BusinessDay 18 Jul 2019

Mr President, select ministers on competence, not nepotism

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n a nation of 198 million citizens, how many people can the President know? It is unthinkable for the president to limit his selection only to persons he knows. It is impracticable.

In addition to the unease over the delay in appointment of a cabi-

net, President Muhammadu Buhari recently claimed that the delay is because he would this time choose only persons he knows to serve in the Federal Executive Council. It is one of several reasons emanating from the Presidency for the costly delay in handling the

Front page editorial simple task presidents elected at the around the same time have tackled in other countries. Moreover, the president’s statement raises a red flag that should worry

from the president’s neck of the woods, contrary to established best practice in our land. Now he is giving notice of extending it to an area with clear constitutional stipulations on spread and repre-

and concern all citizens.

Here is a president who stands accused of ignoring federal character and the diversity of our nation in making appointments to sensitive positions. More than 90% of the heads of our military and paramilitary forces come

Continues on page 12

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Biggest Loser

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NESTLE N1,245 28,042.80

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Foreign Reserve - $45.09bn Cross Rates - GBP-$:1.24 YUANY-N 52.37 Commodities Cocoa

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news you can trust I **THURSDAY 18 july 2019 I vol. 20, no 352 I N300

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Buy

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$-N 357.00 360.00 £-N 455.00 463 .00 €-N 400.00 406.00

Market I&E FX Window CBN Official Rate Currency Futures

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3M

361.61 306.95

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NGUS sep 18 2019 361.03

as total bank assets equivalent to only 20% of GDP low financial depth leading to FX instability

LOLADE AKINMURELE, BALA AUGIE, MICHAEL ANI & OLUFIKAYO OWOEYE

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6M 0.19

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NGUS jul 29 2020 362.53

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India’s LPG model offers solution to Nigeria’s liquidity, growth crisis igeria’s finances are in a precarious state and unless there is adequate liquidity for the government and the private sector, the country will continue to remain fragile to external shocks.

Since the collapse in global oil prices, Africa’s largest economy has seen actual revenues dwarf projected revenues, which has made the government resort to taking on huge external borrowings to meet its expenditure obligations.

However, if there are countries

fgn bonds

Treasury bills

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Tribunal orders INEC chairman to appear before it today …Atku’s witnesses allege gross irregularities in Kogi, Borno, Nasarawa FELIX OMOHOMHION, Abuja

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he Presidential Election Petition Tribunal sitting in Abuja, Wednesday, ordered the chairman of the Independent National Electoral Commission (INEC), Mahmood Yakubu, to appear before it unfailingly today, Thursday, July 18, by 12noon.

Yakubu is to appear along with the Resident Electoral Commissioner in Zamfara State. Both were subpoenaed by the tribunal for presentation of some documents but refused to honour the summons.

Chairman of the tribunal, Jus-

Continues on page 38

Inside L-R: Mike Uche Anokwuru, Zenith Bank; Obaro Odeghe, Fidelity Bank; Herbert Wigwe, GMD/CEO, Access Bank; Dr Ernest Azudialu-Obiejesi, chairman, Neconde Energy; Peter Adeshola Olowononi, Afreximbank; Tolulope Adetugbo, First Bank; UK Ltd, Ufuoma Adasen, Africa Finance Corporation, and Chahid Jarmouni, Glencore UK Ltd, at the presentation of Neconde’s Business Outlook to the consortium of banks in the $640m senior secured medium term facility in Lagos.

Consumer goods sell off is a golden opportunity to buy these stocks P. 25

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Thursday 18 July 2019

BUSINESS DAY

news Market pessimism pushes Nigeria stocks to 26-month low …year’s loss worsens to 11% ISRAEL ODUBOLA & SEGUN ADAMS

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tocks on the Nigerian exchange (NSE) plunged to their lowest level in more than two years on Wednesday amid lingering pessimism which has pushed year’s loss to double digits.

The benchmark index at the Lagos bourse dipped 0.56 percent to 28,043.32 index points to extend a six-day losing streak, threatening a break below the 28,000 level. This is the lowest since May 2017.

The uninspiring performance of the domestic bourse is fuelled by the failure of President Muhammadu Buhari to spur the interest of foreign investors who are keen about the policy direction of the present administration, analysts say.

“It is indicative that investors have weak appetite for Nigerian stocks,” said Gbolahan Ologunro, equity analyst at Lagos-based CSL Stockbrokers, in a telephone interview.

“Investors are not seeing expected reforms required to push up the market.”

So far this year, the market has lost some 10.78 percent, a counter-trend to the positive returns in most emerging markets stocks.

While investors await the

implementation of stimulating policies and the formation of Buhari’s cabinet, the calibre of ministers to hold key positions is expected to influence investors’ betting on naira stocks.

But Emeka Nwagwu, equity analyst at Lagos-based Axe Capital, said “there may be no significant change in current trend even if ministers are appointed”.

“It is only when Federal Government effects businessfriendly policies that the market can revive,” he said in an emailed response.

The recent directives of the Central Bank of Nigeria to compel deposit money banks to give loans to small businesses in a bid to boost growth are also weighing on sentiments as investors fear it might drag profitability.

Bank stocks, the most liquid and active on the NSE, lost 1.4 percent after Wednesday’s trade to emerge second-worst performer in the day’s trade.

Shares of lenders are down some 16 percent year long.

“It is likely that the new CBN policy on banks’ lending will affect the capital market but the degree of impact depends on how they handle it,” Nwagwu added.

•Continues online at www.businessday.ng

$7.1bn worth of oil offered in NNPC’s new crude lifting contracts ISAAC ANYAOGU

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r ude oil valued at $7.1 billion has been offered in oil swaps by the Nigerian National Petroleum Corporation (NNPC) as it issues award letters to oil companies for contracts to exchange crude oil for imported fuel for another year.

Oil companies divided into 15 groups, with at least 34 companies in total, received award letters, according to a Reuters report.

They include BP/Aym Shafa 2; Vitol/Varo 3; Trafigura/AA Rano 4; MRS 5; Oando/Cepsa 6, and Bono/Akleen/Amazon/Eterna.

Others are Eyrie/Masters/Cassiva/Asean Group; Mercuria/Barbedos/Petrogas/Rainoil; U TM/L evene/Matrix/Petra Atlantic TOTSA; Duke Oil; Sahara; Gunvor/Maikifi; Litasco / Brittania-U, and Mocoh/ Mocoh Nigeria.

The successful companies will sell Nigerian crude to refineries in Asia and Europe and NNPC will also award contracts to import refined products.

The National Bureau of Statistics (NBS) said in its first quarter 2019 report that Nigeria imported petrol and other products valued at N3.8 trillion or $12.4 billion in 2018.

The deal, which negotiations began last year, will see the NNPC exchanging over 300,000 barrels per (bpd) of crude oil for imported petrol and other products. Over the course of one year, Nigeria will exchange over 109.5 million barrels of crude valued at $7.1 billion at the current Brent price of $65 per barrel.

NNPC has not made public specific details about the terms of the deal and the contracts are not disclosed.

Also some of the companies offered these swap deals have been accused of gaming the system.

This fuels the perception that Nigeria’s crude lifting terms are prone to abuse because the coveted contracts give investors access to lucrative cargoes with little official monitoring, thus providing arbitrage opportunities.

L-R: Gbenga Oyebode, chairman, Nigerian Bar Association (NBA) Technical Committee on Conference Planning (TCCP); Jonathan Taidi, general secretary, NBA; Paul Usoro, president, NBA; Chinyere Okorocha, chair, fundraising committee, NBA-TCCP; Seni Adio, chairman, technical subcommittee, NBA-TCCP, and Olumide Akpata, co-chair, NBA-TCCP, at a press conference to announce the Pic by Olawale Amoo NBA 2019 annual general conference in Lagos, yesterday.

Nigeria’s growth problem laid bare by US GDP expanding faster LOLADE AKINMURELE

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t’s a sign of economic trouble when the economy of an emerging or frontier market economy, assumed to have plenty of room to expand, is moving at a slower pace compared to a developed market, adjudged to have peaked and already operating near capacity.

That’s the scenario playing out in Nigeria, Africa’s largest economy, where growth has been sluggish since an exit from recession in 2017.

The economy grew 2 percent in the first quarter of 2019, according to official data. That’s lower than the United State’s first quarter GDP of 3.1 percent. It was no different in 2018, when the US expanded 2.9 percent compared to Nigeria’s 1.9 percent.

Expanding at a lower rate than the US makes Nigeria unattractive to foreign direct

promise to be higher than what is obtainable in a country like the United States,” said Egie Akpata, a director at investment banking firm, Union Capital Markets.

“Big investors probably feel they are better off staying away from Nigeria and investing in other emerging economies with better economic indicators and stronger growth prospects,” Akpata, who was a former assistant Vice President in the Global Markets Division of Deutsche Bank AG in New York, told BusinessDay. The mid to long term uncertainty of the Naira exchange rate also contributes to dampening investor appetite for Nigerian assets, according to Akpata.

In an ideal scenario, Nigeria should post higher growth rates than a country like the US, given that it is more difficult for a developed economy that already boasts first class infrastructure to grow faster

than a third world country with third world infrastructure. It’s typical of emerging markets to see sustained years of growth in the range of 6- 10 percent as they play catch-up to developed economies.

Take China, which is the biggest emerging market.

Beijing expanded 6.4 percent in the first quarter and when the economy slowed to 6.2 percent in the second quarter it was the lowest rate in 27 years. This means the economy never expanded below 6 percent in the last three decades.

The last time Nigeria expanded by as much as 6 percent was in 2014, five years ago.

After that time, when the economy has not contracted it has mustered growth of around 2 percent. As a result, Nigeria’s GDP per capita has declined every year since 2016.

•Continues online at www.businessday.ng

Nigerian investors join Shroff for a stake in HotelOnline

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ome Nigerian investors have taken a stake in HotelOnline, a pan-Africa focused traveltech company based in Oslo but started by two Norwegians based in Africa.

HotelOnline was founded in 2014 by Norwegian entrepreneurs Håvar Bauck and Endre Opdal, offering solutions for e-commerce and digital marketing to hotels in Eastern Africa.

The company was first known as Savanna Sunrise Ltd., until acquiring a Polish technology company in 2017, whereupon the new group rebranded to HotelOnline.

After growing rapidly in •Continues online at Kenya, Uganda and Rwanwww.businessday.ng da, the entrepreneurial duo www.businessday.ng

investors who will feel they are not well compensated for the risk they are taking by investing in an emerging market.

It’s no wonder Nigeria has struggled to attract foreign direct investment. In 2018, Ghana- a country of some 20 million people attracted more capital than Nigeria, according to data by the United Nations Conference on Trade and Development (UNCTAD).

Egypt, the highest recipient of foreign direct investment, attracted more than double of what Nigeria got, a big turnaround from when the North African country used to get less than a third of FDI that flocked to Nigeria. While Egypt is forecast to grow 5.9 percent in 2019, Nigeria will probably expand 2.3 percent, according to the International Monetary Fund (IMF).

“For a big investor, there’s little motivation to take so much risk to invest in Nigeria when the return doesn’t

Founders Bauck and Opdal

made a bold entry into the Nigerian market in 2017.

Bauck had lived in Nigeria from 2012 to 2014, but this was a new industry, and

https://www.facebook.com/businessdayng

they were basically starting from scratch.

With help of a Nigerian group of investors, HotelOnline was able to @Businessdayng

establish a strong foothold in the vast new market. The Nigerian investors, who saw the potential of the still-young company early on, funded the first expansion of HotelOnline from a regional to a continental player.

Nigeria is now a cornerstone of HotelOnline's business, and the successful entry into this market became a pivotal moment in the rise of the company.

In late 2017, HotelOnline became the first known African technology startup to successfully complete an equity crowdfunding.

In 2018, HotelOnline acquired Senegalese traveltech company Teranga

Continues on page 38

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Thursday 18 July 2019

BUSINESS DAY

NEWS

Nigeria tasks ECOWAS member states on decent work agenda JOSHUA BASSEY

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igeria has called on ECOWAS member states to place the decent work agenda at the centre of their socio-economic policies, for sustainable development in the sub-region.

The permanent secretary, Federal Ministry of Labour and Employment, William Alo, made the call at the opening of the meeting of labour experts/general assembly of the ECOWAS social dialogue forum holding in Abuja from July 16 to July 19, 2019.

Alo observed that the pillars of the decent work agenda – social dialogue, social protection, rights at work and employment were indispensable building blocks of sustainable development.

He stated that the Nigerian government, on its part, had created an unrestricted space for social dialogue to cushion workers’ vulnerability, and to foster greater reconciliation and mediation between disputing parties.

Alo described social dialogue and collective bargaining as reliable tools for addressing inequality, minimising the incidence of working poor, and ensuring

fair wage distribution, as well as tackling informality in the ECOWAS sub-region; and therefore appealed to tripartite partners and other stakeholders to employ dialogue and consultations to address problems faced by workers and employers alike.

He observed that the theme of this year’s forum, “strengthening social dialogue for the promotion of decent work in the ECOWAS region,” had been designed to promote social dialogue and tripartism, aimed at preventing and ending conflicts, and promoting socio-economic development and integration at the national and regional levels.

The permanent secretary, however, commended the ECOWAS Commission for its role in deepening integration in labour administration in the sub-region.

“Your role in the development of the ECOWAS labour and employment policy and its youth employment action plan, draft ECOWAS decent work regional programme (2019-2022), and the draft directive on harmonisation of labour laws in the ECOWAS region to be validated at this forum, are key milestones worthy of mention,” he said.

VFD Group concludes successful business exit of Germaine Auto

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FD Group plc has announced its divestment from Germaine Auto Centre (GAC) after a period of two and a half years investment.

In 2 0 1 6 , V F D G ro u p bought a 30 percent stake in GAC in a deal that ceded management control to VFD. This deal was meant to give a new lease of life to the then troubled auto firm. During the term of the investment, VFD appointed the right leadership to the firm and aggressively drove cost minimisation and revenue maximisation strategies to restructure the company for leadership position in the auto industry.

In spite of this tough fiscal and operating environment, Germaine was stabilised and effectively positioned for effective growth. In the course of VFD Group’s involvement in the firm, the company settled most of its outstanding customers liabilities and amicably rescheduled its creditors and importantly timed profit.

However, as part of VFD Group’s investment philosophy and model, the Group

divested its invested percentage based on a deal that guaranteed in excess of 25 percent accumulated return.

Remarking on the exit, VFD’s managing director/ CEO, Nonso Okpala, stated, “We are always driven by dedication to provide unmatched returns to our investors and stakeholders. This investment has resoundingly met both expectations.”

Information reaching us indicates that VFD Group’s stake was purchased by the Chukwueke family who founded the business in 2009.

As it marks its 20th anniversary this year, the company will continue to provide customers access to quick, efficient and high quality repairs at reasonable prices.

On a parting note, the former MD/CEO of Germaine, who equally serves as the COO of VFD Group, Gbenga Omolokun, stated, “The new Germaine is poised to take the market by storm and we (at VFD) wish the current Board and Management of Germaine, the best of luck in their future endeavour.”.

9mobile offers customers double data with MoreFlex Jumoke Akiyode-Lawanson

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n furtherance of its commitment to continuously empower subscribers to do more, 9mobile is offering customers double data on its MoreFlex package.

Moreflex is a prepaid package that comprises flexible bundle offers with up to 300 percent bonus on recharges, which can be used for calls, data and SMS. With this offer, new customers and existing subscribers that migrate from other packages to MoreFlex will enjoy 100 percent data bonus on the purchased data plan within the first 30 days of being on the MoreFlex package.

This is in addition to the flexibility that the package gives customers to use their airtime for calls, data and SMS. Speaking on the offer, Adebisi Idowu, 9mobile’s vice president for marketing, said, “MoreFlex is for all categories of customers including upwardly mobile, young and senior executives as well as traders and discerning professionals who want value for their money.

“Moreflex package offers our customers great value for their money through its flex-

ibility, quality and simplicity.

It’s a double whopper because not only do subscribers get to enjoy this double data reward on MoreFlex, they also get to talk more, browse more and text more with up to 300 percent extra bonus on a range of bundles.”

The offer demonstrates 9mobile’s unwavering commitment to innovative solutions that enable customers to do more of the things they want to do without having to exhaust their resources, and also accessing technology using the most reliable network, Idowu said.

To enjoy the offer, subscribers need to be on the 9mobile Moreflex package or migrate to it from other 9mobile packages by dialling *344*amount#.

Through an array of innovative solutions and platforms, 9mobile has been at the forefront of providing solutions that empower and support its customers to achieve more via technology. Since its entry into the Nigerian market a decade ago, the telco has consistently launched innovative products that enable individuals, businesses and communities achieve their goals.

Customs arrests ambulance driver, escort for smuggling N2.8m Tramadol from Apapa port AMAKA ANAGOR-EWUZIE

N Godwin Obaseki, governor, Edo State (m), his deputy Philip Shaibu (2nd r); Aliyu Sabi Abdullahi, chairman, Senate Ad-Hoc Committee on issues in Edo State House of Assembly (2nd l); Chukwuka Utazi, member of the Committee (l), and Degi Eremienyo (r), during a courtesy visit by the committee to Governor Godwin Obaseki, at Government House, Benin City, yesterday.

Worldwide HIV/AIDS death still a challenge - UNAIDS report ANTHONIA OBOKOH

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ccording to the Joint United Nations Programme on HIV and AIDS (UNAIDS) global report 2019 released on Tuesday, HIV-related deaths in 2018 fell to about 770,000, which is 33 percent lower than in 2010 when 1.2 million deaths were recorded.

However, the report called for “greater urgency” in the global AIDS response.

HIV/AIDS mortality remains high worldwide, reminding the international community that the fight against the pandemic is far from over.

According to the report, an

estimated 37.9 million people worldwide now live with HIV, but a record number — 23.3 million of them — have access to antiretroviral therapy (ART), which can control the infection.

According to the report, key populations and their sexual partners now account for more than half (54%) of new HIV infections globally. In 2018, key populations - including people who inject drugs, gay men and other men who have sex with men, transgender people, sex workers and prisoners - accounted for around 95 percent of new HIV infections in eastern Europe and central Asia and in the Middle East www.businessday.ng

and North Africa.

However, the report also shows that less than 50 percent of key populations were reached with combination HIV prevention services in more than half of the countries that reported.

This highlights that key populations are still being marginalised and being left behind in the response to HIV, says the report.

Despite this progress, the UN warns that efforts to eradicate the disease are stalling due to lower investment and marginalized communities that lack vital health services.

Although eastern and southern Africa still have the world’s highest number

of cases, deaths related to HIV and AIDS in Africa have dropped significantly over the past decade.

“We urgently need increased political leadership to end AIDS,” said Gunilla Carlsson, UNAIDS executive director. “This starts with investing adequately and smartly and by looking at what’s making some countries so successful.”

Carlsson said ending AIDS was possible if focus was placed on people, not diseases, road maps were created for the people and locations being left behind, and a human rights-based approach was taken to reach people most affected by HIV.

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igeria Customs Service (NCS), Ap a p a A re a 1 Command, on Wednesday said it arrested a driver of an ambulance belonging to Medbury Medical Services and his escort for smuggling 10 cartons of 225 miligram (mg) of stolen Tramadol out of Apapa Port.

The Medbury ambulance with registration number LND605XW, which original responsibility was to provide emergency medical services in Apapa Port, was intercepted with the contraband drugs worth over N2.8 million, while trying to smuggle the drugs out of the ports in an emergency manner.

The seizure was in line with the Federal Government’s ban through the National Agency for Food Drugs Administration and Control (NAFDAC) on the importation of Tramadol in excess of 100mg.

Briefing newsmen in Lagos on Wednesday, Muhammed Abba-Kura, Customs area controller of the command, who paraded the vehicle and the drugs in Apapa Port, said two male suspects named Michael Ajibade, driver of the Medbury ambulance, and Olatunde Emmanuel, escort, were arrested in connection with the illegal deal.

According to Abba-Kura, investigations are ongoing @Businessdayng

to further uncover those behind the deal.

“On the night of Friday, 12 July 2019, at about 2300 hours (11.00pm), my officers on routine surveillance intercepted an ambulance suspected to be leaving the port with offending articles of trade. Upon examination, the ambulance was discovered to be carrying 10 cartons of 225mg Tramadol tablets valued at N2.8 million,” he said.

Abba-Kura disclosed that further investigation revealed that the drugs were stolen from a container waiting for examination in Apapa Port, saying, “About 211 cartons of Tramadol with Duty Paid Value of N59.3 million were missing from the containers, and we are yet to trace them.

“It is regrettable to state that while the Customs is working round-the-clock to free this country of illicit goods, some unpatriotic citizens are not relenting in their desperate urge to sabotage our efforts.”

He warned that anybody found wanting in connection with the deal would be charged to court of competent jurisdiction for proper prosecution.

According to a statement released by Medbury, the driver took the ambulance unauthorised and acted alone to perpetuate the crime, saying, “Medbury will never stand for such an act.”

Thursday 18 July 2019

BUSINESS DAY

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Lagos orders unions, traders out of Lagos-Badagry, Oshodi-Abule Egba roads JOSHUA BASSEY

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agos State government has ordered roadside traders, oil barons, transportation unions using roads as garages, and all forms of illegal business operations on medians and entire stretch of Lagos-Badagry Expressway and Oshodi-Abule Egba corridors to vacate or face arrest and prosecution.

The decision to oust the affected persons and businesses from the roads was announced on Wednesday by the inter-ministerial ad-hoc committee set up by the government in the wake of May 30, Executive Order issued

by Governor Babajide SanwoOlu on zero tolerance for traffic and environmental nuisances as well as indiscriminate dumping of refuse across the metropolis of Lagos.

The ad-hoc inter-ministerial committee comprised of ministries of transportation, environment, works and infrastructure, taskforce on miscellaneous offences, Lagos State Parks and Gardens Agency, and Lagos Waste Management Authority.

Taiwo Salaam, permanent secretary in the Ministry of Transportation, who briefed journalists at Alausa, said the vacation became imperative to arrest the increasing disorderliness still being experienced on the Lagos-

Badagry and Oshodi-Abule Egba roads.

“It is disheartening to say that the state of the two roads is that of total lawlessness through the activities of traders who have converted BRT corridors into trading centres; illegal activities of oil barons and gangs, especially at Eric Moore, who are using the corridor as their base; indiscriminate dumping of refuse on the BRT corridors; traffic bottleneck due to activities of some transport unions domiciled on these corridors and total breakdown of the traffic laws of the state,” Salaam said.

According to the permanent secretary, the order would enable the government move in for rehabilitation of the road as well as clear the nuisance and restore sanity.

“The public is hereby intimated of the plans of the Lagos State government to clean up the roads and recover the rights of way. Of equal importance is the environmental regeneration of the entire stretch of the roads which has been taken over by shanties, refuse and vegetal nuisances,” he said.

He noted that the clean up of nuisances on the corridors, which had combined to the make them eyesores with stench constituting serious health threats to the people, was expected to commence next week.

Stakeholders ask FG to review BASA to support domestic airlines in Nigeria Ifeoma Okeke

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takeholders in the aviation sector have again called on the Federal Government to review its bilateral air service agreements (BASAs) it signed with foreign countries to make them reciprocal and support the growth of Nigerian airlines, aviation stakeholders said Wednesday.

They said government must wake up from its slumber and come up with sustainable policy frameworks to grow the aviation sector.

Gabriel Olowo, president of Aviation Roundtable and Safety Initiative, said Nigeria needed a stable legal and regulatory frameworks to grow the industry.

They spoke at the 23rd Annual Conference and Award ceremony organised by the League of Airports and Aviation Correspondents (LAAC) in Lagos, on Wednesday.

The conference chaired

by Muneer Bankole, managing director/CEO of MedView Airline, had as its theme, “Boosting Aviation Investment through Policy.”

Olowo decried the multiple entry points for foreign airlines, adding that it was “disastrous and deliberate annihilation of the domestic market.”

He said a situation where some airlines fly to multiple airports in Nigeria without any Nigerian airline reciprocating was “a negative balance of trade.

“The essence of regulation is not only about safety.

We have failed with economic regulations. This is a major weakness.”

Nick Fadugba, president of African Airlines Association, said a situation where 90 percent of the Nigerian market was controlled by non-Nigerian airline “is damaging to the economy.

“Nigeria needs to urgently review its BASA policy.

An air route is like an oil bloc. You don’t just give it out without something in return.”

He said Nigeria deserves a national carrier with minority government shareholding and it must be done transparently and skilfully with knowledgeable individuals.

Allen Onyema, chairman of Air Peace, said the government has no option but to support the Nigerian airlines to thrive and protect jobs of thousands of Nigerians in their employ.

In attendance were Managing Directors of Federal Airports Authority of Nigeria FAAN (FAAN), Nigerian Airspace Management Agency (NAMA), and Nigerian College of Aviation Technology (NCAT), Rabiu Yadudu, Fola Akinkuotu and Capt. Muhammed Abdulsalam, respectively.

Also in attendance were Allen Onyema, chairman/ CEO of Air Peace, Roland Iyayi, managing director, Top Brass Airline, Afzal Parambil, country manager of Emirates, Firiehiewot Mekonne, Country manager, Ethiopian Airlines, among others. www.businessday.ng

L-R: Francis Nwaochei, chair, special projects committee, Society of Petroleum Engineers (SPE) Nigeria Council/team lead, production support, Chevron Nigeria Limited; Debo Fagbami, chairman, SPE Nigeria Council/chief operating officer, Xenergy Nigeria Limited, and Buche Okereke, publicity secretary, SPE Nigeria Council/planning analyst, Chevron Nigeria Limited, at the press conference on the forth coming 2019 Nigeria Annual International Conference and Exhibition of SPE Nigeria Council in Lagos, yesterday.

Pic by David Apara

500mw Okpai power project suffers setback as deadline shifts to Q3 Olusola Bello

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he hope of Nigeria achieving a significant milestoneinthepower sector this month has been dashed, as the July 2019 deadline for the completion of Okpai power phase 2, whichwouldhaveaddedover500 megawattstothenationalgrid,has been postponed to third quarter (Q3) of this year.

The new project will complement the already 450 megawatts, which has been in existence for over 10 years, thereby bringing the total generating capacity of the plant to 1000megawatts.

Also another major sect back to the power sector is the inability of Nestoil Limited, the company constructing the pipeline, to complete its own side of the OB3 gas pipeline which completion was scheduled for the second quarter of this year also. The completion of the pipeline would have helped tomovegasfromtheeasternNiger

Delta to the west where most of the gas plants suffering from lack ofsufficientgassupplyarelocated.

A number of reasons have been adduced for the shift in the completion deadline for the project. One of them was the February 2019 general election which resulted in the expatriates handling the power project going on prolonged holidays because of the fear of violence usually associated with Nigeria’s elections.

Another reason is what one of the industry operators described as ’partner alignments’ – in this case, the company handling the execution of the project has not been able to move the way it wanted because the Nigerian National Petroleum Corporation (NNPC) which has 60 per cent andOandowith20percentstakes don’t assent to the work programme from Eni, the Italian oil giant that is executing the project on time. This situation is said to have contributed in no small measuretothedelayoftheproject.

The Okpai Phase 2 Project is part of the efforts to ramp up power supply in the country. The project, which is meant to shore up the current power generation by 500 megawatts will result in increase of power generation by between 10 to 12 percent provided the transmission segment is up and running.

The immediate past group managing director of the NNPC, Maikanti Baru, had said the Federal Government’s “OB3” gas pipelines project would be completed in the second quarter of 2019.

The “OB3″ project is expected to boost domestic gas supply and also address, among others, the persistent gas flaring in the country.

The NNPC said Okpai phase 2 project was being fine-tuned to expeditiously bring it on stream, adding that it would increase power generation by 10 to 12 per cent. “That is additional 500MW of power that is coming in, would

ensure the transmission is up and going.

It said the project when completed would impact significantly on economic activities of the country.

“Oncepowerisavailable,there will be a lot of improvement in the standard of living of Nigerians.”

Lorenzo Fiorillo, vice chairman and managing director of NigeriaAgipOil Company/ANER, said his company had a longstanding partnership with Nigeria and they would want to grow, build and develop new opportunities for the country and support the country on its energy journey.

“We want to try to change and improve the energy mix of the country and the Okpai project is a testament of this commitment of our company,” he said.

The company said the joint venture partners have been working for 15 years to implement the Okpai phase 2 project which is very important to the NNPC/ NAOC JV.

Lifeline for Enugu communities as Foundation, WaterAid launch N300m water project CHUKA UROKO

For residents in and around Nsukka, Ezeagu, Uzo-Uwani, Isiuzo and Enugu South local government areas (LGAs) in Enugu State, a new lifeline is underway as Coca Cola Foundation (TCCF), through its flagship programme, the Replenish Africa Initiative (RAIN), launches a N300 million water project in partnership with WaterAid for these communities.

Theproject,whichwillprovide access to sustainable clean water, sanitation and hygiene services to over 10,000 residents of these communities, was unveiled at Umuabor and Ugwuaji communities in Nsukka and Enugu South local government areas, respectively.

Expectation is that given the scope of the project, it would provide about 2,250 people per day with access to clean water, refurbish 15 boreholes across

benefitting communities and construct 5 new hand pump operatedboreholes.Anestimated 5,000 households will also receive toilet facilities along with smallscale water service programmes designed to empower women and stimulate grassroots economic empowerment.

The unveiling of the project followed several weeks of strategic planning and collaboration betweentheleadprojectsponsors and other key government agencies and stakeholders such as The Small Town Water Unit, Enugu State Rural Water Supply and Sanitation Agency and the Global HealthAwareandResearchFoundation (GHARF), among others.

ChiChi Aniagolu-Okoye, WaterAid country director, noted in a statement obtained by BusinessDay that “millions of people in Nigeria are still without access to clean water, decent toilets and sanitation, and the adverse con-

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sequences on health and socioeconomic well-being are glaring.”

She assured of their commitment to implement the ‘Sustainable Clean Water and Sanitation in Small Towns and Rural Areas’ project in the five local government areas of Enugu State, adding, “the strategic objective to intervene and provide suitable access to water and sanitation services is crucial to the socioeconomic wellbeing of Enugu State.”

She cited a recent surveys indicating very poor access rates to clean water in South East Nigeria which made it necessary to initiate positive action to prevent further avoidable economic, health and social losses in rural communities.

Clem Ugorji, director, public affairs/communications, West Africa Business Unit of Coca Cola Foundation, also assured of the foundation’s global commitment @Businessdayng

under its RAIN, noting that projectsofthisscalewerenecessaryto catalyse and improve the lifestyle andwellbeingofstrugglingNigerians, especially those in rural areas.

“Our commitment to the SDG goals is both in principle and in practice, and has been so for decades, as we practice what we preach by being careful stewards of such a scarce resource as water.

Our strategy is to look for smarter ways to produce such that our water footprint is significantly reduced,” he said.

Continuing, he said, “we also ensure that our business system leverages on recycling technology to eliminate all forms of water wastage and finally, under our RAIN programmes, we commit to return 100 percent of the water we use in our products back to nature and communities while protecting watersheds and preserving aquifers.”

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Appraising the developments in the nation’s money supply ADEMOLA ASUNLOYE

T

cent to N16.32 trillion at end-April 2019; just as it grew by 2.4 per cent at end-March 2019 and by 3.4 per cent at the end-April 2018.

The development reflected the increase in time and savings deposits of commercial banks. Comparing end-December 2018 to end-March 2019 and end-April 2019, quasi money grew by 3.6 per cent and 6.5 per cent respectively. The increase was attributed to the rise in time and savings deposits of banks.

The trend shows the monthly growth rate of narrow money and its cumulative growth rate for end-April 2018 year-to-date (YTD).

From end-February 2019, aggregate credit to the domestic economy (net) grew by 4.0 per cent to N31.70 trillion at end-March 2018; it further grew by 3.7 per cent MoM to N32.90 trillion at end-April 2019. The domestic credit, however, contrasted with 0.1 per cent decline at the end of the corresponding period of 2018. The growth showed an increase of 3.4 per cent and 3.8 per cent in net claims on the federal Government and claims on the private sector respectively.

Comparing end-December 2018 to endMarch 2019 and end-April 2019, aggregate credit to the domestic economy (net) rose by 15.0 per cent and 19.3 per cent respectively.

The increase in aggregate credit to the domestic economy (net) was as a result of 64.4 per cent and 9.6 per cent rise in net claims on the federal government and claims on the private sector respectively.

Similarly, net claims on the federal government grew by 3.4 per cent and 1.1 per cent to N8 trillion at end-April 2019 MoM and YoY respectively, compared with the 21.8 per cent

MoM growth at end-March 2019. The growth in net claims on the federal government reflected increase in banking system holdings of government securities. In comparison to end-December 2018, net claims on the federal government rose by 59.1 per cent and 64.4 per cent at end-March 2019 and end-April 2019 respectively.

Banking system credit to the private sector grew by 3.93 per cent to N24.90 trillion at endApril 2019 in contrast to 0.87 per cent decline at the end of March 2019. The development was attributed, wholly to the 4.0 per cent increase in claims on other private sector.

Comparing end-April 2019 to the year end of 2018, banking system credit to the private sector grew by 9.64 per cent, compared with the growth of 5.49 per cent at end-March 2019.

It, however, contrasted with the decline of 0.1 per cent at the end of the corresponding period in 2018.

The chart sourced from CBN shows a 13-month trend on aggregate domestic credit to the economy, where MCP, MCG and MAC represent month-on-month changes in credit to private sector, credit to government (net) and aggregate credit (net) to the domestic economy, respectively, while CCP, CCG and CAC, represent the cumulative changes (yearto-date).

The net foreign assets (NFA) of the banking system, on month-on-month basis, declined from end-February by 1.2 per cent to N16.82 trillion in end-March 2019 but were up by 3.0 per cent to N17.32 trillion at end-April 2019.

However, NFA declined by 2.8 per cent YoY at end-April 2019.

12734BDN

he entire stock of currency and other liquid instruments which include cash, coins, and balances held in checking and savings accounts, and other near-money substitutes circulating in the Nigerian economy as of the latest data at end-May 2019 was N34.90 trillion, data from the Monthly Economic Report May 2019 shows.

The analysis of the CBN latest monthly economic report showed that broad money supply (M3)— on month-on-month (MoM) basis rose by 4.0 per cent to N35.17 trillion at the end of April 2019; a 1-percentage point higher than the growth rate of 3.0 per cent at the end of the preceding month.

This is largely attributed to the stance of the monetary policy in the review period which remained accommodative following which the Monetary Policy Rate (MPR) was maintained at 13.50 per cent.

The development in the sector reflected the growth of 3.7 per cent and 3.0 per cent in domestic credit (net) and foreign assets (net) respectively, which more than offset the 2.3 per cent decline in other assets (net) of the banking system.

In comparison to December end 2018, broad money supply (M3) grew by 5.4 per cent at end-April 2018, compared with the growth of 1.4 per cent apiece at the end of the preceding month and the corresponding period of 2018. The growth in broad money supply (M3), relative to the level at the end of

December 2018, reflected an increase of 19.3 per cent in domestic credit (net), which more than offset the decline of 5.8 per cent and 19.4 per cent in net foreign assets and other assets (net) of the banking system respectively.

Similarly, narrow money supply (M1), on month-on-month (MoM) basis, grew by 2.8 per cent to N11.25 trillion at end-April 2019.

However, itwas down by 3.7 per centYearon-Year (YoY) and 0.8 per cent at the end of the preceding month. The growth in narrow money supply reflected the 4.1 per cent increase in demand deposits, which more than offset the 3.5 per cent decline in currency outside banks. Over the level at end-December 2018, M1 fell by 4.3 per cent, compared with the decline of 6.9 per cent and 4.9 per cent at the end of the preceding month and the corresponding period of 2018, respectively. The fall in M1 showed a 3.1 per cent and 10.2 per cent decline in demand deposits and currency outside banks, respectively.

“Broad money supply (M3) grew, while narrow money supply (M1) fell in April 2019. Developments in banks’ deposit rates were mixed, while lending rates trended downwards in the review month. The value of money market assets outstanding rose, owing, largely, to the increase in Bankers Acceptances, commercial paper and FGN Bonds outstanding. Activities on the Nigerian Stock Market were bullish in the review month”, the CBN stated in the report.

There have been three consecutive MoM positive growths in quasi-money since end– February 2019 to end-April 2019. On a Monthon-Month basis, quasi-money grew by 2.7 per

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news SPAR rewards ‘best child actor’ at RealTime film festival SEGUN ADAMS

I

n continuation of its drive to encourage youngsters in the creative industry, SPAR Nigeria has rewarded Mariam Kayode for her role as the ’Best Child Actor’ in the movie “The Coffin Salesman ”directed by Imoh Umoren at the third edition of the RealTime Film Festival.

The festival, which took place at multiple locations across Lagos, feature about 178 short movies of various genres from 156 countries that was screened alongside four feature films.

John Goldsmith, the group head of marketing for SPAR Nigeria, says Nigerian children need to be aided to achieve their aims in life. According to Goldsmith, many children who are interested in film productions and performing arts have not had a leeway into the movie industry.

“Creative expressions cannot be separated from the realities of this age. Nigerians are doing great exploits globally and we need to nurture the upcoming talents, which will in turn enhance the creative industry in the country in general. Our brand will continue to support the development of the Nigerian child through various initiatives,” Goldsmith states.

Stanlee Ohikhuare, the artistic director, RealTime Film Festival, says the sponsorship by SPAR has helped in extending the frontiers of the festival, stating that the emergence of talented children can be encouraged with incentives that will contribute to their overall success in the industry.

“The creative industry in the country will blossom the more if brands like SPAR and others support the ingenuity of everyone with the film making sector. We look forward to rewarding more upcoming talents and we will equally celebrate their creativity till they come into maturity in the industry,” Ohikhuare says.

In her response to the award, Mariam says, “I am excited to be a recipient of the award this year, SPAR has rewarded me for being a part of the movie industry and I will give my best to acting till the brand becomes so proud of me. This year’s award will spur me more into action. Every company that encourages children like SPAR is developing the future of Nigeria.”

The festival boast it’s self as the only festival with competitive category for films made by kids. The organisers of the festival equally put together a workshop where children were taught the rudiments of filmmaking and their productions are shown at the annual festival.

Anaocha/Dunukofia/Njikoka: Ayika defends case against Nwankwo Emmanuel Ndukuba, Awka

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alentine Ayika, member representing Anaocha/ Dunukofia/Njikoka Federal Constituency in Anambra State, has told the Election Petitions Tribunal sitting in Awka that there was no ambiguity over his being candidate of the People’s Democratic Party (PDP) in the Februay 23 elections.

Ayika made the submission in his defence at the closing of the petition against him in Awka.

Dozie Nwankwo, candidate

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of the All Progressives Grand Alliance (APGA), is challenging the victory of Ayika on the grounds that PDP did not sponsor him and that INEC did not publish his name as PDP candidate.

Nwankwo in petition marked EPT/AN/HR/07/2019 with Independent National Electoral Commission (INEC) and PDP as co-defendants said INEC declared PDP winner and not the candidate.

Ayika, who was led in evidence by his counsel, Ikechukwu Ezechukwu, said he bought expression of interest

form, nomination form, contested the PDP primary election and scored 252 votes to emerge flag bearer.

He said his party submitted his name alongside all other candidates who won primary election Anambra on October 18 and started his campaigns when INEC lifted ban in it sometime in November 2018.

Ayika tendered documents including PDP membership card, result of PDP primary election, letter of PDP instructing INEC to recognise him as its candidate, report of PDP

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primary election panel among others.

The Rep member told the tribunal that though there was petition against his nomination by Richard Egenti, a PDP aspirant but that Supreme Court had ruled on February 11 that the petitioner was not the candidate PDP. It would be recalled Egenti had sued PDP and INEC claiming that he won the primary.

Ayika tendered a letter from the national headquarters of PDP urging INEC to continue to recognise him as its candidate for Anaocha/Dunukofia/

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Njikoka Federal Constituency as earlier submitted to the commission in the election in question.

Ayika said upon noticing that his name was not included in the list of candidates, he went to INEC head of Legal Department who told him that he should sort out issue with his party.

He further said he met the PDP National Organising Secretary who said directed that a letter should be written to INEC asking the commission to continue recognise him as the candidate.

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Nigeria’s AFCON outing as a microcosm of our fallen expectations

David Hundeyin

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eep politics out of football” is a phrase uttered more in hope than expectation, because few activities – sporting or otherwise – on earth are as political as football. Apart from the fact that football clubs are often directly organised along political lines and formations, it is the only sport that has a quadrennial global competition alongside continental competitions pitting every country that is interested in a battle against each other.

Football is such a potent political tool that everyone from rich businessmen to elected governments to brutal autocrats have been known to use to it to manipulate public opinion in line with their goals. In Europe, city councils and local governments have been known to spend several hundreds of millions of dollars effectively subsidising wealthy football clubs because the clubs are able to wield that much heft. In Nigeria, football was recognised as having so much political potency that former military dictator Sani Abacha effectively erased the distinction between football federation and government, allowing him use the Super Eagles as an image laundering project.

Despite all that was objectively wrong with Nigeria, one thing that nobody could take from the long suffering citizens of this country was the fact that their 11 designated representatives on the pitch wearing the famous green strip were amazing at football. Whenever the Super Eagles played in the 1990s and early noughties when I was grow-

ing up, it was a serious event going on, commanding everybody’s attention and commitment. For that brief hour and a half, there was national unity, purpose, pride and very often, joy.

Like Nigeria as a Whole, Nigerian Football Woes are Systemic, Not Incidental Despite a series of false dawns over the past decade and a half, Nigeria has by and large failed to make it anywhere near the heights of the 1992 – 2002 period in footballing terms. One by one, the members of the so-called Golden Generation who famously won Africa’s first ever Olympic football Gold medal at the 1996 Atlanta Olympics retired from the game. In their place came a new generation of players who were expected to carry on the baton.

Instead, it has become increasingly apparent since around 2010 that the good times are well and truly over. There might be the occasional blip of unsustained success, such as the 2013 AFCON triumph in South Africa, but from a wide perspective, it is obvious that the new breed of Super Eagles footballers are just not as good as their predecessors.

