Businessday 18 jun 2018

businessday market monitor Commodities

NSE

Brent Oil

Biggest Gainer

$75.88

OKOMUOIL N90.40

Cocoa

Biggest Loser

10.24pc

SEPLAT N754.9

-1.83pc

38,928.02

US $2,433.00

Everdon Bureau De Change

Bitcoin

Buy

₦2,374,225.04 -3.22pc Powered by

news you can trust I * *MONDAY 18 JUNE 2018 I vol. 15, no 77 I N300

Sell

$-N 360.00 362.00 £-N 479.00 489.00 €-N 416.00 426.00

@

FMDQ Close Foreign Exchange Market

Spot $/N

I&E FX Window 361.07 CBN Official Rate 305.85

3M

6M

5 Years

10 Years

20 Years

0.00 11.20

-0.18 12.83

-0.00% 13.16%

0.00% 13.46%

0.00% 13.56%

g

Stocks on path to historical sell-off before elections SOBECHUKWU EZE & EMEKA UCHEAGA

G

F

rom its obscure years of trading at less than a kobo to 1 CFA Franc in 1986, the CFA Franc has risen tremendously in value and now trades at around 54 kobo to 1 CFA Franc.

In the last 5 years, the CFA Franc is up roughly 80 percent against the Naira. A similar Continues on page 37

Continues on page 4

Inside

P. 39

R-L: Oliver Andrews, chief investment officer, Africa Finance Corporation; Andrew Alli, president/chief executive officer, Africa Finance Corporation, honoured with excellence in finance award, and Christopher Moore, publisher, EMEA Finance, at the EMEA 2017 Champions of Finance Award recently in London.

Aircraft towing persists at Nigerian airports as poor infrastructure hampers operations IFEOMA OKEKE

World Cup Result Costa Rica 0 - Serbia Germany 0 - Mexico

Brazil

1 1 1 -Switzerland 1

INSIGHT CFA Franc racing to parity with naira Emeka Ucheaga

eneral elections due in 2019, and a slight buildup of pressure against the currency (naira) should push Nigerian equities lower in the second half (H2) of the year if history is anything to go by.

The stock market is up just 1.79 percent year to date. This performance pales against the market performance of 16 percent in the first half of 2017.

Stocks peaked this year at 45,092.83 points on January 19, and have since suffered a correc-

Long wait for Lagos-Badagry Expressway reconstruction

fgn bonds

Treasury Bills

I

n addition to the numerous charges airline pay to service providers, they have continued to pay ground handling companies over N985million annually to tow their aircraft into the aerobridge , which is the

point to disembark passengers after landing.

BusinessDay’s checks show that in other countries, airlines taxy their aircraft into the aerobridge but in Nigeria, airlines pay to taxy their aircraft to the bridge. A business man close to the government alleged that he

had personally volunteered to assist the concerned agencies fix the problem but they have refused because of the amount they realise from towing aircraft into the bridge on a daily basis.

Experts say that this developContinues on page 37

Why Money Market funds are attracting large inflows OGHOGHO EDOSOMWAN & CYNTHIA IKWUETOGHU

M

oney market funds are open-ended mutual funds that invest in shor tterm debt securities such as treasury bills, certificate of deposits, and commercial paper.

They are usually managed by skilled fund managers who are competent to optimize shareholder returns by arranging a Continues on page 4

2 BUSINESS DAY NEWS

C002D5556

Monday 18 June 2018

BDCs see currency swap deal promoting Group says FG unwilling to prosecute killer herdsmen naira sovereignty in Africa KEHINDE AKINTOLA, Abuja

HOPE MOSES-ASHIKE

B

ureaux De Change Operatorshavedescribedthe $2.5 billion currency swap agreement between the Central Bank of Nigeria (CBN) and the People’s Bank of China (PBoC) as a deal that will promote naira’s sovereignty in Africa.

Aminu Gwadabe, president, Association of Bureaux De Change Operators of Nigeria (ABCON), who spoke on the agreement at the weekend, in Lagos, said the naira would benefit hugely from the deal giventherisinginfluenceofChinese Yuan in the international market.

Gwadabe said the admittance of Yuan into the basket of International Monetary Fund (IMF) currencies and the Naira/Yuan swap deal would actualise the dream of naira sovereignty in Africa.

The naira has remained stable at both the official and parallel markets, as the CBN continues its weekly dollar interventions. The naira, which in February 2017 was exchangingatN520/$intheparallel market, now exchanges at N361/$ while rate at the official market remains N305.9/$. The yuan has equally made significant progress this year, appreciating 1.8 percent against the dollar to become the world’s second-strongest Asian currency.

The ABCON boss also urged the CBN to consider diversifying dollar disbursement to BDCs with percentageamountofyuantomeet the critical needs of their numerous clients travelling to China for

personal and business purposes.

He explained that if implemented, such move would further deepen theinterestinpurchasingyuanand reduce dollar demand.

He disclosed that the currency swapdealwaspartoftheCBN’splan to keep the naira stable and protect the foreign reserves domiciled in dollars. He said the deal would provide adequate local currency liquidity for Nigerian and Chinese industrialists and reduce difficulties they face in searching for the greenback.

He explained that in local currencies, the swap was worth 15 billion Renminbi (RMB)/Yuan or N720 billion, adding that the threeyear renewable deal would allow for the direct exchange of RMB and naira for the purpose of trade and direct investment between the two countries. The agreement could be renewed on expiration, at the instance of both countries.

The ABCON boss said Bureau de Change (BDCs) will equally benefitfromtheswapdealgiventhat a stable and strong naira is good for theeconomyandoperators,adding that increased use of Yuan in trade deals will also open a new business opportunity for BDC operators.

According to Gwadabe, ABCON will continually support CBN inachievingitsexchangeratestability mandate and promoting economic growth through increased global partnerships and collaborations.

According to the guideline, the swap agreement allows for both banks to among other purposes,

make available liquidity in their respective currencies for the facilitation and promotion of trade and investments across Nigeria and China.Thiswillbedonethroughthe purchase, sale and subsequent repurchase and resale of the Chinese yuan against naira and vice versa.

He reiterated that the said swap deal would smoothen bilateral trade,boostinvestment,andprotect the financial market in both countriesaswellascutdollardemandby Nigeriansentrepreneursimporting from China. All these, he said, will firm the value of the local currency.

China has remained Nigeria’s largest import partners over the last five years, with imports from China standingatover20percentof Nigeria’s total imports. He therefore advisedthattoachievethefullgains ofthedeal,Nigeriahadtotakesteps that boost its trade balance with China by raising the quality of its local products to make them more attractive and acceptable to the Chinese people.

He said the deal would reduce currency transaction cost for importers that go for Yuan while also easing foreign exchange liquidity pressuresinperiodsofratevolatility and/or scarcity for Nigeria.

“ThedealwillexpandtheBDCs capacity to handle new business transactionsinYuan.Besides,BDCs in both countries will have their transactionbaseexpanded,including new opportunity to transact higher volume of Naira/Yuan in the export/import of equipment, raw materials and finished goods,” he said.

A

coalition of civil society organisations known as Joint Nigeria Crisis Action Committee (JN-CAC) on Friday expressed concern over the lackadaisical attitude of Federal Government towards ending the gruesome killing of Nigerians, especially women and children by armed pastoralists otherwise called killer herdsmen.

The coalition, which commended the High Court of Adamawa State’s recent conviction of five persons on charges of culpablehomicidepunishablewith death for the killing of a pastoralist in Demsa Local Government Area of Adamawa, however, chided government apparatus for failing to bring to book those involvedintheunabatedkillings in Adamawa, Benue, Kaduna, Nassarawa,Plateau,Taraba,and Zamfara states.

The group stated this via a statement titled: ‘The tilted justice’ signed by Yemi Adamolekun, Abiodun Baiyewu and Chidi Anselm Odinkalu.

“This week, Nigerians received news of the conviction by the High Court of Adamawa State five persons on charges of culpable homicide punishable with death for the killing of a pastoralist in Demsa Local Government Area of Adamawa.

“Given the facts of the case,

it would appear that the security agencies were diligent in the task of investigation as well as in arresting and prosecuting the culprits. We applaud their assiduousness in this particular case, and affirm our support for the rule of law and the administration of justice.

“However, we are reminded thatinthefirstquarterofthisyear alone,morethan4000Nigerians have been killed in violent attacks (including many women and children), by persons or groups described in various places as armed pastoralists, rustlers or bandits.

“In some cases, these perpetrators have decimated entire communities or laid to waste massive human settlements, including schools, hospitals and places of worship. In nearly all these cases, there have been neither arrest nor diligent prosecution.

“Government has a duty to affirm in words and in deeds, its commitment to the equal value of every Nigerian life and to the equal protection of all Nigerians. Where it fails to do this, it encourages the perception that it is unwilling to protect every Nigerian and unable to hold equally accountable anyone who violates a Nigerian life.

“At the moment, it appears that the perception appears to exist that there is a lack of political will to apply to all suspected perpetrators, the same

standards of diligence that has been demonstrated in this case in Adamawa State.

“As a result, large groups of armed and organised killers appear to be on prowl Adamawa, Benue, Kaduna, Nassarawa, Plateau, Taraba, and Zamfara States with no consequences for the challenge that they pose to the safety of our communities, the coexistence of our people and the stability of our country.

“Nigeria Mourns therefore calls on government, particularly our security agencies to forthwith fulfil their constitutional obligation of ensuring the safety and security of all Nigerians, while respecting their human rights, by tracking down and ensuring the prosecution of every member of these murderous criminal groups.

“We also call on government to account for every missing and dead person from affected communities, rehabilitate destitute victims in IDP camps, and promote adherence to the rule of law for all.

“Finally, since the current crop of security chiefs have from all indications proven their inability to guarantee our safety and end the cycle of impunity, we call on President Mohammad Buhari to ensure their immediate replacement with competent and diligent officers,” the statement read.

Monday 18 June 2018

BUSINESS DAY

3

4

BUSINESS DAY

C002D5556

Monday 18 June 2018

Stocks on path to historical sell-off before...

Continued from page 1

tion of -13.67 percent to close at 38,928.47 points on the last trading day of Thursday June 14th.

The slower performance in H1 2018 could be explained by profit taking by large institutional and retail investors who enjoyed a brilliant year in 2017 when equities rallied 42 percent.

A deep dive into historical market performance in the year prior to a general election in Nigeria show that investors are justified by pulling funds out of the market early in the first half of the year, preceding elections.

Typically what is usually seen in the equity market is that the first half of years preceding an election experience positive returns, whereas the second half (H2) sees a negative return with the exception of the year 2006 whose performance rose higher from 9.26 percent in H1 to 26.12 percent in H2.

Although, this performance could be because the year 2006 was a boom market for global equities as the bubble neared its peak levels.

In 2002, the year preceding the re-election of President Olusegun Obasanjo, equities jumped 13.48 percent in H1 2002 but stock returns turned negative to -2.44 percent as investors sought to reduce their market exposure when the elections drew closer.

The strong H1 performance though ensured that the market closed the year on a positive note, with the broad measure of market performance the NSE all share index (ASI) rising 10.71 percent in 2002. Still full year equity returns were significantly lower than it managed to achieve in 2001, where the ASI rallied 35 percent.

In 2010 (a year before the general elections of 2011 that brought President Goodluck Jonathan to power), the equity markets had stellar returns of 21.88 percent in the first half of the year, but the bulls gave way for the bears in the second half of the year as H2 equity return was down -2.42 percent. Although, the stronger performance of the first half of the year ensured that the market enjoyed capital gains of up to 19 percent at the end of the year.

This was an improvement from the -34 percent market return in 2009 and marked the beginning of the stock cycle after the crash of 2008. The period 2014 (a year before the 2015 general elections) started with a low stock return of 2.79 percent in the first half of the year as tensions built up toward the upcoming election and it only became worse as the equity market saw a large bearish market resulting in a negative return

reported in the second half of the year of -8.42 percent and the NSE ASI reported a -16.1 percent drop by year end.

The year 2017 saw a great performance buoyed by bargain hunting and bullish market expectation. Stock prices rose sharply as investors raced to take advantage of the low market valuation.

The bullish run of last year has since faded in 2018 as investors’ sentiments are now even more bearish than they were in 2016 as can be seen from the recent selloff in the equity market.

Robert Omotunde, the head of Research in Afrinvest opines that although he expects Half year, 2018 earnings to be decent, he does not think firm’s financial performance would significantly drive equity prices higher. This is because investors will be very cautious as the general elections draw closer.

“Unless there is a significant policy shock, equity market will close the market positive but significantly lower than their performance in 2017,” Omotunde said. Afrinvest is also in the process of revising their yearend expectation of 18 percent market gains downwards.

If history repeats itself, the equity market may not the best for short term investors to be deploying funds today as equities typically perform poorly months before the general election in Nigeria. Analysts opine that the market selloff is largely caused by foreign investors who are gradually pulling their funds out of the local bourse as the election draws closer. Equities are highly volatile during periods of rising political uncertainty.

Foreign investors are repatriating profits out of the tensed political environment in Nigeria to invest in safer haven assets in USA where treasury yields are higher than they were a year ago.

The S&P 500 is currently up 3.94 percent while NASDAQ is up 10.94 percent year to date versus the NSE ASI performance of just 1.79 percent year to date.

“Going into the rest of the year, the duo of policy normalisation in advanced markets and election uncertainties in Nigeria could potentially create foreign investors’ aversion towards naira assets and, by extension, reduce capital importation into Nigeria.

Already in May, we saw some pressure at the I&E FX Window largely due to a slowdown in Foreign Portfolio Inflow with the equities market returning -7.7% MoM while average yields in the fixed income market expanded 31bps MoM in May,” ARM research analysts said in a June macro-economic update.

L-R: David Ladipo, managing director, Azura-Edo Power Plant; Vice President Yemi Osinbajo, and Godwin Obaseki, governor of Edo State, during the Vice President’s visit to the power plant in Edo State, at the weekend.

Nigeria-China currency swap unlikely to improve value of naira iger ia’s cur renc y swap deal with China which was touted as a way of strengthening the naira, may not be able to make much difference BusinessDay findings reveal.

The currency swap deal which is expected to improve trade relations between both countries, will make payments easier for Nigerian importers who spend up to N1.7 trillion importing from China annually, but the currency swap will on the average, only cover about 15 percent of importation costs over its three year period. Up to 85 percent will still require dollar payments.

“We believe that the deal will only facilitate the ease of trade transaction between Nigeria and China which only accounts for less than 20 percent of Nigeria’s total annual imports. While the remaining 80 percent of our import needs will still be met using Dollars,” said Robert Omotunde, head of research at Afrinvest Securities Limited.

Omotunde further explained that this currency swap deal will only ease the dollar pressure by three percent which is miniscule compared to what is needed to support the Naira.

“Any swap deal should have

been focused on reducing the dollar demand for importing petroleum products which accounts for up to 30 percent of total importation in Nigeria. This (type of) deal would have been more beneficial to the Nigerian economy,” he said.

Muda Yusuf, director general, Lagos Chamber of Commerce and Industry (LCCI), also told BusinessDay that the currency swap will not “make any significant impact on the value of the naira.”

“The main advantage is that it will ease the payment process. Since we have a lot of imports from China, rather than receive your invoice in dollar, which is then converted to Yuan over there, you can now take invoice in yuan and pay directly,” Muda explained.

He further elucidated that, “the entire value of the swap which is about $2.5 billion for three years, does not even cover trade for (only) one year.”

His position corroborates Omotunde, who had also explained that Nigeria’ trade relationship with China in 2017 was almost N2 trillion.

With a currency swap deal worth N720 billion, the value of cash being swapped is not enough to cover up to 50 percent of trade with China in one calendar year.

If the Central Bank spreads the swap funds over the three years, BusinessDay estimates that only

Continued from page 1

Why Money Market funds are attracting ...

balanced mix of portfolio.

Currently, there are seventeen fund managers that have active money market funds in Nigeria, compared to nine fund managers in 2016. The Money market funds currently make up 75.25 percent of assets under management (AuM) in the Nigerian mutual fund industry.

The rest comprise of equity based

funds which is 2.39 percent of the entire market, bond funds (1.73%), fixed income funds (7.39%), real estate funds (7.73%), mixed funds (4.57%), Ethical funds (0.93%), and exchange traded funds which accounts for the remaining percentage of the market, according to Securities and Exchange Commission (SEC) data as at June 8th 2018.

DAMILARE ASIMIYU, SOBECHUKWU EZE & EMEKA UCHEAGA

N

N240 billion will be available for importers annually. Earlier in May, the Central Bank of Nigeria (CBN) signed a currency swap agreement with the Peoples Bank of China (PBOC) to swap N720 billion for 15 billion Chinese Renminbi (RMB) in the first currency swap deal between both nations in modern history. In June, the CBN published the Regulations for Transactions with Authorised Dealers in Renminbi.

This document outlined what is expected of commercial banks, merchant banks, other authorized dealers as well as importers who are all key players in the currency swap deal.

CBN claimed that signing the Naira Yuan swap deal would reduce excess dollar demand in Nigerian trading and investment activities.

This deal according to CBN will increase the strength of the Naira by reducing the Dollar round tripping when Nigeria trades with China.

However, these expectations from the CBN appear to be lofty, as the views of economic experts indicate not much change will be recorded, and perhaps, negligible if any.

Dolapo Ashiru, a Lagos based investment analyst also told BusinessDay by phone, that he believes the swap deal will be more favourable to China which is trying to reaffirm its currency as a global reserve currency.

On the reasons why money market funds have the highest percentage of the fixed income market, an Alpha Morgan investment Analyst said; “It attracts the highest investors because it is risk free, that is, the return will always be positive and it is short term.

Continues on wwwbusinessday online

Monday 18 June 2018

BUSINESS DAY

5

6

BUSINESS DAY

C002D5556

Monday 18 June 2018

NEWS

Budget cycle inconsistency hindering economic, development - experts

O

ver the years, the nation’s budget cycle has been inconsistent without a definite pattern, giving room for speculations and poor implementation.

According to data obtained from the Fiscal Responsibility Commission (FRC) 2016 Annual Report and Audited Accounts, from 2011 to 2017, the time of approvals of the budgets is well into the New Year.

The earliest was that of 2013, which was submitted to the National Assembly on October 10, 2012 and assented to by President Goodluck Jonathan on February 26, 2013, indicating a five-month time lag.

All others were presented to the National Assembly in December and assented to in April, May or June.

In separate interviews with the News Agency of Nigeria, experts say the inconsistency does not bode well for the economy.

Atiku Samuel, head of research, BudgIT, says the economy depends on fiscal, monetary and trade policies to power it.

“Monetary authorities look closely at the budget for direction and that is why the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), was reluctant at its first meeting in 2018 to take action.

“Trade policy formulators sometimes bury decisions inside the budget. As such, the budget is an important planning tool within any functional economy,” he says.

He adds that inconsistency in the budget cycle meant that both monetary and trade policy formulators could not act or take informed actions at the appropriate time.

“That typically cascades across the economy, making decisions irrational and sometimes irrelevant. The organised private sector also suffers. For instance, government spending accounts for about 50 percent of construction related spending.

“If the budget is not presented and passed at the right time, an inconsistent pattern follows as we have in Nigeria and players in that sector will also have to restructure.

“They cannot recruit in anticipation of an increase in spending and that inevitably kills jobs. Some even sack workers because revenue is inconsistent, as we have seen in the construction sector,” he says.

Samuel says that inconsistency in the budget cycle also renders fiscal stimulus ineffective and makes the pattern of spending difficult to trace and follow through, saying no investor likes volatility because it cre-

ates huge unmanageable risks.

Eze Onyekpere, lead director, Centre for Social Justice (CSJ), a civil society organisation (CSO), says the fact that the nation no longer had a fixed budget calendar had introduced inconsistency and uncertainty into the economy.

He says this trend had influenced poor economic performance in terms of Gross Domestic Product (GDP), growth and ability to meet sectoral objectives.

“This has also led to haphazard budgetary and economic policy implementation. Capital budget implementation has suffered under this budgeting scenario.’’

He, however, notes that the executive and legislative arms of government had specific roles to play in rectifying and addressing the budget calendar and implementation challenge.

“First, the executive have to start the budget preparation process early through the Medium Term Expenditure Framework (MTEF).

“The MTEF should be ready for the endorsement of the Federal Executive Council (FEC), on or before the end of the second quarter (June).

“It should be submitted to the legislature which should vet and approve of same before

Kano declares for Moghalu as crowd receives YPP presidential candidate

R

esidents of Kano last week trooped out in large number to welcome Kingsley Moghalu, presidential flag bearer of the Young Progressive Party (YPP), as he continued his nationwide ‘To Build A Nation Tour.’

Representing the drive among Nigerian voters to change the status quo, Moghalu, a former deputy governor of Central Bank of Nigeria, was received with lots of fanfare and excitement by members of the Kingsley Moghalu Support Organisation (KIMSO) and To Build A Nation (TBAN) in the state, as he was welcomed by the Emir of Kano, Muhammadu Sanusi II, in his palace.

Speaking at the visit, Moghalu promised massive investment in entrepreneurship and innovation through the 1 trillion Venture Capital Fund, an economic policy he emphasised would not

be determined or controlled by ethnicity, religion or status.

“It is time for a new generation of leaders that are interested in creating a better future for Nigerians. Every young Nigerian can contribute to the development of our great country, but there needs to be opportunity and access to education, skills, and better security to improve their lives,” he said.

The presidential candidate also promised to bring back industries through strategic support for the manufacturing sector in order to create jobs, diversify the economy and promote investment.

In his response, the Emir of Kano recalled the presidential aspirant’s contributions to the successes achieved by the CBN during his tenure as governor.

“Kingsley and the other three deputy governors made important contributions to the bank’s

success during my term as governor. In my view, any of those four deputy governors are qualified to hold any leadership position in Nigeria today.

“There is no question that whatever happens, Kingsley’s participation in Nigerian politics as an aspirant to the highest office of the land has already steered the narrative in the right direction,” the Emir said.

Speaking with participants during the closing ceremony of 1,000 Women Skills Training conducted under the Kingsley Moghalu Women Initiative in partnership with the Isaac Moghalu Foundation, the candidate emphasised that upon becoming president of Nigeria, his administration would combat poverty by providing access to finance and education for women and girls in the country.

the launch expressed appreciation to the governor and the Vice President for setting up the hub, noting that it was gratifying to know that youths in the state would now have equal opportunity as their colleagues elsewhere to get trained and be engaged in a vibrant digital ecosystem that is supported by the state and Federal Government.

Sunday Olufemi, from Akoko Edo Local Government Area of the state, said he was most excited about the one-stop shop for Micro, Small and Medium Enterprises (MSME) clinic, where young people can now have access to relevant federal government agencies to ease

business registration, product certification, and access to finance and mentoring.

According to Olufemi, “I can confidently say that this is the best thing to have happened to youths in Edo State. Now, we no longer have to go to Lagos before we get training to become fullfledged start-ups. The expertise and support structures are now available for us in Edo State.”

Fred Omoregie, an undergraduate at the University of Benin (UNIBEN), said the hub was a dream come true to many tech-savvy young residents in the state, noting that they now had a viable, well-structured facility to express themselves.

Innovation Hub: Youths hail Osinbajo, Obaseki for facilities, thrilled by training, skills acquisition prospects

Y

ouths in Edo State have hailed Governor Godwin Obaseki and Vice President Yemi Osinbajo for the initiative in setting up the South-South Innovation Hub and Edo Innovates, the two facilities launched recently at the Institute of Continuing Education (ICE), in Benin City, as a platform for youths to get trained and proffer digital solutions to everyday problem.

Recall that the Vice President during his two-day visit to the state launched the SouthSouth Innovation Hub and performed groundbreaking of the 1800-Emotan Gardens project.

A number of the youths at

proceeding on their legislative break in July.

“Thereafter, the executive budget should be ready by the first week of September and submitted to the National Assembly which will then have four months to approve same before the end of the year.’’

According to Onyekpere, there should be a commitment on the part of the legislature to approve the budget before proceeding on Christmas and New Year vacation.

This, he said, would enable implementation begin on Jan. 1 of the New Year.

Victor Muruako, acting chairman FRC, also states that the trend reduces predictability and affects planning even within the Ministries, Departments, and Agencies (MDAs), and with those doing business.

“It is also not very encouraging to investors because government being the highest spender, it is good that there should be a level of predictability,” he says.

Muruako, however, says though the inconsistency was not a good precedent, the commission was working closely with other MDAs, particularly the Ministry of Budget and National Planning, Budget Office of the Federation and Ministry of Finance to improve on it.

Airfares stable despite sallah celebrations IFEOMA OKEKE

A

irfares from Lagos to Northern routes in Nigeria such as Kano, Kaduna, Maiduguri and Abuja have remained stable despite the sallah celebrations.

Investigations reveal there is increasing load factor on major routes on account of the long public holidays and celebrations associated with Muslim festivities.

A visit by BusinessDay to the Murtala Muhammed local airport in Lagos yesterday reveals that airfares for a one-way trip that cost between N28,000 to N32,000 last two weeks still goes for the same range on the Lagos-Abuja, Kaduna, Kano and Maiduguri routes, depending on the airline.

Bernard Bankole, president, National Association of Nigeria Travel Agencies (NANTA), told BusinessDay that there was an increase in the number of passengers travelling for sallah but prices had remained the same.

“The Nigeria Civil Aviation Authority (NCAA) regulates the prices for tickets. Airlines cannot just increase air fares unless there is a cogent reason for that,” Bankole said.

A travel agent who craved anonymity told BusinessDay, “As I speak to you, the load factors to these locations are almost full for tomorrow and

next tomorrow. Nigerians are resilient and love to travel just to celebrate with their love ones.

“Airlines usually leverage on festive periods like sallah to make up for their lost revenues during non-festive periods but this time, prices of tickets are surprisingly stable.”

In the same vein, the Federal Airports Authority of Nigeria (FAAN) has assured all airport users that its network of airports across the country are fully ready to receive arriving and departing passengers during the Eid-El-Mubarak celebration.

In a statement sent to the media by Yakubu Henrietta, general manager, corporate affairs, FAAN, said, “In line with our core mandate of ensuring seamless facilitation of air travellers, FAAN has put in place all necessary facilities and infrastructure to ensure safe passage and a delightful experience at all airports in Nigeria.

“We advise all our esteemed passengers and airport users to always get to the airports early enough as we envisage a surge in traffic.

“This will enable them to complete their check-in formalities in good time and prevent the embarrassment of missing flights, we will also like to remind all airport users that our airports are now cashless as all payments to the Authority should now be done electronically.”

Monday 18 June 2018

BUSINESS DAY

7

8 BUSINESS DAY NEWS

C002D5556

Monday 18 June 2018

Long wait for Lagos-Badagry Expressway reconstruction JOSHUA BASSEY

A

decade later, what started off with much hope for millions of residents of Lagos has remained a pain in the neck, with no end anytime soon.

Having waited about ten years without seeing its completion, residents are raising questions as to what is happening with the reconstruction of the Lagos-Badagry expressway, contract for which was first awarded under the watch of Babatunde Fashola, then governor of Lagos State, who now sits atop threein-one ministry of power, works and housing.

It all started in 2009, less than two years after Fashola took the oathofofficeonMay29,2007.The firstchequetocommencephase1 oftheroadexpansionproject:Eric Moore/Orile Iganmu to Mile 2, was handed over to Julius Berger Plc on April 27, 2009.

Rotimi Oyekan, then commissioner for finance, presented the cheque on behalf of the state government to Julius Berger.

The venue was Block 12, State Secretariat, Alausa, which houses the ministry of finance. A few journalists had been invited to witness the exciting moment.

The incumbent governor, Akinwunmi Ambode was at the time, permanent secretary/ accountant-general of the state, and played a critical role in ensuring the release of the first cheque.

It was an ambitious and bold move by Fashola, who seemed eager to tackle the huge infrastructure gap in Nigeria’s former capital city. The four-lane dual carriage Lagos-Badagry Expressway was first constructed in the early 1970s under the military administration of General Mobolaji Johnson, interestingly, by Julius Berger.

Over the years, the road had suffered massive erosion and abuse of space, as vehicular and human traffic increased with the increasing population of the state. The new design for the international route that connects Nigeria with other communities in the West African sub region was unveiled; ten lanes, with provisions made for a light rail system and Bus Rapid Transit (BRT) that would run in the middle. The total cost of road construction component of the project, at the time was put at N220 billion. This is no longer so, but officials have not said what it is now, or will be.

“We are committed to renewing the infrastructure with a 10-lane highway that will provide the basis for modern transportation for the people who live and work in that corridor. It will also provide access for people who are coming to Nigeria from many parts of the West African sub-region,” Oyekan said as he presented the cheque to the representative of Julius Berger in 2009.

Three years after the first contract for the Lot 1, which had been completed by Julius Berger, the government, in 2012 awarded the Lot 2 to China Civil Engineering and Construction Corporation (CCECC), which also had the responsibility for the rail component.

Obafemi Hamzat, then commissionerforworksandinfrastructure, announced at a stakeholders’ meetings that the new phase

would run from Maza-Maza to Okokomaiko, with the Fashola administration assuring it would leave no project uncompleted.

Several years after the journey began, the Lagos-Badagry road project seems no longer a case of high expectation, but a matter of angst, frustration and disappointment. At the moment, government appears unclear when to complete the project.

The completion date has been shifted several times; 2015 to 2016, to 2017, to 2018 and now to no specific date. This is as engineers from the contracting firm handling the phase 2 are hardly seen on site.

The reinvigorated work pace that greeted the new administra-

tion of Governor Ambode has ebbed, with the residents expressing concern as the rains intensify.

Adebowale Akinsanya, the state commissioner for works and infrastructure would not respond when contacted on the developments of the road. However, one of his aides, said construction work was still ongoing on the road, as the government remained committed to funding the Lot 2 up till Agbara, from where it hopes to enter into a Public Private Partnership (PPP) with any interested investor, to build the last phase to the NigeriaBenin Republic border, at Seme.

“Works have not stopped on the road. If you don’t see the workers and the site engineers on

site, it is probably that they have gotten to phase where they need to do some of their engineering works offsite. It could also be that they are doing their fabrications at their various construction yards,” the commissioner’s aide.

However, concerned about the poor handling of the road, Sejiro Ogungbe-James, the traditional ruler of Kweme Kingdom, Badagry, has tasked the Federal and Lagos State governments to join forces to complete the 64.8km road project in view of its strategic role as Nigeria’s gateway to the West African market.

Ogungbe-James, who spoke on Friday, said the timely completion of the road would alleviate the sufferings

of motorists and commuters and further up the Nigerian market for patronage, just as he lamented the difficulty commuters and motorists currently faced especially on Volks-Iyana-Ijanikin stretch.

“Badagry to Mile 2 shouldn’t take more than 45 minutes but the journey takes more than five hours or more because of the deplorable state of the road. The expressway which is the gateway to other West African countries is an eyesore and it is prone to accidents because of the state of the road.

“Urgent steps must be taken to address this problem because it is one of the major reasons that the ancient city is underdevel-

oped because the state of the road drives away investors,” said Ogungbe-James.

“We have three borders around our communities in which the government generates revenue but we have not felt the impact of the government at the grassroots. We hope that the new port which the government wants to build in Badagry would come to reality because such huge project would open Badagry to the global world.

“The government should focus on developing the rural areas as this will not only woo investors but it will also help in decongesting over populated city centre,” he said.

