BusinessDay 18 Jun 2020 by BusinessDay

businessday market monitor

Biggest Gainer Nestle N995

FMDQ Close

Everdon Bureau De Change

Bitcoin

NSE

FOREIGN EXCHANGE

Biggest Loser Seplat

10.00 pc N476.4 24,972.94

Foreign Reserve - $36.166bn Cross Rates GBP-$:1.25

Commodities -9.99 pc Cocoa US$2,240.00

Gold $1,726.18

NEWS YOU CAN TRUST I ** THURSDAY 18 JUNE 2020 I VOL. 19, NO 587

BUY

$-N 443.00 £-N 540.00 €-N 475.00

Crude Oil $ 38.65

N300

www.

SELL

454.00 555.00 493.00

Market

Spot ($/N)

3M 0.00 4.15

I&E FX Window CBN Official Rate

386.00 361.00

Currency Futures

NGUS MAY 26 2021 419.73

($/N)

FGN BONDS

TREASURY BILLS

5Y 0.00

0.00 2.32

8.40

NGUS MAY 31 2023 492.84

10 Y -0.02

30 Y 0.00

10.97

12.24

NGUS MAY 28 2025 578.69

Cement, telecoms, pensions successes show Nigeria not a lost cause C T

Recession, job losses, FX, taxes worry CEOs as COVID-19 numbers rise

... Sanwo-Olu says lack of data worsened Nigeria’s coronavirus status

ENDURANCE OKAFOR & SEGUN ADAMS

he success stories of some Nigerian industries like telecommunications, pensions and cement show all hope is not lost for the country’s failing sectors, according to stakeholders at a panel session at BusinessDay’s digital dialogues

on Wednesday. The various industry players said the right operating environment, political will, smart regulation and full deregulation of some of the troubled sectors would not only enable them to replicate the success already enjoyed in some industries but

would also create new records. To help failing industries achieve a breakthrough and become successful, the stakeholders noted there was need for the injection of competent hands at the helms of affair of organisations and institutions as well as encourage healthy competition

See full coverage of BusinessDay National Conversation on pages 30,31

that will benefit consumers and investors alike. One lesson Nigeria can learn from its successes in the telecommunications industry is to provide a clear mandate and avoid half-hearted deregulations, said Ernest Ndukwe, former CEO, Nigerian Communica-

Continues on page 29

ODINAKA ANUDU

hief executives of major companies in Lagos are worried about the devastating impact of COVID-19 on the state’s economy, expressing concerns that the imminent recession, job losses, foreign exchange scarcity and taxes could rob Africa’s fifth largest economy of its allure. “One of our major challenges now is access to foreign exchange,” said Roy Deepanjan, CEO of Lagos-based Chi Limited, manufacturers of beverages, at the Private Sector Interactive Webinar with Lagos State Governor organised by the Lagos Chamber of Commerce Continues on page 29

Inside

Collier, bankers seek to unshackle I&E FX window to grow P. 6 economy Flour Mills of Nigeria plc; (2nd row): Ndidi Okonkwo Nwuneli, co-founder, Sahel Consulting; Kola Masha, managing director, Babban Gona Nigeria, and Aliyu Abdulhameed, managing director, Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL), during a panel session tagged ‘Safeguarding the Nation: Agricultural credit and national food security in an economic downturn’ at the BusinessDay national conversation on Nigeria’s response to COVID-19, yesterday.

Belief in ‘Nigeria dream’ strong despite challenges P. 6

Thursday 18 June 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 18 June 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 18 June 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 18 June 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 18 June 2020

BUSINESS DAY

news

Only 15.9% of Kano mass death caused by COVID-19 - report Adeola Ajakaiye, Kano

n official report of the Kano State government’s committee instituted to investigate the recent mass deaths in the state says only 15.9 percent of the deaths are traceable to the ravaging Covid-19 pandemic. The findings of the committee negate the earlier pronouncement of Osagie Ehanire, minister of health, on the report of the Presidential Committee on Covid-19, which put the figure of the deaths connected to the mass-death incidence at 60 percent. The Kano government’s position on the deaths was contained in a ‘Verbal Autopsy Report, and Retrospective Review of Case of Mortality Committee’ submitted to Governor Abdullahi Umar Ganduje at Africa House, Government House, Kano, Tuesday. Presenting the report, Mukhtar Gadanya, head of the state committee, who read the report, disclosed that the retrospective study of the mortalities was conducted over approximately two weeks (April 27 – May 15, 2020), in eight metropolitan LGAs - Gwale, Fagge, Tarauni, Kumbotso, Ungogo, Nassarawa, Kano Municipal and Dala. According to Gadanya, the mortalities in the identified local government areas were line-listed, and questionnaires were administered from house to house of the identified individuals affected by the death incidence. “To make it more scientific, the mortalities reviewed were for a period of one month (April 1 and May 2, 2020), while relatives of those who passed away were interviewed by respective Ward Focal Persons (WFP), using a structure questionnaire into an electronic

platform (ODK). “Data from the questionnaire were reviewed for categorisation into most probable causes of mortality by medical specialists using “two-symptoms” criteria (at least presence of two of any of fever, cough and shortness of breath,” Gadanya explained. The professor pointed out that their research suggested inter-play of various factors contributing to the “mysterious deaths.” Mortality in the community is cyclical and varies by seasons and months. “Main estimate: Suspect COVID-19 – 255 out of 1604 deaths or 15.9% (95% confidence interval: 14.1% to 17.8%). Some deaths may be related to disruption of medical care and socio-economic activities due to fear of contracting COVID-19, which usually happen during epidemics. “If the mysterious deaths were COVID-19 related, the deaths could have come more from local governments that have more COVID-19 cases. Tarauni local government for example, with 100 confirmed COVID-19 cases is the first in pandemic ranking, but in the mysterious deaths it is rated seventh,” he further explained. Among those who impacted on the study, among the development partners were, WHO, UNICEF, DFID, NCDC, AFNET, E-HEALTH, among others. They all participated in the study and were present during the report presentation. In his remarks, Governor Abdullahi Umar Ganduje commended the Committee for the good job done. “This report, which was scientifically conducted, has put to rest all postulations, predictions, permutations and all hues cries about the mysterious deaths.

Dangote empowers Ogun host communities, provides food palliatives, scholarships

s part of efforts to give back to the people and provide succour during the lockdown occasioned by the coronavirus pandemic, Dangote Granite Mines Limited, a subsidiary of Dangote Group, has provided food palliatives and scholarships to five communities in Ijebu-Igbo in Ijebu North Local Government Area of Ogun State. The palliatives were taken round the communities and handed over to the people while the cheques for the scholarship awards were handed over to the Ijebu-Igbo monarch in his palace, who in turn gave them to the community heads for onward distribution to their children. Leading the management team of Dangote Projects to the Ijebu-Igbo palace, Fola Ebenezer Ali, the group general manager, human resources, said the company would continue to do whatever would promote progress in the communities within which the mines granite operates. The management would have loved to gather the awardees together in an elaborate ceremony but because of the global safety protocols to follow in view of the COVID-19 pandemic, which was why the management presented the cheques to the Royal Father who in turn would present them to the heads of the communities, he said.

A c c o rd i n g t o A l i , t h e cheques for the secondary school beneficiaries were made out in the names of individual pupils while those of the higher institutions across the country were drawn in the name of institution where the students are studying. He explained further that the food palliatives had earlier been distributed to the families before the ease of the lockdown in Lagos, Ogun and FCT, and that various food items were given out to cushion the effect of the lockdown on the people whose sources of livelihood have been badly affected. An elated monarch of the town, the Sopelukale of IjebuIgbo, Oba Mufutau Yusuf, Erinkiola 1, expressed his people’s appreciation to Aliko Dangote for the good gestures in alleviating the hardship faced by the people. The royal father said the food palliatives came at the right time when families were finding it difficult to eat and feed their children and that “not minding the Coronavirus pandemic, he has come again to give us scholarship. We really appreciate this.” He assured the management team that the people would not disappoint the company and would do all to maintain peace in the community, saying his people were peace loving. www.businessday.ng

Collier, bankers seek to unshackle I&E FX window to grow economy

…Nigeria touched N380/$ on official market on plans to unify rates SEGUN ADAMS

enior bankers have joined the Oxford University professor, Paul Collier, in calling on the Central Bank of Nigeria (CBN) to relax its hold on the importers and exporters foreign exchange window as a way of easing the country’s foreign exchange demand backlog now estimated at over $2.5bn. BusinessDay learnt that the backlog is giving the bankers sleepless nights as they struggle to appease their correspondent banks abroad that have taken a dim view of the way Nigeria is managing its foreign exchange market. The I&E window has long been acclaimed as a major breakthrough in the country but the initial enthusiasm has dissipated because of what many believe to

be an attempt by the apex bank to manage what happens in the market. “The reason we have this backlog is because you have one major player (CBN) which determines what happens in the market. Free the market, don’t constrain it,” according to one senior banker who spoke to BusinessDay in Lagos. BusinessDay learnt that during Tuesday’s bankers committee meeting, the CEO of GT Bank, Segun Agbaje, was mandated to lead a small team to come up with how the foreign exchange backlog can be swiftly resolved without harm to the economy. The CBN in the first three weeks of March sold $2.7bn in the I&E market (both spot and forward sale) providing most of the liquidity for the market in that period. In May $500,000 was sold but the bank has been dormant

more recently as it tries to manage scarce FX. Analysts say FPIs are not supplying because they cannot get their money out while banks are sitting on their FX leading to severe dollar crunch in the economy. According to sources, dollar liquidity in the market has more or less dried up since April. Trade has fallen to under $40m with some days seeing as little as $10m traded compared to an average of $300m-$400m traded before the coronavirus outbreak. Our source said most of the traders are also the suppliers, matching dollars they bring in with their own demand. More than a month ago, the central bank moved the official rate from N306 to the dollar to N360 but many believe this still leaves much to be desired given that the I&E rate which best mir-

rors the market rate is at N383. There were suggestions Wednesday that this rate could move closer to N385 but no one is sure when this will happen. Speaking at the BusinessDay national conversation, Tuesday, the Oxford University economist Paul Collier said Nigeria is damaging its own economy by maintaining multiple exchange rates and by seeking to allocate foreign exchange. “It is really damaging when the central bank starts to allocate foreign exchange through multiple exchange rates. Unifying the exchange rate around a level that works for everybody is both urgent and important now,” the leading economist said on the panel that also included Finance Minister Zainab Ahmed. “You cannot keep kicking the can down the road in the hope oil price will come again.”

L-R: Olalekan Oyinlade, managing director, Old Mutual General Insurance Company Nigeria Limited; Folashade Adefisayo, commissioner for education, Lagos State, and Olusegun Omosehin, managing director, Old Mutual Nigeria Life Assurance Company Limited, during Old Mutual Nigeria’s visit to the Ministry’s Secretariat to announce series of support to drive education in Lagos State with the shutdown of schools due to COVID-19 in Lagos.

Belief in ‘Nigeria dream’ strong despite challenges DIPO OLADEHINDE

egardless of the numerous economic challenges facing Africa’s biggest economy,participantsat the BusinessDay digital dialogues still believe in the Nigerian dream of a better standard of living. Nigeria’s over $400 billion economy is the biggest in Africa. Yet, gross income inequality and poor distribution of wealth mean Nigerians do not benefit from this wealth, with about 100 million living in poverty. Most Nigerians, however, still believe the country can be better if the right infrastructures and institutions are put in place. These views were expressed in surveys conducted during the second day of the two-day BusinessDay digital dialogues themed ‘A National Conversation: Mapping Nigeria’s Response to COVID-19’. More than 78 percent of the respondents to the surveys said they believed in the Nigerian dream while 94 percent of the respondents believed the Nigerian

dream is achievable. Whether this dream will be achieved in their lifetime or not is split both ways. 50 percent of respondents believe the Nigeria dreamwillhappenintheirlifetime. These views were expressed because of the recent impact of the coronavirus pandemic which has led to a triple crisis in the economy (global and local), healthcare sector and oil market. The crash in crude oil prices has magnified the challenges facing Nigeria’s ailing and oil-dependent economy; a recession is expected in the coming months. In order to solve this problem, Nigeria’s economy is currently seeking innovative ways to cushion the adverse effects of the coronavirus pandemic. The crisis is seen as a catalyst for long-delayed reforms in the energy sector and the often avoided push for diversification. All the respondents in the poll said an improved energy sector will help diversify Nigeria’s economy. Most stakeholders have always insisted that the future of Nigeria’s energy lies in its vast

https://www.facebook.com/businessdayng

gas reserves which need to be unlocked in order to solve its electricity challenges, with approximately 55 percent of Nigeria’s population lacking access to constant power supply. More than 55 percent of the respondents believe they are currently overcharged for electricity while more than 95 percent said they will pay more for electricity if it’s constant and metered. In order to achieve the ‘Nigerian dream’, another critical area that needs national attention is the educational sector. From the survey, 93 percent of respondents said digital technology can help scale education in Nigeria which needs desperate improvement in order to reverse years of decay and prevent falling further behind its peers. All of the respondents agree the government has not done enough to increase digital education, a result which corroborates the views of most stakeholders who believe the Nigerian education system has undoubtedly failed millions of children and need urgent systematic change @Businessdayng

across the country to redress the problem. In order to curb the spread of the coronavirus pandemic, 63 percent of respondents said lockdown of schools should not be eased before September 2020. Also, 92 percent of those polled agreed that enough has not been done to prevent agriculture from the effects of COVID-19 while another 68 percent said getting food supplies has been more difficult during the lockdown. To boost agriculture and indeed the rest of the economy, President Muhammadu Buhari and previous heads of states have looked to restrict competing foreignimports.Sometimesitgoesas far as closing borders for all goods which Buhari has done twice. Campaigns like ‘Buy Naira to Grow the Naira’ and ‘Eat what we Grow’ are attempts to convince Nigerians to support their own but most experts have always insisted that restricting importation without addressing some of the fundamental issues on ground will lead to putting square pegs in round holes.