Arguably, this is partially their fault, but more importantly, it is a direct commentary on the deterioration of Nigeria that Africa’s largest population can no longer find a team of 11 footballers who can play a cohesive, visually appealing and broadly successful type of football.

The Golden Generation to a man, all ended up at Europe’s elite football clubs after building their craft and reputation here in the Nigerian league. The Amuneke’s, Okocha’s, Kanu’s, Yekini’s and Finidi’s were all steeped in a local footballing tradition that can be traced all the way back to Brazilian coach Otto Gloria who introduced what later became Nigeria’s trademark possessionbased football style. From the local league, they went straight into Europe’s big leagues like the Netherlands, Germany, England, Spain and Portugal.

There was no talk of Qatar or China or Belgian second division footballer get-

ting a call-up to the Super Eagles – it was an elite-only affair.

These days, following the implosion of the Nigerian football league system, a Nigerian professional footballer has no defined career path from here to the zenith of the game, and so he must be satisfied with the first offer from Estonia or the Czech Republic where at least he will not be owed his salary and he has the hope of maybe playing well enough to attract he attention of a club from a better league. The pathway from Nigeria to European football no longer reads like “Sharks to Ajax Amsterdam,” but now reads like “Enugu Rangers to Ostersund of Sweden.”

When a team made up of such journeymen puts on the green Super Eagles shirt – fashionable as it might be – Nigerians have learned to either not watch them if they cannot stand disappointment, or to expect very little and praise their effort when they inevitably fall short of achieving anything. Within 20 years, Nigeria’s footballing expectations have plummeted from being global contenders to a shrug and a resigned “at least they tried” – something that is still a new experience for many of us who grew up in the glory days.

Fallen Standards and Expectations Mirror a Nation With An Identity Crisis The footballing situation is analogous to how Nigeria’s self-expectations have fallen drastically over the same period. In economic terms, Nigeria no longer expects itself to play in the same league with countries of similar demographic size and potential like Brazil, Indonesia, Mexico, Bangladesh or Pakistan. While these countries explore nuclear technology and become increasingly important global economic centres, Nigeria only manages to be home to the world’s largest population of extremely poor people because well, where else should we be?

There is also no discernible plan to deal with the country’s slide and return it to the path of international relevance because with the exception of a shrink-

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The Golden Generation to a man, all ended up at Europe’s elite football clubs after building their craft and reputation here in the Nigerian league

ing minority, Nigerians no longer expect the country to achieve anything. Previously, Nigerians used to visibly bristle at the mention of the term “Golden Bronze,” because the perception was that Nigeria should always compete in the final, rather than the “losers final.”

These days, a journeyman team led by a journeyman coach face neither praise nor condemnation – just resigned apathy and a lukewarm “at least they tried.”

At the same time, Nigeria still has the false self-image of a vastly important but sleeping giant, which creates an interesting cognitive dissonance. As with football, on the one hand, we are manifestly mediocre bordering on awful and we know it, but on the other hand we still expect some sort of miracle to help us to success even though we know we do not currently deserve it. The miracle of course, never comes, and we end up making do with what we have now, which is nothing at all.

We have extremely poor quality leadership from president down to local councilor, aged and inadequate public infrastructure, no budget to address our education and health investment deficit, an economy that only makes headlines for creating world-leading poverty levels; and now we also have a football system that will see a nation of almost 200 million people compete at the same level with the likes of Madagascar and Curacao. We are mediocre, bordering on awful in every way, but just not enough to motivate us to actually do anything about it.

Once upon a time, the Super Eagles had the most attractive brand of football in the world, rolling over everything in their path with panache and joy. Now they are a team that defends turgidly for 90 minutes, and then loses anyway.

Who are they?

Who are we?

David Hundeyin is a writer, travel addict and journalist majoring in politics, tech and finance.

He tweets @DavidHundeyin.

Harnessing spirituality as capital for Nigeria’s redemption (Being excerpt from 12th Splash FM and 80th Birthday Anniversary Public Lecture of Chief Murtala Adebayo Akande, the Maye Olubadan, delivered

by Prof. Tunji Olaopa, Executive Vice-Chairman, Ibadan School of Government and Public Policy (ISGPP), at the University of Ibadan on Monday, 8th of July, 2019) eading this title alone gives you some specific religious imagery. The ideas of spirituality and redemption are two key issues that are fundamental to, especially, the Islamic and Christian religions in Nigeria.

Both religions believe firmly in the cultivation of spiritual virtues that have the capacity to enhance a person’s chances of gaining heaven. While Islam holds firmly to the redemptive possibility inherent in adhering to deeply spiritual practices, like fasting during the Ramadan month, Christianity believes in the redemptive power in the death and resurrection of Jesus Christ. Both religions also hold firmly to the capacity that a redeemed person has to become a good citizen of any state. However, and contrary to the promises that these two religions hold for understanding an individual’s capacity to be a good person, Christianity and Islam have both contributed to Nigeria postcolonial predicament. One of the factors making it impossible for Nigeria to achieve national integration, since it gained independence in 1960, is religion and religious fundamentalism.

One can say categorically that the Nigerian state is inscribed within a religious imagination which stands contrary to the religious crisis it is going through. Religious symbolisms are scattered in Nigeria’s national imagination. Even though the

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constitution states that there shall not be any state religion, the national anthem and the national pledge invoke the name of God, consecutive Nigerian leaders, from the presidency to the state level, are usually found in league with religious leaders and in religious places of worship; and prayers are often said at national functions. Yet, and since its emergence from colonial calculation, Nigeria has had to keep contending with the virulence of religious crisis. This began from the amalgamation of the Northern and Southern protectorates of Nigeria in 1914 which laid the foundation of a serious ethno-religious postcolonial crisis whose enormity we are just experiencing at the moment, especially with the Maitasine crisis of the early 1980s, the Boko Haram insurgency, and most significantly with the interpretation of electoral possibilities and administrative efficiency in ethno-religious terms.

At a much more fundamental level, fundamental, that is, to the efficient running of the Nigerian state as administrative machinery for transforming the lives of Nigerians, religious crisis translates fundamentally into a framework of inefficiency and stagnation. This is because religious practices creep into the workplaces in very insidious ways that mark the beginning of administrative and institutional dysfunctions.

In other words, religious fundamentalism also becomes a part of the factor that has contributed to the inefficiency of the public service in Nigeria.

Since the citizens have perceived the government as being absent in their lives, and hence they have no investment in its activities, it becomes possible and even meaningful for them to translate govern-

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ment time into religious time. Thus, a worker in a government agency does not find it illogical to come late to the office because he or she had to attend a morning prayer meeting. An entire sector of an MDA could be involved in series of prayer meetings to facilitate the payment of arrears by the government. A cashier in an office in the pay office could keep customers waiting because he or she had to read the Bible or go to the mosque to pray.

A director can equally refuse to see important visitors or attend meetings because of some religious functions. Thus, with the ascendancy of religiosity, efficiency in the public service had witness some dimension of decline. Religion further enhance the perception of government work as a sinecure, a place where one goes to just sign the register and then leave immediately to pursue some other productive responsibilities like evangelization!

The task of rethinking the institutional framework and dynamics of the public service, as the most efficient machinery for getting the Nigerian state to perform effectively, has been my forte for many years. and it has become increasingly clear to me for a long time that the public service suffers from a religious malaise that further complicates its optimal functionality in achieving an efficient service delivery that smoothly backstops Nigeria’s democratic governance experiment. In confronting this issue, one need engage necessarily with the attempt, in the literature, to separate religiosity from spirituality. In this regard, religiosity is blamed for all the negative sides of religious manifestations like terrorism, bad work ethic, religious rivalries and stereotyping, and so on. On the other hand, spirituality is taken to consist of the type

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Tunji Olaopa of openness that sees all humans as one under God. Spirituality, that is, contrasts to the kind of absolute certainty which the Abrahamic religions holds that they are the sole custodian of the nature of God, and everyone else is an infidel. It is this type of fundamentalist dogmatism that gets others killed in the name of religion! Thus, the big vision of spirituality breaks down religious walls.

However, while we can concede that spirituality holds the ace in enabling us to achieve spiritual capital, we must be careful in throwing away religiosity. This is because being religious possesses a lot of substantive meaning for people, and especially Nigerians who are toiling under the burden of underdevelopment and suffering.

Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng Prof. Tunji Olaopa, retired Federal Permanent Secretary & Professor of Public Administration. tolaopa2003@gmail.com, tolaopa@isgpp.com.ng

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Nigeria & AfCFTA: Rhetoric & reality Franklin Ngwu

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ith the delay and eventual signing of AfCFTA

by President Buhari, it now seems that Africa is on the road to El Dorado with big brother Nigeria on the cruise. After drafting the agreement in March 2018, Nigeria delayed signing for over a year to ensure we get it right through proper and wide consultation.

As commendable as the delay was and as beneficial as the agreement can be to Nigeria, the key question is if we are ready as a country to lead and benefit from AfCFTA. While the execution will start in 2020, there are no convincing signs internally and externally that we are willing and ready to lead or even benefit from the agreement. As the biggest trading bloc in the world with over 54 countries on board, there are certain strategic moves that are required to show seriousness and commitment to lead and benefit.

On the external front, two recent developments stand out. With the signing of the agreement by 54 African countries (remaining only Eriteria), African leaders voted to have Ghana as the headquarters of the forthcoming Africa free Trade Zone. Interestingly, with the free trade zone headquarters comes the African

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aviation hub to be built in Ghana also in addition to further developments of the sea ports. Even without much details, the immense benefits of Ghana’s strategic move and positioning can only be imagined. Think of the job creation, inflows of both foreign direct/portfolio investments, access to international finance and capital market development, manufacturing hubs and spill over products and services that will follow.

As Nigeria fully and significantly participated in all discussions leading to the drafting, signing and expected execution of the AfCFTA, the question is whether we forgot or are ignorant of the benefits of having the headquarters of the free trade zone and the Africa aviation hub in Nigeria. We are talking of the biggest economy and most populous nation in Africa with the best air navigation location abdicating very low hanging benefits to Ghana, a country of about 30 million people. Will United States of America, Germany, United Kingdom, India, China, Brazil behave like Nigeria given the same situation? To rub salt to injury, a Ghanaian friend called me last week to enquire if I was following AfCFTA developments to which I answered in affirmative. He then said that he just wanted to briefly greet his good friend from ‘Giant of Africa’.

As we have lost to Ghana on the above very important aspects of the trade deal and as execution will start in 2020 according to AfCFTA timetable, a further question is how internally prepared we are as a country to really benefit from the implementation. With Intra-African trade still significantly low at about 15% and our 200 million people population a significant target to both manufacturing and service firms, how can we ensure that other areas requiring further negotiations such as the rules of origin and non-tariff

barriers are negotiated in our favor to ensure that we take our preeminence position in the deal? Achieving the above goes beyond talk and documentation.

It will require deliberate, genuine and committed industrialization approach with a nationalistic and patriotic disposition. We to have ask serious and sincere questions on what happened to firms like Peugeot Assembly Plant and Defence Industries Corporation and other important industries in Kaduna and Kano, Michelin, Beta Glass and others in Trans Amadi, Rivers state. Even with Lagos as the commercial capital of Nigeria, what happened to Dunlop, AG Leventis and many others that have closed down? It is the same story in Enugu, Aba, Ibadan, Ilorin, Jos and across Nigeria. As at 1979 we had over 40 firms owned or partially owned by either federal or state governments that are moribund or non-existent as at today. They include Anambra Motor Manufacturing Company (ANAMCO) and Nkalagu Cement Company, Steyr Nigeria Ltd, New Nigeria Salt Company, Delta Steel, Nigerian National Shrimp Co, Serwood Industries and Opobo Boat Yards. Others include Savana Sugar, Aba Textile mills, Electricity Meters Company, Super-Phosphate Fertilizer co., National Truces Manufacturing co., Ajaokuta Steel co. ltd, Nigeria Sugar Company, Lafiagi Sugar company, Nigeria Yeast and Alchohol Manufacturing Ltd, West African Distillers, Nigeria-Romania Wood Industries, Leyland Nigeria ltd and Volkswagen of Nigeria ltd.

If all these and many more companies have failed without AfCFTA, what will happen to the other few remaining companies with implementation of AfCFTA. As it primarily implies free movement of goods, services and people within the common trade area (Af-

‘

We are talking of the biggest economy and most populous nation in Africa with the best air navigation location abdicating very low hanging benefits to Ghana, a country of about 30 million people

rica), how will the few remaining companies in Nigeria survive and compete when we do not seem to have properly learnt or done anything significantly different from the situation and conditions that contributed to the failures of many companies in Nigeria. In infrastructure, monetary, fiscal and supply-side policies, nothing has significantly changed.

In some cases, it is even worse with the terrible state of electricity provision and sea port services clear examples.

How will Nigeria firms compete when it is cheaper to import a container from China to Lagos than to move the container from Apapa to Agbara all in Lagos.

It will be interesting to see how we will benefit from AfCFTA when policies are formulated and executed from political, tribal and ethnic sentiments rather than from a nationalistic and patriotic disposition. Unless a miracle happens, it will be almost impossible to benefit from the agreement with only two main functional sea ports and about three or four international airports. How can we produce when electricity production is still below 5, 000 MW for about 200 million people. While it is good to sign AfCFTA, we must appreciate that to effectively participate, lead and benefit from it requires more than talks and documentation. It starts with a determined and patriotic formulation and execution of a detailed and well integrated economic development plan through which we can appropriately participate, lead and benefit. Unfortunately, we don’t have such long awaited plan!

Dr. Ngwu is a Senior Lecturer in Strategy, Finance and Risk Management, Lagos Business School and a Member, Expert Network, World Economic Forum. E-mail- fngwu@lbs. edu.ng,

On Sanwoolu’s right moves in the right direction

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s the saying goes, ‘the morning shows the direction of the day’, Governor Sanwo-Olu’s initial steps through the executive order he issued in the first week of his administration can be regarded as a right move in the right direction. This is based on glaring challenges in the state in terms of traffic management, road rehabilitation and the environment vis-à-vis refuse/waste management and drainage clearance and maintenance.

It will be recalled that the Sanwo-Olu’s administration agenda is hinged on six Pillars of Development namely: Traffic Management and Transportation, Health and Environment, Education and Technology, Making Lagos a 21st Century Economy, Entertainment and Tourism as well as Security and Governance.

The first executive order is to address the issue of traffic control and management, fixing of potholes on the roads, sanitation as well as cleaning of drainages in the state.

The order is to also ensure the attainment of zero tolerance for environmental abuse including illegal and indiscriminate dumping of refuse and removal of structures on drainage pouted and setbacks. While signing the order, the Governor declared: “I think we have to make some points about issues that happen around the transportation, potholes on our roads, blockages and rest of it, I think it is something we need to tackle immediately”.

As a follow to this, the governor hit the ground running by extending working hours of LASTMA officials till 11.00pm to ensure effective traffic control. In order to motivate LASTMA officially to perform optimally and take up new challenges, Sanwo-Olu also increased their allowances by 100%. With these initial moves in restoring sanity and orderlines on our roads,

Lagosians will soon begin to witness improvement in the area of traffic management in the state.

Generally, two factors majorly contribute to heavy traffic on our roads namely state of the road and general indiscipline of motorists and other road users. In curtailing the excesses of commercial bus operators and the emergent Kabu-kabu (private cabs) operators, the use of the service lanes and bus lays should be strictly enforced.

It is equally essential that LASTMA troopers regularly patrol major highways and roads to give situation reports to the command center and swiftly make necessary moves whenever there are critical issues on the road. It will also not be out of place to bring back the Special Traffic Mayors (STM), similar to the FRSC Special Marshalls made up of eminent personalities and committed individuals, to support and complement efforts of regular LASTMA officials in order to effectively cope with traffic challenges along the expansive length and breathe of Lagos metropolis.

With the return of a versatile, committed, energetic and focused environmentalist LAWMA, there is no doubt that refuse collection and waste management will be getting better.

Presently, refuse heaps along major roads and highways are fast disappearing.

The Private sector Participation, PSP, model which is now fully back in operation should be made to focus more on noticeable black spots and ensure regular collection of waste from homes and other refuse generating points. If this becomes efficient and effective, no sane person will have reasons to dump refuse on the highway indiscriminately.

In terms of road maintenance, sometimes

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people wonder why potholes and sometimes craters are visible on our roads, in-spite of the huge resources usually committed to roads maintenance and rehabilitation in Lagos state.

The truth is that Lagos geographical terrain, which is below sea level, makes constant maintenance and rehabilitation of road network a rather challenging and complex exercise.

As earlier stated, Lagos peculiar terrain obviously makes flash flooding inevitable anytime it rains heavily, but the worrying practice of some residents in indiscriminately dumping of refuse along drainage channels evidently compound the situation.

With the recent appointment of a new General Manager for the Public Works Corporation, Engr. Daramola Olufemi Olubunmi, who is veteran in the sector, expectations are high that he will revisit the old strategies previously deployed by the agency which gave a lot of mileage in terms of improved road network.

With the recent return of Drainage Services to Ministry of the Environment and the expected synergy, deployment of experienced hands and workable strategies like the Drain Ducks and Emergency Flood Abetement Gang (EFAG) across the nooks and crannies of the state, definitely Lagosians will start seeing real improvement in the area of environmental regeneration.

What Governor Sanwoolu has succeeded in doing is what is referred to in Yoruba as eating the beancake from the tender parts (A ti ibi pelebe mu oole je).

The governor started well by paying visit to the Secretariat, Alausa, Ikeja where he interacted with the workforce of the best, most vibrant and highly productive Public Service in the federation. This is quite instructive since it

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Shina Thorpe is the Public Service that will help his administration executes his agenda for a greater Lagos.

The governor is, of course, fortunate, to have a Public Service reputed for thinking in the box, outside the box and even without the box. And his very first action of changing the fleet of old and rickety staff buses with 35 brand new ones demonstrate his resolve to create a conducive atmosphere for Public Servants to discharge their duties.

There is an old saying that there is only one step to greatness: The first step. It does not literally mean that for anyone to succeed only one step is needed. Rather, the implication is that by starting with a good step in the right direction, a fundamental progress has been made. This is because the first step in any human endeavour is quite essential. It is like the foundation of a house; once it is solid all other things will naturally fall in place.

However, it is crucial to conclude by stating that there is a huge difference between listening and hearing. It is hoped that Governor Sanwo-Olu and his able and dependable Deputy, Dr. Obafemi Hamzat, having started well will go beyond mere listening to Lagosians to the more productive stage of hearing well what the people are saying. Legendary playwright, Ola Rotimi’s amply illustrates the distinction between hearing and listening well in the drama, Kurunmi. It is worth reading!

Thorpe is of the Lagos State Ministry of Information & Strategy, Alausa, Ikeja.

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12

Thursday 18 July 2019

BUSINESS DAY

Editorial Publisher/CEO

Frank Aigbogun editor Patrick Atuanya DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Chuks Oluigbo EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, STRATEGY, INNOVATION & PARTNERSHIPS Oghenevwoke Ighure GENERAL MANAGER, ADVERT Adeola Ajewole ADVERT MANAGER Ijeoma Ude FINANCE MANAGER Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso BUSINESS DEVELOPMENT MANAGER (South East, South South) Patrick Ijegbai CIRCULATION MANAGER John Okpaire DIGITAL SALES MANAGER Linda Ochugbua ASSIST. SUBSCRIPTIONS MANAGER Florence Kadiri GM, BUSINESS DEVELOPMENT (North)

Mr President, select ministers on competence, not nepotism Continued from front page

sentativeness.

No, Mr President. The persons you know will not suffice for the executive offices of the Federal Republic of Nigeria. It is the Federal Executive Council.

Ministers ordinarily serve at the discretion of the President. However, they are not members of his kitchen cabinet. In the best traditions, they represent specific interests of the federating units; in this case, the 36 states and the FCT. Some administrations have extended this to include a representative each of the six geopolitical zones.

Much more than representation matters in ministerial appointments, however. Competence is the primary basis everywhere. It has always been and will always be the basis for such engagements.

Our Constitution stipulates in Chapter 6, Part 1, Section 147 and 148 the appointment of ministers from every state of the federation. The constitution recognises that ministers

are critical components of the government. The Federal Executive Council is therefore not a club of friends of the holder of the highest office of the land but a diverse gropu pf capable women and men who assist him in serving the country.

The president does not need to know those who serve with him in the cabinet personally. He should know his domestic staff or kitchen cabinet, but ministers are not personal staff in the strict sense. It is not a requirement for ministerial appointment.

Ministers bring competence, experience, exposure and representation of the disparate interests of the people of the country.

They should be persons of utmost integrity and honesty, be committed to the best interest of Nigeria, have the passion and care for Nigeria and be loyal to the country and the president who appoints them. Additionally, ministers should have broad general knowledge and expertise in given areas, be good managers and be creative and innovative.

These are the attributes that would enable them

to meet the constitutional charge on them in Section 148 (2) to hold regular meetings with the president and the Vice President and work in: a) determining the general direction of domestic and foreign policies of the Government of the Federation; (b) co-ordinating the activities of the President, the Vice-President and the Ministers of the Government of the Federation in the discharge of their executive responsibilities; and (c) advising the President generally in the discharge of his executive functions other than those functions concerning which he is required by this Constitution to seek the advice or act on the recommendation of any other person or body.

The Federal Executive Council is the first team of the president. It should consist of our first eleven, in football lingo. It should have the best players for each position working under the supervision of and in close collaboration with Mr President.

Many matters require tackling in Nigeria. Mr Pres-

ident should take the lead as he is the one who knows the way, defines new directions and should show his team the way. It is time to unveil and implement the promised Next Level in the conception and implementation of programmes that would solve the challenges of Nigeria.

Membership of the Federal Executive Council is of such overarching importance that Mr President may consider engaging the services of our world-class human resource consulting firms. They would deliver to him a broad canvass from which to choose.

Mr President should search far and wide across Nigeria for our most competent people to serve as ministers. Nigeria, under President Buhari, deserves a stellar cabinet of our best from all over the country.

Friends and persons known to him alone would not suffice nor be adequate for the task.

Please get on with the task of naming suitable hands for ministerial portfolios. We are losing s o much time. Go for the best, Mr President.

Bashir Ibrahim Hassan

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

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Thursday 18 July 2019

BUSINESS DAY

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Flashback 2003; NEPA: Liberating the hostages!

ik MUO

I

started this ministry of writing and minding other peoples’ business in 1978,(21 years ago) as a Year 2 student at UI. Since then, I have recorded history on the go, critiqued public programmes and policies, drawing attention to the follies, foibles and lies of public officials and at times, throwing darts here and there. In all these, I have tried to remove seriousness from these obviously serious issues, making readers relaxed as they read through very painful and calamitous events and issues. One of my greatest frustrations in the past 21 years is that anytime I compared the ‘was’ with the ‘is’, the was had always been better than the is, or at was, they are the same. this shows, quite unfortunately, that we are moving forward backwardly!

Just read an article I wrote about NEPA on . 5/2/03,( 16 years ago!) in which I had pleaded with NEPA to liberate the hostages.

Now read on In a classical article written in 1995 (Why Satisfied Customers Defect, Harvard Business Review November-December) Jone and Saser analyzed customer satisfaction and loyalty and categorized customers into six. Three of these categories are of the greatest interest to me. These are Apostles (customers who are so satisfied that they broadcast the good news everywhere), Terrorists (customers who have had bad experiences and they also broadcast it with reckless abandon) and the Hostages (Customers who patronize an organization because they have no choice or the choice is neither feasible nor viable thereby making it a no choice). As things stand now, we are all HOSTAGES to NEPA, we are their customers because we have no choice.

In my last treatise on NEPA (NEPA,

13

Beyond The MEGAWATTS, BUSINESS DAY, 14/1/02) I had argued that whereas it was important to increase the generating capacity of NEPA, it was even more important to give NEPA, a HUMAN FACE, for the organization to adopt customer friendly policies and practices if it would continue to exist and grow. Unfortunately, it appears we are losing on both fronts. Recent reports indicate that the “Megawatts” have gone dangerously so low as to threaten national survival and not much has improved on the customer services front gong by the new year treat I received from NEPA. Late last year I received a NEPA bill and promptly settled it despite some misgiving about it’s magnitude. To make things easy for the almighty NEPA staff who are too big to move about with their own records, a copy of the bill was pasted at the gate.

That was the most recent bill from NEPA. On 13/1/03, NEPA disconnected my light precisely for that same bill.As usual, they sneaked in when there was nobody in the house. My wife came in before me noticed what had transpired, picked up the original copy of the receipt and went after the NEPA Boys. When efforts to track them down after hours yielded no fruits, she reported to the manager in the office who promised that they would reconnect the light immediately.

That “immediately” happened to be about 3:00 pm the following day and that was after another round of running after NEPA staff and reporting at the office.

And from my precious experience and that of others, there is nothing new about that. NEPA would come when you are not at home, disconnect your light because you are not there to prove that you have paid and when you bring evidence of payment, a ding- dong affair commences before the reconnection. This is so because once they finish “dealing” with an area, they disappear from that axis, knowing that angry customers would surely be out for them. An institution and its people who are supposed to “show the light” thus become agents of darkness. I feel sad about my experience because I have done everything possible to avoid this embarrassment. I pay my bills on receipt and at times I even go to pick the bills from their office. And because you are as guilty as your neighbor who has not paid,

I have had to install a separate line to my meter and I had to indicate “Separate line” on the copies of the bill pasted on the walls always. Yet, anytime NEPA is “on duty” we suffer disconnection expect when an adult is in the house to plead, convince, threaten, prove or cajole and that is very rare because they usually strike at a period when no healthy person would be at home.

Even if one were owning, how can NEPA in this on-line day and age resort to such an uncivilized, crude, gorilla-warfar method of relating with its customers? And they do so with nonchalance, rudeness and lack of human feeling because we are all hostages!

The article referred to earlier advised organizations like NEPA to treat the hostages well so that whenever they are set free they may still willingly patronize them. We are all remember those days when the “30 Million Viewers” had to take whatever NTA had to offer, we remember when people went to the airport with their mats because no one was sure when Nigeria Airways would show up, we remember those days when customers had to keep vigil at NITEL offices so as to be early enough to get the attention of arrogant NITEL staff. All these are now in the past tense.

For NEPA, we shall one day also be saying gone are the days. NEPA is the only organization in the world that suffers from “EXCESS CUSTOMERS SYNDROME”. Their only problem is that there are too many customers to serve and that is what every organization worldwide is praying for. It is obvious that NEPA as it is today does not belong to age.They supply more darkness than light, they cannot manage the numerous customers whom circumstances have created for them and they do not even have time for the customers. They don’t have time to prepare and dispatch bills, they don’t have time to read the meters; they don’t have time to record what you have paid, they don’t have time to even know who has paid. The only thing they have time to do is to march down like a conquering army, disconnecting peoples’ light right, left and centre and enjoying the humiliation and suffering that result therefrom.

We, the hostages have had enough, and all we are saying is please, LIBERATE THE HOSTAGES. NEPA should be privatized and

‘

To make things easy for the almighty NEPA staff who are too big to move about with their own records, a copy of the bill was pasted at the gate

the sector be liberalized so that we should have a choice. The only provision is that it should be done transparently and in the National interest, that is the only way to set the hostages free.

Well, indeed, gone are the days! NEPA has been privatized and has transformed to PHCN to Gencos, Discos, Transcos et al.

You can now compare the situation in 2003 with the situation now and draw your own conclusions. Obviously, we have simply poured old wine in a new wineskin!

Other matters: Cultural Risorgimento or the fear of the gods…

Sometimes ago, the police arrested and detained the Chief Priest of Okhuaihe shrine, Osarodion Usuanlele, the Ohen N’ Ukoni Neyedo, in Benin. This detention desecrated an age-long tradition that the priest should never enter Benin, the abode of the Oba. Three dogs were sacrificed in the neighbourhood of the police HQ before the priest was released. The police authority was also given a list including 14 native cows, tortoise, and other animals for further cleansing of the desecrated land. I cannot confirm whether the police complied but your guess is as good as mine. Just the other day, a strange report emanated from Akwa-Ibom state. Residents now fasten charms and allied fetish items on properties marked for demolition to scare away government officials from demolishing their properties. I don’t know whether this strategy worked or not. Again, the authorities of Olabisi Onabanjo University declared Friday, 5/7/19 a lecture free day because of the agemo festival holding in Ijebuland that day. Females are not authorized to behold the agemo ‘spirit’. My question then is: what is happening? Are we witnessing a cultural Risorgimento? Or are our people having more regard for the gods than government agencies and authorities? Anyway, while pondering over this, I will order some charms from the amadioha priests from the east to fasten on my electricity poles. Lets see the reaction of these disconnectionhappy DisCo staff!

Ik Muo, PhD. Department of Business Administration, OOU, Ago-Iwoye, Ogun State muoigbo@yahoo.com ;muo.ik@ oouagoiwoye.edu.ng ; 08033026625

For a greater Lagos

L

agos, the nation’s ‘Center of Excellence, is unique in many perspectives. It is the most populous State in Nigeria as well as the leading non oil sector contributor to the country’s Gross Domestic product (GDP). It contributes over 30% of the nation’s GDP, consumes more than 60% of its energy, pays 65% of its value Added Tax (VAT), and accounts for 90% of the country’s foreign trade and 70% of all industrial investments.

Aside its massive geographical, economic and commercial potentials, Lagos equally holds sway as a pacesetter in the area of good governance in the country. Presently, in Nigeria, better narratives of how government should function are mostly coming from Lagos State. Virtually all aspects of societal enterprise in Lagos are the products of well articulated and properly researched blueprint through which government handles emerging challenges of the megacity. This has been made possible by visionary leadership the state has been blessed with, especially since 1999.

Confronted with this dire situation and a bourgeoning population, together with additional unfunded burden of being a former federal capital, the enigmatic pathfinder of modern Lagos, Asiwaju Bola Ahmed Tinubu, demonstrated uncommon trait of leaders in Nigeria. Just like President Franklin Delano Roosevelt did in the United States of America in 1932, when the US was then in the throes of a great economic depression, Asiwaju thought out of the box by boldly and publicly committing himself to a goal of a quantum leap (fivefold increase) in monthly Internally Generated

Revenue, IGR, of the state, which then stood at N600 million.

As it is usually said in a Yoruba popular adage, Owo ni keke ihin rere (money is the vehicle for all good things), the financial engineer subsequently initiated far-reaching policies in all sectors of the socio-economic spectrum such as Transportation, Education, Judiciary, Health, Environment, Commerce and Industry (as symbolized by the Lekki Free Zone) and other initiatives.

Asiwaju’s successor, Mr. Babatunde Raji Fashola, SAN, was popularly referred to as “The Best Man for The Job” and he actually proved it. Fashola’s dream of a new Lagos transcended his tenure. His government worked with the Organised Private Sector (OPS) to realise the $1.5 billion Lagos Energy City Project as well as the audacious $3.5 billion Atlantic City project.

The Fashola administration made the State a leading hub in the delivery of embedded power and energy solutions with four completed power plants which made it possible for the State to enjoy over 300 KW of public lighting by street lights. It also improved Agricultural outputs in the area of poultry, vegetable and Agro-processing such as rice and cassava milling. Available records also show that the BRF administration recorded giant strides in its infrastructure agenda and one major project one cannot forget in a hurry is the Lekki-Ikoyi suspended Bridge.

Public health equally received a boost with nine Maternal and Child Care Centres, MCC, numerous Flagship Primary Health Centers (all operating 24 hours full service), Eko Health

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Mission, Eye Care Health System Development Initiative, “Eko Free Malaria Programme, Limb Deformity Corrective Surgery Programme, a well positioned Lagos State University Teaching Hospital, LASUTH, Ikeja and functional General Hospitals among several legacy projects initiated and completed during his eight years tenure in office..

Mr. Babatunde Raji Fashola was succeeded

by Mr. Akinwunmi Ambode, who equally took governance to another height in the State. His administration operated on a policy of ‘inclusiveness’ which was anchored on the principle that no part of the state ‘would be left behind’ or neglected in its developmental agenda. His Economic Transformation blue print creatively leveraged on Arts, Entertainment and Tourism as well as Sports to create a buoyant economy for the State. The administration also paid high premium on public security which it not only funded and supported, but also blazed the trail in community policing through the recently launched Neighborhood Safety Corps.

The administration came up with numerous creative and laudable initiatives such as Lagos State Empowerment Trust Fund, Disability Trust Fund, Bus Reform Initiative, Junctions Improvement Projects, Light up Lagos, massive Infrastructure Renewal Projects, Justice Sector Reforms, Revenue Enhancement Scheme, Satellite Cities Initiative, and several Urban Renewal Programmes.

Without a doubt, Lagos is on the clear path of greatness, with assurances that greater successes lie ahead. But then, has Lagos arrived at her Eldorado? Most certainly not! No polity

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Fola Adeyemi ever does. The truth, however, is that Lagos is a work in progress. Over the last 20 years, Lagos remains the most successful state model of developmental democracy, economic emancipation and social progress in Nigeria.

From all indications, Lagos has a very bright future. With their experience in public service, the duo of Mr. Babajide Sanwo- Olu and Dr. Obafemi Hamzat, will, no doubt, steer the ship of the of the State to higher heights and greatness. It has, no doubt, been a dream start in office for the pair. With the speed of light, Governor Sanwo-Olu and his Deputy, Dr. Kadiri Obafemi Hamzat have hit the ground running at the nation’s ‘Center of Excellence’.

Lagosians are thus poised to witness renewed vibrancy and dynamism in the governance of the state. Certainly, this current government is prepared for the task of governing at the nation’s commercial nerve center.

Therefore, it is a blessed assurance and fait accomplice that with time the 6 Pillars of Development (P.O.D.) Agenda, “THEMES” (acronym for: ‘Traffic Management & Transportation’, ‘Health & Environment’, ‘Education and Technology’, ‘Making Lagos a 21st century Economy, Entertainment and Tourism and Security and Governance) would ultimately translate into a Greater Lagos.

Adeyemi is Permanent Secretary, Lagos State Ministry of Information & Strategy, Alausa, Ikeja

@Businessdayng

14

Thursday 18 July 2019

BUSINESS DAY

COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

Oil & Gas

Total caught between fundamental, market rout as price slump 5-year low DAVID IBIDAPO

S

hares of downstream oil and ga s c o m p a ny , Total Nig e r ia, plunged to a five-year low, Tuesday, as a general market rout weighed on the oil and gas firm.

The stock resumed the trading week on a bearish note after price dipped 7.14 percent to N130 to further worsen its year to date performance to a negative return of 38.1 percent and negative 1 year return of 28.93 percent.

The performance of the company’s stock could be attributed to the negative sentiment inherent on the Nigerian stock exchange (NSE) market which has seen companies stock prices bottom, coupled with challenges faced in the industry.

Total Nigeria’s financial performance could also be attributed as reasons investors are selling off on the company’s stock.

A quick review of company’s financials revealed that in the first quarter of 2019, while revenue rose slightly by about 2 percent

to N77.4 billion, total recorded a loss before tax of N418 million against a profit of N2.6 billion in the corresponding period of 2018.

This further saw Total into a loss after tax of N474 million in Q1 2019 against a profit after tax of N1.6

billion in Q1 2018.

On the back of an increase in interest rate on bank overdraft and loans, Total recorded a spike in its finance cost which rose to N1.7 billion in the period under review from N614 million in 2018.

An industry based analysis of oil and gas companies show that stocks of Total on the NSE stood as the worst performer YTD as investors have lost a whooping N24.7 billion in market value.

The last 10 years have

seen investors in the Nation’s bourse demonstrate low appetite towards shares of companies in the oil and gas downstream sector on the back of a plethora of challenges which have wiped out the margins of the oil market-

ing and trading companies as well as other importers of petroleum products.

According to stakeholders in the industry, these challenges ranges from poor governance and management of refining assets to low operating margins for operators, low return on equity, huge debts/receivables on account of unpaid accumulated subsidy and unpaid interest and foreign exchange differentials on product importation.

Going forward, while analysts have forecasted a bearish market for the rest of the year on the back of sluggish fiscal policies, anticipated earnings season should provide some respite for companys’ stock performance on the back of strong earnings.

“Total stock price could decline further if the company’s financials aren’t good enough in second quarter results,” Paul Uzum a Lagos based stockbroker told BusinessDay. The last five years have returned negatively to investors of any investment horizon as 1 year return stood at -28.93 percent, 2 years (-50%), 3 years (-28.57%), 5 years (-33.50%).

Markets

Global debt expands $2trn in Q1 on easier financial conditions

... EMs debt hit $69.1trn record high ISRAEL ODUBOLA

G

lobal debt grew a hefty $2 trillion in the first three months of 2019 buoyed falling interest rates in the face of easier financial conditions, figures from the Washington-based Institute of International Financial (IIF) show.

Borrowers took on debt in first quarter at the fastest pace in over a year.

At $246 trillion which equates to almost 320 percent of world Gross Domestic Product (GDP), global debt is just $2 trillion away from the all-

time high of $248 trillion reached in the previous corresponding quarter last year. “ It is unsurpr ising that global debt grew on the premise that major central banks are tilting towards more accommodative policy stance” said Ifeanyi Obioha, Associate at Ernest & Young (EY).

“While lower interest rates encourage consumers and businesses to borrow to boost growth, they can also dig an economy into a deeper hole.”

The global finance body maintained that going forward broad-based central bank easing could prompt

more debt build-up across the board, thwarting deleveraging efforts and rekindling concern about long term headwinds to global growth.

Debt owed by emerging markets (EMs), which accounted for 28 percent of global indebtedness and 216 percent of world GDP, grew marginally 15 basis points to a record high of $69.1 trillion in first quarter.

The persistent economy-wide increase in EM borrowing continues to feed into higher contingent liabilities for many sovereigns.

With households and

government debt reaching record high of $12.5 trillion and $15.6 trillion respectively, rise in overall debt to GDP ratio since last year has been most significant in China, South Africa and Brazil.

According to the global finance body, high reliance on short-term debt leaves many emerging markets exposed to sudden shifts in global risk appetite, saying dovish monetary stance of major central banks offers a renewed opportunity for firms to lengthen and repair their balance sheet.

Of the $69.1 trillion owed by emerging econo-

mies, $30.1 trillion was borrowed by non-financial corporates, $12.5 trillion by households, $15.6 trillion by government and $10.9 trillion by financial sector.

Nigeria and Kenya both saw households’ debt to GDP ratio dip to 3.9 percent and 7.5 percent respectively in first quarter, from 4.5 percent and 8.1 percent a year earlier, compared to South Africa, where household debt rose to 34.1 percent, from 33.33 percent.

In A f r i c a, Moz a m bique, Eritrea and Sudan are debt-ridden as their public debt to GDP ratio

is over 100 percent.

Following a massive $3.8 decline in the last three quarters of 2018, total debt in advanced markets grew $1.6 trillion to hit $177 trillion in first quarter.

Most of the first quarter increase was on the back of over $1 trillion in government debt, though other sectors recorded increase in debt levels.

Easing in financial conditions is expected support further buildup, worsening concerns about debt service burdens and sovereign debt sustainability, according to the global finance body.

Editor: LOLADE AKINMURELE (lolade.akinmurele@businessdayonline.com) Graphics: David Ogar

Thursday 18 July 2019

COMPANIES&MARKETS

BUSINESS DAY

15

Business Event

Deals

Canal+ acquires Nollywood studio ROK from IROKOtv OLUFIKAYO OWOEYE

F

rench television company Canal+ has acquired the ROK film studio from Video-OnDemand company, IROKOtv for an undisclosed amount.

The new acquisition comprises ROK’s production, content distribution, and publishing channels.

As part of the transaction, Iroko Ltd will also take full control of JV Iroko+, a subscription video-on-demand (SVOD) service available in French-speaking Africa.

The ROK acquisition is not the Canal+ Group’s first collaboration with IROKOtv. The media company joined a $19 million Series E investment in 2016, that also saw Canal+ and IROKO launch a French VOD channel.

The acquisition comes as the CANAL+ group looks to strengthen its content pro-

duction reach in Nigeria and across Africa. As part of the acquisition, ROK founder, Mary Njoku, will continue in a leadership role as directorgeneral of ROK Productions SAS, and will maintain a material shareholding in the company.

According to a statement “ROK will produce thousands of more hours of Nollywood content to deliver movies and original TV series for CANAL+ group’s audiences in French-speaking Africa.”

“As part of the acquisition, CANAL+ group will continue to collaborate with Iroko Ltd, with the non-exclusive content distribution of ROK content through the IrokoTV SVOD app.”

ROK’s debut TV channel was launched in July 2016 by the Lagos-based studio, renowned for its original TV series and Nollywood mov-

ies, followed by ROK2 and ROK3 which are carried on satellite pay-TV services like MultiChoice’s DStv, with a differing channel selection in various African countries.

Speaking on the new acquisition, Jacques du Puy, CEO of CANAL+ International said through this acquisition CANAL+ group would develop and enhance the catalog of Nollywood contents and expand the ROK brand inside and outside the African continent.

According to GfK international ViewScape survey, which covered African countries including South Africa, Kenya, and Nigeria, for the first time, found that around 92percent of Nigerian adults with Internet access are using some form of free online video service, while 55% are now paying to watch digital online content.

L-R: Deborah Ajumobi, headmistress, Express Way Primary School; Funke Akindele-Bello, Dettol brand ambassador; Cassandra Uzo-Ogbugh, brand manager purposeful marketing, Reckitt Benckiser, and Ajiboye, headmaster, Express Way Primary School, at the Dettol Clean Naija’s School Hygiene Program in Ikosi-Lagos

British private equity firm Actis boost African presence with Abraaj funds purchase OLUFIKAYO OWOEYE

P

rivate equity firm, Actis LLP, has completed its takeover of two Abraaj funds run by now defunct buyout firm, Abraaj, in a deal that will boost Actis’ footprint across Africa and the Middle East.

Actis is taking over the management rights of the $1.6 billion Abraaj Private Equity Fund IV and Abraaj Africa Fund III, the deal includes investments in 14 portfolio companies across the two funds, bolstering Actis’ operations in Africa and the Middle East.

Actis has been in talks since

January to take over Abraaj’s funds and it currently manages $12 billion in assets, According to Abraaj, it was invited to step in and provide a solution that was acceptable to investors, known as Limited Partners (LPs), of the two funds and liquidators of Abraaj.