Monday 18 June 2018

C002D5556

BUSINESS DAY

9

10

BUSINESS DAY

C002D5556

COMMENT

Monday 18 June 2018

comment is free

Send 800word comments to comment@businessdayonline.com

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

* Continued from last week

A

s for Professor Itse Sagay SAN, Chairma n o f t h e P re s i dential Advisory Committee Against Corruption[PACAC], he insisted on personally delivering his evidencein-chief as the conscience of the nation even if it meant relying on the front page of “ThisDay” newspaper of the previous day (March 28, 2018) which carried the teaser headline: SAGAY: “JUDGMENTS IN CORRUPTION CASES AGAINST JUDGES SHOW THERE’S ESPIRIT DE CORPS” “The Chairman of the Presidential Advisory Committee Against Corruption (PACAC), Prof. Itself Sagay (SAN), has said the outcome of corruption trials against some judges clearly showed that there is espirit de corps among the judges.

He disclosed this yesterday at a symposium organised by the Nigerian Bar Association (NBA), Ikeja Branch Human Rights Committee in collaboration with The Jury Justice and Rectitude Advocacy Initiative.

The theme of the event was: ‘Salvaging Nigeria’s Criminal Justice System: The Jury Option’ In his opening remarks as chairman of the event, Sagay said he came to this conclusion after coming out of the shock that enveloped him following judgments of the

THOMSON REUTERS Thomson Reuters is the world’s leading source of news and information for professional markets

O

n April 21, 2017, the Central Bank of Nigeria (CBN), announced what some refer to as a necessary dawn for the West African economic giant. The CBN announced a unique foreign exchange (FX) window for Investors and Exporters Trading (known as the I & E window), which after one year has had a successful turnover of $45 billion.

This move is seen as part of the CBN’s continuing effort to deepen the country’s FX market and reduce the demand for hard currency. Importantly, it is also seen as part of the country’s efforts to prompt foreign investors to return to the country.

Thomson Reuters has been invested in Nigeria for over 100 years, and has experienced the development, highs and lows

courts on corruption charges against some judges.

“After my recovery from the shock, it dawned on me that legal knowledge could make judges prone to legal technicalities, creating a barrier between technical law and justice,” he noted.

The Professor of Law however suggested the re-introduction of the jury trial system as a better way to fight corruption in the country.

He noted that in recent years, a lot of evidence has established that some judges cannot be relied upon to uphold the integrity of the judicial system.

According to him, the usual excuses for huge deposits in judges’ account are marriage of judges’ daughters, death of judges’ relations like father, mother, auntie, uncle among others.

Sagay said he supported the abolition of the jury system in 1976 by the military because he believed that laymen could easily be influenced or subjected to other people’s interest and instructions and that a judge, more likely would uphold the integrity of the judicial system among other reasons.

Citing the judgment in the case of a judicial officer charged with corruption, he said judgment in the matter showed that there is es spirit de corps among the judges.

The keynote speaker, Prof.

Taiwo Osipitan, gave a detailed explanation of the jury trial system and how it operates in some countries around the world, suggested that it should first be introduced in relation to capital offences in selected economically viable states.

Osipitan also suggested introduction of special bar and special bench for the system to work in the country.

According to him, the jury trial system can only be effective in a

Nigerians have become a conquered people, their dynamism and potential neutralized by politicians adept at obtaining power for its own sake but inept at governance and economic management country with a mostly efficient and up to date data of its citizens.

“Foremost, Nigeria must first update its database system. The National Identity Card database and INEC database might be very helpful if the decision is to introduce jury trial in criminal cases,” he stressed.

Ibrahim Magu, acting Chairman of the Economic and Financial Crimes Commission who was represented by Seidu Atteh, said the commission would accept any trial system that would assist it in fighting corruption cases successfully.

Earlier in her welcome address, the chairman of human rights committee of NBA Ikeja, Mrs. Carol Ibharuneafe, said the theme of the symposium was necessitated by the fact that society has not been aware of the inadequacy of the criminal justice system.

Ibharuneafe pointed out that with high profile cases amongst public officers, the lapses in the law has been exposed and necessitated review to make it work for our society.

Although there have been suggestions from various stakeholders, she said the facts remain that whether special or more courts, they will still be presided by only one person, the judge.

“Given the high propensity of some of our judicial officers to be compromised, those suggestions may achieve little or nothing, hence

jury option,” she said.”

As for Professor Kingsley Moghalu, he was not done yet. He was back on his feet to elaborate on his election manifesto:“2019: Time to build, innovate and grow (Big).”

“The choice that faces Nigeria in the 2019 presidential election is one between progress and retrogression, between scary poverty and the prospect of prosperity for millions of our citizens and not just the elite few, between our freedom and our continuing false imprisonment by the political elite that have brought us to our present sorry pass. I want to lead our country as its president because I have a BIG vision for the future of our children and youth.

On current trends of what passes for governance in Nigeria and despite our dynamism and resourcefulness as a people, that future is a bleak one.

Meanwhile, the International Monetary Fund has noted that poverty is increasing in our country and that our economic policy is “muddled”.

We remain the world’s greatest importer of Premium Motor Spirit (refined petroleum) while we export crude oil. How else shall we define madness?

Nigerians have become a conquered people, their dynamism and potential neutralized by politicians adept at obtaining power for its own sake but inept at governance and economic management.

We should now elect in Nigeria leaders with a vision, character, and the intellectual and technocratic competence required to confront our myriad problems of nation-building, poverty and insecurity. My vision stands on a tripod: Women make up 51 per cent of our population of 186 million

people, and there are 60 million youth aged between 18 and 35.

Both groups will play a muscular role in my government. We will implement a 50:50 gender parity ratio in political appointments, well above the National Gender Policy recommendation of 30 per cent for women. Competent youth with relevant qualifications and experience will play important leadership roles in the government, ensuring the much-needed inter-generational change of baton in leadership without which any society will enter decline.”

The diplomatic corps were very well represented. They turned up in full force – Ambassadors/High Commissioners from the United States of America; China; Britain; Germany; France; Italy; Japan; South-Africa; Ethiopia etc. it was the Ambassador of Ethiopia who dropped a bombshell – “Ethiopia is building Africa’s largest dam called the Grand Ethiopian Renaissance Dam. When completed, the dam will generate 6,450MW of electricity!

The entire project will cost $4.8billion. Ethiopia started work on that dam in 2010. The project is already over 60% completed as at today.

Meanwhile, Nigeria’s biggest dam project (Mambilla) will generate 3,000MW and will cost $5.8billion! This is a project Nigeria conceived since 1982. Nigeria has still not achieved even 5% completion!

Compare both projects and countries and see for yourself.

Ethiopia is a landlocked, nonoil, agricultural based economy, yet it has witnessed steady economic growth than Nigeria. Have you heard of Ethiopian Airways, where is Nigerian Airways?”

Send reactions to: comment@businessdayonline.com

The establishment of an Investors and Exporters Window in Nigeria of the markets over the years.

In 2012, foreign investors’ appetite for Nigerian bonds was thriving, execution was timely and the countr y’s FX market held liquidity and eligible transactions. Since 2014, a combination of factors from Nigeria being removed from the JPMorgan Government Bond index, trading restrictions and economic slowdown, have resulted in a challenging environment for investors and traders, and lower liquidity and transparency in the market.

The establishment, and resultant success of the I & E window over this period has fuelled hopes of a readmission into the J.P. Morgan Government Bond Index-Emerging Markets (GBI-EM).

Key to making a mechanism like the I&E window successful, and reigniting global investor demand for Nigeria, are partnerships across multiple

market participants, from the regulator to market associations, exchanges and commercial banks to data and technology platform providers that can showcase the Nigerian opportunity to the world.

Thomson Reuters, as a key partner in this effort, believes in the power of connecting global markets, and in the importance of local relevance. As a leading global distributor of financial market data from both proprietary and third party sources, Thomson Reuters has worked closely with CBN, FMDQ, several banks and others, to develop many applications to support the development of the market over the years.

Most recently, Thomson Reuters has launched the FMDQ OTC app as part of its award winning Eikon financial data platform, an app that could serve as a central hub for all strategic FMDQ OTC reference data in the Nigerian financial market.

Specific pages have also been

created within the Thomson Reuters Eikon platform, including a composite page (NGNIE=), for the Nigerian Market to accommodate real-time market data and pricing on the NGN I & Ewindow from local market participants.

Thomson Reuters and other providers continue to partner with the Central Bank of Nigeria (CBN) to support the APEX banks mandate to promote transparency and best practice in Nigeria’sFX financial markets.

As a result of this collaboration and contribution, the Nigerian FX market has seen increased efficiency and activity.

In addition to partnerships, inclusivity of the market as a whole should also be encouraged as a catalyst to increasing the country’s global recognition, reputation and position. New entrants bring dynamism and diversity to the market that will increase its attractiveness and competitiveness globally.

Nigeria currently ranks in 6th place on Africa Financial Market’s Index with a potential to move up the ranks and even overtake South Africa’s 1st place ranking if the current focus on increasing market depth, improving access to foreign exchange, market transparency and regulations continues. The capacity of local investors, macroeconomic opportunity and enforceability of international financial agreements are equally paramount.

As Nigeria seeks to drive economic growth, and strives to play a much larger role in the global economy, a sustainable, automated platform catering for all market players is no longer a luxury but a necessity, and it is exciting to see that regulators, market participants and investors and technology platform providers are working together to make this happen.

Send reactions to: comment@businessdayonline.com

Monday 18 June 2018

C002D5556

COMMENT

BUSINESS DAY

11

comment is free

Send 800word comments to comment@businessdayonline.com

Some interesting insights from Nigeria’s demographic statistics

ANTHONY OSAE-BROWN Osae-Brown is the editor of BusinessDay @osaeB

T

he National Bureau of Statistics (NBS) has continued its great work of providing insightful data on economic activities in the country.

Recently, it released what it called a ‘demographic statistics bulletin’ which provided some insights on the country’s population, a topic that remains highly controversial.

Based on the NBS figures, which it admits, is based on its projections, the country’s population stood at 193 million as at 2016.

This represents about a 13 percent growth from the country’s population of 170 million in 2012, based on the NBS data. In between 2012 and 2016, a period of five years, a total of 23 million brand new Nigerians were born, this comes to an average population growth of 4.65 million per year.

Going by this population growth rate, the country’s population will cross the 200 million mark by 2019 and of this number, at least

30 million will be under the age of eight years.

This means that a minimum of 30 million Nigerians would have been born between 2012 and 2019, a period of seven years.

For the public sector, 30 million Nigerians under the age of eight has significant implication on how we plan our early childhood education programme. How well equipped are our early child education centres and primary schools to equip these kids for a rapidly changing world where knowledge is now the competitive edge? The current state of our public school system does not give much hope. There are also significant implications for provision of healthcare. How do we ensure that these kids do not die before the age of five? Again, the state of primary healthcare in the country does not give much hope.

For the private sector, investing in child linked products looks like a great investment opportunity. It is this data that explains the fact that Lagos state is said to have over 18,000 private schools and that the diaper selling business is a great business in the country.

Businesses positioned to serve this market are likely to thrive into the future as demand in this segment is usually inelastic. Most parents, as long as they can afford it, and in most cases, even when they cannot afford it, will go the extra mile to satisfy their kids.

And there is evidence from

For the public sector, 30 million Nigerians under the age of eight has significant implication on how we plan our early childhood education programme. How well equipped are our early child education centres and primary schools to equip these kids for a rapidly changing world where knowledge is now the competitive edge? the NBS data that the country will continue to have a healthy supply of babies in the next few years. The NBS data shows that the country’s fertility rate moved up from 5.5 in 2015 to 5.8 in 2016. That is an average Nigerian woman has at least six kids in her life time. Jigawa state has the highest fertility rate, with an average of nine children per woman while Rivers, with just three children per woman, had the lowest fertility rate. Compare this with the fact that the average child per woman in Europe currently is one.

Average fertility rates in the Northern parts of the country were almost twice more than many states in the Southern part of the country. The high fertility rate is not surprising because there is little or no attempt to control population

growth rate. Again, the NBS data shows that the number of married women, or women who are in some of form of partnership but are not using contraceptives to prevent pregnancy was 86.6 percent. This means an average of 9 out of every 10 married women were not on any form of contraceptive. If this is taken together with the fact that only an insignificant 1.1, that is an average of 1 in a 100 men use condoms and almost none are sterilized, then the consequence can easily be seen in the country’s fast growing population.

Our capacity to continue producing babies is also quite healthy.

The NBS data shows that there are about 24 million women in the age bracket 15 to 49 years that are currently married or in some form of a legal union. At an average fertility rate of 5.5, these women have the capacity to add 132 million new Nigerians throughout their reproductive life cycle of about 34 years. But population growth is geometric, because as more women get into the productive age, the productive base expands.

This means that the number of new babies will even be higher than the number above.

Actual projections from the United Nation’s Population commission shows that country’s population will cross the 400 million mark by 2050, in just about 32 years from today. This means that it will take us just four more

presidents including President Muhammadu Buhari, assuming he wins a second term, and each subsequent president completes a full 8-year tenure, for us to get to the point when Nigeria has four hundred million people living in it.

This means that in just 8 elections, we will have twice the number of Nigerians that are currently in existence, an additional 200 million people to the current 200 million.

Let that sink in.

The thought of it is both scary and promising. Scary in the sense that when you consider poor state of the country’s public education system that the majority of these new Nigerians will have to pass through, then a nightmare scenario begins to build in your head. The current public education system in the country is not built to prepare Nigerians for the knowledge economy that is taking shape.

But it could be promising if you think of what the country could achieve if we ensure that all these new Nigerians that will be joining us are equipped and trained in the best educational environment possible. Imagine the endless possibilities of a country with 200 million youths below the age of 30 that are well trained and educated?

Note: the rest of this article continues in the online edition of Business Day @ https://businessdayonline.com/

Send reactions to: comment@businessdayonline.com

The Trump-Kim Deal and the Long Path to Peace in the Korean Peninsula

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

H

ere are the facts: Following hours of closed-door talks in the Hotel Capella Singapore, President Trump and North Korean leader Kim Jong Un signed a joint fourpoint agreement: to establish new US-North Korean relations, a stable peace regime, a North Korean commitment to achieve the “complete denuclearization” of the Korean peninsula, and the repatriation of the remains of American prisoners of war.

Unsurprisingly, the agreement does not include a firm “verifiable” and “irreversible” pledge by North Korea to abandon its nuclear weapon program. Yet, the Trump-Kim agreement is not a final deal, but a framework to pave the way to ongoing discussions. Consequently, it should be seen as a promising ‘memorandum of understanding.’

U.S. and North Korean leaders have never met before. So technically, a state of war prevails between the two countries. For these two leaders to sit down, agree on their differences and outline a path to resolve them is a very big deal.

Nevertheless, a real peace and stability requires far more than a fourpoint agreement - a bilateral peace agreement and U.S. withdrawal from the Korean peninsula.

No stability without peace agreement In the West, North Korea is customarily portrayed as a sort of a paranoid hermit kingdom with demons as leaders. In reality, Pyongyang has long – and justifiably – seen America as an existential threat.

In 1951 – after Washington had lost its nuclear monopoly to the Soviet Union - the early setbacks in the Korean War prompted General MacArthur to consider using nuclear weapons against the Chinese and North Koreans – to use radioactive fallout zones to disrupt Chinese supply chains - until, he was dismissed

by President Truman.

Nevertheless, between 1950 and 1953, the U.S. subjected North Korea to a devastating bombing campaign, which destroyed 85 percent of the country’s buildings and caused one million civilians to die; more than the entire civilian deaths in World War II bombing of Germany and Japan, respectively. The scorched-earth policy set the standard of what was to come in Vietnam and the rest of Southeast Asia.

Ever since the 1953 Armistice

Agreement, Washington has seen North Korea as a “rogue state.” Even with the Soviet Union, Washington supported “peaceful coexistence”, but with North Korea, only a “temporary ceasefire.” That’s the material basis for fears of imminent intrusion in Pyongyang.

In this status quo, Trump’s statement in the press conference that the U.S. had agreed to stop playing “war games” with Pyongyang, referring to the joint military exercises with South Korea, is important. But while Trump added he wants to “bring our soldiers back home” from South Korea, he admitted it was “not part of the equation right now.”

Typically, the decision to cease the joint military exercises with South Korea was not included in the agreement. That’s vintage Trump. Only days before, he had nearly agreed to the G7 Summit communiqué, which fell apart amid the controversial aftermath. In the Trump world, deals are seldom fixed entities, but always subject to changing circumstances.

Last August, former U.S. President Jimmy Carter who has negotiated with several North Korean leaders, noted that, for a long time, Pyongyang has sought a “peace treaty to replace the [1953] ceasefire.” In his experience, North Koreans wanted peaceful relations with the U.S. and regional neighbors.

In view of the long record of U.S.led regime changes and the recentlyundermined Iran nuclear deal, that’s not a futile concern.

No lasting peace without U.S. withdrawal from the Korean pen-

insula In a televised 2013 New Year’s address, Kim Jong Un advocated “a radical turn in the building of an economic giant on the strength of science and technology by fanning the flames of the industrial revolution in the new century.” These economic efforts should “be manifested in the people’s standard of living.”

It was an appeal to the White House. But instead of seizing the transition in Pyongyang to work for the peace, President Obama opted for a Pentagon-led “pivot to Asia” that virtually ensured another half a decade of nuclear escalation. After Secretary of State Hillary Clinton’s outline for a Pentagon-led “pivot to Asia,” Obama did not want reconciliation with Pyongyang. Rather, the objective was to seize the opportunity to cooperate with the then-President of South Korea, Park Geun-hye, a conservative hawk and the daughter of the controversial former President Park Chung-hee.

So, instead of rapprochement, Washington pushed for a Terminal High Altitude Area Defense (THAAD) anti-ballistic missile system in South Korea. As far as Washington was concerned, THAAD would kill two birds with one stone: it would subdue Pyongyang and, if needed, it could be used to contain China. These plans, however, fell apart in early 2017, when President Park was impeached and sentenced to 24 years in prison. That paved the way to the presidency of the more moderate Moon Jae-in, who seeks reconciliation with South Korea.

Nevertheless, Park’s conservatives were able to postpone the repeal of the Operation Control agreement (OPCON), which allows the Pentagon - not Seoul - to control its military fate. The mission of the South Korea/ US Combined Forces Command (CFC) is to “deter hostile acts of external aggression” South Korea by a “combined military effort.” The CFC is commanded by a U.S. General and it has operational control (OPCON) over more than 600,000 active duty military personnel both countries.

President Park managed to defer the transfer to 2022. In the event of war, U.S. interests will thus override the interests of South Koreans - in their own country.

The ultimate barriers As a result, a true and lasting peace in the Korean peninsula requires not just on the Trump-Kim deal and the implied talks.

It is also predicated on a Trump administration that will continue to support the talks, the nullification of impeachment efforts against the White House, minimal losses for the incumbents in the U.S. mid-term elections, another Trump election triumph in 2020 – and continued support for the peace process in South Korea in the 2022 election.

It’s a very, very tall order. But in Singapore, Trump and Kim took the first, historical step to the right direction.

• The original version was released by China Daily on June 14, 2018.

Send reactions to: comment@businessdayonline.com

12

BUSINESS DAY

C002D5556

Editorial PUBLISHER/CEO

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

Bashir Ibrahim Hassan

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

Monday 18 June 2018

Hospitals as funeral homes in Nigeria

L

ast year, the Nigerian health sector received a damning in d ictm ent from an insider – Prof Thomas Agan, Chief Medical Director (CMD), University of Calabar Teaching Hospital (UCTH) and Chairman, Committee of Chief Medical Directors of Federal Tertiary Hospitals in Nigeria. He was quoted as saying that over 90 percent of deaths in our hospitals are due to poor attitude of health workers. He said some health workers were not taking the lives of patients seriously in spite of their professional training and work ethics.

This is not new. The collapse of the Nigerian health sector is almost total as both government officials, no matter how patriotic they claim to be, fly abroad for every minor health problem and health workers also jostle to leave for greener pastures abroad where they could earn decent wages. For instance, Nigeria losses over $2.5 billion annually to what has now being termed “medical tourism”. As we write, the nation’s president is holed up in the United Kingdom receiving treatment for an undisclosed ailment.

He has frequented the United Kingdom since his inaugura-

tion for treatment and even flies out for treatment of minor ailment like ear infection.

Similarly, statistics have it that there are now as many Nigerian doctors working outside the country as are working within. According to a particular statistics, there are about 37, 000 Nigerian doctors in the diaspora, with about 30, 000 in the United States alone, and over 5, 000 in the United Kingdom.

The challenges of Nigerian health sector are myriad. The first and obvious is underfunding. Nigeria spends less than 5 percent of its budget on health. In 2016 it allocated only 3.73 percent while in 2017, it budgeted 4.15 percent of its budget to the health sector. For the proposed budget of 2018, it came down again to just 3.95 percent of the total budget.

This is against the recommendation by global international health institutions that countries spend not less than 15 percent of their total budget on health. In many ways this underfunding is responsible for the many ills bedevilling the health sector in Nigeria as infrastructure continue to decay, health workers poorly remunerated and disoriented, and industrial action becomes prevalent. Unable to bear the shameful treatment, thousands

of Nigerian trained doctors and nurses leave yearly in search of better working condition outside.

One of the greatest repercussions of poor funding of the health sector is in the area of training of doctors and other health workers. Ac c ording to key insiders in the sector, beyond the attitude problem of our health workers is the issue of incompetence due to the poor quality of training received by doctors in residency training and even medical students in the universities. These insiders allege that the current mode of training is so deficient it throws out half-baked and incompetent doctors who frequently misdiagnose ailments and give wrong treatments.

This, combined with poor attitude, has turned many Nigerian hospitals into funeral homes and our health workers into undertakers presiding over the death of thousands of Nigerians who are unfortunate not to be wealthy enough or have government connection.

No wonder the hospitals are avoided by the country’s rich, government officials and even the middle class who prefer to spend everything they have to seek medical attention outside the country.

In realisation of the problem,

President Muhammadu Buhari promised, in April 2016, that the Federal Government would not provide funds to any government official to travel abroad for medical treatment unless the case cannot be handled in Nigeria. Unfortunately, the President broke the promise barely a month later in early June 2016 when he was flown to London to be treated for an ear infection. Last year alone, the president also spent a whooping 154 days in the UK on medical leave without any explanation to Nigerians who are picking the bills for his treatment on what ails him.

Of course, government officials and those with means continue to seek medical attention outside the country while leaving the vast majority of Nigerians to their fates or at the mercy of our disoriented health workers.

We urge the government to have a rethink and reorder its priorities. True, resources are scarce with competing needs. However, the government should realise that the terrible conditions they create at home will eventually catch up with them or their families and/or relatives. It is unacceptable that we allocate less than 5 percent of our budget to the health sector.

EDITORIAL ADVISORY BOARD Dick Kramer - Chairman Imo Itsueli Mohammed Hayatudeen Albert Alos Funke Osibodu Afolabi Oladele Dayo Lawuyi Vincent Maduka Maneesh Garg Keith Richards Opeyemi Agbaje Amina Oyagbola Bolanle Onagoruwa Fola Laoye Chuka Mordi Sim Shagaya Mezuo Nwuneli Emeka Emuwa Charles Anudu Tunji Adegbesan Eyo Ekpo

ENQUIRIES NEWS ROOM 08022238495 Lagos 08034009034 08033160837 Abuja

}

ADVERTISING 01-2799110 08116759801 08082496194 SUBSCRIPTIONS 01-2799101 07032496069 07054563299 www.businessdayonline.com The Brook, 6 Point Road, GRA, Apapa, Lagos, Nigeria.

01-2799100 LEGAL ADVISERS The Law Union

MISSION STATEMENT To be a diversified provider of superior business, financial and management intelligence across platforms accessible to our customers anywhere in the world.

OUR CORE VALUES

BusinessDay avidly thrives on the mainstay of our core values of being The Fourth Estate, Credible, Independent, Entrepreneurial and Purpose-Driven.

• The Fourth Estate: We take pride in being guarantors of liberal economic thought • Credible: We believe in the principle of being objective, fair and fact-based • Independent: Our quest for liberal economic thought means that we are independent of private and public interests.

• Entrepreneurial: We constantly search for new opportunities, maintaining the highest ethical standards in all we do • Purpose-Driven: We are committed to assembling a team of highly talented and motivated people that share our vision, while treating them with respect and fairness. www.businessdayonline.com

Monday 18 June 2018

C002D5556

BUSINESS DAY

13

14

BUSINESS DAY

Monday 18 June 2018

C002D5556

In Association With

Nation shall preach Xi unto nation

Making the best of a bum deal

China is spending billions on its foreign-language media Is it worth it?

O

N THE 26th floor of an iconic glass skyscraper, nicknamed the “Trousers”, in Beijing’s main business district, half a dozen casually dressed 20-somethings gather in a rainbow-coloured lounge, chatting away on ergonomic chairs.

The office has the vibe of a hip tech startup. In fact, it is the headquarters of the country’s foreign-language television service, which rebranded itself in 2016 as China Global Television Network (CGTN). The young staff are Chinese who have studied abroad and are proficient in one of the network’s five languages—English, French, Spanish, Arabic and Russian. CGTN is at the forefront of China’s increasingly vigorous and lavishly funded efforts to spread its message abroad. Xi Jinping, the president, has told the station to “tell China stories well”.

CGTN—a consolidation of the foreign-language operations of CCTV, the state broadcaster—is secretive about its budget but open about its ambitions to compete with global broadcasters such as CNN and the BBC. In November it plans to open a new broadcasting centre in Chiswick, a wealthy suburb of London. It will complement the two others the station inherited from CCTV in Washington and Nairobi, each of which has around 150 reporters.

BuzzFeed News, citing an e-mail sent by a local recruiter, reported this week that the new centre is planning to hire more than 350 London-based journalists over the next 18 months. Salaries on offer are “well over” average for journalists in the city, the news site said, quoting someone headhunted for a job. (CGTN’s choice of name may help, too: when they were called CCTV, China’s overseas television operations suffered from association with surveillance equipment.)

To ensure its grip on the message put out by its domestic and international broadcasting services, including CGTN, the government consolidated them in March into a single media group known as Voice of China (its name in English perhaps consciously echoing that of the American government’s broadcasting service, Voice of

Britain is heading for a soft Brexit The logic of the Irish border is forcing Britain towards a close relationship with the EU

W

HEN Britons voted to leave the European Union two years ago, they had no chance to say what sort of Brexit they wanted.

But Theresa May, who became prime minister in the aftermath of the referendum, quickly decided that they wanted the most drastic break possible. Without consulting her cabinet, let alone Parliament, she announced “red lines” for her negotiation with Brussels that put Britain on course for the fullest of separations.

This “hard” Brexit—in which Britain would free itself from the clutches of European judges, trade policy and migration rules, at significant cost to its economy and security—has long looked inevitable. Parliament’s resistance to Mrs May’s extreme plan

America). The reorganisation allows CGTN and the other services to retain their separate identities under a combined management controlled by the Communist Party’s Publicity Department, a powerful agency in charge of propaganda and media censorship.

Voice of China’s missions include “overall planning of important propaganda reports”. Writing in a state-owned newspaper, Jia Wenshan of Renmin University in Beijing said the group would try to “combat fake news, give the lie to the ‘China threat’ propaganda meme and fight the Western media’s hegemony”.

Chinese officials have long complained that Western media dominate global discourse and harbour prejudice against China.

A decade ago, hit by a barrage of critical coverage in the wake of anti-Chinese unrest in Tibet, the government decided to step up its efforts to seize “discourse power” from the West. According to the South China Morning Post, a newspaper in Hong Kong, it allocated 45bn yuan ($6.6bn) for the purpose. The money has been poured into expanding “flagship” foreign-language media, in print and online as well as on air. In 2009 China Daily, then the country’s only English-language daily, launched an edition tailored for the American market. In the

same year Global Times, a tabloid owned by the party’s main mouthpiece, People’s Daily, began publishing its own English-language daily, offering somewhat racier fare than that of China Daily, while still avoiding criticism of the party.

(Global Times has been producing an American edition since 2013, with the help of its own printingpress there.)

All China, all the time Over the past decade, Xinhua, China’s main news agency, which publishes in numerous languages, has set up more foreign bureaus than any rival, boosting its tally to 180 from just over 110. In 2010 it set up a global television channel in English, called CNC World.

China Radio International, part of Voice of China, now broadcasts in 65 languages, up from 43 a decade ago. These outfits have also been building up their online presence in English and other languages, making extensive use of social media that are blocked in China such as Facebook, Instagram and Twitter. In 2012 China Tibet Online, an official website, began publishing in French and German.

Results have been mixed. In 2009, when China began beefing up its foreign-language news media, Pew Research Centre asked people in 38 countries about their views of China. The median rating

was 50%. By 2017 it had dropped slightly, to 47%. But respondents in developing countries were more positive than those in rich ones. A survey in 2016 of youth from 18 African countries found that, of those who had watched CGTN, 63% had liked the channel and only 13% had a negative view. More than half said they agreed with CGTN’s “ideological agenda”. In countries where media are already muzzled, people may be less judgmental about state-controlled outlets run by foreigners, says Hugo de Burgh of the University of Westminster.

For CGTN, the headline numbers look good. It has 62m followers on Facebook, as many as the BBC and Al Jazeera combined.

Two-thirds of CGTN’s online traffic, however, comes from China itself—mainly from people who want to learn English. CGTN does not release audience numbers, but analysts believe that few people outside China have heard of, let alone watch, the channel.

In America’s biggest cities, more people watch the online videos of NTDTV, a channel founded by Falun Gong, a spiritual movement that is outlawed in China, than those of CGTN, reckons Sarah Cook of Freedom House, a thinktank. Videos posted on CGTN’s YouTube page rarely attract more than a few hundred views. Those on the BBC’s often exceed 50,000.

has been timid and the Labour opposition feeble. Yet this week the tide turned. Rebel Tory MPs look likely to wrest control of Brexit’s endgame from the government (see Britain section). Meanwhile, the penny dropped among Brexiteers that the Irish border presents a near-insurmountable roadblock to a hard exit. With less than six months of negotiating time left, it is becoming clear that Brexit will be softer than Mrs May set out. That is good news for Europe and for Britain.

This week’s showdown got the government to promise MPs a “meaningful” vote on the deal Mrs May negotiates with the EU near the end of this year. The assumption had been that a vote to reject Mrs May’s version of Brexit would lead to a drastic “no deal” outcome, in which Britain simply left without covering its financial obligations or establishing its future relationship with the EU. That need no longer happen, because Parliament will now be able to force the government to start again.

That still leaves plenty of room for a hard Brexit. Although the negotiations have laid bare the cost of such a policy, the government has stuck to its demands and red lines. Brexiteers bluster that any problems can be Continues on page 15

Monday 18 June 2018

C002D5556

BUSINESS DAY

15

In Association With

Kim Jong Won

Dealing with North Korea, Trump puts showmanship first The summit was a triumph of showbiz over substance—and Mr Trump made big concessions for no return

A

S A television spectacle, it was irresistible. The star of “The Apprentice” striding commandingly along the red carpet, reaching out his hand, ready to strike the deal of a lifetime. And grasping it, Kim Jong Un, the leader of the world’s most repressive dictatorship, his Mao suit, hairstyle and grievances imported directly from the 1950s, who just nine months before had promised to “tame the mentally deranged US dotard with fire”. In the end, fire did not prove necessary: a suspension of weaponstesting and an invitation to a summit was all it took.

President Donald Trump said it was an “honour” to meet Mr Kim, who duly promised “complete denuclearisation” in exchange for security guarantees. It was, Mr Trump said at a press conference, “a very great moment in the history of the world”.

To the extent history is playing any part in all this, it is in its tendency to repeat itself. North Korea has promised disarmament again and again over the past 30 years, only to renege each time after pocketing generous inducements. If the flimsy agreement Messrs Trump and Kim signed in Singapore is to turn out differently, as Mr Trump insists it will, America must be clear-eyed and exacting in the detailed nuclear regime that it negotiates with the North. Alas, so far Mr Trump seems more eager to play the talks for ratings—threatening not only a meaningful deal, but also America’s position in Asia.