Thursday 18 June 2020

BUSINESS DAY

news

FG to deploy single window, scanners by year end to curb influx of fake products ... calls for strengthening of SON AMAKA ANAGOR-EWUZIE

etermined to check the importation of fake and substandard products into the country in line with established protocols, the Federal Government is concluding plans to operationalise the National Single Window project as well as deploy scanners at the nation’s seaports before the end of the year. The Single Window, a port community portal and functional scanners at the ports, would ensure that lead agencies such as Nigerian Customs Service, Nigerian Ports Authority and Nigerian Police Force would be brought under one platform, and there would be little or no need for routine physical examination of cargo by additional agencies at the ports. Adeniyi Adebayo, minister of industry, trade and investment, stated this on Monday at an investigative hearing on the incessant influx of fake, substandard and counterfeit products into the country, organised by the House of Representatives Joint Committee on Commerce; Industry; Information; National Orientation; Ethics and Values. The minister said there was an implementation committee at work, of which he was a member, to ensure the single window and scanners were deployed appro-

priately. According to Adebayo, this will significantly improve cargo turnaround time at our ports, promote efficiency and transparency, thereby removing the corruption opportunities that fuel the entry of substandard goods into the country, and enhance Nigerian ports’ competitiveness in the West African region. In the same vein, the Federal Government is calling on relevant agencies to further strengthen the enforcement of the Standards Organisation of Nigeria Conformity Assessment Programme (SONCAP) alongside proposed PEBEC reform interventions. Under the programme, importers of a wide range of goods must obtain two certificates in order to operate: Product Certificate (PC), either unregistered, registered or licensed; and the SONCAP Certificate (SC). Jumoke Oduwole, special adviser to the President on Ease of Doing Business, represented at the hearing by Oluwatoyin Bashir, said the action would further complement the efforts of the Buhari administration aimed at improving efficiency at port operations. Oduwole said the decision to streamline the operations of agencies at the port was first implemented by the previous administration in 2011, and again reinforced in 2018.

Delta to establish modular refinery, others to create more jobs Francis Sadhere, Warri

n its quest to create more jobs for its citizens, Delta State Executive Council (EXCO) on Tuesday approved the setting up of a modular refinery and commencement of work at an agro-industrial park in the state. The government also appointed a committee to assess the state of Africa Timber and Plywood (AT&P), Sapele, and determine how the land it is occupying could be effectively utilised for other ventures. The decisions, which were reached at the Exco meeting, were made known to newsmen in Asaba by the commissioner for information, Charles Aniagwu. According to Aniagwu, “Delta is known for its petrochemicals and Exco believes that it is high time we participated in that Sector. So, we are investing in a modular refinery to be established at Okpai, Ndokwa East Local Government Area. “The modular refinery will generate revenue for the state and create job opportunities for our people.” Aniagwu, who was joined by the chief press secretary to the governor, Olisa Ifeajika, also reaffirmed that the 2020

budget of the state was being reviewed in line with developments as a result of the Covid-19 pandemic. He assured Deltans that the state governor, Ifeanyi Okowa, and his team were working out programmes that would get them positively engaged and reduce the effects of the ravaging pandemic. According to the commissioner, the state government would be partnering the private sector to train some youths on how to construct telecommunication towers. “Due to Covid-19, what we had today was more of economic Exco meeting as it was basically on how to re-jig the economy of the State to get more of our people engaged now and after the Covid-19. “Most of us are aware of the agro-industrial Park at Aboh-Ogwashi; Exco approved that government should explore that window provided by the Central Bank of Nigeria (CBN) Agriculture Loan to see that the industrial park, which will be private sector-driven come on stream. “The industrial park is big and you are aware that Norsworthy is among the companies that is investing and managing the park.”

Sanwo-Olu names boards of multi-billion LSETF, LSSTF JOSHUA BASSEY

overnor of Lagos State, Babajide Sanwo-Olu, has approved the reconstitution of boards of two key parastatals considered crucial in driving good governance and delivering the ‘greater Lagos’ vision of his administration. The agencies are Lagos State Employment Trust Fund (LSETF) and Lagos State Security Trust Fund (LSSTF). The LSETF established in 2016 under the administration of Akinwunmi Ambode, with the initial target of N25 billion over four years, provides financial support by way of low-interest loans to residents with business ideas, start-ups and existing small and medium businesses with the aim to boosting employment and growing the gross domestic product (GDP) of the state. On the other hand, the LSSTF, which was established under the administration of Babatunde Fashola, plays a critical role in the security machinery of Lagos. Since its establishment in 2007, the LSSTF, which is jointly funded by the state government and the private sector, has provided equipment and logistics support to federal security agencies with formations in Lagos,

including the police, army, navy and state-owned neighbourhood watch in sums running into billions of naira. Sanwo-Olu, in a statement signed by his chief press secretary, Gboyega Akosile, on Wednesday, said the new board appointments, which take immediate effect, were necessitated by the vacancies in the two organisations. The governor thanked the previous members of the boards for their service to the state and also congratulated the new members for accepting to serve, urging them to improve on the achievements of their predecessors. Members of the four-year tenure LSETF board include Bola Adesola, (chairman), Sinari Daranijo, Tatiana MousalliNouri, Segun Ojelade, Kofo Durosinmi-Etti, Idris Olorunimbe, Ronald Chagoury, and Abisoye Tejumola, who will serve as the executive secretary. Those for the LSSTF are Kehinde Durosinmi-Etti (chairman), Segun Agbaje, Ebenezer Oneyeagwu, Adesola Adeduntan, Emeka Onwuka, Tayo Ayinde, Bamgbose-Martins, Agboola Oshodi-Glover, Yemi Idowu, Niyi Adewunmi, Ayodele Ogunsan, and Abdul Razaq Balogun (executive secretary). JusticeForUwa: Edo seeks collective efforts to end rape, child abuse, others

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

do State government has called for the collaboration of all stakeholders in bringing an end to the rising incidences of rape, child abuse and all other forms of genderbased violence in the state. Commissioner for Social Development and Gender Issues, Maria Edeko, made the call during a sensitisation campaign and solidarity walk against Gender Based Violence (GBV) in various parts of Benin City, the Edo State capital. The commissioner, who was represented by the permanent secretary of the ministry, Joy Ebhodaghe, expressed dismay over the increasing cases of rape in the state, noting that the ministry would implement the extant laws to ensure stiffer penalties to curb the ugly trend. She reassured that the Governor Godwin Obaseki-led administration would continue to step up efforts at ensuring that Edo State remained uninhabitable for rapists and other perpetrators of criminal activities. The rally organised by the ministry in collaboration with Global Women for Quality and Sustainable Development (GWSD) steered protesters to the State Secretariat of the Nigeria Union of Journalist (NUJ) and the Edo State House of Assembly, calling for more stringent laws to protect the people against rape as well as other forms of gender-based violence. The aggrieved protesters decried the incessant cases of rape across the country, condemning in strong terms the rape and gruesome murder of Uwaila Vera Omozuwa, a 22-year-old Microbiology student of the University of Benin.

Thursday 18 June 2020

BUSINESS DAY

RESEARCH&INSIGHT A WEEKLY PUBLICATION OF BUSINESSDAY RESEARCH & INTELLIGENCE UNIT(BRIU)

In association with briu@businessday.ng

08098710024

Post-COVID-19 should kickstart revamping of Nigeria’s healthcare sector ISAAC ESOWE

he ongoing health crisis caused by the severe acute respiratory syndrome coronavirus 2 (SARSCoV-2) has resulted in loss of lives and economic productivity. As of June 4, 2020, a total of 6,591,382 individuals across 213 countries of the world had been infected with the novel virus. In Africa, South Africa recorded the most cases to the tune of 37,525 infected people ahead of Egypt with 28,615; and Nigeria, 11,166 infected individuals. In a bid to effectively curtail the spread of the virus, lockdowns of varying degrees were put in place across the world, especially, in most affected countries. The negative impact of the pandemic on the global economy, the health crisis reveals how important health centres, personnel and medical equipment are, especially in rural areas. State of the Nigerian healthcare sector before the pandemic Access to inclusive, quality health care services is important for promoting and maintaining health, preventing and managing the disease, reducing unnecessary disability and premature death, and achieving health equity for all populace. The Nigerian health care system has been confronted with several life-threatening infectious diseases – from Meningococcal disease, Poliomyelitis, Avian influenza, Cholera, Ebola virus disease outbreak, Lassa and yellow fevers, among others. Hence, there is a need to tackle the problem. Before the confirmation of the first index case on February 27, 2020, the deteriorating state of the Nigerian healthcare sector had been a major subject of discourse between the private and public sectors. For years, Nigeria’s healthcare network was been rated among the

Source: Newspapers, State government’s Budget, BRIU

worst in the world: a 2018 study by The Lancet of Global Healthcare access and quality ranked Nigeria 142nd out of 195 countries. In 2019, the World Health Organisation (WHO) ranked Nigeria health sector 187 out of 191 countries in terms of access to quality health care and delivery. Insight gain by BusinessDay research and intelligence Unit (BRIU) from the Medic West Africa report shows that the prevalence of infectious diseases remains high. Nigeria ranks poorly on the incidence of tuberculosis (128 out of 138 countries) and the prevalence of HIV (123 out of 138 countries). On under-five child mortality, there are 89 deaths per 1,000 live births, a level far above the target of 64 deaths per 1,000 live births set in the UN Sustainable Development

www.businessday.ng

Goals (SDGs). Though, for the past 2 decades and more, there has been some progress recorded in health space. The maternal mortality rate in 2014 was 576 deaths per 100,000 live births compared to 1,000 deaths per 100,000 live birth in 1990. In 2015, Nigeria’s estimated maternal mortality ratio was over 800 maternal deaths per 100 000 live births, with approximately 58 000 maternal deaths during that year. Health care reforms launched in Nigeria before COVID-19 outbreak Over the years, different health care reforms and innovation have been initiated to see to the effective functioning of the health care sector. So far, the sector is still in its decrepit state. In 1946, a Ten-year Develop-

https://www.facebook.com/businessdayng

mental Health plan was introduced to improve the quality of health care delivery – this singular reform gave birth to different schools and institutions such as – Ministry of Health, several clinics and health centres among others. As the population increased, so the health need of the populace increased in similar magnitude. And in a bid to serve the citizenry better – primary health care plan was introduced in 1987 to improve collection and monitoring of health data, improve personnel development within the healthcare system, ensure the provision essential drug availability, improve on immunization programs, promote treatment of epidemic diseases, among other reasons. Unfortunately, this reform was hampered by lack of infrastructure, personnel deficit, in addition to poor public health management, as such, the reforms did not meet its full potential. That, however, led to the establishment of Nigeria Health Insurance Scheme (NHIS) in 2005 to help revamp the crumbling state of the health sector. Findings showed that this too did not attain much progress as health care delivery continued to be limited. A breakdown of the health budget allocated to the ministry of health to mitigate the challenges that impeded the growth of the sector showed that to the government has not made any strong commitment to address the problem of the sector due to low budgetary allocation. Nigeria’s health sector appropriated bill for 2020 fiscal years is 4.5 per cent of the total federal budget. This is below the proposed 15 per cent agreed in 2001 by the Africa Union members in Abuja to enable each country scale up health care spending for sectoral improvement. A crisis like the corona pandemic demonstrates how important reliable information and transparent communications are, particularly when

@Businessdayng

dealing with such a sensitive area as health. Current studies on quality measurement in the healthcare system show why Nigeria is lacking in terms of transparency. The Covid-19 crisis has brought these weaknesses into limelight but also provides an opportunity for Nigeria to address them. At present, there is no adequate and functional surveillance systems. To achieve success in health care in this modern era, a system well-grounded in routine surveillance and medical intelligence gathering as the backbone of the health sector is necessary, besides adequate management coupled with strong leadership principles. And again, Nigeria’s government can make healthcare affordable and accessible with improved service delivery through strategies in reversing workforce migration as well as outbound medical tourism and adopting a framework and policies by the government that would encourage private sector participation in the healthcare sector. Also, there is a need to increase technology adoption to spur growth and development in the country’s healthcare industry. Conversely, due to the pandemic, the number of people that seeks medical tourism has dropped drastically. In 2016, according to Price Waterhouse Coopers report, Nigerians spent $1 billion annually on medical tourism with 60 per cent of it on four key specialities – oncology, orthopaedics, nephrology and cardiology. This is nearly 20 per cent of the total government spending on public health sector for the year including salaries of all public sector doctors, nurses and other healthcare workers as well as other health programmes like malaria, tuberculosis, polio and HIV/AIDS prevention as total government expenditure on health sector for the year 2015 which stood at $5.85 billion.