Abraaj Africa Fund III focuses on investment in sub-Saharan Africa. Abraaj’s APEF IV, also known as Fund 4 or Fund IV was set up to invest in greenfield projects, privatisations, growth capital opportunities and buyouts in the Middle East, North Africa, South Asia and the Levant region.

Abraaj, which claimed to have managed almost $14bn

in funds, was forced into liquidation in June of last year after a group of investors, including the Bill & Melinda Gates Foundation, the World Bank’s International Finance Corporation and The Overseas Private Investment Corporation (Opic), a US government agency, commissioned an audit to investigate the alleged mismanagement of money in its $1bn healthcare fund.

The investigation increased scrutiny of the firm and the alleged misappropriation of funds of US investors and a US government agency attracted the attention of the Securities and Exchange Commission and other US authorities.

SMEs

Triciabiz online business school to empower 100,000 entrepreneurs by 2022 AMAKA ANAGOR-EWUZIE

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etermined to build capacity that would enable entrepreneurs in Nigeria and Africa as whole to succeed in their businesses, Triciabiz has launched an online business school, known as Business Lab Africa (BLA).

Business Lab Africa, which offers a new approach to learning, is a monthly subscription online business school dedicated to providing African entrepreneurs

with practical and locally relevant knowledge to build sustainable businesses towards economic growth.

The business school, according to the promoters, will be providing quality content at a subscription fee of $28 per month, which expectedly, can be afforded

by Micro Small & Medium Enterprises (MSMEs) in Nigeria and Africa.

Speaking in Lagos last week at the media launch of Business Lab Africa, Tricia Ikponmwonba, lead trainer of the school, said BLA

has faculty that consists of trainers with deep business knowledge, adding that the school would be easily accessible via mobile or web.

Ikponmwonba, who had consulted and trained for several Fortune 100 companies and taught a combined pool of over 1 million entrepreneurs through their online and in-class courses/workshops, said the school has trained over 20,000 people in Nigeria, Ghana, Rwanda, United States, United Kingdom and the UAE.

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L-R: Rajesh Ramakrishnan, head, sale, Afrione; Babatunde Ruwase, president, Lagos Chamber of Commerce and Industry (LCCI); Rajan Nahal, COO, Afrione; Moni Udoh, director, ICT ministry of communication, and Chima Igwe, director-general/CEO, Federal Institute of Industrial Research, Oshodi, during the launch of AfriOne Beats, first ever made in Nigeria, at the LCCI 5th edition of ICTEL EXPO 2019 in Lagos Pic by Olawale Amoo

L: R: Lion Femi Olaiya, chairperson, Region 2; Lion Olumide Oyewole, cabinet secretary, District; Lion Wesley Kafidiya, governor, District 404B2; Lion Femi Ladipo, District chief of staff, and Lion Seyi Akinade, chairperson, Region 1, all at the Press Conference at the District Secretariat.

L-R: Joshua Raymaina, chairman, Christian Association of Nigeria, Bauchi State Chapter; Abasi-Ekong Udobang, senior manager, project implementation, MTN Foundation; Jibrin Aliyu Tafida, former chief whip, Bauchi State House of Assembly, and Hauwa B. Idris, director, Bauchi State Ministry of Social Welfare, Youth & Sports, at the State Roundtable for the MTN led Anti-Substance Abuse Programme (ASAP) in Bauchi State.

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Thursday 18 July 2019

BUSINESS DAY

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Thursday 18 July 2019

BUSINESS DAY

Investor

17

In association with

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

Market capitalisation

NSE Premium Index

N11.721 trillion

Week open (5– 07–19)

31,924.51 29,270.95

N12.902 trillion

29,966.87

Week close (12– 07–19)

28,566.79

N13.922 trillion

2,333.94

Year Open

2,241.37

The NSE-Main Board

1,456.29 1,209.18 1,161.93

NSE ASeM Index

NSE 30 Index

NSE Banking Index

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

130.95

723.46

NSE Lotus II

NSE Ind. Goods Index

NSE Pension Index

291.84

2,272.45

1,254.54

1,212.79

801.09

1,438.19

426.64

781.58

1,213.90 1,188.26

366.87

122.55

604.68

251.34

1,914.69

1,123.49

1,045.52

349.60

119.59

574.38

243.48

1,831.69

1,100.83

1,017.01

781.58

Percentage change (WoW)

-2.41

-1.06

-3.91

0.00

Percentage change (YTD)

-9.11

6.33

-19.30

-1.54

-2.11 -16.15

0.78 -12.37

-0.97 -5.45

-5.01

-3.13

-23.30

-19.44

-4.33 -18.01

Disgruntled bears lurk T for chance to scare

-2.02

-2.73

-11.07

6.33

Dantata Success: Claims verification commences for 4,160 ‘investors’

Stories by Iheanyi Nwachukwu

B

ears may be just one step away from staging a devastating return.

This time, no because the bulls have ever reign for long but that they have been lurking for a chance to scare investors further at the Nigerian Bourse.

The current trading pattern shows the stock market is defy fundamentals.

Ahead of the first-half (H1) earnings season, many investors are not keenly betting on stocks that are known for records of interim dividends.

This trend shows the chance fast approaches for the bears than ever expected and signposts the need for catalysts to spur positive market returns.

If the positives do not happen soon as against a sustained negative trade, it would give the bears more opportunity to consolidate position.

“We believe that the bearish run would persist as investors maintain a risk-off approach towards investing in the domestic equities market. Nonetheless, we do not rule out the possibility of bargain hunting due to sharp losses recorded recently,” Afrinvest Research analysts said in their July 15 note to investors.

In the trading week ended

Oscar N. Onyema, chief executive officer, The Nigerian Stock Exchange (NSE) (left) presenting certificate to one of the inductee, Olurotimi Kuti (right) while Mojisola Adeola, national council secretary, NSE (middle) looks on during the induction ceremony of the newly authorised dealing clerk at the Exchange in Lagos.

July 12, the NSE All-Share Index depreciated by 2.41percent while the market capitalisation appreciated by 7.91percent to close the week at 28,566.79 and N13.922 trillion respectively.

“Our outlook for equities in the short to medium term remains conservative”, according to Lagosbased Cordros analysts in their July 15 note.

The Nigerian Stock Exchange (NSE) All Share Index (ASI) has lost

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approximately -10 percent of its yearopen position, a clear indication that investors have shifted far away from equities.

A “bear market” is when stocks see a 20 percent decline or more from a recent high — but they are also marked by overall pessimism on Custom Street. The Nigerian equities market kick-started this week on a bearish note and analysts do not see a sudden reversal of this trend with.

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“As second quarter earnings results begin to trickle in, we expect to see increased activity on the exchange in no particular direction.

However, we expect results to be mixed and as such expect the ASI to respond in like manner,” said market analysts at Vetiva Securities in their July 15 note.

They however noted that in the absence of any other market catalysts to drive the bourse they foresee losses persisting.

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he Securities and Exchange Commission (SEC) has commenced the verification exercise for no fewer than 4,160 people who ‘invested’ their monies with Kano-based Dantata Success and Profitable Company.

The company has been involved in unlawful solicitation of funds from the public with a promise of inexplicably high returns to investors.

SEC issued a July 15 circular to the investing public sequel to the appointment of joint Administrators/ Trustees for Dantata Success and Profitable Company (DSPC) by the Commission pursuant to sections 13 and 173 of the Investment and Securities Act, and consequent upon an ex parte Order granted by the Federal High Court Kano.

Details of the verification timetable showed claims of about 478 unpaid ‘investors’ were verified on July 15, while that of about 780 was carried out on July 16. The daily exercise is from 9 am to 4pm. The venue of the exercise is Mambayya House, Aminu Kano Centre for Democratic Research and Training, Gwmmaja Gidan Mallam, Kano City The verification of claims for additional 1,272 people is expected to be done from July 17 to 18; while from July 19-20, the exercise will cover 1,630 investors.

“All unpaid DSPC Scheme investors are necessarily advised to attend in person as attendance by proxy is not acceptable. Claimants must bring along the following documentary evidence/information for the verification exercise: All original documents and proof of evidence of investment in the illegal scheme including Bank Teller, Bank Deposit Slip, Bank Online Transfer Advice, Completed DSPC Investment Form, E-mail/WhatsApp Correspondence and DSPC Payment Receipt”, the circular reads.

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Thursday 18 July 2019

BUSINESS DAY

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United Capital Investment Views

Investor’s Square

Nigeria H2-19 outlook report: A treasure in the mire?

Global and SSA Overview: Protectionism or free trade? evelopments in the global e c o n o m y remained bumpy in H1-19 with trade, monetary policy, and geopolitics being the key drivers. Trade spat between the US and China continued throughout the period as tariff threats and renegotiations went beyond China, to include the EU, Mexico, and India.

For context, the World Trade Organization (WTO) reported that global trade restrictions – tariffs, import b a n s, a n d n e w c u s t o m procedures - are near record levels. Alongside the Venezuelan crisis, the US sanctions on Iran drove oil prices above $70/b, before trending back to $65/b on the possibility of a fresh showdown in the Middle East, especially as it relates to the very important choke point –

which took effect on May 30, 2019, following its ratification by the minimum 22-member states, is aimed at boosting intra-regional trade. While the AfCTA is identified as a factor to bolster economic activities within the region in the medium to long term, faltering growth momentum in the largest economies on the continent - Nigeria, South Africa, and Angola – is expected to continue to subdue growth in the near term. On the other hand, Ethiopia, Ghana, Ivory Coast, and Kenya will remain the key growth markets in the region.

Nigeria: There and back again Following his victory at the polls in Feb-19, President Bu ha r i s u r p r i s i n g l y re appointed the CBN governor for another 5-year term, the first time a CBN governor w o u l d b e re - a p p o i n t e d since 1999. In their 2nd term, both the President and the CBN governor

Strait of Hormuz.

While the never-ending process of UK’s exit from the EU saw to the resignation of the Prime Minister, Theresa May in Jun-19, the global economy would have to come to terms with the crystallization of the new BREXIT deadline as the UK makes efforts to replace Theresa May. Against this backdrop, monetary policy authorities in the global space are increasingly taking an accommodative stance.

Piecing these factors together, the outlook for global growth is muted, and risks that could upset markets abound.

As trade tensions, sanctions and BREXIT continue to gain ground, Africa is on the verge of piecing together a milestone trade agreement, the Africa Continental Free Trade Area (AfCFTA). The agreement,

must battle structural and policy challenges which have kept output growth at a sub-optimal level. To drive high single or doubledigit GDP growth and check double-digit inflation rate, economic policies must address poor revenue mobilization, rising debt profile, petrol price subsidy, low foreign direct investment, booming population, high unemployment rate, power sector crisis, port congestion, corruption, and insecurity.

In H2-19, we are of the view that Nigeria’s shortterm growth outlook will be dependent on policy uncertainties, the sustenance of the current macroeconomic framework and the implementation of structural reforms or otherwise.

Overall, we expect

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economic activities to be slightly better than H1-19.

Accordingly, we revise our expectation for FY-19 GDP growth at a 2.2percent year on year (y/y). We estimate headline inflation to be sticky between 11percent and 11.5percent, averaging 11.4percent for the rest of the year. While the argument for a currency adjustment continues to gain momentum, we doubt the possibility of a devaluation before the end of the year. On interest rates, we see the potential for a further policy rate cut in H2-19.

Naira Assets: Will markets revert to fundamentals in H2-19?

While the stock market stayed bearish in H1-19, primary market activities, as well as corporate actions, supported returns for the period.

Notably, MTN’s massive listing, ACCESS Merger with DIAMOND, the proposed a c q u i si t i o n o f Da ng o t e Flour and the divestments in FO and WAPCO were some of the major events that shaped performance.

Broadly speaking, secondary market sentiment remained bearish as FPIs continue to snub equities for fixed income securities.

Driven by outsized demand by local and foreign investors, average yields on bills and bonds fell 215bps in H1-19. However, a more accommodative stance by the Apex Bank also resulted in the repricing of sovereign instruments.

The above notwithstanding, demand for short-term bills outstripped other segments of the market. We note that weaker appetite for equities in H1-19 increased the spread between the market PE ratio which settled at 7.4x compared to its 5-year average of 13.1x. Again, the Nigerian market trades at a huge discount to the peer average of 11.1x, indicating that the market presents a huge opportunity for discerning investors. However, overall outlook for naira assets is skewed in favour of short-term bills, as sentiment for equities remain muted in the absence of a badly needed catalyst or clarity in the policy framework of the economy.

•Have you been shabbily treated by your registrar, stockbroke r or other capital market operators?

Let us know and investor will help you investigate and report back.

E-mail: iheanyi.nwachukwu@businessdayonline.com

Meristem Investor Education

Growing your savings: Tips and tricks

S

avings are not only a source of financial security but also an opportunity to earn appreciable income. For you to achieve your set retirement target, savings alone are never enough. There is a need to grow and compound these savings, as the value of money depreciates with economic advancement and inflation.

There are proven tips and tricks which can be used to grow your savings account.

These involve: 1. Set your priorities right Creating a realistic budget with a well-defined priority is as important as savings. This is because no matter how amazing your budget, the chances that you will actually stick to the budget are quite slim without specific savings goals. Goals such as getting ready for contingencies or fulfilling a dream or desire could also be a driving force to more savings and your savings account growth.

However, it is imperative that your savings budget is realistic and the targets are not too high.

2. Automate your savings At times, the challenge most people face in growing their savings account is with discipline. An individual who faces savings because of poor financial discipline can save the situation by utilizing an automated payroll savings plan or standing instruction with the bank. Automating your savings solves the p ro b l e m o f g i v i ng i nt o temptation to spend money or forgetting to put money in the savings account.

3. Don’t allow your savings sit in the bank Idling your savings in your bank account is unproductive.

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This is because the value of money depreciates by 1%-5% in line with the economy and inflation. Therefore, investing these savings in the money or capital market provides the opportunity to grow these funds at the same rate as the economy or inflation.

Sav i ng s t hat a re n o t immediately required should be transferred from a regular savings account to highinterest yielding investment account. And, where such fund will be needed for current liquidity, investment in a highly liquid fund such as a mutual fund is advisable.

You can also stagger the maturity dates of the term deposits such that one is always coming due shortly in order to cover yourself in emergencies.

4.

Enquire about different options and learn the associated risks It is also imperative to explore a variety of options to invest your hard-earned money to maximize your returns. Various options available with the banks and the capital market include fixed/term deposits, savings deposits, stocks, bonds, mutual funds, exchange traded funds and real estate.

While searching for these great options, it is important y o u e n q u i re ab o u t t h e associated risks also because every investment has certain degree of risk. It is necessary you ask questions especially if you are new to investing. For instance, fixed and savings deposits guarantee capital.

On the other hand, capital market investment which provide higher returns are comparatively riskier.

Real estate are considered to be a profitable investment but property values can be @Businessdayng

affected by external factors such as interest rates, changes in local business conditions etc. In addition, the capital gains are subjected to income tax. On the other hand, equity mutual funds are considered the best opportunity for longterm growth because there’s no limit to the future value of their earnings.

5.

Diversify your investments It is not advisable to put all your savings in one type of investment hence the age-old max im, “do not put all your eggs in one basket”. Fixed term deposits which have a guaranteed rate of return could have their value could be eroded by inflation. It is desirable to have a portion of your portfolio in investments that increase in value, such as mutual funds or stocks. For the small investor, mutual funds are the simplest way to diversify. They generally increase in value over time, but are limited by the level of returns one can generate from the fund.

However, spreading your investment so thinly in more than five funds is not advisable because though it may reduce the risk, it also reduces benefit.

In addition, strategically timing your investment while diversifying it is also important. This is due the fact that interest rates rise and fall over time; and you do not want all your deposits to mature at once in case the interest rates are low. It is more advisable to choose a variety of terms and maturity dates.

In conclusion, it is better to engage an investment p ro f e s s i o na l w i t h g o o d experience to assist you arrange your portfolio of assets and maximize your returns.

Thursday 18 July 2019

BUSINESS DAY

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Analysis

Seplat: Making case at NSE for ANOH gas project Iheanyi Nwachukwu

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eplat Petroleum Development Company Plc, a leading Nigerian indigenous oil and gas company dual-listed on the Nigerian Stock Exchange (NSE) and London Stock Exchange (LSE) hosted a capital markets event last Friday July 12, 2019 at the Nigerian Stock Exchange.

The session meant for analysts and investors focused on the Assa North and Ohaji South (ANOH) Greenfield gas and condensate development project, in Nigeria.

Seplat management team led by the Chief Executive Officer, Austin Avuru; Chief Finance Officer, Roger Thompson Brown; and AGPC Managing Director, Yetunde Taiwo made a presentation titled, “Stability, Performance, Growth”.

ANOH gas project The ANOH gas processing project is managed by Anoh Gas Processing Company (AGPC), an incorporated joint venture (IJV) between Seplat and the Nigerian Gas Company. A final investment decision was taken

by Seplat to invest in the ANOH project, as announced in the company’s 2018 full year results on March 6, 2019.

In May 2019, the reconstituted Board of Directors of ANOH Gas Processing Company Limited was inaugurated. The inauguration took place at the Nigerian National Petroleum Corporation (NNPC) Towers in Abuja on Thursday May 2, and is a targeted at delivering 300 million standard cubic feet of gas per day to the Nigerian market.

The ANOH gas processing plant will be the first stand-alone midstream joint venture business between the Nigerian National Petroleum Corporation (NNPC) and a company in the private sector. With the ANOH project, Seplat Petroleum Development Company Plc aims to be the largest supplier of gas to the domestic market.

Key attractions of the domestic gas opportunity Nigeria has strong and growing demand for gas. This is reflected on the population as one of the largest economies in Africa with a population today in excess of 201 million.

About 50percent are urban dwellers while 62percent is less than 25 years in age and 93percent is less than 55 years in age.

Nigeria is projected to grow to a population of 450 million people by 2050 (highest population growth in Africa) and become the third most populated country globally (behind only China and India). This portends high demand from power industries and other commercial enterprises.

Current capacity deficit in thermal power generation provides immediate headroom to place additional gas volumes (significant installed but non-operating generation capacity exists).

There is 7percent royalty on gas revenues as opposed to 20percent on oil production.

There is no Petroleum Profit Tax. Companies Income Tax applies at a lower rate of 30percent, this is in addition to gas utilisation incentive, three years tax holiday (renewable for another two years) or capital allowance uplift.

Management views on ANOH gas processing project

L – R: Roger Brown, chief finance officer, SEPLAT Petroleum Development Co Plc; Oscar N. Onyema, OON, chief executive officer, The Nigerian Stock Exchange (NSE); Austin Avuru, chief executive officer, SEPLAT Petroleum Development Co Plc; Effiong Okon, operations director, SEPLAT Petroleum Development Co Plc and Chioma Nwachukwu, general manager, External Affairs & Corporate Communications, SEPLAT Petroleum Development Co Plc during a Closing Gong Ceremony in commemoration of Seplat Capital Markets Day at the Exchange in Lagos.

“Seplat gas business shall continue to break ground, achieving operational and financial success,” Avuru told the capital market audience. He added that the existing gas business and future growth from ANOH “can start to transform Nigeria’s energy mix”.

“Market prices remain strong, long term outlook for gas in Nigeria and the regional market remains positive. Seplat’s access to gas infrastructure positions it to be the leading long term gas supplier of choice for Nigeria. Conventional diesel off-grid power generation is expected to be displaced, presenting Seplat gas business with a significant opportunity”, the CEO said.

“ANOH has a competitive cost structure,” said Taiwo, who added that lean team and overheads are delivering exceptional value accretive assets in the burgeoning market.

She believes the market gas price remains strong and the long term outlook for gas in Nigeria and the regional market remain strong. “Seplat has a proven track record of delivering midstream gas processing expansion projects at OBEN. First gas is targeted for first-quarter (Q1) 2021”.

“It is an opportunity for Seplat to leverage repeatability gains from its experience of expanding gas processing capacity at the Oben hub. Oben Phase l expansion by 150 Million standard cubic feet per day (MMscfd) was completed in 18 months, within schedule and budget. Oben Phase ll expansion by a further 225 MMscfd was completed in 15 months, within schedule and budget,” Taiwo stated.

Speaking on the project milestone and funding, Brown said the company is considering integrating project execution and funding plan that balances underlying risk with investor appetite.

He said contracts are to contain milestones that permit demobilisation of works with minimal cost exposure and nominal cancellation charges prior to Phase 1 and at Phase 2. Also, project on project risk are to be closely monitored ahead of equity injection, and key milestones achieved to provide necessary comfort to Lenders and the Independent Technical Engineer (ITE) to release debt funds.

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The CFO told analysts and investors at the Nigerian Stock Exchange that AGPC a Special Purpose Company (SPC) is formed to raise $420million of equity to de-risk the project. Equity investors Seplat and NGC granted equal share 50:50 in AGPC, with optionality to sell down 30percent holding pre or post first gas.

“Debt of $280million is to be arranged. GE considering a direct lend to the Senior Debt.

SACE and CPD are considering supporting the project up to $60 million. Equity and debt are to be scaled in line with final project cost whilst maintain a target debt: equity ratio of 60:40. AGPC offshore structure is under consideration. It is structured to be able to repatriate US Dollar,” Brown said.

Funding timeline In line with the Project’s achievable funding timeline with flexibility, Seplat has lined up local banks which include but not limited to: UBA, Zenith, Stanbic, Fidelity, FCMB, First Bank, Access, Union, and Nova; while the international lenders include but not limited to: SCB, RMB, Standard Bank, BHGE, and Nedbank.

The Export Credit Agencies SACE and CDP are also considering the opportunity alongside Italian nexus. The company is also in discussion with AFC/IFC. The CFO said there is a deferred payment structure embedded into several supply contracts, adding that debt facility is expected to amortise over 5-7 years. The company has appointed independent engineer, legal and market advisors to complete due diligence. Funds are targeted before the end 2019. It has received letters of intent of up to $500million from international and local banks. Soft market sounding to date indicates significant local funding appetite of +$500 million.

Pricing is expected to be competed with up to $90million of funding potentially sourced by the suppliers and export credit agencies.

Seplat gas business achieved another record year 2018 with gross production of 323 MMscfd (net W.I 145 MMscfd) and Company revenue of $156 million.

Seplat had announced in March the Final

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Investment Decision (FID) for the large scale ANOH gas and condensate project, adding that initial equity investment of $100 million from government received. Project to comprise a Phase One 300 MMscfd midstream gas processing development with first gas targeted for first-quarter (Q1) 2021.

Avuru had following the company’s interim management statement and consolidated interim financial results for the three months ended 31 March 2019 said: “The next phase of growth for our gas business is now gathering pace following FID for the ANOH project, with governments first tranche of equity investment received.

“We have continued to deleverage the balance sheet and self-fund investments into the existing portfolio from operational cash flow, while retaining the financial flexibility and available resources that will enable Seplat to capitalise on what we expect to be an increasingly busy pipeline of inorganic growth opportunities that fit our acquisition criteria.”

Full year results A review of Seplat 2018 results indicates positive performance across all financial indices, confirming the Company’s position as one of the well managed indigenous oil firms in Nigeria. As at trading week ended July 12, the share price of Seplat at N530 shows its down by 17.2percent year-to-date (ytd).

Seplat reported N228billion revenue in its full year 2018 financial result ended December 31, 2018. The figure represents an increase of 65 percent from the N137billion revenue the company made in the 2017. Seplat also recorded N73 billion profit before differed tax, indicating 480 percent increase from N13billion which the company made over the same period in 2017.

The gross profit for the period grew by 84percent to N120billion from N65billion reported in December 2017. Operating profit stood at N95billion, representing a growth of 177percent over N34billion recorded in the corresponding period of December 2017. Seplat’s net profit after tax dipped by 45percent from N81billion recorded as at December 2017 to N45 billion in December 2018.

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Emefiele flaunts his soft spot for non-oil business SIAKA MOMOH

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mefiele’s vision for Nigeria’ apex bank for the next five years places high emphasis on non-oil sector of the economy. This is what you get from his speech on the subject delivered in Abuja on recently.

He recalled that with concerted efforts by the monetary and fiscal authorities, “we implemented a series of measures which led to the recovery of our economy from the recession by the 1st Quarter of 2017.” Several of the measures favoured the real sector of the economy.

External reserves Said Emefiele: “Building on these efforts, I am delighted to note that our external reserves have risen from $23bn in October 2016 to over $45billion by June 2019. Inflation has dropped from 18.72 per cent in January 2017 to 11.40 per cent in May 2019.

Our CBN purchasing manufacturers index has risen for 26 consecutive months since March 2017, indicating continuous growth in the manufacturing sector, as a result of measures implemented by the CBN which has improved access to raw materials and finance for manufacturing firms.”

He added that GDP growth has risen for seven consecutive quarters following the recession, and exchange rate has appreciated from over N525/$1 in February 2017 at the BDC window to N360/$1. And “with improved inflow of foreign exchange, the exchange rate has remained stable around N360/$1 for the past 27 months”.

Restriction forex on 43 items Said Emefiele: “In order to reduce our reliance on the importation of items which could be produced in Nigeria, we restricted access to foreign exchange on 43 items, while deploying our intervention funds to support growth and productivity in the agricultural and manufacturing sectors. These measures helped to support the attainment of our monetary policy objectives such as a reduction in the inflation rate, stability in our exchange rate and improved accretion to our external reserves,” he said. A plus for the real sector.

Soft spot for the non-oil sector Stressing the apex banks soft spot for the non-oil sector of the Nigerian economy, he

Godwin Emefiele, CBN governor said: “As part of the goals set in 2014, we increased our development finance interventions in order to catalyze growth in critical sectors of the economy. Our objectives were driven by the need to increase investments

by MSMEs as well as spur consumer spending, as these factors would have a positive impact on GDP growth and employment.

Furthermore, our development finance efforts were driven by the need to reduce our reliance on revenues from crude oil.

“At a point in our nation’s history, Nigeria survived on revenues from the non-oil sector, to the extent that we were a dominant exporter of agricultural produce into the global market. Some of these products include Cocoa, Groundnuts, Cotton and Palm-Oil. Our focus in agriculture supported the raw material needs of our industrial sector and created employment opportunities for millions of Nigerians. Regrettably, the discovery of crude oil and the increasing reliance on crude oil revenues led to a severe downturn in the agriculture and manufacturing sectors, while also exposing our economy to the vulnerabilities that normally accompany

an increased dependence on a single commodity for survival. For example, if Nigeria had maintained its market dominance in the palm oil industry, which stood at 40 per cent in the 70s, we would be earning above $20 billion annually from cultivation and processing of palm oil today…”

Anchor Borrowers Programme He followed up with the punch: “Fellow Nigerians, we have a responsibility to reverse the current ugly trend where any external shock affecting oil producing countries bring us to our knees. To correct this trend and as part of our intervention programes, we launched the Anchor Borrowers Programme, which has improved access to finance for over one million smallholder farmers, who are leading our efforts to improve cultivation of agricultural commodities, such as rice, tomatoes, fish, cotton and palm oil. The Anchor Borrowers Programme also enabled agroprocessors and manufacturers to source their inputs from local sources, rather than relying on the importation of these items.

Other intervention facilities “We also deployed other intervention fa-

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cilities such as the Commercial Agricultural Credit Scheme, and the Real Sector Support Fund. These funds were used to channel single digit interest loans through our Deposit Money Banks and other Participating Financial Institutions to beneficiaries to support improved growth in the agriculture and manufacturing sectors. The effectiveness of these interventions in supporting the growth of our local industries has been supported by our FOREX restrictions on the importation of items that can be produced in Nigeria. We also embarked on measures to discourage smuggling of restricted items into the country, by imposing restrictions on the use of financial institutions in Nigeria by identified smugglers, as their activities undermined the growth of our local industries. These measures are aiding our efforts to support local cultivation of goods in areas such as cotton, rice, palm oil etc.

Credit for MSMEs/Small-holder Farmers “We also sought to improve access to credit for MSMEs given the critical role they play in supporting the growth of our economy. Poor access to credit has been highlighted as a significant constraint to the growth of MSMEs. Moreover, given the impact of the recession, it was more important to restart the flow of credit to MSMEs to enable them engage in productive activities that would support growth. As part of efforts to support this objective, we created a N220bn MSME funds, which has been critical in supporting the growth of MSMEs in the agriculture and manufacturing sectors.”

Entrepreneurship/Diversification of the economy He added: “Our intervention support shall also be extended to our youth population who possess entrepreneurship skills in the creative industry. This group deserves our encouragement. We shall also during this intervening period encourage our Deposit Money Banks to direct more focus in supporting the Education Sector. Fourth, grow our external reserves; and fifth, support efforts at diversifying the economy through our intervention programmes in the agriculture and manufacturing sectors. We are confident that when implemented, these measures will help to insulate our economy from potential

Continues on page 23

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Thursday 18 July 2019

BUSINESS DAY

Business Chief

Proprietary and Patent Medicines Dealers are main source of fake drugs – Ike Ugwu Ike John Ugwu, a pharmacist and CEO Pharmacare Support Group, earned his B.Pharm degree from University of Nigeria Nsukka in 1982. He was Managing Pharmacist of Sablin Chemists Ltd of the SAB Group, Aba, and PA to the Group Chairman, 1984-1988, before he founded a family business -the Pharmacare Support Group in 1989.

He spoke to SIAKA MOMOH in Lagos on his business and issues in the pharmacy industry in Nigeria.

Choice of pharmacy as business am a pharmacist. My wife is also a pharmacist too.

So it was natural for us to get into it. This is not to say everyone in pharmacy business is a pharmacist. I chose community pharmacy because it was a way I could fulfill both my destiny and my life as an individual.

Spread of business We are operating in eight locations – seven are in Lagos, one is in Abuja. We would love to have more but we are limited by capacity issue. You have to provide so many things for yourself.

We are more of a convenience store than even a pharmacy. We have pharmacy inside our business. If we had limited ourselves to the pharmacy side of it may be we would have been able to replicate ourselves more. We are being careful. We carry a lot of things that are not drugs.

We operate like a super market.

We are strong with cosmetics, personal care, etc. This is the business model we have chosen to operate; we are okay with it.

Low ambition is the reason why we have not expanded. We now realise we could do more. There are pharmacists in Nigeria that have 60, 80 outlets though some of the outlets are in mall. Ours are stand-alone outfits.

Challenges To get the product you sell is a challenge. We import. The percentage of our import is less than 1%. You could get 90% of the product you sell through other people who import. Sourcing the products and keeping a good price level is one of the issues we are faced with. Then getting qualified staff is an issue. You select them and it is your burden to train them – and they may not stay; then you have to replace them. Then utility – power supply is a problem. You go to our shops, you see a lot of customers coming in and going out. The shops need to be chilled. The generator has to be on for hours on end – it costs more money running generators. We also have government harassment – multiple taxation. Once you become popular, everybody will come to you and leave the rest – the small ones. They come with outrageous bills – State, Local Governments operatives. They come with bills for parking. We are in business in our shops and you come to us to come and pay

I

Ugwu

for parking. Parking for whom?

They say we should pay N300, 000 for parking! They come with big bills and ask you to negotiate. They use a lot of discretion.

This is wrong. They do profiling; it is not good for business. They think you are making it; they do not know the pains you are going through.

Branches of Pharmacy There are so many arms of pharmacy. As a pharmacist, after your training and your internship, you are free to go into other branches of pharmacy. You can be a hospital pharmacist; with this you are employed to work in the hospital. You also have the academia – you can decide to teach. Actually, I would have loved to do that but felt I could do what I am doing now. You could even go into journalism. Pharmaceutical journalism would provide a great fulfillment for some us that are engaged in it. You can work in the industry.

Industry is another big side. By

far, the community pharmacists are in the majority. They set up business in the community, run it as business-people and then serve the community. Retail pharmacists serve the community.

Wholesale/retail Drug distributors and wholesalers support community pharmacists. But there is a dichotomy between retail and wholesale.

Your licensing can allow you do retail because you have your own requirements. Another licence can allow you do wholesale – and this has its own requirements.

You are not expected to do one inside the other.

Fake drugs To qualify as a pharmacist, you need to pass through a fiveyear programme to obtain a Bachelor of Pharmacy. Recently we are beginning to change to do a six-year of Pharmacy and then you earn what we call a Doctor of Pharmacy – Pharm D. Then after a few years, all degrees awarded

for pharmacy graduates will be a Pharm D. All of us that previously had B. Pharm are also converting to Pharm D. by taking another two or three-year course to qualify for Pharm D. The Pharm D. is a degree that stresses more on clinical pharmacy than previously was allowed. But it is a modern way to go.

Now pharmacists are the only ones authorized by law to sell over 90- 99 per cent of medicines. But there are other people called Proprietary and Patent Medicine Dealers who are granted licence to sell only Patent and Proprietary Medicines which are mainly Over-the-Counter drugs – drugs for minor illnesses. The list of products that they should carry is a narrow one. They got the licence to do this since about the 1930s when there were not very many pharmacists.

But then the practice these days is that they have become more in number and they are like competing with pharmacists.

Many of them didn’t even go to school – their basic qualification was less than school certificate.

Now what they are asking them to present is just school certificate attempted. And many of them didn’t have any special training except the apprenticeship that they go through and we find non-pharmacists getting involved in setting them up. You find even architects getting involved, retired matrons, nurses.

These are even people with some qualifications. The problem is that phasing them out is difficult now. Yes, they provide some level of service but they are over reaching their limits. And it is causing a lot of problem.

Putting them under control But now the Pharmacists Council of Nigeria is trying to bring them within control. Their history is well known to government. Something like in 1964 or 1965, they abolished the licence. The first licence they granted, the power was given to the Federal Ministry of Health.

Then in the sixties, they stopped giving the licence to anyone.

But subsequently, may be in the seventies or eighties, they started giving them licence again and then it was the Minister of Health that had the power to do it. But I think it was in 1991 when Olikoye Ransome Kuti was the Federal Minister of Health that they transferred the licence to the local governments. And then that was when they now mushroomed and local governments began to give those licences as a way to raise money and patronage and all that. But then somehow, after that I think it was in 2003 or 2006, it was returned again to the Minister.

Then they had gone to form their own association called Nigerian Association of Patent and Proprietary Medicine Dealers (NAPPMED). They challenged pharmaceutical people. They instituted a lot of court cases. Some of them had a lot of restraining injunctions on the Pharmacists Council. But the Pharmacy Council was able in 2017 to do away with all the cases and then finally, they are under the control of the Pharmacists Council.

Pharmacy Council of Nigeria Bill There is a bill that has already passed through the National Assembly awaiting the President’s signature. Many pharmacists believe that the bill will solve

Thursday 18 July 2019

most of the problems of drug business - who gives what type of drugs. But Mr President is yet to sign it. We are praying he would sign it because if you ask me, nobody knows why he has not signed it. He too is not giving the reason why he has not signed it and it is so vital that he signs it.

May be we will wake up one day and find out that he has signed it.

Capacity issue The gap is a lot. We are supposed to have a ratio of 1:2000 pharmacists; but it looks like the current ratio is 1:10,000. So there is a lot of capacity problem. We have a lot of pharmacy schools but what we are bringing out is not enough. But then that is also because pharmacy practice is not what it should be. If it is what it should be then they can go ahead and produce even far more. Not that the pharmacists do not have employment problem; but which job they get or whether they are satisfied with the job they get is a different matter. We have a lot of pharmacists graduating and leaving for greener pastures.

Local manufacturing of drugs We definitely have to do more.

Everybody is saying we should manufacture drugs locally, but manufacture with what? Most of the raw materials are imported.

Manufacturing in Nigeria is tough. The environment is very harsh. You find out that most products, even those that are registered are coming from India, Pakistan, even China these days; it difficult to compete with them. They are cheaper.

And their quality is not bad. But they are cheaper. Government is just paying lip service to drug manufacturing.

They do a national drug policy and they say they want drugs to be available, efficacious, of high quality, of good price. To make this possible is to ensure that our drug manufacturers are supported one way or the other. But this is not the case. You find out that government patronizes a lot of these manufacturers but they owe them a lot. Why will you buy drugs from them and owe them for three months, for six months and then think you are doing good business? Many of them who are manufacturing are still importing finished products as well as raw materials. The primary ingredients – what we call the active ingredients – the APIs, many of them are not made here.

The petrochemical industry is nothing to write home about.

Many people still have to import their input, including packaging.

Herbal medicine People are beginning to take notice of herbal medicine. Surprisingly, many herbal medicines are actually not coming from pharmacists. But there are people who believe there should be ethnic medicine and it should be working for some people. But we have problem with their standards. In a place like Ghana, some pharmacists are graduating with degree in herbal medicine. I was surprised to see

BUSINESS DAY

23

Editor’s Note

G

Ugwu

this happening when we went to a pharmacy school in Kumasi.

But we recognize some work here that has been recorded and proven but standardizing them for commercial use or worldwide use, I do not know what level have been obtained.

Infrastructure for training of pharmacists When we were in the university, we were about 40 in a class, but now a class can be more than 200. Then when you went to a pharma-chem lab, you have a stand to yourself. But now you find 10 or 20 people crowding around one. What they are doing may not be as practical as we did. It is not adequate.

But then they still find a way to get the knowledge that they require. They don’t appear that substandard but then there will be quality issues.

ACPN Conference The Community Pharmacists in Nigeria have an association called Association of Community Pharmacists of Nigeria –ACPN. It is the umbrella body of pharmacists that are engaged in community practice in Nigeria which includes retailers and wholesalers. We belong to that association. And we belong to the big association called the Pharmaceutical Society of Nigeria. And every year, apart from the big conference which the Pharmaceutical Association of Nigeria holds, the ACPN holds its own. So we held our 38th Annual National Scientific Conference as well. And we held it in the city of Kano. The theme was on the Menace of Drug Abuse and How We Can Tackle it in a Very Innovative Ways. The key note address was delivered by our immediate past president of Pharmaceutical Society of Nigeria, Ahmed Yakasai.

Pharmacists have been in the forefront of drugs and substance abuse in Nigeria. We think it is a monster. Why do we say that?

We do because a lot of people are engaged in it. And the problem that it is creating now and that it will create in the future is so huge that we can’t but begin to tackle

it. Many people do not realize the extent of the problem. We used to treat drug addiction or drug abuse as something simple and only reserved for people that want to harm themselves. We do not care about the fact that it is affecting the society.

Pharmacists also think there could be a better way of tackling the problem. First is to know the extent of the problem, and then to know which solutions we can apply. Stigmatizing such set of people is the worst thing to do.

We got a lot of agencies involved in it. One was National Agency for Food and Drug Administration and Control (NAFDAC).

Others were National Drug Law Enforcement Agency (NDLEA), non-community pharmacists, and Pharmacists Council of Nigeria. We put heads together and came to the realisation that an agency like NDLEA should be more concerned with the drug and substance abuse not from the point of enforcement or even treating such people as victims.

Just by possessing cannabis, you could go to jail for so many years; you could be arrested; you could be tortured, whereas you should be treated more as a victim.

We also found out that a lot of young people are involved in it; a lot of women are involved in it.

The theory of addiction actually starts from getting introduced into the substance. Getting introduced into the substance for a young person could be through peer pressure. It could happen through prescription medicine. What happens is that you use the product and then it helps you and you love what you get. And then it begins to harm you and you continue.

That is the problem. A medicine is prescribed to you for pain, it gives you some relief, and then the next time you want to use it. You keep on using it and it becomes a problem. Some cannot afford the big medicine, then they go to, you wouldn’t believe it, smell toilet, to use excretion from lizard. They sniff anything; they sniff paints, cow dungs, and human excretion!

odwin Emefiele’s fiveyear agenda for Nigeria’s apex bank is good news for us on this platform as it addresses robustly what we stand for as media practitioner. We appreciate his putting on the front burner a steadfast growing of the non-oil sector of the Nigerian economy.

There can never be better news for us since we are on the same page with him.

Take this, coming from Emefiele, for instance: Stressing the apex banks soft spot for the non-oil sector of the Nigerian economy, he said: “As part of the goals set in 2014, we increased our development finance interventions in order to catalyze growth in critical sectors of the economy. Our objectives were driven by the need to increase investments by MSMEs as well as spur consumer spending, as these factors would have a positive impact on GDP growth and employment. Furthermore, our development finance efforts were driven by the need to reduce our reliance on revenues from crude oil.

Ike John Ugwu, a pharmacist and CEO Pharmacare Support Group, in 1989, founded a family business -the Pharmacare Support Group, which has since blossomed into a Community Pharmacy and Supermarket chain employing over 150 staff

Siaka Momoh

in 8 locations in Lagos, Abuja and Enugu.

Ike is a Fellow of the Pharmaceutical Society of Nigeria (PSN). He is also a Fellow of the Nigeria Academy of Pharmacy.

He has served the profession in various capacities, at State, National and International levels. He spoke passionately at length with Siaka MOMOH on his business and issues in the Nigerian pharmacy industry.

You will find this piece and others in this month’s edition of your absorbing magazine a good read.

For advert placements, sponsorship, reactions, editorial contributions, please contact SIAKA through siakamomoh@ yahoo.com; 2348061396410; 23408023033988.

Emefiele flaunts his soft spot for non-oil...

Continued from page 21 shocks in the global economy.”

He said more: “We will support measures that will increase and diversify Nigeria’s exports base and ultimately help in shoring up our reserves…”

Boosting productivity growth “Building on the success of our Anchor Borrowers Programme and other intervention programmes geared towards supporting the growth of our agriculture and manufacturing sectors, and in keeping with the recent Presidential Directives, we intend to: Boost productivity growth through the provision of improved seedlings, as well as access to finance for rural farmers in the agricultural sector, across 10 different commodities namely: Rice, Maize, Cassava, Cocoa, Tomato, Cotton, Oil-palm, Poultry, Fish, and Livestock/Dairy.

“Our choice of these 10 crops is driven by the amount spent on the importation of these items into the country, and the over 10 million jobs that could be created over the next 5 years if efforts are made to expand cultivation and processing of these items in Nigeria. So far, we have held series of engagements with importers and producers of these products. Most of them have committed that they would install or expand their production capacities in Nigeria. We believe these measures will help to boost not only our domestic outputs but

also improve our annual non-oil exports receipts from $2bn in 2018 to $12bn by 2023.”

