for Nigeria to achieve the 80 percent target set by the apex bank, the analysts suggested partnership and collaboration between commercial banks. “we need to see more collaboration from the commercial banks and the microfinance banks, that is because the microfinance banks have the flexibility to reach out to the unbanked population and if they have

the resources to penetrate they could collaborate with the commercial banks to make financial services accessible to those people.” “I feel that we could have more sensitization programs where you educate people and make them understand the need to be financially included. When you are able to explain to them that having a bank account also improves your access to finance especially the SMEs it is a win-win for both parties,” an analyst on the radio show explained. On how to raise awareness at grassroots level and among farmers and people who work in rural areas about Financial Inclusion the analysts said raising awareness in the rural areas is to help them understand the benefit of financial services and companies, banks and SMEs need to go to the areas where people are not financially included and teach and encourage them about these benefits of the financial services. “With the federal government and the central bank working together in collaboration with the stakeholders, the committees that are on ground, the Financial Inclusion State Steering Committee inaugurated in January 2018 giving banks and microfinance banks targets of bank accounts in each of the states. Improving the number of bank accounts is a step forward to achieving broader financial inclusion,” one the BusinessDay analysts cited. “One of the things the government has to do is deepen the microfinance space because these banks are close to the grassroots people and to lure the women traders and farmers in

the rural areas you need to give them soft loans. Loans attract them and they have confidence in the financial system. There is a need to send more agents to these people to have a one-onone interaction with these people in the rural areas. I also know that the CBN has mandated the banks to open 7.6 million new accounts, I do not know how feasible that is and I will need to check the financial statements of some of the Nigerian banks in 2017 to check the deposit growth and get some insights on how they have been performing,” another analyst added. “I think the set target is achievable, but not with the way we are going now because I remember that there was this financial inclusion conference championed by BusinessDay last year and we had the CBN governor Godwin Emefiele and the recurring theme of the guest speakers who had a very good level of financial inclusion knowledge was how we could get banks to work with the telecoms to deepen financial inclusion. They gave examples of Kenya who has a telecom led mobile money market unlike in Nigeria where it is the banks that exclusively have these apps where you can have financial transactions. In Kenya all you need is a SIM card to make financial transaction with short codes and all of that. I remember when i visited Kenya earlier this year, i met someone at the supermarket and at that point I was not with my ATM card, I was thinking i had to come back and all that and she asked “don’t you have mPESA? Use the short code send, the money to me I’ll give you my account” which

is one of the modern mobile money services in Kenya,” the third analyst added. Meanwhile, the CBN governor said they will look into the model use to drive financial inclusion and see what must happen to ensure that Nigeria review its model from the bank-led model that it currently operate to telecom led model, since then, much has really not changed so it raises questions as the drive to boost this financial inclusion. If the telecom model is being implemented in Africa’s largest economy, it will practically mean that all Nigerian adults that have access to mobile phones will also have access to financial services because all they have to do is to just have a mobile money bank account with their SIM cards. This however being done in Ghana where their network providers TiGo in collaboration with the banks created a system where the vendors give access to withdraw money. “So if you have relatives in the rural areas where there are no banks, just with the mobile money, you could transfer to the person’s mobile money account and person will just take the transaction details to the vendor and the person will have access to the money,” one of the analysts said Meanwhile, one of the BusinessDay’s financial inclusion analysts on the radio show said the move to allow the bank and telecoms collaboration should be encouraged to enable Nigeria meet up with 80 percent target set by the CBN to be achieved by 2020, as this can move the nation forward and not be left behind by its African peers. On how to encourage the everyday person to strive to be financially included, even though they live in society that does not seem to encourage such, one of the analysts said “I will just share something I found on how countries are able to boost financial inclusion using Canada as case study. There is they have called the Star Saver, what it does is that at a very young age, you have kids already learning the importance of having access to financial products, imbibing the culture of savings. We have said it repeatedly that if we could find a way of including financial inclusion into our scheme of Continues on page 33

Wednesday 18 July 2018

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Financial Inclusion

BUSINESS DAY

& INNOVATION CBN throws in towel, says 80 percent financial inclusion not feasible Supported by:

ENDURANCE OKAFOR AND OLUWATOSIN DOKUNMU

he Central Bank of Nigeria (CBN) seems to have given up its quest to meet the set 80 percent set financial inclusion target which was projected to be achieved by the year 2020. The apex bank, in its refreshed exposure draft asserts that Nigeria is not on track to meet up with the 20 percent exclusion target as stated in the National Financial Inclusion Strategy (NFIS) of 2012. “Nigeria is not on track to meet the 2020 targets set out in the National Financial Inclusion Strategy (NFIS) of 2012,” the apex bank disclosed in its website on Friday, 6 July 2018. The impediments to achieving this target have been ascribed to economic constraints, insecurity issues in the northern part of Nigeria, obsolete strategies, among others. Dolapo Ashiru, a Lagosbased financial analyst said the CBN’s target is supposed to be based on some certain assumptions which are expected to see to the achievement of the objective, and as such the failure of the apex bank had led to the excuses stated as to why it cannot meet its target. “North East Nigeria is not the whole of Nigeria, if they had driven financial inclusion in other parts of Nigeria, that could have made up for the exclusion rate witnessed in the northern part of Africa’s largest economy which is as a result of the security crisis, Ashiru said in a phone

Godwin Emefiele

respone. According to CBN’s 2016 financial inclusion figures, just 58.4 percent of Nigerian adults were financially included with only 48.6 percent using formal financial services. This showed that Nigeria lagged in her inclusion targets of 80 percent (overall financial inclusion rate) and 70 percent (formal financial inclusion rate) of Nigerian adults by 2020. The NFIS though defined 15 targets for channels and products as well as 22 key performance indicators (KPIs) related to these targets, but Nigeria still lags across all these measures. The economic recession in the country as well as the insecurity in northern Nigeria is said to have hampered the progress of financial inclusion in the country, as they were never anticipated in the course of drafting the NFIS in 2012. Also, the slow uptake of digital financial services and

limited rollout of national identity numbers restricted financial service providers to meet the know-your-customer (KYC) requirements, as compiled from the CBN’s statement. Ayo Akinwunmi, Head of Research at FSDH Merchant Bank said it is a wakeup call for the federal government of Nigeria because if they are saying the insecurity in the northern part of the country is one of the reasons as to why they cannot achieve the set target, it means that the crisis is beginning to have negative impact on the Nigerian economy. “This is because CBN cannot resolve that crisis and a lot of banks are closing down from those areas and the economic activities are also nothing to write home about in those places. So if the crisis cannot make CBN to attain 80 percent target by 2020 it implies that it is having another dimension of risk on the Nigerian

economy,” Akinwunmi said. The 2012 NFIS draft was also limited by a lack of prioritisation of actions and the KPIs as well as obsolete set of solutions which were suboptimal in achieving the desired targets. These limitations informed a refreshed NFIS which were drafted to be more ‘future-proof ’ in order to avoid it from becoming obsolete. “The constraints pointed out as to why they are not being able to meet the set target still exist, they existed 10 years ago, they also existed 20 year ago, so if you are saying only when you have overcome those challenges that is when you will obtain full financial inclusion and literacy, I do not think so, as financial inclusion means making payments and having access to financial services and products and not necessarily with a bank account,” Bismarck Rewane, MD of Financial Derivatives explained.

Meanwhile, CBN recently signed a Memorandum of Understanding (MoU) with Nigerian Communications Commission (NCC) on digital payment systems while collaborating with Nigeria Inter-Bank Settlement System (NIBSS) to roll out 500,000 shared-agent network to offer basic financial services to the excluded, but all these have failed to make the 80 percent inclusion target feasible. The apex bank has therefore outlined new strategies that will help drive financial inclusion to the position it is supposed to be like its African peers. The new strategies adopted were based on two major principles. Firstly, regulations should be focused on the activity and not the actor; defining the eligibility to provide the financial service without closing off the sector from future innovation. Secondly, actors are to focus more on the activities they possess ‘comparative advantage’ in to achieve the greatest impact. Given the complexity and volume of changes that need to happen, individual actors are to focus more on the activities that best suit their capacity whilst maintain an inclusive lens as much as possible. Rewane of Financial Derivatives said if Nigeria wants to do anything they will do it irrespective, and as such including more Nigerians into the financial cycle can be done, and whatever has been done so far can also be accelerated by bringing more people into the financial inclusion cycle. “Just look at the number of telephone lines compared

to the number of bank accounts compared to the number of BVN and you will see that disparity,” he added. The NFIS redraft identified 5 crucial priorities to increasing financial inclusion in the country, making emphasis on; creating a conducive environment for the expansion of DFS, enabling the rapid growth of agent networks with nationwide reach, reducing KYC hurdles to opening and operating a bank account, creating an environment conducive to serve the most excluded and driving adoption of cashless payment channels, particularly in government-to-person and person-to-government payments. The apex bank said in the refreshed NFIS, priorities have been defined based on a new approach that is deliberately more ‘futureproof ’ in its focus on first principles, instead of specific approaches that have the potential to become obsolete. “The refreshed strategy is based on a first-principles approach. It recognises the various core mandates that need to be managed to develop a solid, stable yet inclusive financial system and identifies the principles that need to be in place to manage and govern financial services,” it added. On the best strategy to help include more Nigerians into the financial cycle and the solution to solving the exclusion problem in Nigeria Rewane concluded by saying “more people should be brought into the financial inclusion cycle as this can be done by not necessarily through bank account.”

from primary school already know how to use the app, because the major problem we are having in this country is a number of people in the rural areas don’t know how to use the app and CBN has rolled out more policies to ensure that more people are included in the financial net. So basically, creating awareness will have to start from grassroots so that we don’t have the problems we have now in the future,” the other analyst concluded.”

Although, the apex bank of Africa’s most populous nation seems to have given up its quest to meet the set 80 percent set financial inclusion target which was projected to be achieved by the year 2020. This was disclosed in the lender’s refreshed exposure draft asserts that Nigeria is not on track to meet up with the 20 percent exclusion target as stated in the National Financial Inclusion Strategy (NFIS) of 2012.

Aired yesterday by 11:30am on Rhythm 93.7 FM Continued from page 32

work at a very tender age at schools, it will really go a long way, because people are used to these things, people are already aware of savings at such a very tender age and they can follow through on that. It can really help, because its huge in Canada and Canada has a financial inclusion rate of 90 percent, so it means they doing something great and if we could have that as

well, it could really help,” the analyst explained. On analysts’ final comments on the show in regards to attaining the set 80 percent financial inclusion one of them said “Just to add to how to encourage Nigerians to be financially included, if you talk to a man on the street, they already have a perception that it is expensive and the whole package is not designed for them because they are not educated and so they do not

want to have a bank account. Basically, you just have to educate them on the benefits they stand to gain having access to financial services. From them saving they can have access to loans and other forms of credit and saving in the bank means your money is secure and safe. So having access to financial services and being financially included has its own benefits.” Another analyst in agreement with the former said “I

agree with the idea that we need to imbibe the culture of savings in our children. We need to catch them young so that we do not have a large chunk of about 39 million adults being excluded from the financial net. If you compare this figures to Kenya that have achieved a 75 percent financial inclusion rate which is quite impressive.” “As the other speaker said in countries like Canada and Europe where kids

BUSINESS DAY

Wednesday 18 July 2018

Politics & Policy

BUSINESS DAY

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Wednesday 18 July 2018

Atiku intensifies presidential campaigns, laments Nigeria’s poor economy, insecurity …Signs MoU to establish medical referral centre in Nigeria INNOCENT ODOH, Abuja

ormer Vice President, Atiku Abubakar has expanded his campaign trail even as he lamented the poor state of the Nigerian economy and the insecurity ravaging parts of the country under the leadership of the All Progressives Congress (APC). BusinessDay gathered authoritatively that Atiku barred his mind on the state of the nation when he paid a courtesy visit to the Board of Trustees (BoT) of the People’s Democratic Party (PDP) at the Legacy House in Maitama, Abuja as part of his consultations with critical PDP stakeholders for his 2019 presidential bid. Director General ofAtiku Presidential Campaign Organisation, Gbenga Daniel, who represented Atiku, chronicled the litany of challenges facing the country: insecurity, divisions, economy in shambles, among others. He said the only person well-wired to set the machinery in motion to get Nigeria working again is Atiku. He extended his gratitude to the BoT for keeping the soul of the party even in the midst of challenges adding that history has beckoned on them once again to choose a leader for 2019 even as he called on their support and partnership to join hands with him to make

Atiku

Atiku emerge as the presidential candidate of the party. Atiku lauded the BoT for their role in saving the party and hope they will rise to the historic occasion by deciding what is right for the party. Chairman of BOT, Walid Jibrin in his reaction noted that Atiku is

No one political party dominates CUPP - Agbakoba, Balewa

o-chairmen of the Nigeria Intervention Movement (NIM), Olisa Agbakoba and Abduljalil Tafawa Balewa, have clarified that the recently inaugurated Political Grand Alliance named CUPP (Coalition of United Political Parties) is not dominated by any of the political parties that formed the coalition, stressing that it was a culmination of NIM’s Initiative towards ensuring better Governance of the country from May 29, 2019. In a Press Statement released following its Expanded Steering Committee Meeting in Lagos, the movement debunked the notion being peddled that one of the political parties that make up the alliance, actually initiated CUPP with the intent of surreptitiously controlling all other parties in CUPP. Reminding Nigerians that NIM was essentially the only member of the Alliance without a political party affiliation for now, Co-

Chairman Olisa Agbakoba pointed out, “NIM’s modus operandi, abiniitio, has been to initiate a united electoral alliance of like-minded groups, individuals and parties towards achieving a New Nigeria via the ballot box come 2019. So, NIM is working hard to bring more parties, including, People’s Trust, PT, our own brand new political platform into the Coalition and to end any further misperception regarding CUPP’s purpose and relevance in ensuring that Nigeria does not become a failed state where genocidal actions, brazen impunity and socio economic retrogression are the norm!” Continuing in same vein, NIM Co-Chairman Tafawa Balewa, noted that, “now we’ve all come together, against all odds to create a formidable political alliance, we are not surprised at the vicious propaganda being deployed against CUPP. But, come 2019, we quite assured CUPP shall be victorious Ludorum!”

the first to come and brief the BoT about his presidential aspirations even though there are currently 3 letters of request for courtesy visit by other aspirants who will also be accorded same courtesies. He noted that Atiku was an active member of the party before his exit, and continues to be active

since his return. “The BoT as the conscience of the party will not make a mistake again. It will set up a committee to make a determination on putting its best foot forward,” Jibrin said, adding that Atiku has done the right thing in considering the BoT worthy of interacting with them. The well-attended meeting also included another presidential aspirant, Mallam Shekarau. Meanwhile, Atiku has signed a Memorandum of Understanding (MoU) to establish a world class medical facility in Nigeria. The (MoU) is a partnership between the West Africa Healthcare Services Company of Nigeria and the Saudi German Hospital to establish a medical Referral Centre and 100bed hospital in Nigeria. The MoU was signed on Saturday at a private ceremony in Abuja by Adamu Atiku Abubakar for the West Africa Healthcare Services Company of Nigeria and Reem Osman, Chief Executive Officer of Saudi German Hospitals UAE behalf of her company. The Saudi German Referral Centre and Hospital Abuja is a partnership of Saudi German Hospital and West Africa Healthcare Services Company of Nigeria but managed by the former. Former Vice President Atiku Abubakar, who is the founder of the of the West AfricaHealthcare

Services Company of Nigeria said that the Referral Centre and the diagnostic centre and 100-bed state-of-the-art hospital will, “bring great changes to the medical sector of Nigeria, for the benefit of Nigerians.” Details of the MoU includes the employment of Nigerian medical experts and arrangements for world renowned doctors from the Dubai branch of Saudi German Hospitals Group to visit Nigeria on a regular basis to provide health services. “Basic medical service will be provided here while those cases which need further medical management will be referred to the 300-bed Saudi German Hospital located in Dubai, the biggest in the Emirate of Dubai. “We plan to quickly follow up this Referral Centre with a fullfledged diagnostic centre and later a 100-bed state-of-the-art hospital. We believe that this type of investment in our health sector will help to reverse the trend of our highly trained medical professionals seeking employment abroad at great cost to our country.” Present at the signing of the MoU were the President and Founder of Saudi German Hospitals Group, Sobhi Batterjee, directors of the partnering companies, associates of the former Vice President and family and friends.