One unquestionably good thing did come out of this week’s summit. Talking is much better than the belligerent exchange that went before it (see Briefing). War appears to be off the table, and for that the world can be grateful.

The other good thing is that glimmer of hope. You can never completely dismiss the idea that Mr Kim does mean to change direction. Still in his 30s (like much about him and his country, his exact age is a mystery), he may be daunted by the bleak prospect of a lifetime of nuclear brinkmanship. For his regime to endure, he needs enough wealth to buy conventional

weapons and pacify the urban middle class, which in recent years has begun to enjoy some meagre luxuries. He may also be uncomfortable about his country’s reliance on China for everything from oil and remittances to the plane that flew him to Singapore. If Mr Kim sees nuclear weapons partly as bargaining chips, his investment in warheads and the missiles needed to carry them as far as the United States makes this his moment of maximum leverage. Now would be the time to talk.

Mr Trump was right to test this possibility. The potential prize includes not just the step back from war talk, but the removal of a persistent threat to Asia and, lately, the United States. Also, given China’s disputes with America over trade and security, North Korea could become a template for how the two superpowers can work together, to everyone’s benefit.

Measured by such aspirations, however, Singapore was a disappointment. Mr Trump boasts of the tremendous achievement of simply being there; in reality the North wanted talks all along. For Mr Kim, the offer of a meeting as equals with the sitting president of the United States—external validation of his godlike status at home—was an unexpected and long-desired windfall. He could have used the summit as a signal that he means to overturn the North’s record of deceit. But, despite supposedly intense pre-Singapore negotiations, this week’s agreement contains no binding North Ko-

rean commitments.

“Complete denuclearisation” sounds good, but the North did not set out a timetable. It may, as in the past, take the term to refer to the withdrawal of American troops from South Korea, or even to when America itself disarms, as it is in theory bound to do under the Nuclear NonProliferation Treaty (NPT)— which, incidentally, the North has abandoned. Nor did the agreement mention verification. Mr Trump’s team insists this will be intrusive, but Mr Kim’s “proof” of destroying test sites has so far involved letting a few journalists watch at a safe distance. Verification must involve inspectors with the right to visit any of North Korea’s hundreds of facilities, civilian and military, at short notice. Mr Kim’s willingness to accept such a regime is the real test of whether the agreement is serious.

Worryingly, Mr Trump seems determined to be the deal’s salesman. At the press conference, as he gushed about Mr Kim’s qualities, he announced that America was unwisely cancelling military exercises with South Korea while talks with the North were under way. As the South’s partly conscript army needs frequent training to remain battle-ready, that was a big concession for which he appears to have received nothing. Mr Trump says that sanctions on the North will remain until the process of disarmament is irreversible.

He also acknowledges that China is already enforcing the sanctions less diligently (it is also arguing for further

loosening)—“but that’s OK”.

Mr Kim must know that Mr Trump will struggle to get other countries to tighten the screws on the North again. Mr Trump has a lot riding on the North Korean deal, but just as he abandoned a good Iranian nuclear agreement, so must he be willing to abandon a bad North Korean one, or Mr Kim will string him along.

That is the test of Mr Trump’s seriousness.

Put the Nobel on hold America’s Asian allies are rightly worried that Mr Trump will sacrifice their security for the sake of a dead-end deal.

He failed to warn South Korea and Japan that he was cancelling the military exercises (using a North Korean phrase, he called them “provocative” war games). He talked about America’s Asian commitments as an expensive burden in the same breath as saying that he wanted to pull his troops home. He raised the fairness of trade, as if security was contingent. Dealing with North Korea is a chance for Mr Trump to strengthen the NPT and pax Americana. He looks more likely to weaken both, risking regional arms races and even war.

Mr Kim has gone from pariah to statesman in six months. His regime’s abhorrent treatment of its own people is largely forgotten. His repeated violations of treaties and UN Security Council resolutions have been partly forgiven. Striking any sort of deal with such a figure is unpleasant. Striking a bad one would be a moral and diplomatic disaster.

Britain is heading for a soft Brexit...

Continued from page 14

overcome with a bit of positivity and patriotism, or argue that they are a reasonable price to pay for freedom from Brussels. They have persuaded the prime minister that the referendum obliges her to take Britain out of the EU’s single market and customs union at any cost.

But there is one area where Britain cannot opt for maximal separation, however great Mrs May’s appetite for self-harm. Brussels has demanded that in Northern Ireland, for the sake of peace, there must be no new checks or infrastructure at the border. Mrs May agreed to this in December, and has since been seeking a way to reconcile an independent trade policy with an invisible, open border. She has failed—unsurprisingly, since even the EU’s most frictionless frontiers, like those with Norway or Switzerland, involve some checks. So Britain will resort to a “backstop” plan, keeping Northern Ireland in the EU’s customs union until it finds a solution to the border problem, which it may never do. To avoid customs checks between Northern Ireland and the British mainland, which would incense the Northern Irish unionists who prop up Mrs May’s government, the customs union will cover the whole United Kingdom. And it will have no firm time limit.

The softening may not end there.

Britain has promised that its Northern Irish backstop will include “full alignment” with the relevant rules of the EU’s single market. Again, Mrs May might find that she has to apply this to the whole country, to avoid a unionist rebellion. Britain would thus find itself in a notionally temporary, but in fact indefinite, arrangement that included membership of the EU’s customs union and full alignment with much of the single market. Soft Brexit would have been achieved, via a backdoor in Belfast.

Soft, strong and very long Though the logic of the negotiations now points to a soft exit, such an outcome is not yet inevitable.

Britain’s soft landing outside the EU faces three main risks. The first is that the rest of the EU leaves Ireland in the lurch and drops its demand that the border remain invisible. But EU leaders’ language on the border has if anything been toughening.

16

BUSINESS DAY

C002D5556

Monday 18 June 2018 In Association With

Filthy football

Of 100 African football officials offered cash, only three declined Why fans in Ghana are jaded

F

“

OR shopping,” says a man, laying $65,000 on a table.

“Thank you,” says Kwesi Nyantakyi, the president of the Ghana Football Association, scooping it into a plastic bag.

The bribe was a set-up, secretly filmed for a documentary by Anas Aremeyaw Anas, an undercover journalist. So was a sponsorship deal which Mr Nyantakyi appears to negotiate, taking a cut through his own private company. The film-makers offered money to more than 100 mostly west African football officials, including a Kenyan referee due to officiate at this month’s World Cup. Only three declined.

The revelations have thrown Ghanaian football into turmoil. Mr Nyantakyi, who denies wrongdoing, has resigned.

Domestic matches have been suspended indefinitely. On June 7th the government said it would dissolve the football association.

It has been badly and crookedly managed for decades, which is why Ghana, a football-mad

country, has a league that no one wants to watch.

In the 1970s fans would hang from floodlights, recalls Sam Suppey, then a goalkeeper for Accra Hearts of Oak, one of Ghana’s biggest clubs. Now many teams play in near-empty grounds. In January an official in Kumasi suggested that the city’s stadium could make more money from funerals than football.

Erratic scheduling is a problem. The current season started late because one team was fighting its relegation in court. The exodus of stars is another. “A player shows up for just a season,” says Nana Darkwa Gyasi, a pundit. The best leave for Europe, but many go to rival African leagues, where big clubs such as TP Mazembe in Congo pay higher wages.

Ghanaians crowd into halls to watch European matches on television. As a child, Sylvester Ali would run from school to watch his local team. These days he follows Arsenal instead. “I’d prefer to sit here, have a bottle

of Coke, and watch good-quality football on a clear screen,” he says, sitting in a bar in Accra.

He hasn’t been to a stadium for about 20 years.

Still, there is a kickabout on

every corner. Mark Noonan, the American chief executive of Hearts, says football in Ghana is like cocoa or gold: “It’s one of their national treasures.” For the faithful few, passion is un-

dimmed. Fans serenaded their team bus through the streets after a recent win against Asante Kotoko, their great rivals. “Never say die”, runs their motto, “until the bones are rotten.”

The war on conception

In Tanzania, getting impregnated also means getting expelled from school President John Magufuli thinks the answer to teenage pregnancies is less education

M

ARY (not her real name) was 16 when she became pregnant. The father sold chips by the road near her home in northern Tanzania. She felt special when he gave her money. But when her belly swelled, he ran off. At school she was caned in front of teachers, pupils and her own shamefaced parents. Then she was expelled. “I would not have had sex”, she says, “if I knew you could get pregnant after doing it once.”

A quarter of Tanzanian girls aged 15-19 are pregnant or have given birth. The government’s response is to kick them out of school for good.

Official statistics record that between 2003 and 2011, more than 55,000 girls dropped out because of pregnancy.

This is surely a vast underestimate; cases are often recorded as simple truancy. The main way back into education is through vocational training or at a fee-paying school, which most cannot afford. This policy is reinforced by compulsory pregnancy tests. Teachers pull girls out of class to give a urine sample or, more often, to be squeezed and prodded in the abdomen.

None of this is explicitly required by law. Vague rules say a student may be expelled for an “offence against morality”. In recent years the tone had been changing. Last year the education ministry presented draft guidelines for pregnant girls to re-enter school. The ruling-party manifesto said that those in primary

In Senegal they are readmitted with a certificate saying they are healthy. A handful of places, including Rwanda and Gabon, encourage mothers to continue their studies. In 24 countries there is no clear policy, leaving girls’ fates to the whims of local officials.

For many girls, getting pregnant is the end of their dreams. Some risk backstreet abortions. Others get married. Many end up as maids; a few, as prostitutes. Mary now scrubs pots and pans for a living. “I would go back to school,” she says, wistfully, “if I got the chance.”

school should continue their studies.

But then John Magufuli, the president, made his views known. “After getting pregnant, you are done,” he thundered last year. Halima Mdee, a lawmaker who criticised Mr Magufuli’s stance, was arrested and charged with insulting the president.

In the past, says one teacher, sympathetic schools could quietly readmit girls after they had given birth. But none dares do so now.

An official in one district called for the arrest of pregnant schoolgirls,

to “serve as a lesson to the rest”. Five were apprehended by police.

Punishment does not seem to reduce teenage pregnancy. The rate is higher than in neighbouring Kenya, which allows mothers to return to class. It is highest of all in poor, rural areas, where contraception is scarce and sex may pay for better grades or a motorbike ride to school. A government survey found that 11% of 15- to 19-year-old girls had experienced sexual violence. One activist, too nervous to be named, recalls how

she was expelled after being raped at 14. Girls get the blame for pregnancy, she says, rather than men and boys.

Although Tanzania’s approach is unusual, it is not unique. Sierra Leone and Equatorial Guinea also expel pregnant girls, notes a report published by Human Rights Watch, a pressure group. Laws elsewhere in Africa vary widely. In Malawi pregnant girls are suspended for 12 months, but then allowed to return in the following academic year, subject to some tedious paperwork.

Monday 18 June 2018

BUSINESS

COMPANIES & MARKETS

DAY

17

Google to open Africa’s first Artificial Intelligence centre in Ghana

Pg. 18

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

Mojec gets NERC approval as meter asset provider KELECHI EWUZIE

M

ojec International Limited, Nigeria’s leading indigenous prepaid meter manufacturing company, has been granted an approval of ‘No Objection’ license or certificate by the National Electricity Regulatory Commission, NERC, as an approved asset provider under the new Meter Asset Provider (MAP) Policy.

This was stated in a confirmation letter from NERC to the company dated June 7, 2018 and signed by Dafe Akpeneye, commissioner, Legal, Licensing and Compliance of the agency.

The letter stated that the National Electricity Regulatory Agency has granted license to Mojec International Limited after conducting its

due diligence investigations in line with the new policy and regulations of the Meter Asset Provider Scheme.

This is against the backdrop of some false information and mischievous communication being circulated in the public domain that MOJEC was not part of the Approved MAP list.

The letter reads “The Commission has conducted a due diligence on the supporting documents to your application for a ‘No Objection’ in accordance with Section 8 of the Meter Assets Provider Regulations Act 2018.”

“The initial due diligence did not reveal any adverse findings with the document submitted in support of your application for a ‘No objection’ and Mojec International is hereby granted a ‘No Objection’ to participate in the procurement process for MAPS in accordance

GEEP-MarketMoni: Vice President Yemi Osinbajo and governor Godwin Obaseki flanked by elated GEEP-MarketMoni beneficiaries at the Edo State MSME Clinic in Edo State yesterday .

with Section 8(4) of the Meter Assets Provider Regulations 2018” Chantelle Abdul, managing director, Mojec International Limited in her reaction to the letter of certification, commended the regulatory

Yinson Holdings agrees to supply FPSO to Nigerian oil firms DIPO OLADEHINDE

M

alaysia’s based Yinson Holdings Bhd has announced plans to supply a Floating Production Storage and Offloading (FPSO) unit to Nigeria’s based First Exploration & Petroleum Development Company Ltd (FIRST E&P) to process hydrocarbons offshore in Nigeria.

Yinson Holdings said its indirect unit had entered into a Heads of Terms (HOT) with its associate Yinson Operations & Production West Africa Ltd and FIRST E&P to negotiate the potential supply and charter of the FPSO for the processing of hydrocarbons from the Anyala & Madu fields under Oil Mining Leases 83 and 85.

Luqman Agboola head of energy and infrastructure at Sofidam Capitals Limited said what FIRST E&P is doing is not new to the​​global ​oil and gas sector, although Nigeria is not yet familiar with it yet.

The HOT is intended to create a mutually exclusive relationship between the Parties and to facilitat​​e exclusive negotiations between the Parties for the provision and operation of a FPSO in the Fields.

“They are firming out there activities in a way that doesn’t cost you capital outlay at the initial stage which will saves them a lot of money for investment

and help them manage their operational and CAPEX cash flow,” Agboola said.

Yinson said although subject to negotiations​​it would supply an FPSO for the initial term of the bareboat charter of seven years. FIRST E&P would have an option to extend the term for another eight years.

The negotiations will be on the terms of a Bareboat Charter as well as an Operations and Maintenance agreement as Yinson expects to seal the deal

by June 30, or at a later date mutually agreed by the parties.

In June last year, FIRST E&P announced it had reached an agreement with the world largest oilfield services company, Schlumberger Limited for the development of the same OML 83 and OML 85.

Under the agreement, Schlumberger was supposed to provide over $700 million development cost of the Anyala and Madu fields which would generate 193 million barrels of crude oil into the current reserves of 37.2billion barrels and an additional 800 billion cubic feet of gas into the nation’s proven gas reserves.​ All efforts by BusinessDay to inquiry from FIRST E&P about the present status of its agreement with Schlumberger Limited proved abortive as the company failed to give more information and also​​failed to​ confirm if it will affect its new deal with Yinson Holdings.

In terms of daily production, the fields will yield 50, 000 barrels of crude oil per day and 120 million standard cubic feet of gas per day by early 2019.

FIRST E&P, established in 2011, owns 40percent of the rights to the fields with the remaining 60 percent being held

by Nigerian National Petroleum Corporation (NNPC) which were acquired from Chevron Nigeria Limited (CNL) OML 83 covers an aerial extent of 125 sq. km, with Anyala field as the only discovery within the acreage while Madu field which is the main discovery within OML 85, has an aerial extent of 521 sq. km. Anyala field is located at a water depth of 55m, about 45 km off the coast of Bayelsa State.

Other assets of FIRST E&P are a 45 percent working interest in OML 34 and OML 75 which were divested from Shell Production Development Commission Joint Venture in 2012 and 2015 respectively. FIRST E&P also has a 10 percent interest in a joint venture with Dangote Industries Limited to build the East West Offshore Gas Gathering System pipeline.

The propose FIRST E&P FSPO project is not the first this year; in January 2018 Nigeria itched towards the realisation of the$16billion Egina project as its FPSO, the largest in the country and indeed in Africa arrived Lagos Deep Offshore Logistics Base (LADOL).

agency for the confidence reposed in Mojec International Limited as one of the companies to drive the MAP Scheme.

Abdul stated that “the company being a proudly Nigerian manufacturer of world class standard meters,

remains committed to the Nigerian vision and ever determined to deliver top quality products and services to its customers across the country.”

“MOJEC not only remains a major stakeholder in the Metering arm of the Nigerian

power sector but intends to continue to serve Nigerians and the electricity distribution companies by participating in the MAP program & ensuring that all Nigerians reserve the much desired meters,” she said.

Branch disburses over N1bn loan to Nigerian SMEs IFEOMA OKEKE

B

ranch International, one of the fastest growing digital financial platforms, said it has disbursed over one billion naira loans to small and medium scale enterprises in Nigeria since its one year of operating in the country.

Despite the proliferation of Fintech industries in Nigeria, Branch has successfully distinguished themselves as providers of world class financial services.

Through their innovative approach to lending, Branch has provided world class financial services to the underserved and unlocked financial access to customers around the country. The company provides fast, fair and flexible loans without late fees, hidden charges, rollover fees or restrictions on money expenditures.

At the stakeholders meeting held on the 14th of June, 2018, Matthew Flannery, the CEO said, “I couldn’t be more thrilled to be working in Nigeria with Branch. The startup community is incredibly dynamic, and the country is poised for a FinTech explosion.

The early response from our customers shows that there is a massive need for a product like Branch. We hope to play a significant role in increasing access to modern financial services in Nigeria over the next decade.”

Branch offers a unique

proposition to the average Nigerian, providing users with access to instant loans on their mobile devices. Android smartphone users can receive loans between N3, 000 to N150, 000 requiring no face-to-face meetings, lengthy application processes, collateral or paperwork.

As Branch customers repay their loan, they unlock access to larger loan amounts and more flexible terms. More than 75 percent of customers use Branch loans to help start or grow their business or meet financial obligations.

Notwithstanding, Branch has no restrictions on the usage of the loans; customers are given the independence to make their own financial decisions.

Unlike traditional financial institutions, Branch provides customers with the opportunity to build their credit regardless of their banking history by assessing their loan eligibility based on the data procured from customer’s smartphones.

With the customers’ consent, Branch’s algorithm processes thousands of data points to create customized loan options. These data are protected using world class security and encryption techniques to ensure the safety of customers’ private information.

In Nigeria, Branch has disbursed over N1 billion and over 100,000 loans. The company’s growth continues to accelerate; in the first quarter of 2018, Branch grew 50 percent month on month in Nigeria.

“The growth that we have seen indicates that our product is providing a valuable service and solving a meaningful need for Nigerians around the country. The rapid user adoption is a clear sign of a strong need for fast, accessible world class financial services,” Maria Rotilu, the country manager said.

This year, Branch plans to disburse more than N4 billion and generate over half a million loans.

18

BUSINESS DAY

C002D5556

Monday 18 June 2018

COMPANIES & MARKETS Google to open Africa’s first Artificial Intelligence centre in Ghana OLALEKAN IPELE

G

oogle has announced plans to open Africa’s first Artificial Intelligence (AI) centre in Accra, Ghana later this year.

According to Google, people across Africa do amazing things with the internet and technology for themselves, their communities and the world.

Interests in machine learning research across the continent have increased in recent times and this must have resulted in the decision of the tech giant to designate Africa for one of its AI research centres.

Events like Data Science Africa 2017 in Tanzania, the 2017 Deep Learning Indaba event in South Africa, and follow-on IndabaX events in 2018 in multiple countries across the continent have shown an incredible and continuing growth of the computer science research community in Africa.

The choice of Ghana as the hub for the centre is however generating mixed reactions in Nigeria, Africa’s biggest economy and the most populated country on the continent with many concerned that poor infrastructure, weak

educational system, insecurity and difficulty in doing business may have cumulated in the neglect of the country.

Taiwo Kola Ogunlade, Google’s communications and public affairs manager, Anglophone West Africa told BusinessDay via Email that “Ghana has a strong set of local universities, as well as an office of the African Institute of Mathematical Sciences” “Although the center will be based in Ghana, we are quite focused more widely at Africa as a location where we want to invest in new areas of interest. There are many talented researchers working on AI in Africa now and it’s our goal to collaborate with them more closely through this new AI centre in Accra” Ogundele concluded.

Lucy James, associate consultant with Control Risks’ Africa team said “Ghana likely appealed to Google because of the quality of its education system and other feeder institutions” “The search company is focused on drawing in local talent and there’s no shortage of that in Ghana,” James concluded.

Google has had various offices in Africa over the past 10 years and the company is excited to be a part of growing technology transformation on the continent.

According to Google, ultimately 10 million Africans will benefit from its many digital skills training program with 2 million people having already completed the course.

The company is supporting 100,000 developers and over 60 tech start-ups through Launchpad Accelerator Africa and is also adapting products to make it easy for people to discover the best of the internet, even on low-RAM smartphones or unstable network connections.

According to Jeff Dean, senior fellow, Google AI, “We’re committed to collaborating with local universities and research centers, as well as working with policy makers on the potential uses of AI in Africa” AI has great potential to positively impact the world, and more so if the world is well represented in the development of new AI technologies. So it is important that the world should be well represented in the development of AI. The new AI center in Accra joins the list of other locations where Google is focusing on AI, including Paris, Zurich, Tokyo, Beijing, Montreal, Toronto, Seattle, Cambridge/Boston, Tel Aviv/Haifa, New York, and the company’s Mountain View/San Francisco headquarters.

L-R: Oscar Onyema, chief executive officer, Nigerian Stock Exchange; Uche Ajene, managing consultant, QuadrantMSL; and Sonnie Ayere, president, Association of Issuing Houses of Nigeria (AIHN) at the first inaugural dinner of AIHN in Lagos recently.

CWG receives Federal Government’s license to install prepaid meters

N

igeria’s largest system integration company, C WG Plc has been confirmed as one of the companies licensed by the Nigerian Electricity Regulatory Commission (NERC) to participate in the procurement of prepaid meters in the Nigerian Electricity Supply Industry (NESI).

CWG announced the receipt of the license in Lagos through a statement by its Group Head, Brand & Marketing Communications, Anthonia Ehanmo.

According to the statement, CWG will proceed to obtain Meter Asset Provider Permit from the NERC after entering into Metering Service

Agreement with Electricity Distribution Companies. The Meter Asset Provider Permit allows CWG and other licensees to finance, procure, install, repair and even replace electricity meters according to the MAP Regulations 2018.

CWG Plc, as part of efforts to address power challenges in Nigeria, initiated and designed a ‘Smart Metering Solution’ which works in the form of a connected mobile app for electricity consumers – both the Maximum Demand Customers (MDCs) and the Non-maximum Demand Customers (NDCs).

The Smart Meter, according to CWG is part of a larger plan for the Company’s

Smart Utilities platform that is keyed into Government’s smart initiatives, noting that the solution makes it possible for the Power Distribution companies to detect power theft, monitor and measure usage for improved power efficiencies.

The solution is designed in such a way that it alerts the power companies with the precise location where the theft is occurring in near real time, not more than three minutes after it happens, without requiring large technology equipment or complex and expensive algorithms to decipher them. This is another innovation out of the stables of CWG Plc.

Monday 18 June 2018

C002D5556

BUSINESS DAY

19

COMPANIES & MARKETS TL First Group pushes support for HR in evolving business landscape Modestus Anaesoronye

A

s Organisations continue to grapple with the challenge of structural leadership in a fastevolving corporate landscape, TL First Group has stated that the role of Human Resources, traditionally, as a supporter of operational business requirement to hire and build talents, is metamorphosing into a more strategic business partnership role.

Leadership and Transformation expert and GMD, TL First Group, Olu Olasode, who stated this recently, at a Strategic HR workshop on Innovations in Human Resources Management in Nigeria, noted that in today’s business landscape, an evolved approach to HR is a competitive advantage.

According to him, the talent scenery is changing and generating the largest disruption businesses have ever seen—putting HR in a position where they de-

liver sustainable improvements in the Organisation.

Olasode added that while CEOs are increasingly holding HR departments accountable for delivering human capital results that are growth and success-oriented, it is important to note that without the right human capital infrastructure, the execution of key strategic objectives, as well as the ability to outpace the industry among their competitive set, is nonexistent.

Organisational Development Advisor, Oly-keshi Sanni, who also spoke at the workshop emphasised collective team efforts that projects the company goals. She stated that although managing performance is a core HR function, there are new ways of impacts that address strong culture ambassadorship and superior conflict resolution.

According to Sanni, HR has earned an integral role in helping to execute strategic human capital solutions and ensuring transformational growth and

competitive capabilities within their organization.

Olasode called on Company Executives to begin rethinking formidable strategies and realigning priorities for rebound and growth.The workshop that touched on effective personnel audit, HR architecture and efficiency framework, had in attendance Chief Executives, Chief Operating Officers, Directors of Human Resources and Heads of Departments from various organisations.

TL First is a pioneering accountancy, consultancy and public service productivity organisation which specializes in supporting individual investors, small businesses, social enterprises, not-for-profit organizations, and other third sector organizations. With over forty years of combined experience, they have empowered businesses, charities, and major public-sector organisations to achieve significant improvement in service delivery and outcomes.

Business Event

L-R: Ngozi Madueke-Dozie, general manager, West Africa, Kweséiflix; Busola Adeogun-Phillips, Kwesé Strategic Partner; Elizabeth Amkpa, general manager, Kwesé TV; Business Development Director, Advapro Ltd Helen Ofili, designer of the Kwesé Experience Centre, and, Efe Obiomah, head of PR, Kweséat, the opening of the Kwesé Experience Centre in Victoria Island, Lagos...at the weekend.

FirstBank’ CR&S focuses on service to humanity across 800 business communities HOPE MOSES-ASHIKE

F

irst Bank of Nigeria Limited is commemorating the second edition of its Corporate Responsibility and Sustainability (CR&S) with a focus on service to humanity across 800 business communities in eight countries of operation.

The event scheduled for June 19 – 23, 2018, is themed ‘Touching Lives; You First’ and would offer FirstBank employees the opportunity to give their time and resources in the service of humanity.

The week-long event which is being commemorated across its business communities in Nigeria, United Kingdom, Democratic Republic of Congo, Ghana, The Gambia, Guinea, Sierra-Leone and Senegal is a reflection of the Bank’s brand promise to always put stakeholder needs first, while it reinforces the Bank’s role in driving sustainable development in the communities where it operates.

The CR&S Week would witness the culmination and consolidation of the Bank’s interventions in social responsibility, promoting random acts of kinds across 800 communities to reignite acts of kindness

in our society. The events are tailored towards re-orientating the society along the right values; encouraging the citizenry to intentionally create positive impact in their immediate environment.

Speaking on the initiative, Adesola Adeduntan managing director/CEO, First Bank of Nigeria Limited, stated that “The 2018 Corporate Responsibility and Sustainability week will amplify the Bank’s Employee Giving and Volunteering scheme as we all collaborate across our business communities to create sustainable impact, touch lives and make our societies a better place to live”.

How digital transformation can drive growth, job creation across emerging economies

I

nnovation and entrepreneurship play an ever-increasing role in growing Africa’s emerging technology ecosystem. According to research by the GSMA Ecosystem Accelerator, over the past two years alone, Africa has seen the number of innovation hubs double.

Whilst the big 3 cities – Nairobi, Lagos, Cape Town – have been dominating the Sub-Saharan growth narrative, the next wave of incubators are arriving from new ecosystem cities in North Africa. And the cities driving this growth, Casablanca, Cairo, Sousse and Algiers, are serious about generating sustainable operating models in the fast evolving ICT

landscape to overcome core business challenges around viability, future-proofing the business and most importantly, producing continuous success stories.

Funding in North Africa is shifting from relying on public spending According to the Disrupt Africa Tech Start-ups Funding Report 2017 funding in African tech start-ups surged 51 percent to reach $195 million in 2017, as compared to figures of the same period in 2016. When it comes to funding, the majority of Africa’s tech hubs are grant funded

by Governments and foundations; however there has been a growth of social ventures and a trend toward for profit and

self-funded endeavours to fast track growth.

Rabeh Arezki, chief economist for Middle East and North Africa Region (MNA) at the World Bank stated, “When it comes to sustainable funding, African tech hubs tend to focus on demand-driven service models that solve problems and support the specific needs of an ecosystem. To succeed, a modern innovation hub needs to pinpoint a niche in growth areas and deliver that proposition.

Key areas ripe for development are start-ups looking at improving Internet infrastructure, payment systems and education. These are the types of businesses we see succeeding.”

L-R: Katch Ononuju, director-general, Heritage Centre; Kalu Okoronkwo, publisher/CEO, The New Narrative Newspaper, and Matthew Kukah, bishop of the Roman Catholic Diocese of Sokoto/keynote speaker, at the formal launch of the New Narrative Newpaper in Lagos.

Pic by Olawale Amoo

L-R: Tobechukwu Nkemdilim Okigbo, corporate relations executive, MTN Nigeria, Pascal Dozie, chairman, MTN Nigeria, Julius Adelusi-Adeluyi, chairman , MTN Foundation, and Valentine Ozigbo, chief executive officer, Transcorp Hilton, at the Fela and the Kalakuta Queens Production in Abuja at the weekend.

L-R: Funmito Augusto, board member, Special Olympics Nigeria; Babatunde Fatayi-Williams, representative, Lagos State Sports Commission; Victor Osibodu, chairman, board of directors, Special Olympics Nigeria and Emeka Mba, public affair analyst, West Africa, Coca Cola Nigeria, at the Closing ceremony of the Special Olympics National Games and 50th Anniversary Celebration in Lagos

20

BUSINESS DAY

C002D5556

Monday 18 June 2018

Monday 18 June 2018

C002D5556

BUSINESS DAY

21

22

BUSINESS DAY

C002D5556

Monday 18 June 2018

Monday 18 June 2018

C002D5556

BUSINESS DAY

23

24

BUSINESS DAY

C002D5556

Monday 18 June 2018

Monday 18 June 2018

C002D5556

This is M NEY A daily guide to your Personal Finance

BUSINESS DAY

25

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

Fathers and finances

Y

esterday was Fathers Day. Father’s Day is a celebration honoring fathers and celebrating fatherhood, paternal bonds, and the influence of fathers in society. It is also a good time for fathers to consider the critical role they play in the family, to take stock and to carefully consider their responsibilities by implementing important financial steps to secure their families.

Talk about money with your partner Money woes are a leading cause of fractured relationships and divorce.

Keeping financial problems to yourself makes things worse and damages the fabric and stability of your relationship. Discuss any worries with your spouse as sharing the burden eases it. And if you have loads of money and you hide it away from your spouse, leaving her completely in the dark, this can breed mistrust and put a strain on your relationship.

Establish an emergency fund Your emergency fund should have enough cash to cover at least six months of living expenses. If you can’t achieve that just yet, start small but meticulously, each month as soon as your salary is credited have a certain sum set aside to-

wards savings. Automating your savings is the most convenient way of achieving this.

Review your insurance Life insurance is a must for dads. We tend to assume that bad things won’t happen to us and far too many people ignore the need for insurance until a major mishap or setback occurs; it is then that the impact of inadequate insurance coverage becomes glaring. No matter how meticulous you are with your finances, failure to purchase adequate insurance can impair your financial future and put you and your loved ones in a desperate situation in an instant. Motor vehicle, household, health and life insurance, are just a few of the various policies that are available to protect you and your family. There are educational plans that encourage you to plan for several years before you need the money.

Save for your children’s education For the vast majority of people, funding your children’s education ranks as one of the largest expenses you will ever face and it must, thus, be carefully planned for. Thinking about your young children’s future education may seem like a lifetime away. However, with the rising costs of education, if sound investments are not made now, covering the huge expenses for the secondary and postsecondary years may be a challenge. When your children are still young, you have the benefit of time to select investments that offer the prospect of higher returns over the long term.