He said the CBN’s intervention programmes will strengthen the linkage between farmers and agro-processors/manufacturers by ensuring that the output of farmers is purchased by agro-processors/ manufacturers. According to him, “This linkage with agro-processors is necessary in order to prove that farmers are creditworthy individuals with bankable contracts. It will also help to unlock private capital flows from financial institutions to farmers, in order to enable farmers meet orders from agro-processors.”

Non-oil export aspect to the anchor borrowers’ programme Emefiele added: “We will introduce a non-oil export aspect to the anchor borrowers’ programme, which will be focused on linking smallholder farmers to international buyers. To discourage the activities of smugglers, who bring in restricted goods into the country, perpetrators and their affiliated companies will be blacklisted and denied access to banking services in the entire country. This renewed focus of our intervention program, coupled with increased support for research and development on improved seedlings and enhanced farming practices, will help drive exponential growth of our agricultural and manufacturing sectors.”

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Thursday 18 July 2019

BUSINESS DAY

Innovation

Accelerating digital innovation inside and out Agile teams, ecosystems, and ethics

Businesses and Corporate social responsibility

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T

he fifth annual MIT SMR and Deloitte study of digital business reveals digitally mature organizations don’t just innovate more; they innovate differently—leveraging ecosystems and cross-functional teams that play critical roles.

For the past five years, MIT Sloan Management Review and Deloitte1 have investigated digital maturity, focusing on the organizational aspects of digital disruption rather than the technological ones. We’ve examined companies at the early, developing, and maturing stages of digital transformation and have seen increasing signs of separation between more and less mature organizations. This year’s research finds that the gaps can often be explained by a company’s approach to innovation: Digitally maturing companies are not only innovating more, they’re innovating differently.

This innovation is driven in large part by the collaborations established externally through digital ecosystems and internally through cross-functional teams. Both ecosystems and cross-functional teams increase organizational agility. The risk of this increased agility, however, is that it can lead a company’s innovation efforts to outpace its governance policies. It is particularly important, then, that these organizations have strong policies in place regarding the ethics of digital business.

MIT Sloan Management Review and Deloitte’s fifth annual study of digital business is based on a global survey of more than 4,800 managers, executives, and analysts and 14 interviews with executives and thought leaders. The report presents the following findings: Digitally maturing companies innovate at far higher rates than their less mature counterparts.

Eighty-one percent of respondents from these companies cite innovation as strength of the organization, compared with only 10% from early-

stage companies. Maturing organizations invest more in innovation and constantly drive toward digital improvement in ways that less mature companies do not. Notably, innovation happens throughout digitally maturing enterprises; it isn’t caged in labs or R&D departments.

Digitally maturing companies are more likely to participate in digital ecosystems, and their employees are often organized in cross-functional teams.

Employees of digitally maturing organizations have more latitude to innovate in their jobs — regardless of what those jobs may be. Nearly five times as many survey respondents from maturing companies as from early-stage companies report that their organizations provide them sufficient resources to innovate. This year’s research also finds a strong relationship between a company’s rate of digital innovation and its staffers’ confidence that the organization will be stronger in the future, thanks to digital trends.

Digitally maturing companies are far more likely than their less mature counterparts to collaborate with external partners. While 80% say their organizations cultivate partnerships with other organizations to facilitate digital innovation, only one-third of early-stage companies do the same. The nature of collaboration also differs depending on maturity level. Digitally maturing organizations tend to form alliances that involve less formal, controlled relationships; they rely more on relational governance and less on detailed contracts. Formal partnerships can still serve a vital role in collaboration and often exist as part of larger business ecosystems.

Cross-functional teams are another important source of digital innovation. Not only are digitally maturing companies more likely to use cross-functional teams, those teams generally function differently in more mature organizations than in less mature organizations.

They’re given greater autonomy,

and their members are often evaluated as a unit. Participants on these teams are also more likely to say that their cross-functional work is supported by senior management.

For more advanced companies, the organizing principle behind crossfunctional teams is shifting from projects toward products.

Digitally maturing companies are more agile and innovative, but as a result they require greater governance. Organizations need policies that create sturdy guardrails around the increased autonomy their networking strength allows. Digitally maturing companies are more likely to have ethics policies in place to govern digital business. Policies alone, however, are not sufficient.

Only 35% of respondents across maturity levels say their company is talking enough about the social and ethical implications of digital business.

When asked to predict whether their company will be stronger or weaker moving forward, respondents from digitally maturing and early-stage companies show striking differences. The former believe their organizations have the power to adapt to changes wrought by digital disruption and expand their capabilities, while the latter see disruption as a result of market forces they cannot control.

About the research To understand the challenges and opportunities associated with the use of digital business, MIT Sloan Management Review, in collaboration with Deloitte, conducted its eighth annual survey of more than 4,800 business executives, managers, and analysts from organizations around the world.

The survey, conducted in the fall of 2018, captured insights from individuals in 125 countries and 28 industries, from organizations of various sizes. More than twothirds of the respondents were from outside of the U.S. The sample was drawn from a number of sources, including MIT Sloan.

orporate social responsibility (CSR), as a concept, requires that business concerns have a duty of care to all of their stakeholders in all aspects of their business operations. Their stakeholders include employees, customers, suppliers, community organizations, subsidiaries and affiliates, joint venture partners, local neighbourhoods, investors, and shareholders. CSR requires that businesses have the interests of society at large as an integral part of their policy making.

Social responsibility is therefore a very vital aspect of the business that it should not be taken lightly.

Some of our businesses do not pay attention to it and I believe they do this to their own peril.

Kudos must go to the likes of Zenith Bank, UBA, FirstBank, Access Bank and a few other banks, the Dangote Group, Nigerian Breweries Plc, FrieslandCampinaWAMCO Plc, Guinness Nigeria Plc and some other blue chip companies that are deep into CSR. Churches are also into it. The Redeemed Christian Church of God (RCCG) for instance launched His Love Foundation, a global charity arm of the church last year in Lagos.

The church calls it Christian Social Responsibility. It reads CSR too!

According to the Special Assistant to the General Overseer on Christian Social Responsibility (CSR), Pastor Idowu Iluyomade, “We not only preach the gospel, but also go with food to take care of the hungry; we clothe the naked, provide education for the less privileged; visit and take care of prison inmates and rehabilitate prostitutes and abandoned girls.

“From March to November 2018, we’ve been able to feed over six million people; gave scholarship to over 70, 000 students, and over 192, 264 people have benefitted from our free healthcare services. We’ve impacted the lives of 99, 684 prison inmates; 57 people have benefitted from Enoch and Folu Adeboye Intensive Care Unit, Lagos Sate University Teaching Hospital (LASUTH), Ikeja; 8, 669 people have completed their dialysis sessions in our Healing Stripes Hospital and a good number of them done for free. Apart from that, we have successfully carried out kidney transplants in partnership with medical institutions abroad and have donated dialysis machines to Gbagada General Hospital, Lagos.”

And the church laid out plans to feed 50 million people around the world through His Love Founda-

tion. Said Pastor Iluyomade: “We need to have a compelling sense of responsibility to our community, which should be rooted in love. CSR is, therefore, a faith-based obligation to meet societal needs through the demonstration of love that positively impacts communities and individuals.”

Bill Gates Microsoft has a very fascinating approach to this issue of corporate social responsibility.

It is committed to being a responsible industry partner, working with businesses, communities, and governments to help advance social and economic well-being and to enable people around the world to realize their full potential.

According to industry reports, over the past three decades, Microsoft has expanded its business from the United States into more than 90 other countries, and now employs over 60,000 people globally. As a successful global corporation, the company believes it has a responsibility to use its resources and influence to make a positive impact on the world and its people.

Microsoft software products have enabled hundreds of millions of people to fulfill their personal and professional goals. From the onset, the company built its business through partnerships with approximately 650,000 companies, and it is expanding its global citizenship efforts through the same kind of proactive collaboration with other industry leaders, governments, community-based organizations, and nongovernmental organizations (NGOs).

Microsoft made a commitment to provide technology access and skills training to a quarter billion people by 2010—people previously underserved by technology. At last estimate, 400 million people are using Microsoft Windows operating system.

What do you make of Bill and Melinda Gates Foundation which is making waves across the globe?

Melinda Gates is the wife of Bill gates, the IT guru. She founded the Bill and Melinda Gates Foundation, along with her husband and continues to spend much of her time working in the organization. The couple started the Bill & Melinda Gates Foundation in 2000 with $106 million. It has now grown to become one of the largest charitable foundations in the world. Melinda is very active in the foundation as a co-chairperson with her husband.

Non-CSR-compatible Nigerian companies should take a cue from these splendid examples.

Thursday 18 July 2019

Retail &

BUSINESS DAY

consumer business Luxury

Malls

Companies

Deals

25

Spending Trends

Consumer goods

Consumer goods sell off is a golden opportunity to Buy these stocks BALA AUGIE

W

hile the consumer goods industry is the hardest hit by a harsh and unpredictable macroeconomic environment, the broader market selloff has created an opportunity for many stocks.

Tremendous opportunity arises whenever stock sell off arises, but investors with weak stomach for volatility are advised to sit on the side-lines and watch.

Investment House Cordros Securities Limited have a Buy ratings on Dangote Sugar (DANGSUGAR), Flour Mills of Nigeria (FLOURMILL), NASCON Allied Industries (NASCON) and PZ Cussons Nigeria (PZ), while we have ‘HOLD’ ratings on Nestle Nigeria (NESTLE) and Unilever Nigeria (UNILEVER).

Dangote Sugar’s shares traded at 7.67 times earnings while share price closed at N10.35 as of 2:00 pm Lagos-July 16 2019-; revenue for the first three months through March 2019 dipped by 7.24 percent.

The valuation trend of the producer of the sweetener shows revenue fell by 26.44 percent in December 2018 as price to earnings stood at 6.58 times, and the share price closed at N21.80 as of March 20 2018.

As of March 20 2017, Dangote Sugar shares traded at N6.50, while P/E ratio was 5.41 times earnings; revenue grew by 20.44 percent as at December 2017. As of March 20 2016, its shares traded at N5.70 as revenue spiked by 67.95 percent; P/E

ratio stood at 6.12 times in the period under review; Revenue in that period was up 6.53 percent in December 2016.

NASCON Allied Industries shares closed at N15.50 as of 2:00 pm in Lagos-July 16 2019- while the shares traded at 9.80 times earnings; sales for the first quarter of 2019 were flat. The company’s P/E ratio stood at 10.39 times earnings in 2018 while shares closed at N21.70 as of March 20 2018; revenue as at December 2018 fell by 4.80 percent.

As of March 20 2017, the company shares closed at N7 while P/E ratio stood at 7.61 times; Sales for December 2017 increased by 47.95 percent. In 2016, its shares traded at 8.25 times earnings while shares closed at N6.52 times as of March 20 2016; sales as at December 2016 were up 13.11 percent.

P.Z Cussons’ shares price closed at N6.30 as of 2:00 pm-July 16 2019- as P/E ratio was Nil. As of March 20 2018, P/E ratio stood

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at 26.25 times earnings as shares closed at N22.05b in the period under review; revenue was down 47.82 percent for year ended 2018.

As of March 20 2017, P/E Ratio stood at 29.83 times as shares closed at N14 in the period under review. Shares trade at N22.79 as of March 20 2016 while P/E ratio stood at 22.34 times; revenue was up 73.65 percent as at the year ended 2017.

Unilever Nigeria’s shares closed at N33July 16 2019-as of 2:00 pm in Lagos, while the shares traded at 18.40 times earnings; revenue for the first three months through March fell by 20.83 percent.

As of March 20 2018, Unilever’s shares traded at 30.89 times earnings as shares closed at N55 in the period under review;

Sales were up 9.05 percent as at December 2018. Its shares touched at N31.85 as of March 20 2017 as P/E ratio stood at 39.29 times; sales was up 30.01 percent as at December 2017.

Shares traded at N28.12 as of March 20 2016 while P/E ratio stood at 87.87 times in the period under review; revenue was up 17.81 percent in December 2016.

Nestle Nigeria’s shares closed N1250July 16 2019-m as of 2:00 pm while the shares traded at 20.97 times earnings; Sales were up 5.19 percent as at March 2019. As of March 20 2018, its shares closed at N1380 as P/E ratio stood at 17.62 times; revenue grew by 9 percent as at December 2018.

As of March 2017, Nestle Nigeria shares closed at N750 while P/E ratio trades at 75 times; revenue was up by 34 percent as at December 2017.

The company’s shares traded at 23.37 times earnings as at March 20 2016 while shares closed at N700 in the period under review; revenue was up 20 percent as at December 2016.

Subdued consumer spending due to Naira devaluation and fuel price hike has undermined revenue and margins of companies.

Companies had hiked the price of key products in order to fend off the effect of dollar scarcity and spiralling inflation rate, and they are finding it practically difficult to pass on the cost on struggling shoppers.

Nigeria’s economic growth slowed in the first quarter after the oil sector, the

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country’s biggest foreign-exchange earner, contracted.

Gross domestic product expanded by 2.01 percent in the three months through March from a year earlier. That compares with 2.4% expansion in the fourth quarter.

The country’s inflation stood at 11.20 percent as at June 2019, a figure that is higher than the 6 percent and 9 percent CBN target range.

Over the rest of 2019, economic growth is expected to gather some pace, but the impact will be negligible,” analysts at Cordros Securities “We estimate 2.21 percent in 2019; high inflationary pressures are also expected to persist - we estimate c.10.6 percent by the end of the year; and finally, unemployment is expected to remain above 23 percent, keeping consumer spending in check.

Also, consumer sentiments remain weak, with the CBN’s Consumer Expectations Survey showing that respondents were less optimistic about the future.

Analysts at Cordros Securities say going forward, the potential headwinds for consumers include: higher energy prices – petrol and electricity, and (2) higher VAT rate, which could potentially partially erode the effects of the minimum wage increase.

Data gathered by BusinessDay shows that the cumulative sales of 10 largest consumer goods companies quoted on the floor of the bourse reduced by 3.64 percent to N419.14 billon in March 2019 from N435 billion the previous year.

Combined net income dipped by 11.17 percent to N33.02 billion in the period under review from N37.17 billion the previous year.

Expenses of Nigerian companies are growing faster than an uptick in revenue as cumulative net profit margin fell to 7.19 percent in March 2019 from 9.53 percent as at March 2018.

Some consumer goods firms have put some measures in place to avoid further deterioration in margins.

For instance, it is expected that the NASCON Allied’s earnings will get a boost with the resumption of previously mothballed vegetable oil and tomato paste business.

Flour Mills Nigeria’s deleveraging strategy is expected to add impetus to margin and help deliver higher returns to shareholders.

Nestle, the most profitable Nigerian consumer goods firm will continue to introduce variations of the Maggi brand, launching Maggi Signature powder in the second quarter of the year to compete in the premium seasoning segment.

@Businessdayng

26

Thursday 18 July 2019

BUSINESS DAY

Retail &

consumer business Consumer Spending

Analysts see no relief in sight for Nigeria’s declining purchasing power …to hit mid-year earnings of FMCG firms Endurance Okafor

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o n c e r n s have been raised by analysts on the inability of Nigerians to increase spending as they see no relief in sight going into the second half of the year.

This is on the back of fragile economic recovery which has eroded the purchasing power of many in a country that has the poorest people in the world.

“Recent happenings within the Nigerian economic and political space continue to put pressure on the income of consumers and consequently the consumer spending. Rising levels of inflation continue to erode the real value of the Nigerian consumer income reducing thus their purchasing power, and coupled with ever increasing unemployment level further compounds the woes of the average Nigerian

consumer as their demand for goods and service prints at an all-time low,” Abayomi Ogunjobi, Head Investor Relations/ CEO Arrhenn said.

The dampened consumers’ wallet among other factors; smuggling of cheap products, insecurity in the Northern Nigeria, and the Apapa gridlock has affected the performance of firms in the Fast Moving Consumer Good (FMCG) sector.

“The Consumer goods space remains fundamentally weak particularly due to Weak consumer pockets, Increasing Brand competition and inability to pass through increasing

Companies

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orld’s largest food company, Nestlé, has announced plans to reduce the sugar content in its popular confectionery products including, KitKat The food company is using a patented technique to turn the white pulp that covers cocoa beans into a powder that naturally contains sugar.

Alexander von Maillot, head of Nestlé’s confectionery business said Nestle could use the same process to make milk or white chocolate in the future.

The Swiss food giant, Nestlé said it will start selling KitKat bars in Japan later in 2019 with 70% dark chocolate under the new recipe, which does not include any added sugar. Until now, the pulp has never been used as a sweet-

impact consumer income as it could involve “robbing peter to pay paul”. Overall, we are downbeat on the consumer goods space,” Akinloye concluded.

At the end of the first quarter of 2019, the largest consumer goods firms made N419.14 billion, a 3.78 percent reduction from the N435 billion realized in the same period in 2018, as compiled from BusinessDay analysis of the firms’ financials.

Average net margins fell to 7.07 percent in the same period, a 9.17 percent decline compared to the previous year: meaning the companies are finding it difficult to turn each naira generated in sales into higher profit fuelled by harsh economic environment.

A dive into the first quarter financials of eight consumer goods players revealed that five firms including Unilever, PZ and Dangote Sugar posted declines in their revenue.

Revenue of Unilever dipped 21 percent to N19.2

billion in the first three months of 2019, from N24.3 billion in the previous comparable period. PZ Cussons’ top-line contracted by 13 percent from N63 billion to N55 billion in the first nine months ranging from June 2018 – February 2019.

Among the brewers, while Nigerian Breweries and International Breweries saw revenue jumped 3 percent and 35 percent respectively, Guinness’ top-line shed 4 percent.

According to a H2 outlook report by Afrinvest Research, the consumer goods index declined the most, falling 16.9 percent in the first half of the year as the traffic gridlock in Apapa coupled with dumping of goods, took toll on the revenue and earnings performance of companies in the sector.

“The foregoing no doubt would impact the fortune of most FMCG companies, as consumers would rather save to consume only necessities and shun luxury until improvement is evident in the economy,” Ogunjobi projected.

Consumer spending

KitKat to get less sweet as Nestle reduces sugar in chocolate bars OLUFIKAYO OWOEYE

costs. The implication of this is lower margins for most of the FMCG companies,”Ayorinde Akinloye, a consumer goods analyst at Lagos-based CSL Stockbrokers said.

Data from the National Bureau of Statistics as analysed

by BusinessDay revealed that since 2015, Nigeria’s annual population growth rate of 2.6 perecnt has remained lower than the country’s economic growth rate, even after its exit from recession in second quarter of 2017.

According to World Data Lab, a predictive analytics social enterprise, Nigerians living in extreme poverty crossed

the 83 million mark in 2018, surpassing India’s number of extremely poor at 73 million.

This means that almost one out of every two persons living in Africa’s most populous nation is now living in extreme poverty.

According to economists Nigeria’s current title did not come as a surprise considering the most populous nation in Africa has an unemployment rate that has ballooned to a nine-year high of 23.1 percent in the third quarter of 2018.

“Going forward, I expect these challenges to persist which could go further to impact profits by the end of the year. The catalyst we are looking towards is the implementation of the minimum wage without affecting consumers in the sense that for example, the government does not raise taxes or remove subsidy to meet the new obligations.

This in my opinion is a big ask for the FGN, thus the minimum wage might not

ener for chocolate, and usually it is thrown out.

Nestle and other food companies are under immense pressure from a shift in consumer preferences towards healthier food and away from processed products amid rising obesity and diabetes rates.

Nestlé’s move could bolster its position as a leader in the industry, and it comes three years after finding a way to alter the structure of sugar to make it sweeten food more in lower quantities.

Nestlé’s new 70% dark chocolate will have as much as 40% less sugar than most equivalent bars with added sugar. Nestle’s existing dark chocolate KitKats have 12.3g of sugar per serving.

Nestle, makers of Milo drink and Maggi seasoning is responding with healthier products and also moving into higher growth categories, such as coffee, pet care, bottled water and infant nutrition.

Cooking gas prices fall four straight months on efficiency, availability BUNMI BAILEY

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eamless availability, efficiency of gas and government intervention in tackling the bottlenecks in the gas sector lowered the average price for the refilling of a 5kg cylinder for Liquefied Petroleum Gas (Cooking Gas) for four straight months to June 2019.

Average price of cooking gas fell marginally 1.61 percent to N1, 995.4, according to figures from National Bureau of Statistics.

An expert in the gas sector who wishes to be anonymous said that there is a push by the government for the domestic supply of Nigerian Liquefied National gas (NLNG), as it is currently taking shape in the market.

“What has happen is that in the last 12 months, there has been a seamless efficiency of gas in terms of the supply chain. So now you have gas coming from NLNG and other sources being stored on time and made available to the domestic market, transported

and shipped to consumers,” the anonymous person further said.

It is believed that in the past, sometimes gas products from NLNG and other sources were hoarded because of limited storage capacity at the thermals. When people hoard the products they created scarcity and panic in the market which raises price.

Other challenges confronting the gas sector include production, limited thermals, inadequate finance, poor policy implementation, professional knowledge gaps and low capacity building.

The present administration has been intensifying its efforts in reducing the massive dependence of kerosene for cooking activities by creating an enabling in a bid to increase domestic consumption of LPG by various homes across the country. “The government had decided to unlock the domestic LPG value chain as this was one policy that the current administration was passionate about since Nigeria had one of the largest gas reserves in the world,” Yemi Osinbajo, Vice-President of Nigeria said

at a Domestic Liquefied Petroleum Gas Stakeholders’ Forum in Abuja in 2016.

Also, earlier in August 2018, the Federal Government had agreed to the removal of Value Added Tax (VAT) on locally produced LPG from the Nigeria Liquefied Natural Gas company (NLNG). This action will reduce the cost of locally produced LPG, making it more competitive against imported ones and also encourage investors to go into the manufacture of LPG. The VAT imposed on the LPG from the Nigeria LNG has made the product more expensive.

Ayodele Oni an energy partner at Bloomfield Law

Team Lead: Bala Augie, Olufikayo Owoeye; Analyst: Bunmi Bailey; Graphics: Fifen Eyemisanre Famous www.businessday.ng

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@Businessdayng

Practice, maintained that government is exerting lot of efforts to resolve thermals crises, which has paid off as thermal are now available for gas production.

“The gas is more available that is why the price has been dropping. Before people used to hoard it thereby creating artificial scarcity and there were issues in the port as there was only one functional terminal then,” Oni further added.

Ayorinde Akinloye, a consumer goods analyst at Lagosbased CSL Stockbrokers in his own opinion said thatgas prices have maintained a steady downtrend over the past 4 months particularly in April and May when there was a significant decline in oil prices. “LPG being a derivative of crude oil is also impacted by movements in oil prices, thus the price dip of May and June fed into lower LPG prices,” says Akinloye.

It seems the government implemented the action as the Nigerian Association of Liquefied Petroleum Gas Marketers, (NALPGAM) in May 2019, commended the government for the removal.

Thursday 18 July 2019

BUSINESS DAY

27

ENERGYREPORT Oil & Gas

Power

Renewables

Environment

‘Indigenous companies need collaboration to achieve cost optimization in gas production’ Stories by Olusola Bello

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e mb e rs o f indigenous Oil and gas producers at the recently concluded Nigeria Oil and Gas conference in Abuja xrayed their operations within the context of the hydrocarbon industry and demanded that the government must create an enabling environment for them to succeed.

Their emphasis was what needs to be done to produce gas that would boost the power sector and by extension the economy without much of the challenges they are currently facing.

They are however of the view that the government doesn’t create a market but rather it should support markets.

But for the government to provide the enabling environment they resolved that they would be doing more of advocacy so that they can engage the government better and through they may be able to evolve solutions together.

Ainojie Alex Irune, chief operating officer Oando Energy Resources said that the consequence of not getting things right in the industry is what has led the Central Bank of Nigeria to abridge the financial shortfalls in the industry as they occur

“I think the industry operators and the government should work hand in hand because it is not it is a government and private sector thing. I think the PublicPrivate Partnership (PPP) models only work if both parties understand that they are equally culpable, to this point advocacy is what the stakeholders need to step up to do”, he said/ The other thing that can ensure the success of the indigenous Producers he said, is collaboration. He said as indigenous companies they do have a considerable balance sheet challenges because they borrow funds at about 15 percent interest rate because of the country risks as against

what is obtainable anywhere in Europe which is between 1.3 to 4 percent, in Asia 3.5 percent, US 2.9 percent and South Africa 5 percent. The indigenous companies he explained cannot compete unless they can solve the enabling environmental challenges.

Investment is purely based on market conditions and the return on the cash deployed. An investor he said would always see a country like Nigeria as not being the only their fund can go if the enabling environment is not favorable for them.

“As indigenous players we must understand that the attractiveness of Nigeria first and foremost as an invest-

ment destination is their responsibility so through collaborations, reducing cost, co-sharing, and co deploring”.

The operators he said must come together if need be even in the acquisition of some of the acreages whether it is in gas or oil, power generation or gas to the power value chain.

Another speaker,Ebiaho Emafo,managing director,Eroton Exploration and Production Company lamented the environment in which the indigenous producers are operating stating that about 85 percent of the gas produced goes to the power sector and if the power sector is not able to generate enough electricity for

Nigeria’s Gas development: The Chevron Nigeria case

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he development of Nigeria’s vast gas resources has been one of the major policy thrusts of successive governments in Nigeria. It is worthy of note that Nigeria is blessed with resources for growth and global competition in gas. According to the Department of Petroleum Resources (DPR), Nigeria has the largest gas reserves in Africa and is ranked 9th globally - Current estimates put its proven reserves at about 200 (Tcf ) and 600Tcf unproven.

Nigeria has a robust and rapidly evolving demand base.

Through the National Gas Policy (NGP) and the Nigerian Gas Master Plan, the FGN continues to focus its efforts to unlock the vast gas resources through reducing gas flaring, increasing domestic supply and utilization, while diversifying Nigeria’s economy.

Olusola Bello, Team lead,

In Nigeria, Chevron Nigeria Limited (CNL), the operator of the joint venture between the Nigerian National Petroleum Corporation (NNPC) and CNL ranks high among some corporate bodies that play leading role in gas development in the country.

CNL has continued to receive accolades for its contributions to gas development in support of the Government’s gas development objectives.In February 2018, at the Nigerian International Petroleum Summit (NIPS) in Abuja, Chevron received an award as the greatest contributor of domestic gas in Nigeria.

Chairman/Managing Director of CNL, Jeff Ewing explained that CNL has contributed immensely to the Nigerian government’s gas master plan through the various gas projects it has embarked on and that the company is the

Graphics: Joel Samson.

highest contributor of high quality gas to the domestic market in Nigeria. Also, according to the Department of Petroleum Resources (DPR), CNL supplies about 40% of Nigeria’s domestic gas consumption and the company is one of the highest contributors of high quality domestic gas in Nigeria.

Jeff noted that through investments in gathering and processing of associated gas, routine flaring has been reduced by over 90% in the last ten years in CNL’s operations.

According to him, “amidst the growing global trend in gas production and utilization, the expectations for the gas sector in Nigeria remain high and provide opportunities for investment in the sector.

The opportunities include :Transitioning from an oil based economy to a more integrated oil and gas econ-

www.businessday.ng

omy and end routine gas flaring; Deliberate exploration for non-associated gas to support the Nigeria Gas Master Plan, with a focus on high liquid yield nonassociated gas resources to optimize the gas development project economics..

Other opportunities include: Removing constraints in the gas to power value chain to increase investor confidence, and Supporting and enabling competitive (“Willing Buyer – Willing Seller”) gas pricing model across the chain to enable stakeholders cover their costs and be guaranteed a return on investment.

CNL’s Chairman/Managing Director explained that the company’s gas story began with the implementation of different phases of the Escravos Gas Project (EGP), with four phases of development over the years.

the populace and generate enough revenue to pay for the gas, then there is a problem.

“As an indigenous investor you would want to invest money where you are going to get a return, so investing in gas when you know you are not going to get your money is a challenge”, he said.

According to him, there is a lot of regulations put in place by the government suggesting that she does not want producers to flare gas. This he said makes a lot of sense but when confronted with some of the challenges in the sector you may find out that it is easier to flare, especially when you realize the gas produced is taking and you are not going to get paid for what you supply.

He, however, advised the operators to keep on talking as they still need to work on gas infrastructure which would enable them to supply gas to the domestic market, especially for industries within their areas of operations and beyond.

He emphasized on the need for them to work towards collaboration because when they work together it reduces total cost and gain value for the business which they operate.

In his contribution on national gas utilization, Wale Olafisanof AMNI International Petroleum Development said there is the need for the

DPR reiterates zero tolerance to infractions from operators

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he Acting Director of Petroleum Resources, Ahmad Rufai Shakur has emphasised the Department’s commitment to intensify it’s regulatory and supervisory role for the oil and gas industry in Nigeria.

Speaking at a media briefing at the DPR in Lagos, the acting Director informed the public that the agency will not tolerate any acts of infractions by licensed operators in the sector.

The declaration by the Ag. Director is coming on the heels of the recent discovery and seal of an illegal LPG plant owned by Petrocam Trading Nigeria Limited during the department’s routine monitoring of LPG facilities in Lagos.

Email: energyreport@businessdayonline.com, Tel: +234-8023020011

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operators to rise and stop the concept of being spoon-fed as nobody is going to come from anywhere in this world to develop Nigeria saying that Nigerians need to do that for themselves.

He said he does not believe that Nigerians cannot pay for power. As indigenous companies, he stated they must hold fast what we have and develop this country for the sake of generations coming. To achieve this he said they need collaboration and discipline because our future depends on this.

“Yes, we are doing about 22 percent of oil productions, we can do more than that in gas if we start that now. We can say it is more expensive in terms of capital expenditure (CAPEX) if you have good project money would follow it,” he said.

He said the gas being produced is not just for the power sector but for petrochemical, agriculture and so on.

Kemi Fatogbe of CBN while commenting on the situation with gas subsector said while every other nation is pushing towards gas utilization the country is still dragging its foot by not giving it the attention it requires.

She said however that the industry has not done enough advocacy about what needs to be done in the industry to make the government bring out impactful policies.

@Businessdayng

The inspection team observed that a 10MT capacity Gas filling plant was fully operational and without due DPR approval The facility did not meet the required minimum safety distance to adjourning structures as well as other violations.

As a result, the illegal gas plant has been decommissioned and it is no more in business for non compliance with DPR’s statutory guidelines and regulations on construction and operations of Gas Plants.

There Director advised members of the public to desist from buying products from unlicensed outlets and also to report any suspicious activity to the nearest DPR office Nationwide.

28

Thursday 18 July 2019

BUSINESS DAY

ENERGYREPORT Govt support, not strict regulation will develop the Power sector

Chukwueluka Umeh, executive director, Nestoil, have identified non adherence to signed agreements by regulators, fixing of uncompetitive price and lack of support as malaise to the provision of regular power to Nigerians. In this interview with Olusola Bello at the sidelines of the recently held Nigeria Oil and Gas conference in Abuja, he mention ways on how government can make provision of power available to the citizenry.

How can Nigeria as a country tap from its huge natural gas reserve to develop the power sector? ike I earlier said Nigeria is at the point where we ne e d to de cide where we’re going as an economy. Our primary income is from oil and gas with a large percentage of that skewed towards oil. But the world is changing, the energy focus is changing and we must also change so that we can survive as a country.

Where we are today. We export. You heard the ghroup managing director of the Nigerian NationalPetroleum Corporation (NNPC) said that we will use only about 10 percent or thereabouts of our gas domestically. And I think this is what causes a lot of the economic challenges that we are having in the country today. We should really be a gas economy rather than an oil economy. But as you know it’s the other way around. For us to be a gas economy, we must make the entire gas value chain work. What that means is the gas producer should be able to make the investments required for them to produce, the gas transporter, the owner or the owners of pipelines should have robust infrastructure to move their gas around the country.

And it’s not just what we have today. The pipelines we have in the country today are grossly inadequate to move our gas around. So, we should ideally have pipelines running to every part of the country. Every state in this country should have a gas pipeline get into it. Beyond that, the actual use of the gas in the country is of optimum importance. What I mean at this point is that we need to have power plants running on gas in most parts of the country. It’s a travesty that we’re producing 4000 megawatts every year to 180 million people.Meanwhile in Norway, you heard the high commissioner said they have 3 million people but they’re producing 36,000 megawatts.

South Africa has 57 million people and they’re producing 42,000 megawatts and we’re still talking about 4000 megawatts in Nigeria.

We hit 4500 megawatts, I think a year ago and people were clapping, they should be crying. People should be weeping. As the High Commissioner from Norway was speaking I was ashamed.

We should be crying. So the power industry must work, the petrochemicals indus-

L

try must work. We produce or we have the capacity to produce about two million metric tons of fertilizer in this country per year, but we also import petrochemicals. We shouldn’t be importing. We should not import fertilizer.

We should be producing, using it domestically and also export and we have the capacity, so those value which is part of the value chain must work, distribution companies should be able to make the money required to make the investments that they need to make.

How can we have a truly gas economy that will protect the value chain?

How is it possible that a DISCO, like EnuguDisco that covers the five southeastern states, they have only metered less than a million people. How is that possible and we have over 80 million people thereWhere’s the power going? But you can’t blame the Discos because they need to be able to make the investment and make their money back.

When the government tells the DISCO how much they can sell power, they can’t make their money back. That means they can’t invest, so DISCOs must be able to sell power at a price and a tariff that allows them to make the investments and then still make a return.

Like I said nobody is in business for their good health. People go into business to make a return. For us to be able to achieve this, the government must work with the private sector as true partners. They must realize that private companies are the ones that are going to catalyze the industry.

They’re the ones that are going to make the required investments, they’re the ones that are going to attract foreign investments for us to grow our energy industry.

So once the distribution networks are working, people are buying power and paying for the power that they buy, they are able to pay the GENCOs for the product that they produce and sell to them.

The GENCOs are able to pay the gas transported to the owners of the pipelines and then to the gas producers and the value chain works.

Only then can we have a true gas economy in this country and we can do it within,if I’m being conservative, within 15 years, within our lifetime, we can actually see this happen.

It’s within our lifetime that China went from a relatively poor economy to almost a superpower. It happened in www.businessday.ng

Chukwueluka Umeh

the space of about 20 years.

So we can do the same thing and you know when we talk about oil and gas, I tell people don’t put the cart before the horse. We must allow the industry to grow. The investment will come. Companies like Nestoil will grow, other smaller subcontractors will growtoo. Nestoil will also grow, other companies will start just like Nestoil started 28 years ago, so it’s a chicken and egg situation.

But we must do the right thing. We must slacken our regulations to a point that they would allow private companies to start building.

In the eight to nine years that we’ve been talking about power privatization, only one power plant has been built, only one which is the Azura power plant. But the Government has given out licences to over 100 companies, yet only one was able to build a power plant. And even today, it is struggle to collect the money for the power they produce. So ladies and gentlemen I pose it to you, we have to change the way we do things in this country.

Only then can we start to see true progress.If the oil price fall to $30 a barrel today, we are in trouble.

Successive government have done a lot in the power sector, but why are we still having the same issues?

I will respond by asking the question back to you.

We privatized the telecoms industry some years ago to date and it works very well.

Why did it work? I’ll answer the question. When the government privatized the telecoms industry, they essentially did a proper part of that and then hands off.And let the private sector drive the industry, the NCC today does what I call intelligence regulation. The NCC allows private companies when

they are issued frequencies to work within their frequencies and then they regulate, they say how many states you must roll out in. Some of the things you can and cannot do and they allow them to do business.

The network providers, when they came to this country, they charged a very high tariff but people were still happy to pay it because at least the network was functioning.People underestimate the ability of Nigerians to use the resources available to them. The government today in power is very concerned about people paying more than they think they should pay for power and because of that, they are regulating the industry so much that it stifles any growth, it stifles any development.

When the privatization of the power industry started back in 2010, they had a very nice roadmap laid out, it was clear how all the assets were going to be sold, It was clear how all the debt within the industry was going to be handled and it was clear the metrics that successive companies had succeeded in buying these assets will be held to.

All of that has changed.

All the private companies that came in from overseas and governments that came in from overseas to invest have so been demoralized because the regulations continue to change every time. Agreements that were signed, you heard the British High Commission saying we must respect contracts. A lot of the contracts that were signed were not respected, a lot of the rules were changed in the middle of the game.

When you say to a person if you buy this asset you have 30 days or 60 days to pay for it, if you don’t pay we’ll take the asset that way and give it to the next bid-

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der. When we don’t do that, guess what happens? You are sending a message to the investors that we’re not going to do what we said we would do. And that’s what happened. Now the people that bought the assets were told that within a number of years they expected to make certain investments and if those investments are not met, there were certain sanctions that would be allotted to them. None of that has really been done. So we have not done a true privatization. Today, as a power company, you would jump through so many regulations to try and get a simple license and I say to people the licence is just a piece of paper. It doesn’t help you get money to build any assets, so I say to the government what we are trying to do in Nigeria is that we are trying to regulate the market into existence. You can’t do that.

Let the market grow first.

Then you regulate it. The regulations that the government should worry about today are simply the regulations that will say these are the type of companies that can do this type of business, these are the metrics that you must meet for you to be able to do this business and these are the areas where you’re allowed to work. Beyond that, the government needs to step back and let the companies do what they need to do so that they can actually raise money to do business. We have invested over $50 million in the energy industry,in the power industry at Century Power.

We have gone through all the agreements that the government said we needed to go through, we have gone through a lot, which is, I mean we paid lawyers, local and international lawyers, we paid technical technocrats, technical consultants from different countries to do all the things we were supposed to do. We have done environmental impact assessments approved by the World Bank. Where are the agreements for us to now go and raise the money? They are there but they’re not bankable. Bankable mean that you cannot secure a loan with those documents and your guarantee that you’ll be able to repay the loans. So the industry would never work.

On that, what we are currently doing, it would never work. I said it five years ago, six years ago, I said it four years ago and I’m still saying it again, it will never work. It is just a dream. @Businessdayng

How can the industry work?

For the industry to work, we must change the way we do it. The government must relax their regulations. I am not saying do not regulate it. I’m saying you must relax it. You must let private companies deal with each other as through the willing buyer - willing seller type regime. You cannot regulate gas price. You cannot regulate the price of power that the generating companies produced and you cannot regulate the price that distribution companies sell their power. Let competition regulate the price. People will buy. Today, you probably pay about N30 per kilowatt per hour for the power you get from the National Grid, when you use your generator you are probably paying close to N100. But you don’t know that, you will be happy to pay N50if you get power for 24 hours a day,seven days a week, you will be happy to pay it. But a lot of Nigerians do not know what they are currently paying, so they think that the government is doing them a favor by regulating these prices. They are not doing them a favor. Even some people in the government do not realize what they’re doing. So you must let private sector work with them as partners. That is the only way it’s going to work.

I thought you are going to give us good news about the OB3 pipeline project, but as business people have you approached government on power situation and say these things cannot work they way they are going?

On OB3 Pipeline construction: That pipeline work is still ongoing. And I seriously still welcome you to come and see it. I say to people that we have 10 percent more rainfall in Niger Delta virtually every year. It is better you see it, than you hear it. When you see the River Niger go up from a certain level in meters in the space of four weeks or five weeks. You can’t imagine it, you can only see it.

What are you doing on advocacy to get the message on the power sector to the right quarters?

On advocacy, I would be more than happy to have a chance to sit with the president for 10 minutes, all I need is 10 minutes of his time.

However you know the country we live in, so sometimes they’re set in, it’s difficult to have that kind of opportunity to talk about things like this but we’re still open to having that engagement.

Thursday 18 July 2019

BUSINESS DAY

29

LegalBusiness BD Business Law Industry Report Practice Intelligence Partnerships

Securitisation as a financial engineering tool for bridging the Corporate Finance funding gap ABAYOMI ADEBANJO & CHUKA IKELE

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nderpinning any viable economy is the existence of a thriving financial system backed by healthy financing structures with the ability to shoulder the huge responsibility associated with supporting sustainable enterprises, which in turn facilitates commerce and guarantees the making of a strong economy.

Securitisation, famously known as a structured financing technique or infamously as a synthetic transaction is a means of transferring risk from the books of financiers and originators, enabling the reflation of books, diversification of funding sources and management of balance sheet.

This is not to say that this approach to structured financing is without peculiar hiccups, after all it has often been blamed in the U.S. as a major catalyst to the 2008 financial crisis which shook the global financial system, led to the demise of numerous banking giants, collapse of formidable industry players and bailouts of unprecedented nature, coupled with numerous ripple effects which many institutions and economies are yet to fully recover from.

The above notwithstanding, the recovery of the global financial system and the attendant measures put in place by the US Securities and Exchange Commission alongside other European regulators in the leading markets across the globe have led to a somewhat stable climate where structured financing and securitisation have flourished and taken center stage as effective financial engineering techniques.

Securitisation is especially worthy of consideration to any growing economy due to the numerous upsides including liquidity, increased investment activity, trading volumes and market maturity which are hallmarks of a healthy investment climate and which further lays a solid foundation for foreign direct investment, creation of jobs and financing for new ventures.

Although securitisation in the European market like other developed markets has not been without its own unique challenges, there have been gradual but consistent increase in the volume of securitisation deals since the global financial crisis in 2008. According to the Association for Financial Markets in Europe

Abayomi Adebanjo

Chuka Ikele

(AFME) in its Securitisation Data Report 2018, “In Q4 2018, EUR 88.4 billion of securitised product was issued in Europe, which formed an increase of 62.1% from Q3 2018 and an increase of 19.3% from Q4 2017. Of the EUR 88.4 billion issued, EUR 35.2 billion was placed, representing 39.9% of issuance, compared to the 55.1% of issuance in Q3 2018 and the 42.5% of issuance in Q4 2017.” While this is a far cry from the EUR 450 billion annually placed issuance levels of the pre-crisis years, it has demonstrated the resolve of the European markets and more importantly European Parliament to promote a safer form of securitisation as a means of raising capital, irrespective of its somewhat negative perception due to the fallout of the financial crisis. This conscious but yet measured approach of the European Parliament speaks volume about the instrumentality of securitisation in improving the efficiency and stability of the European financial system as well as providing more investment opportunities.