245,000 PVCs await collection in Kwara - INEC ...NOA charges Nigerians to obtain their PVCs SIKIRAT SHEHU, Ilorin

ndependent National Electoral Commission (INEC) in Kwara State has disclosed that 245, 000 Permanent Voters Cards (PVCs) readily available are yet to be collected by those who registered with the commission. Jacob Ayanda, Director, Kwara State INEC, bemoan the situation stressing that it is worrisome more so that election time draws closer. The commission, however, revealed that in preparation for the forthcoming general elections, INEC has upgraded its system completely especially smart cards reader because it will be given results without delay. “After 2015 elections, all PVCs that were brought to Kwara State was about two hundred and forty -two thousand (242, 000) cards. Surprisingly, since Maylast year till now, only 5000 cards have been collected out of the aforemen-

tioned cards readily available. “Many people registered, we printed their cards but they didn’t collect them. This apart, people that registered last year are about 10 000, whereas those who collected the cards were not more than two thousand 2000,” Ayanda said. Ayanda, who spoke in a monitored programme, ‘Matters Arising’ on royal FM on Monday said, “We started registering people since April 2017 and by 17th of August this year, we will stop registration for 2019 election. So, people still have opportunity to quickly go and register now. “So, when the registration comes to an end next month, distribution of cards will continue till two weeks before the election,” he added. “I advise people to go and register for everyone to get his or her voter’s card so as to exercise their franchise in the discharge of their social responsibilities which only PVC is the weapon to do so,”Ayanda said.

Meanwhile, the National Orientation Agency (NOA) has urged Nigerians to troop out enmasse to INEC offices to collect their PVCs, warning that the PVCs remain the prerequisite for participation in the voting exercise during the 2019 general elections. A statement released by Adeyemi Raphael, Public Relations Officer of NOAKwara State chapter, stated that the call was made by Olusegun Adeyemi, Director of NOA in Kwara and Mohammed Sabi, the state Commissioner for Information and Communications when the former paid a courtesy visit to the latter. The NOA Director also reiterated the fact that the Agency and the Ministry of Information had in the past, collaborated to achieve some feats in the state and NOA looks forward to more synergy in the area of Voter Education, registration and collection of PVC as well as campaign against drug abuse and other vices in the State.

Wednesday 18 July 2018

BUSINESS DAY

36 BUSINESS DAY NEWS Key issues in focus as Africa’s power forum kicks off today MIKE OCHONMA

frica’s stakeholders and industry experts in the continent’s energy sector are gathering at the Sandton Convention Centre, South Africa to assess the trends, challenges and solutions in power generation and distribution across the continent. At the Power-Gen & DistribuTech Africa 2018, experts will be deliberating on issues such as the impact of integrating VRE systems into African grids, the future of flexible hybrid solutions, storage solutions, floating power plants, improving asset management and system performance, and blockchain technology for electrifying Africa. Pan-African and international case studies will assess NamPower’s Encroacher Bush biomass power project, the Robben Island microgrid, and South African experiences in peaking projects. During the three-day event, experts will assess the trends, challenges and solutions in power generation and distribution across the continent. A delegation of over 50 pan-African power sector VIPs will also attend. The forum, which serves as an important yearly knowledge sharing and networking platform, also offers delegates pre-scheduled business-tobusiness matchmaking. New power sector priorities are emerging across Africa, such as the financing of new power projects, integration of independent power projects, sustainable plant management and the role of the digital revolution

in power generation and distribution today. According to local and international power experts speaking ahead of the PowerGen & DistribuTech Africa conference and expo, keeping the lights on is no longer good enough. They argue that to move forward, growth is crucial, sustainability is not negotiable, and forward-looking strategies must incorporate digital innovation and integration of smaller, distributed generation into the grid. According to Willie de Beer, advisory board chairperson, Power-Gen & DistribuTech Africa, the power sector is operating in a disruptive landscape, in which the kw/h business is no longer sustainable. “We are now confronted from a broader industry perspective with things like leadership challenges, how well we operate and run our utilities, and how we should capitalise on the environment to remain relevant into the future,” he says. With tracks covering strategic and management issues through to technology and trends, the meeting will address the top of mind power topics in Africa today. Yearly, the events attracts over 3,000 delegates, including power industry stakeholders, utilities and sub-Saharan government officials from panAfrica and abroad. It covers all scopes of power generation and distribution trends, technologies and solutions for Africa. Over 70 leading local and international brands will showcase solutions in the free-to-access exhibition area.

Amal Hassan named among Emerging Leaders by Fortune

ccording to the USAID, “When women do better, countries do better, communities do better, and families do better.” This is why Amal Hassan, a Nigerian technopreneur/CEO of Outsource Global, was one of 16 women business leaders that made it to the 2018 Fortune-US Department of State Global Women’s Mentoring Partnership. The Fortune-US Department of State Global Women’s Mentoring Partnership is a public-private partnership between Fortune Most Powerful Women, the US Department of State and Vital Voices Global Partnership. This year’s mentoring partnership featured emerging-leader mentees from 13 countries, which include Bosnia and Herzegovina, Egypt, Guatemala, India, Indonesia, Palestinian Territories, Kenya, Macedonia, Mongolia, Nigeria, South Africa, Tunisia, and Vietnam. The programme also had in attendance over 300 alumnae who have worked with mentors from America’s most prestigious companies, such as Goldman Sachs, Johnson & Johnson, IBM, Young and Rubicom (Y&R) and Accenture. Amal Hassan and other mentees engaged in skills train-

ing, panel discussions, networking events, and mentorships with executives from the Fortune Most Powerful Women community. Amal had multiple sessions at Y&R a global leading branding and communications powerhouse. During her mentorship with Shelly Diamond, the Chief Client officer of Y&R, Amal focused on developing critical leadership, professional and business skills. Wunderman, VML, Sparkplug companies and WPP fellows also offered their time, helping her with brand building, social media strategies, channel planning, web strategy and personal leadership skills. In addition to meeting with practice leads throughout the company, a core team held a strategic planning session to help Amal articulate her unique vision and mission. Amal Hassan has earned an unprecedented amount of recognition over the years for her remarkable business success and commitment to promoting youth and women empowerment. Her company, Outsource Global, employs more than 700 employees, of whom more than 50% are women, as call centre agents, legal practitioners and medical professionals from its world-class facilities in Abuja, Lagos, and Kaduna.

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Wednesday 18 July 2018

Nigeria oil production level now 1.850mbpd … Nembe Creek Trunckline comes on stream OLUSOLA BELLO

igeria has resumed the production of about 150,000 barrels of crude oil following the repairs of and reopening of Nembe Creek Trunkline, and consequently the force majeure on Bonny Light crude has been lifted. With this development, additional 150,000 barrels are being pumped daily, thereby bringing the country’s production level to about 1.850 million barrels per day (mbpd). This is about 300,000bpd short of the government projected daily production of 2.2mbpd on which the national budget was hinged.

OPEC data indicate that Nigeria produced 1.7 million barrels in the month of June. The fixing and reopening of the Nembe Creek Trunckline is no doubt a relief to the Federal Government that has been eager to increase its production level so that IT can also benefit from the current high crude oil prices. Shell says it “lifted the force majeure on Bonny Light exports following the repair and reopening of the Nembe Creek Trunkline by the operator, Aiteo Eastern E&P Company Limited.” Shell declared force majeure on Bonny Light export on May 17, 2018, following the shutdown of NCTL by the

…300,000 short of 2.2mbpd for 2018 budget operator. Meanwhile, OPEC and its allies say they could boost oil production by more than the 1mbpd agreed on last month if needed, Russia’s energy minister, Alexander Novak, said. This is even as the price of crude oil hits $72 per barrel in the international market. Oil prices have remained near their highest in more than three years despite pledges by Russia, Saudi Arabia and their allies last month to boost production. Supplies are being strained by deepening losses in Venezuela, erratic flows from Libya and the prospect of renewed US sanctions on Iran, which could curb its exports. Novak did not comment on

whether he discussed in detail the option of raising supply by more than the agreed amount with his Saudi Arabian counterpart Khalid Al-Falih during their phone conversation earlier this month. “If there is a need, we can always contact other countries” to discuss the possibility of increasing further, Novak said. “We discussed this as an option -- this communication -- but as to the need of any decision now, it’s too early to talk about it.” Questions on which countries will increase supply and by how much remain contentious topics in the coalition of producers often referred to as OPEC+.

Godwin Obaseki, governor, Edo State (4th left, back row); Yakubu Gowon, special adviser to the governor on special duties (4th right, back row), with coaches and athletes of Edo State origin, who represented the country at the 2018 Commonwealth Games in Australia, after a courtesy visit to the governor, at the Government House, Benin City, yesterday.

Nelson Mandel Day: Edo salutes commitment to global peace, good governance

NECA warns Nigeria’s rising debts unsustainable

JOSHUA BASSEY

do State governor, Godwin Obaseki, has hailed the late Nobel Peace Prize winner and former South African President, Nelson Mandela, for his commitment to global peace and good governance, charging world leaders to emulate his dedication to better human society. Obaseki, who gave the charge on the occasion of the commemoration of the Nelson Mandel International Day, marked on July 18, each year by the United Nations, said Mandela remained one of the greatest gifts from the African continent to humanity. “A special day for the Nobel Peace Prize winner, who fought with all he had for the liberation of black South Africans from the shackles of apartheid and the enthronement of a rainbow nation of many colours, is a call on world leaders to take actions that will enhance the wellbeing of majority of the people we swore to serve,” the governor said. He added: “Mandela demonstrated his unshakable faith in one diverse and united South Africa at great personal cost, and led from the front to challenge obnoxious, divisive and retrogressive laws and tendencies in order to foster a community where peace reigns supreme.”

He urged leaders to use the Nelson Mandela International Day to reflect and draw up a checklist of workable solutions to pressing problems facing humanity, namely; health challenges, global security, food security, climate change, infrastructural deficit amongst others. According to the UN, “Nelson Mandela devoted his life to the service of humanity — as a human rights lawyer, a prisoner of conscience, an international peacemaker and the first democratically elected president of a free South Africa.” The UN explained that “in recognition of the former South African President’s contribution to the culture of peace and freedom, UN General Assembly declared July 18 Nelson Mandela International Day. “Resolution A/RES/64/13 recognises Mandela’s values and his dedication to the service of humanity in: conflict resolution; race relations; promotion and protection of human rights; reconciliation; gender equality and the rights of children and other vulnerable groups; the fight against poverty; the promotion of social justice. “The resolution acknowledges his contribution to the struggle for democracy internationally and the promotion of a culture of peace throughout the world.”

… as Mohammed Yinusa emerges president

igeria Employers’ Consultative Association (NECA) says the Federal Government needs at this point to check its excessive appetite for borrowing, and rather look inward by widening the tax net to generate funds to support the growth of the economy. NECA, a key member of Nigeria’s Organised Private Sector (OPS), is of the view that the country’s revenue/debt ratio is not only unsustainable, but worrisome, warning that the Africa’s biggest economy walks the tight rope and risks slipping back into the pre-debt relief era. Larry Ettah, the out-gone NECA’s president, who is succeeded by Mohammed Yinusa, first vice president of the association, raised the concerns at the NECA’s annual general meeting, in Lagos, Tuesday. According to Ettah, “We are very worried that for three consecutive years, the rising cost of debt servicing is in the top three allocations in the national budget. In the last three years, the government has had a budget of about N18.012 trillion (2015: N4.493 trillion; 2016: N6.077 trillion and 2017: N7.441 trillion); of which debt service alone took

an average of 23.71%, more than one-fifth of the budgets, amounting to N18.012 trillion. This leaves N13.74 trillion for recurrent and capital expenditures.” The 2018 budget as recently passed by the National Assembly and signed by President Muhammadu Buhari showed that the debt service provision, including sinking fund, amounting to N2.2 trillion, is the third largest component of the 2018 expenditure framework, representing 24.17 percent or approximately a quarter of the entire budget size of N9.12 trillion. Making reference to the recent Global Economic Perspective report, which showed concerns over Nigeria’s debt servicing obligations and continuous foreign exchange controls, Ettah said it was troubling that the nation’s debts on both domestic and external fronts were on the rise, in contrasts to the revenue earned by the government. “The bigger concern is the possible un-sustainability of such debt servicing. While the debt servicing costs in other economies remain sustainable, that of Nigeria is being dragged down by naira depreciation and increased recourse to non-concessional borrowing for infrastructure development,” he said.

Wednesday 18 July 2018

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BUSINESS DAY

38 BUSINESS DAY NEWS

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DisCos are technically insolvent... Continued from page 1

interactive session held at the instance of House Committee on Power, with critical stakeholders in the Nigeria’s power sector includ-

ing Nigeria’s Bulk Electricity Trading Company (NBET), Electricity Distribution Companies (DISCOs) and Generation Companies (GENCOs). In his presentation, BPE Director General harped in the need to immediately solve the challenges bothering on price structure and liquidity of DISCOs. “We need to solve the liquidity challenge. How do we make the industry viable in terms of liquidity? If we take all the energy that the DISCOs buy and the energy sold, assuming there’s minimal losses on collection side, we find it difficult that there is enough revenue to push us through.” “There’s a gap in the price structure. There is an empirical way of bridging other gaps. If we identity what that gap is then government can handle the other issues,” he noted. According to the BPE helmsman, the assessment conducted by the Bureau showed that “many of them are technically insolvent. Their current liabilities are in excess of their assets, most are owed to NBET. They are unlikely to pay because of poor tariff.” “They need to improve infra-

structure that consumers can pay for, but technically they do not have the capacity to do so,” he said. While noting that the proposed N75 billion for the DISCOs by government is an ad-hoc arrangement and unsustainable, Okoh stressed the need for medium and long term solutions to the myriad of challenges facing the industry. He observed that the N701 billion subsidy provided by government through NBET was part of government’s intervention towards subsidizing the system. Okoh who noted that the subsidy when introduced will not be wholly paid by government at the end to the day, explained that the tariff subsidy can be paid back through future adjustment in the tariff as part of efforts to solve the liquidity issue. While stressing the need for expedite action in addressing the liquidity challenge, he argued that “if we don’t address that now, it is a time bomb and I just pray it won’t explode on all our faces.” In his representation, Eugene Edeoga, NBET Director of Procurement lamented that the company is “technically dead and insolvent with huge liabilities” arising from over N800 billion owed it by the DISCOs. Speaking earlier, Ernest Mupwaya, MD/CEO Abuja Electricity Distribution Company (AEDC) affirmed that the major challenge bothers on price

differential, adding that the DISCOs paid up to 100 percent of the tariff as a result of the movement of tariff from 2015 to December 2017. According to him, the electricity tariff is impacted mostly by movement in foreign exchange and inflation. He added that the challenges facing DisCos need holistic, sustainable solutions, including “adjustment in tariffs so that there will be regular light,” pointing out that Ministries, Departments and Agencies (MDAs) of government owe DisCos over N72 billion. “It is important to point out that some government institutions are owing the DISCOs over N72 billion and there are individuals and corporations

who are by-passing meters and stealing energy,” Mupwaya said.

While noting that the DISCOs have not implemented five minor reviews which ought to take place within six months, he lamented that the “delay has led to the erosion balance sheet of the discos if you borrow from bank to carry out the transformation it will affect the balance sheet,” adding that the “price differential hinders every aspect of the supply chain and does not have enough revenue.” On the tariff adjustment, he urged government to recognise in the books by deferring the debts to enable the DISCOs raise more funds, adding that “when the balance sheet is cleared with the aid of CBN, we

can borrow the funds we need to expand” Continues on wwwbusinessday online.com

Wednesday 18 July 2018

Banks are biggest NSE index movers... Continued from page 1

2,355 points to the All Share Index (ASI) in the past year, more than any other group of companies on the top 10 list of index movers. In the past year alone, share pric-

es in these banks have accelerated dramatically off the back of strong earnings performance in FY 2017 and Q1 2018. Shares in Stanbic IBTC rose 67.79 percent while FBNH rose 75.69 percent. Zenith, GTBank and ETI are up 20.22 percent, 15 percent and 46.85 percent respectively. Although banks have outperformed other sectors on the index, the outsize index weights of Nestle and Dangote Cement which account for 38% of market capitalization on Nigeria Stock Exchange combined with their strong equity performance of 74.06 percent and 13.18 percent respectively ensured that both firms finished as 1st and 2nd biggest index movers over the past year. Gains in Nestle moved the index up by around 1,513 points while gains in Dangote Cement added 1,430 points to the broad equity index. Other firms who ranked among the top 10 index movers over the past year include Dangote Sugar (7th), Seplat (9th) and Unilever (10th). Their stocks are currently up 113.91 percent, 40.21 percent and 58.65 percent respectively in the past one year. Out of the top 10 index movers, five are included in the banking index, 3 are in the consumer goods index and one each from the industrial index and oil and gas index. The top 10 index movers currently account for 70 percent of market capitalization on NSE. The market rout this year has negatively affected all the big index movers as the year to

date performance for the market giants ranged from -7.29% to +27.69%. In the one year under review, all 10 stocks had a positive return with the least performing company rallying 13.18 percent versus year to date performance where three companies slumped to negative returns since year beginning and only 4 have managed to rally over 10 percent year to date. The bearish market sentiment was worse in other parts of the market. Out of the bottom eight market laggards in the last one year, four are oil companies which include Total (159th), Oando (160th), 11 plc (161st) and Forte oil (162nd) among 165 publicly traded companies surveyed using data compiled from Bloomberg. The oil companies pulled the index lower by -285 points over the past year. The bottom three market laggards include Intercontinental Breweries (163rd), Lafarge Africa (164th) and Nigerian Breweries (165th). Nigerian Breweries in particular is responsible for a drop of around -883 points on the All Share Index during the one year period which was the highest by any firm on the index. NB is the 4th largest company (by market capitalisation) on NSE so when the stock performs poorly, it typically drags the overall market performance. Stifling competition in the brewery space is most probably responsible for the poor performance of the brewery companies during the past year. If the other sectors like FCMG, Oil marketing and Manufacturing do not pull their weights around boosting their equity performance this year, the market may once again have to rely on banks to pull the market higher again in 2018.