It takes discipline, consistency and sacrifice to amass the money that you need

several factors including where the guardians live, their financial situation, how many children they have, the way their children are being raised, their spouse and so on. Sit down with your spouse, to discuss the pros and cons of various options and come to a decision and include this in your will. Inform the proposed guardians also.

Give your family your time In the final analysis, all the money in the world cannot replace that precious time for bonding, building and nurturing relationships with your children. Make the time. to educate them and give them the best chances in life.

Who is your Next of Kin? In Western cultures, the choice of the spouse as next of kin is the most obvious one, for example, the mother of his children is generally the person in whom a man places the most trust.

In Nigeria, however, it is very common for a man to choose his brother as next of kin. In the event of the husband’s death, making the wife your next of kin will save her and the children a lot of hardship given the traditional extended family system where other family members can often forcefully claim their brother’s property. There are numerous examples of widows having to cope with not only the loss of their spouse but also of all their personal possessions and property.

Many people assume that if they pass on, their spouse will automatically become beneficiary to their estate. If you were to die intestate, that is, without

leaving a will, your property will not simply pass to your spouse as you might think; strict rules rank your next of kin, and your property will be distributed according to laws of intestacy, which may vary from state to state.

Put an estate plan in place It is only by having a clear estate planning mechanism in place, that you can protect your immediate family, including your wife and children, and ensure that your investments and property and other assets do not go into the wrong hands in the event of your untimely passing. Review and update your will, trust and other estate planning documents from time to time, to ensure that they are in accordance with your current status and intentions; you might have had more children or wished to include additional beneficiaries, may have acquired additional assets or disposed of some.

Review your beneficiary designations It is important to check

beneficiary designations periodically, say once a year, to make sure that they are up to date. At some time or the other, you have probably had to fill out a form or some other documentation where you had to clearly state your next of kin. Many people don’t take this designation that seriously and sometimes even forget whom they designated as time goes by.

Designate a guardian for your children Considering the worstcase scenario is something that no one likes to think about. But if something happens to both you and your spouse, you do want to be sure that your children will be well taken care of. Some couples disagree about who would play that role; should it be his brother or her sister or a friend perhaps? If you haven’t made your wishes clear, the court will appoint someone without any guidance from you; it may be someone that you do not want to raise your children. You would have considered

Instagram and Twitter: @ mmwithnimi, Facebook and Google+: ‘Money Matters with Nimi’. www. moneymatterswithnimi. com, or send us an email info@ moneymatterswithnimi. com Nimi Akinkugbe has extensive experience in private wealth management. She seeks to empower people regarding their finances and offers frank, practical insights to create a greater awareness and understanding of personal finance.

For more personal finance tips, contact Nimi: Email: info@ moneymatterswithnimi Website: www. moneymatterswithnimi. com Twitter: @MMWITHNIMI Instagram: @ MMWITHNIMI Facebook: MoneyMatterswithNimi

26

BUSINESS DAY

Monday 18 June 2018

Access Bank Rateswatch Market Analysis and Outlook: June 14 - June 22, 2018

KEY MACROECONOMIC INDICATORS Indicators

Current Figures

Comments

GDP Growth (%)

1.95

Q1 2018 — lower by 0.11% compared to 2.11% in Q4 2017

Broad Money Supply (M2) (N’ trillion) Credit to Private Sector (N’ trillion)

24.52 22.25

Increased by 0.90% in Apr’ 2018 from N24.30 trillion in Mar’ 2018 Decreased by 0.85% in Apr’ 2018 from N22.44 trillion in Mar’ 2018

Currency in Circulation (N’ trillion) Inflation rate (%) (y-o-y) Monetary Policy Rate (%)

1.96 11.61 14

Increased by 17.31% in Apr’ 2018 from N1.67 trillion in Mar’ 2018 Declined to 11.61% in May’ 2018 from 12.48% in Apr’ 2018 Raised to 14% in July ’2016 from 12%

Interest Rate (Asymmetrical Corridor) External Reserves (US$ million) Oil Price (US$/Barrel)

14 (+2/-5) 47.63 75.24

Lending rate changed to 16% & Deposit rate 9% June 13, 2018 figure — an increase of 0.02% from June start June 14, 2018 figure— a decrease of 3.40% in 1 week

Oil Production mbpd (OPEC)

1.71

May 2018 figure — a decrease of 3% from Apr’2018 figure

COMMODITIES MARKET

STOCK MARKET Indicators

Friday 14/06/18

NSE ASI

38,928.02

Market Cap(N’tr) Volume (bn) Value (N’bn)

Friday

38,669.23

14.10 0.34

14.01 0.21

5.25

3.89

NIBOR Friday Rate

OBB O/N CALL 30 Days 90 Days

Friday Rate

(%)

(%)

14/06/18

08/06/18

3.6700 4.2500 16.8800 15.1100 15.3500

Change(%)

Friday

4.8300 5.3300

(116) (108)

5.7143 13.5397

1117 157

13.9530

140

Friday

1 Month

(N/$)

(N/$)

Rate (N/$)

14/06/18

08/06/18

14/05/18

Official (N) Inter-Bank (N)

305.90 342.71

305.95 341.88

305.80 339.65

BDC (N) Parallel (N)

360.99 362.00

359.90 362.00

361.00 363.00

1-week Change

YTD Change

(%)

(%)

(3.40) 1.73

16.72 (3.80)

3.74 2.32 (0.83) 9.53 0.91

24.69 (8.72) 20.37 (16.76) 21.34

(0.02) 0.95 (1.10)

(1.43) (1.40) (1.25)

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS Tenor

Friday

Change

(%)

(%)

(Basis Point)

14/06/18

08/06/18

3-Year 5-Year

0.00 13.24

0.00 13.33

0 (9)

7-Year 10-Year 20-Year

12.67 13.23 13.59

12.80 13.33 13.56

(13) (10) 3

(Basis Point)

08/06/18 12.06 12.50

20 (87)

6 Mnths 9 Mnths 12 Mnths

12.61 13.11 12.95

12.82 13.11 12.50

(21) (0) 45

ACCESS BANK NIGERIAN GOV’T BOND INDEX

Indicators

Index

Friday

Friday

Change

(%)

(%)

(Basis Point)

14/06/18

08/06/18

2,685.72

2,681.09

0.17

9.15 5.91 9.15

0.17 0.36 0.18

-46.16

0.21

Rate (%)

Date

Mkt Cap Gross (N'tr) Mkt Cap Net (N'tr) YTD return (%)

9.17 5.94 9.33

YTD return (%)(US $)

-45.95

TREASURY BILLS (MATURITIES)

Disclaimer

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

Change

(%)

12.26 11.64

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

Friday

(%) 14/06/18

AVERAGE YIELDS Friday

Friday

1 Mnth 3 Mnths

BOND MARKET Tenor

14/06/18

Energy 0.67 Crude Oil $/bbl) 75.24 Natural Gas ($/MMBtu) 2.94 0.67 Agriculture 60.27 Cocoa ($/MT) 2,414.00 Coffee ($/lb.)

118.85 34.91 Cotton ($/lb.)

93.29 Sugar ($/lb.)

12.76 Wheat ($/bu.)

526.00 Metals Gold ($/t oz.)

1,298.70 Change Silver ($/t oz.)

16.95 323.70 (Basis Point) Copper ($/lb.)

FOREIGN EXCHANGE MARKET Market

Indicators

08/06/18

MONEY MARKET Tenor

Global Economy In the U.S. the Federal Reserve (Fed) raised interest rates to 1.75% - 2% range in the meeting held on June 12 and 13, 2018. This increase is due to continued strength in labour market, stronger economic activity, increased job creation and declining unemployment rate.

There has also been an uptick in household spending and fixed investment. The inflation rate is also seen to be improving. In a bid to foster maximum employment and price stability, the Fed projected two additional rate hikes by the end of this year. Gross Domestic Product (GDP) forecast for 2018 was revised higher to 2.8% from 2.7% at the previous meeting. Elsewhere in the U.K., consumer prices remained stable in May 2018 at 2.4%.

Core inflation which excludes the prices of energy, food, alcohol and tobacco also remained flat at 2.1%. Month-on-month, consumer prices climbed by 0.4% according to the Office for National Statistics (ONS). In another development, China’s inflation rate stood at 1.8% in May 2018, unchanged from the previous month’s rate as reported by China’s statistics agency. The year-on-year rate being the lowest since January 2018 was driven by slower growth in food prices which stood at 0.1% from 0.7% in the previous period. Nonfood index rose to 2.2% in May from 2.1% in April.

91 Day 182 Day 364 Day

Amount (N' million) 6,217.066 50,000.00 124,640.724

10.4662 14-June-2018 11.0801 13-June-2018 12.9897 13-June-2018

Local Economy The Consumer Price Index (CPI) which measures inflation in Nigeria rose by 11.61% year-on-year in the month of May 2018, which is 0.87% points less than the 12.48% recorded in April 2018. This represents the sixteenth consecutive month of decline in the rate of inflation since January 2017. The food index rose by 13.45% (year-on-year), slightly lower than 14.80% recorded in the previous month, thus indicating a sustained decline in the pressure of food prices. The highest increases in the food index was seen in the prices of potatoes, yam and other tubers, vegetables, fish, bread and cereals, fruits and meat. The core sub-index, which excludes the prices of volatile agricultural produce stood at 10.7%, 0.2% points lower than 10.9% in April. During the month, the highest increases were recorded in prices of hairdressing saloons and personal grooming establishment, vehicle spare parts, fuels and lubricants for transport equipment, books and stationaries, domestic services and household services, pharmaceutical products, paramedical services, medical services and passenger transport by road. In another development, the Central Bank of Nigeria (CBN) revealed in its monthly business expectation survey report that the confidence index on the macro economy for the month of May 2018 stood at 28.9 index points, same as the previous month.

The optimism on the macro economy was driven by the opinion of respondents from the services, industrial, construction and the wholesale/retail trade sectors. The firms that were surveyed identified insufficient power supply, unfavourable economic climate, high interest rate, unclear economic laws, financial problems, unfavourable political climate and insufficient demand as the major factors constraining business activity in the current month.

Stock Market Trading at the local bourse advanced in the week ended June 14, 2018. The bullish performance was due to demand for medium and highly capitalized stocks. The All Share Index (ASI) inched up by 0.7% or 258.79 points to 38,928.02 from 38,669.23 points the previous week. Similarly, market capitalization ascended by 0.7% to N14.10 trillion from N14 trillion the preceding week. Last week’s performance was influenced by gains in the

stocks of companies in the banking, consumer goods and oil & gas sectors. This week, we expect the market to remain on the upside as investors continue to take advantage of lower stock prices of previous weeks.

Money Market Cost of borrowing at the money market recorded mixed movements last week. On one hand Open Buy Back (OBB) and the Over Night (O/N) rates fell to 3.67% and 4.25% from 4.83% and 5.33% respectively the previous week due to Open Market Operation (OMO) maturity of about N244 billion. However, longer tenured interbank rates increased across other rate buckets. The 30-day and 90- day Nigerian Interbank Offer Rates (NIBOR) climbed to settle at 15.11% and 15.35% from 13.54% and 13.95% respectively. This week, we expect rates to further trend lower due to expected Retail Secondary Market Intervention Sales (SMIS) refund and OMO maturity.

Foreign Exchange Market The local currency posted differing directional performances in various segments of the foreign exchange market last week. The interbank window slightly depreciated to N342.71/$ from N341.88/$ representing a drop of 83 Kobo. The parallel market rate remained stable at N362/$. Meanwhile, the unofficial rate appreciated marginally by 5 kobo to settle at N305.90/$ from N305.95/$ the previous week.

The appreciation and stability recorded in the parallel and official market segments may be attributed to the apex bank’s regular interventions. This week, we envisage the stability in the market would continue due to consistent FX liquidity by the CBN. Bond Market Bond yields declined slightly last week following client demand on short to medium term placements. Yields on the five-, seven- and tenyear debt papers finished at 13.24%, 12.67% and 13.23% from 13.33%, 12.80% and 13.33% respectively the previous week. The Access Bank Bond index rose marginally by 4.63 points or 0.17% to 2,685.72 points from 2,681.09 points the previous week. This week we expect bond yields to appreciate due to the expected bond auction.

Commodities Oil prices fell last week, pulled down by rising supplies in the United States. American Petroleum Institute (API) revealed that crude oil inventories in the U.S. rose by 830,000 barrels to 433.7 million last week.Bonny light, Nigeria’s benchmark crude, ended at $75.24 per barrel, down $2.65, or 3.4%, from the previous week. In a similar vein, precious metals prices turned lower after the U.S. Federal Reserve announced it was raising interest rates. Interest rate hikes push up bond yields, making non-yielding precious metals less attractive.lost 0.02% to settle at $1,298.70 per ounce. However, silver climbed by 16 cents, or 1%, to settle at $16.95 an ounce due to higher demand. This week, oil prices are likely to drop further weighed down by the prospect of easing supply curbs from OPECled producers at their meeting on June 22nd.

Precious metals prices are likely to remain under pressure due to expectations of additional rate hikes by the US Fed.

MONTHLY MACRO ECONOMIC FORECASTS Variables

Jun’18

Exchange Rate (Official) (N/$)

Jul’18

Aug’18

Inflation Rate (%)

340.80

341

341.02

11.00

10.50

Crude Oil Price (US$/Barrel)

10.20

75.2

75.9

76

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

Monday 18 June 2018

Stocks

Currencies

C002D5556

Commodities

Rates + Bonds

Economics

Funds

Week Ahead

BUSINESS DAY

Watchlist

ECONOMY

Mobil and Forte Oil beat downstream industry average as others lag BALA AUGIE

O

ur analysis this week is centred on the major players operating in the downstream oil and gas industry.

Investors that crave for stocks that magnify their income should pay attention to this short and lucid analysis.

Firms are operating in a volatile and unpredictable macroeconomic environment. For instance, the partial removal of subsidy by government deal a blow on earnings as many oil marketers couldn’t adjust to the new template of the regulator.

What’s more, the delay in subsidy payment by federal government resulted in accumulated debt in the balance sheet of firms that borrowed money from banks to finance the importation of petroleum products.

Total and Forte record strongest profit margins Forte Oil Nigeria Plc’s gross profit margin of 18.64 percent recorded in December 2017, which is higher than the 13.85 percent recorded the previous year, beats industry average of 15.74 percent, according to Market and Intelligence’s calculations.

The indigenous oil and gas giant’s pretax and after tax margin of 8.20 percent and 8.89 percent are more than the industry average of 3.36 percent and 3.15 percent respectively.

Forte is the only firm in the entire industry that has succeeded in utilizing shareholders’ resources in generating higher profit.

In other words, return on equity (ROE) increased to 22 percent in December 2017 against 7 percent as at December 2016.

The improvement in profit margins amid cap on

27

P.E

SHORT TAKES 80mn to 85mn Soaps and cosmetics maker PZ Cussons on Thursday said its full year pre-tax profit is expected to be at the lower end of the 80 million to 85 million pound range it previously provided, as conditions in Nigeria have worsened.

The company said while higher oil prices in Nigeria have contributed to increased foreign exchange reserves and a relatively stable exchange rate, liquidity has not flowed down into the economy.

11.61 percent Annual inflation in Nigeria slowed to 11.61 percent in May, its lowest level in more than two years and its 16th straight monthly drop, the National Bureau of Statistics said on Wednesday.

It fell from 12.48 percent in April. A separate food price index showed inflation at 13.45 percent in May, compared with 14.80 percent in April.

Food inflation has been in double digits for almost three years, but has slowed for more than six months. price petroleum products by the regulator shows Forte’s corporate strengths and power brands as it continues to curtail costs.

11 plc (formerly known as Mobil Nigeria plc has a gross profit margin of 12.19 percent in as at December 2017 beat industry average of 10.50 percent, according to Market and Intelligence’s Calculations.

Pretax profit margin of 8.89 percent and after tax margin of 6.15 percent are well above the industry average of 3.36 percent and 3.15 percent respectively.

Mobil has zero debt in its capital structure, which means it gives the leeway to borrow to fund future expansion plans.

The company announced last week that it was reopening its Liquefied Petroleum Gas (LPG) business. The company last operated in this segment 20 years ago. The strategic plan could help add impetus to earnings.

Conoil Nigeria Plc’s, MRS Nigeria Plc’s, and Eterna Oil Nigeria after tax margins of 0.69 percent, 0.78 percent, and 0.59 percent are lower than the 3.36 percent industry average.

Share price and Valuation Forte Oil is trading at 3.11 times book value, while its share price hit an all-time high of N47.70 in February of 2016, only to touch down

at N52.62 percent as at the last trading day on June 14, 2018.

Total has a price to book (P/B) ratio OF 2.19 times, as share price hit an all-time high of N329 in October 2016, but closed at N202.90 at June 14 2018.

Mobil is trading at 2.19 times book value, while share price hit an all-time high of N360 in April 2017, but traded at N183 as at last trading day.

Conoil’s PB ratio is trading at 1.2 times, while share price appreciated the most in November 2013 when it touched at N76. However it is trading at N32 as at Thursday June, 2018.

Eterna has a PB ratio of 0.66 times, while its share

price hit an all-time high of N6.93 as at May 11 2018. It closed at N6.30 on the last trading day of the week.

Investors and market participants do not attach value to MRS’ equity relative to its book value of equity as the firm’s has zero PB ratio.

MRS’s share price hit an all-time high of 70 in July 2014, while it closed at N34.25 on the last closing day before the festive period .It is the most beleaguered among its peer as it continues to grapple with high gearing ratio, weak sales, tepid operating performance.

The company was unable to pay cash dividend but gave its owners bonus shares or scrip issue.

$7 billion African Trade Insurance expects its annual insured trade and investment portfolio to double to $7 billion within five years, driven by new members including Ghana and Nigeria.

The company expects the annual portfolio would rise by $1 billion this year to $3.5 billion and double to about $7 billion by 2022.

The investment risk insurer is owned by 14 African nations and other organisations such as the African Development Bank.

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

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

28

BUSINESS DAY

C002D5556

Monday 18 June 2018

Markets Intelligence ECONOMY

FBN Asset YTD return highest among peers after dividend adjustment ENDURANCE OKAFOR

F

BN Capital Asset Management Limited recorded the highest year-to-date (YTD) total return among its peers listed on the Security Exchange Commission (SEC).

This analysis was done following an adjustment of its dividend of N11 paid in March 2018. When this is added to its returns of -1.0 percent as analysed by BusinessDay, it gives a total YTD return of 5.4 percent covering the period between January and June 1st 2018.

This was not different for First City Asset Management plc Legacy Equity Fund as it had a YTD return of -5.59 percent in the period under review. Although, when adjusted with its dividend of 12 Kobo which the equity fund paid in January 2018, a total YTD return of 2.32 percent was recorded for the fund.

Only the two funds were analysed with dividend adjustment among the initial 10 registered funds surveyed in Business-

Source: Companies’ Publication

Day’s article published last week Wednesday 13, June 2018, with the headline; Stanbic IBTC aggressive fund, United Capital, ARM lead equity funds performance in 2018, owing to the availability of data on the paid dividend of the funds.

Meanwhile, the Nigerian Stock Exchange (NSE) all share index return for the period was reported to be -3.73, and it is the benchmark with which this analysis was carried out.

Other funds that had returns above the NSE all share index in the period under review were; Stanbic IBTC aggressive fund

with a 3.82 percent, United Capital asset management Ltd equity fund (+ 3.22%), ARM aggressive growth fund (+0.36%), Stanbic IBTC Nigerian equity fund (-0.13%), and AXA Mansard investment Limited (-3.65%).

Although the dividend data of these funds were not available to BusinessDay as at the time of this report, and as such dividend adjustment were not carried out on the funds’ returns.

Analysts however linked the performance of the listed equity funds that outperformed the NSE all share index in the period to being exposed to growth stocks.

Investment by these funds in instruments that had very strong potential was another reason cited by analysts for the bullish returns.

Meanwhile, the sizes of an equity fund is determined by a market capitalization, while the investment style, reflected in the fund’s stock holdings, is also used to categorize equity mutual funds.

An equity fund is therefore a mutual fund that invests principally in stocks. It can be actively or passively (index fund) managed. Equity funds are also known as stock funds.

Forte Oil has the largest Enterprise value among listed oil marketers BALA AUGIE

F

orte Oil’s Enterprise value or EV of N81.03 billion is the largest among peers. This is followed by Total; (N76.17 billion), and Mobil; (N61.59 billion).

The EV for short is a measure of a company’s total value, often used as a more comprehensive alternative to equity market capitalization.

EV is calculated as the market capitalization plus debt, minority interest and preferred shares, minus total cash and cash equivalents.

If a company were to purchase Forte Oil’s outstanding shares for N41.12 billion, it will also have to settle the indigenous downstream oil and gas giant’s outstanding debts which sum up to N33.93 billion. In total, the acquiring company will spend N82.07 billion to purchase Forte’s.

However, since Forte has

N969.69 million in cash, this that will be used to pay off Forte’s amount can be added to repay debt will only be N33.93 billion – the debt. The money from the N969.69 million = N32.96 billion. coffers of the acquiring company Therefore, the company will

pay, out-of-pocket, N32.96 billion + N48.12 billion = N81.01 billion, which is the estimated market value of Forte’s.

BUSINESS DAY

Monday 18 June 2018

Start-Up Digest

29

In association with

Steve Babaeko: Breath of fresh air in African advertising industry ODINAKA ANUDU

N

igeria is blessed with high-flying entrepreneurs who redefine their industries with creativity and innovation. This set of entrepreneurs has a unique approach to business and comes with a breath of fresh air.

Steve Babaeko happens to be in this group. Steve founded X3M Ideas five years ago, but this firm has grown so fast that it now has an office in Johannesburg, South Africa. X3M Ideas is a digital advertising/ marketing/branding company that has handled a number of creative jobs in Nigeria and Africa.

He is the group chief executive officer of X3M Group, made up of X3M Ideas, X3M Music, and Zero Degrees, among others.

Having conquered the industry in Nigeria, Steve now feels that his company must leave its footprints on the sand of Africa.

He set up an office in South Africa one year ago to serve SouthCentral African countries. He has been in advertising since 1994, working in a couple of places in the country.

Steve’s South-Central Africa Project covers South Africa, Mozambique, Zimbabwe and Botswana.

“The vision is quite clear. I have always felt that there are just so many people on this continent, and we need to do business with each other. There are over one billion people or about 1.3 billion people on the continent. If you look at other regions like the Americas, the South-East Asians and the North-East Asia or Europe, the level of intra-continental trade is high. Sometimes it is even more expensive to travel from one African country to another than to travel to Europe. If we can bridge the gap in intra-African trade, there will be prosperity. It is a no-brainer.

“Nigeria and South Africa are the biggest economies in Africa.

These two continents can change the story of Africa,” he says.

His experience in South Africa has been unique as the country has its rules that must be obeyed, including prompt payment of taxes.

But why did he choose South Africa?

According to Steve, some of the firms he works for already have roots in South Africa and Southern Africa.

“I was in Lusaka two weeks ago and the billboard read, ‘Dangote Cement: Creating Value’. These were the stuffs developed in this shop. If they are already there, what about other clients? Access Bank

Steve Babaeko

is already in Zambia. One of the reasons why we had to take this decision is that our clients are moving in there. We are already providing quality service for them here in Nigeria and we can transport the services there. We are comfortable doing business in Africa. We just have to pursue this African agenda more,” he explains.

“There are certain best practices in Nigeria in terms of marketing communications and we know we will be useful in other parts of Africa. I just consider this as the beginning because the vision is to leave indelible marks on the footprints across the continent.

We are going to take it region by region,” he states.

Steve is not afraid of competition as he believes his firm is already a major player.

“You will remember that recently we were in Morocco at Crystal Award and everybody came asking me the global agency I was affiliated with. I told them we are an independent agency. We are only one of the few independent agencies that won 15 awards at this scale. Major players from South Africa came for the award and not many of them won up to this level.

So, we are already competitive. We are going there as a major player that have done something substantial at this scale. For an agency that started five years ago to be ranking the way we are, is not a tea party.

We have left our mark on this market,” he says, confidently.

The entrepreneur is looking at East Africa, especially Kigali, Rwanda. He believes the economy of the country is growing and has been so for the past five years.

He met some of the country’s officials in a conference in Dubai

few months ago, and was reassured that his investment would be safe.

Steve believes that the Nigerian market is big enough, but wants the country to get its acts right to attract more investors.

“First and foremost, I am a Nigerian. This is still a wonderful market. We have our challenges, we have our issues. We need to get governance and infrastructure right; we need to get many things right. I was in Accra the other day and the airport there was way smaller than ours but very organised. If we can get infrastructure right in Nigeria, the sky is the limit.

We are going to build more entrepreneurs and take over this continent. Some of the places you go to, like South Africa, have very good infrastructure. But there are also other places where infrastructure is not as good as Nigeria.”

The creative entrepreneur believes that the tendency for Africa to leapfrog is very high. He says technology makes it easier for people of the continent to scale up.

One big discussion in the advertising/ branding industry in Nigeria today is mergers and acquisitions. Steve believes that some agencies in the country will die if they do not merge or get acquired. He tells Start-Up Digest that he is talking to people that want to merge with his firm.

“In Nigeria, it is still the inevitable. In the next five years, when you mention names of some agencies, people will tell you they used to remember them. We have no choice, we have to merge. People have to acquire them. The old school way of saying, ‘I am a big fish in one bathtub’ is gone. Nothing is wrong with being a small fish in a big pond. That is what mergers

and acquisition will do for you. If not, agencies will die. It is just the inevitable. Commonsense will prevail,” he explains.

Five years after, Steve’s firm is a success story, but the entrepreneur believes he should still be seen as a start-up.

“We are still operating with the mentality of a start-up. Even Amazon, I am sure, still thinks like a start-up. The size is a matter of the mind. We started with nothing and, to be honest, we still think we are very much work in progress. We started with seven people. Today, across our group in Nigeria, we are over 100 people. You can just measure that scale,” he says.

There are opportunities in Africa, he says, adding that the level of creativity in Nigeria’s advertising/ branding industry is going up. “Before now, Nigeria hardly ever got some of those continental awards. But these days, Nigeria is like the next emerging powerhouse to watch on the continent. I was a jury at an award event last year and the story was the same. Nigeria is another country to watch.”

According to him, it is wrong for ad agencies to sacrifice building brands for winning awards, stating that this is a wrong approach in the industry.

“We are not going to say we will not build brands in the name of winning awards. Our first passion is moving that brand from point A to point B. The obsession for winning awards cannot overtake the work we do,” he assures.

“Agencies all over the world sometimes create what is called ‘scam ads’. These are ads clients did not commission. Some people will run their ads at 4am on TV stations. The agencies will pay for

those ads even when nobody saw them, and they will enter them for awards,” he discloses.

He says as a thoroughbred professional, one must draw a line between obsession for winning awards and obsession for building brands.

Steve adds that there is a mentality that brought his firm to where it is today.

“From day one, when we started this agency, I told my staff that we were not competing with agencies in Nigeria. Our sights have always been on that global level, to be a global player. We want to be a local player with the best global practice. I told my staff from day one that anybody that calls X3M a new agency or a start-up agency would be fired on the spot. Anybody that worked with us from day one had that mindset,” he discloses.

Steve’s firm prides itself as an ad agency that is expanding without raising money from anywhere.

He points out that his obsession is to spread or export the concept of black excellence, African excellence, across the continent, especially in the field of advertising.

He, however, explains that raising funds is still a major problem.

“Infrastructure is a problem, including regulation. Apart from West African sub-region, where you can go in easily, in other places you have to talk about visa, work permit, and other things. Those are challenges, but challenges are part of the game. Ability to surmount those challenges is what distinguishes you from others. If it was easy, everybody would have offices across the world,” he states.

What did Steve bring into the industry?

His answer is very clear: “We brought a bit of fresh air. Most agencies have existed for 20 years but cannot count how many brands they have touched. But I can count how many brands we have touched positively. As a person, I am not driven by money, but the passion and love for what I do.”

Start-Up Digest Team ODINAKA ANUDU Editor

odinaka.anudu@businessdayonline.com 08067478413

Reporters Josephine Okojie Angel James Joel Samson Graphics

30

BUSINESS DAY

C002D5556

Monday 18 June 2018

Start-Up Digest

A peep into Odunlami Adedayo’s logistics business Josephine Okojie

O

dunlami Adebayo is the founder of Fa s t T r a c k D e livery Limited, a start-up haulage and logistics business that operates from Lagos to other parts of the country.

Odunlami was inspired by his late mum. He also refused at an early stage of life to leave his future to chance. “I did not want to leave my future to chance, and I have never seen myself as the 8am -5pm guy,” he says.

“I saw a business opportunity in moving goods from one place to another, especially agro products, and I decided to start Fast Track Delivery Limited, a company that focuses on logistics, haulage, courier service, import and export,” the young entrepreneur tells Start-Up Digest.

Having identified an opportunity in the logistics business, he established Fast Track in July 2015. His initial start-up capital was N300,000, an amount he raised through his personal savings and from family and friends.

The geophysics-turned-entrepreneur tells Start-Up-Digest that he spent his initial capital to purchase bicycles he used then for delivery. “I started out with a bicycle in delivering goods initially. After few months, I started investing in couriers and other administrative set-ups,” he discloses.

The young entrepreneur says that the business has grown tremendously since starting owing to the fact that Fast Track

Odunlami Adedayo

Delivery has been able to deliver timeously. The firm now has trucks, which support its logistics services.

“I would say my business has grown tremendously. The business has shown steady and progressive growth, from delivering

with bicycles to using couriers,” he further says.

Odunlami has only received support from the Global Student Entrepreneur Award after claiming the 2nd runner up position in 2016.

The business currently has

Start-ups attract investors, grow revenues after accelerator programmes – Survey JOSEPHINE OKOJIE

A

recent sur ve y conducted by the Aspen Network of Development Entrepreneurs has shown that early venture businesses that participated in accelerator programmes report higher levels of new investments and revenues relative to their counterparts which did not participate.

The report entitled, ‘Accelerating the Flow of Funds into EarlyStage Ventures: An Initial Look at Program Differences and Design Choices’ has shown that many accelerators explicitly aim to catalyse equity investment, with programming focused on investment readiness and connections to equity investors.

The report shows that in a sample of 52 ventures, the aver-

age flow of incremental funds into participating businesses had a greater significant average flow than businesses that did not participate in any accelerator program.

“In the majority of these programs, this difference exceeds the reported cost of running the program. These superior funding outcomes are accomplished in different ways; many programs are most effective at stimulating revenue growth, while others are best at increasing the supply of outside equity investment,” the report states. “ P ro g ra m s w h e re e q u i t y growth dominates are more common in North America, while those where revenue growth dominates are more common in Latin America and Sub-Saharan Africa,” the report adds.

Start-up accelerators, also known as seed accelerators,

are fixed-term, cohort-based programs that include seed investment, connections, mentorship, educational components, and culminate in a public pitch event or demo day to accelerate growth.

Accelerators offer different sets of experiences to entrepreneurs. Some programmes focus on skill-building, while others emphasise connections to investors, customers, and others.

According to the report, some accelerators and their partners aim to spur entrepreneurial solutions in specific domains, and programs that focus on specific sectors.

“Specialised programs are also believed by some to be more successful because they connect entrepreneurs to more targeted networks while providing knowledge and expertise that are more directly,” the report states.

seven employees with three working on full-time basis and four doing part-time.

Responding to questions on major challenges confronting his business, the young entrepreneur says that bad state of roads across the country remains the

main issue limiting his business.

He explains that bad road network, coupled with terrible traffic situation, has continued to impact negatively on his business by increasing his delivery time to customers.

“Traffic makes it impossible to meet delivery times. Major roads in Lagos are always congested on a daily basis,” he notes.