An additional testament to the resolve of the European Parliament was the introduction of the EU Securitisation Regulation which came into force on 1 January 2019, and which reiterated the requirement for institutional investors to observe defined criteria and procedures for investment making decisions as well as the observance of risk retention (skin in the game) requirements by originators or lenders. Institutional investors have been further saddled with the duties of establishing processes for monitoring asset performance by the originators, sponsors or lenders in each secuwww.businessday.ng

ritisation transaction, as the case may be. In addition to the foregoing, due diligence and disclosure obligations are reproduced in the Regulation, for example the loan-by-loan disclosure requirements in the Credit Rating Agency Regulation (also known as “Article 8b” disclosure) is included and it provides that information regarding credit quality, cashflow, performance data must be disclosed to investors every quarter for asset backed securities and monthly for asset backed commercial papers Another interesting highlight of the Securitisation Regulation is the Simple, Transparent and Standardised (STS) securitisation framework which aims to promote amongst other things, the issuance of simpler and transparent securitisation transactions which are capable of diligent appraisal and observation by both retail and institutional investors as well as regulators. Additionally, the framework provides that for certain securitisation transactions to fall under the STS classification, the underlying asset pool should be homogenous in nature, bearing in mind that STS securitisations are eligible to benefit from more favourable regulatory capital treatment. It is the hope of the European Parliament and European Union that this would serve as an incentive for simpler securitisation transactions which are capable of promoting transparency and healthy developments in a more sustainable fashion.

The Nigerian conundrum The International Finance Corporation (IFC), a member of the World Bank Group as of 2017 had estimated that small and medium enterprises (SMEs) in Africa were

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facing a financing gap of over $136 billion annually. This financing gap is further exacerbated by the limited funding sources or more appropriately the lethargic and narrow financing options that have become the staple option of most SMEs in Nigeria even with the obvious prospects of securitisation.

Now, some breakthrough has been recorded in the securitisation regime in Nigeria since the issuance of Securities and Exchange Commission Nigeria (“SEC”) Rules on Securitisation and also concerted efforts to pass the Securitisation bill but even with this nascent progress there has been only 3 successful securitised issuance programs in the past decade (i.e. the Cerpac Future Flow Securitisation of Expatriate Receivables programme, the FMBN Mortgage Backed Securities (MBS) Series 2 & 3 bond issuances and the Nigeria Mortgage Refinance Company (NMRC) bond issuances) and surprisingly sponsors have not been able to exploit the existing framework to enable them generate the much needed liquidity for their businesses and the question then is whether there are any lessons to be learnt from the international markets especially Europe especially given their measured approach to securitisation.

In as much as the key role of the state and regulators through legislation is to formulate and drive sound economic policies capable of bridging the huge funding gap, it would be most diligent to outline as well as appraise the role that financial engineering can play if deployed effectively and responsibly in the Nigerian lending space. In simpler terms, financial engineer@Businessdayng

ing is the use and development of quantitative techniques (which are mostly innovative) to create solutions to financial challenges as well as minimizing risk for the purposes of achieving increased earnings and profits. We are by no means suggesting a hook, line and sinker approach to applying financial engineering techniques, mainly due to the nuances and variances between a fully developed economy and a developing one. We can, however, borrow a leaf from certain aspects of the concept especially securitisation, which has over time proven to be an effective approach to creating liquidity, diversifying risk and recycling capital for re-ploughing into the financial system. This can be achieved by identifying and avoiding the pitfalls that plagued the often complex securitisation techniques which ultimately contributed to the 2008 global financial crisis and basically applying a simple and transparent approach, in the process breaking down all the complexities capable of constituting further problems.

Given the possibility of securitising all on-balance sheet assets in Nigeria even intellectual property assets subject to the proviso that the underlying assets represents the debt obligations of a homogenous pool of obligors, it is important to interrogate the lack of interest in accessing capital.

On a surface level, the ambivalence towards securitisation options seems to be a function of 2 integral factors. Firstly, lack of sufficient market knowledge and awareness about this option and secondly, the seeming complexity and costs associated with this option (even though the benefits far outweigh the costs). Notwithstanding these patent issues, there are other more structural latent issues that may be contributing towards the unpopularity of securitised transactions and these relate to the following: Taxation: There exists no specific Nigerian tax laws governing the taxation of securitised transactions and a dearth of tax cases dealing with securitisation, meaning there is a lack of precedent on which to base most of the subjective issues associated with securitisation. Further compounding the situation is the absence of waivers or incentives for contentious areas such as Stamp Duty tax and Capital Gains Tax all of which impact these transactions.

Insolvency: An integral re-

Continues on page 30

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Thursday 18 July 2019

BUSINESS DAY

BD LegalBusiness LEGAL INSIGHT COSON v. MCSN: let the music pay who exactly? (2)

FRANK OKEKE & TITILADE ADELEKUN ILESANMI Continued from last week

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fter several petitions

by MCSN, Abubakar Malami, the Attorney General of the Federation issued a directive mandating the approval of MCSN as a CMO, having met all the criteria under Article 2 Copyright (Collective Management Organisations) Regulations 2007 (CMO Regulation). Contending with this development, COSON filed an action COSON v. MCSN & NCC Suit No: FHC/L/CS/1259/2017 praying the FHC to withdraw the approval. The suit was dismissed and MCSN’s appointment was validated.

COSON’s License is Suspended Subsequently, COSON’s operating license was revoked by NCC, following the lingering factional dispute in the governing board of COSON as to legitimate leadership. According to reports, part of this resulted from allegations of financial mismanagement against COSON by some influential artistes under COSON’s repertoire.

As a result NCC issued a directive mandating COSON to, amongst other things, hold an Annual General Meeting to elect directors. This directive was ignored by COSON which led NCC

to revoke its license under Article 3(i) CMO Regulation.

Current Position on CMOs in Nigeria As at the date of this article, it would appear that COSON does not have the right to demand for royalties from any person during its suspension. Incidentally in NCC v. Tony Okoroji & Ors. Charge No: FHC/L/338C/18, the NCC also proceeded against key personnel of COSON for demanding royalties with its suspended as a CMO an action punishable under section 39 NCA. The crux of the matter is lis pendens - thus no action can be taken to disrupt the status quo. COSON cannot demand royalties until its suspension is lifted either by the NCC or through the final judgment of court of competent jurisdiction.

COSON’s suspension, if lifted, would result in the existence of two CMOs (MCSN and COSON).

While Nigeria has always operated a single CMO system (MCSN and COSON at some point operated simultaneously for about fourteen (14) months), the law does not prohibit a multiple CMO system. The CMO Regulation which guides the operations of CMOs in Nigeria arguably contemplates more than a single CMO; the reality is that there is currently no prescriptive provision for only one CMO in Nigeria.

Accordingly, belonging to a CMO is optional and artistes de-

cide who they want representing them; thus MCSN and COSON (if it successfully scales it legal hurdles) can only collectively manage artistes respectively registered under them. It is therefore advisable that before making payments to CMOs for copyright usage, “users” request for the artistes in the repertoire of the collecting society (whether MCSN or COSON). This is to ensure dues are paid to the right organisation, the right fee is charged and double payments are avoided.

Comparison with other Jurisdictions In other jurisdictions like America, their music industry operates a multiple CMO (also known as Performing Rights Organisations (PRO)) system, with organisations such as BMI, ASCAP, Pro Music Rights (PMR), Global Music Rights (GMR) etc.

The CMOs operate by managing the copyright of their registered artiste members. The major challenge with a multi CMO system is the issues of double payments.

On a positive note, a multiple

CMO system would promote accountability on the part of the CMOs. Over the years major drawbacks of CMOs include abuse of powers; non- transparent operations; monopolistic behaviour to create profit for themselves; mismanagement of artiste royalties; selling expensive blanket licenses etc. For instance in 2009 the CEO of an Insight Firm in America, accused ASCAP for allegedly only remitting royalties to artistes whose music are on one of the US top 200 grossing songs of the year.

Also just recently, according to news reports, TuFace Idibia petitioned the NCC against COSON leadership over alleged mismanagement of funds and corruption.

A CMO, being a company limited by guarantee, is allowed to recover expenses incurred in the recovery of royalties. Tuface’s allegations related to ‘bogus’ fee expenses for security agents, legal fees etc.

A multiple CMO system would balance the bargaining powers of both the copyright user and the copyright owner by setting reasonable fees, promote competition among CMOs, etc.

Conclusion Clearly, the CMO system is not without flaws and it is fraught with many challenges. The concept of royalties payment by CMOs is one that cannot be mathematically ascertained, as it is impossible to determine the exact number of times artiste’s songs were played vis-à-vis

another artiste to determine who gets a higher percentage. The process is based on fair assumptions.

However, certain mechanisms can be put in place to ensure transparency such as encouraging a comprehensive database of artistes from the combined repertories of CMOs, display of license fees for the various categories of artiste, public audits, transparent disbursement of funds etc. A recent example in America was the consent decree issued pursuant to agreement between ASCAP, BMI and the US Department of Justice to ensure that PROs were bound by certain rules, control abuse of power and ensuring fair access to PROs’ musical repertoire.

The purpose of CMOs is to ensure artiste’s rights are protected and no one exploits their works without proper compensation.

Most artistes, despite airplay or other usage of their works, have nothing to show for it while the infringers enjoy the benefit it brings to their businesses. A multiple CMO system may be just what NMI needs to provide competition amongst CMOs and keep them on their toes. In the end, if we say let ‘the music play’, the music must in turn pay the artistes.

•Frank Okeke & Titilade Adelekun Ilesanmi are commercial lawyers with LeLaw Barristers & Solicitors, Lagos, Nigeria

Securitisation as a financial engineering tool for bridging the...

Continued from 29 quirement for securitisation transactions is that the SPV issuer of the asset backed securities must be insolvency remote meaning that the possibility of the SPV becoming the subject of any insolvency proceedings or exposed to the originators liquidators as a result of the originators insolvency is far off. Under the current legal regime the construct of the insolvency protections does not guarantee the insolvency remoteness of the SPV even though the SEC provisions prescribe some common steps to achieve insolvency remoteness including ensuring the SPV is operated on a solvent basis (by not having any operational employees and only undertaking activities within the narrow purview of the securitisation transaction). However more needs to be done in terms of legislation to ringfence the SPV from the insolvency proceedings of the originator and from the originators’ liquidators by limiting the statutory powers in terms of the SPV assets, including adding non-petition and limited recourse wording in all significant transaction documents that restricts a counterparty’s ability to take unilateral enforcement action against the SPV. Accounting treatment : The IFRS rules have made securitisation structures that allow an origi-

nator to remove receivables from its balance sheet harder to achieve because the originator would need to show that it is not only unconnected to the SPV but also it does not have a significant interest in the risks and rewards associated with the receivables.

Adapted, simple and clear securitisation as a solution A simple true sale securitisation transaction would involve a corporate/licensed financial institution/originator trading financial receivables derived from payments owed from loans, purchase of goods or services or any other circumstance creating a financial obligation to a securitisation undertaking or entity. The securitisation undertaking would then issue corresponding asset backed securities to investors (mostly institutional), this notwithstanding, the Originator would be subjected to risk retention regulations which would see such originator maintaining a certain percentage of the risk of the receivables on their books to ensure they oversee long term performance and servicing of the underlying receivables. In the above scenario, there are 3 categories of beneficiaries – (i) the obligors/SMEs who have access to financing needed to scale their businesses, (ii) the originator who has succeeded in eliminating the receivables from its balance sheets, increased its funding and www.businessday.ng

liquidity capacity for other capital requirements, diversified the attendant risk as well as strengthened its ratios, (iii) the investor who has been provided with an appealing and consistent avenue to invest its portfolios without the complexities typically associated with such. The ultimate winner in all of these is the financial system as it becomes more efficient, attains growth and stability which can further translate to the real economy.

Still being mindful of the peculiarities which a Nigerian securitisation transaction would bring about, it is still necessary to outline the potential wins that such a development would bring in the Nigerian context. For one, the shenanigans involved with the use of taxpayer funds to bail out banks with toxic assets would end and in the same stroke promote financial responsibility; the increased access to funds by SMEs will in no small way improve the economic situation of the country – from the creation of jobs, to tackling unemployment as well poverty and ultimately insecurity.

Alternatively, development financial institutions affiliated with the government can be pre-funded with clear priorities including lending to MSMEs, after which securitisation of the loans can be undertaken to allow for liquidity and utilization of recycled capital.

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The application of securitisation, although a welcome idea would not be devoid of the “Nigerian factor” which in practical terms would mean the huge risks that financial institutions, originators or investors would be exposed to if and when these structures are abused, misused and defaulted on by the “Nigerian” debtor. It is no news that Nigeria lacks the infrastructure (comprehensive database) with which to monitor, identify and allocate corresponding credit scores to individuals and would-be directors or officers of these MSMEs, in the event that loans are consistently defrayed overtime or outrightly defaulted. There also exists the problematic topic of adequate security (ranging from unavailability of collateral to actual value of the collateral) to unrealistic and unfriendly interest rates.

The above, in addition to the various challenges typically known to the lending/credit space coupled with general inconveniences surrounding doing business in Nigeria, have proven to be enough to stifle access to finance as a whole due to the associated high probability of default. This high probability of default has historically been largely responsible for the unreluctant attitude of financial institutions/originators towards financing businesses or projects not driven by high networth individuals or well-known @Businessdayng

corporate brands.

While this is not an ideal situation for any emerging economy that has aspirations towards developed economy status, it has left open a void of massive but yet untapped potential; which from a prudential and entrepreneurial point of view would be most rewarding for whomever is able to deploy the highest levels of creativity and innovation to build a well-adapted securitisation product and/or collaboration capable of withstanding the identified systemic rigours surrounding SME lending. Such product would not only revolutionize the banking and finance sector but would, upon the securitisation of the underlying loans align the interests of borrowers, banks, originators, investors and translate to a colossal win for the financial system and the economy.

As the saying goes fortis Fortuna adiuvat (“fortune favours the brave.”)

•Abayomi Adebanjo, Sector Head Financial Services Sector of Jackson, Etti & Edu is a qualified lawyer and holds a MBA from the prestigious LBS. •Chuka is a qualified lawyer and legal counsel at CrossLend GmbH, a Berlin/Luxembourg based Securitisation and Fintech company.

Thursday 18 July 2019

BUSINESS DAY

PERSPECTIVE

BD

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LegalBusiness

Nigeria’s judiciary now a stamping ground for contempt JOSEPH OTTEH

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n 14th June 2019, Governor of Kebbi State, Atiku Abubakar Bagudu removed Justice Elizabeth Asabe Karatu, from office as Acting Chief Judge of the State and appointed Justice Sulaiman Ambursa to act in that capacity, following the Kebbi State House of Assembly’s refusal to confirm Justice Karatu as substantive Chief Judge of the State. Before this time, Justice Karatu had petitioned the National Judicial Council (NJC) alleging, among other things, that she was being victimized by state authorities on grounds of her Christian faith and that Justice Sulaiman Ambursa had played

Justice Elizabeth Karatu Outside her court

a part in efforts to frustrate her confirmation as Chief Judge of the State.

On July 5 2019, which was Jus-

tice Karatu’s last day in judicial office, she was effectively prevented from approaching her courtroom where she was scheduled to deliv-

er the last of her judgement(s), by an officer of the Nigerian Security and Civil Defense Corps, who said his actions were in compliance with a directive given by undisclosed persons. Live footage of the scene showing Justice Karatu being prevented from entering her court has circulated widely on social and news media. The government of Kebbi State has not disputed, as much as we know, the current narrative of this event.

Preventing Court Proceedings from Taking Place a Brutal Assault on Rule of Law and Judicial Independence This is not the first time that Judges have been prevented from accessing their courts, recalling the events in Ekiti State in 2014.In every instance where this happens

through the deliberate act of a person or authority, it is a gratuitous contempt of the adjudicational authority of the courts as well as a grave assault on the rule of law and the administration of justice in Nigeria. It is one of the most sinister ways of preventing courts from playing their roles as arbiters of disputes and guardians of the liberties of the people and thereby represents a major threat to the rule of law and democracy.

Legally speaking, what the official of the Nigerian Security and Civil Defence Corps did was a classic act of judicial contempt – contempt of court, in all of its complexion. Whoever authorized the said officer to prevent Justice

Continues on page 32

JEE SECTORINSIGHT Raising capital in the FMCG sector: Overview of key considerations OBAFEMI AGABA INTRODUCTION he Fast-Moving Consumer Goods (FMCG) Sector represents one of the largest sector worldwide comprising companies that supply products that are in constant high demand such as food, beverages, personal hygiene and household items. From a retailing perspective, FMCG is cited as a low marginhigh volume game. Within these sub categories, FMCG products are often near-identical and for this reason competition can be intense.

Seeing as profit margins are usually slim, firms operating within this space focus on driving top line sales. To boost profitability, FMCG companies adopt varied strategies to drive product loyalty and in turn improve sales revenue.

Given the intense competition and emphasis in growing sales volume, the need for investment in capital assets and maintaining operational liquidity is intrinsic to creating competitive advantages for companies in this sector, hence the importance of expanding into new frontiers and markets cannot be overemphasized.

A corporate entity interested in expanding its business frontiers and increasing its revenue base has to consider various capital raising options. The key consideration in choosing a source of business finance is to strike a balance between equity and debt to guarantee that the finance structure suits the corporate entity’s business and also to ensure that it

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continues to thrive as a going concern. Below, we examine the dynamics of raising capital including identifying the right mode, capital and investor type as well as those consideration that are germane to a successful capital raise.

WHEN TO RAISE CAPITAL While timing is key in raising capital and there is no specific period to commence the process, there are important milestones the Company should set out to achieve. The company needs to have figured out its plans and feasibility, spent some time in the market, studying trends and profiles, undertake and analyse sales and growth projections, and articulate its objectives for raising capital. What is most important to raise funds is to be able to persuade the investors and convince them that the company can optimize resources in such a way that will catalyse actual growth in sales revenue.

OPTIONS AND KEY CONSIDERATIONS The options available to a company interested in raising finance can be capped under two broad headings which are: (a) Equity Financing and (b) Debt Financing.

Equity Financing essentially is raising money through the issuance of either ordinary or preference shares (these could be redeemable or irredeemable) by the company which is then bought by individual investors or institutional investors e.g. Pension Funds, Private Equity Firms, Venture Capitalists etc in return for money and these can be achieved through

Obafemi Agaba

any of the following platforms e.g.

Initial Public Offer (IPO), Rights Issue, Private Placement. This form of financing is attractive for the following reasons • Increased public awareness of the company because IPOs often generate publicity by making their products known to a new group of potential customers • It helps create shareholder value • Equity capital need not be repaid, unless the company is liquidated and can perpetually use it to grow the business • Increase in the capitalization of the company.

However, there are certain drawbacks: • Raising equity finance can be demanding, costly and time consuming.

• Leads to a dilution in shareholding of existing shareholders.

• Depending on the investor profile, equity financing may lead

to loss of control.

• Imposition of onerous reporting standards by the company to investors and regulators Debt financing on the other hand is a process that enables a company to raise finance by direct borrowing from financial institutions or through the issuance of debt instruments.

This form of financing could take the form of Bond Issuance, Loan Notes, Convertibles Asset Finance, Loan Syndication, Bills, and Mezzanine Financing.

The predominant issue with this form of financing is the issue of security as there is usually recourse to the assets of the company if the company is unable to meet its debt obligations. This form of financing is attractive as business owners can retain maximum control over business without worrying about diluting ownership interest. The interest payments on debt financing are also tax deductible. The lenders/ providers of debt do not share in profit and managerial decisions are shared neither with the creditors nor with debt holders.

Raising debt capital has proven to be more economical (except in the case of variable rate loans) as principal and interest obligations are known beforehand hence easily the company plan based on its cashflow.

However, there are certain drawbacks: unlike equity, debt must at some point be repaid. The larger a company’s debt-equity ratio, the riskier the company is considered by fresh lenders and investors. Too much debt in a

A publication by the law firm, Jackson Etti & Edu. www.businessday.ng

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company can erode its value and lead to insolvency.

Debt financing documents also often contain restrictions on the company’s activities, thus preventing management from pursuing alternative financing options and non-core business opportunities.

The company is usually required to pledge asses of the company as collateral and owners of the company are in some cases required to personally guarantee repayment of the loan.

Conclusion Irrespective of whatever finance method a company adopts i.e. either debt or equity, the overall contemplation for a business when considering its finance options is to avoid exposing the business to excessive high borrowings but without necessarily diluting its share capital.

It is very important for a company to consider its strategy for capital raising options before deciding on how to finance its activities.

Additionally, having the right set of professional advisers generally helps in the capital raising process and removing as much uncertainty or risk for investor or financiers will encourage investment and potentially reduce the cost of capital as a lower perception of risk, commands a lower premium on the capital.

For further information, questions and clarifications, please contact: Obafemi Agaba Sector Head, Fast Moving Consumer Goods (FMCG) obafemiagaba@jacksonettiandedu.com

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Thursday 11 July 2019

BUSINESS DAY

BD LegalBusiness PHOTOFILE Nigeria’s judiciary now a stamping ground...

Lawyers protest killings in South-Africa at embassy in Lagos Continued from page 31

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awyers in Lagos, on Monday stormed the South Africa High Commission at Molade Okota Thomas Street, Victoria Island, Lagos to protest the gruesome killing by strangu-

lation of late CIIN Deputy Directorgeneral, Elizabeth Ndubisi-Chukwu in a five-star hotel in Johannesburg while attending the Annual Conference of industry regulator, African Insurance Organisation (AIO).

THEBAR

Insecurity: We will no longer defend kidnap suspects- Ondo Lawyers YOMI AYELESO, Akure

Karatu from accessing her court is also a principal contemnor and all of them should be made accountable for their actions. It is also an interference with the administration of justice which is a criminal offence in quite a number of jurisdictions, including, possibly, Kebbi State The incident has profound other implications: the day of the incident was the last official working day for Justice Karatu as a judicial officer. She was in court to deliver final verdicts.

The Constitution requires that court proceedings must be held in open court. Preventing Justice Karatu from accessing her office invariably means that she couldn’t deliver her judgements in a legitimate way, and no longer could do so validly after that day.

This means that the entire trial conducted on the case(s) due for judgment would return a blank, and the efforts and expenses of everyone involved in them in vain. This would be a huge travesty, and a major set-back for the access to justice rights of those concerned, given that the right to a fair and reasonably-timed trial is a constitutional right, besides representing a major waste of public resources expended in conducting

the trial. Those responsible for interfering with the judicial process in this malevolently obstructive way and occasioning these futilities must be held responsible for their actions.

A Strong Response Needed: What the Judiciary Must Do If the Judiciary allows any form of this impunity to stand, it will shoot itself in the foot, inflicting harm on itself and its own powers and dignity, while opening the gates for repeat occurrences of similar acts in the future. If its responses come up short or light, it sends an ambivalent message about its own strength or resolve to defend itself when its core values are attacked, as well as its integrity as an institution of government. A weak response will further reduce the image of the Judiciary in the eyes of both members of the Judiciary and the wider public.

The leadership of the Judiciary (in both Kebbi State and nationally) must therefore; fully, impartially and transparently investigate the incident and bring those responsible for interfering with the administration of justice in this way to account; Related to this, it will also be particularly important to interrogate the response of the (acting)

(although) some of our colleagues have said it that it is unconstitutional.

“We are still calling the government to secure the lives and property of the people and one of the ways is to ensure that our roads are passable and motorable.

“If our roads are passable and motorable, it will be difficult for bandits or kidnappers to carry out their evil deeds.

“Our position still remains that governors should be ready to pay the ransom demanded by kidnappers.

Maybe if they are doing that they will live up to their responsibility to provide adequate security in their respective states”.

Ahmed said the maiden NBA Owo Law week was tailored in line with Law Week celebrations across the globe, stressing that the annual programme was to promote public understanding of the law and its role in society. www.businessday.ng

•Joseph Otteh is the convener, Access to Justice.

Akeredolu reiterates commitment to equal distribution of developmental projects in Ondo

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ndo State governor, Oluwarotimi Akeredolu, SAN, has said equal distribution of develop-

mental projects across the nooks and crannies of the state was a deliberate policy of his administration.

Akeredolu made this known

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he Nigeria Bar Association (NBA) Owo branch has said government at all levels must live up to its responsibility of securing lives and property of citizens.

The NBA chairman in the branch, Tajudeen Ahmed said this on Monday while speaking with journalists at the commencement of the branch’s 2019 Law Week activities in Owo. Lawyers from the branch added that governors should be made to part with ransom being demanded by kidnappers in their respective states, saying the action may prompt them to sit tight and provide adequate security.

Ahmed further reiterated the branch’s resolution not to represent in court, any suspected kidnapper or bandit caught in the dastardly act, henceforth.

The lawyers said they took this decision as part of efforts to reduce the rate of crimes in the state.

According to the chairman, the moment lawyers refuse to represent kidnappers and bandits in court, it would be difficult for them to scale through in the court.

He said, “The Owo NBA branch will not defend anyone accused of kidnapping and the resolution stands even at the lawyers’ bar,

Chief Judge of Kebbi State Justice Sulaiman Ambursa to the incident and clarify whether he knew of it at the time it was taking place and responded to it in a manner expected of a person at the helm of the State’s Judiciary. Should his response be found wanting, this should be grounds for concluding that he cannot discharge the functions of a Chief Judge competently.

Where the laws applicable in Kebbi State establish the offence of interference with the administration of justice, ensure criminal prosecution of all persons responsible for interfering with Justice Karatu’s right and duty to access her court room and deliver her judgments.

Conclusion If Nigeria’s Judiciary steps up to the plate, and offers a principled and bold intervention on this incident, this would be a significant way for the Judiciary’s new leadership to announce that change is underway and that the Judiciary will no longer be a stamping ground for acts capable of publicly ridiculing it. This is the kind of hope Nigerians desperately seek to see in the horizon, however distant it seems, particularly in these troubling times.

Governor Oluwarotimi Akeredolu (r) addressing members of Owo branch on a courtesy visit to him.

The governor and members of the branch.

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during a courtesy visit by executive members of Nigerian Bar Association, Owo branch.

He explained that the premium his administration placed on good governance was far beyond the limited value of dividends of democracy across Nigeria.

The governor further explained that a lot of the state resources were being expended on the maintenance of some Federal Roads like OwoIkare and Akure-Ado Ekiti Roads.

According to Akeredolu, the state would not be reimbursed for the road maintenances in view of a letter to him from the Federal Government.

He noted that the Ore Flyover and Okitipupa bypass would be completed before the end of the year, and the second quarters of 2020, respectively.

Earlier, Tajudeen Ahmed, Chairman, NBA, Owo Chapter, described the performances of the governor as salutary and unprecedented in diverse sectors across the senatorial districts of the state.

The chairman also recognised Akeredolu’s role as the past NBA president, and revealed the decision of the association to confer on him the Grand patron title of the branch at grand finale on Friday 19th July 2019 of its law week beginning next Monday.

Thursday 18 July 2019

BUSINESS DAY

Live @ The Exchanges Nigeria stock market moves halfway into bear region Stories by Iheanyi Nwachukwu

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igeria’s equities market furthered its loss path on Wednesday July 17 as largely capitalised stocks occupied the basket of top draggers.

The stock market is now seen halfway into the bearish region as evidenced in the record yearto-date (ytd) negative return which moved to new level of -10.78percent.

A “bear market” is when stocks see a 20 percent decline or more from a recent high. Current trading on Custom Street is marked by overall pessimism as investors have refused to buy stocks despite attractive

prices.

The stock market decreased by 0.56percent at the sound of trade closing gong. Month-to-Date (Mtd), the market has lost 6.42percent, while weekto-date (Wtd), it has decreased by 1.83percent.

Chief amongst the stocks that lost their value include Nestle Nigeria Plc, Julius Berger Nigeria Plc, Guinness Nigeria Plc, Unilever Nigeria Plc and Flour Mills Nigeria Plc. While prices of many stocks are at their new lows, they provide attractive entry points for bargain hunting investors.

The Nigerian Stock Exchange (NSE) All Share Index decreased to new low of 28,042.80 points against preceding trading day level of 28,200.88 points; while the value of

listed stocks closed lower at N13.666trillion from a high of N13.743trillion recorded the preceding trading day.

Investors lost N77billion. In 3,449 deals, investors exchanged 243,717,849 units valued at N3.887billion. GTBank Plc, FBN Holdings Plc, UBA Plc, Zenith Bank Plc, and Lasaco Plc were actively traded stocks.

Nestle Nigeria Plc recorded the highest share price decline, from N1250 to N1245, losing N5 or 0.40percent. Julius Berger Plc also lost, from N19.95 to N18, losing N1.95 or 9.77percent.

Guinness Nigeria Plc followed after its share price moved down from N47.5 to N46, losing N1.5 or 3.16percent. On the gainers table, UACN recorded the highest gain, from N5.8 to N5.9, adding 10kobo or 1.72percent, while that of AG Leventis moved up from 30kobo to 33kobo, adding 3kobo or 10percent; while Chams Plc rose from 25kobo to 27kobo, adding 2kobo of 8percent.

VFD Group to invest N2.37bn in Abbey Mortgage Bank …Private Placement of 2.26bn shares at N1.05kobo per share

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he shareholders of Abbey Mortgage Bank Plc at the company’s annual general meeting held on Monday July 15 resolved among others to raise additional capital of N2.37billion by way of Private Placement of the company’s ordinary shares.

The shareholders resolved that subject to obtaining the requisite regulatory approvals, the Private Placement shall be by way of sale of 2,261,538,462 ordinary shares of the Company at the rate of N1.05kobo per share to the VFD Group Plc, a financial services-focused proprietary investment company.

Private placement is a funding round of securities which are sold not through a public offering, but rather through a private offering, mostly to a small number of chosen investors.

Abbey Mortgage Bank Plc is listed on the mainboard of the Nigerian Stock Exchange under the “Mortgage Carriers, Brokers” subsector of the Financial Services

Sector.

Details of the resolutions at the meeting are at the Nigerian Stock Exchange (NSE). The Private Placement formed part of the special resolutions at the meeting which held in Lagos.

Considering Abbey’s last closing price of 90kobo per share at the Nigerian Stock Exchange (NSE), the private placement is priced at a premium.

Though, the stock had reached a 52-week high of N1.17 kobo per share.

Abbey Mortgage Bank Plc is a Primary Mortgage Bank (PMB) which operates under the supervision of the Central Bank of Nigeria (CBN).

The company’s business is providing banking services in personal savings and investments, cash management, specialized banking, deposit and funds management, children and school account services, real estate and mortgage services, amongst others.

It is also an accredited Primary Mortgage Bank for the National Housing Fund (NHF) and a subscriber to the recently created Nigerian Mortgage Refinance Compa-

ny Plc (NMRC).

The shareholders of Abbey Mortgage Bank Plc also resolved that subject to the approval of the Nigerian Stock Exchange (the NSE) the Placement shares shall be listed on the NSE upon conclusion of the Private Placement.

The directors of the company have been authorized to take all necessary steps required to give full effect to the Private Placement including all necessary filings at the Corporate Affairs Commission (CAC).

During the ordinary business at the meeting, the shareholders received the audited financial statements of the company for the year ended December 31 2018 together with the reports of the directors, auditors and audit committee.

The shareholders also resolved that the authorised share capital of the Company be increased from N3.5billion to N6billion by the creation of 5billion additional shares of 50kobo each, such shares ranking pari-passu with the existing shares of the Company.

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Thursday 18 July 2019

BUSINESS DAY

cityfile Militants agree to end violence in Imo SABY ELEMBA, Owerri

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Search and rescue operation ongoing at the scene of three story building collapse at Dillimi Jos North LGA of Plateau State in Jos on Tuesday. NAN

Patient stabs self at UBTH IDRIS UMAR MOMOH & CHURCHILL OKORO, Benin

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yet-to-beidentified patient on Saturday reportedly stabbed himself to death at the University of Benin Teaching Hospital (UBTH).

The ugly incident was said to have occurred at the Accident and Emergency (A & E) ward of the hospital on Saturday night.

The incident occurred hours before a final-year student of the University of Benin (UNIBEN), report-

edly committed suicide by jumping down from the 2nd floor of a hostel building on Sunday evening at the faculty of arts.

The deceased was said to be a student of the department of actuarial science, faculty of management sciences. The patient whose source of ailment was unknown at press time was alleged to have taken his own life while awaiting a doctor.

The hospital’s image maker, Joshua Uwaila, who confirmed the incident, described it as unfortunate.

“An unfortunate incident happened on Saturday night, July 13, 2019 at about 10:30 pm when a young man who was a patient at the male medical ward of our hospital suddenly broke a louvre and stabbed himself.

“All efforts to resuscitate him proved abortive as he was certified dead at 11:00 pm. The result of autopsy is being awaited at the moment” he said.

It was also gathered that no sooner had the wife of the deceased stepped out of the ward to buy something at a nearby

shop within the hospital premises than the tragedy happened.

The incident, however, resulted to a spontaneous protest by helpless patients at the ward.

A witness who was also admitted in the ward on Saturday night, said: “the deceased came in to the hospital with his wife.

The witness, who pleaded anonymity, said the deceased had a talk with his doctor before the incident. The remains of the deceased have since been deposited in the hospital morgue.

Residents applaud extension of tricycle operation in Aba GODFREY OFURUM, Aba

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esidents of Aba, the commercial hub of Abia State, have applauded the government over its decision to extend the operational hour of tricycle operators in Aba, saying that the development would reduce the suffering of residents.

They also obser ved that it would increase business hours and boost commerce in the

commercial city.

Kalu Ogbu, a trader and one of the respondents, told CityFile that food vendors, especially fast fo o d facilities in the area, would benefit from the decision and urged security agencies in the area to increase patrols within Aba and its environs to ensure security.

He also explained that this decision of government would boost confidence of patrons to Aba, who www.businessday.ng

come from neighbouring states, stressing that these set of patrons stayed out of the city during the ban.

Governor Okezie Victor Ikpeazu, Monday, approved the extension of the hours of operation of tricycle operators, popularly known as Keke from 6.00am to 9.00pm in Aba and Umuahia.

The governor in a statement signed by Onyebuchi Ememanka, his chief press secre-

t a r y , h o w e v e r, u r g e d the tric ycle operators to reciprocate the action by checking the use of their tricycles for criminal activities.

The governor also directed the Commissioner of Police, Abia State and Hhads of other security agencies to remain vigilant and intensify their patrols with a view to nipping in the bud, any crimina l a c t i v i t y t hat may emanate from this extension.

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eace is imminent in the volatile local governments of Ohaji/ Egbema and Oguta, Imo State as militants operating in the areas have agreed to give peace a chance.

This is as a result of the peace meeting initiated by Gerald Irona, the deputy governor of I m o St a t e, w h o h a i l s from Oguta. The meeting involved all the parties in the renewed violence in the affected areas.

At a meeting in the deputy governor’s ancestral home, Oguta, the militants agreed to forgo all their grievances and immediately end every form of hostility in the area.

Speaking during the meeting, Irona frowned at the renewed violence in the area, in spite of

subsisting amnesty from the state government, saying that the g ov e r n m e n t m ay n o t hesitate to cancel the amnesty programme, if hostilities and cult-related violence continue.

“No government will fold its arms and allow her citizens terrorised, harassed and killed under whatever guise.

Whatever the issue is, we shall not patronise criminals. The hostility must end immediately and unconditionally,” Irona warned.

After the discussions that lasted for two days, all the warring parties accepted the deputy governor’s proposal of an unconditional end to every form of hostility in the area.

They thanked the s t at e g ove r n m e nt f o r the decision to dialogue with them, instead of outright hostility, promising to turn a new leaf.

NAPTIP arrests 6 suspected human traffickers

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enin zonal command of the National Agency for the Prohibition of Trafficking in Persons (NAPTIP) said it arrested six persons in connection with human trafficking.

Nduka Nwanwenne, zonal commander of the zone, comprising Edo and Delta, said that the suspects, four males and two females, were arrested for organising foreign travel, involving an 18-year primary school drop-out, to Mali.

He said that the victim who was an orphan was staying with her grandmother at Agbor in Delta, when she fell into the hands of the traffickers in May, 2018.

He also said that the suspects were apprehended by operatives of the command, with the support of the police, at the weekend.

The commander added that the suspects were picked up in Agbor and Asaba in Delta, and in @Businessdayng

Benin in Edo “in a wellcoordinated raid after surveillance activities’’.

He explained that the victim had revealed that between the point of recruitment at Agbor and Mali where she was introduced into prostitution, she was passed on to various persons not less than eight times.

He said that the victim also revealed that at every point of exchange, she was sold to the next trafficker, adding that she faced exploitation throughout the journey, until she got to a house in Farasabapie in Mali.

Nwanwenne further said that the victim told the command that it was while she was being exploited that one of her customers assisted her to escape to Bamako, from where she was taken to the Nigerian embassy.

He said that the victim was at the embassy for five months before she was brought to Nigeria.

Thursday 18 July 2019

BUSINESS DAY

35

BUSINESS TRAVEL Multiple Frequencies: How Domestic airlines struggle under dominance by foreign carriers IFEOMA OKEKE

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omestic car r iers grapple with a lot of challenges ranging from high cost of aviation fuel, lack of aircraft maintenance facility, foreign exchange rate, multiple taxation amongst others.

However, among these problems is the multiple frequencies operated by foreign airlines in the country; one that has continued to hugely deplete the revenues of local carriers.

BASA agreements Bilateral Air Service Agreement (BASA) is an agreement that allows foreign airlines to operate in the country but the agreement is founded on the principle of reciprocity. It is a deal that enables a country’s airlines to enjoy equal leverage, in terms of flight operations, in countries with which their home country has an air agreement.

In addition to the numerous BASAs signed by Nigeria with other countries, the country recently signed BASA with the Republic of India. The agreement stipulates that passengers being processed from Nigeria would enjoy direct flight to India as a result of the agreement.

While Nigeria has continued to sign various BASAs, experts have raised concerns on the ability of Nigerian carriers to reciprocate these agreements and even if they are able to reciprocate, they often contend with stringent regulations from the host countries, making it extremely difficult to sustain the routes.

It is in the light of these Nigeria needs to find out what went wrong with previous air agreements it signed with other countries and why they are not delivering value before it signs more.

How BASA works against local carriers No matter how juicy a BASA agreement may seem between two countries, these agreements must be signed on the basis of reciprocity or else the country on the other end may be shooting itself on the foot.

Domestic airlines operating in Nigeria have continued to lose out in revenue and flight frequencies, while foreign airlines are increasing and opening more routes in Nigeria after BASA with some countries.

The Single African Air Transport Market, (SAATM) which is part of the BASA agreements is a flagship project of AU Agenda 2063, which aspires to create a single unified air transport market in Africa, liberalise civil aviation in Africa, and motivate the

continent’s economic integration agenda.

The agreement has seen more foreign airlines such as Sudanese airlines, Ethiopian airlines, RwandAir, Emirates open more routes and increase frequencies in Nigeria, while Nigeria airlines suspend operations into foreign countries.

Nigeria currently has 24 foreign airlines operating in the country and most operate in Lagos, Abuja, Port Harcourt and Kano, while only two Nigerian carriers, Arik and Air Peace currently flies into West African and UAE countries.

Air Peace recently commenced operations into Dubai via Sharjah and will soon commence operations into Johannesburg in few weeks. Air Peace will need the support of government in sustaining these competitive routes, just as other countries support their local carriers from unfair competition.

However, the government will start by supporting and protecting its own (Air Peace) by first reviewing the one-sided BASAs it signed with some of these countries, which is working against most of Nigeria’s domestic carriers.

Few months ago, the Federal Government approved two Sudanese airlines - Badr Airlines and Tarco Airways to operate into Kano. The two airlines are currently operating two flights weekly from Khartoum, Sudan to Kano.

Ethiopian Airlines has gradually evolved to become a Nigerian indigenous carrier as it presently flies to four destinations in the country from its base in Addis Ababa.

The East African carrier operates scheduled flight operations to Murtala Muhammed International Airport, MMIA, Lagos; the Nnamdi Azikiwe International Airport, NAIA, Abuja, Aminu Kano International Airport, AKIA, Kano and recently, Akanu Ibiam International Airport, Enugu with over 21 frequencies weekly.

Apart from Ethiopian Airlines, www.businessday.ng

other foreign airlines like RwandAir, British Airways, Etihad, Air France/KLM, Egypt Air, Emirates and South African Airways among others have joined the bandwagon of carriers that operate multiple entries into Nigeria regularly without reciprocity from any of the nation’s carriers.

On the other hand, Medview, a Nigerian carrier which flew into Dubai and London suspended operations into these countries because the airline did not receive the needed support from the federal government and the host country.

Arik Air which flew London, Johannesburg-South Africa and almost all countries in West and Central Africa suspended operations into these countries because of its huge debt to its foreign partners and unfavourable policies by host countries.

However, Nigeria’s largest carrier, Air Peace has risen up to the challenge by representing Nigeria in other parts of the world through its commencement of Dubai route and is currently seeing huge passenger traffic into the route with its highly subsidised fares, thereby shaking up competition on the route.

With the commencement of operations on this route, Air Peace would be offering travellers from Nigeria the opportunity of connecting 23 other destinations from the United Arab Emirates. The destinations that could easily be connected from Sharjah international airport include: Riyadh, Madina, Jeddah, Beirut, Delhi, Colombo, Dhaka, Mumbai, Kathmandu, Moscow and several others However, while foreign countries have continued to burden Nigerian carriers with obnoxious demands, making it almost impossible for domestic airlines to operate, federal government continues to give more frequencies to foreign airlines.

Domestic carriers say this

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agreement is slowly killing their operations and benefiting the foreign carriers.

A call for FG’s support Some operators have argued that domestic airlines can survive on domestic routes if government can reduce the multiple landings given to the foreign airlines to reduce their incursion into the domestic routes and invariably domestic market.

John Ojikutu, Aviation Security Consultant and Secretary General of the Aviation Safety Round Table Initiative (ASRTI), told BusinessDay that foreign airline should not be given multiple destinations and landings.

Ojikutu said, “Ethiopian airline’s multiple landing should be reduced to only two, Lagos or Abuja and any other. British Airways and Virgin Atlantic should decide which out of Abuja or Lagos to fly into but none of the two should fly to Lagos and Abuja as British airways is presently doing.