Lessons from Ekiti governorship election Continued from page 1

ernance Awards popularly called the Governors’ Awards. The latest edition of the report, which is more expansive than the first edition produced in 2013, takes an in-depth look at indicators which are critical for Nigeria’s economic prosperity. Trucks return to Apapa bridges causing traffic nightmare for businesses and individuals in Lagos, Pic by Olawale Amoo

Ethiopian, Qatar Air in talks with FG... Continued from page 1

opian’s chief executive officer, will hold talks with a Nigerian minister about the proposal on Tuesday at the Farnborough air show in England, he said in an interview with Bloomberg. Nigeria said this month that a new airline would begin operations this year, with the name to be revealed at the expo. Africa’s most populous nation has struggled to support a viable home-grown airline for decades, with a succession of carriers collapsing or slashing routes. That’s left the oil-rich country dependent on services provided mainly by European and Persian Gulf carriers for trips beyond the region. Ethiopian Air, by contrast, has become Africa’s only consistently profitable carrier by turning Addis Ababa into a crossroads for travel around the continent and beyond, replicating the hub

model of Persian Gulf carriers. The network features about 70 global cities and almost 60 across Africa. Ethiopian Air already owns stakes in Malawi Airlines and Togo-based Asky Airlines and aims to secure equity holdings in new carriers in Zambia, Chad, Mozambique and Guinea by the end of the year while helping to manage existing operators in Equatorial Guinea and Democratic Republic of Congo. Earlier yesterday the government announced plans for the company to buy a 20 percent stake in Eritrea Airlines as part of a new peace deal, with flights between the neighboring states starting Wednesday. Tewolde, who spoke in London, said he expects to face competition over the Nigerian project from Qatar Air ways, which has stakes in carriers including British Airways owner

IAG SA and Latam Airlines Group SA, the biggest South American operator. Nigeria said last week that its planned national carrier would be unveiled today. The airline will be run as a public- private partnership and should become profitable in three years, according to the government. Aviation Minister Hadi Sirika tweeted from his tweeter handle, @hadisirika from Farnborough that he’d held talks on sourcing jets from Airbus SE and planned to meet with Boeing Co. and other suppliers. Former flag-carrier Nigeria Airways collapsed in 2003, with successor Air Nigeria -- founded as a joint venture with Richard Branson’s Virgin Group -- folding in 2012. Private operator Arik Air was taken over by Asset Management Corp. of Nigeria last year, leading long-haul flights to be suspended. Continues on wwwbusinessday online.com

These indicators are the revenue from the Federation Account Allocation Committee (FAAC) and how it was shared among the 36 states of the federation as well as the portion that was given to the 774 local government areas in the country; the FAAC portion that each geopolitical zone received as well as what these revenues meant for an individual in a state and geopolitical region in the country; the budgetary allocations to health, education, among others. The report also takes a look at the internally generated revenue (IGR), consumption of white products such PMS, AGO and HHK across states in each geopolitical zones; mobile and internet penetration rates, neonatal, prenatal and maternal mortality rates across states and geopolitical zones in the country. Before now, not many Nigerians are aware of the great disparity relating to the preference for a place of birth as some Nigerians had their place of birth at home, public and private healthcare facilities. The 2018 State of States report highlights the differences between Hausa, Igbo and Yoruba, the three major ethnic nationalities in Nigeria. Based on data sourced from the

National Bureau of Statistics (NBS) which was extensively analysed in the report, over 60 percent of live births among Hausas took place at home. Majority of the live births among Yorubas took place in public healthcare facilities while the preference among the Igbos is highest for private healthcare facilities. Furthermore, the report shows that each state of the federation has its uniqueness for crimes. Particularly when analysed along drug seizures, most of the banned drugs were seized from the north particularly Kano and Plataea states. In the south, Edo and Ondo states topped the states where the highest drugs seizures took place by law enforcement agents. However, most of the females arrested in connection with banned drugs were from Edo, Bayelsa and Delta states. Meanwhile, all is set for this year’s Governors’ Awards holding this Thursday, July 19 2018 at Abuja, the Federal Capital Territory (FCT). Dignitaries expected at the event include the former head of states, Abdusalam Abubakar; His imperial Majesty, Oba Adeyeye Ogunwusi, the Ooni of Ife and the Emir of Kano, His Royal Highness, Sanusi Lamido Sanusi, governors and their associates in public and private sectors and their family members. The annual event is meant to celebrate governors who have distinguished themselves in different spheres of their states’ economies. The criteria for winners have been carefully selected to give an unbiased and verifiable outcomes as much as possible. Continues on wwwbusinessday online.com

Tuesday 17 July 2018

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39 NEWS

BUSINESS DAY

Increased housing affordability coming on CBN’s mortgage guarantee initiative T

Buhari requests N242bn to fund 2019 election OWEDE AGBAJILEKE, Abuja

CHUKA UROKO

n no distant future, increased affordability will be coming into the Nigerian housing market on the back of Central Bank of Nigeria’s (CBN) new mortgage initiative, known as Mortgage Guarantee Programme, which seeks to bring more home seekers into the mortgage net. Affordability has always been a big issue in the Nigerian housing market because most of the people who need houses cannot afford them because Nigeria is one of the most expensive housing markets in the world. This is also a country where it is believed that mortgage is nonexistent because what is available as mortgage is neither accessible nor affordable to over 70 percent of the population. But a guaranteed mortgage is here. It is a mortgage given to a borrower by a lender where an identified third party will take responsibility for the loan if the borrower defaults. Expectation is that this will push up housing affordability because, with the new programme, once a borrower defaults, the third party

receives a claim from the lender, pays the lender off, and assumes responsibility for the mortgage. “A quality mortgage guarantee programme is used to provide credit loss protection to lenders in case of borrower default,” explained Tokunbo Martins, director, Other Financial Institutions Supervision Department (OFISD) at CBN, who spoke at the ongoing Abuja International Housing Show. “Mortgage guarantee products incentivise lenders to accept loans with lower down-payments, thus increasing affordability”, she added. The implication of this is that borrowers, who, ordinarily, would not have qualified for mortgage loan by reason of their low income, can now obtain loans, which enhances their affordability. In most cases, the national government is the driver of any successful mortgage guarantee programme, which they administer through a government agency, a private entity or a hybrid encompassing both types of entities. The programme comes with a lot of benefits and, according to Martins, its importance in Nigeria cannot be over-emphasised

given that this is a country where typical down-payment is over 20 percent with extremely high additional costs for regularisation, titling and other home buyer responsibilities. “Mortgage guarantee in our market will also be used as a valuable tool to regularise and standardise the market in every area from documentation to underwriting to collateralisation and mortgage dispute resolution. These are major issues we need to resolve,” she advised. Essentially, mortgage guarantee is a product of great value to any housing market because it is a tool of opportunity for both the supply and the demand sides of the mortgage market and Martins notes that it provides potential opportunity of lower downpayment for borrowers, while opening up a larger market for lenders who make the decision to finance the target population for the programme. Martins highlighted the benefits of the programme as increased access to housing finance, access to higher amount mortgages, better loan terms (rate, term etc), market standardization and increased consumer literacy, more stable property

values, and more stable and improved national housing sector leading to better economy. She stressed that a major benefit of the programme is its capacity to encourage the influx of investor funds – both local and international, explaining that a well-executed mortgage guarantee programme provides comfort to intending investors by signalling the presence of standards in the industry that could reduce the risk of losing their invested funds. The good news on this programme is the role being played by the Nigeria Housing Finance Programme (NHFP). This is a programme daily implemented by a Project Administration Team (PAT), domiciled in the OFISD at CBN. NHFP, which is the result of a PPP between the Federal Government, CBN and World Bank, is working in collaboration with its stakeholder partners currently in the feasibility study stage of establishing a pilot company, to be known as The Nigeria Mortgage Guarantee Company (NMGC). “This effort is meant to offer Mortgage Guarantee in Nigeria,” Martins said.

he 2019 general elections scheduled to hold in the next seven months will cost N242,445,322,600, President Muhammadu Buhari said on Tuesday. In a letter to the National Assembly, the President requested that the sum of N164 billion be provided through virement or supplementary appropriation on the 2018 budget, while the balance of N78 billion would be required in the 2019 budget. He also asked that N64 billion earlier removed by lawmakers to fund critical projects should be reinstated, bringing the total to N228 billion. However, the President said N228 billion should be deducted from the N578 billion the lawmakers inserted in the 2018 budget for the funding of the election and critical projects. The 2019 election is billed for February 16 and March 2, 2019, while campaign primaries by political parties will commence from August 18 to October 17, 2018. It is still unclear if lawmakers would approve the President’s request before they embark on annual recess by next week. “The total amount required

Over 200m births not registered globally - UNICEF/NOA

Delta undertakes 83 energy projects worth N3.9bn

UDOKA AGWU, Umuahia

elta State governm e n t h a s u n d e rtaken a total of 83 energy projects at the cost of N3.9 billion in the last three years. Also, in order to facilitate economic activities in the rural areas of the state, the ministry of energy through its parastatals – rural development agency executed over 32 projects with an estimated cost of N507,025,050.00 within the period. This is as the administration has paid the Benin Electricity Distribution Company (BEDC) bills for government offices and residential quarters amounting to N109,727,064.27, as part of its resolve to facilitate and sustain conducive working condition of the workforce. The commissioner of energy, Newworld Safugha, made the disclosure when he spoke at the ongoing 2018 ministerial briefing at the ministry of information, Asaba. He noted that though the power sector was now under the purview of the private sector to provide electricity in the country, the state government had intervened and would continue to intervene in various ways because of the exigency in the sector and commitment of Governor Okowa to the people of the state. According to Safugha, under the electricity power supply, the state government in its interventionist efforts has facilitated the reconnection of communities to the national grid, reinforced, rehabilitated and upgraded electricity power supply infrastructures throughout the state.

L-R: Babatunde Fowler, executive chairman, Federal Inland Revenue Service (FIRS)/guest speaker; Larry Ettah, immediate past president, Nigeria Employers’ Consultative Association (NECA), and Olusegun Oshinowo, director-general, NECA, during the 61th annual general meeting of NECA in Lagos, yesterday. Pic by Olawale Amoo

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to be provided for in the 2018 budget for the 2019 General Elections and to restore the identified critical projects to the amount earlier proposed is therefore N228,854,008,215.Implementing a budget of N9.12 trillion for 2018 will be extremely challenging and therefore, I do not consider it expedient to propose a further increase to the size of the 2018 Expenditure Framework to fund these very important and critical expenditure items. “Accordingly, I invite the Distinguished Senate to consider, in the national interest, reallocating some of the funds appropriated for the new projects which were inserted into the 2018 Budget proposal totalling N578,319,951,904 to cover the sum of N228,854,008,215 required as noted above,” the President said in a letter dated July 11, 2018, which was read on the floor of the Senate on Tuesday by Senate President Bukola Saraki. The President attributed his request to fund the election through virement to ‘prevailing fiscal constraints’. According to the President, the amount for the election was arrived at after proposals from the Independent National Electoral Commission (INEC) and security agencies.

NICEF and NOA say av a i l a b l e re c o rd s show that over 200 million children around the globe have not had their births registered, and about 80 countries do not have well-functioning civil registration systems to document births and deaths, mostly in sub-Saharan Africa and South Asia. Imo Uche, a resource person from National Population Commission (NPC) while addressing over 150 women at Umuode-Nsulu autonomous community, Isiala North LGA of Abia State during UNICEF/NOA Social Mobilisation Technical Committee (SOMTEC) outreach, said the use of sworn affidavit in place of birth certificate would be dropped in the near future. Uche warned that without birth certificates, individuals would face challenges of going to school, seeing the doctor, accessing social protection and participating in public life. He pointed out that inability of some parents to register births of their children could deprive such children of their identities and the crucial birth certificates, which are literally children’s passports to benefits such as education and welfare programmes, and shield to help protect him/her from trafficking, child labour, or other forms of abuse. He said, “When the government knows how many children are born, how many people die and what the principal causes of their deaths are, we know better where to prioritise health investments.”

MERCY ENOCH, Asaba

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Edo to review operation of orphanages, others - Obaseki IDRIS UMAR MOMOH

do State government is reviewing the operations of o r p ha nag e s, o l d people’s homes, remand centres, schools for people with special needs and other such centres for vulnerable persons, for efficiency and improved impact. Godwin Obaseki, the state governor disclosed this at the foundation-laying for Baba Rabi Foundation at Uzairue, in Etsako West local government area of the state. “We are reviewing how orphanages, old people’s homes, remand centers, schools for people with special needs, and centres catering for vulnerable persons are managed in the state. As a government, we will do all it takes to support people with goodwill as we are ready to work with them to help us reach out to more vulnerable persons in our society.”

The governor commended Fatima Mede, the chairperson of Baba Rabi Foundation, for building the facility, noting, “this is the kind of values people should celebrate. Even as a retired permanent secretary living off her gratuity and pensions, she considered it worthy to follow in the footsteps of her parents, Baba Saliu Egele and Rabi Saliu Egele, who were reputed for their philanthropy.” Earlier, In-Tae Lee, the South Korean ambassador to Nigeria, commended the chairperson of the foundation for her contribution to the development of the society, noting, “This effort is quite commendable as it is geared towards eradication of poverty in rural communities through agricultural development. Rural development is a part of the policies of South Korea as a nation. We will continue to support the center to improve the lives of the people.”

Lagos CP redeploys officers to counter robbers’ threats

mohimi Edgal, Commissioner of Police (CP) in charge of Lagos, has redeployed officers and men at Igando police division, Alimosho, with a view to beefing up security. Residents of Igando, Egan, Akesan and Obadore have been under attacks by armed robbers, who recently wrote a letter, informing them to prepare for them. During a visit to the community on Monday, Edgal said that a new Divisional Police Officer (DPO) would take over immediately and that policemen who had spent up to three years in the community would be transferred. “I have called this emergency meeting because of my style of policing, which is community policing and safety partnership. I believe that we have a security problem and we can solve it together.

“It has come to my notice that the good people of this community are being troubled by hoodlums. I am here to put in place measures to counter them. “I know the DPO here has been working hard, but he will be given more responsibilities as I am here with a new DPO who will be briefed and charged with the responsibility of working with you. “The new DPO will also send me the list of all policemen in Igando, and I will make sure that those that have spent up to three years will be transferred. Edgal said that there was the need to identify the hideouts of the hoodlums. “Before I leave here, the traditional ruler or the local government chairman must provide us a place to station the Federal Special AntiRobbery Squad.

Obaseki condemns killings of policemen in Edo

odwin Obaseki, Edo State has condemned the ambush and killing of four policemen by assailants, while on routine patrol in Sabon-gida Ora, Owan West local government area of the state, at the weekend. Obaseki said the ugly incident is being investigated to ascertain the motive of the killers while assuring that efforts to arrest them was ongoing. “Our administration will work with the security agencies to apprehend the criminals and bring them to justice,” he said. The governor stressed that the unprovoked attacks

on men and women of the police force and sister security agencies is unacceptable and assured that the state’s security architecture will create roles for communities and local groups as well as the organised private sector to support security agencies in eradicating crimes across the state. Four policemen attached to the Sabongida-Ora divisional police headquarters, were last Saturday killed and burnt in their patrol van by unknown persons. The police officers were killed at a road block at Uzebba-Aviosi junction along Ifon road, Sabongida-Ora, the reports said

An official of the Pension Transitional Arrangement Directorate (PTAD) trying to put off the fire during the Fire Drill Exercise for the officials of PTAD by the officers of the Nigerian Fire Service in Abuja.

NAN

Abia bars MDAs, LGAs, touts from revenue collection GODFREY OFURUM

bia State government has cancelled all revenue collection licenses or permits hitherto issued by Ministries, Departments and Agencies (MDAs) and also barred its local government areas (LGAs) from involvement in revenue collection, in a move to end multiple-taxation and touting in the state. The state government warns that only properly identified staff of the Abia State Internal Revenue Service, in partnership with the state’s global consultant on IGR, CSDC, are been authorised to collect revenue due to the state and local governments. The development was an outcome of a meeting between Okezie Ikpeazu,

the state governor, and key stakeholders in the internally generated revenue collection chain, aimed at ending multiple-taxation and touting, especially in Aba, the state’s commercial hub. John Okiyi Kalu, commissioner for information, who confirmed this to BusinessDay , also stated that the revenue collected on behalf of local governments would to be remitted to them, by the state revenue collection agency, after monthly reconciliation. The state government also reiterated its decision to use recognised trade unions, such as Abia State Amalgamated Traders Association (ASMATA), National Union of Road Transport Workers (NURTW), Abia State Amalgamated Tricycle Operators Association (ASATOA), Associa-

tion of Importers, among other recognised groups, to enforce the collection of flying revenue from their members. It urged leaders of the concerned associations to liaise with the office of the chairman of the Abia State Internal Revenue Service, to obtain approved list of payable revenue. “Corporate organisations operating in the state are to ensure that Pay As You Earn (PAYE) and other taxes are remitted to the government as and when due or face punitive action and sanctions, as provided by law. Also any policeman or security agent attached to a revenue collection team, other than the State Internal Revenue Service, is to be arrested and prosecuted for engaging in illegal duties,” Kalu said.