The entrepreneur calls on the government at all levels to invest more in road infrastructure, saying that no economy can grow steadily without the needed infrastructure.

He stresses the need to ensure easy movements of people and goods from one point to another.

Similarly, he identifies inadequate seed capital for start-ups as another problem that confronted his business during its early stage.

He notes that the business was able to overcome the challenge by starting with bicycles for delivery before investing in trucks and other courier vans, after sustaining its profit consistently.

“We started very small by using bicycles to make delivery. We started making investments in trucks and vans when we were able to sustain our profit margins over a period of time,” the young entrepreneur says.

On his advice to other entrepreneurs, Odunlami says, “My advice to other entrepreneurs is that you don’t have to be perfect before you know you are doing well. All you need is progress and not perfection. Logistics has its challenges, but also its welcoming returns.”

FIIRO trains entrepreneurs on fish export ODINAKA ANUDU

Y

ouths and women across the country are currently undergoing training at the Federal Institute of Industrial Research Oshodi (FIIRO) on fish smoking technology aimed at equipping them for export of dry fish.

Speaking at the opening ceremony of a three-day training workshop on ‘Fish Smoking Technology’ (Batch B) held Monday in Lagos, Gloria Elemo, director general (DG) of FIIRO, said that at the end of the training, participants would have armed themselves with the requisite knowledge to produce high quality smoked fish for the local and foreign market.

Elemo noted that unemployment should have no room in Nigeria considering the great potential and abundant human/natural resources available in the country.

This, according to her, compelled the institute to developed homegrown technologies that would transform the economy and industrial landscape when transferred to investors and entrepreneurs across the country.

She added that FIIRO would soon start implementing its various

job creating strategies in collaboration with several agencies aimed at reducing unemployment to the barest minimum in the country.

“One of such programmes is the National Techno-entrepreneurship Development Initiative, designed by FIIRO with the support of the federal government of Nigeria,” she stated.

According to her, this initiative has the capacity to train two million unemployed youths and women annually at full implementation, in addition to various numbers of small and medium enterprises that will grow there from.

“The training workshop could be conceived as one of the immediate intervention programmes of the federal government to reduce unemployment through empowerment of youths and women who in turn would graduate to be job providers rather than job seekers,” Elemo posited.

Commending FIIRO, Bolaji Daniel, coordinator of the Ikorodu Fish Farmers, stated that by being trained by FIIRO, the international market would no longer reject dried fish from Nigeria.

“This training will help us to do the right thing, in terms of moisture content, nutrition composition, and all the processes of cleaning up which we never knew. A lot of people smoke fish, but without the real knowledge and training,” she said.

BUSINESS DAY

Monday 18 June 2018

31

Start-Up Digest

How Mosunmola redefines business of event planning, catering ODINAKA ANUDU

E

vent planning and catering business is changing. One of those who are creating the needed change in the industry is the restless Mosunmola OlalekanOtun, chief executive officer of Minds and Brains Limited, which is fully into event planning, decoration and catering services.

Mosunmola started with nothing several years ago but has now grown to become a household name in the events planning industry.

The name ‘Minds and Brains Limited’ reflects Mosunmola’s vision about business.

“When you talk about creativity, you need your mind and your brain. Fortunately for me, my husband already had a business name called Minds and Brains before I started.

Then we were producing Insurance World on MiTV. Naturally, I just picked the name because it went with creativity,” she explains.

According to her, creativity starts from planning an event, down to ensuring that it is successful.

“Let’s assume that it’s a corporate event, you must try to find out what the company is trying to achieve.

If the company wants to change its logo, you now ask,

Mosunmola Olalekan-Otun

‘Since you are changing your logo, do you have any corporate colour in mind or are you changing your colour?’

“Another question to ask is, ‘where do you want the event to take place?’ Some companies can say they want a five-star treatment.

If they want something for the masses in places like Mushin or Ajegunle, the planning will be different.

You can also ask them of

Nigeria must provide cheap funds for SMEs - NASME JOSEPHINE OKOJIE

T

he Nigerian Association of Small and Medium Enterprises (NASME) says that accessing MSMEs finance is becoming increasingly difficult despite that more funds are currently sitting in the banks now than before.

The association urges the country to provide cheap funds to small business owners across the country, urging the federal government to finalise logistics around the Development Bank of Nigeria to enable entrepreneurs realise their potential.

Eke Ubiji, executive secretary, NASME, made this known to journalists at a press briefing held in Lagos recently.

“There are lots of funds available now for MSMEs but the conditions to access them are too stringent,” Ubiji said.

The executive secretary urged the government to

reduce some of these conditions so that MSMEs can easily access funds from development financial institutions.

Ubiji stated that funding has hindered the development of MSMEs in the country.

“A lot of our members have shut down their businesses due to the combination of challenges they face, which is making it difficult for them to be competitive,” he said.

“With the MPR at 14 percent, it is difficult for MSMEs to survive with loans from commercial banks. Also, the infrastructural deficit is still huge and these are some of the issues we will look at when we talk about the ease of doing business,” the executive secretary added.

“If we really want to attain what is stated in the economic growth recovery policy document, we still have to intensify our efforts as a country,” Ubiji said.

their target market. You must find out if the programme appeals to the youths, the elderly, the medium income or to the super rich. With this, you will be able to plan. If it has to do with the youths, you can come up with music and fashion,” she says.

She tells Start-Up Digest that event planning is very lucrative but can also be challenging.

“In Nigeria we do not believe in holidays and vacations like the West. Our own way of relaxing is at the parties. There is no weekend there won’t be parties. It’s just that the economy affected us in the sense that the event you do for 10 million, they can just ask if you can manage N3 million. So you have to squeeze things and work with the ones you have,” she states.

The entrepreneur ex-

plains that she has four or five permanent staff members and many trainees, adding that she works with decorators, ushers and hostesses, among others.

She was motivated to go into event planning by an encouragement from her pastor. ”As a Christian, one of my pastors asked me to pursue events. He said I had a skill in organising things. If anybody was doing anything in the church, I would be the one that would organise the cooking, the serving and all that. He asked me to look into the area and see if it was my calling. I prayed and went for a formal training,” she discloses.

As of today, Mosunmola has undergone entrepreneurship trainings in South Africa and India.

How much did he start this business with? Mosunmola replies, “I didn’t have much. I only relied on the grace of God and my husband’s purse. He is a big encourager. If clients paid like N40, 000 and the cost of the whole thing was N80, 000, I would run to him crying.

I want to thank God because my husband has been quite supportive.”

How big is she now? She replies that she is not there yet.

“We have moved from where we were in terms of clientele, materials and personnel. We are worth millions now.”

On the biggest deal she

has done, she answers that there have been many.

“So many, like the Lagos Business School Presidential Dinner. We have been handling it for six to seven years. It’s always a real challenge and brings out creativity in us. When you work with Lagos Business School, there is nobody you can’t work with, because they want the best.”

Like all entrepreneurs, she faces some challenges.

“You have the challenge of personnel. Once your drivers work for two or three months, they decide to leave. They are well remunerated. But some will even begin to think of setting up their own even when they have not learnt the job well.

“Finance is also a problem. To expand the business, you need money. You approach the banks and their interest rate will scare you away. Most of the things you want to buy can damage any time, so it’s a big risk to even borrow from the banks.”

“Again, clients are not making up their minds on time. Approvals sometimes come late.

Again, in some occasions, you find the challenge of not telling the whole truth. A client can tell you he needs food for 500 people, but when you get there you find 1,000 people. But the client will tell the guests that it is the caterer that didn’t bring their food.”

How iCreate SkillFest 2018 will empower Nigerian youths ODINAKA ANUDU

i

Create Skill Fest 2018 is a youth empowerment programme targeted at equipping Nigerian and African young people with skills needed to succeed in the 21st century.

iCreate Skill Fest 2018 is expected to shape public perception of vocational skills, serving as a catalyst to vocational skill acquisition, according to the organisers.

The event will enable young people appreciate the need to upscale their skills and ready themselves

for 21st century challenges.

The vocational skills event is organised in partnership with Abuja Chamber of Commerce and Industry. It will take place in October 2018 alongside a host of other programmes, including skills competition, exhibition and a con-

ference.

“With a focus on the youth and the upcoming generation, we will pioneer a new generation of credible, creative, innovative, and excellent vocational experts, who will tremendously and positively impact the Nigerian economy,” said the organisers.

The event will bring together talented technicians, artisan, tech start-ups, and innovators from universities, polytechnics and vocational training centres in Nigeria, while showcasing their skills excellence.

Participants will compete for funding opportunities and exclusive internship programs.

The event is expected to attract hundreds of government officials, vocational skills experts, big firms and other stakeholders.

The organisers urge would-be participants to visit www.icreateafrica. com.

32

BUSINESS DAY Harvard Business Review

C002D5556

MondayMorning

Monday 18 June 2018

In association with

Become a more productive learner best practices of how we learn, we can reverse this trend. Here are four ways to become a more productive learner.

— FOCUS THE MAJORITY OF YOUR INFORMATION CONSUMPTION ON A SINGLE TOPIC FOR SEVERAL MONTHS. Spreading your consumption habits too thin has real consequences.

— PUT WHAT YOU’RE LEARNING INTO “ F R A M E W O R K S .”

Frameworks act as the internal architecture for our brains, creating “rooms” for the information we receive. They help us retain new information by associating it in a structured, repeatable way with what we already know.

MATT PLUMMER AND JO WILSON

T

oday we consume five times the information every day than we did in 1986.

One would think this would translate into increased knowledge. Yet this does not appear to be the case; scores of average American adults on tests of general civic knowledge have remained almost constant for the last 80 years. We’re consuming more information but not learning more. In short, we have become less productive learners.

By applying an intentional approach to consuming information and

— REGULARLY SYNTHESIZE WHAT YOU HAVE LEARNED. Synthesizing is challenging because it involves making sense of the new information in light of everything you already know. It differs from summarizing in that synthesizing involves bringing your opinion to bear about what is important.

— CYCLE BETWEEN INFORMATION FEASTING AND INFORMATION FASTING. It’s important that you have seasons when you limit your consumption of information, so you can focus on reviewing, considering and applying what you’ve already consumed. Remember that new information

can interfere with previously acquired information.

We don’t have to be victims to the millions of blogs, YouTube videos, Facebook posts, and even books demanding our attention but giving us little. Decide to become a productive learner and you can actually reap the benefits of the incredible increase in the amount and accessibility of information.

(Matt Plummer is the founder of Zarvana. Jo Wilson is a sustainable productivity coach and creator of habit development paths at Zarvana.)

How working parents can meet the demands of school age kids DAISY WADEMAN DOWLING

A

s a working parent, you’ve already got two jobs, and having two jobs isn’t easy. But you’re also going to spend a minimum of 13 years with a third critical role: stewarding your child’s education. Here are a few simple, specific techniques that put any working parent of school-age kids on their front foot.

— EXPLAIN THE WHY, NOT JUST THE WHEN, OF TIME AWAY FROM WORK. Make it easier for colleagues to understand, sympathize and ally themselves with you — and telegraph your commitment to the job as well.

— PLAN AND BUNDLE VOLUNTEER COMMITMENTS. Even with a very flexible job, it’s unlikely that any working parent can make

it to every bake sale, library fundraiser and field trip. In the first week of school, tell your child’s teachers and/or the school’s volunteer coordinators that you’re eager to do your fair share — but that you will be doing it all in one go.

Then schedule a personal or vacation day well in advance and use it entirely for school volunteerism.

— INVEST YOUR TIME WHERE IT MATTERS MOST. A groundbreaking and comprehensive research study done by professors from the University of Texas and Duke University found that only a handful of habits make a real difference, such as reading aloud to young kids and talking to teenagers about college plans.

— MAKE “FAMILY STUDY HALL” A HABIT. Beat the nightly homework drama by

setting a hard-and-fast time each evening that the whole family has study hall: silent, dedicated work time around the dining table.

— TREAT TEACHERS AND ADMINISTRATORS AS YOU WOULD VALUED COLLEAGUES (BECAUSE THAT’S WHAT THEY ARE). You do

need to develop strong working relationships with the professionals teaching your child.

To do so, think of a favorite co-worker, one who you enjoy

(C) (2017) Harvard Business Review. Distributed by New York Times Syndicate

We have you covered through CBN’s special intervention for specified retail invisible transactions.

Are you travelling abroad for vacation

Visit any of our designated branches nationwide for your following invisible trade transactions: School Fees Pilgrimage & Other Travel Allowances (PTA and BTA) Medical Allowances

or studying abroad?

We are here to serve you. *Terms and conditions apply

www.firstbanknigeria.com

FirstBankofNigeria

@FirstBankngr

Firstbankngr

FirstBankofNigeriaLtd

@firstbanknigeria

+FirstBankNigeria

being staffed with on tough projects. Take this exact same approach with educators.

They’ll notice and appreciate your collaboration, and likely respond in kind.

— REMEMBER WHAT YOU’RE MANAGING TOWARD. It can be helpful to re-center by remembering the two key outcomes you — and every parent — are really shooting for: independence and opportunity. You want your son or daughter to develop into a competent, responsible adult capable of managing in a complex world.

And you want them to find the maximum possible number of open doors in terms of college and, later, in terms of career.

(Daisy Wademan Dowling is the Founder and CEO of Workparent, a consulting firm.)

Monday 18 June 2018

BUSINESS DAY

33

REAL SECTOR WATCH C002D5556

FG woos investors to export processing zones …as NACC sees free zones as preferred investment destination ODINAKA ANUDU

T

he Nigeria Export Processing Zones Authority (NEPZA) is wooing deep-pocket investors with attractive incentives, offering them the opportunity to repatriate foreign capital investment in the zones.

Speaking at a breakfast meeting organised by the NigerianAmerican Chamber of Commerce (NACC) in Lagos, Emmanuel Jime, managing director of NEPZA, urged investors to put their money in export processing zones as 100 percent of foreign ownership of business is allowable there.

“Goods manufactured or produced in the zones shall be imported into the Customs territory irrespective of whether the goods are prohibited or not upon payment of the appropriate duty,” said Jime, who was represented by an official of the agency, Richard Obianu.

“However, prohibited goods that have been assembled or packaged without the 35 percent local content value addition requirement may not be allowed into the Customs territory,” he said.

NEPZA is a federal agency that manages free zones and industrial parks across the country. Free zones are designated areas for duty-free import or manufacture of raw materials, machines, semifinished, processed and finished goods. They are also called industrial parks.

According to Jime, up to 100

L ​ -R: Joyce Akpata, director-general, Nigerian-American Chamber of Commerce (NACC); Debo Lukanmbi, manager, Social Performance and Planning, Chevron Nigeria; Oluwatoyin Akomolafe, president, NACC and Richard E. Obianu, assistant general manager, Nigeria Export Processing Zones Authority at NACC’s June Breakfast Meeting held in Lagos on June 13, 2018

percent of goods may be exported into the Nigerian Customs territory against a valid license/permit, and on payment of appropriate duties, subject to extant fiscal guidelines of government.

He stated that there is no import or export license required to operate in the free zones, adding that legislative provisions pertaining to taxes, levies, duties and foreign exchange regulations do not apply within the zones.

Nigeria has 37 free zones/ industrial parks, which include Lekki Free Zone, Calabar Free Zone,

Kano Free Zone, Snake Island, Lagos Deep Offshore Logistics Base (LADOL), and Eko Atlantic City, among others. However, only 12 are fully operational. Those that are not in operation are mostly owned by state governments.

According to Jime, import duty on goods manufactured, processed or assembled in the zones and exported into the customs territory would be at the rate applicable to raw materials (in the state in which they are originally introduced into the zones) except where the raw materials are local

to the customs territory and in which event the duty applicable shall be zero-rated.

He assured investors that their cost of doing business would reduce by at least 10 percent if they choose to invest in the zones, adding that they only need to pay $3000 and can acquire Free Zone Developer’s License (own a free zone) or Free Zone Enterprise License (play in an existing free zone).

On his part, Oluwatoyin Akomolafe, president, NigerianAmerican Chamber of Com-

merce, stated that a free trade zone is a preferred place for investment because of its friendly business law and regulations deliberately put in place by governments to boost manufacturing activities and promote export of finished products.

“The idea of free trade zone is a well-developed system of attracting foreign direct investment (FDI) into a country that has been in practice in advance economies around the world and was introduced into Nigeria with the establishment of NEPZA, which has led to the creation of different free trade zones across the country,” Akomolafe said.

He pointed out that the idea of free trade zone is meant to encourage world trade, limit trade restriction and promote employment.

“It has often been said that the current economic climate presents a great opportunity for the restructuring of the economy.

I cannot agree more. The country has had opportunities in the past but they were wasted by the very people who should ensure compliance.

“It is my hope that at this critical junction of our national life, certain fundamentals will be put in place; some of these would include provision of critical infrastructure like the establishment and functioning of free trade zones. This will ultimately lead to a boost in industrialisation which will bring about job creation, skills upgrade, promotion of exports and economic development,” he added.

SON’s absence at ports accounts for influx of substandard goods — Senate

T

he Senate Committee on Industry has criticised the absence of the Standards Organisation of Nigeria (SON) at seaports, stressing that this is not in line with global best practices.

According to the law makers, the directive ordering SON out of the port is a violation of the Act establishing the standards body, stressing that the law specifies SON to be at the points of entry to monitor goods coming into the shores of the country.

Sam Egwu, chairman, Senate Committee on Industry, stated this during an oversight function to SON offices and laboratories in Lagos.

“Their absence at the ports accounts for the influx of substandard goods into the country. The agency that has the duty to check against the influx of these goods is not allowed to operate at the ports. We feel this is an aberration. It is not right; it is also against the law and

we are going to take it up.

“I am sure the appropriate authority of the highest level might not be aware of this. SON is vital to safeguarding the nation from these substandard goods. Take for example, tyres today, we have so many fake tyres plying the Nigerian roads and this is one of the reasons why we have so many accidents on our roads because these products enter our markets without proper monitoring.”

He rated the agency high for the judicious use of its 2017 budgetary allocation, stating that the commendation was a call to duty for SON not to relent on its efforts in its quest to sanitise the Nigerian markets.

“We have seen other laboratories in China, Kenya and Tanzania.

I think what we are seeing here is something we are proud of. The state-of-the-art laboratories being installed here are commendable,” he added.

Jibrin Barau, member of com-

mittee, said the Senate would do everything possible to enable SON discharge its responsibility.

Barau said the impact of SON would be vital for the growth of the country’s local industries.

“Undue advantages give fake products edge over quality products and it is a very serious matter where only a body like SON can help to address. I think they are doing well. I am happy that they are getting facilities to make them operational and more effective in

the country.

“It is really surprising to see that SON is absent at the ports in view of the functions they undertake in the laws establishing the agency. It is clear that their absence is against international best practices and no country allows it borders to be open to all sorts of goods without checking them.”

Earlier, Osita Aboloma, director general, SON, had expressed his gratitude to the committee, pointing out that SON has made steady

progress over the years under the leadership of the committee.

“I am also proud to tell the world that the issue of possession and co-ownership of the building where our operational office in Lekki is situated has been resolved in favour of SON due to your able leadership,” Aboloma said.

The Senate Committee were taken to SON’s one-stop office in Apapa and its multi-billion laboratory complex in Ogba, expected to have about 38 laboratories dedicated for testing life endangering items and food.

“We are ready to take up the challenges that come with standardisation and quality assurance.

We have capacity for infinite possibilities. Our laboratories are stateof-the-art; our personnel are world class and competitive with other global standards bodies. We still need your continuous guidance and support for us to stand out among other regulatory agencies,” Aboloma assured.

34

BUSINESS DAY

C002D5556

REAL SECTOR WATCH

Monday 18 June 2018

Power supply to industrial clusters improves slightly as manufacturers’ energy spend drops 22% Stories by ODINAKA ANUDU

P

ower supply to industrial clust e r s i m p rov e d slightly year-onyear in the second half of 2017, from eight to nine hours on the average, leading to 22 percent decrease in manufacturers’ energy expenditure.

According to the latest data obtained from the Manufacturers Association of Nigeria (MAN), analysed

by BusinessDay, manufacturers spent N51.35 billion in the last six months of 2017 as against N66.03 billion expended in the second half of 2016, indicating a 22.23 percent drop.

This is a testament that improved power supply across the country will have a multiplier effect on the economy, analysts say.

The data show that manufacturers spent N66.96 billion in the first half of 2017, indicating a 23 percent drop when compared with the amount spent on

the second half.

Power outages occurred four times each day on the average in the second half of 2017, the data say.

“The decline in expenditure on alternative energy source can be attributed to the relative improvement in electricity supply to manu-

facturing companies from the national grid,” MAN says.

About 30 to 40 percent of manufacturers’ expenditure goes to alternative energy sources such as diesel, fuel, gas, low-pour fuel oil, USPs, coal-fired plants and inverters, among others.

Ma n u f a c t u re r s s p e n t

Nigerian manufacturing output rises by only 2% --UNIDO

T

he United Nations Industrial Development Organisation (UNIDO)’s World Manufacturing Production Statistics for Quarter I, 2018, says that Nigeria’s manufacturing output rose by just two percent in the first quarter of this year.

The rep or t says that there was lower growth in major African economies, with manufacturing output rising by 1.1 percent in Egypt, 2.0 percent in Nigeria and 1.5 per cent in South Africa. This shows that Nigeria is not, after all, a laggard in manufacturing on the continent.

Estimates based on limited data showed some slowdown in Africa, where manufacturing output rose by 1.9 percent in the first quarter of 2018, lower than 2.3 percent in the last quarter of 2017.

According to estimates, global manufacturing output rose by 4.2 percent in the first quarter of 2018, which was slightly lower than 4.7 per cent of the last quarter of 2017.

The manufacturing output of industrialised economies rose by the lower rate of 2.9 percent in the first

quarter of 2018, compared to 3.5 per cent in the last quarter of 2017. The manufacturing output growth of China, which accounts for a quarter of global manufacturing production, also fell marginally, to 6.3 percent in the first quarter of 2018 from 6.8 percent in previous quarter.

According to UNIDO’s World Manufacturing Production Statistics for Quarter I, 2018 report, the full impact of tariff uncertainties on the dynamics of global manufacturing is yet to be seen as the first quarter figures indicate only a marginal slowdown.

Observed growth rates are still high but deceleration is visible in all country groups, including the developing and emerging industrial economies where manufacturing output increased by 4.8 percent in the first quarter of 2018 compared to 5.3 percent in the previous quarter.

The manufacturing of European industrialised economies, which hit record high growth of 5.0 percent in the last quarter of 2017, rose by 4.1 percent in the first quarter of 2018. Among the major

economies, manufacturing output rose by 4.2 per cent in Germany and 4.6 percent in Italy. However, the performance of France was much weaker, at 2.0 percent.

A number of European Un i o n ( E U ) e c o n o m i e s achieved high manufacturing growth in the first quarter of 2018. Manufacturing output rose by 6.4 per cent in Austria, 5.8 per cent in Estonia and 9.3 per cent in Slovenia.

Among non-EU economies, high growth was observed in Belarus: 9.9 percent and Serbia 6.0 percent, while growth was marginal in Norway and the Russian Federation.

The manufacturing output of the United States rose by 2.5 percent in the first quarter.

In East Asia, manufacturing output rose by 2.6 per cent in Japan and 5.2 per cent in Malaysia. However, manufacturing output dropped in the Republic of Korea.

Among emerging industrial economies, India performed well, with 7.0 percent growth. Among other fast growing economies, manufacturing output rose by 5.5 per cent in Indonesia and Vietnam.

N129.95 billion on alternative energy sources in 2016 as against N58.82 billion recorded in 2015.

Nigerian manufacturers are increasingly generating power on their own, with annual self-generating capacity in the industry put at 13,223 megawatts (MW).

According to a survey undertaken by Adeola Adenikinju, professor of economics at the University of Ibadan, which was funded by the European Union and the government of Germany in 2015, the chemicals and pharmaceuticals sub-sector is the biggest self-generator of power in the sector with capacity reaching 3,153MW. The sub-sector is followed by the food, beverages and tobacco sub-sector (2,098MW) and the industrial plastics and rubber (2,051MW).

Already, the Manufacturers Association of Nigeria, through its recently formed MAN Power DevelopmentCompany, has signed an agreement with Tower Energy Solution & Systems Limited for the supply of six to 10 megawatts (MW) of electricity to Henry Carr Industrial Cluster in Ikeja, Lagos.

MAN has an agreement with Negris Group for the supply of up to 80 MW of electricity to Odogunyan in Ikorodu industrial cluster.

The organisation is also talking with solar power supply firms in the northern Nigeria, where there is limited gas supply, to enable clusters in Kaduna, Kano and other parts of the north to have incremental power at cheaper rates.

Similarly, a negotiation is on the pipeline w ith Sahara Energy, Geogrid LighTec Limited and other companies for the supply of power to industrial clusters, according to Ibrahim Usman, chairman of MAN PowerDevelopment Company Limited .

“The idea is to be able to put manufacturers together in clusters and arrange for power, which can be supplied through providers that will engage in power supply through hydro, solar, gas and will remove the cost of manufacturers getting involved in producing their own power, “ said Reginald Odia, chairman of Economic Policy Committee of MAN and director of the MAN PowerDevelopment Company.

Akomolafe emerges as new president of Nigerian-American Chamber

T

he Nigerian-American Chamber of Commerce (NACC), after a successful 57th annual general meeting, elected Oluwatoyin Akomolafe as the new president to pilot the affairs of the chamber for the next three years.

The president, in his inaugural address at the AGM held on 7th June in Lagos, said he would focus on re-branding the image of the chamber, balancing the American and Nigerian aspects of the organisation as well as modernising its communications strategy.

“I want to fully participate

Oluwatoyin Akomolafe

in all economic fora and partner with leaders and leading organisations that could propel us toward a successful future. I also want this organisation to commit to serving its members, providing more networking and business opportunities,” he stated.

Akomolafe obtained a degree in the Department of Agriculture, University of Ibadan, and on completion of his course, he went straight into the business of import and export. He was later head-hunted by the West Africa Portland Cement Company (WAPCO)

in 1979 where he rose to the position of Western Regional Area Manager when he left in 1988. While under the employment of WAPCO, he never gave up on setting up his business. From 1989, he established Index Brook Limited with a vision to building it up into an integrated oil& gas company.

Akomolafe has devoted his career to nurturing Index Brook Limited into a group of companies operating in different countries, providing consultancy services, project management and engineering services to the major oil and gas companies in the industry and across the world. These companies include; Index Brook Nigeria, Index Brook Guyana, Canyon Offshore Mozambique, Pasedena Exploration and Production, Index Brook Angola and Index Brook Ghana.

He is an active member of the Christian Friends Society, Archbishop Vining Memorial Church, Ikeja, Lagos; the Ikoyi Club; The Metropolitan Club; The Regents Park Club, London; The West Lake Country Club, Houston, Texas, amongst other societies, social clubs, professional associations and non-profit organisations.

Monday 18 June 2018

C002D5556

BUSINESS DAY

35

AbujaCityBusiness Comprehensive coverage of Nation’s capital

Osinbajo declare national summit on law reforms open, Tuesday KEHINDE AKINTOLA, Abuja

V

ice President Yemi Osinbajo will on Tu e s d a y , 1 9 t h June, 2018 declare open the national summit on law reforms in Abuja.

According to the organisers, stakeholders expected at the event include: Justice Walter Onnoghen, Chief Justice of Nigeria ; Senate Leader, Bukola Saraki; Speaker Yakubu Dogara and other members of the Senate and House of Representatives; Justices of Supreme Court; President of Court of Appeal; Chief Judges of Federal High Court; FCT High Court; Chief Judges of States High Court; President of National Industrial Court; Attorney General of the Federation and Minister of Justice; Attorney Generals of the 36 states; State Law Reform Commissions;

Heads of Government agencies and p[rastatals, among other stakeholders.

Kefas Magari, Chairman of Nigerian Law Reform Commission (NLRC), who disclosed this at a press briefing held in Abuja, noted that the federal laws have not been revised for over 15 years due to paucity of fund.

He however noted that the present administration has graciously released fund for the exercise, hence the resolve of the Commission to convey the summit.

Lamenting the negative effect of the delay of the revision exercise on the smooth operation of government institutions, Magaji said, “the desire for the law revision exercise was informed by the fact that the last law revision exercise was done in 2002 and published in 2004 as the laws of the Federation of Nigeria 2004.

“The implication of this development is that, federal laws in Nigeria have not been revised in the last fifteen years contrary to international best practices, which require that law revision exercise be undertaken every ten years.

“The negative effect of this delay is that there is a huge gap in the body of laws and negatively affects the smooth operation of government institutions and the effective Administration of Justice particularly in terms of awareness, access, implementation, citation, referencing and use of extant laws.”

The NLRC Chairman explained that about 552 Acts of the National Assembly are published in the laws of the Federation of Nigeria 2004, adding that many of them have undergone series of amendments, while oth-

ers have been repealed in the last fifteen years.

“Within the same period, several new laws have also been enacted with little or no publicity, thereby making the use and referencing of these laws difficult.

It is imperative that these amendments and new laws be revised and incorporated into the laws of the Federation of Nigeria to facilitate their effective use.

“The purpose of the summit is to elicit the buy-in support nd cooperation of all relevant stakeholders, and the Nigerian community to ensure a successful law revision that will engender good governance, produce the bet set of laws of the federation of Nigeria ever, which will encourage a sound democratic culture based on the knowledge and application of the rule of law.

Ondo First Lady seeks ADB’s collaboration on women empowerment initiatives KEHINDE AKINTOLA, Abuja

I

n her deep sense of commitment to women affairs and development, Betty Akeredolu, Wife of Ondo State Governor has called for African Development Bank’s (AfDB) collaboration in the area of women empowerment and social development in the State.

Akeredolu made this call during a technical session with the visiting AfDB group management team led by its Senior Director, Ebirima Faal at the Ondo State Executive Council Chamber, Akure.

Akeredolu welcomed AfDB group to Ondo State and wished them a happy stay during the period of their stay in Ondo State.

The Sunshine State First Lady recounted some of the landmark achievements of the office of the Wife of the Governor within one year in office to include: ICT training for 105 girls from across

Senate orders deportation of Samsung MD OWEDE AGBAJILEKE, Abuja

T

L-R: Chibueze Okorie, Commissioner 1 for Nigerian Law Reform Commission (NLRC); Kefas Musa Magaji, NLRC Chairman and Jummai Audi, NLRC Commissioner II, during a press briefing the National Summit on Law Revision holding Tuesday in Abuj. Pix: KEHINDE AKINTOLA

Ondo State, where all the participants went home with a tablet.

Others include: solar Renewable Energy training for over 200 Ondo State girls and beyond; skill acquisition training for over 1,000 women in 5 LGA’s in her FOWOSO women empowerment program, where a hundred women and girls smiled home with a laptop; accelerated birth registration; massive breast cancer Awareness in Nigeria.

Akeredolu also stressed that all the achievements were accomplished in the midst of huge debt inherited by their administration on assumption of office and called for AfDB’s collaboration towards giving Ondo women and children the much desired dividends of democracy in the area of qualitative health care delivery, maternal and child mortality reduction, poverty alleviation, gender parity, among others.

he Senate has ordered the Nigeria Immigration Service (NIS) to deport Young Ho Jo, Managing Director of Samsung back to South Korea.

The Upper Legislative chamber has accused Young Ho Jo of coming into the country without proper documentation.

The order for deportation of Samsung Managing Director was announced by Solomon Adeola, Chairman, Senate Ad-hoc Committee probing the $16.35 billion Egina Oil Field Project, during an interactive session with major and sub-contractors of the project.