BUSINESS DAY

Thursday 18 June 2020

comment

comment is free

Send 800word comments to comment@businessday.ng

Understanding the social contract III: The inexplicable case of Lagos

CHRISTOPHER AKOR

ver the last two weeks, I have tried to show the nature of the social contract we have in Nigeria – one that is basically rights-based with little or no awareness of the corresponding duties, how that kind of social contract came about and how the social contract is conceived and practiced differently in other climes. I therefore concluded – which is also in line with virtually all academic research into the social contract that “there cannot be government accountability where the government is not funded by the people directly and where the people place rights over duty or even makes the fulfilment of duty contingent on the government doing its own part.” This isn’t just theory but is also true in all cases and for all governments the world over. Just pick any country and analyse its revenues and check its accountability index. While countries that depend on their citizens to fund the government are more accountable to their citizens, countries that do not are not accountable to their citizens. In fact, in such countries like Nigeria for instance, the people are not sovereign but mere subjects who thrive or languish at the mercy of the government/political elite.

Even when such countries profess to be democracies and claim that sovereignty resides with the people, in reality, the government/political elite always find ingenious ways to thwart the will of the people or make it impossible for the people to freely express their will. I conclude this series with a reflection on Lagos – a state that has dared to buck the trend in terms of revenue dependence in Nigeria but which has not experienced any sort of corresponding increase in government accountability to the people. From the inception of the 4th Republic in 1999, Lagos state signalled its intention to not only harness its internally generated revenues and lessen or even end its dependence on federally allocated revenue altogether, but also institute a duties-rights conception of the social contract that will force its large middle class settlers to cultivate taxpaying habits. Over the last 20 years, the Internally Generated Revenue of Lagos rose from a mere N600 million monthly in 1999 to about N30 billion in 2018 thanks to a series of tax reforms and public campaigns. According to figures released by the National Bureau of Statistics, Lagos state alone generated N297.09 billion in internally generated revenue between January and September 2019, representing 30 percent of IGR generated by all the states in the country and well above the total budget size of more than 20 of Nigeria’s 36 states. Already, by 2012, Lagos state has become less reliant on federally allocated revenue, which represented a mere 30 percent of its budgeted revenues while tax revenues account for the rest 70 percent. True, as former Governor Ambode once quipped, “IGR is the energy that keeps [Lagos] going

and puts the state on a sound financial footing to continue to meet its obligations to the citizens.” However, the Lagos experience seems to confound the long-established social contract theories that accountability naturally improves as the government relies more on the people for its revenues (through taxation). The Lagos state government is one of the most notoriously non-accountable states in Nigeria. It not only refuses to publish its statement of accounts, but also runs the government in such an opaque manner that leaves no one in doubt that it is a feudal system with fealty to only one master - the godfather of the state, who brooks no disloyalty from any government personnel, elected or appointed. Election after election, the feudal system persists in Lagos and virtually all the candidates of the godfather are returned elected. Despite being a democracy and with one of the most sophisticated elite and middle class in the entire country, the feudal lord in Lagos seems to be the only law in town and his words and wishes are law regardless of what the over 20 million people in the state want. It will not be out of place to say all elected and appointed government officials in and from the state are accountable only to the feudal lord and no one else. He alone decides who gets elected or appointed to which position and he determines the political careers of virtually all the political players of the state. How can one explain this inexplicable situation? There are many factors that account for this anomaly. First, the mindset that Nigeria is still an oil-rich country and over-reliance on oil revenue, military rule and subjugation, lack of interests and non-involvement in the political process especially by the middle

‘

Election after election, the feudal system persists in Lagos and virtually all the candidates of the godfather are returned elected. Despite being a democracy and with one of the most sophisticated elite and middle class in the entire country, the feudal lord in Lagos seems to be the only law in town and his words and wishes are law regardless of what the over 20 million people in the state want

June 12 and the founding fathers of Nigeria (1)

he founding fathers of Nigeria would be unhappy with the regular eulogy of praises on them at events like the democracy and independence days. They would be unhappy with the legacy they left behind, the state of the country- the economy, disunity, poverty level, massive corruption, herdsmen killings, religious intolerance, and the threat to the sovereignty they fought and gained from the colonial masters. Alas, they would be saddened by their actions in leaving a country without a specific national value and existential ideology except for competitive co-existence for power and dominance on the platform of religion, tribe, and ethnicity. The founding fathers like Herbert Macaulay, Alvan Ekoku, Nnamdi Azikwe, Obafemi Awolowo, Ahmadu Bello, Abubakar Tafawa Balewa, Aminu Kano, Joseph Tarfa, Dennis Osadebey, Ernest Enahoro and a host of others will be unhappy with the current state of affairs of the country. No doubt, the nationalists fought for Nigeria’s independence with their lives at risk and with all the resources available to them. They were united in the pushing for Nigeria’s emancipation, and that appeared to be the only cause Nigeria has been truly united on except for the votes on June 12, 1993. The aftermath of independence was the battle for the political leadership of the country through regionalism and focused on our differences. The political parties founded during nationalism and after independence were more of regional alliances of people in a new country when the unity of purpose, direction and action should have been the focus. The unity void is with us today, and the best opportunity to correct it was destroyed by the military junta led by Ibrahim Babangida. From the Nigerian National Democratic Party, Union of Young Nigerian, Nigerian Youth Movement, National Council of

Nigeria and Cameroon, Northern Elements Progressive Union, United National Independence Party, United Middle Belt Congress to Action Group, Northern People’s Congress and others were parties with regional roots and ideology. The second republic major political parties like the Unity Party of Nigeria, the National Party of Nigeria, Great Nigeria People’s Party, and others are the same without national cohesion, ideology, and value. Though the second republic parties have leadership that cut across the ethnic segments of the country, it was evident that the intentions for the mix were devoid of any national identity or ideology—just a little show of diversity to gain votes from the other ethnic groups. With the above, Nigeria, as a country with diverse ethnic groups, has been divided at birth with one common ground. The common ground was to gain independence from the British. There were little concrete and united attempts to build a unified country except for the introduction of the quota system, which is the subjugation of merit, equality, and fairness for inclusion through ethnic balancing. The lack of national cohesion and drive to transit into one big nation where the differences are subjugated for the benefits of diversity makes our political growth and maturity a game of gamble. We are in the circumstance that was foreseen by the nationalists but for which they did not do enough to avert. If you are in doubt and want a proof that the unity of this country has been a concern for ages, take a new look at the statements of your founding nationalists about the country they led. Sir Ahmadu Bello said “It is true that we politicians always delight in talking loosely about the unity of Nigeria. Sixty years ago, there was no country called Nigeria. What is now Nigeria consisted of several large and small communities, all of which were different in their outlooks and beliefs. The advent of the British

www.businessday.ng

and that of Western education has not materially altered the situation, and the many and varied communities have not knit themselves into a composite unit.” Chief Obafemi Awolowo’s famous quote attested to the unity problem when he said, if rapid political progress is to be made in Nigeria, it is high time we were realistic in tackling its constitutional problems. Nigeria is not a nation. It is a mere geographical expression. There are no “Nigerians” in the same sense as there are “English”, “Welsh,” or “French”. The word “Nigerian” is merely a distinctive appellation to distinguish those who live within the boundaries of Nigeria from those who do not. Sir Abubakar Tafawa Balewa said, “Since 1914 the British Government has been trying to make Nigeria into one country, but the Nigerian people themselves are historically different in their backgrounds, in their religious beliefs and customs and do not show themselves any sign of willingness to unite, Nigerian unity is only a British intention for the country”. Though actions were claimed to have taken through the words of the nationalists, our founding fathers, none of such effort is to be proud of as the successive leaders have either failed to build on it or have destroyed value. The so-called founding fathers laid the foundation for the mismanagement of Nigeria’s diversity, polarising the nation with political parties on religion and ethnic ideology and not ideologies that build nations. We should stop eulogising leaders based on their involvement in the colonial struggle alone but on a sustainable legacy like that of Lee Kuan Yew which set Singapore on the trajectory of growth and prosperity. Our current reality is the posterity of our founding fathers; not what they have done without recurring positive effects. Our independence is not real independence to the current set of Nigeria youth who

https://www.facebook.com/businessdayng

class has made the opaque situation in Lagos to persist. In 2019, for instance, the former governor of the state was denied a second term for disloyalty and someone, whose only political ambition, by his own admission, was to be Chief of Staff, was imposed as the governor of the state. But he went through the process or elections and secured a whole 75 percent of the votes cast. The statistics were harrowing. Out of the 5.6 million registered voters in the state, less than a million voted. If just 50 percent of registered voters turned out to vote, the situation would have been different. During the election campaign, I was invited to moderate a town hall meeting between Lekki residents and then candidate of the All Progressives Congress. I overheard an argument between the organisers and a member of the campaign team of the candidate. The individual made it clear to the organisers that the governorship candidate was only being magnanimous by attending the town hall meeting, but that he doesn’t need their votes to win. Besides, as he claimed, the middle class don’t vote. And even when the candidate came for the event, he arrogantly refused to entertain any of the requests made by residents of the area. This is an area with a population in the millions. Of course, the feudal lord of Lagos knows this fact, incorporates it in his political strategy and always comes out successful. Ultimately, no change happens in a flash. It takes time and effort. Besides, duties always precede rights. As the people of Lagos are socialised into performing their duties and as discontent grows louder, the people would soon begin to question the status quo and demand a change.

Positive Growth with Babs Babs OlugbemI

are not better compared to their counterparts in other countries with similar resources as Nigeria. With the colonial rule, our education and health sectors might not be as it is. So, in eulogising the so-called founding fathers, let’s debase their credentials with the defective political structure and institutions they gave us and only praised them for the project with a sustainable legacy like the free education one of them gave the nation which is alive till date, with products from all the ethnic groups in Nigeria and which shows in the tolerance and accommodative nature of the region he governed. The education legacy of Awolowo is enduring and lives on if we are to be objective. The enduring achievement of the founding founders of nations is not their participation in the emancipation struggle. It is work after the emancipation. The accomplishment of founding fathers should be the foundation in terms of political structure, and institutions they established to guarantee future development for the coming generations. Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng Babs Olugbemi FCCA, the Chief Responsibility Officer at Mentoras Leadership Limited and Founder, Positive Growth Africa. He can be reached on babs@babsolugbemi.org or 08025489396.

@Businessdayng

Thursday 18 June 2020

BUSINESS DAY

comment

comment is free

Send 800word comments to comment@businessday.ng

Kano & Coro: Politics of blame-trading & ‘my people-my people’... Bulum, another Professor Governor

ik MUO

he political dynamics of Coro-war in Kano became pronounced following the worrisome incidents of mysterious deaths in the state. By the way, mysterious deaths and illnesses have become a part of our coro odyssey as they have occurred in Bauchi, Jigawa, and many other parts of the country. It all started when the government on 26/4/20, acknowledged the mysterious deaths, stated that investigations were ongoing but declared that the deaths were not connected with coro but were rather caused by complications hypertension, diabetes, meningitis and acute malaria. 600 mysterious deaths occurred in 7 days, and most of them were eminent people (including Ibrahim Ayagi) a situation that almost resulted in grave-diggers strike. But does it mean that multiple deaths are not sources of worry long as they were not CORO-related? Furthermore, the FG did not immediately say or do anything about the matter, an action some people interpreted to mean that the PMB government doesn’t care about “a whole” Kano state. This happened when the coro-fire was already raging and there were underground disaffections because the governor was handling the matter as a family-affair as his smallgirl doctor was allegedly in charge of the operations (even if discreetly). People knocked Ganduje over his cluelessness on the matter with one