At the me eting, the stakeholders also agreed that all revenue payments would be made to the designated government accounts, which would be published, by the State Internal Revenue Service Agency. The government further warned that no MDAs in the state is authorised to issue revenue collection license or permit to any individual or group from henceforth, just as directed local government authorities to withdraw all revenue collection permits issued to agents with immediate effect. “It is our hoped that revenue leakages within the state will be minimized and soon become a thing of the past with the full deployment of the new computerized collection system,” said Kalu

Plateau IDPs beg for healthcare services

nternally Displaced Persons (IDPs) in two IDP camps in Plateau have appealed to the state government, philanthropists and medical organisations to help out with healthcare services. Leaders of the IDPs made the appeal when a group of medical laboratory scientists, under the auspices of G50, donated some relief items at the Geo-Science IDPs camp and the COCIN IDPs camp at Heipang in Jos South local government area of the state. Francis Chunk, the camp leader at the Geo-Science Camp at Anguldi near Bukuru-Jos, lamented that most of the IDPs were living with

various health challenges, and neeeded an urgent medical attention. According to Chunk, the camp lacks the financial resources to get medical care outside, except it was an issue of “life and death”. Presenting the items, Tanimu Umar, the team leader of G50, said that the donations were to meet their personal hygiene needs, especially women and infants in the camp. Umar listed the items to include sanitary towels, diapers and female panties. He assured the IDPs of medical assistance as the group consists of medical laboratory scientists. Similarly, Solomon

Chollom, a member of the G50 group and chairman of the Association of Medical Laboratory Scientists, National Veterinary Research Institute (NVRI), Vom chapter, said the association would set up a temporary laboratory in the camp. He said that the makeshift laboratory would serve as a diagnostic centre to ensure that the IDPs are treated appropriately based on tests carried out. Iliya Makau, the camp leader at COCIN Heipang, told the donors that the camp had 2,578 people most of whom needed medical intervention in view of their various health challenges.

Both camp leaders thanked the group for its donation that is aimed at providing them with succour at the critical time of their needs Chollom reiterated his earlier pledge that a makeshift laboratory would be provided to ensure that the IDPs access medical care in camp. One of the displaced persons, Sarah Bitrus, expressed gratitude to the group for their intervention. At least 12,000 IDPs are residing in nine camps in Jos South, Riyom, Barkin Ladi and Mangu local government areas following recent communal clashes in the state.

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Electricity sector tops 2017 global energy investments ... hits $750bn, oil sector trails at $715bn ISAAC ANYAOGU

he electricity sector attracted the largest chunk of investments in the energy sector, amounting to $750 billion in 2017, out of $1.8 trillion invested in the sector, the International Energy Association (IEA) says, indicating the increasing role electrification from alternative sources is playing as the world turns from fossil fuels. Paris-based energy think tank IEA in its World Energy Investment 2018 report says this feat achieved, the second time in a row,sustainedbyrobustspending on grids, which is more than $715 billion spent on oil and gas supply globally, actually represents a 2 percent decline in real terms from the previous year. “State-backed investments are accounting for a rising share of global energy investment, as state-owned enterprises have remained more resilient in oil and gas and thermal power compared with private actors. The share of global energy investment driven by state-owned enterprises increased over the past five years to over 40% in 2017,” IEA says in a release. “Meanwhile, government

policies are playing a growing role in driving private spending. Across all power sector investments, more than 95% of investment is now based on regulation or contracts for remuneration, with a dwindling role for new projects based solely on revenues from variable pricing in competitive wholesale markets. Investment in energy efficiency is particularly linked to government policy, often through energy performance standards,” the organisation states. The report also finds that after several years of growth, combined global investment in renewables and energy efficiency declined by 3% in 2017 and there is a risk that it will slow further this year. “For instance, investment in renewable power, which accounted for two-thirds of power generation spending, dropped 7% in 2017. Recent policy changes in China linked to support for the deployment of solar PV raise the risk of a slowdown in investment this year,” the organisation said. As China accounts for more than 40% of global investment in solar PV, its policy changes have global implications. The IEA be-

lieves this confirms its past reports that have highlighted the critical importance of policies in driving investment in renewable energy. Energy efficiency, which is the group’smainpolicythrustshowed someofthestrongestexpansionin 2017, but was not enough to offset the decline in renewables. Moreover,efficiencyinvestmentgrowth has weakened in the past year as policy activity showed signs of slowing down the group said. “Such a decline in global investment for renewables and energy efficiency combined is worrying,” said Fatih Birol, the IEA’s executive director. “This could threaten the expansion of clean energy needed to meet energy security, climate and clean-air goals. While we would need this investment to go up rapidly, it is disappointing to find that it might be falling this year.” Meanwhile, the share of fossil fuels in energy supply investment roselastyearforthefirsttimesince 2014, as spending in oil and gas increased modestly. Meanwhile, retirements of nuclear power plantsexceedednewconstruction starts as investment in the sector declined to its lowest level in five years in 2017.

EU funds INEC, National Assembly, others with £26.5m OWEDE AGBAJILEKE, Abuja

he European Union (EU) has disclosed that it has released £26.5 million to strengthen democratic institutions in Nigeria. This, it disclosed, is geared towards reinforcement of democratic governance in the country, even as it asked stakeholders to ensure that every votes count in the 2019 general elections. Speaking at a two-day summit on elections observation in Abuja, Ketil Karisson, Ambassador of Delegation of European Union to Nigeria and the Economic Community of West African States, observed that there have been positive results and improvements in Nigeria’s electoral process over the years. He listed beneficiaries of the fund to include the Independent National Electoral Commission (INEC), the National Assembly, media organisations, political parties and civil society organisations. The ambassador did not, however, give the breakdown of the amount. Karisson explained that the EU is planning to deploy an Election Observation Mission to monitor the 2019 elections.

“The EU is doing this because we have a strong interest in Nigeria’s political stability because a breakdown of Nigeria’s democracy will have significant negative impact on the stability of the West African sub-region, the African Continent and Europe,” he said. The event is organised by the National Institute for Legislative and Democratic Studies (NILDS). In his submission, Senate President Bukola Saraki said the conduct and outcome of the 2015 general elections should be the minimum standard to be adopted for the forthcoming 2019 general elections. “As the 2019 general elections draw nearer, it is my hope that we will not only replicate the success story of 2015 but in fact, surpass our previous achievements. “Thus, we should consider 2015 as a minimum standard and work to deepen our democratic culture as we emerge as a vanguard for other emerging democracies not only in the continent but globally,” he said. Earlier in her opening remarks, the Director General of NILDS, Ladi Hamalai, stressed the need for greater citizens’ engagement in elections observation for credibility of the process.

Wednesday 18 July 2018

Addressing climate-change induced conflicts charts roadmap to achieving SDGs - BIMUN ISAAC ANYAOGU

he Babcock International Model United Nations (BIMUN), a simulated forum of the United Nations General Assembly organised by Babcock University, has urged member states to pay close attention to the connection between climate change and cases of conflicts in different states, as the two are interlinked. In remarks made at the second edition of the event held in the University, in Ilishan Ogun State, in collaboration with the United Nations Information Centre (UNIC), recently, Ademola Tayo president and vice chancellor of the university, said the link between climatechange and conflicts should make states invest in achieving the Sustainable Development Goals (SDGs). “Considering the role the goals play in charting a path for meaningful and all encompassing development in the world, and putting this side by side with possible threats the effects of climate change pose at their achievement, it was a wellthought out decision that you chose the theme ‘Addressing Climate Change-Induced Conflicts: A Roadmap for Achieving the Sustainable Development Goals,” Tayo said.

Africa Initiative for Governance announces 2018/2019 AIG scholarship recipients … application opens for 2019-2020 AIG Scholarships

frica Initiative for Governance (AIG) has announced the recipients of the 2018/2019 round of the AIG Scholarships,theorganisation’sfully fundedscholarshipprogrammefor young, outstanding West Africans with a passion for public service. Commencing2017,foraperiod of five years, five scholarships are made available every year by AIG to talented West Africans from all backgrounds who are passionate about the public sector, to pursue the Master of Public Policy at the Blavatnik School of Government, University of Oxford. AIG also announced the openingoftheapplicationwindowforthe 2019/2020 AIG Scholarships. The application window will close on Friday, September 14, 2018. Upongraduation,AIGScholars areexpectedtoreturntotheirhome country and apply their learning experienceaschangeagentsintheir country’s public sector The 2018/2019 AIG Scholars are Adetola Adegbite (Nigeria), Blessing Ajimoti (Nigeria), Prosper Amuquandoh (Ghana), Louisa Chinedu-Okeke (Nigeria) and Tobechukwu Nneli (Nigeria). “We are pleased to announce our second cohort of AIG Scholars,” said Aigboje AigImoukhuede,FounderandChairman of AIG. “Public service is one of the fundamental contributors to national development and it is critical to encourage talented, young individuals as regards the crucial role that they play in the process. “With AIG’s continuing support, these high-calibre women and men will acquire the skills and experience to drive best practice

standards of public service and governance across Africa”. TheAIGScholarshipsarefunded by AIG under a partnership entered into, in June 2016, between AIG and the Blavatnik School of Government at the University of Oxford, based on a shared vision of improving the world through good governance and public leadership. AIGScholarsaredeterminedaftera rigorousprocess,whichassesseskey qualities such as outstanding academicability,leadershipandstrong commitment to public service. “The AIG Scholarship Awards selection process is a very competitiveone,withthousandsoftalented individuals applying from across Nigeria and Ghana,” said Chienye Ogwo, CEO of AIG. “We congratulate this year’s awardees and remain committed toourmissiontoseek,attract,inspire andsupportfutureleadersofAfrica’s public sector. “I feel a great sense of achievement, and very lucky to be given this opportunity,” said Prosper Amuquandoh,afirst-classgraduate of Physics and Computer Science from the University of Ghana, and one of the 2018 AIG Scholars. “The multidisciplinary nature of the programme will empower me with an advanced level of competence to achieve my goals of being an effective public policy practitioner.” “The uniqueness of the AIG Scholarship is that it is an initiative by Africans, with Africans and for Africa,” said Tobechukwu Nneli, another 2018 AIG Scholar and firstclass Political Science and Public Administration graduate of the University of Benin.

L-R: Adetola Adegbite; Louisa ChineduOkeke; Aigboje Aig-Imoukhuede, founder/chairman, Africa Initiative for Governance (AIG); Prosper Amuquandoh, and Tobechukwu Nneli, at the AIG Scholarships Pre-Departure Orientation, yesterday.

Africa, Middle East Advertising body appoints Nigerian as Jury DANIEL OBI

Nigerian, Sinmisola Hughes-Obisesan, Africa’s first female Creative Director of the global Leo Burnett Advertising network has been appointed as member of jury of Loeries, an international advertising festival for Africa and the Middle East. As a top honours body for creativity and innovation, the Loeries recognises, rewards, inspires and fosters creative excellence in the advertising industry across

the African and Middle East region. Sinmisola will be joining other international heavyweights as juries for the award. According to a statement, Sinmisola was also the first female and millennial Creative Director at Insight Publicis and also stands as the second female Creative Director in the history of advertising in Nigeria. She has had a thriving career in advertising spanning over 13 years. “A firm believer in cocreation and idea person

at heart, her superpower lies in her ability to create award-winning, impactful campaigns for local and international brands that connect with today’s digital consumer. “Some of her works include the Pepsi ‘Naija All the Way’ campaign, the famous Pepsi Long Throat campaign, Pepsi ‘No Shakin Carry Go’ campaign, Nestle Maggi, Gulder, BankPHB, and the award-winning Heineken Campaign featuring Jidenna. “Sinmisola not only un-

derstands today’s digital consumer, she also understands the importance of the creative vision of placing people at the heart of advertising storytelling, a philosophy driven by Leo Burnett’s ‘Humankind’ culture.” The statement further said that in recognition of her contribution to the advertising industry and in addition to her efforts for driving change within the industry, Sinmisola was awarded Outstanding Creative Personality of the year by Marketing Edge.

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FINANCIAL TIMES World Cup final ratings flop for Fox

US legislators urge Facebook and Google to defy Vietnam data law Page A10

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Jay Powell plays down Trump trade risks in bullish testimony Fed chairman reiterates need for gradually raising interest rates in speech to Congress KADHIM SHUBBER

ay Powell struck a confident tone about the strength of the US economy on Tuesday in testimony to the Senate banking committee and suggested the risks from Donald Trump’s trade wars could be balanced by US fiscal policy. The Federal Reserve chairman told lawmakers the US job market had continued to strengthen and that “for now” the US central bank believed it was best “to keep gradually raising” interest rates. His prepared remarks gave only a brief nod to the effects of trade as he noted that economic growth could be stronger or weaker than predicted due to trade negotiations, and the impact of tax cuts and increased government spending. “It is difficult to predict the ultimate outcome of current discussions over trade policy as well as the size and timing of the economic effects of the recent changes in fiscal policy,” he said, adding that the risk of the economy weakening was “roughly balanced” by the possibility it might grow faster than expected. “Investment by businesses has continued to grow at a healthy rate,” he said. Mr Powell said economic growth had accelerated in the second quarter of 2018, boosted by “robust job gains, rising after-tax incomes and optimism among households”. He noted

that an average of 215,000 net new jobs were created each month in the first half of the year. “The unemployment rate is low and expected to fall further. Americans who want jobs have a good chance of finding them. Moreover, wages are growing a little faster than they did a few years ago,” he said. Unemployment fell 0.1 percentage points to 4 per cent during the first half of the year, he told the committee, while inflation, as measured by the consumer price index, had slightly overshot the central bank’s 2 per cent target due to an increase in energy prices. The consumer price index showed inflation at 2.3 per cent for the 12 months ending in May, he said. However, he noted that the core measure of inflation, which excludes energy and food costs, was at 2 per cent, in line with the Fed’s target. “With a strong job market, inflation close to our objective, and the risks to the outlook roughly balanced, the [Federal Open Market Committee] believes that — for now — the best way forward is to keep gradually raising the federal funds rates,” he said. A majority of Federal Reserve policymakers have predicted two more rate increases in 2018, and three are expected in 2019. Mr Powell added that the process of reducing the Fed’s balance sheet was “running smoothly” and that the policy reflected the strong performance of the economy.

Strikes by Amazon workers in Europe threaten Prime Day sales Annual event hit as German and Spanish staff down tools and US site is hit by outages ALIYA RAM & CLAIRE JONES

mazon w orkers in G e r ma ny w e nt o n strike on Tuesday, adding to the problems afflicting the company’s biggest annual promotional event following industrial action in Spain and website outages in the US. Between 2,500 and 3,000 of the company’s 16,000 workers in its largest market outside the US refused to work on Tuesday, according to German services union Verdi, although Amazon itself put the number in the

hundreds. The European strikes are the latest blow to Prime Day, Amazon’s 36-hour global discount event. Technical problems hit the company’s US website soon after the sale’s launch on Monday, with website-tracker Downdetector reporting Amazon.com as unavailable across swaths of the key US east and west coast regions. Amazon’s warehouses have been the subject of long-running protests and concern about insecure work and poor conditions across Europe, parContinues on page A4

Jay Powell: ‘The unemployment rate is low and expected to fall further’

Donald Trump’s defence of Russia sparks outrage in US National intelligence director reiterates accusations of Kremlin election interference KATRINA MANSON & KADHIM SHUBBER

onald Trump’s refusal to blame Russia for meddling in the 2016 election sparked outrage across the political spectrum and prompted his director of national intelligence to reiterate accusations that the Kremlin was out to “undermine our democracy”. Friends joined with foes to condemn Mr Trump’s assertions on Monday that he found Russian President Vladimir Putin’s denial of involvement “extremely strong and powerful” even if the US intelligence community had come to the opposite conclusion. Newt Gingrich, former Republican speaker of the House of Representatives and one of the US president’s most reliable defenders, said Mr Trump’s comments at a joint news conference with the Russian president in Helsinki were “the most serious mistake of his presidency and must be corrected — immediately.” His call came after John McCain, the ailing Arizona Re-

publican senator known for his wariness of Russia and Mr Putin and his battles with Mr Trump, said: “No prior president has ever abased himself more abjectly before a tyrant.” In an interview later on Monday with Sean Hannity on Fox News, Mr Trump strengthened his defence of Mr Putin, calling his performance at their joint news conference “very, very strong”. He said the two men had a good discussion in private on issues including nuclear proliferation, stabilising Syria and supporting Israel. Mr Trump added that the main reason the US and Russia had been driven apart was “a phoney witch hunt deal” — a reference to special counsel Robert Mueller’s investigation of Russian interference in the US elections. The day’s dramatic events put the US president at odds with intelligence, diplomatic and law enforcement officials in his own administration as well as with representatives of both parties in Congress who have concluded that Russia interfered in the 2016 presidential election.