According to Adeola, resolution for the deportation

of the Samsung MD was adopted by the Senate last week Thursday in line with recommendation of the committee in its interim report.

The senator who made the announcement to the hearing of the embattled South Korean and other operators of the Egina oil field project, revealed that illegality of Jo’s residency in Nigeria came to the fore during scrutiny of his papers.

He said: “Young Ho Jo who has been working for the past two months in Nigeria as the Managing Director of Samsung without fulfilling legal requirements for such told us that he couldn’t complete his documentation as a result of alleged brake down of machines of the Nigeria Content Development Monitoring Board (NCMDB) .

Buhari rediscovering Nigeria for youths -Bello JAMES KWEN, Abuja

M

inister of the Federal Capital Territory, FCT Muhammad Bello has described the policies and programmes of the President Muhammadu Buhari-led administration as laying solid foundations that will rediscover Nigeria for the benefits of the youths.

Bello stated this during the Iftar Ramadan breakfast with FCT youths at his official residence in Life Camp, Abuja where he said

the present administration is essentially holding forth for the youths.

He added that the progress, prosperity and tremendous transformation that is happening in the country is being done for the benefits of the youths.

“Most of us here are basically just holding forth for you. The strength, progress, prosperity and the tremendous amount of transformation that is going to happen in this country is going to be done during your time.

“So, what Mr. President and his team are doing now is basically to rediscover

Nigeria for your benefit, to lay a very solid foundation so that it becomes easier for you to govern it, live in it and to provide all the benefits for the teeming population”, the FCT Minister noted.

Bello who stated that it was important for the country not to miss this golden opportunity, said there is need for the youths to rise above clannish tribal and ethnic sentiments and unite to work together for the benefit of the country.

“We have to be friendly to each other, we have to love each other, we have to be united, we have to

be disciplined, we have to be honest, we have to be hardworking and above all, we have to be very broad minded to accept your neighbours, irrespective of their tribe, religion and whatever they do and to work for the good of the community. If we do these, the sky is going to be the limit for all of us.

“If all of you put heads together and really unite as Abuja symbolizes, then when it is your time, you are going to govern over a country that will be solid, that will be prosperous and that is going to be the envy

of all African nations and all nations of the world,” he added.

The FCT Minister equally charged youths resident in the FCT to continue to work towards improving the security and harmonious coexistence within the city to ensure it remains the city that cherished is by Africa and the wider world.

Citing a recent statistics that shows that a larger proportion of FCT population is comprised of youths, Bello charged the youths to guard the city very jealously, including its security, beauty as well

as its harmonious interreligious, inter-communal and inter-ethnic relationships.

“Abuja as a city is something that many people from other parts of the world admire and cherish, we must therefore guard it jealously,” he stressed.

Earlier in his remarks, Senior Special Assistant to the President on Social Investment Programme, Ismaeel Ahmed, thanked the Minister for the honour and reception given to them by agreeing to host the youths to a special Ramadan breakfast dinner.

36

BUSINESS DAY

C002D5556

Monday 18 June 2018

Monday 18 June 2018

C002D5556

Gencos put TCN to task over blackout Olusola Bello & Harrison Edeh

T

ransmission Companies of Nigeria (TCN) has been put to task over the current blackout the country is going through by the power generation companies (Gencos), who are demanding full disclosure from the TCN on the blackout being experienced in the country.

The companies, speaking through its spokesperson, Joy Ogaji, executive secretary, Association of Power Generation Companies (APGC), have demanded clarification from the TCN on the true position/state of power supply during the long weekend/Eid Malud holiday marking the end of one-month of Ramadan.

The APGC faulted the position of the TCN on the total grid collapsed and required additional clarification from the agency based on what it described as available facts.

The Gencos scribe said it want clarification on the followings: (a) How does it, TCN, explains the instruction from National Control Centre (NCC), an arm of TCN, to Gencos not on the Escravos – Lagos Gas Pipeline Service (ELPS) and hydro power companies to ramp down, - meaning that they should not shut down completely

their operations possible because of shortage of gas supply to the power plants. (b). It also wants to know why there was no effective planning by TCN to forestall the current crises, given the fact that the National Gas Company (NGC) communicated the notice of its intention to carry out temporary repairs.

According to Ogaji, when answers to these questions are provided, the APGC/GENCOS will respond appropriately to TCN management on issues bothering on generations.

The TCN had stated that as a result of gas pipeline rupture on June 15, as well as technical issues at the Shell gas wells on June 16, there has been a sharp drop in generation into the grid by a total of 1,087.6mw, resulting in loadshedding nationwide, necessary to maintain stability of the grid.

Due to the NGC pipeline incident, TCN said six thermal powergenerating stations are currently unable to generate electricity and have therefore been shut down.

The affected power stations include the Ihovbor, Azura, Omotosho gas, Geregu gas, Olorunsogo gas, Sapele and the Egbin Power Station which has managed to generate 60mw only on each of its units, losing a total of 211mw.

Also, Afam VI power station was shut down so that Shell Oil

Company can resolve its gas well issues to enable it commence gas supply to Afam VI power station.

According to Ndidi Mbah, general manager, public affairs, with a total loss of 1,087.6mw into the grid, the transmission system has become quite fragile and that TCN is working hard to avert a collapse of the system, by engaging in load-shedding.

Load-shedding, she explained, is to ensure that available generation is commensurate with what is allocated to discos nationwide, to create a balance and avert grid instability.

The release further noted that NGC is making efforts to ensure that the gas pipeline issues are resolved in order to restore normal gas supply to the affected power generating stations, to enable them generate into the grid.

Meanwhile, Shell has resolved its gas well issue this morning and gas supply partially restored to Afam VI. TCN noted that there has been no collapse of the grid as has been reported.

Meanwhile, the company appealed for understanding and assured that its engineers are working hard to continue to maintain the stability of the grid, pending completion of repairs of the gas pipeline by NGC and restoration of full gas supply to the affected generating stations.

Emir of Kano, Muhammadu Sanusi II (2nd r) and Kingsley Moghalu (2nd l), presidential flag bearer of the Young Progressive Party (YPP), flanked by members of Kingsley Moghalu Support Organisation, as he visited Kano to gather support for the next Presidential election.

CFA Franc racing to parity ...

Continued from page 1

move over the next 5 years could see the CFA Franc finally reach parity.

CFA Franc is the official currency of many francophone countries in Africa within the West African and Central African region. There are two types of CFA Franc, the West African CFA Franc and the Central African CFA Franc. Both currencies are backed by the French treasury and although separate in theory, they can be used interchangeably for trade.

The currency codes are XOF for the West African CFA franc which is used by eight West African Countries and XAF for the Central African CFA franc which is the national currency of six Central African countries.

The eight members of the West African Economic and Monetary Union (WAEMU) who use the CFA Franc are Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo. While for the six members of the Central African Economic and Monetary Community (CAEMC) are Cameroon, Central African Republic, Republic of the Congo, Gabon, Equatorial Guinea and Chad.

CFA Franc was formerly pegged to the French Franc but after the French Franc was replaced by the Euro, CFA Franc has been pegged to the Euro at 1 CFA for 0.15 euro. The CFA Franc is backed by the French treasury and the francophone countries have had to give up their monetary policy to the European Central Bank in order to tie their currency to the Euro.

The benefit of this policy has been years of low inflation rate and low interest rate.

The disadvantage is that the strength of the Euro and subsequently the CFA Franc has made the francophone countries less competitive than Nigeria and Ghana according to Wale Okurinboye, Head, Investment Research at Sigma Pensions.

He added that as Naira has continued to weaken over the years, Nigerian businesses have taken advantage of the stronger currencies in the neighbouring countries to push cheaper exports into these countries.

In 2017, Nigeria exported

Continued from page 1

Aircraft towing persist at Nigerian airports as poor infrastructure...

ment totally discourages the ease of doing business the government promised to implement across Nigeria including AT the airports.

All 30 international airlines operating in Nigeria pay nothing less than N985,500,000 annually into the coffers of the Skyway Aviation Handling Company (SAHCOL) and Nigerian Aviation Handling Company Plc (nahco aviance) to tow their aircraft into the Starways, which is the disembarkment point for passengers, BusinessDay’s findings show.

According to the 2017 figures from the Nigeria Civil Aviation Organisation, (NCAA) on passenger movement, international airlines operate 30flights on the

average every day from the Murtala Muhammed International Airport (MMIA) daily. This implies that in 365days, the airports will process nothing less than 10,950 flights annually.

Ground handling companies charge airlines 250dollars per towing. This implies that airlines pay nothing less than 2,737,500million dollars every year to tow their aircraft into the finger. This amounts to N985,500,000 using an exchange of N360 to a dollar.

This amount excludes charges airlines pay for towing the aircraft as a result of flight cancellations, delays and repairs.

John Ojikutu, member of avi-

ation industry think tank group, Aviation Round Table (ART) and chief executive of Centurion Securities, told BusinessDay that the fingers in most of Nigerian airports were built in 1975, and no improvement has been done on them. He said apart from the fingers in Abuja airport, the ones in other airports are out-dated and may not accommodate certain aircraft types if they are taxied. Thus, the airlines have no choice but to tow them into the finger “Some airlines insist on using certain fingers. For instance in 2007, Airbus 340 had long wing fan and Emirates was flying Boeing 777. The two of them chose

37 NEWS

BUSINESS DAY

fingers that were closer to each other to park. The pilot alone cannot safely park that aircraft side by side with the other one.

So, they park outside and the towing vehicle will come and tow them into the finger.

“At some other times, it is the type of aircraft and airmanship of the pilot that will determine if he parks by himself or tow the aircraft. The pilots most times do not trust the marshal’s directions, so they request for a towing vehicle to move it quietly into the position,” Ojikutu added.

He noted that there are also risks in towing the aircraft as the vehicles of the handlers sometimes hit the aircraft.

more than N115 billion worth of goods to Economic Community of West African States (ECOWAS) countries while it imported only about N28.60 billion from them, thereby posting a trade surplus of almost N90 billion against its neighbours.

The relatively strong currency of the West African neighbours is a major driver for the demand of Nigerian goods in these countries but this currency stability has also made imports from Europe, China and America inexpensive.

In 2013, David Adulugba, then Chief Executive Officer of the Nigerian Export Promotion Council said that although Nigeria exports have penetrated the francophone markets, France still remains their biggest trading partner.

The peg between CFA Franc and Euro makes francophone countries a natural destination for France exports. Compared to the high inflationary environment in Nigeria and Ghana, prices of manufactured products in Europe keep reducing which makes Nigeria less competitive than their French counterparts in this market. Okurinboye also said that due to the poor state of transportation networks between Nigeria and the francophone countries, Chinese imports which ought to be more expensive than Nigerian imports are not as goods transportation costs raise prices of Nigerian imports for the French speaking countries.

ECOWAS reported that interregional trade in 2017 was just 12 percent of total ECOWAS trade.

ECOWAS target is to increase inter-regional trade to 50% by 2021. This could be achieved by placing higher tariffs on foreign imports and improving market access for and between ECOWAS countries. This could be a big opportunity for Nigerian businesses to take advantage of this favourable policy by further diversifying their export destination and driving sales in West Africa.

Whether Nigeria chooses to enter into a monetary union with other ECOWAS countries or maintain the current monetary system, analysts expect that Nigeria will continue to preserve its competitive advantage over the francophone countries in

“If you hit the engine of a 777, it costs about 20million dollars.

The Nigeria Civil Aviation Authority (NCAA) should ensure handlers operate with insurance to cover their operations,” he added. However, Henrietta Yakubu, general manager public affairs FAAN told BusinessDay that towing aircraft is an extra precautionary safety measure adopted by FAAN. Yakubu also added that some airlines prefer to park in the open bay. She also explained that space constraints make airlines tow aircraft but assured that the issue will be addressed after the construction of the new terminals.

38

BUSINESS DAY

Monday 18 June 2018

CityFile Arepo community seeks Amosun’s intervention on road ENDURANCE OKAFOR

R

Wife of Ondo State governor, Betty Anyanwu – Akeredolu and others during the Forum for Wives of Ondo State Officials, (FOWOSO) during Empowerment Outreach programme for women, youths and special needs people in Ondo east local government area of Ondo State.

9 pregnant women among 157 new returnees from Libya

N

ine pregnant women are among the 157 latest Nigerian returnees from the North African country of Libya. The voluntary returnees arrived last weekend with the assistance of International Organisation for Migration (IOM).

Abraham Tamrat, programme manager, Migration Management Unit, IOM, Lagos, who confirmed the development, said that the returnees arrived at the Cargo Wing of the Murtala Muhammed International Airport, Lagos aboard a chartered flight on Friday.

... 8,500 so far returned, 514 in June alone According to Tamrat, the returnees comprised 89 males and 62 females, including three children and three infants, with six medical cases. He said that the Nigerians returned from the Libyan cities of Janzour, Salah Adden and Tajoura.

They were received on arrival by officials of National Emergency Management Agency and the Nigeria Immigration Service.

Tamrat said officials of the National Agency for the Prohibition of Trafficking in Persons, Federal Airports Authority of

Nigeria and the police were also on ground to receive the returnees.

He said that the IOM had assisted the return of no fewer than 8,500 Nigerians from the North African country where they had been stranded enroute Europe.

Tamrat noted that Friday’s arrival brought to 514, the number of Nigerians who have voluntarily returned from Libya in June under the Voluntary Return Assistance Programme.

Don’t relent in prayer for Nigeria, Peace Corp member nabbed with pistol Ambode charges citizens JOSHUA BASSEY

G

overnor of Lagos State, AkinwunmiAmbode has charged Muslims to intensify pray for Nigeria ahead of the 2019 elections, stressing that mutual understanding, love and unity must be reinforced among the citizens irrespective of tribe and religion.

Ambode gave the charge in a keynote address he delivered at the Eid-el-Fitri get-together in Lagos Mainland, weekend, to mark the end of the 30-day fasting and prayer by Muslims in the state. The get-together was held simultaneously across the 20 local government areas of the state.

Represented by Tunji Bello, the secretary to state government, at Evans Square, venue of the event, Ambode noted that the get-together was to promote an inclusive governance and ensure that “everybody feels the pulse of governance, irrespective of their locations within the boundaries” of the Lagos.

“This is also a way of showing appreciation to God for His “love which

made it possible for Lagos to experience an atmosphere of peace and religious harmony,” he added.

Calling for continued support from the people of the state, the governor assured that his administration was inching towards the realisation of the goal of transforming Lagos into a smart city that is ideal for living and doing business.

Also speaking, the wife of the governor, BolanleAmbode, appreciated God for making it possible to celebrate the Eid-el-Fitri with the Muslims. She said Lagosians had good reasons to give thanks to God “for witnessing an era of effective collaboration between Muslims and Christians.

We are thankful that in our diversity, we are enjoying enduring and satisfactory level of peace, unity, and harmony,” she remarked.

She called for improved condition of the girl-child, widows, orphans, and the less privileged persons in society.

AbdulLateef, the commissioner for home affairs, advised Muslims to, beyond Ramadan, continue to pray for the development of Lagos and for sustainability of peace and unity in the state.

SAMUEL ESE, Yenagoa

T

he police in Bayelsa State sa i d t h e y have a r re ste d a member of the Peace Corp with a locally made pistol during a raid on a criminal hideout at Amarata, Yenagoa.

The raid was a direct response to the increasing wave of criminal activities in Yenagoa, the Bayelsa State capital in recent months which has adversely affected lifestyle.

Asinim Butswat, sp okesp ers on of the state police command in a statement said the arrest was as a result of synergy between the police and National Drug Law Enforcement Agency (NDLEA).

The suspect, 33-year Seiyefa Okorie was said to be “fully dressed in Peace Corps T-shirt and had the organisation’s identity card” when he was arrested.

Though the suspect has confessed to being a drug peddler, the police said the investigations were ongoing.

esidents of Arepo, a community in Obafemi Owode local government area of Ogun State, have called for the intervention of the state government in the construction of the bad road that leads to the 18 estates within the community.

The residents through the Arepo Central Community Development Association (ACCDA) recently taxed themselves, as they raisedN8 million to construct the main access road to Arepo.

The community resorted to raising funds as the wait for the government to construct the road was taking eternity. The construction of the road was awarded about 6 years ago and every means by the community to get the government to execute the project proved abortive.

“We raised money to construct this part of the road because we did not get the help of the state government. This road was awarded to First August in November 2012 with a sign post erected at the Journalist Estate Phase 1 gate. Since then, the road has remained untouched and impassable for motorists and pedestrians, Kehinde Adeyemo, the president of ACCDA said.

However, the community remains optimistic that the state government would come to their rescue, considering when the same road almost divided into two at the gate of NUJ II Estate leading to heavy erosion. The residents embarked on the culvert through proceeds raised from the occupants in Arepo but the government through the ministry of works intervened in the construction of the second stage of the culvert.

The bad state of the road poses a threat to the lives of the inhabitants of the Arepo community.

Adeyemo, the president of ACCDA said during raining season, they sometimes record casualties on the road especially among pregnant women and children.

“This is because the road has become impassable. People most times resort to using okada and we all know how vulnerable women and children are under this avoidable but pathetic situation,” Adeyemo lamented, as appealed to the state government’s intervention.

Akeredolu’s wife seeks AfDB’s support for women

W

ife of Ondo State governor, Betty Anyanwu-Akeredolu has called for African Development Bank’s (AfDB) collaboration in the area of women empowerment and social development in the state.

Akeredolu made the call during a technical session with the visiting AfDB group management team led by its senior director, Ebirima Faal in Akure, the state capital.

She said a lot had been done with the support of government to empower women in the state, and listed such to include ICT training for 105 girls who received a tablet each.

Solar renewable energy training for over 200 Ondo State girls and beyond; skill acquisition training for over 1000 women in five local government areas, accelerated birth registration, breast cancer awareness among others.

Monday 18 June 2018

C002D5556

39 NEWS

BUSINESS DAY

350,000 benefit from FG’s GEEP MarketMoni Lagos, Edo among states with highest average airfare in May - NBS programme nationwide - Osinbajo IFEOMA OKEKE & BUNMI BAILEY

L

agos, Edo and Abuja were the states with the highest average airfare in Nigeria in May 2018, according to the National Bureau of Statistics (NBS) transport report.

From the report, Lagos had an average fare of N40,500, Edo had N39,950 and Abuja FCT had N39,592.05, while states with the lowest airfare had N25,700.02, Osun had N24,950.05 and Kastina had N24,300.

The average airfare across the states increased marginally by 1.04 percent year-onyear to N31,659.08 in May 2018 from N31,651.02 in May 2017, and declined by 0.40 percent month-on-month from N31,833.05.

John Ojikutu, member of aviation industry think tank group, Aviation Round Table (ART) and chief executive of Centurion Securities, told BusinessDay, “Eighty percent of air traffic emanates from Lagos and Abuja. This is followed by Port Harcourt.

I think Enugu is catching up with Kano. Kano’s traffic went

down as a result of the crisis in the north.

“We can increase the traffic is Nigerian Airspace Management Agency (NAMA) and the Federal Airports Authority of Nigeria (FAAN) do the needful. They need to increase navigational infrastructures and the landing facilities in some of the country’s airports so that the airlines can go there at night and this will increase traffic.”

He explained that if Ibadan, Akure and Ilorin airports’ night landing aids could be fixed, the traffic would increase in these states and about 10 to 15 percent of those travelling by road in the night could fly to these destinations.

A travel expert who craved anonymity told BusinessDay that expectedly, Abuja and Lagos were the busiest airports in Nigeria, but Edo was experiencing surge due to passengers’ traffic from the state.

According to the NBS report, states with highest bus journey fare within city were Abuja FCT having N325.2, Cross River having N282.1

and Abia with N235.5, while states with lowest bus journey fare within city were Bauchi having N87.9, Anambra with N93.3 and Rivers having N96.36 The transport fare watch report for May 2018 covers the following categories bus journey within the city per drop constant route; bus journey intercity, state route, charge per person; airfare charge for specified routes single journey; journey by motorcycle (Okada) per drop, and waterway passenger transport.

Average fare paid by commuters for bus journey intercity decreased by 0.05 percent month-on-month and increased by 14.9 perent year-on-year to N1,716.3 in May 2018 from N1,722.9 in April 2018. States with highest bus journey fare intercity were Abuja FCT having N4,125.5, Adamawa having N3,166.5 and Borno with N2,744.4 while States with lowest bus journey fare within city were Bauchi having N1,064.54, Enugu had N1,096.9 and Yobe with N1,125.0.

IDRIS UMAR MOMOH, Benin

F

ederal Government says over 350,000 Nigerians have benefited so far from the Government Enterprise and Empowerment Programme (GEEP).

GEEP is one of the National Social Intervention Programmes (NSIP) of the current administration, providing interest freeloans of between N10,000 and N100,000 to market women, farmers, artisans and enterprising youths nationwide through the Bank of Industry (BoI).

Vice President Yemi Osinbajo, who made the disclosure at the Edo State’s edition of Micro, Small and Medium-Scale Enterprise (MSME) Clinic during his two-day working visit to the state on Thursday, said over 4,000 beneficiaries were from the state.

“The Federal Government of Nigeria, through BoI has empowered over 4,000 Edo State people with loans, and 350,000 persons have so far benefitted from the programme nationwide,” he said.

Osinbajo said, “The policy of the Federal Government is to support businesses, not just big business but particularly small, medium-sized businesses and micro-businesses. The whole idea is that we want to ensure that we give whatever support whether it is cash, advise or even

registration to all of our small and medium enterprises.”

According to Osinbajo, the Federal Government has concluded plans to roll out TraderMoni scheme, a new microcredit scheme to cater for ultramicro enterprises in addition to the existing GEEP MarketMoni scheme that targets market women, traders, artisans and enterprising youths.

“It is a different thing from MarketMoni because TraderMoni is for the smaller traders.

These are the hawkers; those who are doing little things where in many cases their inventory, the whole thing they are selling is sometimes not even more than N5,000 - N10,000. We want to give those kinds of people some credit as well, and once they pay back, we will give them some more money,” he said.

Earlier, Uzoma Nwagba, GEEP MarketMoni chief operating officer, noted that GEEP was geared towards addressing one of the tough challenges of microenterprises in Nigeria, which was access to finance.

Nwagba said the pro-poor programme would improve the economic wellbeing of the beneficiaries as well as inflate the economy from the grassroots.

On her part, Toyin Adeniji, executive director of Financial Inclusion in BoI, said the pilot phase of the TraderMoni

scheme had already began, with 368 traders in Edo State, each walking home with N10,000 after the event.

She said BoI was making every possible effort to enhance the scope of the programme and bring in more beneficiaries.

She however, listed how the programme has impacted positively on the economic status of the beneficiaries to include improvement in businesses, job creations among others.

“Beneficiaries of the GEEP loan have been able to improve their businesses. Some of them from a one-man shop now employ six people; those who buy things in small units now buy in bulk. It is a very aggressive scheme and we have a target to reach over a million. As at now we have disbursed loans to over 350,000 beneficiaries nationwide, and to scale up the scheme, we have identified and categorised a new group of micro traders who need only about N10,000 to boost their businesses.

“GEEP MarketMoni loans are repayable over a period of 6 months with a five percent administrative charge. To ensure that the loan instalments are paid on time and conveniently, collections begin from the third week after loans are received.

Beneficiaries enjoy a two-weeks grace period,” she said.

Glo’s GO Russia promo winners depart for Russia

T

he first batch of 7 winners out of a total of 22 that will emerge in the ‘GO Russia’ promo, the on-going customer appreciation offer recently unveiled by National Telecommunications Company, Globacom, have left the country for Russia.

The winners were accompanied by a Globacom official on the trip to Russia where they will visit different tourist attractions, historical sites and monuments.

The lucky subscribers were sent off formally at the Mike Adenuga Towers’ headquarters of Globacom on Wednesday where the company congratulated them for emerging winners of the promo and urged them to be good ambassadors of Nigeria when they get to Russia.

Globacom restated the company’s commitment towards empowering its subscribers and giving them access to the best value and pricing at all times.

The winners on the trip include Agbede Temidayo Bayodele from Ekiti state, Adeoye Adefisoye Simon from Oyo State and Olugbokiki Mukail Omolola from Ogun State.

Others are Orewa Edwin Ehi from Port Harcourt, Aghaegbunem Marvel Chukwufumnaya from Abuja, Oladunjoye Joseph Babatunde from Ogun State and Kome Sunny Ikpeba from Delta State.

The Company stated that “more winners will be unveiled from the next set of

draws to be conducted soon in the GO RUSSIA promo which was unveiled to reward our amazing subscribers who have stood solidly behind the brand over the years” Speaking at the event, one of the winners, 45-year-old Kome Sunny Ikpeba from Delta State said, ”I have never won anything before, so when I got a call from Globacom to say that I qualified for a ticket, I was very happy. This is really good”. He thanked Globacom for giving him the opportunity to visit Russia.

Another winner, Oladunjoye Joseph Babatunde, a Lagos cinematographer, also commended Globacom for packaging GO RUSSIA promo. The Ogun State Indigene said, “I feel good, it is going to be a very good experience for me. I am a loyal Glo subscriber as i started with them at inception.”

Also commenting, a final year Mechanical Engineering student of Ekiti State University, Agbede Temidayo Bayodele who said the Russian trip was his first overseas trip advised his colleagues who thought it was a scam to participate in the promo because “it is for real!”

A total of 22 lucky winners will emerge eventually from the promo which offers an allexpenses-paid trip to Russia.

The promo which runs from May 16 to July 8, 2018, is open to all new and existing Prepaid/Postpaid customers on the Glo network nationwide.

Betty Anyanwu-Akeredolu, wife of Ondo State governor (r); Victor Kiladejo, Osemawe of Ondo Kingdom (l), during the Forum for Wives of Ondo State Officials (FOWOSO) Empowerment Outreach Programme for Women, Youths and Special needs people in Ondo East Local Government Area of Ondo State.

CBN’s National Collateral Registry to aid MSMEs to access funds GODFREY OFURUM, Aba

T

he National Collateral Registry, a policy of the Central Bank of Nigeria (CBN), was established to specifically reduce the issue of collateral that hampers micro, small and medium entrepreneurs from accessing funds from commercial banks and other financial institutions.

Celsus Agha, a manager in the development finance office of the CBN, said this at the zonal stakeholders meeting on the review of micro, small medium enterprises (MSMEs) policy, held in Aba, the commercial hub of Abia State.

Agha observed that com-

mercial banks and other financial institutions require collateral before MSMEs could access loans from them, as they regard MSMEs as high-risk operators.

He explained that the CBN launched the national collateral registration, in which movable collateral could be used to access funds.

For instance, “An ‘akara’ seller, who needs N50,000 to invest in his/her business, but does not have a collateral to access the fund, can use his/ her phone worth N100,000, as collateral.

“What he needs to do is to walk into a commercial bank of his/her choice, register the phone with the bank and it

could be used to upset a loan that has been collected.”

Camillus Ogbuagu, head, development finance office, CBN, Umuahia, observed that MSME sub-sector of the economy was faced by huge financing gap hindering the development of the sector.

He stated, “Section 6 - subsection 10 of the micro finance policy, regulatory and framework for Nigeria, stipulates that a micro-finance development fund shall be set up, to provide for the funding requirement of micro-finance institutions, to achieve the provisions of Section 4. Sub-section 2 of the policy, which stipulates that all individuals within this bracket

have access to funding.”

He explained that the CBN had been in the forefront of ensuring that this was done so as to bring funding nearer to this portion of the society, through participatory financial institutions.

He stated that the CBN had different funds for different groups, and appealed to participatory financial institutions to remove barriers to enable MSMEs to access these facilities.

The forum, organised by the Federal Ministry of Industry, Trade and Investment, is aimed at removing impediments to the development of the MSME subsector of the economy.

Monday 18 June 2018

BUSINESS DAY

A1

A2

BUSINESS DAY

Monday 18 June 2018

Monday 18 June 2018

FT

C002D5556

BUSINESS DAY

A3

FINANCIAL TIMES EM crisis clashes with Fed hawkishness

AIG: The long struggle to repair its reputation

Page A4

Page A6

World Business Newspaper

Ships carrying 630 migrants arrive in Spain after week of turmoil Valencia landing comes after hardline Italian government refused entry IAN MOUNT

T

he rescue ship Aquarius and two Italian vessels carrying more than 600 migrants arrived at the Spanish port of Valencia on Sunday, after a weeklong odyssey across the Mediterranean Sea sparked by the Italian government’s refusal to allow those onboard to land.

Pedro Sánchez, Spain’s new socialist prime minister, announced a week ago that the migrants, mainly sub-Saharan Africans, would be allowed to disembark in Valencia, after they were refused permission to enter first Italy and then Malta.

The Italian coast guard ship Dattilo was the first to arrive after a 1,300km journey. The Aquarius, a rescue ship operated

by French NGO SOS Méditerranée, and the Italian navy ship Orione docked later.

The 630 passengers of the three ships included 123 unaccompanied minors and several pregnant women.

More than 2,000 people, including Red Cross volunteers, translators, medics and police gathered at the port to meet and process the migrants, who were greeted with applause when they arrived. Many of those disembarking the Dattilo and Aquarius appeared relieved, smiling as they stepped down into the dock.

The head of emergencies for the city of Valencia said a total of 44 people had been taken to hospital, although none were thought to be in a serious condition. “Despite the fatigue, they are generally in good spirits,” the Red Cross said on Sunday.

Magdalena Valerio, immigration and social security minister, said: “These people cannot be allowed to float around the Mediterranean, where they face the possibility of dying … This country [Spain] is showing its solidarity and generosity.”

Spain initially said the migrants would be given a month-long residency authorisation, later increased to 45 days, and then would be treated according to Spanish law “without major exceptions”.

The fate of the migrants opened a

crisis in the EU shortly after the Aquarius rescued them off the Libyan coast on June 9. Matteo Salvini, Italy’s new interior minister and leader of the far-right League, refused to allow the ship to dock and demanded that Malta accept the migrants. Maltese officials refused, leaving the migrants in limbo.

The recently installed populist coalition in Rome, comprising Mr Salvini’s League and the anti-establishment Five Star Movement, has taken a hard line on undocumented immigrants and has said it will be more confrontational with Brussels and other EU member states over the issue.

Over the past four years, Italy has taken in almost 640,000 migrants, and previous efforts to create a system to share the cost and effort required have foundered on anti-immigrant sentiment that has been sweeping the continent.

After Italy’s refusal, tensions flared when French president Emmanuel Macron accused Rome of “cynicism and irresponsibility” for not accepting the migrants and Italian prime minister Giuseppe Conte replied that he would not accept “hypocritical lessons from countries that have always preferred to turn their backs when it comes to immigration”.

Mr Sánchez’s cabinet at the weekend announced that the French government had offered to accept the immigrants who wished to continue on to France.

The Spanish prime minister thanked Mr Macron and said: “This offer shows that this is the framework of co-operation with which Europe must respond, with a spirit of European solidarity and real content.”

Mr Sánchez, who took power two weeks ago after winning a vote of noconfidence against former centre-right prime minister Mariano Rajoy, has sought to present himself as more progressive than his predecessor.

In an example of their more progressive bent, Fernando Grande-Marlaska, Spain’s interior minister, this week said that the Sánchez government wanted to remove the wire fencing around Melilla and Ceuta, two Spanish territories in north Africa.

Argentina’s Treasury minister defends IMF bailout Nicolás Dujovne says care has been taken to ensure austerity drive is not overambitious BENEDICT MANDER

A

rgentina’s Treasury and finance minister insisted that the government would meet tough new targets for lowering the fiscal deficit next year, as he defended the country’s decision to seek a $50bn bailout from the International Monetary Fund.