Olufumilayo wondering why a government that was quick to split the emirate, appoint (and swore-in) new emirs, sack Emir Sanusi and exonerate the Governor-dollar allegation suddenly became clueless with the mysterious deaths and coro. Then the PDP jumped into the ring, demanding a presidential visit and an immediate investigation into the mysterious multiple deaths and condemning the governor’s handling of the matter. As expected, the APC responded in kind, describing the PDP comment as “a desperate attempt by the opposition party to play petty politics with a serious matter of national and international importance”. And then Garba Shehu, whose main job description is “igha-aja” (mudslinging) against any contrary spirit warned against attempts to politicise the mysterious Kanio deaths declaring that it was “not the time to waste energy on political point-scoring by current or former office holders” or orchestrate any differences between the Federal and State government All this happened at a time when the Kano testing facilities were in disarray with some of the staff testing positive to the extent that the centre was closed. The Governor went to the BBC Hausa Service to hit the FG below the belt lamenting “Sincerely speaking, we are not getting deserved attention. If these equipment (testing centres) are under our control, we will do our best to make sure it works properly. But we are not getting the needed support and cooperation from the Presidential Task Force on COVID-19.” (hmmmm!) Kwankwanso, the former governor then wrote an open letter (everybody has now learnt from Obasanjo), asking the FG to take over the Coro-war in Kano because there was poor leadership (Politics?). He premised his letter on the very scary rise in the number of people that are mysterious dying in Kano. the uncoordinated and unprofessional manner

in which the fight against the disease in Kano state is being waged and the attendant and unprecedented mistrust of the government by the governed; the near absence of cooperation and coordination between the state and the federal government on the COVID-19 response; the frightening reality of the tendency of the present health emergency might become a security emergency. As all this was going on, the Kano State government accused a former NHIS boss, Usman Yusuf of playing politics with Coro because the Prof had alleged that Ganduje was distributing the disease across the North. The Commissioner for talk-talk also reminded all of the incapacitated Aminu Kano Teaching Hospital, was owned by the federal government, and that the state had no control over the testing centre. He then accused the Prof of playing politics with the disease, with the core objective of denting the sparkling image of the Governor Ganduje and ultimately igniting crises in the state., regretting that he chose the political path rather than collaborating with the state to address some of these issues. The governor who had accused the FG of abandoning Kano eventually cried to the FG to “come over to Macedonia to help us” (Acts 16:9). The Federal Government did so in a big way. While it was sending one or two miserable trucks of contested quality products to other states, it sent an armada 110 Trucks (yes, one hundred and ten trucks) of items to kano. The NCDC also sent a special team to the state, which resorted to the unusual practice of verbal autopsy. The NCDC then announced that the deaths in Kano were Coro-related, stating that it had 5 cogent reasons to believe so. However, when the FG imposed a curfew on Kano, the same governor begged the Government to relax the curfew on “behalf of our people who are presently running out of food items” Two days later, the governor adopted a modified curfew option of free movement in

‘

The governor who had accused the FG of abandoning Kano eventually cried to the FG to “come over to Macedonia to help us” (Acts 16:9). The Federal Government did so in a big way. While it was sending one or two miserable trucks of contested quality products to other states, it sent an armada 110 Trucks (yes, one hundred and ten trucks) of items to kano

amounts to about 3,600mw out of which 100mw are dispatched to Niger Republic, Togo and Ajaokuta Steel leaving 3,500mw which at the average monthly tariff of N32 per kWh should yield about N80.6b. Out of this amount, the Gencos through Nigerian Bulk Electricity Trading (NBET) are expected to receive N52b, the Transmission Company of Nigeria (TCN) is expected to receive N8.6b and the balance of N20b would go to the Discos. However, in reality, the Discos cumulatively are only able to collect an average of N40b monthly from the 4m metered customers and 4m unmetered customers. Revenue collections by Discos are tracked by Central Bank of Nigeria (CBN) through the banks. Out of the N40b about N3b is deducted as first line charge for payment to CBN for the Nigeria Electricity Market Stabilisation Facility (NEMSF) it disbursed in 2015 to cover payments for legacy gas debts and tariff/ market shortfalls which had accumulated over the years even prior to privatisation; another N2b goes to FIRS payment for VAT; N8.5b is paid to TCN on the average while NBET receives N12b on the average. The Discos are left with N14Billion to cover their operations. In the above scenario, the Gencos that ought to have received about N52b receive only N12b remittance from Discos through NBET, which is not enough to cover their gas supply payment obligations not to mention their Operation & Maintenance costs thereby leaving a revenue shortfall of N40billion. TCN is only charging about 50 percent of its approved tariff of N8.3/kWh due to a NERC freeze on its full cost-recovery. This explains why

www.businessday.ng

Dr Muo is of the Department of Business Administration, OOU, Ago-Iwoye

TCN has regularly relied on government funding and borrowing for its capital expenditure when ideally it ought to be a profit-making company. Instead of receiving about N17b/month TCN receives only N8.5b. Likewise, Discos-the power industry scape goat-are constrained to use only N14b to run operations across the entire country including staff payroll and welfare, state income tax remittances, acquisition and maintenance of transformers, power lines, operational vehicles, tools and equipment, robust ICT infrastructure and until recently meters. Prior to privatisation, this gap otherwise called tariff/revenue shortfall existed and was well beyond the current 50 percent. However, because NEPA/PHCN was owned and operated by the government under the Ministry of Power & Steel, all operating and capital costs of the electricity industry from gas supply to generation, transmission and distribution costs were captured and covered under the Federal Government budget of the Ministry while collections were treated as revenue to government. In so doing the shortfalls were covered by the government. At all times during that period the budget of the Ministry of Power and Steel with specific relation to NEPA was always many times more than the revenue accruing to the Federal Government from the sale of electricity. At privatisation of the electricity sector, this tariff shortfall was duly recognised by the parties and a combination of government subsidy and tariff increase was adopted to cover the shortfall. The expectation was that with the shortfall covered by the combination of govern-

https://www.facebook.com/businessdayng

Other matters: Zulum, another professor governor I did not know much about Babagana Zulum, the Professor-Governor of Borno state but on 7/2/20, he earned my attention and admiration. One day and one event are enough for me to “know” him. After all, as our people would ask, how many lions should somebody kill before he becomes an Ogbu-Agu(lionkiller)? The day started like every other normal day and the governor started it in a manner that appears to have become in “his character”. He had paid an unscheduled, cock-crow visit to Shehu Sanda Kyarimi 2 Primary School to undertake an on-the-spot infrastructure needs assessment and was positively shocked to meet Mrs Mazi, a L12 teacher at the school around 6.30 am. She hails from Abia State and has been teaching for 31 years and was still a class-room teacher. Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng

Solving Nigerian intractable electricity issues – another view

he Nigerian Electricity Industry and COVID-19 seemingly share similar traits with the peace of God – they both surpass all understanding and have seemingly defied human understanding. Unlike the peace of God which confoundment endures forever, the solution to human COVID-19 lies in vaccine and/or a cocktail of drugs that would provide a cure while the cure to the electricity industry’s unending constipation lies in liquifying the market. Consider the following statistics. The total number of customers in the books of the Electricity Distribution Companies (Discos) is 10.4m, meanwhile there are more than 20million buildings and facilities connected to the electricity network in Nigeria. Out of the 10.4m customer accounts, more than 20 percent are inactive. Thus, less than 8m customers are paying for electricity consumed by over 20m consumers. Of the barely 8m active customers, only 4m are metered, the rest are on estimated billing. Out of the 4m metered customers, 50 percent of the meters are old, outdated and compromised. Thus, while 4m customers ostensibly pay for electricity they consume, the remaining 4m unmetered customers are meant to pay for electricity consumed by them and the other 12m consumers (who are not yet customers in the books of the Discos), for the books to balance. However, the 4m unmetered customers are not paying and indeed are unable to pay the difference. I will now translate this sorry scenario into naira and kobo. The total average electricity generated by the Electricity Generating Companies (GENCO’s)

the state between 10am and 4pm on Mondays and Thursdays and opening of Ya’nkaba and Ya’nlemo markets where vegetables and fruits are sold. So, the governor asked the FG to intervene and when the FG intervened via curfew, the governor modified the curfew. The governor was also one of the very first governors to open up the state for religious activities, in the interest of “my people”. Indeed, everything was and is for my-people, my people! To what extent do his people believe that coro is real and take responsibility for their safety? I don’t know but some of the boys were playing coro-footballtournament during the lockdown while there were allegations that the distancing and crowd protocols were not observed during the burial of the emir of Rano. But that is by the way!

Kester Enwereonu ment subsidy and tariff increase, the investors will make the requisite investments required to reduce the losses to levels that would reduce the need for subsidies; as efficiency and generation by Gencos rise, the retail price for electricity will fall. This informed the adoption of the Aggregate Technical, Commercial and Collection (ATC&C) loss reduction mechanism as basis for selecting the winning bids during the privatisation process. Unfortunately, after privatisation neither was subsidy infused per the agreement, nor tariffs adjusted to facilitate capital injection by the investors until a later date when inflation and exchange rate had driven the gap in tariff even wider. It is worthy of note that at privatisation the exchange rate was N157 to a dollar, at the point tariff was adjusted by about 30 percent in 2016 the exchange rate had spiralled to N360 to a dollar (more than 130 percent) thus rendering the tariff increase of no impactful consequence. Indeed, in dollar terms, the increased tariff was less in value (9 US cents) than the tariff in 2013 (13 US cents). The consequence was that the Disco Investors were no longer able to attract funds to make the required investments to reduce the losses. Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng Enwereonu is a lawyer and electricity industry stakeholder

@Businessdayng

Thursday 18 June 2020

BUSINESS DAY

comment

comment is free

Send 800word comments to comment@businessday.ng

The doomsday clock HumanAngle

Femi olugbile

ccording to the Doomsday Clock, the world is now “100 seconds to midnight”. It Is the closest the world has ever been to “doom”. The Bulletin of the Atomic Scientists was founded in 1945 by the University of Chicago scientists who had participated in the Manhattan Project that developed the atomic bombs that were dropped on Hiroshima and Nagasaki. Two years later, they developed the concept of Doomsday Clock to measure, from time to time, how close humanity and the planet earth were to a life-ending catastrophe. Apocalypse – meaning the end of life as we know It, is depicted as “Midnight”. The founding of the Bulletin by the scientists who, technically at least, bore a vicarious responsibility for the science that enabled America to kill of hundreds of thousands of Japanese men, women and children may be

seen as an attack of conscience in people appalled by the sheer destructive potential of the forces they had unleashed. It was no rocket science to discern, even at that time, that the horror was not going to end in Hiroshima and Nagasaki. Given the propensity of nations to strive to outdo one another, they foresaw there would be a race to build bigger, more powerful bombs than the ones that devastated Hiroshima and Nagasaki. Nations would assert their power by stockpiling nuclear weapons. In short order, there would be a real risk that two nuclear-armed nations would confront one another. The genie of nuclear conflagration was out of the bottle, and could never be squeezed back in. The worst fears of the scientists have been realised, and more. The end of the Second World War, hastened by the thermonuclear roasting of hapless Japanese, immediately unleashed a cold war between the “East” and the “West” – headlined by a nuclear arms race between America and the Soviet Union in which each contender amassed a nuclear arsenal with sufficient reach and power to blow up the world and everything in it several times over. If some people took comfort in the common sense fact that nuclear war was inconceivable because there could be no “victor” and it was bound to end in “Mutually Assured Destruction” (MAD), it quickly became clear after incidents such as the Cuban Missile Crisis that the possibility of one leader miscalculating and sparking off “the mother of all wars” was very real. The leader did not have to be a red-eyed “mad” despot. He could just be a nationalist, flexing patriotic muscle and playing “chicken” with his neighbour. The original danger the Atomic Scientists foresaw to humanity was a thermonuclear war. Over time, it became clear to Science that planet

Earth might not even require a nuclear war to kill off all life. The degradation of the Environment, the loss of the ozone layer, would, unchecked, kill the planet, and all in it. More lately concern about the role of the internet in cyber-warfare and other disruptive technologies has been added to the worry list of the Doomsday Clock. Internet-driven wars of disinformation prosecuted through the social media are sowing distrust among races and nations influencing elections and civil strife in other countries. The hands of the Doomsday Clock have sailed perilously close to “midnight” several times in the past. Before 2020, the “lowest” points occurred in 1953 and 2018, when the clock was set at “Two Minutes to Midnight”. In 1953 the USA and Soviet Union began to test hydrogen bombs which were vastly more powerful than the bombs dropped on Japan. On 24th January 2018, the clock was moved again to “Two Minutes to Midnight” in the heat of the hyperbolic hair-trigger exchange between Donald Trump and Kim Jung Un. The Science and Security Board of the Bulletin meet twice a year to assess the current risk to humanity. A conflation of risk issues has driven the world closer to apocalypse now that it has ever been. In setting the 2020 Doomsday Clock, the experts from the Bulletin of Atomic Scientists were joined by “The Elders” – a body of leading statesmen and thinkers formed by Nelson Mandela, with the lofty concern of bringing peace and harmony to the world. Mary Robinson, former President of Ireland and current Chairman of The Elders, as well as Ban Ki-Moon, former UN Secretary General and Deputy Chairman of The Elders joined the Scientists to emphasise present peril and the need for urgent corrective action. With erratic temperamental “na-