“That is not just the finding of the American intelligence community but also the House Committee on Intelligence,” said Paul Ryan, the Republican speaker of the House. “The president must appreciate that Russia is not our ally.” A rebuke was issued by Dan Coats, the director of national intelligence. Only three days before, he had compared the cyber threat faced by the US from adversaries like Russia to the build-up to the 9/11 attacks, telling an audience in Washington: “The warning lights are blinking red again.” In a statement issued after the Helsinki news conference, Mr Coats said: “We have been clear in our assessments of Russian meddling in the 2016 election and their ongoing, pervasive efforts to undermine our democracy, and we will continue to provide unvarnished and objective intelligence in support of our national security.” A senior state department official told the Financial Times they were “furious and irate” after Mr Trump’s performance, adding they did not understand what the president was doing.

Netflix shares drop 13% after stumble in subscriptions Fall comes after video streaming service missed its own estimates of user growth CAT RUTTER POOLEY

etflix shares opened 13 per cent lower on Tuesday after the video streaming service missed its own estimates of user growth by 1m after the market close on Monday. Netflix reported worse than expected subscriber growth for both its international and domestic markets in the second quarter and cut its estimates for third-quarter growth, despite ramping up spending on content and marketing over the past year. A strong dollar also weighed

on the group, which generates much of its costs in dollars but generates revenues in local currencies, hitting the average selling price when converted back to dollars. Analysts remained cautious about whether the results were a one-off blip or a sign of a more fundamental slowdown. “By and large, [the second and third quarters] have historically been weaker quarters, but higher marketing spend in [the first half ] could help to accelerate growth in the back half of the year,” John Janedis of Jefferies said in a note. Mr Janedis added that “while

there was no single source of the weaker results” neither was there a “break out hit during the quarter”. The reliance on Netflix and other streaming services on big hits to boost subscriptions highlights a tension between the platform model of growth, which relies on increasing user numbers to support valuations, and traditional media groups that rely on the quality of content to drive revenue. “Long term, international subscriptions will be the value driver for the stock”, Mr Janedis added.

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FT Strikes by Amazon workers in...

ECB fires starting gun in hunt for new head of eurozone watchdog

Continued from page A3 ticularly Germany where labour laws are tougher than in many other markets. “[The G erman strike] is about the wages and wage levels, it’s about health and safety,” Verdi said. “The work is physically and psychologically demanding.” Workers at distribution centres across the eurozone’s largest economy walked out several times in 2013 and in 2014 over pay and conditions. Verdi, the country’s second-largest union, had wanted Amazon to agree to collective bargaining arrangements and a reclassification of workers in distribution centres as retail workers — a move that would have entitled them to higher pay. The company also came under fire in the German press, which is often much more sympathetic to workers than media in other big economies, after a documentary showed security workers mistreating foreign temporary staff. The security company was later fired by Amazon. Amazon has 11 distribution centres in Germany. Unemployment in the country is at its lowest level since reunification between the east and west in 1990, which has led to bumper pay rises for German workers this year. Amazon insisted it was a “fair and responsible” employer. “We believe in continuous improvement across our network and maintain an open and direct dialogue with associates . . . provide safe and positive working conditions.” It added that Prime Day would be “an epic day of our best deals”. The German strike comes a day after Amazon staff in Spain also downed tools. The Confederación Sindical de Comisiones Obreras union said most of Amazon’s workers at its flagship Spanish warehouse near Madrid had refused to work to protest against changes to collective bargaining agreements, leaving only about 80 in their posts on the first day of the promotions. “In 2016 the company’s [collective bargaining] agreement came to an end,” the union said. “After nonsense negotiations, the company decided unilaterally to apply a sectoral [collective bargaining] agreement and this changed the working conditions of many workers.” Amazon also contested the Spanish union’s figures, saying the “majority” of its 1,400 workers at the site had gone to work on Monday. The company has about 2,000 fulfilment workers across Spain. Additional reporting by Michael Stothard

Wednesday 18 July 2018

Supervisor must grapple with Brexit fallout and legacy of financial crisis CLAIRE JONES & RACHEL SANDERSON

Facebook is one of the primary source of communication for civil society groups, and contacts between people in Vietnam and Vietnamese communities overseas © EPA

US legislators urge Facebook and Google to defy Vietnam data law Hanoi’s new cyber security move attacked as crackdown on free expression JOHN REED

group of US Congress members has written to Mark Zuckerberg and Sundar Pichai, the chief executives of Facebook and Google, urging them not to store users’ data in Vietnam, as required by the country’s restrictive new cyber security law. The law, passed by the country’s rubber-stamp parliament last month, will require foreign technology companies to open offices in Vietnam, and in some cases compel internet companies to take down posts or hand over users’ data to Vietnam’s Ministry of Public Security. “The cyber security law does nothing to protect internet users,” 17 members of both the Republican and Democratic parties wrote in the letter, which was seen by the FT. “Rather, it is a blatant effort by the Vietnamese government to crack down on online expression by enlisting the help of leading technology companies — especially Face-

book and Google.” The high-profile intervention from Washington highlights the awkward position internet companies now face as they weigh the attraction of Asia’s fastest-growing markets — Vietnam said its economy grew 7.08 per cent in the first half of this year — against the risk of being seen as collaborating with communist authorities to stifle free speech and dissent. The law requires online companies operating in Vietnam to remove content within 24 hours of receiving a request from either the public security or information and communications ministries When the law was passed on June 12, internet companies warned it would undermine Vietnam’s ambitions to promote innovation in its economy. Officials said that it needed the law to ensure national security. “It is already being reported that your companies have removed video and accounts after requests by the Vietnamese government,” the US legislators wrote, “including accounts of users in California and Germany”

— both of which have large Vietnamese diaspora communities. They also urged Facebook and Google to set transparent guidelines for content removal, and to “promptly publish” the number of requests they received from the Vietnamese government, as well as the number of times they complied with such requests. “If the Vietnamese government is coercing your companies to aid and abet censorship, this is an issue of concern that needs to be raised diplomatically and at the highest levels,” the lawmakers wrote. The letter’s signers come from both major US parties and were led by Christopher Smith, a New Jersey Republican, and California Democrats Alan Lowenthal and Zoe Lofgren, co-chairs of the congressional caucus on Vietnam. Unlike China, Vietnam allows foreign social media companies to operate. Facebook, Google, YouTube, and messaging apps have been a primary source of communication for civil society groups, and contacts between people in Vietnam and Vietnamese communities overseas.

Mexico’s economy struggles to reap rewards of good behaviour Labour and tax rules hurt growth despite prudent macroeconomic policy JUDE WEBBER

or a generation, Mexico has done everything right macroeconomically — but ended up with the wrong result. Over the past 20 years, inflation has averaged about 4 per cent and fiscal and current account deficits have been about 1.5 per cent of GDP. Mexico has successfully integrated into the world economy with a series of trade agreements, and it exports more manufactured goods than the rest of Latin America put together. Yet its growth per capita has been worse than in any other country in the region except Venezuela, and companies in Mexico get as much access to credit, expressed as a share of GDP, as those in sub-Saharan Africa, said Santiago Levy, a senior

official at the Inter-American Development Bank. “It’s a real paradox . . . All the things you expect economies to do, Mexico has done, yet its performance has been very, very disappointing,” Mr Levy told the FT. “The reason is at a micro level.” Mr Levy, who served as Mexico’s deputy finance minister from 1994-2000 and social security chief between 2000 and 2005 — and who turned down an invitation to join the incoming administration of Andrés Manuel López Obrador for family reasons — says in a new book, Under-Rewarded Efforts: The Elusive Quest for Prosperity in Mexico, that the answer is to tackle tax, labour and social insurance rules that stifle productivity and undermine the country’s increasing investment in education. “More of the same

will not do,” he wrote. Mr López Obrador won a landslide victory on July 1 on a platform of change, and one of his core pledges was to boost growth. He takes office on December 1. “We haven’t grown enough in the last 35 years, average growth has been 2 per cent,” Mr López Obrador said last week. Lack of growth had created a lack of jobs and generated poverty, crime, violence and migration, he said. “It is fundamental to get the economy growing. The world is going to grow 4 per cent this year and our country will grow 2 per cent . . . We have to get out of this rut.” To the relief of critics who have expressed fear that he may be tempted by populist measures, the president-elect has promised to continue Mexico’s prudent fiscal management.

he European Central Bank has started the hunt to fill one of the most important jobs in eurozone finance — bank supervisor-in-chief. Danièle Nouy is about to complete her term at the helm of the Single Supervisory Mechanism, the ECB’s banking watchdog set up in the throes of the financial crisis. While she is credited with shepherding the supervisor creditably through its first five years, her successor will have much to do to build the standing of a young institution whose reputation has been marred by squabbles with eurozone member states. As well as grappling with crossborder regulation after Brexit, the successful candidate will have to deal with legacies of the eurozone crisis — particularly in Italy, one of the region’s biggest banking markets, where sour loans remain a problem and the SSM’s image has been tarnished by clashes with Rome. In deciding who should take on those challenges, the central bankers and EU lawmakers in charge of the appointment know nationality will be a factor, as it is with many senior EU positions. Several candidates could leave the race if governments decide political capital would be better spent on securing other senior jobs — not least the ECB presidency when Mario Draghi’s term ends next year. “It is difficult to disentangle the SSM succession from the race to succeed Draghi,” said Nicolas Véron, senior fellow at Bruegel, a Brussels-based think-tank. The establishment of the SSM was in part a bid to restore trust between member states. During the crisis, many harboured suspicions that other national supervisors were failing to get tough on their banks. Ms Nouy has sought to level the playing field by imposing the same standards on banks around the region. But with member states often arguing that the SSM ignores the quirks of each country’s banking systems, harmonisation remains a work in progress. Perhaps nowhere has its stance been so fiercely criticised as in Italy, where senior banking executives have declared Ms Nouy “biased”, “a technocrat with no understanding of banking” and even “mad” because of the SSM’s focus on the country’s bad loans. “The SSM’s reputation is mixed in the sense that they are seen as not recognising how banking works and want to reverse-engineer a certain result without thinking of how that is going to affect a bank’s ability to make money in the longer term,” said Marco Mazzucchelli, a senior European banker who was a member of a European Commission group charged with suggesting structural reform of the eurozone banking system in the wake of the crisis.

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@ FINANCIAL TIMES LIMITED

World Cup final ratings flop for Fox US English-language viewership was down by onethird from the 2014 final ANNA NICOLAOU

rance’s World Cup victory shattered television ratings records in Europe, but US audiences were not quite as captivated. About 11.3m people in the US tuned in to the final match on Sunday, down a third from 2014’s World Cup final, Nielsen said on Tuesday. Overall, the tournament drew about 20 per cent fewer viewers than 2014, dealing a blow to 21st Century Fox, which had bet heavily on the rising popularity of soccer in the US. Fox had warned advertisers to expect audiences of between 15 and 20 per cent lower than 2014, according to people briefed on the discussions, but the ultimate outcome was worse for many matches, according to Nielsen. Fox surprised observers in 2011 when it paid $425m for the US English language television rights to the 2018 and 2022 World Cups, snatching the tournament from ESPN, where it had been broadcast for two decades. But it suffered a stroke of bad luck last October, when the US team’s loss to Trinidad and Tobago prevented the country from qualifying for the World Cup. That all but guaranteed smaller audiences, compounding the problem of matches airing outside of US prime time. “When you bid for the World Cup you have a grab bag of potential locations and time zones,” said Lee Berke, a sports media consultant. “This was the worst-case scenario for Fox.” With smaller audiences came fewer advertising dollars. Zenith Media, a media agency, predicted that the World Cup drew $400m in US advertising sales — about $100m less than in 2014. Advertisers paid between $399,451 and $475,963 for 30-second sports during the broadcast of the final match, according to SQAD,

a research company. This was about 12 per cent cheaper than the equivalent adverts for 2014’s final. Without a US team to root for, the world’s largest brands, advertisers, and Fox tried hard to persuade Americans to watch the World Cup regardless. Volkswagen made light of the situation with an advert in which fans from Switzerland, Brazil and Argentina urged US viewers to cheer for their teams instead. Soccer has lagged behind sports such as American football or baseball with US audiences, but viewership had been rising since the US hosted the World Cup in 1994. The prices for soccer broadcasts likewise swelled. Combined, Fox and Spanish-language broadcaster Telemundo poured more than $1bn into the rights to the 2018 and 2022 World Cups. This is more than double than the prices paid by their predecessors, Disney-owned ESPN and Univision, for the 2010 and 2014 tournaments. Sport has become even more important for Fox as the company prepares to sell its entertainment assets. What is left over, which executives call the “new Fox”, will be focused on sport and news. The bet on soccer did not pay off this year, but analysts expect it will still bear fruit in the future. Fox extended its agreement with Fifa to cover the 2026 World Cup, which will take place in North America, guaranteeing the US team a spot and potentially causing interest to fire up again. Four of the six largest US audiences of previous tournaments came when the US team was playing. Meanwhile, Fox has continued to add other sports franchises. Earlier this year it paid $3.3bn for Thursday night American football games, which sportscaster Joe Buck told advertisers would “cement us as the primary home of the most powerful content in all of media”. The company also bought the rights to pro wrestling entertainment from the WWE, in a deal reported to be worth $1bn.

British Land/CVAs: store wars Limiting retail revenue dependence is a good idea in case rent agreements balloon

ritish landlords are an unpopular bunch. When prop er ty investors began to carp ab ou t p ro b l e m s p o s e d by struggling retailers, sympathy was in short supply. On Tuesday, British Land offered proof that such complaints were valid. Across the group, administrations and deals cut with creditors known as company voluntary arrangements (CVAs) now account for 1.6 per cent of contracted rent (which excludes incentives), up from 1 per cent in May. Held against the company’s retail division alone, the impact looks more serious. About 3 per cent of contracted rent now looks uncertain. This

figure is likely to rise. Unfortunately for British Land and retail property groups such as Hammerson and Intu, CVAs are going to become an increasingly common feature of the UK retail sector. New Look, Carpetright and Mothercare have already employed them to agree easier rent terms or break leases. House of Fraser is in the middle of one. Even Debenhams and Arcadia have been suggested as potential future candidates. If CVAs balloon, there is little landlords can do. Multiple creditors with various exposures mean the arrangements tend to be agreed. British Land voted against House of Fraser’s CVA but was outnumbered.

Altice returns to bond market with $3bn sale French telecoms taps the market, but investors await more radical plans for group’s debt pile ROBERT SMITH

ltice’s French unit completed a nearly $3bn high-yield debt sale on Tuesday, raising junk bonds for the first time since concerns around the cable group’s debt pile spooked investors at the end of last year. Altice France had originally planned to raise around $2bnequivalent in dollar and euro 8.5-year high-yield bonds, but increased the size of the sale to allow it to fully repay a bond maturing in 2022. “We view this refinancing as an opportunistic move designed to help rebuild investor confidence in the Altice Europe narrative ahead of bolder refinancing moves,” said analysts at research firm CreditSights, who described the pricing on the new deal as “generous”. The group raised $1.75bn of dollar bonds at 8.125 per cent yield and €1bn of euro bonds at

5.875 per cent yield, the highest yields its French unit has been charged in both markets since it was created out of the merger of Numericable and SFR in 2014. Patrick Drahi, the FrancoIsraeli billionaire, built Altice’s sprawling cable and telecom empire through a rapid series of debt-funded acquisitions, harnessing the strong institutional demand for high-yield bonds and leveraged loans in an era of low interest rates. In the process, the group broke records for the scale of its debt sales. The nearly $22bn of bonds and loans backing Altice’s acquisition of France’s SFR in 2014 comprised the biggest ever buyout package of junk debt. And a $5.2bn bond deal from its French unit in 2016 was the largest single highyield bond tranche ever issued. But investor sentiment quickly soured towards the end of 2017, after poor quarterly results in October heightened concerns

around the company’s ability to maintain itsdebt pile of more than €50bn. Altice’s senior management, much of whose personal wealth is tied up in the company’s stock, vowed to put the brakes on M&A deals and simplify the group’s structure, leading to a spin-off of the group’s US business earlier this year. The company’s eagerness to push out its debt maturities was also seen last week, when Altice France had to increase pricing and sweeten terms to coax investors into a new $2.5bn loan sale, which will also go towards refinancing existing debt. Before these two high-yield bond and leveraged loan sales, Altice France was faced with more than €4bn of debt maturing in 2022, a large so-called “maturity wall” that it has now cleared. “They are terrified of the maturity wall and they’re chopping away at it,” said one bond fund manager.