“We took great care in reaching a deal that [will not] force us into positions of political stress that could be counterproductive,” said Nicolás Dujovne in an interview with the Financial Times, recognising that an overambitious austerity drive could endanger President Mauricio Macri’s hopes of winning a second four-year term in elections in 2019.

Mr Dujovne nevertheless pointed to innovative clauses in the deal proposed by Argentina that will allow the government to increase spending on social programmes and relax the deficit targets if necessary, which the fund “welcomed warmly”. “It will probably apply this in other countries,” he added.

Such socially sensitive terms contrast w ith past IMF programmes, not least the fund’s last standby arrangement with Argentina that ended with the 2001-02 financial crisis that had grievous social consequences and tarnished the multilateral lender’s reputation in the country and beyond.

Continues on page A4

US President Donald Trump is looking to appoint a person who has never worked as a regulator or in financial services to head the Consumer Financial Protection Bureau © Reuters

Trump eyes low-profile White House staffer to head consumer body Move to nominate Kathy Kraninger seen fitting pattern of quietly defanging bank rules BARNEY JOPSON

P

resident Donald Trump plans to nominate a little-known White House official to head a financial watchdog meant to protect consumers in the latest sign of his administration embracing a lowprofile approach to slashing bank regulations.

Mr Trump wants to place Kathy Kraninger, a budget official who has rarely appeared in the news, as head of the Consumer Financial Protection Bureau. She would succeed Mick Mulvaney, the acting chief who is also her boss as head of the White House budget office.

Mr Mulvaney, an outspoken former conservative lawmaker, was appointed as the CFPB’s acting head last November and became the face of Trump administration efforts to defang the seven-year old agency and make it more bank-friendly.

The White House announced the plan to nominate Ms Kraninger, an associate director in the White House budget office, on Saturday.

The CFPB was created by the Dodd-Frank reforms that followed

the 2008-09 financial crisis and was reviled by bankers and Republicans, who saw it as an example of big government run amok, and blamed it for stifling the financial sector.

Ms Kraninger, a former Capitol Hill aide who will face an uncertain confirmation vote in the US Senate, has not worked as a regulator or in financial services or spoken publicly about the CFPB. Mr Mulvaney, by contrast, famously once called the agency a “sick joke”.

The nomination of a low-profile bureaucrat and the Saturday announcement fits with the Trump administration’s broader approach to bank deregulation, which critics say appears aimed at attracting little attention and downplaying significant moves.

Dennis Kelleher, head of Better Markets, a pro-regulation campaign group, said: “The Trump administration continues its relentless deregulation and anti-consumer crusade with its hope-no-one-ispaying-attention Saturday night announcement.”

Although Mr Trump has championed business deregulation as one of his biggest accomplishments, he has

rarely highlighted specific measures to loosen rules for banks, which do not get primetime announcements or the fanfare of press conferences.

Republican lawmakers acknowledge privately that making life easier for banks does little to appeal to voters in an election year, including Americans who are struggling economically and warmed to Mr Trump’s populist campaign message.

Lindsay Walters, White House deputy press secretary, said: “[Ms Kraninger] will bring a fresh perspective and much-needed management experience to the [CFPB], which has been plagued by excessive spending, dysfunctional operations, and politicised agendas. As a staunch supporter of free enterprise, she will continue the reforms of the bureau initiated by acting director Mick Mulvaney, and ensure that consumers and markets are not harmed by fraudulent actors.”

Mr Mulvaney has already made big strides in stymying some of the CFPB’s former work, putting a temporary freeze on new regulations and moving to review proposed rules, including those on payday lenders.

The secret VTB stake that helped lead to Otkritie’s downfall The private bank’s rapid growth was supported by state-run VTB but their links went deeper

MAX SEDDON

W

hen Otkritie, then Russia’s largest privately held lender, was nationalised last year to stave off its collapse, state-run bank VTB wrote off its 10 per cent stake in the bank’s parent company.

Then a new central bank-appointed team sorting through the mess made a startling discovery: the upstart Otkritie had itself secretly amassed a 20 per cent stake — more than half the free float — in VTB. This made it the largest shareholder after the Kremlin.

The disclosure last January shocked Russia’s financial sector — already reeling after the central bank nationalised three top-10 lenders in four months at a cost of $24bn — and sparked feverish speculation over the motive behind the purchases, which VTB insists it knew nothing about.

A non-entity just a few years ago, Otkritie grew rapidly thanks to cheap central bank funding and acquisitions

funded in part by VTB. Yet the central bank later delivered a damning verdict on the bank, saying its capital was “largely fictitious” and its management style marked by “adventurism”.

The VTB purchase played a key role in Otkritie’s downfall, according to Mikhail Zadornov, the bank’s new, central bank-appointed chief executive. Mr Zadornov told the FT in an interview that Otkritie spent so much on the VTB shares in late 2014 that its “colossal” losses on the trade numbered in the “tens of billions of roubles”.

But Otkritie’s loss was VTB’s gain.

Bankers say that Otkritie’s massive purchases helped boost VTB’s stock — long one of Russia’s underperformers amid concerns about the bank’s profitability and corporate governance — by helping to wipe out the short interest on the Moscow exchange and nearly double the price.

VTB says that it only learned of the stake, which is now down to 15

per cent, last autumn, and denies any role in Otkritie’s purchase. The stake was spread out among Otkritie’s various subsidiaries to keep the individual holdings below the disclosure threshold of 5 per cent. “Nobody ever enlightened us about these plans officially or unofficially and we don’t know anything about them,” the bank said.

Otkritie’s quiet relationship with VTB Otkritie’s former owners, led by founder Vadim Belyaev, continue to operate through a company called Otkritie Holding, despite losing control of the bank. They did not respond to requests for comment.

The undeclared purchase was so secret that Mr Zadornov, who ran VTB’s retail arm for 13 years, says he had no idea about it until central bank governor Elvira Nabiullina tapped him to head up Otkritie last fall. The stake is so large that it entitled Mr Zadornov to appoint himself and a deputy to VTB’s board in April.

A4

BUSINESS DAY

C002D5556

Monday 18 June 2018

NATIONAL

FT

Donald Trump’s trade tirades show his mastery of the message RANA FOROOHAR

C

ritics of Donald Trump (me included) need to spend more time watching the US president and perhaps relatively less parsing the details of his policies. I did this last week while he was sounding off for 20 minutes in an impromptu press conference with reporters that covered everything from North Korea (“there is no longer

a nuclear threat”) to his legal issues (“there was no obstruction, there was no collusion”) to tariffs on China. And when you do, you see him as much of middle America does — strong, concise and cogent.

Let me head off those readers who are already starting to draft their complaint letters; I didn’t say Mr Trump was truthful or correct in regards to any of these issues. And yes, I get upset

as any thinking person does watching him salute a North Korean general as he insults America’s historic allies, while his border patrols remove children from immigrant parents.

But sadly, public opinion is usually formed more on the basis of feelings than facts.

On television, Mr Trump comes across as clear and authentic, at least to himself. And that, as any psychologist

will tell you, is what really matters when projecting the characteristic to others. He remains cool and secure in his own views.

Reporters trying desperately to clarify facts as they press him on the issues come across as harried and desperate. This is Television 101: soundbites work better than complex data points.

It is tough to overestimate how much optics matter — half of Americans still glean the majority of their news from television,

South Korea embarks on war games over disputed islets

Argentina’s Treasury minister defends IMF bailout Continued from page A3 With the IMF set to disburse an initial $15bn after its executive board meets on June 20, Mr Dujovne insisted that this would take pressure off the peso, which continued to slide despite the announcement of the IMF deal on June 7, losing more than 10 per cent of its value since then. The continued turmoil prompted the resignation on Thursday of the central bank governor, Federico Sturzenegger, who was replaced by Luis Caputo, the finance minister.

Even so, the newly empowered Mr Dujovne, who will take on Mr Caputo’s responsibilities as finance minister, argued that the peso’s slide was “logical” since it followed several weeks when the exchange rate was effectively fixed by the central bank. Meanwhile, a drop in bond prices over the past week was mostly due to a “risk-off” environment in emerging markets, he added.

How investors continue to view Argentina in the coming months will determine how much the government will borrow of the $50bn that the IMF has made available.

“It is very probable that in the first quarters we will make use of the option [to access the quarterly disbursements stipulated in the agreement], but then as sovereign risk falls and the market has a greater appetite to absorb Argentine debt at low rates, we can [return to the market]. But for now the fund’s rates are very favourable,” said Mr Dujovne.

With investor confidence proving difficult to win back, Mr Dujovne admitted that both Argentina and the IMF had taken a great risk in reigniting their relationship.

“We are partners in this, without a doubt. We need the credibility provided by a programme with the fund, while the fund needs to show it was not mistaken in supporting Argentina, having had problems in Argentina in the past . . . it is a very big bet [for the IMF].”

Despite Mr Macri’s political gamble, given that the IMF is widely questioned in Argentina, Mr Dujovne remained “convinced” that he would be re-elected next year, regardless of the hit to the economy this year as a result of the run on the currency.

He likened the temporary slowdown in growth to a bout of turbulence on an aeroplane which would be overcome by the fourth quarter, with growth picking up more strongly in 2019. He expected a 10 per cent year-on-year increase in infrastructure spending next year, driven by a programme of public private partnerships that is under way.

“Winning the elections will not depend on whether growth is at 4 per cent rather than 2 per cent, but on whether people continue to want the change this government represents, or to go back to populism,” he said, arguing that the Peronist opposition was “very far from offering itself as an alternative” for voters.

according to the Pew Research Center. Most of the rest rely on social media.

Timing matters, too. That is another area where the US president has succeeded. While there is no good time for a trade war, this is about as good a moment as any. The US economy grew 2.3 per cent in the first quarter of 2018, and some analysts are predicting 3 per cent, or even higher, for the second quarter, which ends this month.

Sovereignty of Dokdo remains hot-button issue between Seoul and Tokyo

BRYAN HARRIS

O

King Maha Vajiralongkorn’s decision to take ownership of the portfolio, estimated to be worth $30bn, confirms his position as one of the world’s richest monarchs © EPA

Thai king assumes direct ownership of portfolio worth billions Assets previously held in royal family’s name will lose tax-exempt status JOHN REED

T

he trust that holds billions of dollars of assets in the name of Thailand’s royal family said at the weekend it had transferred ownership of a wealth portfolio directly to King Maha Vajiralongkorn, in a move that confirms his position as one of the world’s richest monarchs.

The Crown Property Bureau said in an announcement on Saturday that its assets previously registered in its name would now be held “in the name of His Majesty”, marking the latest change made by the new Thai king in the way the royal house’s vast corporate and real estate holdings are managed.

The body also said that its assets would be subject to the same taxation as those belonging to any other Thai citizen, removing their tax-exempt status. “The removal of exempted status was accomplished in line with His Majesty’s wishes,” the statement said.

The Crown Property Bureau’s portfolio includes stakes in Siam Commercial Bank, a leading lender, and Siam Cement Group, a leading

industrial conglomerate, as well as swaths of land in downtown Bangkok.

The bureau does not make the value of its portfolio public, but Forbes Magazine in 2012 valued the bureau’s holdings at more than $30bn, and based on this estimate described the late King Bhumibol as the world’s richest monarch. Thailand’s embassy in Washington wrote a letter reprimanding the magazine, saying the Crown Property Bureau’s assets were “held in trust for the nation”.

King Vajiralongkorn, 65, became Thailand’s monarch in 2016 after the death of his long-reigning father King Bhumibol Adulyadej. Since then he made several changes to how the monarchy’s wealth holdings were managed.

In July last year, Thailand amended its royal property law to give the new king full control of the Crown Property Bureau. According to a filing with Thailand’s Securities and Exchange Commission in October, a 3.3 per cent stake worth $500m in Siam Commercial Bank was transferred from the Crown Property Bureau on behalf of the new king.

Reuters in March reported, based on stock exchange data, that the king had acquired a stake worth $150m in Siam Cement, and that the bureau’s stake had dropped by a similar amount.

Individuals and media outlets in Thailand, including the Financial Times, are restricted in what they can say or report about the royal family under the kingdom’s strict lèse majesté law, which sets prison terms of up to 15 years for perceived insults to the royal family.

Commentators in Bangkok, speaking anonymously on Saturday, had mixed reactions to the news about the Crown Property Bureau.

Some expressed surprise at the king’s assumption of direct control of its assets, but others welcomed the news they would no longer be tax exempt.

King Vajiralongkorn divides his time between Thailand and Germany, where local media have reported on his activities, including stories that touch on his personal life that would be taboo in his home country.

Thailand censors the availability of such reports to internet users in the kingdom.

France, Germany, Brazil, Spain — who has the best World Cup squad?

We’ve crunched the data to find out who comes out on top in terms of quality and experience MURAD AHMED AND JOHN BURN-MURDOCH

T

hroughout the tournament, we’ll bring you an FT view on the data and the talking points that matter, while FT correspondents from Asia to South America will provide a global perspective on this huge sporting event.

Plus there’ll be links to other FT coverage you might have missed.

Stat of the day The news that Spain had sacked their head coach Julen Lopetegui on the eve of the World Cup makes even less sense when you consider they have the strongest squad of players in the tournament.

We came to this judgment by crossing two factors: quality and experience.

First, how good a country’s footballers

are, based on the “elo ratings” of the club sides they play for; the theory being that a country with many Barcelona players is better than those reliant on players at, say, Stoke City. Second, how many minutes they have played in elite competition, such as one of Europe’s “Big Five” leagues of Spain, England, Italy, France and Germany, and the Champions League, the continent’s most prestigious club tournament.

That Spain emerge as the strongest squad according to these measures is not a surprise. The national team are made up of stalwarts of Real Madrid and Barcelona, the best club sides in Europe. Spanish teams have dominated their rivals in European competition for the past decade.

The national team reflect this, and the current squad are among the very best to appear in any World Cup since 2002, when our data starts. Lopetegui departs with an unbeaten record, having won 14 and drawn six since he took over as coach in 2016.

Blessed with talent, the team’s playing style was also subtly changed

by Lopetegui. Past Spain teams held possession for long periods. This was partly a defensive tactic — the opposition can’t score if they can’t get the ball. But it also led to slow and increasingly predictable football. Under Lopetegui, the team have been more direct and decisive. That has resulted in impressive victories in which Spain have blown away tough opponents, beating Argentina 6-1 and Italy 3-0.

nly days after South Korea and Washington determined that North Korea was no longer a serious enough threat to justify joint military exercises, Seoul has turned its attention to its real enemy: Japan.

On Monday, South Korea will begin two days of war games in which navy, air force, coast guard and marine units will practise defending Dokdo, a collection of tiny islets off its east coast that are controlled by Seoul but claimed by Tokyo.

The move underscores the topsyturvy world of diplomacy in the era of Donald Trump, in which Justin Trudeau, Canada’s prime minister, briefly became Washington’s public enemy number one, while Kim Jong Un, a dictator in one of the world’s most repressive regimes, was treated warmly by the US president and described as “very talented”.

As part of the exercises to defend against a putative Japanese attack — one that no serious analyst believes is remotely likely — South Korean marines will land on the rocky outcrop, which is home to a lighthouse, police barracks and mobile-phone towers.

Although such maneouvres have happened regularly in the past, one Japanese diplomat reacted with dismay that Seoul should have turned its attention to the supposed Japanese threat.

That it should have done so at the precise time it was stopping war games against North Korea, which has regularly threatened to turn both Japan and South Korea into a sea of fire, is likely to be regarded as doubly puzzling in Tokyo.

“Japan is the last country on the planet to resort to force to resolve this issue,” the diplomat said, referring to the islets, which are called Takeshima by Japan. “In terms of resolving disputes with South Korea, Tokyo has always underlined using diplomacy based on international law.”

Bong Youngshik, a North Korea expert at Yonsei university, said: “What is the point? The islands are clearly not coveted by any other country.” There was, he added, no reason to believe Dokdo had rich mineral desposits or anything else remotely worth fighting for. “That is all a myth, although nobody dares say it.”

Along with sex slaves — the Korean women who were forced to work in Japan’s wartime brothels — the sovereignty of Dokdo remains a lingering issue between Seoul and Tokyo.

The timing of the exercises is likely to raise eyebrows after Mr Trump announced last week that he had cancelled long-running joint drills between Washington and Seoul. Those drills, which were ostensibly to defend against North Korean aggression, were deemed “expensive” and “provocative” by the US leader.

Japan did not react immediately to South Korea’s announcement, but has strongly protested similar exercises in the past, calling the last one in 2016 “unacceptable and extremely regrettable”.

Almost no analyst believes Japan would seek to retake control of the disputed islets, also known as the Liancourt Rocks, by force.

Monday 18 June 2018

C002D5556

BUSINESS DAY

A5

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

EM crisis clashes with Fed hawkishness

Emerging markets currency crash has left Fed chairman Powell unmoved GAVYN DAVIES

N

ow that last week’s announcements by the “big three” central banks are out of the way, some macro traders expect a relief rally in risk assets, including emerging market currencies and bond spreads that have been in crisis mode since April.

Optimists think they now know the worst of the news from the US Federal Reserve, for 2018 at least, while both the European Central Bank and the Bank of Japan will remain dovish until core inflation rises in these economies.

So is the worst over for EM assets? It did not seem that way as Argentina and Turkey continued to plummet in the strong dollar environment on Friday.

And the Fed is turning more hawkish as it wakes up to the effects of the US fiscal stimulus.

What caused the EM sell-off?

It is hard to explain the timing of the EM meltdown with any precision. The newsflow about US president Donald Trump’s intended protection against China and Nafta intensified in April, which cannot have helped. However, protection is not a sufficient explanation, since the Asian economies that will probably be hit hardest by US trade controls have performed much better than other EM assets since then.

Another explanation is that idiosyncratic bad news was released in several big economies in April, notably Turkey, Brazil and Argentina, undermining confidence in their bonds and currencies. But that does not explain why other countries with stronger fundamentals, such as South Africa, became almost equally embroiled in the debacle.

Instead, the change in the market’s assessment of Fed policy and the consequent rise in the dollar has surely been central. It is clear from the important work of Silvia Miranda-Agrippino and Hélène Rey that a rising dollar, following an unexpected tightening in

US monetary policy, is bad for all risk assets, especially those in the EMs. The dollar started to rise in April after prolonged weakness. There are two (admittedly debatable) reasons for this: the realisation that US fiscal stimulus is likely to have large and persistent effects on demand and supply in the country’s economy; and the failure of eurozone activity data to bounce back after the first quarter, causing weakness in the euro. There are obvious problems with both these suggestions, especially in terms of exact timing, but together they can explain the reversal in the dollar and the decline in EM asset prices.

One more factor was crucial. Unlike in previous EM financial crises (such as 2013 and 2015-16), the Chinese economy was robust in April 2018, People’s Bank of China monetary policy was easing and there were no reasons to fear a deliberate devaluation of the renminbi. With China in good shape, Asian EMs have emerged almost unscathed from the recent episode. See Robin Brooks on Twitter: Will the EM sell-off get worse from here?

If the latest outbreak of trade hostility between the US and China gets a lot worse, Asian EM assets might get dragged into the crisis. But the most probable cause of further prolonged EM weakness stems, as usual, from US fiscal and monetary policy.

Reserve Bank of India governor Urjit Patel caused a stir when he warned in the Financial Times on June 3 that a global dollar shortage could develop as the financing of the US budget deficit absorbed foreign savings.

On top of this, he claimed that the planned shrinkage of the Fed’s balance sheet would suck further dollar liquidity out of the global financial system, leaving EM economies scrambling to roll over their dollar debt as capital flows back into the US Treasuries market. This has already started, causing recent EM strains.

US banks poised for $170bn in shareholder payouts Large banks set to distribute more than annual profits ALISTAIR GRAY AND BEN MCLANNAHAN

L

arge US banks are poised to hand over more capital to investors than they are generating from their businesses for the first time since the 2008 crisis, lowering their defences against another catastrophic shock to the financial system.

Shareholders in 22 of the country’s biggest listed banks are in line for a record haul of almost $170bn in dividends and stock buybacks over the coming year, according to Barclays research, about a quarter more than in 2017.

Federal Reserve regulators are preparing to release first round results this week from their annual stress tests, which govern banking dividends and stock buybacks.

The expected rise in payouts shows how the industry is bouncing back from years of depressed returns. Not only are banks generating billions of dollars in additional profits from lower taxes and higher interest rates, but the Fed is allowing them to return more of their earnings to shareholders.

Analysts at Goldman Sachs,

Credit Suisse and Keefe, Bruyette & Woods predict the average bank will get the go-ahead to hand over more capital than profits produced over the next four quarters.

While some individual banks have been able to do so in prior years, the industry overall has not paid out more than its earnings since 2007, according to Barclays.

The distribution plans give ammunition to critics who argue that banks should instead be required to strengthen capital buffers to prevent future taxpayer bailouts.

The payouts were “outrageous”, said Anat Admati, finance professor at Stanford University. She argued that too-big-to-fail banks should not be allowed to make them “until we are sure they do not pose a danger to society any more”.

Regulators say that after years of building loss-absorbing cushions, banks have become better able to withstand a meltdown of the kind that rocked global financial markets in 2008.

Officials are expected to allow higher payouts this year because they have become more comfortable with banks’ improved capital positions — not because they have relaxed the stress tests.

ESG offers the chance to raise the moral purpose of investing © AFP

Wall St banks sign up to new platform to underpin bond revenues Top debt underwriters aim to improve pricing technology and maintain market influence ERIC PLATT

G

oldman Sachs and three other banks have signed on to a new bond platform under development by Bank of America, Citigroup and JPMorgan, as Wall Street clubs together to maintain its influence on the lucrative market for debt issuance.

Wells Fargo, BNP Paribas and Deutsche Bank are also joining the initiative, which aims to improve the technology used in the sale of bonds.

Underwriting debt is a relatively stable source of billions in annual revenues that could come under threat from tech start-ups and financial data companies investing in the market.

Bank of America, Citigroup and JPMorgan have for months been working together to improve what is often a disjointed and labour-intensive process for getting pricing and other information to potential bond investors. With the addition of the four new banks, six of the top 10 debt underwriters are now involved in the consortium.

“We get calls literally daily from

other market participants seeking to be involved in this project,” said Peter Aherne, the head of North American capital markets at Citi. “We’ve agreed it is far better for our technology to be on the desks of our clients than to have another provider’s.”

Financial institutions generated a record $23bn in fees underwriting debt last year, a high water mark spurred by low interest rates and a surge in borrowing by companies, according to Dealogic. Those fees have slipped in 2018 as debt sales have slowed and competition has intensified. The top 10 debt underwriters this year captured 48.6 per cent of the commissions generated on bond sales, the second lowest level over the past nine years and down from 55.2 per cent in 2010.

More than 30 banks have signed on to a competing bond syndication platform from Ipreo, which was initially backed by 11 firms including Goldman and BNP, as well as HSBC, UBS and Société Générale.

The new platform in development

by JPMorgan, Citi and BofA — the top

three debt underwriters — should reduce the strain on their workforces.

Financial groups have cut payrolls since the financial crisis to rein in costs. While trading of corporate and sovereign bonds has become increasingly electronified, the initial sale of debt remains a cumbersome process.

In an interview with the Financial Times, executives at the three founding banks on the project said the new venture would be housed in a thirdparty entity and it would be owned by the financial institutions that use the platform. The exact ownership structure has not yet been decided.

The platform will be used to announce new bond sales, communicate pricing information with investors, share credit ratings, prospectuses, term sheets and other documentation, process investor orders and ultimately allocate bonds to would-be buyers.

“It should deliver cost savings and greater productivity for dealers and creates more efficiency on the investor side,” said Bob LoBue, co-head of JPMorgan’s global fixed income syndicate. “

Brazil trucker strike hits suppliers of consumer staples Multinationals count the cost after 10-day protest disrupted supply chains ANDRES SCHIPANI AND SCHEHERAZADE DANESHKHU

M

ultinationals operating in Brazil are counting the cost to their revenues following a nationwide trucker’s strike that brought the country to a near standstill, disrupting supplies and hitting Latin America’s largest economy.

Unilever, producer of Dove soap to Magnum ice cream, was the first to quantify the damage when it warned last week that revenues in its second quarter, ending June 30, would be reduced by €150m. Brazil accounts for 6 per cent of the Anglo-Dutch group’s sales.

Others are expected to follow.

Analysts at Goldman Sachs said: “The challenges Unilever has faced in Brazil are unlikely to be entirely company-specific and we believe a similar headwind to other [European] consumer staples companies with a meaningful exposure to Brazil is likely to include AB InBev, Ontex, Heineken and Danone.”

Budweiser brewer AB InBev, which makes 16 per cent of its sales in Brazil,

declined to comment. Rival Heineken said on Friday that although the strike had caused “major disruption” to supply chains, the blow was cushioned by having a few weeks’ supply in the system. Stocks ran out in a few places but “we have also seen volumes picking up after the strike ended,” Heineken said.

Coca-Cola said only that the strike, which lasted 10 days between late May and early June, had “impacted” on its Brazilian operations.

Bernstein Research predicted that among US companies operating in Brazil, cosmetics group Avon, ColgatePalmolive, Kimberly-Clark, Procter & Gamble and PepsiCo, among others, were likely to be hardest hit.

Verônica Brito, who manages a grocery store in central São Paulo, said that during the strike, the shop was short on perishables, such as dairy products — an almost empty shelf usually packed with milk and cream cheese was testimony to that. “Some people started to get worried about the lack of goods but we managed to stay afloat,” she said.

Although things have now returned to normal, Viva Lácteos, the asso-

ciation of Brazilian dairy producers, an industry group that represents local and global companies, including Mondelez, Danone, and Nestlé, estimates the sector lost about R$1.3bn ($349m) following the discarding of 360m litres of milk.

João Carlos Basilio, executive president of ABIHPEC, the body that brings together the makers of personal care and hygiene products in Brazil, including Unilever, Colgate-Palmolive, Avon and Procter & Gamble, said that before the strike the industry expected sales of more than R$118bn in 2018.

“Now, it is likely that we won’t have real growth,” he said.

The strike could cost Brazil’s ailing economy more than R$15.9bn, shaving 0.2 per cent off gross domestic product this year, according to the government.

Meanwhile, the strike is also likely to have hit the Brazil-based meatpacker JBS and its peer BRF, the world’s biggest poultry exporter. The Brazilian animal protein association, ABPA, said the sector lost R$3.15bn after 167 chicken and pork abattoirs halted operations while lorry drivers blocked roads and highways.

A6

BUSINESS DAY

FT

C002D5556

Monday 18 June 2018

ANALYSIS

AIG: The long struggle to repair its reputation A decade after it needed a $185bn state bailout, the insurer is on the acquisition trail again, but investors remain wary OLIVER RALPH AND ALISTAIR GRAY

S

eventy Pine Street is an aristocrat among New York’s skyscrapers.

The 66-storey art deco tower in downtown Manhattan has been a fixture on the skyline for almost 90 years.

For part of that time it served as headquarters for Hank Greenberg, the chief executive who drove AIG into new markets until it became the dominant force in insurance.

Today 70 Pine Street is a luxury apartment block. AIG, with Mr Greenberg long departed, has slunk off a couple of blocks down the road to an altogether more humdrum building. And after over a decade of crisis AIG is a shadow of its former self, having sold off large chunks of its business.

Yet in January it spent $5.6bn on its first purchase in a decade, with a hint of more deals to come, and has used the past 12 months since Brian Duperreault arrived as chief executive to recruit a new management team and shake up the way it operates. It is all designed to restore some of the company’s swagger.

“AIG is like a supertanker with a very small rudder, so it is a nightmare to turn around,” says industry veteran Stephen Catlin. Adding that he thinks Mr Duperreault “is about the only person you’d trust to do it”.

The insurer has been under sustained pressure for most of the past 15 years. It lurched from Eliot Spitzer’s accounting investigation that resulted in a $1.6bn settlement in 2006 to needing a $185bn government rescue two years later just to survive at the height of the financial crisis.

It has repaid the taxpayer bailout, partly via asset sales. At its peak, the insurer

was worth $240bn and had a triple A credit rating. It is now worth about a fifth of that and Fitch rates it A-, six notches lower.

Activist investors Carl Icahn and John Paulson agitated for a wholesale break-up of the group as recently as 2016.

Mr Duperreault, 71, who spent more than 20 years at AIG earlier in his career, has already tried to retire from the industry twice, but the pull of AIG was too great to resist. “I still bleed AIG blue,” he tells the Financial Times, “it’s still part of who I am. My formative years in the business were all here.”

Yet despite his arrival giving the company a lift, its share price remains under pressure, with investors wary about the speed of any turnround. And Mr Duperreault will have to deal with this scepticism against the backdrop of an industry struggling to increase premiums despite a series of natural disasters. At the same time a surplus of capital, a byproduct of low interest rates, has kept prices low.

“The market is quite difficult,” says John Heagerty, analyst at Atlantic Equities.

“Pricing has improved, but not as much as people had hoped . . . I think it’s going to take a long time to turn it [AIG] around.”

One of Mr Duperreault’s priorities has been recruitment. During the crisis and its aftermath, AIG haemorrhaged staff, with some of the brightest in the industry walking away while many others were laid off.

“We had to establish that we were a place where talent comes [again],” he says.

He has lured a host of senior industry figures, many of whom he worked with in roles at ACE, Marsh & McLennan and Hamilton, as well as at AIG itself.

Peter Zaffino, the former head of insurance broker Marsh, was hired last year as chief operating officer running the

general insurance business. He is seen by some in the industry as Mr Duperreault’s heir apparent. Tom Bolt, a former Lloyd’s of London executive, was poached from Berkshire Hathaway.

Some have been lured by a promise of more independence, a nod perhaps, to the era of Mr Greenberg and his predecessor Cornelius Vander Starr, both of whom gave employees a high degree of autonomy. In Fatal Risk, his book on AIG’s crisis years, the journalist Roddy Boyd notes that: “Fifty years before Peter Drucker and other management gurus by the boatload would preach decentralisation . . . Starr made it the centrepiece of his managerial style.”

Mr Duperreault has taken those principles to heart. “The AIG that I knew was a collection of specialists, individuals who really knew a particular subject matter as

such as catastrophe bonds.

The deal also brought in fresh underwriting talent. “Validus brings expertise in underwriting property risk, including catastrophe risk, and has a good record of performance,” says Bruce Ballentyne, an analyst at Moody’s.

Yet it has upset some. The price tag has drawn criticism: AIG is paying a premium of 45 per cent to Validus’s share price before the deal, and one banker says that it has paid “$1bn too much”.

Others are unhappy that the deal is being funded with money that might otherwise have been used for shareholder payouts. Mr Duperreault’s predecessor, Peter Hancock, had planned to return $25bn over two years via buybacks and dividends. But Mr Duperreault has made clear that he would rather deploy the

The former AIG headquarters at 70 Pine Street in New York © AFP

well if not better than anybody else,” he says. “I’ve found that the AIG I returned to had lost some of that.”

He also returned last year to an AIG that had become a selling company. Since the crisis business units from AIA, the Asia operation, to a company ski resort in Stowe Mountain have been jettisoned.

The downsizing was encouraged by Washington.

Regulators restricted the company’s growth because they deemed it a “systemically important” financial institution. But last autumn, as part of the Trump administration’s deregulatory agenda, it rescinded AIG’s “too big to fail” status.

Just four months later, the chief executive followed through on his plans to expand the business with a $5.6bn deal to buy Bermuda-based Validus. The deal adds business areas AIG had never been in, or had exited, including Lloyd’s of London, reinsurance and the fast-growing market for “insurance linked securities”

resources to expand.

“A company should have a growth strategy. Otherwise, you’re a shrinking company, and that probably isn’t going to work out well for you at the end of the day,” he says.