The idea is to create markets for domestic airline.”

Allen Onyema, Chairman of Air Peace has stressed that Air Peace will never be able to combat international aero politics without the support of the government.

“We can only combat it if our government supports us. It is a shame that several Nigeria airlines have come here (Dubai) and they were pushed out either through unfair competition or some armtwisting tactics, it is very unfair.

“The only plan we have is the plan of sustainability, to sustain our operations to the best of our abilities. That is so far as we can go, if we are not supported. So Air Peace needs the support of everybody,” Onyema added.

Air Peace, a catalyst for economic development In the past, government officials blamed Nigerian airlines for not having capacity to reciprocate traffic but that can no longer be said about AirPeace, which has not @Businessdayng

only commenced international operations but has acquired several aircraft in a bid to compete favourably in local and international market.

BusinessDay’s findings have shown that AirPeace alone employs over 3,000 direct workers; and provides over 9,000 ancillary jobs, a feat several foreign airlines operating in the country has been unable to achieve.

Air Peace is energising the economy of the country and acting as a catalyst with its operations of about 110 flights daily, moving Nigerians around in the economy, no doubt, the airline should be supported.

Indeed, the airlines led the way with an unprecedented investment in aircraft in its bid to make a strong case for Nigerian flag carriers on regional and international skies, even as no city is left behind on the home front.

To this effect, the airline recently placed a firm order for 10 brand new Embraer 195-E2 aircraft. The order comprises purchase rights for another 20 E195E2 jets. Also, 124-seater jet in dual class and 146-seater jet in single class configurations respectively.

With all purchase rights exercised, the contract is valued at N640.5 billion ($2.12 billion) based on current list prices.

The carrier also set a regional record in September 2018 when it ordered 10 brand new aircraft from Boeing, increasing its fleet size then to about 37 aircraft. With the new order, Air Peace’s fleet size has increased to 67 aircraft.

Air Peace had earlier set a domestic record as the first Nigerian airline to acquire and register the Boeing 777 aircraft in the country.

Three of the four wide-body aircraft it acquired for its long-haul operations to Dubai, Sharjah, Johannesburg, London, Houston, Guangzhou and Mumbai have so far been delivered.

A call for review of BASAs For domestic airlines to survive and remain in business, there is a need for government to review its signed BASAs. Last year, the federal government promised to review its BASA partnerships but that has not implemented till date.

Muhtar Usman, the director general of the Nigerian Civil Aviation Authority (NCAA), has said that BASA and all forms of partnership with international carriers are not static but are subject to review from time to time.

It is in this light, that local airlines have continued to clamour that this review be carried out and there can be no better time than now, when Nigerian carriers are bracing up for competition in the international market.

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Thursday 18 July 2019

BUSINESS DAY

TECHTALK Innovation

Apps

Fin-Tech

Start-up

Gadgets

Ecommerce

IOTs

Broadband Infrastructure

Bank IT Security

Budget 2019: Next ICT minister could fiscally be a sitting duck Stories by FRANK ELEANYA

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he ministr y of Information and Communication Technology (ICT) may not be on the same level with ministries like oil and gas in terms of revenue generation for the government, but it is no less important to the development of the country’s economy.

In fact, the next frontier of economic growth – the digital economy - would certainly be determined by the steps the stewards in the ICT ministry take. The sector is also quoted in the ICT Roadmap 2017 as the arrowhead for weaning Nigeria off oil and gas and consequently, diversifying the economy.

Unfortunately for Nigeria and whoever the new minister of ICT would be, the budget to power that growth is anything but hopeful.

The total budget approved for the 2019 fiscal year by the national assembly and assented by President Muhammadu Buhari was N8.92 trillion. The President’s assent came two days before the end of the current administration and over five months after the appropriation bill was presented at a joint session of the National

Assembly by the President on 19 December. The National Assembly increased the budget size from $8.83 trillion to N8.92 trillion, translating to an increase of N90.33 billion.

A breakdown of the 2019 budget showed that recurrent expenditure will claim the lion share at N4.07 trillion while capital expenditure gets N2.09 trillion and debt servicing at N2.14 trillion.

The federal government has several projects it is embarking on in the fiscal year in ministries it considers priority including transport, power, housing, works, health, water resources, agriculture and rural development; industry, trade and investment; education; and Niger Delta.

Interestingly, the ministry of ICT does not feature on this priority list and they are probably right to judge so. The total budget for the ICT ministry at a little above N12 billion, about $33 million and less than the $50 million a startup (OPay) in Nigeria is deficiently unambitious considering the huge communications technology infrastructure gaps and ICT education and research that Nigeria require to grow its digital economy.

Olaolu Samuel Biyi, cofounder of SureGifts and who has also been purring

through the budget lately, told BusinessDay that the biggest challenge for the ICT budget is the over-bloated recurrent expenditure. The ministry budgeted N3 billion to pay for the people that will administer only N5 billion (about $13 million) earmarked as capital expenditure. Out of the N5

billion expenditure, a good percentage is for building or improving the ministry’s various offices.

Priority spend will go to six projects including improvement of security solutions for teleport which was allocated N100.6 million; WiFi network implementation in Lagos will get

N150 million; Nigeria-Kanet Network Expansion Upgrade gulps N113.5 million; NigComSat/Public Access Satellite TV channel gets N154 million; completion and operationalization of incubation hubs in Nasarawa, Enugu, Oyo and Katsina; and N95.4 million goes to insurance of NigComSat1r and upgrade.

“In general, it is clear that there is no coherent technology development plan for the country, and this budget would have been inadequate even 20 years ago,” Biyi said.

There could also be potential transparency issues for the new minister as there is little public information on the progress made so far on all the projects that are top priority for the ministry. NigKaNet, launched in 2015, is a Ka broadband services that offers high speed connectivity and data downloads at great speed and affordable prices.

It was first unveiled for rural dwellers in Kubwa, a suburb in Abuja by the Nigerian Postal Services (NIPOST) in partnership with One Network. Since it was launched, there has been little or no information as to the progress made in that community as a result of the project.

The WiFi Network Implementation in Lagos is also another project that also has

scanty information regarding its existence. One would also wonder why NigComSat will receive three major interventions given that little has been achieved from previous investments made in the satellite technology.

It must said that while infrastructure remains Nigeria’s biggest challenge to digital transformation and sadly gets denied the attention it deserves, other countries have moved on to setting new trends in ICT. The minister of ICT in Singapore recently announced that all pupils in the country will have compulsory coding classes from next year as part of the government’s goals to develop a healthy pipeline of tech talent for the digital economy. In Rwanda, the ICT minister who is just 36 years old is already positioning the country as the hub of ICT and attracting investments from different places.

“Given this budget, the most positive outcome would be for the first year to be a waste; that is, poor implementation of this budget will likely be better for the country,” Biyi said. “The next minister should focus on preparing the ministry to operate more efficiently and begin to structure the next budget for real, impactful interventions.”

Prospects brighten for local hosting of data in Nigeria CALEB OJEWALE

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igerians like foreign things’, a cliché used to describe the appetite for goods manufactured outside the country, and preferably in the western world, appears to be playing out even in data hosting.

Unlike purchase of goods, where an individual can take delivery and actually assert ownership, it gets tricky when it comes to data hosting.

Where data is hosted abroad, such data resides on the servers of the foreign entity, and is subject to laws and regulations of that host country.

Recently, the National Information Technology Development Agency (NITDA) warned Ministries, Departments and Agencies to desist

from hosting government data abroad or face sanctions. In a statement by Isa Ibrahim, Director General of NITDA, the agency noted “that prior to the operation and full implementation of the Regulatory Guidelines for Nigerian Content Development in ICT, a sizeable component of government data was hosted outside Nigeria.”

“The situation has now changed as NITDA’s compliance monitoring activity revealed that substantial data assets of the Federal Government are already hosted in Nigeria.

“These include the Government Integrated and Financial Management Information System, Integrated Tax System, Integrated Payroll and Personnel Information System, and more recently the Treasury Single Account,” the

statement read.

However, while the government is more concerned about hosting of its data abroad, as it rightly should, millions of Nigerians as individuals, and thousands of businesses rely on foreign hosts to meet their webhosting needs. This market is possibly bigger, than even the hosting of data that is not necessarily associated with websites.

Sunday Folayan, President of Nigeria Internet Registration Association (NiRA), was in 2016, reported to have said Nigeria loses up to N60 billion annually on some forms of domain hosting abroad, noting it would have been a significant revenue boost to the country had those domain names been hosted locally.

Previous interviews with stakeholders in the industry,

appear to give credence to the position of NITDA, that local providers now have the ability to host data in Nigeria.

Olusola Teniola, president, Association of Telecommunication Companies of Nigeria (ATCON), had told BusinessDay. “The issue of cost versus trust in hosting websites locally as opposed to the general trend of resorting to foreign based hosting sites was one that had strong merits about five to seven years ago when there were very low numbers of neutral data centres present in the country.”

As at 2017, he said there were at least four neutral data centers based in Nigeria that are very similar to what one gets in South Africa at Tier-3 level grade. These are internationally certified and fully connected to the undersea fibre network that feeds into

London and thus into the WWW. On his part, Ayotunde Coker, Managing Director, Rack Centre, had also told BusinessDay, that in the past, when the quality of Tier III hosting and providers of high quality, high availability websites in high connected environments did not exist in Nigeria, people resorted to hosting with foreign web hosting companies. This was due to quality of functionality, availability, the global connectivity and customer service offered by those foreign providers.

“It was understandable that people would resort to this as there was no comparable capability in Nigeria,” he said.

However, according to him, Nigeria now has a “globally acclaimed Tier III facility such as Rack Centre, so this is no longer the case.” He

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

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@Businessdayng

described Rack Centre as the most connected carrier neutral Tier III data centre in West Africa, with high levels of reliable connectivity to Africa and the world.

“The Internet Exchange Point of Nigeria is hosted in Rack Centre and we provide a Cloud on Ground offering that provides high quality web hosting and domain registration services here. Now we have these services here, at equal to or higher in quality than foreign services, there are no longer reasons to resort to hosting abroad,” said Coker.

Companies providing data hosting services in Nigeria according to Datacentremap. com include; Medallion Communication Limited; Excelsimo Networks Limited; MTN Nigeria; ipNX Nigeria Limited; MainOne; IS Nigeria Data Centre; and Rack Centre.

Thursday 18 July 2019

BUSINESS DAY

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news Abuja aglow as world presidents, dignitaries, celebrities set for Africa’s biggest event -#theUBA Marketplace 2019 … 120 SMEs to display products at event … over 20,000 visitors expected at the two-day event ENDURANCE OKAFOR

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nited Bank for A f r i ca ( U BA ) plc is set to host over 20,000 visitors, 100 small and medium enterprises and leading private and pu b l i c s e c t o r p l aye r s from across Africa, at the continent’s biggest entrepreneurial fair t a g g e d # t h e U B A m a rketplace2019 in Abuja, Nigeria.

The event, which will be held on July 26 and 27, 2019, on the sideline of the Tony Elumelu Entrepreneurship Forum, the largest gathering of the entrepreneurship ecosystem in Africa, will host businesses and business owners in various industries including food, fashion, beauty, home/interior and gadgets.

The event will offer p l e na r y s e s s i o n s a n d discussions on the small and medium scale enterpr is es (SMEs) sector and the relevance of financing. The plenary sessions will highlight entertainment and music industries. Likewise,

fashion, a big cultural and revenue attraction on the continent, will be showcased with the designs of 10 leading African labels.

At the master-class sessions to be held during the UBAmarketp l a c e 2 0 1 9 , s ma l l a n d medium scale businesses will have opportunity to network and get solutions to some of the challenges they face in running their businesses.

Also, entrepreneurs who are beneficiaries o f t h e To n y E l u m e l u Foundation (TEF) will be presented a platform to pitch their businesses with a grand prize of a grant, courtesy of UBA. Group managing dire ctor, Kenne dy Uzoka, speaking about the event, stated, “UBA has always been at the forefront of entrepreneurship across Africa, undertaking many projects aimed at contributing to supporting Africa’s growth and economic integration. The birth of the UBAmarketplace and this entrepreneurial fair is a testament to our commitment to African www.businessday.ng

SMEs.” Uzoka said with the fair, UBA seeks to touch base with small business owners while positively affecting the lives of entrepreneurs doing business in its countries of operations and beyond’.

“I think everyone realises the fact that we need to prioritise the private sector. We need to encourage entrepreneurship and the youths.

This is the driving factor and the major reason why we are organising an event of this magnitude,” he said.

U B A’s R E D T V w i l l light up the Redzone at the UBA marketplace with entertainment featuring Africa’s star boy Wiz kid; DJ Cuppy and many more.

US opens channel for bilateral trade with Nigeria … as initiative expands trade, investment relationships to boost Jumoke Akiyode-Lawanson

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he United States of America, through its ‘Prosper Africa’ initiative is determined to foster two-way trade between the US and Nigeria in order to help grow small businesses and improve Nigeria’s economy despite business challenges.

During a day dialogue in Lagos with private sector business owners, US representatives opened discussions on ways to increase access to finance for Nigerian farms and firms, how to make the African Growth and Opportunity Act (AGOA) work for Nigerian businesses and efforts to scale up and out.

Speaking with select journalists after the dialogue, Earl Gast, executive vice president for programmes, Creative Associates Initiative, an international development organisation, said, “The idea of the new initiative ‘Prosper Africa’ is that with Africa’s prosperity should come the US prosperity; and how can we have private sectors of both Nigeria and the US partner in ways where US capital, know-how and exports can lead to greater economic growth in Nigeria and ben-

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efit Nigerians.

“The thinking is that US resources and exports might help grow Nigerian companies so that they are able to export more than they are doing now, and so AGOA allows Nigerians to take advantage of the US market.”

Today, the Nigerian economy is bolstered by a thriving small to medium enterprise (SME) community. The country owes 54 percent of its Gross Domestic Product (GDP) to small and medium businesses; hence, it is a matter of fact that the country will benefit a great deal if businesses are allowed to thrive regionally and globally.

“Today was an opportunity for us to listen to Nigerian companies, and it was a great opportunity to exchange information and make connections because ultimately, that’s how business is done. To scale, one needs to work through associations and we had the Nigerian-American chamber of commerce here, representing a lot of companies,” Gast told BusinessDay. According to Florie Liser, president/CEO, Corporate Council on Africa, the point of Prosper Africa is that instead of 14-15 different US governments and ministries @Businessdayng

all doing their own thing, they can have a one-stop approach to co-ordinate support for US businesses that want to come to Africa, invest and do business on the continent and African businesses that want to trade in the US. “US companies are already trading in Africa and a lot more are interested in coming to Nigeria to do business because the return on investment is one of the highest in Africa and because of the vast opportunities in sectors like agriculture, construction, health and information technology,” she said.

Nigeria has become attractive for foreign investment and double way trade in the last year, as it went up 16 places in the World Bank ease of doing business ranking.

Liser said, “Already, one of the things that the US have tried to do over the years is the regional trade and investment hub in Accra Ghana that was put there to support African businesses that wanted to export to US markets under AGOA and to help them to be more competitive and understand the US market because the market is huge and complex.”

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Thursday 18 July 2019

BUSINESS DAY

news Tribunal orders INEC chairman to appear ...

Continued from page 1

tice Mohammed Garba, issued the order following complaints by the People’s Democratic Party (PDP) and its candidate in the February 23 presidential election, Atiku Abubakar, that their petitions against the election of President Muhammadu Buhari were being sabotaged by the INEC chief, following his refusal to appear before the tribunal to tender some unnamed documents.

Atiku through his counsel, Chris Uche (SAN), had complained bitterly to the tribunal that Mahmood Yakubu and INEC commissioner in Zamfara had been frustrating him in the 10-day hearing notice given to him by the tribunal to substantiate his allegations and claims in his petition jointly filed with the PDP. The petitioners had filed two applications on July 9 seeking an order of court to compel INEC chairman to physically appear before the tribunal and present certain documents listed by the petitioners and the Zamfara REC to produce the election results for Zamfara State in the presidential poll.

While that of the chairman was served on him on July 15, that of the Zamfara REC was served on him on July 12.

Responding, counsel to INEC, Yunus Usman (SAN), told the tribunal that he was not aware of the subpoena on Yakubu but that of the Zamfara REC had been complied with, adding that they were waiting for the petitioners to pay the normal fee and collect the said documents.

But in a short ruling, presiding justice of the five-man panel held that orders of court are sacrosanct and must be obeyed.

“Since the record of the court shows that the chairman of the 1st Respondents INEC and Zamfara REC were duly served to produce documents named therein, the chairman and Zamfara REC as the legal team representing them in this matter are to comply with the order,” the tribunal held.

Meanwhile, a melodrama played out Wednesday at the tribunal when one of Atiku’s witnesses burst into tears in the witness box.

Arume Mohammed Yahaya wept uncontrollably while recalling the sporadic shootings in some parts of Kogi State that led to the death of a voter.

According Yahaya, political thugs in his polling unit, armed with dangerous weapons, disrupted the election and left voters scampering for safety.

He said that two of the voters hit by bullets were rushed to a nearby hospital and that one of them died shortly after

he was admitted.

Recalling the event, he burst into tears in the open court.

Under cross-examination

by Wole Olanipekun (SAN), counsel to President Buhari, the All Progressives Congress (APC) candidate in the election, the witness told the tribunal that political thugs invaded his polling unit in Abocho in Selina Local Government Area of Kogi State and fired gunshots sporadically to scare away voters.

The witness said in the confusion that followed, voters deserted the polling unit and ran in different directions for safety, adding that at the end of the day election could not be conducted but votes were allocated to the APC. At this stage, the witness said, “I am emotional because someone died from gunshots.”

Yahaya then paused for a while and started weeping.

It took the intervention of the tribunal chairman who encouraged him to be strong and conclude his testimony.

Yahaya, who revealed that before 2019 he was an APC member, said his pain was that someone died in the election and not because PDP didn’t win.

Another witness, Adamu Samuel Sule, also from Kogi State, alleged that INEC officials did not give PDP agents election results on the instruction of some unnamed APC stalwarts.

Other witnesses who testified alleged that in Borno State, ballot papers were thumb-printed and counted as lawful votes for President Buhari and the APC. The witnesses said that at the end of the thumb-printing allegedly done by the APC agents and aided by security agents, zero vote was allocated to Atiku and the PDP at Chibok Local Government Area of the state.

Witnesses who came from Nasarawa State also testified that in Nasarawa, especially in Karu LGA, where PDP polled 22,580 and APC 9,407, the results were cancelled on the grounds that the petitioners led in the poll.

They further told the tribunal that result sheets were exchanged and in some cases allegedly rewritten to favour of Buhari and APC. Under cross-examination

by Buhari’s lawyer, the witnesses informed the tribunal that they did not come to Abuja with their own copies of the results having submitted them to their party in the state which in turn submitted them to the petitioners’ lawyers.

The witnesses include Lorshe David, Dangana Shau Barde, Aliu Abdullahi, Sanni Abdul and Dr Allen Manasseh.

Further hearing in the petition has been adjourned till Friday, July 19. www.businessday.ng

L-R: Chris Ogbechie, professor, strategic management, Lagos Business School; Folashade Ambrose-Medebem, communications, public affairs and sustainable development director, Lafarge Africa; Adejoke Orelope-Adefulire, senior special assistant to the president on sustainable development goals; Michel Puchercos, country chief executive officer, Lafarge Africa, and Titilope Oguntuga, sustainable development and corporate brand manager, Lafarge Africa plc, at the 2019 Lafarge Africa Sustainability Forum in Lagos.

India’s LPG model offers solution to Nigeria’s liquidity,...

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in the world that have successfully scaled through similar situations as Nigeria, India, the world’s most populous nation after China, is a sure example to learn from.

Reforms the nation enacted some 30 years ago helped it attract sufficient investments, reduce unemployment and lift well over 370 million of its populace out of poverty.

In the late 90s, the Indian government flagged off economic policy reforms in the business, manufacturing and financial services industries, targeted at boosting economic growth.

The reform was a model referred to as Liberalisation, Privatisation and Globalisation (LPG). The major aim of the LPG model was to slacken government regulations hurting the growth of investment in the country, transferring of state-owned assets and positioning the country for consolidation among various economies of the world.

With these reforms, the Indian economy grew the overall amount of overseas investment to $5.3 billion in four years from a microscopic $132 million in 1992.

Today, the country is ranked the second-highest destination for investment in the world, according to data from the United Nations Conference on Trade and Development (UNCTAD).

For Africa’s most populous nation, the government has over time complained of a shortfall in revenue even though it currently sits on idle assets scattered around the country.

Nigeria has dead capital that is worth as much as N900 billion majorly in the real estate and ag-

ricultural sector, according to estimates done by global consulting firm, PricewaterhouseCoopers.

The country got about $23 billion in remittances in 2018, and a dismal amount of Foreign Direct Investments (FDI), compared to peers. It also has low levels of external liquidity (compared to the size of its economy) in the form of foreign reserves.

“By unlocking idle assets, improving remittances and making the environment more attractive for FDIs, the government can create the needed liquidity that is required for economic growth,” Ayo Teriba, chief executive officer, Economic Associates, said.

“Going to FDIs puts you in the driver’s seat. Egypt unified its exchange rates and boosted its supply of liquidity. As for remittances, if you can’t embrace your non-residents to send money home, how do you attract foreign investors?

We need to move up the remittances and FDI table to join the likes of India and China,” he said.

Teriba added that Nigeria could securitise (not sell) its financial assets (such as LNG/oil JV equity stakes) to get more liquidity, privatise brownfield assets and liberalise other sectors of its economy like rail, for investors to pump money into, leading to increased overall liquidity in the economy.

According to Teriba, if there is no liquidity in the system, there won’t be stability; ease of doing business in a country would be threatened; growth would be slow; infrastructural deficit would widen; diversification agenda can never be achieved; unemployment would skyrocket and the

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well-being of the populace would continuously diminish.

Nigeria’s postal service currently has about 2,000 buildings in prime locations around the country, BusinessDay investigation shows. Nigeria also has a total of 2,000 police stations and 235 prisons all located in commercial locations across the country.

Teriba argued that the government could securitise or commercialise these assets by opening equity investments as these would attract more external liquidity and help the country in building buffers.

Data compiled by BusinessDay show that Nigeria is the most domestic illiquid country across Africa.

In 2017, the total money available in circulation as a percent of Gross Domestic Product (GDP) stood at 19.5 percent.

This figure represents an abysmal amount when compared with peers around the continent. For Africa’s most industrialised economy (South Africa), money supply as a percentage of GDP stood at 72.2 percent while Angola had 56.5 percent.

In a bid to encourage lending to the real sector, the Central Bank of Nigeria sent two clear options to banks. Either they lend 60 percent of their deposits or they would be forced to pack a higher amount as cash reserves with the apex bank.

The CBN also reduced the amount which deposit money banks can keep with the CBN to yield overnight interest by 73 percent to N2 billion from as high as N7.5 billion.

•Continues online at www.businessday.ng @Businessdayng

Nigerian investors join Shroff for ...

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Solutions, expanding their foothold into Francophone Africa. The acquisition was done through an equity deal, bringing in a substantial group of Senegalese shareholders.

As part of the transaction, serial startup investor Eric Osiakwan joined the HotelOnline Board of Directors.

HotelOnline currently works with 1,500 hotels and counting. In addition to Kenya, Uganda, Rwanda, Nigeria and Senegal, the company is also present in Pakistan.

HotelOnline has recently raised additional funding in a Seed Round, where the Nigerian group of investors significantly increased their stake. Other prominent investors in the Seed Round are: Shravan Shroff, known as the first investor in traveltech unicorn OYO Rooms (currently valued at USD 5bn) and co-founder of the Mumbai-based, angel investor-funded accelerator Venture Nursery.

TrondRiiber Knudsen, a prominent Africa-focused startup investor targeting disruptive technologies and digital services in Emerging African markets.

Shravan Shroff has also joined the HotelOnline Board of Directors.

Nnamdi Agbim, who leads the Nigerian investors, has joined the Board of Directors as an advisor, representing the Nigerian shareholder group.

Tore Hofstad, a highly experienced Norwegian startup investor with several recent successful exits in Europe, has taken the reins as the new chairman of the company. He is now the third-biggest shareholder.

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MAN supports Buhari on AfCFTA signing … calls for policies to encourage more SMEs ODINAKA ANUDU & MICHAEL ANI

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anufacturers Association of Nigeria (MAN) says President Muhammadu Buhari’s signing of the African Continental Free Trade Area (AfCFTA) deal got the backing and recommendations of the association.

In a document seen by BusinessDay and singed by MAN’s director general, Segun Ajayi-Kadir, the manufacturers’ association noted that the Federal Government carried out extensive consultations with private sector players in the country, and there was specific study appraisal to assess the potential impact of the agreement on the manufacturing sector in particular and the Nigerian economy in general before signing the trade agreement.

“We are glad to note that the Federal Government did carry out an all-inclusive nationwide consultation and conducted a country-specific study on the potential impact of AfCFTA,” Ajayi-Kadir said.

“In addition, a Presidential Steering Committee on Impact and Readiness Assessment (PSCIRA) of the AfCFTA was set up to guide government on how to independently assess the benefits and risks of the AfCFTA contract to Nigeria and to

propose short, medium and long-term measures to manage them,” he said.

According to Ajayi-Kadir, MAN actively participated at the Steering Committee level as well as the technical working group, and it was based on the outcome of these processes that the President appended his signature at the just concluded Extra-Ordinary Session of the African Union.

On July 7, 2019, President Muhammadu Buhari assented to AfCFTA at the AU Extra Ordinary Meeting held in Niamey, Niger Republic, making Africa’s largest economy the 53rd country in the continent to sign the trade deal.

Upon implementation, the deal would lead to the removal of tariffs on 90 percent of goods produced by 2020, while 10 percent of traded goods are expected to be phased in later. Similarly, it will ease non-tariff barriers to trade on the continent and provide economies of scale as firms try to sell to the bigger African market, leading to increased efficiency.

According to Ajayi-Kadir, there were also several conditions the steering committee advised should accompany Nigeria’s consent, which he said he believed, had been taken on board.

Over 12,000 lawyers set to attend 59th NBA August conference OLUWASEGUN OLAKOYENIKAN

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o fewer than 12,000 lawyers from different parts of Nigeria are expected as delegates at the 59th Nigerian Bar Association (NBA) conference slated to hold on August 23 to 29, 2019, Gbenga Oyebode, who chairs the association’s Technical Committee on Conference Planning, says.

Oyebode disclosed this in Lagos on Wednesday at a press conference organised to officially announce this year’s edition of the NBA annual conference. He pointed out the large number of lawyers the association hoped to host showed there was a significant interest in its conferences.

“We expect that the total number of registered lawyers that would attend the conference will be in excess of 12,000,” the legal luminary said while reeling out the details of the conference. “This is the trend that we tend to see in the Nigerian Bar Association whether the conference is held in Lagos or Abuja.”

The theme of the 2019 NBA conference is, “Facing the Future” and was borne out of the pressing need to invest in a sustainable foundation for an optimistic future, according to NBA chairman, Paul Usoro.

“The conference is placing topical issues on the agenda for Nigerians and it is going to of-

fer solutions and ideas on what needs to be done to change the economy of Nigeria and make life much better for Nigerians,” Usoro said.

The conference is expected to feature 34 technical sessions and showcase sessions, where subject-matter experts, business leaders and renowned political leaders in various fields of human endeavour will lead conversations.

Among the sessions are Code of Conduct Tribunal: A clash of the judicial and the executive powers, capacity building in the oil and gas industry, lighting up the future – identifying and removing the clogs in the power chain, social media: culture, liabilities and professional ethics, and trade in legal services: current realities and future possibilities.

Others include state of play, future challenges and opportunities in cross border trade in legal services, regional economic communities and regional economic agreements on crossborder legal services such as the African Continental Free Trade Area (AfCTA) and the Economic Partnership Agreement (EPA) among ECOWAS nations.

The conference will also feature sessions on digital trade in legal services, public private partnership, infrastructure financing in Nigeria, leveraging technology in justice, among others. www.businessday.ng

L-R: Funmi Quadri, business and membership development manager, NACCIMA; Godfrey Adejumoh, head of corporate communications, Unilever Nigeria; Ayoola Olukanni, director-general, NACCIMA; Soromidayo George, director, corporate affairs and sustainable business, Unilever Ghana and Nigeria, and Godwin Bamsa, head, external affairs and sustainable business manager, Unilever Ghana and Nigeria, at a courtesy visit of Unilever Nigeria representatives to NACCIMA head office in Lagos.

Edo Assembly: 7-man Senate committee visits Obaseki, commences work

… rejects Reps’ move to disrupt its activities ... calls on IGP, DSS, all parties to respect subsisting court order

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enate Ad-hoc Committee investigating issues surrounding the inauguration of the Edo State House of Assembly (EDHA), led by Aliu Sabi Abdullahi, on Wednesday, visited the Edo State governor, Godwin Obaseki, as the committee began work.

Members of the committee are on a fact-finding mission to get first-hand information on the lingering issues at the Assembly.

Abdullahi said, “We are here on a fact-finding mission as mandated by the leadership of the Senate. For us in the Senate or National Assembly, the constitution allows us to interfere in a way in the crisis in any of the state assemblies to restore law and order.

“We have the constitutional duties to look into the issues with a view to ensuring that all is well.

I am convinced beyond reasonable doubt that the civility of this state is not in doubt. Edo State enjoys parliamentary civility. We will visit the Oba of Benin and

members of Edo State House of Assembly (EDHA).”

He added, “We are here to get the facts; ours is to articulate and prepare the facts and lay it the way they are before the 109 senators who will do justice to the issue. I assure you that we are out for the good of this state and its people.”

Responding, Governor Obaseki thanked the committee for finding time to visit the state to get first-hand information on the issue at the state Assembly, adding that his administration in the last two and half years had continued to pursue peace and order in the state without any political crisis.

Obaseki said, “It is a very sad situation as we never anticipated this will happen. We are happy your committee is here on a fact-finding mission. If this has been done by the leadership of my party, we will not have gotten where we are today.”

The constitution is clear on issues at the Assembly, he said,

as he had issued a proclamation letter, adding, “I have fulfilled my constitutional responsibility. I believe in the separation of powers. There were issues and we expected that those in higher authority should have stepped in to ensure it is resolved but now the matter is in court. I am sure the 109 members will look at the facts dispassionately because I know you are men of integrity.”

The governor said he knew pressure was being mounted on some individuals on the matter, but expressed confidence in the capacity of the committee to do justice to the matter for the interest of the state, country and democracy.

Meanwhile, the Edo Assembly, Wednesday, said, “It has come to our knowledge that the Ad-hoc Committee of the House of Representatives investigating issues surrounding the inauguration of the Edo State House of Assembly has recommended that the Inspector General of

Police (IGP) and Department of State Services (DSS) should seal up the Assembly.”

Considering what we came to know in the course of this process, the recommendation of the AdHoc committee does not come to us as a surprise.

For example, the chattered plane marked 5N FCT, which brought the committee members to Benin City, was paid for by the national chairman of All Progressives Congress (APC), Adams Oshiomhole, who is a major party in the disagreement.

Also, the younger brother to the national chairman, Seid Oshiomhole, in a recent leaked audio conversation, revealed the underhand dealings in Abuja regarding the matter. He stated that Oshiomhole and his proxies had been having meetings with the committee members and other actors in the issue in Abuja, “and dolling out money to ensure the issue goes in their favour.”

Eland, ADM expansion in Nigeria oil, gas sector may point to recovery STEPHEN ONYEKWELU

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wo London-listed energy companies Eland Oil and Gas and ADM Energy are consolidating expansion into Nigerian assets, an indication that the country’s oil and gas sector may be at the verge of recovering from its firstquarter 2019 contraction.

Data from the National Bureau of Statistics (NBS) show that in the first three months of 2019 real Gross Domestic Product growth in the oil sector contracted by -2.40 percent (yearon-year), indicating a decrease by 16.43 percent points relative to the rate recorded in the corresponding quarter of 2018.

AIM-listed ADM Energy plans to rapidly expand its Nigerian asset base while targeting “other investment opportunities in the oil and gas sector, primarily in West Africa,” according to newly elected chief executive, Osamede Okhomina.

ADM Energy is an AIM quoted natural resources investment company targeting near term production assets in proven oil and gas jurisdictions such as Nigeria. The Aje Field, part of oil mining licence (OML) 113, which is ADM Energy’s investment in Nigeria, has now commenced production.

AIM is a sub-market of the London Stock Exchange that was launched in 1995 to allow smaller, less-viable companies to float shares with a more flexible regulatory system than is applicable to the main market. At launch, AIM comprised 10 companies valued at £82.2 million.

Similarly, London-listed Eland Oil & Gas had received the green light for its planned development of the Gbetiokun field in oil mining licence (OML) 40 in Nigeria, from the Department of Petroleum Resources (DPR).

The plan includes the drilling of five oil production wells during the first phase of development,

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with six more production wells and a single workover, to convert the Gbetiokun-2 well to a water disposal well, to be carried out during the second phase.

The first two wells, Gbetiokun 4 and 5 will be drilled back-toback and are expected to increase the output from the field to 20,000 barrels per day. It was reported in June that Eland was preparing to bring the early production system at Gbetiokun online this month, with output from the Gbetiokun-1 and 3 wells expected to average an initial gross rate of 12,000 bpd.

The facility has a nominal capacity of 22,000bpd, which will allow for production from the additional wells being drilled this year and next.

Eland has also previously stated that the modular design of the early production system would allow it to expand the capacity beyond 22,000bpd if required.

However, the selection this week of Nigerian national, Ok@Businessdayng

homina, founder and former vice-chair of UK explorer Energy Equity Resources (EER), follows the non-board appointment last month of Dubai royal Sheikh Ahmed Bin Dalmook Al Maktoum as ADM president following a major investment.

“It is very heartening to see the arrival of Middle East capital into West Africa’s upstream sector,” Okhomina said.

ADM Energy, formerly MX Oil, is currently focused on Nigerian block OML-113, including the gas-rich but oil-producing Aje field in partnership with Nigerian indigenous operator Yinka Folawiyo Petroleum.

Okhomina told Upstream, a global oil and gas platform, that ADM would soon welcome “a new technical director, wellversed in the latest techniques – oil and gas technology has advanced in leaps and bounds over the past half-decade and we aim to deploy these modern technologies in the field.”

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Thursday 18 July 2019

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@Businessdayng

Thursday 18 July 2019

FT

BUSINESS DAY

41

FINANCIAL TIMES

World Business Newspaper

JIM BRUNSDEN IN BRUSSELS AND JAVIER ESPINOZA IN LONDON

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he EU has launched a formal investigation into how Amazon uses data from other merchants selling goods on its websites, saying it wants to “take a very close look” at the company’s business practices to see if they breach antitrust rules.

The step marks the latest probe into a US tech giant by the outgoing EU competition commissioner Margrethe Vestager and comes weeks after US president Donald Trump accused her of hating the US. Brussels has been conducting a preliminary investigation into Amazon’s business practices since last year, exploring the company’s dual role as both a retailer and a host of rival thirdparty merchants — sellers that use Amazon as a platform to market their goods.

More than half of all items sold via Amazon in 2017 came from third-party retailers.

The commission sent out questionnaires to sellers as part of the preliminary informationgathering process, and has now decided to follow up with a formal investigation, Ms Vestager said on Wednesday.

“E-commerce has boosted retail competition and brought more choice and better prices,” Ms Vestager said. “We need to ensure that large online plat-

Amazon faces EU antitrust investigation over data use Vestager questions how US tech giant treats third party sellers in its marketplace

EU competition commissioner Margrethe Vestager © Reuters

forms don’t eliminate those benefits through anti-competitive behaviour.”

Brussels said that its in-depth investigation would look at the “standard agreements” between

Amazon and third-party merchants and how “the use of accumulated marketplace seller data

by Amazon as a retailer affects competition.”

The commission is also prob-

ing how retailers qualify for the “Buy Box” — the button that allows customers to directly add a product to their online shopping cart. For a retailer, “winning” the buy box means that

when a customer searches for a particular product, and then clicks to buy it, that retailer’s offer, rather than competing ones, will be chosen.

In contrast, customers would need to click through the product page to see offers from other sellers. Amazon uses a system of performance-based metrics to determine which companies get the box.

“Winning the ‘Buy Box’ seems key for marketplace sellers as a vast majority of transactions are done through it,” the commission said.

A formal probe will allow regulators to flesh out their main concerns. It could ultimately lead to fines or to force Amazon to change its business practices.

Amazon said in a statement that: “We will co-operate fully with the European Commission and continue working hard to support businesses of all sizes and help them grow.”

The commission said that its investigation would be taken forward as “a matter of priority”.

Elon Musk-backed Neuralink unveils Currency intervention: how would the US brain-implant technology do it, and would it work?

Start-up plans to use information strips it calls ‘threads’ to bring medical advances PATRICK MCGEE IN SAN FRANCISCO

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euralink, the Elon Musk-backed company seeking to build brain implants to communicate with machines, unveiled the microscopic products it has been developing since 2017 and said it hopes to begin trials on human patients by the end of next year.

The secretive, 100-employee company revealed its vast ambitions in a presentation on Tuesday night aimed at recruiting more experts. “We want to have the best talent in the world,” Mr Musk said at the California Academy of Sciences.

The chief executive of Tesla and SpaceX said the ultimate goal of Neuralink is to allow humans to achieve “a sort of symbiosis with artificial intelligence”.

Mr Musk said humans risk being overtaken by AI-equipped machines, but if the brain can be enhanced with computer connectivity, “we can go along

for the ride”.

He said the company had begun testing on rats and that it was working with the University of California, Davis on monkeys.

“A monkey has been able to control a computer with its brain, FYI,” he said.

Neuralink is just one player in an emerging field that could enhance human functionality or equip paraplegics with robots they could control with their minds.

Others include Facebook and CTRL-labs, the Amazon Alexa Fund-backed start-up that is trying to take a less invasive approach by focusing on neural signals anywhere on the body.

Neuralink intends to insert proprietary chips and information strips it calls “threads” into people’s brains, which it said could bring huge medical advances.

“I’ve been humbled by how helpless we are treating neurological diseases,” said Matthew MacDougall, Neuralink’s head surgeon. “We have the potential, for the first time in history, to solve some of these problems.” www.businessday.ng

Washington’s FX policy has oscillated between heavy interventions and benign neglect

EVA SZALAY IN LONDON

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he US dollar is near a multidecade high, on a tradeweighted basis, and President Donald Trump is not happy about it. His increasingly blustery rhetoric, accusing other countries of manipulating their currencies lower to boost exports, could mean that the US Treasury Department intervenes in FX markets for the first time in years.

Since 1995, the US has stepped in three times — but on each occasion acted in concert with other big central banks to smooth excessive exchange rate fluctuations.

Could the US intervene on its own?

The short answer is yes.

America’s exchange-rate policy has oscillated from periods of large and frequent interventions to benign neglect under different administrations. In some cases, the view about exchange rates changed significantly under the same administration, flipping from viewing a strong dollar as a threat to making it an official policy

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— as in Bill Clinton’s two terms as president.

“What is remarkable about these fashions is how abruptly [policies] changed at times,” said Robin Winkler, a strategist at Deutsche Bank.

Following the breakdown in 1973 of the Bretton Woods exchange-rate system — in which the currencies of 44 countries were pegged to the value of the dollar, which, in turn, was pegged to the price of gold — big central banks regularly intervened to influence their currencies. In the US, President Richard Nixon had hoped that the end of the system would stabilise the dollar’s value but it did not, forcing the Treasury to step in frequently to buy dollars.

Jimmy Carter’s administration also deployed significant resources to support the dollar in 1978 before interventionist policies briefly fell out of favour under Ronald Reagan.

The dollar appreciated more than 50 per cent under Reagan, with a 90 per cent rise against the Deutschemark in the five years to 1985. This led to a change of stance during Reagan’s second term, which ultimately led to the Plaza Accord of 1985, under which @Businessdayng

big central banks co-ordinated to weaken the greenback.

In the lead-up to the 1987 October stock market crash, the dollar gained ground again despite heavy intervention from the US. In late 1988 the currency saw another spurt, against the Japanese yen in particular, as the Federal Reserve raised interest rates. That led to the US intervening on an unprecedented scale in the first half of 1989, which caused clashes between the Treasury and the Fed’s rate-setting committee.

From that point, the Treasury “largely gave up on interventions, conceding that they had failed to have the desired impact”, said Mr Winkler.

How would intervention work this time?

Since 1934, the US Treasury has held responsibility for managing exchange rates, through the official vehicle for currency interventions — the Exchange Stabilisation Fund.

The New York Fed acts as the official agent for the Treasury during interventions but the central bank also holds additional firepower to influence prices.

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NATIONAL NEWS

What to expect from President von der Leyen The former German defence minister secures Brussels’ top job seemingly against the odds ALEX BARKER AND MEHREEN KHAN IN STRASBOURG

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rsula von der Leyen will be the first female European Commission president, the first German in half a century, and the first to be confirmed by a majority so small it can be counted on two hands.

Her wafer-thin nine-vote margin leaves a bittersweet edge to a life-changing victory for the former German defence minister, who has been propelled into Brussels’ top job in a matter of a fortnight, seemingly against the odds.

Brushing off questions about the implications of the European Parliament vote, Ms von der Leyen insisted she “did not know” who voted for her in the secret ballot, and that “a majority is a majority in politics”.

But the nature of the vote — and the anti-establishment groups that appear to have pushed her over the line — highlights the political trouble that lies ahead for the von der Leyen administration.

In some ways, Brussels now has a better sense of the challenges the next commission will face in building a working majority in parliament — and passing any legislation — than where the new president stands on the biggest policy questions.

The price of the vote After a scramble to win round sceptical MEPs, by Tuesday Ms von der Leyen secured pledges of support from leaders of political families who in theory command more than 500 votes. The fact that only 383 positive votes actually materialised will be a cause for some alarm. “A lot of people have been lying through their teeth all day,” said one party official.

Attention will initially focus on those parties outside the EU mainstream whose support made a difference — around 40 MEPs from Poland’s Law and Justice party and Italy’s Five Star movement — and whether Ms von der Leyen is now beholden to them in some way.