Sterling starts to factor in possibility of Mad Max Brexit Pressure has been building — be ready for it to burst KATIE MARTIN

inally, some reality has caught up with sterling. Up to now, currency traders have shrugged while Theresa May’s Brexit wishlist has unravelled and the risk of an ugly exit from the EU has grown. On Tuesday the pound’s serenity started to crack, with Mrs May’s latest domestic travails delivering a modest knock to under $1.32. It had been a long time coming. That could reflect complacency, akin to the market’s reluctance to respond fully to the risk of a full-blown trade war, a feature the IMF pointed to this week. Perhaps a global trade shock and a Mad Max Brexit are just too grim to consider. Equally likely, sterling bulls and bears are both standing back and waiting for their mo-

ment to pounce. There is little glory in heroically jumping first and being wrong in what is, after all, a binary outcome: goodish Brexit or scorched-earth Brexit. It’s not that the stakes are low. Instead, “for sterling investors, the choice of reactions is clearly limited”, Rabobank points out. “The relatively confined degree of sterling volatility in recent weeks suggests that political uncertainty has chased many potential market players to the sidelines.” The market assumption is still that UK politicians will find a way back from the brink. But now, the prime minister’s authority is increasingly challenged. As analyst John Wraith at UBS writes: “We believe the r i s k o f p a r l i a m e nt re j e c ting any deal put in front of them late in 2018, or early in 2019, is increasing, and this

puts both the agreement on future relationships and the transition period after the end of March 2019 in serious jeopardy.’’ He adds: ‘’Given risks to all sides, we still see an orderly exit as the most likely out-turn. But the prospects of that outcome have dimmed over recent weeks . . . while those of more ominous out-turns have increased significantly.’’ Where next? If optimists are right, a UK rate rise in August could help propel the pound to $1.35. “The BoE’s default position is a rate hike at the August meeting, and the onus is on data or events stopping them hiking,” RBC thinks. Tuesday’s wobble, 0.5 per cent or so even despite generally benign jobs data, is just that: a wobble. But pressure has been building. Be ready for it to burst.

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Africa PE infrastructure deals hit $12.1bn in 5yrs MICHEAL ANI

frica, the second largest continent by size and population recorded a total of 97 Private Equity (PE) infrastructure deals worth $12.1 billion in the five years between 2012 and 2017, according to a report published by the African Venture Capital Association (AVCA) last week. The positive trend captures the huge appetite by private equity investors for infrastructure in Africa, which according to a 2017 survey done by AVCA, was identified by African Limited Partners (LPs) as the most attractive sector for PE investment in Africa over the next three years. Africa is still being held back by infrastructure deficits, with the continent’s largest economy, Nigeria, needing close to N30 trillion of investments in the next 5 years to bridge a yawning infrastructure deficit according to independent estimates. Between 2015 and 2017, the number of PE Infrastructure deals rose 20.5 percent increase from 44 to 53 from 44 between 20122014, accounting for 55 percent of the total number of PE Infrastructure deals from 2012-2017. In terms of percentage share of PE Infrastructure deals in Africa by region, West and South Africa accounted for almost half, with 48 percent of the total deals by number between 2012 and 2017. Multi-region deals, however, attracted the largest

share of deals by value, with 50 percent of the total $12.1 in the period under review. West Africa had the highest percentage of PE infrastructure deals at 27 percent and 28 percent in volume and value respectively. South Africa followed closely, accounting for 21 percent of the volume and 6 percent of the value of regional PE infrastructural deals in Africa. East Africa came third with 19 percent volume and 5 percent in value while North Africa accounted for 8 percent and 4 percent of the volume and value of PE infrastructure deals in the period surveyed. Central Africa had infrastructure deal volume and

value of 3 percent and 7 percent, while Southern Africa (excluding South Africa) and other multiple regions accounted for 3 percent volume, 1 percent value and 19 percent volume and 50 percent value respectively. The top four sectors attracting PE infrastructure deals in Africa are utilities (53 percent), telecommunication services (24 percent), Industrial including transportation (13 percent), and energy (8 percent). PE investments in infrastructure projects in Africa include Albatros Energy (African Infrastructure Investment Managers, 2017), CMC Networks (The Carlyle Group, 2017), CSquared (Convergence Partners,

2017), Starsight Power Utility (African Infrastructure Investment Managers & Helios Investment Partners, 2017), Kathu CSP (Metier Sustainable Capital Practice, 2016), Mobisol (Investec Asset Management, 2016), Lekela Power (Actis, 2015), Gas Train (African Capital Alliance, 2014), IHS Towers (Emerging Capital Partners & other investors, 2014), Seven Energy International (FBN Capital, 2012) and SlimSun Too (Inspired Evolution Asset Management, 2012). Economic development has been widely associated with the existence of adequate infrastructure across different key sectors such as telecoms, transport, power, sanitation. According to the World Bank ‘’Africa Pulse’’ report published in April 2017, closing sub-Saharan Africa’s infrastructure quantity and quality gap would increase per capita GDP by 2.6 percent per year. However, given the fact that Africa’s governments have neither the financial resources nor the technical expertise required to close the infrastructure gap by them, private capital must become available (Infrastructure Financing in SubSaharan Africa, AFC & BCG). Private Equity (PE) firms operating in Africa are wellplaced to work alongside the public sector and other types of investors to provide capital and technical ability to help develop the continent’s infrastructure assets, and are responding to this opportunity as evidenced by increased investment and fundraising activity.

Abraaj’s $1bn Africa fund investors in hunt for new manager MICHEAL ANI

group of investors in Abraaj Group’s near-$1 billion subSaharan Africa fund are seeking a new manager, potentially complicating a broader sale process for the embattled firm’s asset management unit, according to a Bloomberg report. T h e i nv e s t o r s h av e reached out to Carlyle Group LP and London-based private equity investor Actis LLP, sources said, asking not to be mentioned because the matter is private. The Dubai-based investor has been in turmoil since investor’s alleged misman-

agement at its $1bn healthcare fund. Abraaj’s $1.1bn in assets includes $645m of limitedpartnership stakes in its own funds. PricewaterhouseCoopers who are provisional liquidator of Abraaj Holdings, alongside Deloitte, provisional liquidator of Abraaj’s asset management arm, are seeking to sell the firm’s assets to sustain operations and pay back the private equity group’s $1.1bn in debts. Cerberus capital management LP, a US-based asset manager and Colony capital Inc are two companies in the race for buyout of Abraaj. However, Abraaj Group’s

provisional liquidator currently favours Cerberus and an agreement could be reached in the coming weeks, sources disclosed. In June this year, Cerberus had been presented to creditors as a preferred bidder, but is still deciding whether it is willing to incur the potential reputational damage from involvement with the Abraaj franchise. The US asset manager (Cerberus), would pay $5m in cash and $20m to assume liabilities and provide new liquidity to meet costs, one source familiar with the proposal said. Colony Capital’s bid was turned down by both provi-

sional liquidators. “Today, I would say the probability is 60/40 that Cerberus do it,” one of the source said. “Colony sale was put together too hastily especially given the fact that Colony is more of a real estate investment firm, the fit with Cerberus would be much better.” The person added. Earlier this month, Colony withdrew a $248m bid for Abraaj stakes in six of its funds and their management rights, citing investor resistance. These investors, concerned that their stakes could be subject to similar mismanagement alleged in other funds, had called for a forensic audit.

Wednesday 18 July 2018

COMPANIES & MARKETS

Alta Semper follows up Health Plus deal by snapping up stake in Morrocan company LOLADE AKINMURELE

lta Semper, a private equity manager investing flexible and strategic capital across select African frontier markets, has followed up its $18 million investment in retail pharmacy chain, Health Plus, by snapping up an undisclosed stake in Oncologie & Diagnostic du Maroc (ODM), Morocco’s oncology, radiology and diagnostics platform. This transaction marks Alta Semper’s third investment in the healthcare space in Africa, following a US$45 million investment, in 2016, in Egypt-based consumer healthcare company, Macro Pharmaceuticals and the Health Plus Nigeria deal this year. In an interview with BusinessDay in April, Zachary Fond, a director at the Africa-focused private equity firm, said the firm was in the middle of acquiring majoritystake in a leading oncology, radiology and diagnostics company in Morocco. Sources familiar with the matter say Alta Semper has its eyes on yet another deal in the African healthcare space before the year runs out. Growing demand, driven by favourable demographics, increased consumer awareness and evolving consumption patterns are big attractions to Africa’s healthcare sector. Alta Semper will provide both growth capital and strategic support to allow the Company to increase its footprint across Morocco, as well as expand into select geographies across North and Sub-Saharan Africa. Alta Semper will also support ODM in identifying bolt-on acquisitions across the country and expanding its management team and board of directors. Afsane Jetha, Managing Partner & CEO of Alta Semper, said: “We are very excited to embark on our partnership with Mohamed Elmandjra and ODM to expand the business within its high growth markets by enhancing the provision of quality healthcare and improving operations.” “We believe ODM is well-positioned to capitalise on the increasing demand for diagnostics, oncology and radiology services across Morocco, as well as to expand regionally into neighbouring countries, through its worldclass infrastructure and visionary management team.” Founded in 2014, ODM is the first and largest private specialised healthcare platform in Morocco, offering services in oncology, medical imaging and diagnostics throughout the main regions of the country. The Company offers a variety of cancer treatments including radiotherapy, chemotherapy, brachytherapy, haematology and other oncology services. Like the wider continent, the specialty healthcare market in Morocco is characterised by increasing demand, driven by an increase in incidents of chronic diseases and enhanced insurance coverage. Similar to many emerging markets, the healthcare sector in Morocco suffers from a lack of adequate infrastructure, under-equipped hospitals, inadequate geographic and regional dispersion, as well as a lack of adequate oncology and radiology facilities. Furthermore, Morocco has recently changed its laws to accelerate the development of private healthcare. Its forward-thinking government is increasingly acting as a payor vs. provider of chronic healthcare services, allowing private investors in the healthcare market to flourish. The investment will enable the Company to capitalize on the growing demand for high quality yet affordable healthcare services in Morocco. The investment will also allow ODM to continue to attract the leading local human talent as well as move towards assisting the country progress towards the Sustainable Development Goals. Mohamed Elmandjra, Founder & CEO of ODM, said: “We are delighted to have Alta Semper be our lead investor in this next phase of development of ODM. Their expertise in deploying capital in African markets will be key to support our growth in Morocco and beyond and enable us to provide best in class specialized healthcare.” Alta Semper was advised by regional law firm Matouk Bassiouny.

BusinessDay PRIVATE EQUITY & FUNDRAISING (Team lead: LOLADE AKINMURELE - Analysts: MICHEAL ANI, DIPO OLADEHINDE, ENDURANCE OKAFOR, DAVID IBEMERE ... Graphics: DAVID OGAR ) Businessday’s Private Equity and Fundraising section is a weekly publication that provides in-depth analysis on private equity trends and tracks deal activity in Nigeria.

Email the PE & F team loladeakinmurele@gmail.com

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NEWS YOU CAN TRUST I WEDNESDAY 18 JULY 2018

Opinion Project Oseese and alternative politics OPEYEMI AGBAJE opeyemiagbaje@rtcadvisory.com

n 2014 I incorporated “The Opeyemi Agbaje Institute Ltd/Gte” as a vehicle for my interest and passion for policy, strategy and leadership. My intention was to launch the institute in 2015 coinciding with my 50th birthday. In the event, I deferred the launch to avoid an overload of activities as I launched two books (“Democracy without Democrats: Travails of Politics and Development in Nigeria 1999-2011” and “Uncomplex Strategy: Making Business Strategy Accessible to Managers, Entrepreneurs and Students”) as well as provided a lecture platform for then Lagos gubernatorial candidate, Jimi Agbaje (my un-related namesake) in April 2015. In 2016, my major pre-occupation was the publication of my third book, “The BRF Era: Policy and Governance

in Lagos State 2007-2015” an expose on the policy underpinnings of the Babatunde Fashola administration in Lagos State. Once that was done however, my attention returned to the institute and my wish to fulfil my desire to impact policy and leadership in the Nigerian society. I concluded over a period of reflection between May 2016 and September 2017 on a focus on my state of origin, Ogun and a project focused on studying the economy, society and politics of the state, and articulating a policy blueprint for the state’s transformation. That project now well known as “Project Oseese” commenced in December 2017 with a very clear project plan and successful fund raising effort. I am deeply grateful to those visionary individual(s) who have supported our effort. OSEESE stands for “Ogun State Economic Enablement and Social Emancipation” Project and is founded on our Ogun State Vision 2035 which seeks to transform the state into “a developed, first-world region with human capital, quality of life, infrastructure, economic

development, institutions and governance standards comparable to leading regions in developed countries”…the other meaning of “OSEESE” in its Yoruba connotation affirms that “it is possible!” Project Oseese has taken us round all the 20 local governments in Ogun State consulting and engaging with ordinary citizens; examining the state of resources, roads, schools, hospitals and other infrastructure in the state; and ascertaining directly from our people their welfare and condition. The verdict is overwhelming-outside metropolitan Abeokuta where there has been discernible investment in roads and bridges, most roads are dilapidated across the state; many schools and hospitals are in serious need of repair (while some new schools constructed by the outgoing administration lie unused and increasingly disused!); p ove r t y a n d u n e mp l oyment ravage our people; our youths in particular are jobless and angry; our women are in dire need of affordable finance for their trading activities; and the

overall conditions of our people are sad and even depressing! As we toured the state, from Abeokuta South and North, Ado-Odo/Ota, Odeda, Ewekoro, Yewa South and North, Imeko-Afon, Obafemi-Owode, Ifo, Ijebu-Ode, Odogbolu, IjebuEast, Ogun Waterside, Ijebu North-East, Ipokia, Ijebu North, Ikenne, Remo North and Sagamu, what we met was poverty, hunger, physical devastation, neglect and inequitable development. The question that our respondents frequently confronted us with was how we hoped to implement the development plan we were preparing as we went round, and it was a poser that my team and I wrestled with as well. Initially we had a multiple implementation strategy that included elite pressure, grassroots mobilisation and consultation with government and politics. We also had the option of direct political action; and the more I pondered the issue, the more I realised we would have to seriously consider our prospects in that direction. Our sense from all our

travels and the underdevelopment that confronted us was that the two main political parties had failed our people! To be fair, much of the development in the state capital is attributable to incumbent governor Ibikunle Amosun and that seen in the rest of the state mostly happened under either Olusegun Osoba or Gbenga Daniel. Outside these, our people had basically been left to their own devices, neglected and impoverished! A reflection on all these left me with the firm conc l u s i o n t hat i f w e wa nt to earn the tr ust of our people, our strategy of direct political participation must consider alternative political platforms to those two that had so far disappointed the people of Ogun State. I settled on the Social Democratic Party (SDP) a party with some residual goodw ill in the state as well as name recognition. Since June 6, 2018 we have embarked on various levels of consultations at state, senatorial districts and local government basis, and a second round of LG visits to sensitize residents and party members on our Oseese

agenda. The conduct of the recent Ekiti elections which was bastardized with open monetary inducement by both main parties seriously challenges our assumptions that free, fair and credible elections may offer our people salvation through alternative political platforms such as SDP, KOWA, Labour or ADC, but we will remain undeterred and continue to evaluate options for offering Ogun State alternatives to PDP and APC! I am convinced that our current socio-economic and political trajectory is unsustainable-how could political parties continue on a path that involves paying each voter N4,000.00 or N5,000.00 in a general election? How can politicians (and voters!) sustain a system in which elections are an entirely commercial transaction that happens once in four years and leaves the populace thereafter in poverty and misery? Will our voters eventually understand that they will always be the losers in such a transaction? I intend to find definitive answers to these questions and at the very least satisfy my conscience that I tried my best!