‘ More lately concern about the role of the internet in cyber-warfare and other disruptive technologies has been added to the worry list of the Doomsday Clock. Internetdriven wars of disinformation prosecuted through the social media are sowing distrust among races and nations influencing elections and civil strife in other countries

ape, a social menace which is becoming rampant in our society today. It is described as an act of sexual intercourse with an individual without his or her consent, through force or the threat of force. In many purviews, every crime of rape has been spanned as sexual assault, which also entails acts that fall short of intercourse. Although, the legal definition of rape has changed substantially overtime since the late 20th century but whatever its origins, rape is a serious crime. However, In many rape trials, the guilt or innocence of the accused is based on whether or not the victim consented to sexual intercourse so therefore the determination of this consent often can lead to distressing cross-examinations of rape victims in court and as a result of this many rape victims choose not to report the crime to the police or press charges against their assailants which has left the issue of rape both underreported and under prosecuted. Africa has the highest prevalence rate of child sexual abuse. As at 2004, 60 per cent of children involved in child trafficking from Africa to Europe were Nigerians and between 2012 and 2013, about 30 percent of women in Nigeria experienced one form of domestic violence or another. Findings from a National Survey carried

out in 2014 on Violence Against Children in Nigeria confirmed one in four females reported experiencing sexual violence in childhood with approximately 70 percent reporting more than one incident of sexual violence. In the same study, it was found that 24.8 percent of females’ ages 18 to 24 years experienced sexual abuse prior to age 18 of which 5.0 percent sought help, with only 3.5 percent receiving any services. In recent times, the case of rape in Nigeria has become quite alarming and threatening and requires urgent intervention, it is no longer a solitude criminal act affecting just a few women in the society. With the rights, privacy, dignity and selfpreservations of women being infringed upon by this social menace with little or no policy to protect the rights of this victims, this is a wakeup call to the government to proffer solutions to curb this issue, some of which include strategies such as: Public enlightenment which has shown to be a critical tool in changing behaviour, attitude, beliefs and value system of people. Therefore, there should be intense public enlightenment and education at schools, social clubs, cultural group gatherings, churches, mosques and through the media, to first of all, demystify the myths about sexual assault.

www.businessday.ng

Creating programmes to empower and support women and girl thereby strengthening economic supports and leadership opportunities for girls. Supporting Victims or Survivors to Lessen Harms by providing victim-centered services, treatment for victims of rape and treatment for at-risk children and families to prevent problem behaviour including sex offending. However, the government cannot handle the issue of rape prevention alone. Portfolios across all levels of government, including education, health, justice, and crime prevention, as well as the non-government sector and community stakeholders, each have a significant contribution to make. In conclusion, it is my belief that the issue of rape can be prevented if we work out and follow preventive measures, but however, if we continue to emphasise masculinity and femininity and avoid the complexity of sexual relations and sexual violence, we will be left with little hope for primary prevention becoming a reality.

Abraham John Onoja

How can we save ourselves from these beasts? Marauding in Human form They smile but deceitful They lure and seek to compromise

Retributions of the Accused Yea wolves in sheep clothing’s Cowards and as of beasts Kiddy Fiddlers and peeping toms Thou Vile creatures

https://www.facebook.com/businessdayng

tionalist” strongmen like Donald Trump squaring off against the Confucian mystique of Xi Jinping, mixing it up with boy-king Kim Jung Un, and the climate change and coronavirusdenying Brazilian Bolsonaro trying to out-Trump Donald Trump, while cold calculating “Leader-for Life” Vladimir Putin rides the Russian bear, consideration for the well-being of humanity is all too often relegated to the back-burner in the power corridors of the world. America and Russia are back to testing medium range nuclear missiles. China is threatening to overtake America in technology, as in economy, which America considers an unacceptable, existential threat. Meanwhile, the Chinese are already posturing like a racist colonial power in Africa. Cyberwarriors from Iran and China penetrate the most elaborate antivirus firewalls to hack into banks and shut down electricity networks in foreign countries. Perhaps they already have the power to reach nuclear launch consoles and steal the codes! And now there is COVID19 – a baby beside the “Spanish Flu” of 1918, which killed fifty million people. Even if it cannot match the “Spanish flu” in deadliness, the economic, social and political havoc it has wreaked is unmatched in the history of human society. The world will never be quite the same again. And now also there are “Black Lives Matter” placards on the streets of Western nations, and black and white protesters, demanding restitution for four hundred years of evil that built the foundation for the “civilization” we know. It is one hundred seconds to midnight. Can anyone turn back the hands of the Doomsday Clock? Olugbile is a writer and psychiatrist. synthesiz@gmail.com

Prevalent rape cases: Cause, prevention and way out

@Businessdayng

Who can save us!! While we slept, they skim While we walk the path, they lurk While we are weak, they prey Ponder on the tears Untold pain and misery Remorse and grief It is to you but few minutes It is of us a life time Hear these words From off the woods and forest, Down in the valley and mountains Thy days are numbered oh yea beast For judgement cometh quick Oh, sons of belial A day cometh, for you will be judged Judged for your treachery #SayNoToRape

BUSINESS DAY

Thursday 18 June 2020

Editorial Publisher/Editor-in-chief

Reducing the cost of oil production

Frank Aigbogun editor Patrick Atuanya

NNPC lacks the moral authority to issue threats

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

Bashir Ibrahim Hassan

utting the cost of oil production reported by Nigerian oil companies, which is among the highest in the world after shale oil producers in the US, is now a matter of survival but the government’s firebrand approach neglects its own role in the problem. Mele Kyari, the group managing director of the Nigerian National Petroleum Corporation (NNPC) has warned that unless oil companies reduce their cost of production, they may not have a business in the current $30 price environment. With oil prices hovering around $40 a barrel, many oil companies in Nigeria reporting $30 as cost of production will not have a business as the industry readjusts to the new normal of low prices. So Kyari is right that they may not have businesses. Kyari further alluded to a troubling situation among the local oil companies. In a webinar series with the theme: “The Impact of COVID-19 on the

Nigerian Oil and Gas Industry – the Way forward,” Kyari accused local producers of employing gimmicks including inflating the cost of associated risks and personnel costs which guts revenue available for taxation. He threatened that the government would revoke contracts and cancel projects of any firm that would not adhere to the production cost of $10 per barrel. In reality operating in Nigeria’s troubled Niger Delta region is fraught with risks. The kidnapping industry which Lagos-based SBM Intelligence firm said is worth over N7 billion was birthed in the region as oil workers, especially expatriates became prime targets. Companies pay millions yearly to government’s security agencies to protect their personnel and facilities. Community agitations over grievances real and imagined adds to the problem. People rupture pipelines in their own communities and some even prevent oil companies from carrying out repairs quickly in the hope they would extract more money by claiming

damages. True, some oil companies have behaved irresponsibly but by and large they have become more responsive. Many still pay millions to keep the locals happy as well construct projects which governments have failed to provide. Worse still, the multiple and sometimes conflicting regulations from half a dozen regulators raises operation cost for local oil producers. Some oil companies have paid twice for an Environment Impact Assessment on the same project and different agencies impose multiples levies and taxes for the same project. There is also inefficiency at the ports which raises logistics cost and the sometimes-unrealistic standards of International Oil Companies (IOCs) for their lesser Nigerian counterparts pose a problem. A simple requirement that vendors run their own cafeterias, to be eligible for contracts with them, for example, could raise cost for struggling local producers. Government intervention often ends at agitation for application of local content in materials and personnel but most oil companies

have found clever ways around the problem, often loading the personnel roster with Nigerians who do most of the work that don’t really matter. The fact that the threat to pull the contracts of operators who fail to produce at $10 is coming from the NNPC, speaks to the regulatory gaps in the sector. As a player and partner in joint venture agreements, the NNPC lacks the moral authority to issue threats when its own operations are not even efficient. It has run the refineries to the ground and does not even settle its obligation to its partners leading to cash call arrears. It lacks imagination to supply petrol to the market proclaiming an end to subsidy when government still controls pricing. In any case, as a player, it should not be issuing threats, that is the role of the regulators if things were normal. Notwithstanding, oil companies need to be more efficient and re-examine costs especially fat bonuses and allowances top management is hurling home. These are mean times; everyone should get lean.

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

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

Enquiries NEWS ROOM 08169609331 08116759816 08033160837

} Lagos Abuja

ADVERTISING 01-2799110 08033225506 SUBSCRIPTIONS 01-2799101 07032496069 07054563299 DIGITAL SERVICES 08026011296 www.businessday.ng 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.businessday.ng

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 18 June 2020

BUSINESS DAY

ENERGYREPORT Oil & Gas

Power

Renewables

Environment

Why natural gas is ultimate to Nigeria’s industrial devt enhancing food security.

olusola Bello

atural gas is key driver to industrialisation as it serves as feedstock to other industries such as the power, fertilizer and methanol subsectors amongst others. This is why the ramping up of domestic gas utilisations should be in focus in- country now, says Audrey Jeo Ezeigbo, president Nigeria Gas Association. It is worthy of note that Nigeria is blessed with resources for growth and global competition in gas. According to the Department of Petroleum Resources (DPR), Nigeria has the largest gas reserve in Africa and is ranked 9th globally - current estimates put its proven reserves at about 203 (Tcf ) and 600Tcf unproven. Austin Avuru, managing director and chief executive officer of Seplat Petroleum Development Company said, Nigeria must now have a change of mindset that sees oil and gas as a rent-seeking asset to an enabler of the economy. The gas industry in the country having survived the devastating impact of COVID19 needs to be stimulated to engender competition, get a regulator that would oversee the activities of operators, stimulate gas market and have a workable framework. Notable challenges of gas price, infrastructure and gas transmission should also be comprehensively addressed now to create a vibrant industry that can help boost the usage of natural gas and

Pipes being assembled for Ajoukuta, Kaduna, Kano gas pipeline project by Oilserv Limited

promote industrial growth. Amidst the growing global trend in gas production and utilisation, the expectations for the gas sector in Nigeria remains high and provide opportunities for investment in the sector. The opportunities include: Transitioning from an oil based economy to a more integrated oil and gas economy and ending routine gas flaring; Deliberate exploration for non-associated gas to support the Nigeria Gas Master Plan, with a focus on high liquid yield non-associated gas resources to optimize the gas development project economics. Other opportunities include: Removing constraints in the gas to power value chain to increase investor confidence, supporting and enabling competitive (“Willing Buyer – Willing Seller”) gas pricing model across the

value chain to enable stakeholders cover their costs and be guaranteed returns on their investments. There are some ways in which developing gas resources will enable diversification and boost the Nigerian economy. The country is endowed with vast natural gas resources, which can play a leading role in diversifying the economy by stimulating the development of other sectors of the economy. Let us take a critical look at the ways in which gas can aid diversification of the economy. Gas to power For Nigeria, gas provides a unique opportunity to provide steady, widely available, cost-effective and generally affordable power to everyone. A shift to gas-fueled power generation would represent significant savings oppor-

tunities over sources such as diesel, which is multiple times more expensive than gas currently. This savings can then be redeployed to other goods and services as new investments. Gas to industry as feedstock Additional opportunity exists in leveraging gas to develop industries that use gas as feedstock, to produce methanol and ammonia used in fertilizer production. Nigeria, with significantly larger gas reserves, has the potential to achieve even bigger success. The Nigerian agricultural sector, the largest GDP contributor to our economy, would benefit immensely from greater availability of fertilizer. Considering the low nitrate concentration in our soil and gas being the key feedstock for nitrate-based fertilizer, developing the gas industry could contribute to

Source of energy for production An officer of Promasidor while speaking about the experience of his company during the COVID19 pandemic said that one of the opportunities the use of natural gas offered as a source of energy for production since the COVID-19 pandemic began in Nigeria, “is that our gas engines have really improved our power availability, thereby resulting into higher efficiency. It has also reduced our maintenance cost and Carbon emission.” It has increased stability and availability because it is our primary source of power, gas minimize production down time because there has not been power changeover during production process. Also, an officer of Honeywell flour expressed the same sentiment as Promasidor stating that using natural gas has been very helpful especially when talking about reliability and availability of the supply. No outages except for period of planned maintenance which were well communicated before the date. “Natural gas burns cleaner than any other liquid fuel, so the maintenance interval is longer with less maintenance cost. Also the logistics of fuel transportation is totally eliminated being a pipe gas,” he said. The Nigeria LNG (NLNG) maintains 70-80 thousand jobs in the economy and contributes $1.3 billion each year in revenue to the Federal Government, providing much needed revenue for

the government to deploy for the benefit of Nigeria, such as development of infrastructure and diversifying the economy. Other areas where gas can benefit the economy include alternative fuel for transportation, residential and commercial utilisation. To realise the full benefits of gas as a catalyst for economic growth and diversification, several challenges across the entire gas value chain need to be resolved. These are; inadequate infrastructure along the value chain; regulated low prices; legacy debt related to gas and power supply and the challenging business environment. It is no longer news that infrastructure along the gas and power value chain remains inadequate. Particularly, Nigeria lacks sufficient pipelines to deliver gas from the fields where it is produced to the current and potential off-takers (e.g., power plants, manufacturers). In addition, the transmission and distribution systems lack the capacity to deliver the generated electricity to businesses and other consumers. Building infrastructure requires a sustained joint effort of the stakeholders led by government. Active government support will help enable a stable investment climate, acceptable commercial terms and contractual risks. The above elements will help in attracting the required private investments which would strengthen existing off-takers and ultimately lead to emergence of new buyers and suppliers.