Despite the hires, the acquisition and talk of a more positive mood around the company investors remain sceptical. AIG’s share price has wilted since last May, down 14 per cent against a 14 per cent rise for the S&P 500 over the same period.

“Most investors I talk to think if there’s anyone who can fix this thing it’s going to be Duperreault and the people he’s bringing in,” says Paul Newsome, analyst at Sandler O’Neill. “[Yet] the stock price suggests a lot of people think it’s not going to happen very quickly.”

Part of the reason for the share price fall may be the scaling back of share buybacks, but there are more fundamental problems.

AIG has long avoided the kinds of financial products, such as credit default swaps, that

turned toxic in 2008 and led to its bailout.

Today, it is the traditional property and casualty insurance business, which accounts for almost two-thirds of revenues, that is the group’s big anxiety.

In particular, AIG has struggled to generate a profit from business insurance in the US. It covers a wide range of commercial risks, from workplace injury claims to clean-up costs from environmental damage, but policyholder claims have proved to be higher than anticipated at the time the policies were sold, forcing AIG to boost its reserves. As a result the company has booked some of the biggest reserving charges in the industry’s history.

At the end of 2015, it added $3.6bn to sums earmarked for claims payouts. A year later, and to the anger of investors, the company took an even bigger reserving hit of $5.6bn.

The company’s difficulties stem partly from decisions taken years ago. Problematic policies sold by AIG, such as professional liability and workers’ compensation, are known in industry jargon as “long-tail”, leaving the insurer on the hook for potential liabilities years into the future.

And while other companies sell similar policies few have had the same scale of problems as AIG. “In some lines [types of insurance], management wasn’t conservative enough; in other places it was bad luck; in other places it was underpricing,” says Mark Dwelle, analyst at RBC Capital Markets.

Some point the finger at policies AIG sold during the financial crisis when it was faced with an uncomfortable choice: sell the insurance more cheaply than its better-rated rivals, or give up business.

In many cases, say analysts, it chose the former. One person familiar with the company says AIG was at the time taken advantage of by savvy corporate insurance buyers exploiting the “internal disarray” by securing cover from the company at attractive terms.

Others argue the problems date back even further, to the company’s rapid expansion in the late 1990s. The scale of the mispricing only became clear several years later, when claims started to roll in.

For all that AIG’s modern managers have been bound by the decisions of the past, analysts say more recent executives also share the blame. More than half of the $5.6bn reserve charge AIG took last year was due to losses on policies sold since 2011, for instance.

Mr Duperreault has said he expects the troublesome general insurance business to deliver an underwriting profit by the end of this year.

Monday 18 June 2018

C002D5556

Nigeria to transform to major driver of global growth – Lai Mohammed

M

inister of information and culture, Lai Mohammed, says Nigeria will transform to major driver of global growth with its pool of vibrant, energetic youths and government’s repositioning policies.

The minister said this in a keynote address he delivered at the 2018 ‘Africa Together Conference’ at the University of Cambridge in the UK on Saturday.

A text of the minister’s address was made available to newsmen on Sunday in Abuja by his special adviser, Segun Adeyemi.

The minister was speaking on the global projection of Africa’s population, which is said to double by 2050.

According to Mohammed, the anticipated development will not be a threat to the continent and the member states if proper things are done.

Mohammed specifically said the administration of Presi-

dent Muhammadu Buhari was implementing the right policies to maximise the projection for national development.

“To some, this is a ticking time bomb. What if there is no opportunity? What will youths without jobs do, mobilise, destabilise? True in Africa, urbanisation has not correlated with poverty reduction as it has in other regions. However, where some see looming clouds, I see a concentration of energy,’’ he said.

The minister added: “The number of people reaching working age will be larger than the rest of the world combined by 2035. And they will be young.

“This great pool of vibrant and energetic labour has the potential to transform the continent’s development. If there is one country that is emblematic of this, it is perhaps Nigeria. Indeed, it will be largest contributor to this surge.

“We shall move from being the 7th largest nation on earth to

the 3rd. And among the ten largest nations on earth, Nigeria will be the fastest growing,’’ he said.

The minister said the Buhari administration was steadily transforming Nigeria through innovative measures that were yielding positive results and repositioning the country for greatness.

He listed investment in people, changing the business environment and building national infrastructure as some of the areas in which the administration had made a great impact.

According to him, by focusing on education and skills acquisition, the administration is addressing the need to create opportunities for the country’s teeming youth population.

To address the challenge of school enrolment and high number of out-of- school children, he said 8.2 million are being fed daily free meals in 45,000 schools.

He said the Home-Grown School Feeding programme had

Children in UK exceed annual sugar intake limit in 6 months

C

hildren in the UK have consumed more than a year’s worth of sugar in less than six months, public health figures showed.

While four-to-ten-year-olds should not have more than the equivalent of five to six sugar cubes per day, they are consuming 13 on average, according to data from the latest National Diet and Nutrition Survey.

This means children will have around 4,760 cubes of sugar by the end of the year — more than double the maximum recommendation.

Too much sugar is blamed for high obesity rates in children and dental decay.

The British Department for Health agency is urging parents to try to cut back on sugary drinks, cakes and biscuits.

“We’re barely halfway through the year and already children have consumed far

more sugar than is healthy — it’s no surprise this is contributing to an obesity crisis,” said Alison Tedstone, chief nutritionist at PHE. “Snacks and drinks are adding unnecessary sugar to children’s diets without us even noticing. Swapping to lower- or no-added-sugar alternatives is something all parents can work towards,” Tedstone said.

In spite of the publicity around the sugar levy, which began in April, sugary drinks such as colas, lemonades and juices are still one of the biggest sources of sugar in children’s diets.

They account for 10 percent of sugar consumed by children, as do buns, cakes, pastries and fruit pies.

Biscuits are almost as big a problem, making up 9 percent of children’s intake, with spreads, jams and table sugar also contributing 9 percent.

Other big sources of sugar include breakfast cereals (8%), chocolate confectionery (7%), and yoghurts, from age frais and other dairy desserts (6%).

Fruit juice and smoothies can count as one of the five fruits and vegetables everybody is encouraged to eat per day, but they contain a lot of natural sugar.

PHE said that one serving a day of no more than 150ml is enough, which should be drunk with a meal not as a snack. PHE suggests parents should swap their children’s sugary drinks for water, lower fat plain milks, sugar-free or no-added-sugar drinks.

It also offered ideas on its Change4Life website. It said that lower sugar snacks include fruit, plain rice cakes, toast, fruit teacakes, malted loaf or bagels with lower-fat spread.

The Obesity Health Alliance said PHE’s figures were alarming.

lions of families, helping them to address their own development goals, but we can help them do more and build their longerterm future,” Gilbert Houngbo, President of IFAD said.

According to IFAD analysis, families spend about 75 percent of their remittances on basic needs such as food, housing, education and health.

“Remittances help reduce hunger and malnutrition, improve education and health levels, and lift people out of poverty.

By doing so, remittances contribute directly to the Sustainable Development Goals set by the international community in 2015.

“Not only are remittances a critical lifeline for millions globally, the direct benefits of money sent home by migrant workers touch the lives of one in every

seven persons on the planet,” IFAD said.

According to IFAD, after spending remittances on basic needs such as food, housing, education and health, a sizable amount – over 100 billion dollars, still remains.

“This presents a large pool of resources, which can then be invested in financial and tangible assets such as savings or small business development that help families build their future.

“These productive activities can also create jobs and transform economies, in particular in rural areas.

“Given appropriate investment options, customised to their circumstances and goals, remittance families will invest more and become agents of change in their communities,” IFAD said.

Diaspora remittances to developing countries to exceed $6.5trn between 2015-2030

I

nternational Fund for Agricultural Development(IFAD)has estimated that remittances sent to developing countries could cross $6.5 trillion between 2015 and 2030, involving over 1 billion senders and receivers.

IFAD said in 2017, 200 million migrants sent $481 billion to remittances-reliant countries of which $466 billion went to developing countries, helping sustain about 800 million people across the world.

This amounts to more than three times the annual official development assistance that countries give in aid, the rural development agency said.

Close to half of remittances will go to rural areas where poverty and hunger are the highest, according to IFAD. “Remittances are vital for mil-

yielded other results, including the employment of more than 80,000 cooks and a ready-made market for food crop farmers.

The minister said skills shortages in the labour pool were being addressed through several measures, including the fourpronged N-Power programme.

He said the administration was also changing the business environment for good, focusing especially on removing the red tape that makes it cumbersome for business and stifles innovation.

The minister noted that the challenge of access to credit was also being frontally addressed by making it possible for MSMEs to register their movable assets, such as vehicles and equipment for collateral, to raise loans and finance.

Mohammed told his audience that the two most critical impediments against business, decent transport connections and a reliable power supply, were also being tackled.

“For instance, Nigeria earmarks 30 per cent of its annual national budgets for capital expenditure. That means N2.7 trillion has gone toward our infrastructure in the last two years -unprecedented in our history,’’ he said.

A7 NEWS

BUSINESS DAY

NGOs want sickle cell disorder treated as major public health challenge SEYI JOHN SALAU

A

s part of efforts to deepen the awareness for sickle cell disorder, the Coalition of NGOs in Lagos has called on the government to pay more attention to the disorder by treating cases of sicklecelldisorderasamajorpublic health challenge in Nigeria.

This call was made as the coalition commemorates this year’s awarenesscampaignwithacharity walk on the theme “SCD: A Walk for Hope.”

Toyin Adesola, chairperson, Coalition of Sickle Cell Disorder NGOs, Lagos State/executive director, Sickle Cell Advocacy and Management Initiatives (SAMI), said, “The coalition is working to sensitiveNigerianstorecognisethe disorder as a major public health problem.”

According to Adesola, about 1-in-4 persons in Nigeria are healthy carriers of the sickle cell geneandover150,000childrenare born annually with symptomatic sickle cell anaemia.

“Our goal is to improve the quality of life of people with sickle cell disorder in Nigeria and increasetheiraveragelifeexpectancy from less than 20 years to what obtainsamongaffectedpersonsinthe US – 60 years – and even surpass it.

“This can only happen if all hands are on deck, with governments working in concert alongside the privatesector,NGOsandcommunities across the country,” she said.

Annette Akinsete, national

director/CEO, Sickle Cell Foundation of Nigeria, said the walk was to create awareness to the public and also to get active participation from the government and private organisations.

“The World sickle Cell Day is to spreadaccurateinformationabout sicklecellbecausethereissomuch misinformation in the public,” Akinsete said.

Akinsete added that Red Umbrella Walk was to mobilise everyone including the government to pay attention and fund projects on sickle cell disorder. “The coalition of NGOs is to strengthen our campaignsandwebelievethatthis willmakeourvoicestobelouderto attract the attention of the governmentandcorporateorganisations,” she said.

The Red Umbrella Charity Walk is an annual event that helps to deepen awareness about Sickle Cell Disorder. Through the campaign, people are given proper education on how to identify individuals with the disorder as well as tips on how to manage the conditions and crisis that occur to them.

The event tagged ‘Red Umbrella Charity Walk’ sponsored

by Fidelity Bank Plc. is to commemorate the World Sickle Cell Day. Nigeria joined the rest of the world to commemorate the 2018 World Sickle Cell Day on June 19 as designated by the United Nations to draw attention and create necessary awareness to the problems posed by sickle cell disorder.

A8 BUSINESS DAY NEWS

Monday 18 June 2018

C002D5556

Edo, reference point for good governance - Osinbajo

V

ice President Yemi Osinbajo says Edo State in the last decade has retained her status as a reference point with regard to good governance in Nigeria.

Osinbajo gave the commendation at a state dinner held in his honour at the Edo Government House in Benin City, as part of his two-day visit to the state.

The Vice President e x p re s s e d s at i s f a c t i o n with efforts of the Governor Godwin Obaseki-led administration in re-enacting the developmental strides recorded in the administration of the late Samuel Osaigbovo Ogbemudia.

He assured of the Federal Government’s readiness to support the state in it effort to bring development to the people.

He s a i d t h e va r i ou s projects that informed his visit to the state would boost the Edo economy, e s p e c i a l l y t h e Fe d e ra l G o v e r n m e n t ’s S o u t h South Innovation Hub.

In his remark, Obaseki expressed his appreciation to the Vice President for his continued support for the state, noting that t h e s e v e ra l i n i t i a t i v e s of the Office of the Vice President have provided jobs for Edo youths.

“The N-Power and NBuild programmes have remained major sources of encouragement for the state in her journey to greatness,” the governor said.

The Edo State deputy governor, Phillip Shaibu, solicited for more supp o r t f ro m t h e Fe d e ra l G overnment to enable the state benefit more from the initiatives of the President Muhammadu Buhari-led administration.

Obaseki at the dinner announced full scholarship to Miss Obakpolor Esosa, a Senior Secondary School 1 student of Idia College, Benin City, due to the depth of her presentation on the Menace of Human Trafficking.

People with albinism deserve our support – Obaseki

G

overnor of Edo State, G odwin Obaseki, has called for support for people with albinism, urging s o cieties that marginalise and stigmatise them to turn a new leaf.

O b a s e k i , w h o ma d e the call in commemoration of the International Albinism Awareness Day, marked on June 13, each year, stressed that it was time for a change of attitude towards people with albinism.

“With the deluge of information on the internet, the myth and unscientific views many societies hold of people with albinism should have no place in an information age. But unfortunately, some societies still despise and exclude them. This needs to stop,” the governor advised.

According to Obaseki: “Some of the most hardworking people I have met are people with albinism, despite their peculiar needs, which are often not captured by human resource managers in the private and public sectors.”

He saluted champions of the cause of people with albinism and challenged families, religious institutions, the media, opinion and thought leaders as well as governments at all levels, to intensify the campaign for the social

inclusion of people with albinism.

Th e Un i t e d Nat i o n s General Assembly in 2014, adopted a Resolution proclaiming, with effect from 2015, 13 June as International Albinism Awareness Day. According to the global body, “The United Nations Human Rights Council adopted a resolution in 2013 calling for the prevention of attacks and discrimination against persons with albinism.

“Moreover, in response to the call from civil society organisations advocating to consider persons with albinism as a specific group with particular needs that require special attention, on 26 March 2015, the Council created the mandate of Independent Expert on the enjoyment of human rights by persons with albinism.

“In January 2016, Ms. Ikponwosa Ero, United Nations Independent Expert on the Enjoyment of Human Rights of Persons with Albinism submitted her first report on albinism to the UN Human Rights Council. Adding to the information contained in the July 2016 report to the G eneral Assembly, the latest report was presented to the Human Rights Council in 2017 and included a focus on witchcraft as a key root cause of attacks against persons with albinism.”

L-R: Ipalbo-Harry Banigo, deputy governor, Rivers State; Nyesom Wike, governor, Rivers State; Ifeanyi Okowa, governor, Delta State; Celestine Omehia, former governor of Rivers State, and George Sekibo, a senator, during the inauguration of Mgbuosimini Rumueme Primary Health Care Centre in Rivers.

NAN

Nigeria lacks manpower, stable policies to drive prospective projects in aviation – experts … national carrier, MRO, airport concession to kick off soon IFEOMA OKEKE

N

igeria is said to be short on requisite skills and policiestodrivetheaviation sector, in the face of opportunities opening up in few months, experts say.

Experts have reiterated that adequate manpower and stable policies are key drivers to the six major prospective investments in the aviation sector, some of which may kick off this year.

The six projects in the roadmap include the concession of the four major airports, establishment of MaintenanceRepairandOverhaul (MRO) Centre and Aviation leasing company, development of Aerotropolis and cargo/Argo allied terminals,establishmentofnational carrier.

In March 2018, the Federal Government unveiled transaction advisers for these six projects in the Aviation Roadmap in line with the Infrastructure Concession and Regulatory Commission (ICRC) guidelinesandpublicprocurement act.Thisimpliesthatthereareplans ongroundfortheseprojectstocommence soon.

“Nigeria needs to be ready to

shoulderthesehugeinvestmentsin the aviation sector. With the current deficitofmanpowerandunfriendly government policies, I do not think these investments will ever be sustainable,” an operator who craved anonymity told BusinessDay. The operator says further that these investments are very capital intensive and if the investors perceivethattheirinvestmentscouldbe at risk, they may withdraw.

He recalls that between 2015 and 2016, the sector lost over $2 billion in investment from internationalfinancierswhowantedastake in Nigeria air transport sector by buildinganMRO,butthedepleting fleetofdomesticairlinesandinconsistent government policies have halted the investment decision.

The five Civil Aviation Training institutions in Nigeria include the Nigerian College of Aviation Technology (NCAT) Zaria, the International Aviation College (IAC), Ilorin, International Helicopter Flying School, Enugu, Landover AviationTrainingSchool,Ikeja,and Aeroconsult Training School, Ikeja.

BusinessDay’s findings show that NCAT, which is the biggest aviationschoolinNigeria,graduates an average of 500 trained personnel yearly, followed by IAC Ilorin,

which produces between 60 and 80 pilots yearly. Other schools produce between 150 and 200 trained personnel yearly.

HadiSirika,ministerofaviation, says these numbers are not sufficient to address the growing travel market in Nigeria, adding that the country needs trained work force inICTfirms,aerospacemanufacturers, MRO, power plants engineers and mechanics.

Over the next 20 years, Boeing is forecasting that the world would manufacture over 39,600 airplanes valued at more than $5.9 trillion becausethetotalnumberofaircraft in year 2015 will increase from 22,510 units to 45,240 aircraft by the year 2035.

This will come from the manufactureof39,620newunitsofvarious typesofaircraftworth$5,930billion.

ItispredictedthatAfricawillrequire 1,150 units valued at $ 170 billion.

Sirika explains that the engineers, ICT experts, pilots, among others that will join and participate in the design, manufacturing, operations and maintenance of these aircrafts would be in excess of 1 million people. There will also be additional need for additional aviationinfrastructuretoservicethe increasing fleet of aircraft.

Bayelsa workforce down to 27,000 from 55,000 SAMUEL ESE, Yenagoa

B

ayelsa State government says its workforce is now 27,000 down from 55,000 as a result of the ongoing public sector reforms introduced by the Governor Henry Seriake Dickson administration.

Commissioner for information and orientation, Daniel Iworiso-Markson, made the disclosure at a town hall meeting organised to drum up support for the ongoing reforms at Sagbama on Thursday.

Iworiso-Markson, who described the public sector reforms as one of the best policies embarked upon by the state, said the reduction was achieved by removal of ghost workers from the payroll.

He said the ghost workers were discovered through verification exercises and

expressed hope that more achievements would be recorded for the overall benefit of the people before the end of the administration.

Thanking the people of Sagbama for producing Governor Dickson as a leader who is doing so much to transform the state, he stressed that the reforms would provide job opportunities and resources for more infrastructural development.

Iworiso-Markson called for support from the chiefs and people of the area and urged them to work hand in hand with the various teams that would visit their communities to verify and pay pensioners.

Also speaking, the commissioner for labour, employment and productivity, Collins Cocodia said Bayelsa State was second to Lagos State in terms of public service workforce in 2012, but now has 27,000

persons on the payroll.

In their separate remarks, the Leader of the state House of Assembly, Peter Akpe and Bernard Kenebai representing Sagbama I endorsed the restructuring process disclosing that the legislature would soon institutionalise the reforms.

Earlier, the acting chairman of Sagbama Local Government Council, Michael Magbisa, in his welcome address lauded the state government for the reforms revealing council’s monthly wage bill has dropped from N173 million in 2016 to N66.4 million.

Special adviser to the governor on political matters, Fyneman Wilson, Francis Doukpola, the Ibenanaowei of Oyiakiri Clan, Joshua Igbagara and state secretary of the People’s Democratic Party (PDP), Godspower Keku, expressed support for the reforms.

Azura-Edo IPP: Proof of Edo’s enabling environment for private investors - Osinbajo

V

ice President Yemi Osinbajo has attributed the delivery of the Edo-Azura 450mw Independent Power Project (IPP) as a testimony of the Governor Godwin Obaseki-led administration’s posture in creating an enabling environment for private businesses.

The Vice President, who said this during a visit on Friday to the Azura-Edo IPP, near Benin City, said the project demonstrated the capacity of Nigerian engineers as well as Nigerian enterprise.

He said the plant has greatly increased the capacity of Nigeria to generate power, noting, “With the 450mw from this plant and the quality of this particular plant, I think we are on to a very good thing. I think with the capacity to increase generation from here, I think this is very positive.

“All that we need to do is to create the environment for businesses to thrive. As you know, this is a privately owned plant and a private initiative but with the active support of the government.

This is one of the reasons why I am here. To give all the support that we can and ensure that the environment is right for those who want to invest in the power sector is what we will do and what we will continue to do.”

He described as fantastic his experience in the state for the two days, noting, “I have been to the groundbreaking of the housing units at Emotan Gardens. I have also gone to see the innovation hub, which we describe as the South-South Hub, a collaboration between the Federal Government and the State Government.

“I saw all of the young, creative Nigerians involved in technology and innovation, doing wonderful things. I was here to commission that; and to see our N-Power and Government Enterprise and Empowerment Programme (GEEP). I am glad that I came and I will be back.”

Earlier on Friday, the Vice President met with Christian leaders in the state at the Government House, during a breakfast session and paid a visit to the Benin Monarch, Omo N’ Oba N’ Edo, Uku Akplokpolo, Oba Ewuare II, in his palace.

BUSINESS DAY

C002D5556

NEWS YOU CAN TRUST I MONDAY 18 JUNE 2018

fivethings

Opinion

for your new week

Buhari is right to halo ‘June 12’, but wrong to politicise it GLOBAL PERSPECTIVES

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

F

or the avoidance of doubt, it is right, unquestionably right, to revisit the annulment of the June 12, 1993 election, recognise the results and honour the winner. So, I have no issue with the substance of President Buhari momentous, out-of-the-blue, decision to declare June 12 as Democracy Day and a public holiday, and to confer the country’s highest national honour posthumously on Chief MKO Abiola, the acclaimed winner of the annulled election, and the second highest national honour on Abiola’s running mate, Babagana Kingibe, as well as, posthumously, on the late lawyer and civil rights activist, Chief Gani Fawehinmi. I rejoice with them and their families for receiving a belated justice for the pains they suffered directly from the iniquitous and criminal annulment of the 1993 election.

Yet, laudable as these decisions are, we cannot, and must not, ignore the motive and process that underpinned them. This is important because the capriciousness of the annulment cannot justify the capriciousness of its redress. A civilised society is not run on the whims and caprices of its leaders.

Furthermore, in politics, as in law, motives and process matter. In politics, a wrong motive and a flawed process can undermine the legitimacy of an otherwise sensible decision. And, as every lawyer knows, process values are often more important than substance values, and motives can taint or esteem an action!

Sadly, the rightness of the President Buhari’s decisions is tainted by their arbitrariness and underlying cynical politics. And it is on these grounds of improper motive and flawed process that I refuse to have a herd mentality but instead strike a discordant note amid the cacophony of celebratory noises about the president’s historic decisions.

For a start, President Buhari was wrong to have hatched his ‘June 12’ plans stealthily and then spring a surprise on the nation in what some have called a “masterstroke”. Secondly, even worse, he was wrong to have done so in such a blatantly partisan way in a pre-election year, with just over six months before the next general election.

In the UK, gaining unfair elec-

toral advantage is so frowned on that there is a “purdah” in the pre-election period which prevents ministers and civil servants from announcing new policy initiatives that may be seen to give the government an advantage over the opposition.

Yet, as Professor Wole Soyinka put it in a speech at the investiture of Abiola and others, Buhari’s ‘June 12’ decisions were made “with an eye on electoral fortunes, undoubtedly”. Indeed, leaders of the president’s party, All Progressives Congress (APC), have made absolutely no pretence of the decisions being non-partisan. Bola Tinubu, APC’s national leader, made explicit links to next year’s elections when he said to Buhari: “Thank you for bringing hope back to Nigerians. You deserve the praise and we are going to win with you”.

Certain things should transcend partisan politics, and after 25 years, the annulment of the June 12, 1993 election should be one of them. Unfortunately, what should have been a crossparty opportunity to unite the country turned out to be divisive. For instance, why was the investiture attended by virtually no senior politician outside the APC and by hardly any prominent Nigerian outside the Southwest? Well, because the June 12 issue was politicised and ethnicised, as it has been for over 20 years with the annual charade of Southwest governors declaring a public holiday on June 12, while the rest of the country took absolutely no notice!

holiday – are so fundamental, with far-reaching national consequences, that they should not be taken frivolously with the wrong motive and a flawed process. Unfortunately, that’s precisely what happened. It’s a pity!

The process flaws in President Buhari’s decisions were obvious from the statement signed by him announcing the decisions. First, the statement said the federal government took the decisions “after due consultation”. But who were consulted and why was the consultation so secretive?

There was absolutely no reason why the process by which decisions about the June 12 annulment were made should not have been open and transparent. I can’t think of any civilised nation where the government would show such insensitivity to process values and spring a surprise on its citizens on such an important issue. Heightened sensitivity to process values brings greater legitimacy for major decisions.

Second, the statement described Abiola as “the presumed winner” of the annulled election. My immediate reaction was: “Really? So, President Buhari took these far-reaching decisions based on a presumption”. This exposes a fundamental process flaw at the heart of the president’s decisions. Elsewhere, such monumental decisions would have been preceded by an independent commission of inquiry, headed by a highly respected judge.

The commission would verify the results of the election,

But these decisions...are so fundamental, with far-reaching national consequences, that they should not be taken frivolously with the wrong motive and a flawed process. Unfortunately, that’s precisely what happened.

It’s a pity!

President Buhari’s decisions are therefore significant. By declaring June 12 as Nigeria’s Democracy Day and a national public holiday, he has rightly stripped the commemoration of the June 12 annulment of its crude ethnicization. Equally, by conferring Nigeria’s highest national honour, GCFR, posthumously on Abiola, Buhari has effectively reversed the annulment of the June 12, 1993 election and posthumously recognised Abiola as the elected president.

But these decisions – the recognition, effectively, of Abiola as winner of the June 12, 1993 general election and declaration of June 12 as Democracy Day and national

tell us the winner (which, of course, we all know was Abiola), order the release of the results and make other recommendations. Based on the independent review, the government could then make the kind of decisions that President Buhari made.

Let’s face it, you can’t effectively reverse the annulment of the June 12, 1993 election and declare Abiola the elected president without publishing the official results of the election. In a rule-oflaw country, such decisions would result from the recommendations of a judicial commission of inquiry. As things stand, President Buhari’s decisions seem so arbitrary and so whimsical. It is wrong!

But what are the motives, why did Buhari do it, and why now? Well, it’s about the politics of next year’s election.

First, on a collateral level, the decisions were designed to embarrass Generals Ibrahim Babangida and Olusegun Obasanjo, both of who have come out to oppose Buhari’s second term bid. Babangida, of course, was the evil genius who annulled the June 12, 1993 election, and Obasanjo was the serendipitous beneficiary of the annulment, who, regrettably, ignored the June 12 issue and Abiola throughout his eight years as president. Let’s be clear, Babangida and Obasanjo deserve eternal opprobrium for their ignoble parts in the June 12 saga, and few should shed tears if Buhari’s decisions make them ashen-faced!

But, then, while Buhari is happy to embarrass Babangida and Obasanjo on the June 12 issue, he’s paradoxically whitewashing General Abacha, who emerged from the annulment to impose a reign of terror on Nigeria, ensuring the deaths of Abiola and his wife, Kudirat, among others. I wrote about this three weeks ago, and Professor Wole Soyinka put it powerfully when he told Buhari at the investiture: “It is not possible to honour MKO Abiola in one breath and then admire his tormentor (Abacha) in another breath”.

Indeed!

Now, the second motive is more strategic. Buhari wants to bribe the Southwest ahead of next year’s elections. APC’s Southwest leaders needed something positive to say to their people about Buhari during the campaign. They would have struggled, given Buhari’s poor performance.

But now Buhari has thrown them something like a lifeline. Surely, they would, to use a term in British political lexicon, “weaponise” the ‘June 12’ decisions to try and gain electoral advantage.

They would trumpet how Buhari did what previous leaders didn’t do by righting the wrongs of the June 12 annulment and honouring Abiola and Fawehinmi!

The truth is that the June 12 issue will feature prominently in next year’s elections. The highly political statement, titled “June 12 tsunami and those who won’t forgive Buhari”, issued by the presidency after Buhari’s announcements, and the statement by the secretary to the federal government that “more heroes of democracy” would be honoured, are clear indications that President Buhari’s decisions on the June 12 annulment were mainly intended as a political weapon against the opposition ahead of next year’s elections.

Sadly, the crude arbitrariness and blatant politicisation of President Buhari’s actions have cast a shadow over what are otherwise sensible decisions on the ‘June 12’ issue. Pity!

Fascinating business facts

S

75%

outh Africa says demand for processed meat has dropped by 75 percent and the demand for pork cold cut by 50 percent following the outbreak of listeriosis which has killed at least 208 people since the start of 2017. The meat industry has had an estimated 40% of its profit wiped off. More than 1,038 have been infected the government said. Tiger Brands Ltd., the country’s biggest food producer, closed factories for cleaning and has recalled and incinerated more than 4,000 metric tons of products and the plants will probably stay shut most of the rest of the year.

O

$76.96

il touched a one-week high Friday as traders weighed conflicting supply signals from Saudi Arabia, Russia and Venezuela. Futures rose above the $66-a-barrel mark in New York. Brent futures for August settlement slid 36 cents to $76.96 on the London-based ICE Futures Europe exchange. Oil ministers from Saudi Arabia and Russia are set to talk next week, fueling speculation that two of the world’s biggest crude exporters may be ready to wind down historic production limits.

T

38%

he share of women to receive full-time MBA degrees from U.S. schools at below 38 percent from mid-2012 through mid-2017 may help explain why the battle to get more women into boardrooms is not being won. New data show that since 2012 the number of women applying to full-time MBA programs has “hit a plateau,” according to a 2017 paper from the Graduate Management Admission Council. Meanwhile, about 21 percent of S&P 500 company board members are women. “If we can get more women to come into business school, that’s a way to build the pipeline to effect change longer term,” says Ellen Taaffe, the director of women’s leadership programs at Northwestern University’s Kellogg School of Management.

T

$50bn

he IMF came to Argentina’s rescue on Thursday with a standby arrangement worth $50bn over three years, far more than envisaged by markets which were expected to welcome the move. The size of the loan, which was subject to approval from the IMF board, surprised local media which had speculated it would be closer to $30bn. “I thought it was going to be big but this far exceeds expectations. Great news,” tweeted Miguel Kiguel, an economist, who expected bond prices to rally on Friday. “It is now clear that the country has ample capacity to pay [its debt].”

E

0.1%

quity markets were lower Friday as investors shun risk ahead of a controversial meeting of the G7 in Canada, with attention back on the Trump administration’s trade tariffs. Mr Trump further stoked the flame of the crisis after lashing out on Twitter at French and Canadian leaders, Emmanuel Macron and Justin Trudeau, over the two countries’ trade practices, just as western leaders prepared for what promises to be a fractious G7 summit.

S&P 500 is down 0.1 per cent at 2,767 in early New York trade, as the pressure on developed world equities eases after wider falls for German and Chinese stocks earlier in the day. Frankfurt’s Xetra Dax 30 is down 0.4 per cent, having traded over 1 per cent lower after another set of economic data sharply missed forecasts, adding to concern that the country’s economy is struggling to gain momentum after a lacklustre first quarter.

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Ghana Office: Business Day Ghana Ltd; ABC Junction, near Guinness Ghana Limited, Achimota – Accra, Ghana.

Tel: +233243226596: email: mail@businessdayonline.com Advert Hotline: 08116759801, 08082496194. Subscriptions 01-2950687, 07045792677. Newsroom: 08022238495 Editor: Anthony Osae-Brown. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.