Listening to the women of the East and the IPOB-Ohaneze truce

CHIDO NWAKANMA Nwakanma is a Visiting Member of the BusinessDay Editorial Board and serves on the Adjunct Faculty at the School of Media and Communication, Pan Atlantic University, Lagos. Email chidonwakanma@gmail.com.

he season is upon us again. The women of the East are preparing eagerly for one of the most significant multi-location conventions in the world. In a few weeks, it would be time for the annual August meeting of Igbo women. The August Meeting is noteworthy for several positives. It is one of the largest conventions in the world, holding simultaneously in many locations across the states of the South East. Some other persons would celebrate even the mere fact of the scale of this annual event that the Meetings Incentives Conventions and Events (MICE) industry ought to take into its calendar once organised convention-style. The August Meeting aggregates the development visions and agenda of edu-

cated Igbo women elites and the rural folks. It stands on existing communal democratic decision-making models. The Igbo are individualistic yet collective and take decisions for the common good at open forums where all votes count. There is no preferred stock. Their highly educated daughters are furthering the cause of community development from their new homes as wives and mothers. The involvement of the highly educated daughters of Igboland has raised the stakes and profile of the August Meeting. They used to stay away and look askance at the ordinary folks who participated. Their involvement has brought cosmopolitanism in betterorganised events. It brought a downside inevitably in the fashion contests that ensued, a regular occurrence where women gather. Unfortunately, lazy Nollywood writers picked on the downsides of the August Meeting and demonised this important platform for community development. That narrative of a negative for the August Meeting needs to change to a rediscovery of its essence and utility. At the August Meeting, women of Igboland focus on community development projects. They tackle their projects or contribute

to the ones outlined by the development association of the village, town or broader community. It is Akuruelo in practice. Their forebears played critical roles in the struggle for independence including taking on the colonialists in the Aba Women’s struggle. With the August Meeting, Igboland is reaping from the contributions of its large body of educated females and the foresight of the Igbo in educating women and tapping into this highly productive and replicable human capital. It strengthens the Igbo experience and skill set in running community development organisations. The United Nations system in Nigeria has admirably promoted the recognition and involvement of Community Development Associations in grassroots development. Ndigbo were pioneers in driving growth using community associations. They built schools, gave themselves boreholes, electricity and such. It is time to scale up and to modernise. The call on the educated women increasingly involved in the affairs of their development associations is to turn this forum into a more focused development agency. The August Meeting must resume its developmental urgency

and walk back from a creeping elite flamboyance and exhibitionism. It must be depoliticised, from village to state and regional levels. The women should think of organising the August Meeting across tiers. The traditional village level one, followed by one of kindred communities, local government tostate-level events. They can then have the South East-wide August Meeting rotated annually among the states. The South East August Meeting would be a high impact cultural event with influence on politics and economy. This event should be such as brings the Igbo and their local and international friends to savour their artefacts, exhibitions and various aspects of culture. It should attract sponsorship of corporate bodies and stakeholders in the South East. Governors are welcome to sponsor. The August Meeting at every level should now work with what serves as the Women’s Wing of our town unions to become a gender-based NGO or CDC. They would register with the relevant government, international and multilateral agencies. They would define areas of focus and seek support and collaboration. They can become Community Development

Corporations, for instance, which are “non-profit, community-based organisations focused on revitalising their locations and neighbourhoods”. CDCS can drive investments in various areas including agriculture, health and social services. We shall listen to the women of Igboland in August. With the recent exploits of one of their kind, President Kolinda GrabarKitarović, the fourth and current president of Croatia at the World Cup, many ears would eagerly listen to what our women have to say and do. The IPOB-Ohaneze truce A welcome development took place July 6, 2018, as the Indigenous People of Biafra called a ceasefire in its declared war on Ohanaeze. If you followed the social media wars earlier, you are likely to miss the announcement and its import. There has been no ululation. The boys baying for blood in support of IPOB seem not to have heard. It is one of the most significant positive developments in Igboland in recent times. This columnist harped on the need for a rapprochement and closing of ranks between the young and the elders of Igboland as an essential first step. (The needless war of IPOB versus Ohaneze, April 4, 2018,).

It is heartening that it has happened. Mazi Uche Mefor, Deputy Leader, signed the brief statement from IPOB. It stated in part: “Following an important meeting with some respectable Igbo elders, the representatives of IPOB and leadership of Ohaneze Ndigbo earlier today July 6, 2018, in Enugu, under the distinguished chairmanship of the very eminent Prof Ben Nwabueze. IPOB High Command herebymandates that all forms of verbal attacks and name calling on all media platforms against Ohaneze Ndigbo cease with immediate effect. No IPOB family member should disparage Ohaneze Ndigbo or its leadership until further notice. This is strictly to give room for a number of representations and demands made by IPOB to those present at the meeting to be given due attention with the shortest possible time frame under an atmosphere devoid of rancour. “The meeting stressed among other things the need for our people, who are presently under siege in parts of Enugu State, to recognise the urgency and need to synergise and constitute a common front against all forms of threats to our existence as a people.” Keep the dialogue going. Let peace reign.

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Ghana Office: Business Day Ghana Ltd; ABC Junction, near Guinness Ghana Limited, Achimota – Accra, Ghana. Tel: +233243226596: email: mail@businessdayonline.com Advert Hotline: 08116759801, 08082496194. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Anthony Osae-Brown. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.

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ENERGY intelligence oil

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BUSINESS DAY

POLICY

NERC is carrying out forensic audit of DISCOs – here’s what it means Page 5 finance people appointments Tony Attah, MD NLNG, signs contract agreement with two Consortia, SCD JV (Saipem, Chiyoda and Daewoo) and BONNY JV (KBR, TECHNIPFMC and JGC), for NLNG’s Train 7 Front End Engineering Design (FEED) as Farhan Mujib, Executive Sponsor, Operations KBR, representing Bonny JV (L) and Guido D’Aloisio, Managing Director, Saipem Contracting Nigeria Limited, representing SCD JV, watch…in London recently.

Debrief

Saudi Arabia to invest $10bn in South Africa’s energy sector

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OPEC weekly basket price DAY

PRICE

13/7/18

74.05

6/7/18

75.13

29/6/18

72.4

22/6/18

71.83

15/6/18

73.85 Source: OPEC

The $650m loan shows no sign of fatigue for Dangote’s refinery project FRANK UZUEGBUNAM

he recent $650 million loan facility signed by Africa’s richest man, Aliko Dangote, with the African Export-Import Bank (Afreximbank) for his oil refinery project shows that there is no sign of fatigue for the multibillion project. The seven-year term loan would attract a moratorium of five years, according to facility terms read out during the signing. The oil refinery would cost around $10 billion and pro-

cess 650,000 barrels of crude daily. The mega refinery sits an hour’s drive east of Lagos on a swampy strip of land bounded by the Atlantic and a lagoon. About 7,000 Nigerian, Chinese, Indian and other workers are rushing to get it ready by early 2020, when it is scheduled to start production. The target is to complete the refinery by December 2019. Devakumar Edwin, Dangote’s Group Executive Director had earlier told Reuters that the company would borrow $3.3 billion for the project, arranged by Standard Char-

tered Bank. The remainder will be funded by equity and through export agencies. The refinery and petrochemical complex is being equipped with a jetty to ferry products by sea within Nigeria and abroad including an undersea pipeline to transport gas. It would account for half of Dangote’s sprawling assets when it is finished next year. Dangote intends to process different grades of crude to meet local demand for refined petroleum products and also target export markets abroad. The refinery will produce

around 50 million liters (13.2 million gallons) a day of gasoline, which will easily meet the needs of Nigerians and onethird as much diesel. The company has also been talking to traders including Royal Dutch Shell Plc, Vitol Group and Trafigura Group about them supplying crude oil and buying refined products, according to sources. Afreximbank, celebrating its 25 years of operation this year, aims to foster intra-African trade through the creation of a payment platform to ease settlement and currency risks.

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oil

Deregulation is solution to Nigeria’s oil crisis - Olawore JOSEPHINE OKOJIE

bafemi Olawore, former executive secretary, Major Oil Marketers Association of Nigeria has once again emphasised the need for Nigeria to deregulation its petroleum industry to address the myriad of issues besetting the sector. Olawore said this in Lagos recently at the sentforth dinner held on his behalf by MOMAN that had in attendance Akin Akinfemiwa, former chairman and chief executive of Forte Oil and Clement Isong the new executive secretary as well as other heads of major oil marketers in the country. Olawore said the over $2 billion oil subsidy claims owed oil marketers has forced members of the association to shut operations while urging the government to settle their claims before the Assets

Management Company of Nigeria (AMCON) takes over, according to a press statement made available to BusinessDay. He stated that the difficulties in recovering their money from the government was why many oil marketers have left the country, citing Forte Oil’s recent notice to divest from some of its investments, following Mobil,

Wednesday 18 July 2018

Chevron, and Texaco’s sale of their holdings. “Subsidy is not free money as some erroneously believed as those who came in to profit have left, leaving the space for real players who believed in what they are doing and despite reconciliation and various meetings called to know when the debt will be paid, nothing is forthcoming from the governments side”, he said. He said against the backdrop of reservation on deregulation in the country by a segment of the citizenry, deregulation was indeed in practice in Nigeria between January to July 1999, as the Nigerian National Petroleum Corporation (NNPC) did not import any litre of petrol and the time was found to be successful with the citizens need met by the oil marketers. Olawore, with over twenty years’ experience at MOMAN, said the goal of the association is to have

Brief Ghana: Ghana benefitted $4.009bn from petroleum revenue a free market oil industry with all the qualities inherent that will allow free entry and exit without government interference but provision of only regulatory framework. “Deregulation of the oil industry with strong regulators will allow for participation of real investors in the sector as from the time of Ibrahim Babangida, we have been clamouring for deregulation and it is sad that Ghana that came here to study how Petroleum Product Pricing Agency (PPPRA) work have gone back to their country, set up their own agency for product pricing and have deregulated, so what’s our excuse? “MOMAN’s goal will be achieved when we have a free market as no one will be owed then and all will work optimally with forex issue not arising as this has left so many oil marketers almost bankrupt though the situation is okay now,” Olawore added.

he Chairman of Pubic Interest and Accountability Committee (PIAC), Steve Manteaw, has disclosed that Ghana has benefited a total sum of $4.009 billion from petroleum revenue in the seven years of petroleum production. He said out of the total sum of $4.009 billion in 2011 to 2016, the government had spent GH¢790,736,394.73 on roads and highway ancillary projects and GH¢110,656,071.10 was spent on transport infrastructure. Manteaw disclosed this during a public forum on the management of petroleum revenues from 2011 to 2017. The forum was to educate the public on how the oil money had been spent in the country in the seven years of petroleum production in Ghana. “The expenditure of

GH¢70,992,432.00, was spent on education in the seven years, which included Hostel, classroom blocks, science resource centres, staff and office accommodation, buildings and equipment in tertiary institutions among others”. He emphasized that agriculture modernization got GH¢357,063,439.91 but the money was rather spent on infrastructure, which did not help the sector to promote food security in the country.

Niger: Savannah Petroleum makes third oil find in Niger’s Agadem basin

K exploration firm, Savannah Petroleum, announced a third oil discovery in Niger’s southeastern Agadem Rift Basin which it hopes will support an early production scheme in the landlocked African country. Kunama-1 exploration well in the R3/R4 PSC Area encountered 9 meters of net oil-bearing reservoir sandstones holding “light oil,” Savannah said. “The Kunama discovery, following on from Amdigh and Bushiya, provides further encour-

agement for our plans to establish an early production scheme in Niger, which we expect to be able to provide an update on later in this quarter,” Andrew Knott, Savannah Petroleum CEO, said in a statement. Savannah said it does not expect to provide a discovered resource estimate until a well test program has been completed later in the year. According to previous company presentations, Savannah was expecting the Kunama prospect to hold 24 million barrels of mean unrisked recover-

able resources. Savannah’s Niger assets consist of two PSC areas which together cover an area of 13,655 sq km, almost half of the Agadem Rift Basin. The basin has been in production since 2011 following a first phase of development of the Agadem PSC area by a CNPC-led joint venture. Savannah is preparing to drill a fourth exploration well on the Eridal-1 prospect on its acreage in the coming weeks and has options for a further five wells under its current drilling rig contract.

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gas

BUSINESS DAY

WEST AFRICA

ENERGY intelligence

Brief Global LNG: Spot prices decline as deals emerge

sian spot liquefied natural gas (LNG) prices continued correcting lower with potentially steeper dips expected ahead amid thin demand from China and India and healthy supply. Recent tender deals seemingly confirmed the bearish tone. Spot prices for August LNG-AS delivery in Asia were assessed at $10 per million British thermal units (Btu), down 10 cents from the previous week. LNG prices may be a shade lower heading into September.

Russia’s Sakhalin II plant sold a tender August 22-loading cargo to a North Asian buyer at an estimated delivered price of $9.90 per mmBtu, market sources said. Earlier, Australia’s APLNG plant sold August 4-loading free-on-board cargo potentially to Shell at an estimated $9.30 per mmBtu. Despite above-average temperatures in Japan, utilities show limited demand for LNG, while in China buyers may be waiting for prices to fall further before wading into the spot market. Total LNG imports into China remain brisk however. Cooling prices may also tempt Indian buyers back into the market but for now demand was sparse with only Gail wrapping up a tender purchase for a single late July cargo.

Mozambique: Exxon expands LNG project to cut production costs

xxon Mobil will expand its Rovuma liquefied natural gas (LNG) project in Mozambique by half to cut production costs as the partners prepare to book the plant’s supply and formally tap lenders in September, the company said. The US oil giant took charge of the East African LNG project’s onshore operations following a $2.8 billion deal with Italy’s Eni last year, adding to its suite of projects in Qatar, Papua New Guinea, Russia and the United States. It now aims to build the world’s biggest liquefaction units, or trains, outside Qatar, in Mozambique’s remote north, shelving former operator Eni’s more modest blueprint in pursuit of cost savings to boost returns on investment.

“The larger train design will lower the unit cost of the Rovuma LNG project and ensure a competitive new supply for the global LNG market,” Julie King, Exxon spokeswoman said. Under new development plans submitted to the government, Exxon’s first two liquefaction trains should each produce 7.6 million tonnes per annum (mtpa), with a start date in 2024.

Saipem-led JV wins contract for NLNG FEED project FRANK UZUEGBUNAM

joint venture including Italian oil services group Saipem, Japan’s Chiyoda Corp and Korea’s Daewoo E&C has been awarded a new contract related to an LNG project in Nigeria, Chiyoda said in a statement. Saipem will be the leader of the joint venture. The contract is for the front-end engineering design (FEED) and preparation of an engineering, procurement and construction (EPC) proposal for the NLNG Train 7 project, meant to expand an existing LNG plant operated by Nigeria LNG Limited, it added. The planned plant expansion project, Train 7,

will help NLNG to realise its expansion goals of increasing liquefied natural gas production output from 22 Million Tonnes Per Annum (MTPA) to 30 MTPA. A completed FEED process will pave way for Engineering, Procurement and Construction (EPC) pricing and bidding processes which are preconditions for Final Investment Decision (FID). “The Front End Engineering Design is the most crucial part in the build-up to the actualisation of Train 7, after some delay and lost opportunities to reinforce Nigeria’s position prominently on the global energy map. The contract goes to show that Train 7 is alive,” Tony Attah, NLNG Chief executive said.

The FEED contract is a dual-FEED also involving B7 JV Consortium comprising American company KBR Inc., Technip of France and Japan Gas Corporation (JGC. “Typically, FEED takes about 9-12 months but we have explored another strategy for this project by adopting the Dual FEED Process which awards this crucial part of the Train 7 project to two prospective engineering consortia, instead of one contractor. What this does for us is give us a degree of freedom to start FEED and sometime after, EPC Bidding, with both activities overlapping. We remain committed to taking FID as soon as these processes are complete”, Attah said. Maikanti Baru, group managing director, Nige-

rian National Petroleum Corporation (NNPC) in his remarks enumerated NLNG’s contribution to the country. “As at today NLNG has generated revenues in excess of $25 billion to the Federal Government of Nigeria comprising of Dividends of circa $17 billion and taxes of $7.2billion and is a delight and a source of immense pride to the Government and people of the Federal Republic of Nigeria, its host communities, the Shareholders, financial markets and several other stakeholders”, Baru said. The NLNG is a midstream company that has monetised over 5.96 Trillion cubic feet (Tcf ) of Associated Gas (AG) which would have otherwise been flared.

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AfDB: Africa Energy Marketplace to accelerate project execution

For Côte d’Ivoire, key recommendations proposed for the next two to three years include tax holidays and tariff rebates for solar equipment makers and importers. The country is also looking at establishing a phased programme of environmental impact assessments and collaborating with development partners to strengthen the financial viability of the power sector. Ethiopia’s action plan includes capital mobilisa-

tion for capacity building and reforms in its Ministry of Water, Irrigation, and Electricity; developing offgrid energy solutions, and measures to mitigate currency risks. Ethiopia is also looking to ratify the New York Arbitration Convention to fulfil international lender’s bankability requirements. As part of its future energy plans, Nigeria will assess its gas-to-power value chain and develop robust franchising regulations for mini-grid systems in

power

Tanzania: Regional development bank commits to Tanzania’s gas power plant

under-served areas. This move will form part of its nation-wide integrated multi-modal electricity generation and distribution system. Meanwhile, Zambia plans to create an off-grid working group to improve stakeholder communications and coordination in the domestic off-grid market. The African Energy Marketplace is also promoting South-South economic cooperation and knowledge exchange.

ast African regional development financial institution, TRADE & Development Bank (TDB), has committed a $200 million soft loan to the Tanzanian government for construction of a gas power plant in Kilwa District, Lindi Region. The bank’s president, Admassu Tadesse, recently met and discussed various issues related to the project with Tanzania’s Finance and Planning Minister, Philip Mpango, as well as Energy Minister Medard Kalemani. Tadasse noted that: “Tanzania is one of our main stakeholders, it is seventh in the list of 37 countries that own shares in TDB, with 6.4 percent stake.” Kalemani said the Kilwa gas plant is designed to generate 318MW and that it will increase availability of power in the country. He further highlighted that at present the country generates 1,500MW. “We are still connecting villages to electricity, so far we have 176 villages that need electricity and

120 of them are located in islands, TDB has agreed to support the construction of hydropower projects and each will generate 10MW,” said Kalemani. Tadesse stated that the bank is implementing various development projects in the country. He said some of the projects being implemented in the agriculture, financial and banking sectors as well as electricity, infrastructure and industries. “We have other projects worth $157 million that the bank has already approved. Also other $660 million have been allocated for Tanzania to boost agriculture, trade, infrastructure, energy, chemical and petrol sectors,” he said.