Such was the concern over the vote that Angela Merkel called her Polish counterpart to commiserate over Law and Justice MEPs failing to secure top jobs in the parliament. Warsaw may be expecting even more when portfolios are distributed to commissioners in Ms von der Leyen’s team.

Some MEPs are worried it may extend to a softer line on rule of law in general when dealing with illiberal regimes in Poland and Hungary. Ms von der Leyen has conspicuously avoided mentioning “Article 7” — the rule of law enforcement mechanism that has become such a bugbear for Poland and Hungary.

This may all be manageable.

But expectations have certainly been raised. Mateusz Morawiecki, Poland’s prime minister, hailed his country’s “constructive” role and said he hoped a similar attitude would prevail in negotiations over the EU’s budget.

The stable majority The bigger long term concern for Ms von der Leyen may be the arithmetic of power. The European Parliament is more fragmented than at any time since direct elections began in 1979 and there is scant sign of a stable coalition emerging between the three or four pro-EU groups needed for a majority. Without finding a working arrangement, Ms von der Leyen’s policy ambitions will be hamstrung.

Tuesday’s vote demonstrated that she will not only be handicapped by lacking established networks of influence in the parliament. Even the (many) leaders of the parliament she will come to know may struggle to deliver their troops.

That goes for her own political family too. While it is impossible to know for sure, insiders in Strasbourg on Tuesday night suggested dozens of European People’s party MEPs must have also turned against her. If they did, it was partly a reaction of a von der Leyen policy programme too heavily geared to their opponents.

What we know To win over her sceptics in the socialist, green and liberal camps, Ms von der Leyen presented a 24-page “policy framework” big on environmental issues, social policy and gender equality.

The former German families minister, for instance, said she wanted to force EU companies to introduce binding pay gap transparency measures, recruit the first gender-balanced college of commissioners and introduce a system that looks something like a minimum wage.

On the environment, Ms von der Leyen has pledged a “Green new deal” within the first 100 days of her term with eye-catching proposals like an EU carbon border tax and cut in the bloc’s emissions by 55 per cent in 2030 (up from an existing promise of 30 per cent).

Her climate proposals were not enough to get backing from Green MEPs, but were hailed by Pascal Canfin, a green turned En Marche MEP, as “the most important ambition” ever shown by an incoming commission president.

Ms von der Leyen insisted that Green MEPs would not strike down her proposals when they are put to vote in the parliament.

“They have to get to know me, they have to win confidence and rely on me,” she said. This indeed may have been one of the reasons some of her own centre-right MEPs failed to support her. www.businessday.ng

Kirsten Gillibrand campaigning in Iowa. The US senator from New York had the top ‘burn rate’ among the Democratic presidential candidates from April to June © Bloomberg

Cash burn rate in 2020 campaign highlights laggards Pressures to stay in the race shows up in Democratic presidential field finances BROOKE FOX AND FAN FEI IN NEW YORK

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ampaigns are not unlike businesses. They bring in revenue from donations, they spend those funds on getting their candidate elected and try not to run out of cash in the meantime.

They also have to file quarterly financial reports.

Filings by the Democratic party candidates for US president this week showed a large gap between the top five fundraisers and the rest of the field, and won headlines for Pete Buttigieg, the 37-year-old mayor of South Bend, Indiana, in the top spot with $24.9m in donations.

But they also provided detail on how much money the campaigns are spending as well as raising.

That data provides an insight into how the candidates are approaching the presidential race and highlights the financial precariousness of several campaigns.

Kirsten Gillibrand’s presidential campaign spent $4.2m in the second quarter of this year,

despite raising only $2.3m in the same period, giving her the top “burn rate” among the candidates of about 183 per cent. The New Yorker still has $8.2m in the bank, thanks largely to a $9.6m transfer from her US senatorial campaign in the first quarter, but the pressure will be on to raise more in the third quarter if she is to stay competitive.

Ms Gillibrand is not the only candidate who spent more than she raised. Ten of the 25 candidates for Democratic nominee outspent their income from April to June. Of those that had a burn rate higher than 100 per cent, all had less cash remaining than Ms Gillibrand.

Wayne Messam, a Florida mayor, and John Hickenlooper, former governor of Colorado, both have campaigns that have less than $1m in their coffers and burn rates well over 100 per cent.

The candidates who placed in the top five for money raised — Mr Buttigieg, Bernie Sanders, Elizabeth Warren, Joe Biden and Kamala Harris — all managed to keep second-quarter spending within about 55 per cent of total

money raised.

Mr Sanders’ campaign spent $14m in the second quarter, the most of any candidate. Mr Biden, Ms Warren and Mr Buttigieg were not far behind with $11m, $10.6m and $8.8m spent, respectively.

Ms Harris’s campaign had a different strategy, keeping expenditures extremely low despite the fact that the US senator was a top-five fundraiser. The Californian spent only $3.3m in the second quarter, despite bringing in $11.8m from individual donations.

While Mr Buttigieg topped the table for second-quarter donations, his was not the biggest infusion into campaign coffers.

Mr Sanders came top of that league table with $25.6m raised, but helped by transferring money from previous races. Transferring cash from other runs is not uncommon, especially if a presidential candidate has run for Congress. Michael Bennet, a US senator from Colorado, and Massachusetts representative Seth Moulton also transferred about $700,000 each in the second quarter.

Italian financial police seize Atlantia board minutes Search aims to find out how Genoa bridge safety issues were brought to board’s attention DONATO PAOLO MANCINI IN LONDON AND HANNAH ROBERTS IN ROME

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taly’s financial police have seized board meeting minutes from the Rome offices of Atlantia, whose subsidiary operated the Genoa bridge that collapsed last year, killing 43 people.

The company on Wednesday confirmed the raid and said police had taken documents relating to board meetings of the past 10 years.

One senior police official said that the aim of the search, which

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took place on Tuesday, was to determine how any safety problems involving the Morandi bridge had been brought to the board’s attention. He added a separate search had been carried out in March but that Tuesday’s visit helped to complete the picture.

The Financial Times reported earlier on Tuesday that Atlantia had in September commissioned a detailed report into the company’s management of the Morandi bridge, which collapsed in August last year, sending cars plunging 45 metres to the ground.

The report, which among @Businessdayng

other things found there were “extraordinary” inspections of the bridge for all years bar two between 2009 and 2017, has not been made public. The FT reported people close to the board said there was a feeling that the findings of the report had been rushed through.

Prosecutors in Genoa are carrying out an investigation, which has grown to include more than 70 suspects, reverberating through Italy’s business and government establishments. No determining cause for the collapse has yet been confirmed.

Thursday 18 July 2019

BUSINESS DAY

43

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

China’s surplus with trading partners falls into balance IMF says Beijing no longer a net lender to the world, easing fears of risk to global economy JAMES POLITI IN WASHINGTON

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hina’s economic relationship with the rest of the world is roughly in balance, according to the IMF — a significant change after years of criticism from other countries that China posed a risk to the global economy.

The country’s current account surplus has dropped to close to zero, the IMF reported on Wednesday; for the first time since 2012, when the IMF began reporting on the imbalances that afflict the world’s major economies.

At just 0.4 per cent of GDP in 2018, China’s current account surplus declined by 1 percentage point year on year, according to the IMF. China’s “external position” is “broadly in line” with “mediumterm fundamentals and desirable policies”, the IMF said.

For years China’s current account had showed it to be a big net lender to the world, running a surplus as high as 10 per cent of GDP in 2007. But in recent years its economy has become increasingly reliant on domestic demand — as opposed to exports and foreign investments — and that has helped rebalance its trade

position.

“There’s obviously a lot more still to be done, but it’s important to recognise some of the things that have been done, including increased currency flexibility and reduced reliance on external demand,” Gita Gopinath, the IMF’s chief economist, told the Financial Times.

“We want China to pivot towards more consumption-driven growth, while at the same time being careful about a further buildup in financial risks,” she added.

Zhang Jun, head of the school of economics at Fudan University in Shanghai, said the trend was likely to continue.

“Policy has been very clear that China will speed up opening the domestic market and increase imports,” he said, adding that current account deficits were possible in future due to the rapid growth in imports of services, of which tourist spending is the largest component.

“The merchandise trade has not been able to create a surplus to offset the deficit from service trade,” he said.

However, some economists believe that China’s current account surplus could rise again, because some of the factors driving the decline, like the recent fiscal stimulus, could wear off.

Netflix removes scene after link to US teen suicides Health experts connect debut of 13 Reasons Why with rise in deaths ANNA NICOLAOU IN NEW

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etflix has removed a graphic scene from a years old episode of its popular show 13 Reasons Why, after health experts linked the series with an uptick in suicides.

“We’ve been mindful about the ongoing debate around the show,” Netflix wrote on Twitter, adding that “on the advice of medical experts”, it has edited out a scene from the show’s first season which originally aired in 2017. The three-minute scene shows high school student Hannah taking her own life in a bathtub.

13 Reasons Why is based on a best-selling novel of the same name, in which Hannah creates 13 tapes for classmates explaining why she ended her life.

The series garnered critical praise but also drew backlash over its treatment of its controversial subject matter, with mental health experts and school administrators arguing that it romanticises suicide and could trigger vulnerable teenagers.

Netflix’s move to delete the scene follows a study in April funded by the National Institute of Health, the US government agency, which found a 29 per cent spike in US teen suicides in the month following the show’s debut.

At the time, Netflix said that the company was “looking into the research” and working to “handle this sensitive issue responsibly”.

Netflix consulted mental health groups including the American Foundation for Suicide Prevention, which informed Tuesday’s decision to edit out the scene.

Changing a television show years later is a rare move. Netflix’s decision illustrates the different viewing habits of streaming versus traditional television, said people familiar with the plan. With a new season of 13 Reasons Why coming this summer, Netflix executives were mindful that some people may watch the show from the start for the first time on the streaming platform, which is why they changed a scene that debuted years ago, these people said. www.businessday.ng

Chinese shoppers in Beijing. Domestic demand has helped to rebalance China’s economy. © EPA

Betting man Kyle Bass wagers Fed policy will turn Japanese Fund manager who called subprime mortgage crisis predicts US rates will touch zero ORTENCA ALIAJ AND ROBIN WIGGLESWORTH IN NEW YORK

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yle Bass, the outspoken hedge fund manager who rose to prominence through prescient bets against the US housing market, Greece and Iceland, is now wagering that US interest rates will collapse to near zero next year as the country enters a recession and the Federal Reserve is pushed into crisis mode.

Investors expect that the US central bank will cut interest rates when it meets later this month, as a pre-emptive measure to ward off headwinds of trade tensions and slowing global economic growth, and to ensure that inflation creeps back up to its target of close to 2 per cent.

Interest rate futures indicate that traders think this will be the start of a longer rate-cutting cycle,

with the Fed potentially lowering rates by a full percentage point to 1.25-1.50 per cent by this time next year. But Mr Bass — the founder and chief investment officer of Dallas-based Hayman Capital Management — thinks the forecasts are too mild.

He is betting that the current US economic slowdown worsens into a recession by mid-2020, which will force the central bank to move monetary policy back to its financial crisis setting — and stay there for the foreseeable future.

“As we have all learned, once an economy falls into the tractor beam of zero rates, it’s almost impossible to escape them,” the hedge fund manager told the Financial Times.

Betting on the Fed slashing interest rates has become a popular trade among hedge fund managers. Commodity Futures Trading

Commission data indicates that money managers are now the most “long” on popular interest rate futures — in other words, betting that rates will fall — than they have been since early 2008.

“The steady fall in US Treasury yields, despite a strong economy and a large deficit, raises the prospect that the US could join the zero bond yield world of Japan and Europe in the next few years,” Jan Loeys, a senior strategist at JPMorgan, wrote in a note to clients last week.

Mr Bass’s concerns over the US economic outlook have been stirred by the “inverted” yield curve, with the 10-year Treasury trading at a lower yield than three-month bills since late May. An inverted yield curve has historically been an accurate omen of recessions, preceding every US downturn since the end of the second world war.

Lower US interest rates squeeze bank lending margins Wells Fargo shares fall, Goldman Sachs rises as investors focus on Fed’s impact ROBERT ARMSTRONG IN LONDON AND LAURA NOONAN IN NEW YORK

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or US banks, the future finally arrived this week.

Investors have long fretted about falling interest rates hitting growth at even the bestmanaged lenders. On Tuesday, the blow came, and it landed on the strongest US bank of all, JPMorgan Chase; on Wednesday, it was Bank of America’s turn.

Announcing a mixed set of second-quarter results, JPMorgan cut its 2019 outlook for lending profits by half a billion dollars in expectation of multiple rate cuts from the Federal Reserve, which will compress lending margins. BofA matched that and more, taking almost a billion out of its outlook.

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Wells Fargo, another of Main Street’s mega banks, cut its lending margins outlook three months ago but that could have been dismissed as an outlier, hobbled as it has been by a fake accounts scandal.

JPMorgan and BofA, America’s two biggest banks, cannot.

JPMorgan’s net interest margin — the difference between the cost of its funding and the price charged for lending — fell from 2.57 per cent in the first quarter to 2.49 per cent in the second. BofA’s went from 2.51 to 2.46, and similar contractions took place at Citigroup and Wells Fargo.

Investors took note. Shares in Wells, which earns most of its money on Main Street, fell 3 per cent on Tuesday. Goldman Sachs, a Wall Street power that is the least @Businessdayng

rate-sensitive of the top US banks, rose 1.9 per cent. Meanwhile, JPMorgan and BofA, which were both boosted by strong retail results, both rose about 1 per cent in the wake of their reports.

Futures markets have been pricing in Fed rate cuts since the end of March, and bank shares have been underperforming the wider market for several years. Investors have worried that America’s decade of economic expansion is coming to an end, and that leveraged banks will be the first to feel the pain.

Adding to the uncertainty is the question of how many times the Fed will cut rates this year.

Citigroup is bracing for one rate cut by the US central bank. Wells is pricing in one or two, BofA two, and JPMorgan “up to three”.

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Thursday 18 July 2019

BUSINESS DAY

FT

ANALYSIS

Jay Powell links Federal Reserve’s dovish tilt to ‘global factors’

Chief says US policymakers are ‘more keenly aware’ of international economic environment JAMES POLITI IN WASHINGTON

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ay Powell, the Federal Reserve chairman, sent his latest signal that the US central bank is considering an easing of monetary policy to offset mounting trade tensions and softness in the world economy, stressing that “global factors” had become more relevant to policymaking in recent years.

Speaking at a conference in Paris ahead of a meeting of G7 finance ministers and central bank governors, Mr Powell said the Fed would “act as appropriate to sustain the expansion” in the face of increasing “uncertainties” about the US outlook — reinforcing expectations of an interest-rate cut of at least 25 basis points this month.

Although the US unemployment is at historically low levels, and consumer spending has remained strong this year, Fed officials have grown increasingly nervous about persistently lowinflation readings, and weakness in some manufacturing data.

More importantly, they have placed huge emphasis on the threat to the US economy posed by the flagging global outlook as a rationale for moving ahead

with an “insurance” interest rate cut — with Mr Powell noting that policymakers had grown “more keenly aware” of the international environment over the past decade.

“The global nature of the financial crisis and the channels through which it spread sharply highlight the interconnectedness of our economic, financial and policy environments. US economic developments affect the rest of the world, and the reverse is also true,” he said.

“We have seen how monetary policy in one country can influence economic and financial conditions in others through financial markets, trade and confidence channels. Pursuing our domestic mandates in this new world requires that we understand the anticipated effects of these interconnections and incorporate them into our policy decision making.”

Mr Powell has faced criticism from some economists and investors for moving towards possible rate cuts without a more obvious deterioration in hard economic indicators — ditching the Fed’s traditional dependence on data for policy decisions for a more nebulous assessment of risks.

Top Democratic senator lashes out at Facebook Libra plans US lawmakers label social group ‘dangerous’ and cryptocurrency a ‘crazy experiment’ KIRAN STACEY IN WASHINGTON AND HANNAH MURPHY IN SAN FRANCISCO

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acebook had repeatedly broken the public’s trust and should not be trusted to run a digital currency, a senior Democratic senator warned, in an indication of the political hostility the company is facing as it attempts to launch a new cryptocurrency.

At a Senate hearing into Facebook’s “Project Libra”, Sherrod Brown, the most senior Democrat on the Senate banking committee, accused the company of being “dangerous” and not understanding the power of its own technology.

“They are like a toddler who has gotten his hands on a book of matches. Facebook has burned down the house over and over and called every arson a learning experience,” he said.

Mr Brown was just one of several senators who accused Facebook of having broken consumer trust in the past with incidents such as the Cambridge Analytica controversy.

“The last thing we need is to concentrate even more power in huge corporations. Look at Facebook’s record, we’d be crazy to give them a chance to experiment with people’s

bank accounts; to use powerful tools they don’t understand like monetary policy; to jeopardise hardworking Americans ability to provide for their families.”

The often combative tone of questioning at the hearing reflected the wider opposition Facebook has run into since announcing its plans to launch a low-cost virtual currency alongside 27 other companies by the end of next year.

On Monday, Steven Mnuchin, the US Treasury secretary, echoed President Trump in voicing scepticism about Facebook’s plan. It had “a lot of work to do” before it persuaded politicians and regulators to give the go-ahead, Mr Mnuchin said, warning Libra could be used to launder money, evade taxes and finance terrorism.

It was the first of two Congressional hearings into Project Libra this week, which Facebook hopes will blunt some of the criticism encountered so far in Washington.

David Marcus, the co-creator of Libra and former executive of PayPal, the online payments company, attempted to allay concerns about the project by assuring senators that Facebook would not launch the currency until it had regulatory approval. www.businessday.ng

© EPA

The lawyer thrust into the front line of Deutsche Bank clean-up Stefan Simon advised the bank on Libor scandal — now he is its head of regulation OLAF STORBECK IN FRANKFURT AND ORTENCA ALIAJ IN NEW YORK

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ithout the Libor scandal, Stefan Simon’s career switch from law to banking is unlikely to have happened.

Until three years ago, Mr Simon was a successful German corporate lawyer working in the sleepy Rhineland town of Bonn and teaching law at the University of Cologne. Since then, after dabbling in film production and acting, he has risen rapidly to become one of the most influential figures at Deutsche Bank, Germany’s largest lender and one of the world’s most troubled leading banks.

In 2016, Qatar’s al-Thani royal family and Deutsche’s largest investor, suggested that Mr Simon should join the lender as a supervisory board member. Next month, the lawyer will swap that non-executive job for a top management role at Deutsche.

Mr Simon’s latest career move is a rare step in corporate Germany and raised eyebrows among corporate governance experts.

Alexandra Niessen-Ruenzi, professor of corporate governance at Mannheim University, called it “problematic” and said it was at odds with the basic principles of Germany’s two-tier board system.

The appointment is part of a wider management reshuffle alongside a drastic restructuring of Deutsche aimed at shedding 18,000 jobs and a fifth of its balance sheet.

Mr Simon, a Zurich resident, will be in charge of legal and regulatory affairs — a pivotal job that paid his predecessor Sylvie Matherat €4.5m last year, compared with the €487,500 he received as a supervisory board member.

His role, making him one of the

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nine members of the executive board, will be pivotal for a lender with a reputation battered by misconduct and shortfalls in compliance and anti-money laundering.

Deutsche is being investigated over its role in processing €160bn of potentially suspicious transactions for Danske Bank’s Estonian unit and US regulators are probing its handling of allegedly suspect payments for President Donald Trump.

Ironically, it was one of the worst misconduct cases that opened the door to Deutsche for Mr Simon: the Libor interest rate rigging scandal that has so far cost the bank €3.8bn in fines and settlements, plus legal fees.

Five years ago, as a partner at Germany’s prestigious law firm Flick Gocke Schaumburg, Mr Simon was commissioned by Deutsche to give advice and support to its employees who were being questioned by regulators over the Libor scandal.

Among the bankers he supported was Michele Faissola, the lender’s erstwhile global head of rates. Mr Faissola left Deutsche after John Cryan took over as the bank’s chief executive in 2015 with no love lost between the two.

The controversial investment banking veteran was later cleared

by German regulators of any wrongdoing on Libor.

He is still embroiled in a Milan lawsuit over allegations of falsifying the accounts of troubled Italian lender Monte dei Paschi di Siena between 2008 and 2012, when it was a client of Deutsche’s.

In May, the Italian prosecutor called for a jail term for Mr Faissola and others allegedly involved. Mr Faissola denies any wrongdoing.

During the Libor questioning, Mr Faissola was impressed by Mr Simon’s deep legal expertise as well as his independent mind, said a person familiar with the @Businessdayng

events. In an odd twist, Mr Faissola then became an adviser to Qatar’s royal family, who own 6.1 per cent of the bank.

When a seat on Deutsche’s supervisory board became vacant in 2016, Mr Faissola recommended Mr Simon to Qatar, and the rest is history.

Inside Deutsche, some people were initially alarmed about the reputation risks. Mr Simon was embroiled in an acrimonious spat with a former client who accused him publicly of attempted fraud, attempted embezzlement and violation of fiduciary duties.

Mr Simon has denied the allegations. A spokeswoman for Flick Gocke Schaumburg said prosecutors did not see any case for a criminal investigation. Moreover, a court in Stuttgart declined to accept the civil lawsuits filed by the disgruntled former client.

FGS also commissioned an external investigation into the matter. According to Mr Simon, who answered questions for this article via a spokesman, the internal probe did not find any evidence of misconduct. Both sides said his subsequent departure from the law firm was “on highly amicable terms”.

After leaving FGS, Mr Simon spent time on one of his favourite pastimes: acting. Two years ago he co-produced and acted in Dirty Bomb, an award-winning short movie that describes the true story of how, in 1944, Jewish slave labourers in a German concentration camp sabotaged the construction of V2 rockets.

In the film, Mr Simon plays sadist SS commandant Heinrich.

“This character for me personally places a lot of challenges because I am German . . . so obviously that causes a lot of questions also for the actor,” he said in a makingof clip available on the film’s website.

Thursday 18 July 2019

BUSINESS DAY

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Garden City Business Digest Egi and TOTAL E&P initiative for food security Ignatius Chukwu

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he national food security programme of the federal government of Nigeria recently received what could be described as a boost by no less a corporate body than Total E&P Nigeria Limited, Port Harcourt District, one of the multinational oil companies operating in the Niger Delta Region.

The company has distributed special cassava stems to over 400 farmers in Egi Town, in Ogba/Egbema/Ndoni Local Government Area of Rivers State.

The gesture is said to be in consonance with Total E&P Nigeria Ltd’s vision of facilitating the agricultural and business development of its host communities with a view to eradicating hunger, poverty and general economic hardship in the area.

This distribution of high yielding, Vitamin A-rich cassava stems to farmers by Total E&P Nigeria Ltd, which was done at a brief ceremony held at Obite Civic Centre, Egi Town, is a commendable initiative that has the capability to increase food production in the host communities of Oil Mining Lease (OML) 58 operated by the company.

It also signals a paradigm shift from the age-long tradition of high level insensitivity to the plight of host communities and the perennial underdevelopment occasioned by crisisinstigating divide and rule policy which many oil companies have severally been accused of implementing in their various host communities in the Niger Delta.

Thus, Total E&P Nigeria Ltd, Port Harcourt District, by this ingenuous, life improving and development-oriented high food productivity initiative, is championing a new trend in social responsibility implementation, which aptly fits into the national food security policy of the federal government of Nigeria, thus making the multinational oil company a true, sincere and trustworthy partner of the Nigerian government in the nation’s quest to reduce hunger to the barest minimum.

The fact that the cassava stems distributed to the Egi farmers are high yielding, diseaseresistant and rich in vitamin A, makes the initiative a key contributory component of the United Nations Millennium Development Goal (MDG) of eradicating extreme poverty and hunger by the year 2030, which is first on the list of UN MDGs. The imperativeness of this MDG is underscored by the fact that more than 800 million people in the world today are still living in extreme poverty – meaning that they live on an income that is below $1.25 a day – while about 795 million people are highly under-nourished due to inadequate food.

More disturbing is the fact that presently, 90 million children under the age of five are still under-nourished, under-weight and exposed to a plethora of hunger-related diseases globally.

In Nigeria and the Niger Delta Region in particular, where Total E&P Nigeria Ltd is operating, the rates of hunger and poverty are very high. A report by the World Poverty Clock last year revealed that 86.9 million Nigerians are currently living in extreme hunger and poverty

while the country, in February 2018, overtook India as the nation with the highest number of its citizens living in extreme poverty, despite being Africa’s largest producer of crude oil.

With the Niger Delta Region being part of the third world where the UN MDGs focus is highest, Total E&P Nigeria Ltd’s agricultural development initiative for farmers in its host communities couldn’t have come at a better time than now. The DGM, Community Affairs and Development, Total E&P Nigeria Ltd, Port Harcourt District, James Urho, at the evnt, emphasized that the programme was part of the business and enterprise development for farmers in the company’s OML 58 operational area, adding that gesture is a demonstration of the company’s commitment to sustainability of agricultural programmes in their host communities.

The DGM was represented by the manager, Patrick Idoko. He said: “Today’s ceremony is symbolic because we are going to officially handover the improved cassava stem to 400 host community selected farmers from the 16 Egi communities to plant and nurture them to

maturity. We have plan to introduce a full integrated cassava processing chain for the good people of Egi. This initiative by Total E&P Nigeria Ltd, apart from being a catalyst to increased food production and hunger/poverty eradication in Egi Town in particular and Niger Delta at large, can also serve as a panacea to the incessant cases of militancy, oil facilities vandalisation, kidnapping, armed robbery, ritual killing, political thuggery, touting, pick-pocketing and other forms of criminality that seem to have become recurrent decimals in the oil-rich Niger Delta Region.

If sustained, the programme could help bring these social ills to an end, as it will not only facilitate the eradication of hunger and extreme poverty in the various host communities but will also create job opportunities for the many jobless Niger Delta youths through the development of the agricultural sector, which will also in turn increase the Rivers State Government’s informal sector revenue generation drive, which appears to be one of the passionate cardinal economic development goals of Governor Nyesom Ezenwo Wike’s administration

How mere 10% discount to vessels ready to berth outside Lagos has caused boost in PH port Port Harcourt

by Boat

IGNATIUS CHUKWU

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he Nigerian Port Authority (NPA) recently gave a 10 per cent fee reduction to any vessel opting away from Lagos ports. Investors in Port Harcourt led by the Rivers Entrepreneurs and Investors Forum (REIF) led by Ibifri AC Bobmanuel, have come out to say this has caused a boom in PH port.

Details: We commend the NPA again. We have noticed a fresh burst of positive activities in the NPA in the past one month especially on issues we (REIF) had been talking about. We had written letters to the NPA, to the former minister and to the presidency; but, in the last one month, some actions have been taken. The NPA has offered a 10 per cent discount off any vessel that calls at seaports other than Lagos

ports. This has given some kind of impetus to activities around other seaports in the country (east).

We have noticed a wave of new activities that were never seen before. You could narrow this down to the issues surrounding drought.

Five years ago, we had different meetings on the seaports in Port Harcourt and we made it clear that that seaport had no issue with drought.

Most onlookers amaze me when people who ought to know would come on air and heap all of the blames on droughts. I felt that was wrong because if you are saddled with a responsibility, you should be diligent enough to know what the bottlenecks were. It meant that most of those saddled with the responsibility do not know what the issues were.

I have heard top leaders such as governors asking the President to come and canalize the seaports, but I felt that the issue has nothing to do with the drought. The minister and DG of NIMASA all came and talked about droughts. This is not the issue. The drought in Port Harcourt seaport has one of the highest in the country. Lagos is between 13 and 16; Port Harcourt has between 15 and 17. So, this tells you it’s not about the drought.

Unfortunately, what it means is that the minister’s handlers did not take out time to brief him properly on what the problems were.

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As we speak today, vessels (even container vessels) are calling at the Port Harcourt seaport. I personally took delivery of goods at that same seaport. All of a sudden, my containers are coming here. It then means that drought is not the issue. The problems may be different.

We have said it time without number that it is not drought. Before now, we had 30 per cent discount. Today, we are doing 10 per cent and this has caused activities. You have Cosco calling at the Port Harcourt port, we have CLA calling too. Obviously, Maerskline will follow suit sooner than later.

What they can do is set up technical committee of real industry players and import/ export leaders who have huge contacts in shipping industry that know where exactly the problems are. If they do that, within the twinkle of an eye, the problems afflicting eastern ports would disappear and ease of doing business in Nigeria would improve.

The gridlock in Lagos is hampering Nigeria’s ease of doing business rating. According NCBS, Nigeria is losing between N20Bn and N100Bn per day due to port crisis. If the eastern ports pick up fast, the Apapa gridlock would disappear.

Ports were built over 100 years ago for a certain capacity. Now, over 100 years down the line, people expect just one or two of them to carry the weight of a whole nation. I think

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there must be something wrong with our thinking (psyche). Even if you decide today to ask Julius Berger to build flyover from one end of Lagos to the other, the gridlock will not go. Lagos alone cannot handle the cargo coming into Nigeria after over 100 years of port activity.

It was said then that Nigeria needed four different seaports and that was why the colonial masters invested in those seaports.

After about 120 years, we still think that same capacity could be shrunk into two seaports and it should accommodate capacity expansion of over 120 years. It is madness to think it will work. To get the old prost working is good but something drastic must be done. The Port Harcourt and eastern ports should be firing at full cylinder. It has nothing to do with the drought but the bottlenecks created there. It will take seasoned people that understand these bottlenecks to fix it.

The system has been so swift that the kind of people that created it for reasons best known to them kept it there. So, set up a committee that will look at it and immediately raise up activities around these ports. The FG would have itself to thank for that decision because if they do that, it simply means that Customs would bring the highest revenue in the country. Why would we have such an opportunity and play politics. It does not make sense.

@Businessdayng

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Thursday 18 July 2019

BUSINESS DAY

Investing in Rivers State REIF explains why $2.6Bn deep seaport project should be in Rivers • Hails NPA on suspension of project Stories by Ignatius Chukwu

M Details:

y name is Ibifri Bobmanuel, President of the Rivers Entrepreneurs and Investors Forum (REIF), and board member of RRDL (special purpose vehicle SPV for major investments that are geared toward development of the southsouth and east). RRDL is an SPV put in place for such major projects like the NLNG Dry Dock. That process and all of that is still ongoing. This NPA project clearly fits into what the RRDL should handle. The primary aim of the NPA project is not too far from what the Dry Dock is dealing with. Putting the two projects together will definitely make our work more interesting.

We have taken keen interest in the statement made by the NPA saying they have cancelled the $2.6Bn contract to develop Nigeria’s second deep seaport in Lagos. This is what we at REIF had cried against right from the beginning. We were against the economic reason behind it; being that they have major projects in Lagos, it would not make economic sense to locate all such ports in that same environment.

The South-South and South East

L-R: Ibifiri Bobmanuel and Gov Nyesom Wike

zones still have a huge potential when it comes to port-related activities or maritime activities because as far back as 1912, Port Harcourt was actually the first destination for a deep seaport in Nigeria. The NPA was working skeletally on it. Later, sea ports were developed in Lagos at Apapa and Tin-Can, then Warri and Calabar.

Economically, it would be most expedient and smart to invest in a second deep seaport in a different location in the country. A deep seaport should be located at strategic place whereby it would be easier for vessels to come in with access to

the international channel instead of going as far as Lagos. We think it is natural thing to be done.

So, we are pleased with the NPA on this review. If we give them knocks when they do wrong, we should be able to commend them when they do right. We must urge them on to look at relocating that investment to Rivers State owing to the fact that we have the existing channels and infrastructure to fasttrack the project.

The NLNG and its large fleets are here and close to 60 per cent of maritime activities in Nigeria are done in this region. It would only be a right

thing for any serious-minded investor to be attracted toward this direction because the channels are being secured by the same security agencies that protect the NLNG vessels. This benefit will be extended to the vessels coming. Too, you do not need to create new channels or do canals anymore.

You also consider proximity. If you are doing your feasibility study, the factors of location and existing channels would be taken care of.

REIF will be working with the NPA to work out a proposal for the investment consortium and see how we can tie up and expand the basis so that this project comes into fruition in this part of the country. We will be engaging the NPA and key players to ensure this is done. We need to form a common synergy on this.

We are very pleased with what the NPA has done and we commend them for that.

The primary ancillaries are no different from those of the Dry Dock concept. That is why we are commending the action of the NPA on the matter.

Recall that REIF has been in the frontline calling on the FG to see how to situate such investments in some other location. For the purpose of growth, putting all in one location does not help commerce.

Also, Lagos is not a new city and the infrastructure there has suffered

wear and tear. The city is almost on its knees calling for investment.

The amount of funds expected runs into trillions of Naira. Lagos cannot handle too much of that. Now, you have two identical kinds of projects to go to the same place. That is why we are commending the NPA for the decision they have taken by suspending it and rethinking it.

After Lagos, the next natural place is Rivers State. The facilities are there and the environment is eager for it.

It will impact on the region at large and the proximity of Rivers State to all other parts of the Niger Delta is plus or minus two hours. You will be cutting back on the wear and tear on roads and other national infrastructural facilities. You will be promoting the efficiency of doing business in Nigeria because you do not have to travel from the east to Lagos.

That is why we think it should come to Rivers State. You will understand that conglomerates like NLNG are spending billions of dollars in the Niger Delta (Tran-7) of about $7Bn investment. There is the N120Bn Bonny Road that is under construction. This shows that the region is safe; if not, they would not be spending such amounts there.

So, bringing in more huge projects would rather complement the NLNG activities and boost the economy of the region.

Kula king shocks the world, says signature on OML 25 ‘settlement agreement’ not for return of Shell

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he signature signed by kings, chiefs and leaders in OML 25 host communities in the Atlantic town of Kula with representatives of the SPDC may fetch more crisis than peace. This is because on of the most important monarchs in Kula, the Amananyabo of Kula, Bourdillon Ekine, Oko 28th, shocked the world on Friday, July 12, 2019, in his palace, when he told the national and international media on tour of the oceanic area that he did not sign so SPDC would return but for other reasons.

He said: “Yes, I attended the meetings called by the state governor. I am a government-recognised monarch.

So, l must attend especially to advise on the way forward. Before I signed, I told the governor that the signing was not for reopening of the flow station, but to facilitate the release of the monies owed the communities (some N1.46Bn). I also told the governor that those who were signing the agreement were not the real owners of the oil wells. I advised the parties to come to Kula and settle the matter.”

He said he had written a book in which he described Shell in bad light and cannot come now to wish them back. “I stand with my people.

Let Shell not come again. If not, give Belema operatorship of OML 25 so they can buy it off later”.

OML 25 area has been a volatile and highly polarized area for long.

Once, the natives allegedly clubbed about 10 chiefs to death. Once, a family had beaten to death their maternal uncle who brought them up, all

because of a disagreement.

Several groups lay claim to the oil fields and seem prepared to kill to win. The rule forbids an oil company to pay out any funds accruing to the oil community if they are in crisis or in court. Thus, over N1Bn has remained fallow, waiting for peace to return.

That was the peace that the Nyesom Wike-led government said they wanted to bring about so the funds can come in.

This would also pave the way for the flow station that was shut down two years ago to come back to life as over N700Bn has been lost in the shut down. The shutdown is currently the most topical issue in Rivers State and Niger Delta in general: OML25 known as the Belema

Flow Station is operated by SPDC as a consultium with 32.3 per cent stake on behalf of SPDC, Total E&P and Nigerian Agip Oil Company(NAOC), in Joint Venture with the Nigerian National Petroleum Corporation, NNPC which controls 60 per cent stake while an indigenous oil company known as Belemaoil Producing Limited has 7.7 per cent participating interest in the facility which it inherited from Chevron Nigeria Limited.

The facility consists of a Gas Plant and an Oil Flow Station which accounts for over 45,000 barrels of crude oil per day and over 135,000 metric tons of gas per day amounting to billions of petro-dollars revenue accruing to the federation accounts of the Nigerian Government.

The oil facility was shutdown by the Host Communities of Belema, Offoin-Ama and Ngeje on the 11th of August, 2017 in protest over unresolved issues with the oil multinational company ranging from alleged neglect, marginalization, impoverishment, enslavement, degradation of the environment by oil pollution, etc.

Shell says it gives benefits to all host communities. Shell is being quoted to say they have spent $300m in the development of the host communities, a position the people described as false. The communities thus took the media to the areas to see things for themselves.

They had also accused Shell of surreptitiously wanting to divest the oil facility to Crystar Oil and Gas, a

Belema king and chiefs demanding better deal out of IML 25 www.businessday.ng

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claim Shell had not publicly denied.

Since the shutdown of the facility for almost two years now, several attempts by the oil multinational company to re-open the facility have been unsuccessful.

Efforts by the NNPC which regulates Nigeria’s oil industry to resolve the protracted dispute between Shell and the host communities have not yielded any result as a meeting called by the NNPC in Abuja between the disputing parties in August 2017 ended in a stalemate.

Current effort by the Rivers State Governor Nyesom Wike to resolve the lingering dispute between Shell and the Host Communities with a view to re-opening the oil facility have further deepen the oil crisis as the move by the Governor have been rejected by the people. The communities say the intervention of the Rivers State Government in the protracted oil dispute is unconstitutional and unpopular arguing that oil related matters are on the Exclusive List and not on the Concurrent List of the 1999 Constitution as amended.

The Rivers State Governor had issued a 7 day ultimatum for the disputing parties to resolve all contentious issues with a view to re-opening the facility for normal oil production to resume, saying that as a responsible government it cannot fold its arms and allow the dispute to continue to linger as according to him all tiers of governments are losing revenue daily as a result of the continuous shutdown of the oil facility.

Thursday 18 July 2019

BUSINESS DAY

Corporate Social Impact

35

Onuwa Lucky Joseph (08023314782) Editor.

Celebrating Past African Laureates of the Rolex Awards for Enterprise Stories by ONUWA LUCKY JOSEPH

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olex has made its name as a premium luxury brand.

While timepieces might seem passé with the advent of mobile phones, it is noteworthy that many still consider wearing a watch as part of their dress-up routine. It is difficult to declare yourself fully dressed if you can’t look at your wrist and tell what time it is. It’s an art, really, when you see the well-practiced do it.

Aside being a top end luxury brand, Rolex is also known for its ruggedness. It has positioned as one of those essentials that the truly adventurous cannot do without. Its warranty is such that you can take it to the furthest parts of the earth, or the deepest parts of the waters, and it would still not stop ticking.

However, despite, and maybe because of its positioning, Rolex is working hard towards becoming an aspirational totem. A lifter of folks in their numbers. It’s in this wise that the Rolex Awards for Enterprise seeks to celebrate those who by their inventiveness and resourcefulness help in ultimately crafting a better world for us all, but especially the downtrodden, the barely surviving. The Awards which came on stream in 1976 to celebrate the 50th anniversary of the Rolex oyster have seen more than 140 Laureates (as the winners are called) given the added impetus and fillip of $75,000 to go conquer further.

And according to the Rolex website, “the support given by Rolex to Award winners since the launch of the programme has had a catalytic impact and has in many cases transformed lives and communities. It has also stimulated new ways of thinking about common problems in areas as diverse as creating technologies that improved lives, saving endangered ecosystems, protecting the oceans, exploring new frontiers on the planet, or pioneering advances in science and health”.

We focus today on some African winners of the Award: You’ll be surprised to find that what some of them did that earned them the prize may not look like mind-blowing stuff. But those inventions and fabrications have helped enable a better life for a lot more people. And that what it’s about. The search for the better life; that’s the concept at the heart of social enterprise.

Arthur Zang: (Cameroonian) IT specialist Arthur Zang has

used his technological knowhow to invent and manufacture Africa’s first computer tablet to diagnose people with heart disease. Arthur Zang’s Cardio Pad puts him at the forefront of young African innovators – and has won him plaudits and prizes in his home country and as far away as the United States (where Forbes magazine described him as “an example of African innovation at its finest”), as well as the Royal Academy of Engineering in London.

The Cardio Pad went on sale in January 2016, with the potential to enable heart examinations across Cameroon, a sprawling country of 22 million citizens and only 50 cardiologists, almost all of whom are based in the two main cities of Douala and Yaoundé.

The electronic device gives health workers the ability to check a patient’s heart and, within minutes, transmit a digitized electrocardiogram – using a mobile phone connection – to a distant cardiologist for diagnosis. This device is clearly not for Cameroon only, but for Africa and the world.

Bruktawit Tigabu (Ethiopian): Teacher/Puppeteer. Ap-

palled by the deaths of thousands of children from preventable diseases in her country, schoolteacher Bruktawit invented an entertaining way to inform youngsters about hygiene. A puppet giraffe called Tsehai and her animal puppet friends are watched by millions of children in Ethiopia and abroad. As they watch their favourite TV show, children are learning basic rules of hygiene, from hand-washing upwards, that can save their lives in a country where every year 300,000 children under the age of five die from diseases such as diarrhoea.

This miracle began when Bruktawit Tigabu gave up her job as a schoolteacher to make the nation her classroom, combining her active imagination and a missionary zeal to save lives that have since won her recognition and funding in Ethiopia and around the world, from France to Japan and the United States, where Tsehai is often compared with Sesame Street.

Andrew Muir (South African). Conservationist, Andrew Muir, a South African conservationist is using the natural world to support young people orphaned by AIDS improve their lives, helping them to find jobs www.businessday.ng

and develop life skills. In 2006, Andrew Muir, as CEO of the Wilderness Foundation Africa, set up the Umzi Wethu (Our Home) programme to give young people, who have few prospects of employment, training and jobs in the ecotourism sector, from park rangers to chefs cooking for tourists. Umzi Wethu also provides life-skills training, wellness counseling, one-to-one mentoring and wilderness experience.

Olivier Nsengimana (Rwanda): Rwanda’s turbulent history

has meant wildlife conservation has not always been a priority, but the situation has improved over recent years. Olivier Nsengimana has been part of this change with an emblematic bird as his flagship species. In Rwanda, the grey crowned-crane is a symbol of wealth and longevity.

But this elegant bird is endangered. With a golden tufted crown and a flame-red spot on its neck, the graceful creature is dying out due to loss of habitat and because it has become a desirable pet for the nation’s elite. It is often found adorning the gardens of hotels and fashionable homes.