WED 2020: Chevron Nigeria Limited’s commitment to Biodiversity Conservation olusola Bello

he World Environment Day (WED), which takes place annually on June 5 is the biggest event to celebrate and promote environmental awareness and sustainability across the globe. Established by the United Nations General Assembly in 1972, WED aims to raise global awareness and mobilize humans to take positive environmental action to protect nature and the planet Earth. This global event has since become the principal vehicle through which the UN stimulates worldwide awareness about the environment. It also gives a human perspective to environmental issues, empowers people to become active agents of sustainable Olusola Bello, Team lead,

development and advocates multi-stakeholder partnerships in support of the environment. From 1973, when the first WED was held, the event has always been marked with different campaign themes and discussions focusing on environmental stewardship. “Biodiversity”, the theme for World Environment 2020, as defined by the United Nations (U.N) Convention on Biological Diversity includes the diversity of ecosystems, species and genes and the ecological processes that support them. Unfortunately, biodiversity is under threat in many areas of the world and maintaining global diversity has emerged as a prominent and widespread issue, as natural diversity in ecosystems is essential to human life and plays an important role in sustainable development. Chevron Nigeria Limited,

Graphics: Joel Samson.

the operator of the joint venture between Nigerian National Petroleum Corporation (NNPC) and CNL conducts its business in a socially and environmentally-sustainable manner in compliance with regulatory requirements, stakeholder expectation, best practices and has made Environmental stewardship part of its social investment programs. For close to 60 years, CNL has remained an active agent of sustainable development and strong advocate of partnerships in support of the environment. Explaining CNL’s commitment to biodiversity, the Chairman/Managing Director, Jeff Ewing noted that CNL is proud to be part of the solution to the global environmental issues wherever the company operates through its sound environmental management policy that supports environmental

www.businessday.ng

stewardship and sustainable development. According to him, CNL has in place a company-wide operational excellence management system that delivers industry-leading performance in process safety, personal safety and health, environment, reliability and efficiency. CNL has a record of responsible environmental stewardship everywhere it operates and has also established enduring partnerships with governments, non–governmental organizations, business organizations and communities. CNL has been supporting and sponsoring various programmes aimed at Biodiversity Conservation. These partnerships and efforts continue to be widely recognized and rewarded,” he remarked. CNL’s Environmental stewardship process lays the foun-

dation for sound environmental management. The identification, assessment and management of environmental risks runs through the entire project cycle from inception to operations and through decommissioning. CNL recognizes the importance of minimizing our footprints towards conserving biodiversity. The NNPC/ CNL Joint Venture (JV) strives continually to achieve world class environmental excellence by assessing potential risks and reducing its footprints and potential impacts from its operations on the environment. CNL continues to conduct Environmental Impact Assessments (EIA) and Environmental Evaluation studies of its operations to ensure potential environmental risks are identified and where necessary mitigated in accordance with environmental performance

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

https://www.facebook.com/businessdayng

@Businessdayng

standards and industry best practices. The company continues to invest in best available technology for tracking and managing of its ecological footprint in its areas of operation. Chevron Nigeria’s commitment to preserving the environment has left enduring landmarks in the landscape. The Company established in 1992, the Lekki Conservation Centre (LCC) -- a center of excellence in environmental research and education, reserved as a sanctuary for the rich flora and fauna of the Lekki Peninsula. The 78-¬hectare facility was set up by the Company in partnership with the Nigerian Conservation Foundation (NCF). NCF is Nigeria’s foremost non-governmental organization dedicated to environmental conservation and an affiliate of the World-Wide Fund for Nature.

Thursday 18 June 2020

BUSINESS DAY

Investor Helping you to build wealth & make wise decisions

Market capitalisation

NSE Premium Index

The NSE-Main Board

N13.050 trillion

2,227.98

N13.137 trillion

2,227.98

NSE All Share Index

Week open (05-6–20)

25,016.30

Week close (11-6–20)

25,182.67

Percentage change (WoW) Percentage change (YTD)

0.67 -6.80

0.65 5.96

NSE ASeM Index

NSE 30 Index

NSE Banking Index

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

1,030.84

762.45

130.93

426.07

225.22

1,817.83

1,166.83

1,005.15

1,037.88

1,086.24 1,094.50

298.62

762.45

300.00

135.76

425.20

219.31

1,841.29

1,193.02

1,009.65

0.46

3.69

0.68 -9.89

0.00 0.00

0.76 -7.07

-15.93

7.90

-0.20 -28.28

NSE Lotus II

NSE Ind. Goods Index

NSE Pension Index

-2.62

1.29

2.24

0.45

0.36

10.92

-4.21

Champion Breweries: On course to improve shareholders’ returns Iheanyi Nwachukwu

hen shareholders m e e t a t Champion Breweries Plc’s 44th Annual General Meeting on Friday July 3, 2020 in Uyo, Akwa Ibom State, one of the things they will laud the board and management for include the improved results for the year ended December 31, 2019. Champion Breweries Plc is involved in the brewing and marketing of Champion Lager Beer and Champ Malta. It also provides contract brewing and packaging services to Nigerian Breweries Plc, a related party within the Heineken group. The company’s results were p o si t i ve ly i mpa c te d in t he financial year ended December 31, 2019 as shown in its top-tobottom line figures. Revenue grew from N4.8billion to N6.9billion. Operating profit changed its narrative from a negative position of N223million in 2018 to a positive position of N241million in 2019. Profit Before Tax (PBT) printed at N206.7million in 2019 as against Loss Before Tax (LBT) of N255.4million in 2018. Profit after income tax (PAT) increased to N168.5million as against loss after tax (LAT) of N263.8million in 2018. The Directors did not recommend any dividend during the review year. “Our performance in 2019 reflects the successful execution of our strategy, as well as the relevance of our unique diversified footprint and premium brand portfolio, led by Champion Beer”,

the company said in its report at the Nigerian Stock Exchange (NSE). “We w ill not share away from the fact that increased stiff competition and huge cost in production and operations have remained a major challenge in the attainment of our sustainable goal”, said Elijah Akpan, chairman, Champion Breweries Plc. He said, “Our investment in power generation by way of utilization of gas has begun to pay off as significant savings have resulted as well as improved ef f ic ienc y in ou r mo de l of operation in recent times.” “The board remained resolute in working with management on strategies to grow the business and would lean on the shareholders continuous support towards the

capitalisation of the company,” Akpan said. In 2018, the company embarked on a capital re-structuring scheme. The shareholders through a special resolution approved for the balance of N8.574billion in the Company’s Accumulated Loss account as at December 31, 2017 to be transferred to the Company’s Capital Reduction Account (CRA). Consequently, the share premium account was reduced by the N8.574billion in the CRA by writing off the losses of the Company in the CRA. Subsequently, the Company obtained court approval on October 23, 2018, Corporate Affairs Commission (CAC) approval on December 6, 2018, and a letter of no objection from the Financial Reporting Council

of Nigeria (FRCN) on December 19, 2018. The Securities and Exchange Commission (SEC) was also duly notified of the capital restructuring scheme. Upon approval, the Company reduced its accumulated loss and share premium account by N8.574billion. The Company currently has an authorised share capital of N4.5billion comprising 9billion ordinary shares of 50 kobo each, and an issued and fully paid shares amounts to N3.914billion comprising 7.829billion ordinary shares of 50 kobo each. At 88kobo per share which its shares closed last week on the NSE, its market capitalisation on 7.829billion share outstanding is valued at N6.889billion. During the review year, the Nigerian

Stock Exchange (NSE) granted the Company additional two (2) years grace period to comply with the 20percent free float requirements of the Exchange. This extension was subject to the Company holding a “facts behind the figures” session to brief the market of its plans to cure its free float deficiency; and submitting quarterly compliance reports to the Exchange. In order to comply with these conditions, the Board of Directors initiated necessary steps as at reporting date to ensure that these conditions are met, and more importantly, that the free float deficiency is cured. As at year end, the Company was not able to increase its free float (2018: increase from 17.2percent to 17.3percent). Analysis of the company’s shareholding as at December 31, 2019 shows Raysun holds 4.729billion units representing 60.4percent equity stake in Champion Breweries Plc. Assets Management Nominee holds 961.863million units, representing 12.3percent equity stake; Akwa Ibom Investment Corporation (10percent or 786.225million units); while other shareholders account for 17.3percent or 1.351billion units. Raysun was incorporated in February 2010 as a holding company for Heineken’s Nigerian entities. Champion Breweries Plc said Raysun Nigeria Limited has accepted to sell some of its shares in the Company to minority shareholders through the Nigerian Stock Exchange ( N S E ) t o g ra d u a l l y c o m p l y with the 20percent free float requirement of the NSE.

AIICO Insurance seeks NSE approval, listing of N3.5bn Rights Issue ...on the basis of 5 new shares for every 13 held Iheanyi Nwachukwu

he Nigerian Stock Exchange (NSE) notified its Dealing Members that AIICO Insurance Plc through its joint stockbrokers, Magnartis Finance and Investment Limited and Stanbic IBTC Stockbrokers Limited, submitted an application to The Exchange for the approval and listing of a Rights Issue of 4,357,770,954 ordinary shares of

50kobo each at 80kobo per share. The Rights Issue is on the basis of 5 new ordinary shares for 13 ordinary shares held. The Qualification Date for the Rights Issue is Monday June 15, 2020, according to a circular to the dealing members signed by Godstime Iwenekhai, Head, Listings Regulation, NSE. AIICO Insurance had at an Extraordinary General Meeting (EGM) of the company held on Thursday, March 5, 2020 sought approval of shareholders of the www.businessday.ng

company to raise additional capital in line with the new regulatory requirements.

https://www.facebook.com/businessdayng

The move by AIICO Insurance to raise additional capital is to meet the regulatory requirements of N18 billion capital base for Composite insurance companies as directed by National Insurance Commission (NAICOM). The new capital structure for Life, Non-Life and Composite insurance companies, including reinsurance companies, were increased from N2 billion, N3 billion, N5 billion and N10 billion to N8 billion, N10 billion, @Businessdayng

N18 billion and N20 billion respectively. Subject to the approval of regulatory authorities and pursuant to Article 44 of the Articles of Association of the company, the directors of the company were authorized by shareholders to raise, by way of a rights issue, addition capital of up to N3.5 billion or any higher as determined by the board of directors by way of issuance of ordinary shares to the existing shareholders of the company.

Thursday 18 June 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 18 June 2020

BUSINESS DAY

SPECIAL FOCUS

Corporate Profile Dr. Obafemi Ogunbekun

scrambling for the small risk pools available through under-pricing and undercutting behaviour.

r. Obafemi Ogunbekun is a Family Health Physician and an experienced Health Insurance practitioner. He earned his medical degree from Rostov-on-Don Medical institute, a renowned medical college in Russia in 1975.

These risks eventually crystallize into market failure with some players unable to meet their obligations of service access to enrollees and payment to providers. This vicious cycle is what ethical HMO players with strong corporate governance principles avoid at all costs in order to preserve social capital and trust in the industry. As a member of the Board of THT, I am proud to state that as a leading HMO we deliver on our coverage promises on any of our products on offer and continue to pay our providers fairly.

Dr. Ogunbekun co-founded Total Health Trust (THT) Ltd, the foremost Health Maintenance Organization (HMO) in Nigeria. He was the founding Executive Director (Provider Services) responsible for the healthcare provider network development and coordination of service delivery nationwide.

The prospects for health insurance in Nigeria remain optimistic as a significant market size of over 180 million Nigerians is still largely uncovered. We expect that with the pace of federal and state legislation mandating health insurance for every citizen of Nigeria and state residents, the market will grow significantly over the next 5 years, provided other macro-economic factors are addressed.