Ebong, Senior Special Adviser to the Governor on Technical Matters & Due Process, and other top government officials of the state. The project communities comprise Ibeno (where the power plant is located), Eket, Esit-Eket, Mkpat-Enin, Onna and Ikot Abasi Local Government Areas in Akwa Ibom State, whose representatives were part of the ceremony aimed at fostering hitch free operations and promotion of orderliness in the area to allow a con-

ducive investment/work environment at all times through the construction to completion of the Power Plant Project and during operation of the Power Plant Project. The agreement covers critical areas such as Community Employment Opportunities, Procurement and Supply Contracts, and Socio-Economic Development Projects. Speaking during the signing ceremony, Chief Executive Officer, Black Rhino Group, Brian Herlihy, commended the Gov-

ernor of Akwa Ibom State for his support to assure that the project comes on stream and commence construction before the end of 2018. He stated that the company was investing 1.1 billion dollars in the QIPP project adding that over 12,000 people from Akwa Ibom would be employed during the construction of the project. Brian hinted that aside invest $1.1billion, ExxonMobil is also going to invest another 500million dollars for gas.

fDB’s VicePresident for power, energy, climate and green growth, Amadou Hott, at the inaugural meeting of the Africa Energy Marketplace, in Côte d’Ivoire said that “energy powers economies and every delay in power project execution keep our people in darkness”. “We must show a greater sense of urgency because what is at stake is the global relevance, social progress and economic productivity of Africa’s nearly 1 billion people,” he said, adding that, “Children are growing up without electricity.” Participants who came from Côte d’Ivoire, Egypt, Ethiopia, Nigeria and Zambia produced time-bound action plans to accelerate energy sector reforms and project execution. According to the AfDB, the scope of the discussions targeted up to 200 projects at various completion stages, with an estimated total investment value exceeding $50 billion.

Wednesday 18 July 2018

Nigeria: QIPPL signs agreement with Akwa Ibom communities

ua Iboe Power Plant Limited (QIPPL), the promoter of the Qua Iboe Power Plant has signed a community part-

nership agreement with project impacted communities in Akwa Ibom State. Execution of the agreement is a strategic move by QIPPL to proac-

tively establish a positive relationship with neighbouring communities in Akwa Ibom State and collaborate with them to identify and develop sustainable programs for accelerated socioeconomic development in the communities. The CPA was executed with the communities under the auspices of the Akwa Ibom State Government with His Excellency, Governor Udom Gabriel Emmanuel, Emmanuel Ekuwem, the Secretary to the Government, Ufot

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NERC is carrying out forensic audit of DISCOs – here’s what it means ISAAC ANYAOGU, STEPHEN ONYEKWELU, BUNMI BAILEY

he National Electricity Regulatory Commission (NERC) says it is ready to commence a forensic audit of Nigeria’s eleven distribution companies to know their commercial viability. During the BusinessDay Future of Energy Conference held in Lagos on July 12, the Commission’s Vice Chairman, James Momoh through a representative said an open book review of the DisCos’ operation is long overdue. What does it mean? According to online resource, investopedia a forensic audit is an examination and evaluation of a firm’s or individual’s financial information to understand the state of affairs. It is often used for litigation and could be used to determine financial viability of a business. The investigation for a forensic audit follows the same format as a regular audit of financial statements. The steps can include planning, review and a report. If the investigation was undertaken to discover the presence of fraud, evidence is presented to uncover or disprove the fraud and determine the amount of the damages suffered. In the case of NERC, the objective is to discover their financial viability but the approach remains the same. The regulator will embark on a study of the revenue management of the DisCos who settle as little of 15 percent of their market invoice. The audit will seek to determine what is the basic revenue baseline and the minimum they are allowed to remit, develop appropriate basis for appropriation and disbursement of market funds. Why the forensic audit? Nigeria’s electricity market has shortfalls of about N1trillion, this means that power supplied cannot be fully accounted for. DisCos who collect money from electricity users which should be used to pay all other

market operators collect barely 40 percent of their market invoice. The power sector is designed such that DisCos collect money, remit to the Nigerian Bulk Electricity Trader (NBET), who pays GenCos and Gas Companies. If DisCos collect poorly, everyone else is short-changed. The Federal Government has provided bailout funds to assuage these shortfalls, but without plugging the gaps from which these leakages occur, they would not achieve their purpose. Expected Outcomes More often than not, forensic audits uncover evidence of malfeasance and it is conducted to find evidence strong enough to prosecute the guilty. A financial examination of the DisCos accounts may not exactly lead to litigation but when it uncovers evidence of poor revenue management, the regulator can inflict bruising fines or even withdrew their license in cases of misappropriation. Recently, NERC found that the Benin DisCo used revenue it collected to provide loan facilities for its directors, which constitutes a breach of their performance contract. It is possible some other DisCos could have similar challenges. What does it mean for you? For Nigeria’s electricity users, this kind of audit is long overdue. As a result of the poor financial management practices of the DisCos customers pay huge amounts in estimated billings, there are no investments to improve the distribution network to provide better supply. NERC says the forensic audit will correct these problems. However, for it to be effective, the regulator must be willing to mete out sanctions where necessary something it has often been accused of neglecting to do. The commission says it is setting up an Information Technology system that will monitor revenue collection real time and also show how money is spent. The application of technology may help check subsequent abuse.

06 BUSINESS DAY WEST AFRICA

ENERGY intelligence

finance people appointments

Saudi Arabia to invest $10bn in South Africa’s energy sector

Brief

Transocean proposes $600m private offering

ransocean is proposing a $600 million private offering. Proceeds from the placing of senior secured notes will be used to help finance the construction of a deepwater rig delayed in 2015, Transocean said. The rig company said it plans to offer $600 million in secured notes due 2025, secured by a lien on the Deepwater Pontus rig and other assets related to it. “The net proceeds from the notes will be used to partially finance the construction or acquisition of the Deepwater Pontus,” the company’s statement read. Transocean announced in 2015 that it reached an agreement with Royal Dutch Shell and Daewoo Shipbuilding & Marine Engineering Co. to delay the delivery of the Deepwater Pontus by at least a year. The company said at the time the delay would have no impact on the day rate of duration of the 10-year operating contract for the rig. Deepwater Pontus was listed in Transocean’s fleet last year. No further details on the secured notes was available.

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Rig companies at the height of a market downturn that saw the price for Brent crude oil, the global benchmark, crash below $30 per barrel were forced to scale back and cut day rates, what they charge to lease a rig, in order to survive. Transocean’s placement comes just as second quarter earnings season gets under way. The company, which recently acquired rival rig company Songa Offshore, said revenues from its drilling contracts declined $110 million to $589 million for the three months ending December 31. The company attributed the decline to fewer operating days, as well as lower lease rates for some of its rigs. Songa Offshore had four rigs in its portfolio designated for harsh environments. On top of its legacy fleet, Transocean has four drill ships designed for ultra-deep waters under construction and two of those are already under contract to Royal Dutch Shell for the next 10 years. Transocean’s fleet of rigs was upgraded and overhauled as new assets come into service, while older ones are retired.

audi Arabia will invest at least $10 billion in South Africa, mostly in the energy sector, including building oil refineries, Khusela Diko, spokeswomen for South Africa’s president Cyril Ramaphosa said. The move is part of Ramaphosa’s drive to attract $100 billion in investment to boost the ailing economy. The pledge was made by Saudi Crown Prince Mohammed bin Salman during an official visit by Ramaphosa and government ministers to the oil producing nation, Diko said.

“Most of it will be in the energy sector, including building refineries, petrochemicals and renewable

energy,” said Diko. Diko said that details of the projects will be given during an investment

summit expected to be held this year. Ramaphosa has promised to revive the economy and crackdown on corruption since becoming president in February and after winning the leadership of the ruling African National Congress last year. Investment and business confidence were eroded during the nineyear presidency of Ramaphosa’s predecessor, Jacob Zuma, when South Africa’s credit rating was slashed to junk by two of the top three agencies and economic growth slowed to a crawl.

Total acquires Engie’s LNG business, becomes world’s second largest LNG player

otal closed its $1.5 billion acquisition of Engie’s portfolio of upstream LNG assets, strengthening the French major’s hand in the fast-growing global LNG sector and giving it improved risk management options during a period of plentiful supply into the next decade. Total and Engie, which is transforming away from fossil fuels into a greener, service-focused energy company, first announced

the deal in November last year. “Acquiring Engie’s LNG business is a real step change for Total allowing us to leverage size and flexibility in the fast-growing and increasingly commoditized LNG market,” Total CEO Patrick Pouyanne said in a statement. “This transaction makes Total the second largest global LNG player among the majors with a worldwide market share of 10 percent and the

group will manage an overall LNG portfolio of around 40 million mt/ year by 2020,” Pouyanne said. Total said an additional payment of up to $550 million could be payable to Engie in the event of an “improvement in the oil markets in the coming years.” Engie’s LNG portfolio comprises participating interests in liquefaction plants, notably a 16.6 percent stake in the planned

Cameron LNG project in the US, long-term LNG sales and purchase agreements, an LNG tanker fleet as well as access to regasification capacities in Europe. Following the transaction, Total will have a liquefaction capacity portfolio of 23 million mt/year, spread out across the Middle East, Australia, Russia and the US, it said. It will also have a worldwide LNG trading contracts portfolio of 28 million mt/year, 18 million mt/year in European regasification capacity and a fleet of 18 LNG carriers, of which 2 are FSRUs. Already a major LNG player, Total is following the example of Shell in gaining increased coverage across the entire LNG value chain, enabling it to secure margins despite the well-supplied market by exploiting the optionality afforded by a broad portfolio of assets and supply arrangements.

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marketinsight

Oil demand growth on certain future from higher prices ISAAC ANYAOGU

consequence of higher crude oil prices is that major importers especially China and India may begin to shed some of their demand. Already, there are moves to form a cartel to curb OPEC’s clout on the global market. There are concerns that Europe and Japan may be prompted to join a new movement to combat OPEC. In the past, absence of alternatives to fossil fuels was sufficient deterrent but with alternatives to fossils, the threat may be real this time. India, China, and Europe are working hard on Electric Vehicle (EV) adoption. Japan is a leader in battery manufacturing. If they set their minds to it, these four players could upend the oil market and effectively cripple OPEC according to a report from Oil price. Citing two surveys, the online energy resource suggested that as many as 90 percent of Indian drivers were willing to switch to EVs if the government built the necessary charging infrastructure, reduced road taxes, and increased subsidies. The second survey identified price and range as additional roadblocks towards the mass adoption of EVs in India. Because of these challenges, New Delhi recently amended its ambitious goal of having an all-EV fleet on the roads of the country by 2030 to having 30 percent of the fleet electric. China has ambition to become an undisputed leader in global EV adoption: the country accounted for more than 50 percent of global EV sales last year. This was made possible in large part by

generous government subsidies for EV manufacturing. These subsidies are due to be wound down to 0 by 2020, and carmakers are already beginning to brace for a future without the support of the state. It is safe to say it remains uncertain if the EV boom will continue after 2020. Beyond just higher oil price, a new tighter tax regime on independent Chinese refiners, which is already choking the refining margins and profits of the so-called ‘teapots’ who have grown over the past three years to account for around a fifth of China’s total crude imports is a major factor. The teapots have become instrumental in China’s growing thirst for crude oil after the government started allocating import quotas to the independent refiners in 2015.

Under the stricter tax regulations and reporting mechanisms effective March 1, however, the teapots now cannot avoid paying consumption tax on refined oil product sales—as they did in the past three years—and their profit bonanza is coming to an end. Despite ample government-approved crude import quotas, independent

Snapshot

99.2m bpd Despite ample governmentapproved crude import

refiners are now losing money on refining, cutting utilizations rates, and closing for maintenance to cut exposure to the unfavorable market conditions. With higher oil prices this year and the hefty taxes they now cannot avoid paying, the teapots are expected to reduce their imports, threatening China’s oil demand growth and ultimately, global oil demand growth according to Oil price report. The higher import and tax expenses are now leading to the teapots cutting purchases in order to keep afloat in their once-lucrative refining business. Lower purchases from the chunk of the Chinese market accounting for one-fifth of the country’s oil imports could spell trouble for Chinese and global oil demand growth.

BUSINESS DAY

OPEC Flakes OPEC says market needs more of its oil 2H18, but looks well-supplied in 2019

PEC’s recent decision with Russia and other allies to boost crude output by a combined 1 million b/d may be insufficient to meet global demand in the months ahead, according to the producer group’s own forecast. The so-called call on OPEC crude is expected to average 33.34 million b/d in the third quarter, rising to 33.58 million b/d in the fourth quarter, OPEC said in its monthly oil market report. Fears of a shortage in global spare capacity are perhaps overdone, the report hinted, as a rush of non-OPEC supplies in 2019 will reduce the pressure on OPEC to keep the taps open, even as world oil demand is set to rise above 100 million b/d for

the first time. Demand will grow 1.45 million b/d to 100.30 million b/d in 2019, but will be outpaced by the increase in non-OPEC supply of 2.10 million b/d, OPEC said in its report, which provided the organization’s first forecast of 2019 fundamentals. As a result, OPEC sees the call on its crude falling to 31.82 million b/d in the first quarter and 32.14 million b/d in the second quarter.

OPEC monitoring committee will review output compliance

he committee overseeing the OPEC/ non-OPEC supply agreement will assess how the coalition complies with its aim of bringing “overall conformity levels” down to 100 percent, UAE energy minister Suhail al-Mazrouei said in letter to Iranian counterpart Bijan Zanganeh. “I can provide firm reassurance that the monitoring committee will closely monitor the situation with a goal of assuring 100 percent compliance from OPEC members to the agreed 1.2 million b/d voluntary reduction in oil production,” Mazrouei wrote in the letter. The committee is scheduled to meet September 22-23 in Algiers. It is chaired by Saudi energy minister Khalid

al-Falih. Iran faces the prospect of significant losses to its crude oil exports later this year as US sanctions take hold and has insisted that the supply accord would be breached if members exceed their quotas. OPEC finalized an agreement on June 23 with its 10 non-OPEC allies, led by Russia, to increase output by 1 million b/d from May production levels.

08 BUSINESS DAY WEST AFRICA ENERGY intelligence

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Wednesday 18 July 2018

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Off-grid power solution entrepreneurs raise hopes of attaining SDG 7 …critical component to drive West Africa Power Pool STEPHEN ONYEKWELU

ctivities of off-grid power solution entrepreneurs in sub-Saharan Africa are re-igniting hope regarding the possibility of attaining universal electricity access by 2030, United Nations’ Sustainable Development Goal Seven (SDG 7). This is important because, the Paris-based International Energy Agency (IEA) and the World Bank estimate that progress in electricity access has been slow and without access to electricity, poverty will be emboldened. With 1.06 billion still without access to electricity and 3.04 billion people still relying on solid fuels and kerosene for cooking and heating, the road ahead is dolorous and treacherous without massive investments from both public and private stakeholders. In West Africa, access to electricity is at 52 percent, with shortages of up to 80 hours per month at a cost of $0.25 per kilowatt-hour, more than twice the global average, a World Bank report stated. The World Bank estimates that integrated power trade in the region could lead to cost savings of US$5-8 billion per year by enabling countries to import cheaper sources of electricity; it will increase access to affordable, reliable and modern energy, and reduce CO2 emission intensity The World Bank has dedicated US$750 million in International Development Association (IDA) funding to support the West Africa Power Pool (WAPP) and intends to further step-up its support However, off-grid solutions are gaining critical mass and need to be factored into West Africa’s energy master plan. Propelled by success in East Africa, offgrid solar power startups are entering West Africa, offering pay-as-you-go kits in a race to claim tens of millions of customers who lack reliable access to electricity. At least 11 companies, including lead-

ing East African players such as Greenlight Planet, d.light, Off-Grid Electric (OGE), MKOPE Solar, Fenix International and BBOXX, have moved into West Africa, most within the last two years. With a potential market worth billions of dollars, major European energy companies such as French utilities EDF and Engie are taking notice too. “It is important to be there now, because the race has already started,” Marianne Laigneau, senior executive vice president of EDF’s international division told Reuters five months ago. The main challenge facing smaller companies now is how to raise enough capital to supply the expensive solar kits in return for small upfront payments from customers. Mobilising funding for firms providing home solar systems is also part of the United

States of America government’s Power Africa initiative. Major power generation projects have been slow to get off the ground so Power Africa has partnered with startups such as OGE, M-KOPE and d.light, among others, to accelerate off-grid access. Off-grid start-ups are not the only companies striving to bridge electricity access gap and improving energy efficiency. On February 10, BusinessDay reported that big generator makers have set sights on Nigeria’s $9.2 billion off-grid market. Sources told BusinessDay that leading generator makers including Jubaili Bros, Cummins West Africa and Mikano International are considering morphing into power companies capable of providing power through a variety of means, including renewables. Jubaili Bros, a diesel generator manu-

facturer and seller is leading the pack, committing to install solar systems at its facilities in Lebanon, Nigeria, UAE and Afghanistan. The total amount of the solar power produced from these facilities, when it is completed will be around 500 KW, the company has said. Mofid Karameh, CEO of Mikano International in a 2016 interview said, “The next step for us is to go into power supply. We are thinking of building a big power station. There are many different power needs in the country from big development companies, industrial projects to banks. We will supply power to them directly and would not sell generators to them anymore. These are the new steps for the business. Not to supply machines but to supply power. What do customers want? They want power. They do not want to buy equipment.”