Veterinarian Olivier Nsengimana has put the grey crownedcrane at the heart of his mission to inspire the next generation of Rwandans to protect their country’s natural heritage. As part of his campaign to raise awareness of the importance of crane conservation, he has established a database of illegally kept cranes in Rwanda, with 216 registered so far, 98 of which have now spent time in a rehabilitation facility as part of the process of reintroduction to the wild.

Hans Hendrikse (South Africa): The Q Drum invented

by South African architect Hans Hendrikse has improved the lives of many thousands in developing countries, providing a simple, easy means to transport up to 50 litres of water at a time.

Hendrikse passed away in 2012,

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but his rollable water container continues to be produced at the principal manufacturing location in Johannesburg.

In the rural areas, fetching water can be a health hazard.

Women and children are often forced to lug heavy, cumbersome containers over long distances, risking back and neck injuries.

But South African architect Hans Hendrikse devised a simple solution with his low-cost, rolling water container. The Q Drum, co-designed with his brother Pieter, needed to be “as simple, repairable and replaceable as possible” so it could be used in rural areas and did not need to be lifted. Combining their architectural and engineering skills, the brothers came up with the donut-shaped plastic container, which has a longitudinal shaft or central hole, through which a rope is tied, to pull or roll the drum along all terrains. The QDrum has improved many thousands of lives. Wondering why it’s taking so long for the Q Drum to make an appearance in Nigeria…

Sebastian Chuwa (Tanzania): The vision of award-win-

five years.

Since Chuwa’s death, his family has maintained his legacy.

Tomas Diagne (Senegal): A visionary naturalist, Tomas Di-

agne observed that the African spurred tortoise, which can live for more than 150 years, was becoming rare and decided to save it. When young animal lover Tomas Diagne began collecting tortoises at home in Senegal in the early 1990s, little did he know that one day he would become a world expert. Today, his pioneering conservation work to return the Sulcata tortoise to the wild has proved so successful it has spurred him to expand his vision across Africa. Diagne, who chairs the African group of the global partnership TSA (Turtle Survival Alliance), won a Rolex Award in 1998 for his plan to establish a “village” in Noflaye for Senegal’s endangered tortoise species, in particular the giant Sulcata.

Mohammed Bah Abba (Nigerian): In a semi-arid land with no refrigeration, food perishes

ning botanist Sebastian Chuwa rallied the people of northern Tanzania to create a sustainable future through a massive reforestation project. In his native Tanzania, Sebastian Chuwa saw his people’s ability to support themselves was in peril. Subsistence farming by a poor – and growing – population was leading to deforestation, exacerbating the threat to an already fragile ecosystem. In response, Chuwa launched a programme of spearheading tree planting and environmental education near Mount Kilimanjaro where he lived.

The patience and perseverance of the conservationist, who died in 2014, spurred communities into action, sowing the seeds for a better future through an informal reforestation project in northern Tanzania that included the prized African blackwood, or mpingo, and encouraged thousands of schoolchildren to plant tree seedlings.

Chuwa credited his Rolex Award with allowing him to reach the milestone of 1 million trees planted by 2004. It enabled his African Blackwood Conservation Project (ABCP) to develop the mpingo nursery and buy a four-wheel drive, a catalyst to the project’s success. In 2010, he celebrated the planting of 2 million trees, and pledged to plant another 5 million over the next @Businessdayng

quickly, causing major problems for local people. But Mohammed Bah Abba, who came from a family of potters, had a spectacularly simple solution. The late Bah Abba’s “desert refrigerator” or “pot-in-pot” is his extraordinary legacy to the subsistence farmers of Nigeria. It also made him famous, having been named one of the 2001 Inventions of the Year

by Time magazine.

It works very simply: one pot sits inside another and damp sand fills the space in between.

As the sand dries in the desert air, heat in the inner pot is wicked away, keeping the contents cool.

By 2005, with help from his Rolex Award, Bah Abba had distributed nearly 100,000 pot-in-pots in 11 northern Nigerian states, as well as in parts of Cameroon, Chad, Eritrea, Niger and Sudan.

In 2008, an adaptation of the potin-pot was used in Guinea by the non-governmental organization Médecins Sans Frontières to store antimalarial drugs for children.

Bah Abba also helped introduce the concept in The Gambia. The ability to conserve perishable foods has boosted the incomes and lives of farmers. Bah Abba died in 2010, but articles on his

Continues on page 36

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Thursday 18 July 2019

BUSINESS DAY

Corporate Social Impact

Shaquille O’Neal teams up with Epson to help advance education Stories by ONUWA LUCKY JOSEPH

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BA Hall of Famer, business leader, and philanthropist Shaquille O’Neal recently announced a new partnership with technology leader Epson that will empower students with free tech tools. The new initiative, titled “Epson and Shaq Give Back,” will work in collaboration with Communities In Schools (CIS) to provide a suite of technology products, including EcoTank printers, interactive projectors, and scanners, to schools across the United States.

The organization works directly with schools to encourage students to stay in school and continue down a path that leads to graduation. The partnership between CIS and the “Epson and Shaq Give Back” program will ensure more schools gain access to the tools they need to help their students stay focused, motivated, and moving forward “Epson and I share the same passion for education and giving back,” O’Neal said in a statement. “We can’t wait to roll this program out.”

According to a press release, O’Neal and the printing giant have partnered to release EcoTank printers, which will offer cartridge-free printing with easy-to-fill, supersized ink tanks, empowering users to

W

e are going to develop 120 classrooms over a three-year period and the government of Kaduna state has promised to match our contributions. This means that we would be having 240 classrooms catering to no less than 26,000 children in the Northern Nigeria. #AccessPoloDay2019 (This is big deal, clearly. We on our part, intend to keep count

and to hold Access Bank and Gov. El Rufai to account. 2022 is delivery date!).

Celebrating Past African Laureates of...

Continued from page 35 get more done in less time. The unique replacement ink bottles allow users to print thousands of pages, creating less waste, which is much more environmentally sound.

This seems to be the perfect fit for O’Neal given the fact that, in addition to his many accolades, he’s a tech enthusiast and skilled investor. He’s also a first mover when it comes to identifying innovative companies and products.

“Between family and work, life keeps me pretty busy,” O’Neal continued. “I’m always on the lookout for products that make everyday tasks quick and easy so I can focus o n t h e t h i ng s t hat matt e r most. Epson simply offers the best printing and home technology out there.”

Through the newly-formed partnership, the four-time NBA champion and Epson will focus on creating a complete line of

technology solutions for home, business, and education. In a massive push, Epson will roll out a series of original campaigns featuring the former L.A. Lakers star as its ambassador across multiple platforms including TV, digital, in-store, social media, and appearances.

“Shaq’s fun and dynamic personality engages a wide variety of fans and customers from around the world,” said Keith Kratzberg, president and CEO, Epson America Inc. “His energetic approach to life, outstanding business acumen and passion for technology make him the perfect partner for Epson. We look forward to working with him to generate excitement around our products and deliver greater value to our customers—starting with carefree color printing, a large supply of ink and ultimately a much more enjoyable printing experience.”

(Culled from 3BLMedia)

Tulsi Chanrai Foundation Eye Hospital, Abuja, Commissioned by Buhari

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From Herbert Wigwe’s Twitter Page

uly 11 was an auspicious day for eye care in Nigeria as President Muhammadu Buhari made out time to formally commission the Tulsi Chanrai Foundation Eye Hospital. The commissioning is in line with the Chanrai Foundation credo that eradicating curable blindness not only offers a person the gift of sight, but more importantly, restores livelihood thereby immediately and favourably impacting economic output across the nation.

Located at Kukwaba, Abuja, about 60% of the hospital’s services will be provided free of charge to benefit the poor and marginalized communities, while the rest will be at highly subsidized rates to enable affordability to a broader range of socio

economic classes.

The owners, who are largely Indians, say the hospital will be run by a team that’s largely Nigerian, inclusive of 30 eye professionals who have recently undergone intensive training in India.

Management of the facility will be by the globally renowned Aravind Eye Care System of India, the largest provider of quality eye-care in the world.

The hospital, expected to be self-sustaining in about four years’ time, commenced operations in January 2019 and has since provided quality eye service to over 6,400 out patients and performed over 1,000 eye surgeries, of which 850 have been free for the poor.

TCF Eye Hospital which aims to be the premier ophthalmic training institute in Nigeria currently offers services for cataract, pterygium, glaucoma and other conditions. This is scheduled to expand soon to other complex eye issues, for Nigerians and other West Africans.

Listed amongst the generous supporters of the new hospital are the Kewalram Chanrai Foundation, Worldwide Healthcare, Enpee Group, Fareast Mercantile Ltd - Nigeria, the HB Chanrai Group of Companies, amongst other donors. Tulsi Chanrai Foundation was launched by the Chanrai family nearly 2 decades ago.

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Like this one right here, that you’re reading!

Nnaemeka Ikegwuonu (Nigerian): Nigeria has Africa’s biggest population and economy, but poverty afflicts the countryside

where smallholders eke out a living. Thanks to Nnaemeka Ikegwuonu and his network of radio stations, they are now learning how to improve farm incomes.

More than 90 per cent of Nigeria’s population – many of them farmers on smallholdings – survives on less than US$2 a day. Growing up in a rural community, Ikegwuonu spent his after-school hours raising poultry and cattle, and noticed that farmers had little access to information about farming practices and environmental issues.

In 2003, he founded the Smallholders Foundation to provide the rural community with information via interactive radio – so farmers can themselves both ask questions and provide feedback on contemporary agricultural techniques and environmental conservation. The radio network audience has grown to an estimated 2 million. His foundation is also the springboard for two new for-profit companies: ColdHubs Limited (focusing on improving the shelf life of local produce) and the Agripreneurship Academy (training young farmers).

Louis Liebenberg (South Africa): Liebenberg designed

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the CyberTracker to enable Kalahari Bushmen to record their observations of animals, but the technology has proved a highly versatile scientific tool. South African scientist Louis Liebenberg made it his life’s work to revitalize the art of animal tracking, but the computer program he developed in pursuit of this mission has had much wider applications. The CyberTracker, which can be used on a smartphone or handheld computer, enables Southern Africa’s Bushmen to select icons that depict the behaviour of animals.

Designed to protect species and ecosystems by monitoring and gathering data, the device has proved extremely versatile, and is now being used for scientific research, citizen science, education, farming, social and health surveys, crime prevention and disaster relief. The CyberTracker, available as freeware, has been downloaded more than 100,000 times by users in more than 200 countries.

Sanoussi Diakité (Senegal) Fonio is a delicious, healthy cereal eaten in West Africa. But for centuries it had a drawback – hours of pounding and winnow-

ing were needed to remove the husks from the grain. Sanoussi Diakité invented a machine that removes them in a fraction of the time. The 50 kg machine invented in the 1990s by Diakité, an engineer and teacher, has transformed attitudes to fonio. The device costs between US$1,320 and $2,200, depending on the type, which makes it too expensive for individual households. But governments across West Africa have begun buying it to make it accessible to as many people as possible.

Fonio Day, suggested by Diakité, is now celebrated annually. He has been appointed Director General of Senegal’s National Office for Professional Training.

Thursday 18 July 2019

BUSINESS DAY

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ECONOMIC MONITOR A WEEKLY PUBLICATION OF BUSINESSDAY RESEARCH & INTELLIGENCE UNIT(BRIU)

briu@businessday.ng

08098710024

Domestic debts of Nigerian states: What is new in the latest data?

TELIAT SULE

T

he latest data published by the National Bureau of Statistics (NBS) shows that the 36 states of the federation owed N3.809 trillion as domestic debts

by March 31, 2019. At the rate of 360/$, the 36 Nigerian states owed $10.6 billion as domestic debts at the end of the first quarter of 2019.

This implies that in the first three months of 2019, domestic debts increased by N883.5 billion or 3.3 percent.

When compared with December 2016 when states owed N2.81 trillion or $7.79 billion, the 36 states of the federation grew their domestic debt portfolio by 36 percent or borrowed additional N1.004 trillion or $2.8 billion from the domestic creditors. In recent days, arguments for and against the rising debts among states have staged a comeback with the proponents and opponents justifying their positions as to what level of debt is sustainable for states.

What is new in the latest data?

First, states with low domestic debt portfolios are increasing their domestic debt profiles, albeit slowly. Take for instance, as at December 2018, the ten states with the highest domestic debts cumulatively had N1.96 trillion representing 53 percent of the total local debts owed by the 36 states.

Fast forward three months later, that is by March 2019, the same ten states with the highest local debts collectively owed N1.97 trillion , which amounted to 52 percent of the N3.81 trillion local debts owed by the 36 states of the federation.

In other words, the share of the biggest ten states dropped in March 2019 compared with their positions in December 2018.

By size, Lagos owed N530.24 billion domestic debt in December 2018 and that increased to N542.23 billion in March 2019, representing an increase of 2.26 percent during the three-month period. Rivers’ local debt remained unchanged at

N225.59 billion. Delta State owed N228.81 billion in December 2018 but that decreased by 2.34 percent to N223.44 billion in March 2019. In other words, the Delta State Government paid N5.4 billion to local creditors in the first quarter of 2019.

Akwa Ibom State owed N199.77 billion in March 2019, a marginal 0.56 percent increase over N198.66 billion in December 2018. Cross River paid local creditors N703.51 million indicating that its domestic debts as at March 2019 at N167.25

2019. Ekiti State’s domestic debt remained unchanged at N118.01 billion in March 2019. Plateau State paid N1.78 billion to reduce its domestic debt by 1.77 percent to N98.59 billion as at March 2019 from N100.37 billion in December 2018.

Outside the top ten most indebted states, some other sub national governments experienced double digit growth in their domestic debts or even more. Katsina State topped the list of such states.

N7.84 billion from domestic creditors and thus pushed its new local debt level to N57 billion in March 2019 as against N49.1 billion in December 2018.

Kogi State’s domestic debt was higher by 13.84 percent or the state government sourced additional N11.75 billion from local creditors leading to a new local debt at N96.7 billion as against N84.92 billion in December 2018. And Kaduna State increased its domestic debt by additional N8.6 billion or an in-

billion was 0.42 percent lower than N167.96 billion in December 2018.

In the first quarter of this year, the State of Osun paid local creditors N398.37 million, leaving its domestic debts at N147.70 billion in March 2019 as against N148.10 billion in December 2018, a decrease of 0.27 percent.

Bayelsa State grew its domestic debt by 2.53 percent from N130.04 billion in December 2018 to N133.34 billion in March 2019.

Kano State borrowed additional N4.22 billion or an increase of 3.61 percent in its local debt from N117.08 billion in December 2018 to N121.31 billion as at March

In the first three months of this year, the Katsina State Government borrowed N36.2 billion or an average of N12.08 billion per month, leading to 117.48 percent rise in its domestic debt, which moved from N30.85 billion in December 2018 to N69.1 billion in March 2019.

Gombe State sourced additional N4.52 billion from local creditors which pushed its domestic debt to N76.89 billion, representing 21.4 percent increase when compared with N63.3 billion three months earlier. Ondo State recorded 16 percent increase in its domestic debt , which means it borrowed

crease of 10.12 percent to have new domestic debt level at N93.20 billion in March 2019 compared with N84.64 billion in December 2018.

Other states recorded single digit growth in their domestic debt levels which ranged from 1.03 percent to 8.7 percent. The states are Kwara, Bauchi, Enugu, Jigawa, Adamwa, Nasarawa and Niger.

On the other hand, Rivers, Ebonyi , Anambra and Ekiti maintained the same domestic debt levels between December 2018 and March 2019 while Abia, Sokoto, Yobe, Delta, Plateau, Ogun, Imo, Edo and Benue reduced their domestic debt portfolios during the

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first quarter of this year.

Debt to IGR ratio So, if the states of the federation were to repay their domestic debts through internally generated revenue (IGR) only, how long will it take each state to repay all the debts?

Using the December 2018 IGR figures, the states with the longest periods of repayments based on this metric are Ekiti, Adamawa, Osun, Kebbi, Borno, Nasarawa, Taraba, Gombe, Bayelsa, Katsina, Bauchi and Cross River. It will take a minimum of ten to eighteen years to offset their domestic debts if the repayment is through IGR only.

On the contrary, the states with the shortest payback periods are Rivers, 2 years; Sokoto, 1.9 years; Anambra, 1.7 years; Lagos, 1.4 years and Ogun, 1.1 years.

Local debt per capita If the local debts were to be shared among the residents of each state, how much will each resident pay? Nigerians domiciled in Bayelsa State would pay N60,257 each, and this is the highest in the federation. Lagosians would pay N44,608 each. Nigerians resident in Cross River would pay N44, 532 each. Deltans would each pay N40,737 while Akwa Ibomites would each pay N37,700 each.

Others are those living in Ekiti where each resident would pay N37, 216 each. Nasarawa residents would pay N36, 733 each. Osun residents would pay N32, 410 each while Rivers’ residents would pay

N31,955 each. These are the five states where residents have the highest domestic debt burden and the debt per capita in each state is higher than the recently approved national minimum wage of N30,000 per month as well as the national domestic debt per capita at N20,692.

At the bottom of the pyramid of the local debt per capita are the residents of Kano, Katsina, Yobe, Niger, Sokoto, Jigawa and Anambra states. Each resident in the aforementioned states would pay less than N12,000 if their domestic debts were to be fully paid by IGR only.

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PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 220,380.40 6.20 -3.12 144 8,019,030 UNITED BANK FOR AFRICA PLC 191,516.76 5.60 -1.75 222 13,642,722 ZENITH BANK PLC 583,974.78 18.60 -0.80 377 13,283,936 743 34,945,688 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 201,013.64 5.60 -0.89 199 29,467,823 199 29,467,823 942 64,413,511 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,605,377.67 128.00 0.78 54 486,832 54 486,832 54 486,832 BUILDING MATERIALS DANGOTE CEMENT PLC 2,896,886.26 170.00 -0.29 74 1,861,990 LAFARGE AFRICA PLC. 208,595.95 12.95 -2.63 130 2,690,449 204 4,552,439 204 4,552,439 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 311,875.62 530.00 - 12 6,021 12 6,021 12 6,021 1,212 69,458,803 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 14,408.66 5.40 - 0 0 0 0 0 0 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 0 0 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 OKOMU OIL PALM PLC. 53,228.18 55.80 - 5 5,112 PRESCO PLC 44,800.00 44.80 - 7 10,082 12 15,194 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,520.00 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,440.00 0.48 - 5 227,000 5 227,000 17 242,194 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 873.61 0.33 10.00 2 161,216 JOHN HOLT PLC. 179.01 0.46 - 0 0 S C O A NIG. PLC. 1,903.99 2.93 - 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 41,054.47 1.01 1.00 54 5,336,298 U A C N PLC. 16,999.65 5.90 1.72 53 1,263,808 109 6,761,322 109 6,761,322 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 23,760.00 18.00 -9.77 13 112,370 ROADS NIG PLC. 165.00 6.60 - 0 0 13 112,370 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 3,325.95 1.28 - 4 5,500 4 5,500 17 117,870 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 13,231.85 1.69 - 1 10 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 100,757.61 46.00 -3.16 28 723,340 INTERNATIONAL BREWERIES PLC. 146,129.65 17.00 - 1 2,000 NIGERIAN BREW. PLC. 471,817.22 59.00 - 79 656,652 109 1,382,002 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 87,500.00 17.50 - 125 1,928,805 DANGOTE SUGAR REFINERY PLC 123,600.00 10.30 -0.48 61 669,101 FLOUR MILLS NIG. PLC. 57,405.31 14.00 -4.11 139 2,875,239 HONEYWELL FLOUR MILL PLC 7,295.78 0.92 -7.07 38 2,507,626 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 0 0 NASCON ALLIED INDUSTRIES PLC 39,741.58 15.00 - 8 66,864 UNION DICON SALT PLC. 3,321.07 12.15 - 0 0 371 8,047,635 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 20,284.58 10.80 - 18 90,116 NESTLE NIGERIA PLC. 986,857.03 1,245.00 -0.40 75 85,519 93 175,635 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 4,628.12 3.70 - 7 51,279 7 51,279 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 24,616.96 6.20 -1.59 18 824,790 UNILEVER NIGERIA PLC. 183,840.17 32.00 -3.03 43 1,386,436 61 2,211,226 641 11,867,777 BANKING ECOBANK TRANSNATIONAL INCORPORATED 182,578.03 9.95 - 55 879,952 FIDELITY BANK PLC 46,359.68 1.60 -1.23 80 7,596,347 GUARANTY TRUST BANK PLC. 859,390.43 29.20 -1.02 255 77,510,081 JAIZ BANK PLC 12,964.27 0.44 - 6 360,000 SKYE BANK PLC 10,687.83 0.77 - 0 0 STERLING BANK PLC. 61,611.49 2.14 -1.83 77 7,151,431 UNION BANK NIG.PLC. 192,196.97 6.60 -3.65 64 2,143,346 UNITY BANK PLC 6,896.71 0.59 -9.23 8 345,583 WEMA BANK PLC. 21,601.70 0.56 -6.67 31 3,035,964 576 99,022,704 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 4,504.63 0.65 - 12 475,889 AXAMANSARD INSURANCE PLC 17,325.00 1.65 -8.33 16 686,330 CONSOLIDATED HALLMARK INSURANCE PLC 2,520.30 0.31 3.33 9 1,013,677 CONTINENTAL REINSURANCE PLC 19,811.94 1.91 - 0 0 CORNERSTONE INSURANCE PLC 3,240.49 0.22 - 5 3,300 GOLDLINK INSURANCE PLC 909.99 0.20 - 0 0 GUINEA INSURANCE PLC. 1,228.00 0.20 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,563.20 0.35 2.94 59 11,301,390 LAW UNION AND ROCK INS. PLC. 2,062.24 0.48 - 3 3,800 LINKAGE ASSURANCE PLC 5,120.00 0.64 - 2 55,000 MUTUAL BENEFITS ASSURANCE PLC. 2,346.27 0.21 5.00 26 8,642,469 NEM INSURANCE PLC 12,092.35 2.29 - 12 206,150 NIGER INSURANCE PLC 1,547.90 0.20 - 0 0 2,583.62 0.48 - 3 51,000 PRESTIGE ASSURANCE PLC REGENCY ASSURANCE PLC 1,333.75 0.20 - 1 1,000 SOVEREIGN TRUST INSURANCE PLC 1,668.16 0.20 - 4 96,800 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 1 10,000 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 0 0 WAPIC INSURANCE PLC 5,353.10 0.40 -2.50 33 7,279,589 186 29,826,394

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MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 2,583.90 1.13 - 1 6,378 1 6,378 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 3,780.00 0.90 - 0 0 7,370.87 0.50 - 0 0 ASO SAVINGS AND LOANS PLC INFINITY TRUST MORTGAGE BANK PLC 5,796.93 1.39 - 0 0 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 6,900.00 3.45 - 28 158,622 CUSTODIAN INVESTMENT PLC 36,467.56 6.20 - 5 9,403 DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 FCMB GROUP PLC. 30,298.15 1.53 -4.37 97 8,837,476 1,131.98 0.22 - 0 0 ROYAL EXCHANGE PLC. STANBIC IBTC HOLDINGS PLC 399,381.56 39.00 -1.27 13 4,275,949 UNITED CAPITAL PLC 12,960.00 2.16 -1.37 45 464,898 188 13,746,348 951 142,601,824 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 0 0 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 852.75 0.24 - 1 500,000 1 500,000 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 544.04 0.55 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 9,492.94 4.55 - 0 0 9,925.77 8.30 - 8 80,100 GLAXO SMITHKLINE CONSUMER NIG. PLC. MAY & BAKER NIGERIA PLC. 4,140.56 2.40 - 9 271,200 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 949.58 0.50 - 4 12,178 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 325.23 1.50 - 0 0 21 363,478 22 863,478 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 781.44 0.22 4.76 17 4,350,000 17 4,350,000 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 1 10 NCR (NIGERIA) PLC. 648.00 6.00 - 0 0 TRIPPLE GEE AND COMPANY PLC. 346.47 0.70 - 0 0 1 10 PROCESSING SYSTEMS CHAMS PLC 1,267.94 0.27 8.00 5 113,680 E-TRANZACT INTERNATIONAL PLC 9,996.00 2.38 - 0 0 5 113,680 TELECOMMUNICATIONS SERVICES AIRTEL AFRICA PLC 1,215,762.01 323.50 -0.15 47 130,325 47 130,325 70 4,594,015 BUILDING MATERIALS BERGER PAINTS PLC 2,028.76 7.00 - 0 0 CAP PLC 17,325.00 24.75 - 27 32,129 CEMENT CO. OF NORTH.NIG. PLC 171,522.69 13.05 - 34 416,195 FIRST ALUMINIUM NIGERIA PLC 844.14 0.40 - 0 0 MEYER PLC. 313.43 0.59 - 0 0 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,959.74 2.47 - 2 1,800 PREMIER PAINTS PLC. 1,156.20 9.40 - 0 0 63 450,124 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 2,906.18 1.65 - 18 301,610 18 301,610 PACKAGING/CONTAINERS BETA GLASS PLC. 33,173.14 66.35 - 1 10 GREIF NIGERIA PLC 388.02 9.10 - 0 0 1 10 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 82 751,744 CHEMICALS B.O.C. GASES PLC. 1,889.75 4.54 - 1 2,000 1 2,000 METALS ALUMINIUM EXTRUSION IND. PLC. 1,781.64 8.10 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 92.40 0.42 - 0 0 0 0 1 2,000 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,315.17 0.21 - 18 644,458 18 644,458 INTEGRATED OIL AND GAS SERVICES OANDO PLC 49,725.65 4.00 1.25 76 3,373,078 76 3,373,078 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 56,974.05 158.00 - 3 2,077 CONOIL PLC 12,803.42 18.45 - 49 255,023 ETERNA PLC. 4,368.88 3.35 - 5 25,977 FORTE OIL PLC. 24,095.90 18.50 -0.80 59 586,816 MRS OIL NIGERIA PLC. 6,354.80 20.85 - 5 2,600 TOTAL NIGERIA PLC. 44,103.89 129.90 -0.08 24 27,199 145 899,692 239 4,917,228 ADVERTISING AFROMEDIA PLC 1,820.01 0.41 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 17,551.17 1.80 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 341.14 0.29 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 3,112.54 5.28 - 8 7,853 TRANS-NATIONWIDE EXPRESS PLC. 328.19 0.70 - 4 54,843 12 62,696 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 1 80 1 80 HOTELS/LODGING CAPITAL HOTEL PLC 4,723.78 3.05 - 0 0 IKEJA HOTEL PLC 2,847.95 1.37 - 4 6,000 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 1 300 TRANSCORP HOTELS PLC 41,042.18 5.40 - 0 0 5 6,300 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 1 10,000 1 10,000 PRINTING/PUBLISHING ACADEMY PRESS PLC. 241.92 0.40 - 0 0 LEARN AFRICA PLC 1,080.03 1.40 - 5 55,066 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 776.54 1.80 - 3 28,000

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Thursday 18 July 2019

BUSINESS DAY

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Thursday 18 July 2019

BUSINESS DAY

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Thursday 18 July 2019

BUSINESS DAY

53

POLITICS & POLICY Reps urge IG, DSS DG to shut down Edo State House of Assembly …Obaseki insists no going back on Edo Assembly inauguration ...As Senate extends submission of allege sex assault panel’s report Owede Agbajileke, James Kwen, Abuja; IDRIS UMAR MOMOH & CHURCHILL OKORO, Benin

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he House of Representatives, Wednesday urged the Inspector-General of Police, Mohammed Adamu and the Director-General of the State Security Services, Yusuf Bichi to immediately shut down the complex of the Edo State House Assembly and to provide adequate security to allay further fears of intimidation and threat as alleged by members-elect.

It also asked Edo State Governor, Godwin Obaseki to issue a fresh proclamation within one week in line with section 105(3) of the constitution of the Federal Republic of Nigeria, 1999 (as amended) for a proper inauguration of the state’s 7th Assembly.

Th e G re e n C ha mb e r reached these resolutions following the adoption of the Report of its Ad-hoc Committee on intervention in the Edo House of Assembly crisis.

Recall that the House last week set up an ad-hoc Committee chaired by Abdulrazak Namdas (APC,

Adamawa) to investigate the crisis rocking the Edo State House of Assembly following the inauguration of only 9 out of the 24 members-elect.

Presenting the report at plenary, Chairman of the Ad-hoc Committee, Namdas declared all actions taken by the 7th Assembly members as null and void, stressing that the National Assembly should take over Edo State House of Assembly if the Governor and the Legislature fail to comply with recommendations in the report.

He added that, “All mem-

bers of the Edo State House of Assembly, both those who have been inaugurated and those who have not been inaugurated should dissolve their factions in the interest of peace and stability of the House with the view to moving the State forward.

“Where recommendations fail, the National Assembly should invoke the Provisions of Section 11(4) of the 1999 Constitution (as amended) to take over the State House of Assembly until the situation normalizes”.

But Edo State Gover-

Ifeanyi Okowa, Delta State governor (6th left); Kingsley Otuaro, deputy governor (7th left); Sheriff Oborevwori, speaker, Delta State House of Assembly (5th left), and others, during the swearing-in of newly appointed special advisers to the governor, at the Government House Asaba.

Buhari group seeks probe of CUPP over alleged comments against Judiciary Iniobong Iwok

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p o l i t i c a l g ro u p, the Buhari Media Organisation (BMO), has called for the investigation of Imo Ugochinyere of the Coalition of United Political Parties (CUPP) over his statement seeking to compel the judiciary to do his group’s bidding and declare the Presidential candidate of the People’s Democratic Party (PDP) in the last election, Atiku Abubakar as President of Nigeria.

The BMO said the statement is a subtle call for rebellion against the judiciary and the Nigerian State, and must be addressed seriously by the nation’s law enforcement agencies.

The group further alleged that the claim by the PDP at the Presidential Election Tribunal that its witnesses were attacked on their way to Abuja from Zamfara, which had been debunked by the Nigerian Police Force (NPF), is a reflection of the party’s

nor, Godwin Obaseki on Wednesday said there was no going back on the earlier proclamation of the state House of Assembly.

Obaseki made the disclosure when the 7-man ad-hoc committee set up by the Senate to look into the crisis rocking the state House of Assembly visited the state for its fact-finding mission.

The state governor, who said he had fulfilled his constitutional responsibility in proclaiming the house, however, added that the matter was already before

lack of a moral compass, its zero values and a worrisome desperation.

The group stated this in two separate press statements signed by its Chairman, Niyi Akinsiju and Secretary, Cassidy Madueke.

The group noted that Ugochinyere’s call was an incitement, calling for rebellion against the processes of the judiciary, and seeking that Nigeria is plunged into chaos.

This, according to the group, must not be treated with kids-gloves by the nation’s security agencies.

“Are there no law enforcement agencies in the country?

Is this not a prima facie call to rebellion and anarchy? Are we going to wait for hired thugs to attack the judiciary before we see where the PDP and Atiku are headed to?

“BMO finds the call by the group, CUPP, seeking that the Supreme Court declareS Atiku President as a joke taken too far. It subtly calls for anarchy and must not be tolerated by the Nigerian State.

“The judiciary has its prowww.businessday.ng

cesses; President Buhari was declared the winner in a free and fair election. The closest loser, Atiku Abubakar, who was far behind him with a margin of nearly 4 million votes has challenged Buhari’s victory in court. Atiku must, therefore, submit himself to the processes of the court and not use ‘charlatan’ groups to call for a rebellion against the Nigerian state.

“The court processes are not influenced by third parties who have no business in the arena. CUPP’s satellite relationship with Atiku is no ground for it to make such seditious remarks against the judiciary, on a matter that is already in court. Justice is a matter of evidence, material facts and law - not anarchy, not chaos, not up-ending the system!”

T h e g ro u p u r g e s t h e country’s security agencies to quickly swoop on Ugochinyere and investigate the intent of his alleged subtle call for anarchy and rebellion against the judiciary and the Nigerian state.

competent court.

“As far as I am concerned, I abide by the Constitution.

I have fulfilled my constitutional responsibility by issuing a proclamation letter to the clerk of the house for the inauguration of the state assembly.

“The Clerk of the House undertook the processes as deemed fit. I believe in the separation of powers. Before I issued a proclamation letter consultations were held. Various party organs met before decisions were reached,” he said.

The governor, who alleged that the national leadership of the party are behind the crisis, however, urged the committee to look at the matter in the interest of the country and in defence of democracy.

Meanwhile, the Senate has extended the submission of the report of its Ad-hoc Committee on alleged assault by Senator Elisha Abbo by one week.

This was sequel to a request by Chairman of the Committee, Sam Egwu (PDP, Ebonyi) on the floor of the Senate on Tuesday.

Recall that in a viral video released a fortnight ago, Abbo who currently represents Adamawa North in the National Assembly, was

seen physically assaulting a nursing mother at a shop in Abuja.

Speaking under Order 43 of the Senate Standing Orders 2015 (as amended), which borders on Personal Explanation, Egwu revealed that the committee’s work has been halted as a result of a court case instituted by the police against the lawmaker.

According to him, the embattled senator, the police and counsel to the victim all appeared before the committee but declined to make submissions on the grounds that the matter was subjudice.

He also disclosed that both the shop owner and the victim are yet to physically appear before the committee.

Egwu therefore, requested for an indefinite suspension of the submission of the panel report pending the determination of the suit.

Responding, President of the Senate, Ahmad Lawan who presided over the session, dismissed the request, explaining that the Senate was not investigating the criminal aspect of the case but the area of ‘personal privileges’.

He therefore, extended the submission of the report by one week.

Okowa swears-in eight new special advisers Francis Sadhere, Warri

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elta State Gove r n o r, I f e a n y i Okowa on We d n e s d ay i n Asaba, swore-in eight new Special Advisers, saying the appointments were coming in batches to ensure that the right set of persons were fixed into the right positions.

Okowa also said that this was to ensure that his administration has a formidable team to build a stronger Delta State.

Okowa said: “I believe that the process of political appointments is continuous and appointments will come in batches because, we are all aware that there is room for a lot of people to be given political appointments, but, it is not possible to appoint all Deltans into office.”

Those who were administered oath of office as Special Advisers at the event include Edwin Uzor, Pascal Adigwe, Mike Okeme, Prince Kelly K. Penawou, Mary A. Iyasere, Johnson Erijo, Daniel Yingi,

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and Ernest Ogwezzy “The appointment and swearing-in of this set of Special Advisers, further demonstrates this administration’s determination and collective resolve to put in place, a viable machinery of governance, which will assist in meeting the challenges of repositioning the State towards achieving our vision of a stronger Delta.

“The appointments we are making are premised on professionalism, merit and competence and I urge those who are yet to be appointed to be patient because, all those who worked will be rewarded in one way or the other; please, keep praying for me and the administration,” Okowa said.

He admonished the Special Advisers and other political appointees in his administration, to acquaint themselves with the policy direction of his administration, while the appointments should facilitate professional and technical input into the decision making process of government.

“I encourage the newly @Businessdayng

sworn in advisers to bring in their wealth of experience to bear, so that the tempo with which the government is pursuing its various projects and programmes, gets accelerated; they should demonstrate exemplary leadership qualities and carry the people along, and see the appointments as opportunity to serve the people by becoming bridges between them and the government so that their yearnings and aspirations can be satisfied,” he stated.

While urging the appointees to be people-friendly, Governor Okowa emphasised that his administration was addressing the challenges of sustainable development in all its ramifications.

Edwin Uzor on behalf of the appointees thanked the governor for considering them to be part of the team to build a stronger Delta State, saying, “We identify with your (Okowa’s) vision and we will work with you for the desired objectives to be achieved.”

industry Insight

BUSINESS DAY Thursday 18 July 2019 www.businessday.ng

Industry Insight

Why micro, small and medium enterprises matter

Gbemi Faminu

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i c r o, s m a l l a n d m e dium scale enterprises (MSMEs) are the bedrock on which the Nigerian economy stands. A recent report by the National Bureau of Statistics (NBS) and the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) proves this point.

The number of MSMEs rose from 37million in 2013 to 41.5million in 2017.

Micro enterprises were 41.47 million, constituting 99.8 percent of the total enterprises, while small and medium businesses were estimated at 73,081, which is 0.2 percent of the total.

Together, they employ 59.647 million people in the economy. They also contribute 50 percent to the gross domestic product (GDP) and 7.64 percent to export receipts.

While they are scattered across various sectors, they are majorly found in the trade sector— both for wholesale and retail—, agriculture, manufacturing, and food services, among others.

Interestingly, the report shows that the number of medium scale enterprises dropped by 61 percent, from 4,670 in 2013 to 1,793 in 2017, while the total MSMEs grew marginally by 12.1 percent.

Analysts say this is a reflection of the Nigerian economy in the last six years— particularly in periods of negative or sluggish growth in 2016/2017.

“The periods covered by the survey were when the Nigerian economy was in mostly down and in recession. The small and medium enterprises suffered from shocks in the economy, forcing many to close shop,” Friday Opara, director, strategic partnership, SMEDAN, who contributed to the survey, told BusinessDay on the phone.

“This was why we had a decline in the number of medium-sized businesses. The growth recorded in micro businesses was as a result of so many retrenched workers starting up micro businesses to keep life going,” Opara explained.

Yes, there were massive retrenchment and business closures, particularly between 2016 and 2017 when the Nigerian economy was in recession.

In August 2016, the Manufacturers Association of Nigeria (MAN) and the NOI Polls reported that 222 small-scale businesses closed shops, leading to 180,000 job losses. Frank Jacobs, former president of the Manufacturers Association of Nigeria(MAN), told BusinessDay in 2016 that 54 firms shut down in one year preceding August 2016.

Two years after recession, have the problems of MSMEs ceased?

According to the 2019 World Bank’s Doing Business Index, Nigeria ranked 146th out of 190 countries, scoring 52.89 out of 100 points. This reflects the difficult conditions of business owners in Africa’s biggest economy. The MSMEs are left to battle with various issues ranging from a limiting environment to restrictive economic policies, overbearing regulatory agencies, and tax multiplicity, among others.

Babatunde Paul Ruwase, president of the Lagos Chamber of Commerce and

Industry (LCCI), said at a breakfast meeting that MSMEs are critical to the nation’s economic development, especially with regard to job creation and poverty reduction. He said the private sector, especially the MSMEs, should be empowered and supported.

Funding remains a major hiccup for MSMEs, as these businesses require funding either in the form of loans or grants.

Nigerian banks are usually reluctant to lend to businesses, especially MSMEs due to issues around absence of identity, lack of collaterals and trust. Those willing to give out loans charge high interests that are usually difficult for firms to pay.

Nigeria retained its double digit monetary policy rate at 13.5 percent from a previous 14 percent, and commercial lenders give out loans at 20 to 35 percent interest rates with a 12 months tenor.

Furthermore, development banks like the Bank of Industry which give out loans at single-digit rates of about nine percent lack the required capital to keep up with its activities.

Nigeria’s benchmark interest rate is among the highest in Africa at 13.5 percent. Ethiopia’s is 7 percent; Kenya is 9 percent; South Africa is 6.75 percent;

Zambia is 10.25 percent, and Cameroon is 4.25 percent.

Similarly, Rwanda is 5 percent; Mauritius, 3.5 percent; Algeria is 8 percent, and Senegal is 4.5 percent. Manufacturers are asking the Federal Government to recapitalise especially the Bank of Industry, which provides single-digit funding to them. Doing this, they say, will increase lending to the real sector.

Interestingly, the NBS report shows that 85 percent of businesses could not have access to external financing within 2013-2017. In fact, only 5.3 percent of SMEs had access to bank credit, even with 40 percent of them having relationships with banks. Most MSMEs reported average monthly sales/turnover of N100,000 as a result of lack of funding for expansion.

Infrastructure is a major issue. Think about the ports. A research report conducted by the Lagos Chamber of Commerce and Industr y (LCCI) in 2018 showed that at least 5,000 trucks seek access to Apapa and Tin Can ports in Lagos every day, despite that the two ports were originally meant to accommodate only 1,500 trucks.

The report showed that Nigeria loses N600 billion in customs revenue, $10 bil-

lion (N3.6trn) in non-oil export sector and N2.5 trillion in corporate earnings across various sectors on annual basis due to the poor state of Nigerian ports.

There are no good railways at the moment and roads are bad in many instances, thereby increasing logistics costs, which are now next after energy for MSMEs. Analysts say good infrastructure boosts businesses and raises the gross domestic product (GDP), creating jobs and economic prosperity. They urge the government to help businesses by spending aggressively on capital projects rather than on recurrent.

According to USAID’s energy sector review, Nigeria has the ability to generate 12,522 megawatts (MW) of electric power from existing plants, but it is only able to distribute around 4,000 MW. Currently, manufacturers in Nigeria currently self-generate a little over 13,000MW through alternative sources of energy in order to stay afloat.

In fact, cost of alternative electricity generation alone constitutes about 40 percent of our production cost.

The Manufacturers CEOs Confidence Index (MCCI) survey conducted by the Manufacturers Association of Nigeria (MAN) in the first quarter of 2019 highlighted various issues hurting Nigeria’s productive sector. Generally, these are part of the issues that trouble business owners in the country and dissuade prospective investors from Nigeria.

According to the MCCI, CEOs confidence stood at 51.3 points in the first quarter of the year, slightly above the 50 points benchmark of a good performance. Issues around foreign exchange, double digit interest rate, government capital implementation, multiple taxes, overregulation and raw materials were identified by chief executives of Nigerian firms as some of the challenges dragging the growth of the sector backwards.

Findings reveal that business owners pay no less than 54 different taxes annually to different regulatory agencies. These eat deep into their finances and margins.

Furthermore, many taxes, levies and fees charged by the federal government are also duplicated by states and local governments.

Analysts believe that there are still various things that the federal government can do to improve the ease of doing business in Nigeria. These include improving the infrastructure and transportation system as well as reforming the taxation system.

To aid these businesses, it is imperative for Nigeria to align withthe World Ba n k ’s re p o r t o n g l o b a l e c o n o m i c overview which states that, “it is of paramount importance for emerging market and developing economies to rebuild policy buffers while laying a stronger foundation for future growth by boosting human capital, promoting trade integration, and addressing the challenges associated with informality.” Nigeria needs energy and tax review, and must begin to think of creative ways of making funds available for MSMEs, analysts say.

MSMEs matter, and no serious nation can afford to toy with them.

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