Prior to joining THT, in 1983, Dr. Ogunbekun founded a 26-bed hospital, Saint Charles Hospital in Lagos and served as its Medical Director for more than 25 years. Dr. Ogunbekun also served as the Managing partner at Health Assurance Consultants, a Private sector consulting firm involved in healthcare activities and research into private and public partnership in the healthcare industry. This includes research into the introduction of telemedicine for healthcare delivery in Nigeria, development of alternative methods of financing healthcare delivery and mobilization of the private sector for the national health insurance scheme. He was a member of the team that introduced private health insurance to Nigeria and pioneered the first public private partnership in healthcare delivery in Nigeria. Dr. Ogunbekun served on the Boards of the University College Teaching Hospital, Ibadan and the Gbagada Cardiac and Renal Centre. He was a 2-term Chairman of Ibeju-Lekki General Hospital and Chairman of the Primary Health Centre Committee of Lekki Local Government Development area. He was the Technical Adviser/ Vice Chairman, Board of Trustees, Ikosi Isheri - Olowora Mutual Health Assurance Scheme; a Lagos State Government Pilot Scheme on Community Health Insurance. He is professionally affiliated with several national and international organizations, including the International Hospital Federation, International Society for Quality in Healthcare (ISQUA) and Guild of Medical Directors, Nigeria, and is a Fellow of the Institute of Directors (IoD)-Nigeria. Dr. Ogunbekun is a retiring member of the Board of Directors at THT. Kindly share some of your experience as a board member and director at THT Total Health Trust Limited (THT) was founded and incorporated in 1997 as the first Health Maintenance Organization by 3 doctors namely: Dr.Ladi Awosika, Dr. Ebun Sonaiya, and myself. The company began operations in 1998. The three of us came together from different sole proprietorship businesses to set up the first Nigerian health insurance company that also had Mr. Tunde Hassan-Odukale, an insurance guru and business consultant as its chairman, as well as Dr. Sunny Kuku, an academic, accomplished hospital business/ management mogul and finance expert as a nonexecutive director. Every member of the Board brought different skills and expertise to the table. The road to our current position as the leading HMO in the country was very rough. We encountered resistance from colleagues, borne out of poor knowledge about health insurance. We addressed this through regular health insurance conferences, lectures and workshops bringing in experts from developed countries, where health insurance was the mode of obtaining health. 5 years after the commencement of THT private health insurance, the Federal Government of Nigeria approved the legislation and adopted the health insurance scheme for the country. What are some of the success stories the organization recorded while you were a board member and director?

Dr. Obafemi Ogunbekun

Since its founding, THT has remained at the forefront of the development of health insurance as an industry in Nigeria. In 2005, THT was accredited by the National Health Insurance Scheme as a national HMO to provide cover under the scheme. THT’s success as the leading HMO in Nigeria resulted in the company becoming a subsidiary of Liberty Holdings South Africa, a Pan-African financial services provider. Liberty Holdings is a progressive South African financial services group with a comprehensive range of insurance, investments, and banking services. The investment by Liberty has enabled THT to create a robust administrative and technology platform that enables the provision of seamless and efficient service to our clients. It is part of the wealth business unit of the Standard Bank Group, the largest South African banking group by assets and earnings. THT has built a formidable reputation in Nigeria and we remain the HMO of choice for over 300,000 members, over 500 corporate clients, and government institutions. THT has one of the largest networks of independent service providers, made up of over 1200 private and more than 2000 NHIS-accredited clinics and hospitals throughout Nigeria. The workforce of the organization has grown to over 200 from 40 at inception. THT won the Nigerian Healthcare Excellence Awards for HMO of the year in 2016, 2017, and 2019. The annual Excellence Awards are an initiative of Global Health Project and Resources (GHPR), in partnership with Anadach Group USA, and are designed to celebrate and recognize the best individuals and organizations that have contributed, in a remarkable manner, to the improvement of the Nigerian healthcare sector. As a multinational corporate organization, THT provides international health insurance solutions for corporate employees both in-country and across the African continent. The range of health plans includes comprehensive in-country and out-patient health benefits across our wide network of contracted healthcare providers, international emergency medical evacuation on select plans, and quality customer care via 11 in-country offices. These are some of the many success stories recorded while I was on the Board and a director of THT. As an experienced health professional, what is your evaluation of the private health Insurance in Nigeria compared to other developed climes? The health insurance industry in Nigeria is only 23 years old and can be considered as nascent in term of market size, population coverage, product scope and regulation. In comparison with private health insurance markets in developed economies where the industry has been in existence over 100 years, coverage is still a very small percentage of our population and requires significant support from government to make progress. Health Insurance in Nigeria is said to have a lot of challenges. What are the major challenges and prospects for private health insurance in Nigeria? The success and sustainability of health insurance depends on the effectiveness of risk pooling, as well as strong technical foundations of periodic actuarial determinations on prices of health plans. Without these factors guaranteed through a mix of effective regulation and a strong federal legislative mandate that makes health insurance compulsory, the challenge of “dangerous” and unhealthy competition emerges with

www.businessday.ng

What do you think are the roles of corporate governance towards achieving greater universal health coverage? Strong institutions build strong sectors and ultimately resilient and productive economies. A strong corporate governance culture serves the purpose of institutionalizing the principles of transparency, accountability, and ethical business practices which enables HMOs to continue to fulfill their obligations to provide and grow the health insurance population coverage sustainably in the long term. Do you think THT has a strong corporate governance structure? Over the years, Total Health Trust evolved from being a wholly indigenous company to becoming a subsidiary for Liberty Holdings, which is part of Standard Bank Group, a testament to a strong corporate governance framework. Even from inception, the principles of corporate governance for the fledging company were succinctly defined, planned for, and implemented with policies and procedures in place for corporate decision making from the Board level to the executive and management functions of the company. The foundation has grown stronger over the years with sustainable business practices now part of the fabric of the company, which has contributed in no small measure to the continued growth of the business and maintenance of its leadership position in the industry. How has THT’s corporate governance structure helped the organization achieve commendable health coverage in Nigeria? From the onset, transparency and trust were cardinal principles on which the business was founded. These principles have since been institutionalized as we corporatized the business and have guided decision making across the organization, ensuring an ethical distribution of roles and responsibilities in the operations of the company. Over the years, we have developed and maintained the requisite organizational structures, processes, and policies to deliver our services in an ethical and efficient manner. Total Health Trust is an organization that delivers on every promise made. The company provides and delivers customized health cover. It reimburses and treats its healthcare providers as partners. Total Health Trust treats its staff as its most valuable assets. The results of robust corporate governance have earned us an unequaled reputation as Nigeria’s leading Health Insurance Company. As one of Nigeria’s leading Health Maintenance Organizations (HMO), could you mention some of the health care packages you run that distinguish you from those of your competitors? Liberty health Cover is a health insurance package that distinguishes us from those of our competitors. It is a suite of Fee-for-Service health insurance options that offer a range of in-country to worldwide treatment and care. It remains a major differentiating healthcare package in the industry. The product has continuously been improved upon to ensure that all necessary medical treatments are covered with generous benefit limits that guarantee access to high-end care including organ transplants, cancer care, and other critical illnesses. Seeing that you are close to retirement at THT, could you share with us some of your next steps? I am involved in an NGO and my retirement will afford me more free time to focus on it. “Sharing with others”

https://www.facebook.com/businessdayng

(SWO) is a non-governmental, non-profit making organization with 2 main areas of focus:1) Provide portable water for needy communities 2) Provide medical assistance programs for needy communities The target groups are rural communities. In Ibeju-Lekki local government area, our mission is to give health information on prevalent diseases to the community; thereby empowering the community to make informed choices. We employ various methods like lecture series for doctors, nurses, medical personnel working in Ibeju-Lekki local government area. We hold regular health fairs and go on outreaches into the community. In addition to health education, SWO does onsite health assessment and screening programs to check the following: 1) Health Risk Appraisal (HRA) 2) Height and Weight 3) Body Mass Indices (BMI) 4) Blood Pressure 5) Basic Lab Tests like HIV, Blood Sugar, and Urinalysis. SWO has organically grown from a shared vision by like-minded global professionals seeking to assist underprivileged and disenfranchised communities, through the provision of basic amenities and selfsustainable long term programs - the desire and passion to share our knowledge, and expertise with others. So far, SWO has distributed wheelchairs to physically challenged indigenes of the area free of charge. We are currently setting up a health education library in Lekki. We also hold annual lectures to educate and generate awareness for rural sanitation campaigns. What are some of the lessons you learnt in THT that you think will continue to drive you even at retirement? Retirement is not just a case of not setting an alarm anymore to go to work. Mark Twain, an American writer, and humourist wrote that age is an issue of mind over matter. If you don’t mind, it doesn’t matter. While I was actively engaged in Total Health Trust, 24 hours were not enough for me in a day. I am used to waking up early in the morning and I cannot see myself staying back in bed. A major part of my work schedule is keeping memberswell and active by providing them with counselling on a healthy lifestyle, preventive medicine, and safety in the workplace. I am a strong advocate of workplace health programs. Integrating physical activity and mental wellness has proven to reduce stress levels, prevent obesity, and reduce morbidity and mortality. I will continue to maintain a lifestyle that will improve my health status in retirement. How do you think the government can support HMOs in their efforts to achieve greater universal health coverage in Nigeria? The government can support HMOs and other players in the ecosystem by strengthening capacity for the regulation of the various stakeholders, as well as legislative mandate to ensure compulsory health insurance that will expand and consolidate the risk pools, the introduction of actuarial reviews, pricing standardization, and stakeholder capacity building. It is also important to note that the government can leapfrog the industry through a digital transformation process by investment in a robust electronic health insurance exchange platform that links all ecosystem stakeholders to ensure seamless processing of multiple health insurance transactions from enrollees to HMO to the provider. We believe this technological innovation will transform the sector in the same way as the ATMs and electronic banking transformed the Banking industry over a few years Access to health care has continued to be a major challenge in Nigeria. What do you think needs to be done to address this challenge? Several factors are responsible for the persisting challenges with access to healthcare in Nigeria and some lie outside the health system. Poverty as the main driver of social exclusion needs to be tackled sustainably alongside health system factors. If we intervene with key macroeconomic indices and bring them down the unemployment rate as well as increase SME financing, income levels will increase, and thus with the ability to pay for health insurance and ultimately will increase access to care. Innovative product design for the informal sector is also a crucial aspect that we must develop as an industry as a vast majority of the Nigerian population work in the informal economy and has traditionally been considered too risky for mainstream health insurance.

@Businessdayng

Thursday 18 June 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

18 BUSINESS DAY

Thurssday 18 June 2020

FINANCIAL TIMES

World Business Newspaper

China tightens restrictions as Beijing outbreak widens Flights cancelled and schools closed as authorities try to prevent a second coronavirus wave DON WEINLAND , QIANER LIU AND ALICE WOODHOUSE

hina has tightened coronavirus restrictions in Beijing, cancelling flights and closing schools in a bid to stem the outbreak in the capital. Officials said on Wednesday that 31 new cases were discovered on Tuesday, bringing the total number of infections detected in the city over the past six days to 137. The increase in the number of cases has slowed over the past four days and areas outside of the city have not yet seen a sharp uptick of infections. The Beijing outbreak has been linked to the sprawling Xinfadi market in the west of the city, which supplies most of the city’s fresh produce. The market has been shut down and several residential compounds in the same district put under lockdown. Schools across the capital have been closed and taxis have been prevented from entering or leaving the city. Nearly 1,300 flights, or 70 per cent of flights departing from Beijing’s two airports, have been cancelled on Wednesday, according to state media. Officials announced that anyone boarding a plane would have to take a nucleic acid test, designed to detect traces of the virus. Officials in other provinces have also begun rolling out new contain-

Residents of Beijing queue to get nucleic acid tests, which can be used to detect traces of coronavirus, after a rise in cases in the Chinese capital © REUTERS

ment measures. The Chinese territory of Macau said anyone who had travelled to Beijing within the past two weeks would be subject to a 14-day period of medical supervision in a government facility. “We are now responding to outbreaks with a calmer attitude,” said a local official in the southern province of Guangdong, who asked not to be named. “We have gained some experience and now it’s just a matter of following procedures: sending out notices, tracking people from high-risk areas and getting companies to

pay more attention.” Beijing has redeployed thousands of community workers to take temperatures at the gates of residential compounds, only a week after the government had eased regulations. Many Beijing residents had recently stopped wearing masks outside but the new outbreak has prompted malls and restaurants to insist on customers donning protective gear again. Analysts do not think the new measures will be lifted imminently. “In view of the recent Beijing outbreak, we expect China’s

precautionary measures, such as quarantine requirements and travel restrictions, to persist for an extended period,” said Serena Zhou, an economist at Mizuho Securities. China’s central bank has tightened its monetary stance in recent weeks. Ms Zhou said the latest outbreak could force policymakers to loosen that position in the hopes of stimulating economic growth. The new case numbers in Beijing pale in comparison with figures in the US, where thousands of people are diagnosed with the virus daily. But Beijing, China’s political

hub and home to the Communist party elite, has been on high alert since the start of the pandemic and has largely prevented a crisis from enveloping its most important city. Experts have noted that a Covid-19 disaster in the capital would be embarrassing to the Communist party, which has claimed success in controlling the outbreak compared with the US, UK and many European states. Editor’s note The Financial Times is making key coronavirus coverage free to read to help everyone stay informed. Find the latest here.

EU launches in-depth antitrust probe into $50bn Fiat Chrysler-PSA deal Brussels says it is concerned tie-up could ‘reduce competition’ in small vans market JAVIER ESPINOZA AND PETER CAMPBELL

russels has opened an in-depth antitrust probe into the $50bn merger of Fiat Chrysler and France’s PSA amid concerns that the deal “may reduce competition” in the lucrative small commercial vans market. The second-phase investigation was launched on Wednesday after the two carmakers failed to offer any concessions to the European Commission to assuage worries over their potential dominance in the market. Their failure to bow to earlier demands was first reported by the Financial Times last week, when the deadline of June 10 passed without concessions being offered. The two businesses would

The second-phase probe was launched on Wednesday after the companies failed to offer concessions to the EU to assuage worries over their potential dominance © REUTERS

become the world’s fourthlargest carmaker if the merger were completed and would control about a third of the European vans market, more than double their closest competitors Renault and Ford. Margrethe Vestager, the www.businessday.ng

commission’s executive vicepresident, and responsible for competition policy, said: “[Commercial vans] are a growing market and increasingly important in a digital economy where private consumers rely more than ever on delivery services.

https://www.facebook.com/businessdayng

“Fiat Chrysler and Peugeot, with their large portfolio of brands and models, have a strong position in commercial vans in many European countries.” A deeper probe into the vans business was expected by the companies, which built it into a deal timetable that is expected to involve the merger closing in the first quarter of next year. EU regulators have 90 working days, until October 22, to make a decision. The deal can still be blocked, approved without conditions or waived with remedies. The deal has already received clearance from antitrust regulators in China, Japan, the US and Russia, but the overlap between the groups in Europe was always expected to be a sticking point for competition authorities. Although the carmakers have a joint venture producing vans @Businessdayng

in the region already, the vehicles compete with each other on the forecourts, the commission argued. “In many countries, either PSA or FCA is already the market leader in light commercial vehicles, and the merger would remove one of the main competitors,” it said. In a joint statement on Wednesday, PSA and FCA said: “Both companies will continue to co-operate with the EC to answer its questions in the same constructive spirit that has defined our proposed merger from the start. “As we continue to make progress through our crosscompany project teams, we will be detailing to the EC — and other regulators — the substantial benefits of the proposed merger to our customers, the European industry and each company.”

Thurssday 18 June 2020

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Debt investors let borrowers go back to the future Lenders allow companies to roll over profits from 2019 to avoid breaches of covenants NIKOU ASGARI AND KAYE WIGGINS

usinesses suffering plunging revenues because of Covid-19 are seeking to avoid potential debt breaches by substituting last year’s profits in place of this year’s in the documents they present to their lenders. The UK pub chain Punch Taverns, US events group Live Nation Entertainment and Samsonite, the Hong Kong-listed luggage maker, are among companies employing the tactic, according to filings and people familiar with the moves. The strategy amounts to asking lenders to imagine that the pandemic had not happened, but debt holders have so far accepted it because acknowledging depressed 2020 earnings could cause problems on both sides. “Conceptually I’m not fine with it; it doesn’t make any sense,” said one Punch bondholder. “But I don’t have any incentive to fight against the company and to push [it] down a messy path.” When companies breach terms known as covenants — such as a requirement to stick within certain ratios of debt to earnings — lenders are normally at liberty to demand immediate repayment, or in extreme cases trigger restructurings and take control of business assets. But lenders’ acceptance of old earnings figures is a sign that they are holding back on such drastic measures and instead giving companies time to recover from events over which they have no control. If companies are able to get inter-

Some businesses are reporting estimates of profits that would have been made if the viral outbreak had not happened, and calling it ‘ebitdac’ — earnings before interest, tax, depreciation, amortisation and coronavirus © FT montage

pretations of covenants . . . lenders might rethink the way the covenants work going forward Trevor Piper, senior credit officer at rating agency Moody’s “Bondholders are willing to accept these changes because they’re temporary and because they can see a route through this,” said Thomas Leys, investment manager at Aberdeen Standard Investments. He added that forcing default after a tripped covenant might leave lenders holding assets that were hard to offload. “Getting a load of pubs and trying to sell them is not thinkable in this environment,” he said. The use of historical figures is the latest move by cash-strapped businesses to flatter their books. Some have started reporting estimates of profits that would have

been made if the viral outbreak had not happened, and calling it “ebitdac” — earnings before interest, tax, depreciation, amortisation and coronavirus. The trend has unnerved some investors, who are worried it will allow companies to evade restrictions on how much they can borrow. Europe’s markets regulator, Esma, warned last month companies should not add back estimates of lost earnings, saying that doing so would “not faithfully present issuers’ overall financial performance.” The Punch bondholder said the developments are an unsettling sign of a “new era of adjustments,” in which companies routinely ignore costs they consider non-recurring or exceptional. Punch, which operates about

1,300 UK pubs and is owned by European private equity firms Patron Capital and May Capital, last month asked bondholders to let it use last year’s ebitda figures in place of this year’s for the period in which pubs have been forced to close, said two people familiar with the details. Beverly Hills-based Live Nation Entertainment, which runs the Reading and Leeds and Lollapalooza music festivals, in April said it will suspend covenants for the next few months, then use 2019 earnings figures to calculate its net leverage covenant from the fourth quarter of 2020 until the second quarter of 2021. “It is not very common to substitute in past ebitda,” said one Live Nation loan holder. The investor said that if current profit figures were

used, the entertainment company would be unable to access its revolving credit facility, putting it in a worse position. A spokesperson for Live Nation said the switch “will allow us the flexibility to manage our business during the disruption it is experiencing this year”, When presenting its first-quarter results last month, Samsonite outlined proposals to use 2019 instead of 2020-21 ebitda figures in its covenant calculations running from September 2021 until March 2022. Samsonite did not respond to requests for comment. Punch declined to comment. Patricia Lynch, a partner at law firm Ropes & Gray, said that although past earnings will not accurately reflect the post-pandemic world, giving companies time to see how things play out is not a bad idea, given that Covid-19 will probably have “longer-term effects on consumer behaviour”. “If covenants are tested with real actual ebitda and [companies don’t] get a waiver then they would go into default,” said Shweta Rao, senior director at credit research firm Reorg. “It’s generally in the interest of bondholders and creditors not to go into a restructuring scenario.” But others warn that if many more borrowers try to pass off historical numbers as current then lenders may be less flexible next time around. “If companies are able to get interpretations of covenants . . . lenders might rethink the way the covenants work going forward,” said Trevor Piper, senior credit officer at rating agency Moody’s.

Stocks push higher as stimulus hopes offset Covid-19 concerns Worries over jump in new cases eased by central bank support and hopes for virus treatment PHILIP GEORGIADIS AND HUDSON LOCKETT

hares on Wall Street opened higher on Wednesday, as investors welcomed signs of economic recovery and central bank support even though concerns remained over a new rise in Covid-19 infections. The S&P 500 edged up 0.3 per cent, following three sessions of back-to-back gains. The tech-weighted Nasdaq rose 0.5 per cent. Investors are faced with new coronavirus outbreaks in the US and China, but worries over how a jump in cases could derail the economic recovery have been overshadowed by central bank support and hopes for a Covid-19 treatment. Strong US retail sales data on Tuesday also lifted hopes of a quick recovery for the world’s largest economy. Following an uptick in market jitters last week, which had re-

Investors have been cheered by signs of economic recovery and central bank support but concerns remain over a new rise in Covid-19 infections © Getty Images/EyeEm

cently left the Vix volatility index at a two-month high, trading was more restrained on Wednesday. “These mood swings reflect the fact that investors have no road map for this unfamiliar financial landscape and little confidence in what lies around the next corner,” said Paul O’Connor, head of multi-asset at Janus Henderson Investors. “While the big picture outlook www.businessday.ng

remains so uncertain, investor behaviour will tend to be reactive rather than strategic, amplifying the market impact of every news event,” he added. Jay Powell, the Federal Reserve chairman, on Tuesday warned Congress of “significant uncertainty” surrounding the US recovery, even as he reiterated that the Fed remained committed to supporting the economy.

https://www.facebook.com/businessdayng

Anthony Fauci, a leading member of the White House coronavirus task force, has urged states to move aggressively to prevent recent increases in cases from turning into “a real surge”. London’s FTSE 100 was up 0.8 per cent by mid-afternoon in London, while Frankfurt’s Xetra Dax added 0.8 per cent and in Paris the CAC 40 picked up gains through the day to rise 1.2 per cent. The mood in Asia-Pacific was more cautious as investors eyed gloomy geopolitical developments in the region, including an escalation in tensions on the Korean peninsula and the deaths of at least 20 Indian soldiers during clashes with Chinese troops in the Himalayas. Japan’s Topix index fell 0.4 per cent, while Hong Kong’s Hang Seng rose 0.6 per cent. India’s Sensex index added 0.6 per cent. Traders are also monitoring new coronavirus outbreaks in Beijing, with authorities report@Businessdayng

ing 31 new cases in China’s capital by the end of Tuesday. “Markets have quickly built [in] expectations of a quick recovery in China in recent weeks and the incoming data has also been supportive,” said Johanna Chua, an emerging Asia economist at Citi. “If the spread of infection in and beyond Beijing continues in the days and weeks ahead, then markets may be forced to rethink such expectations.” Meanwhile, data showed the biggest fall in Japanese exports in more than a decade during May, raising concerns over how quickly the world’s third-biggest economy can recover from Covid-19. The yield on US 10-year Treasuries fell 0.009 per cent to reach 0.7463 per cent. Oil prices swung between gains and losses. Brent crude, the international benchmark, was recently 0.9 per cent lower at $40.60 a barrel. US marker West Texas Intermediate lost 1.3 per cent to $37.90.

Thursday 18 June 2020

BUSINESS DAY

LegalBusiness BD Business Law Industry Report Practice Intelligence Partnerships

The Federal Government of Nigeria, the Siemens deal and interesting issues worth reviewing AYODELE ONI

upgrades or replacement, but also other intangible which will improve the grid quality and reliability significantly.

n July 2019, the Federal Government of Nigeria and the German multinational conglomerate, Siemens AG (“Siemens”) signed an agreement for Siemens to carry out much needed upgrades on Nigeria’s power generation and distribution infrastructure. This agreement was brought to the fore, again, recently following Siemens issuance of a Technical and Commercial report (the “Report”) on Nigeria’s power sector, on May 9, 2020. In the Report, Siemens delivered a verdict on the electric power value chain in Nigeria, stating that the sector would continue to require subsidies and face harsh financing conditions for new projects. This verdict was based on the significant problems facing the Nigerian Electricity Supply Industry (“NESI”), specifically; insufficient revenue collection, high technical and commercial losses; and below optimal performance of existing power plants, the combination of which would result in multi-billion-dollar economic losses in the NESI. In addressing the problems with power generation in Nigeria, the Report highlighted that of the 13 Gigatwatts (“GW”) of power generation capacity available in Nigeria, on average, only 3.4GW actually reached final customers (including residential, commercial and industrial users). The Report addressed the significant level of improvements required in the NESI, highlighting that whilst removing the Aggregate T echnical and Commercial Collection’ (“ATC&C”) losses would result in earnings for the power generation sector, these earnings would only become positive after 2028, unless the reduction of ATC&C losses was accompanied by additional expansion of generation capacity. According to the Report, this is necessary, because existing generation assets have been rendered partly idle assets which do not actively participate in the energy system. In order to expand the generation capacity, there would be a need to remove several bottlenecks in the transmission and distribution grids, to allow free flow of electricity. Some practical measures identified by the Report included rehabilitating defective connections of key

substations to the existing control center in order to improve the operation of transmission network and to unlock its potential. Through the Report, Siemens also highlighted plans in its Nigeria Electrification Roadmap (the “Roadmap”), which was developed as the outcome of workshops involving the Federal Ministry of Power, the Nigerian Electricity Regulatory Commission (“NERC”) and the Transmission Company of Nigeria (‘TCN”). The Roadmap is structured into three Phases to wit; (i) Phase 1, which focuses on essential and “quick-win” measures to increase the system’s end-to-end operational capacity to 7 GW (ii) Phase 2 which focuses on targeting remaining network bottlenecks to enable full use of existing generation and “last mile” distribution capacities, bringing the system’s operational capacity to 11 GW, and; (iii) Phase 3 which will focus on

INSIDE The NBA should have a sexual harassment policy

developing the system’s operational capacity up to 25 GW in the long term, with appropriate upgrades and expansions in both generation, transmission and distribution. The Report stated that following the issuance of the Roadmap, there would be further engagements with Distribution Companies (“DisCos”) and TCN, including through field visits to all the eleven (11) Discos to further identify and validate projects for Phase 1 of the Roadmap. Additionally, Siemens would be technically guided by the preliminary power system simulation analyses carried out on the grid network by its Experts in the Power Technologies Institute. The aim is reportedly to initiate these projects as quickly as possible so there will be visible impact in the grid within the next two (2) years. It is worthy of note that the identified projects for phase 1 include not only tangible grid network assets which require

Legal Business set to hold 2nd edition of ELIR

Commentary on the Siemens and FGN Deal and the Way Forward Although, the Siemens deal is laudable, the devil is in the details and it must be noted that it will not be economically viable to focus solely on extending the grid to some areas in Nigeria. Improvement of the NESI necessitates a recognition of the important role which distributed generation type projects such as mini-grids have to play. It is germane to continue to improve both transmission and distribution infrastructure. The extra power generated would be wasted, if the DisCos were unable to take up and distribute the additional power to customers due to infrastructural constraints. Whilst it is the case that the Report has rightfully noted the problems with the transmission and distribution networks and some positive effects which addressing these issues will have, it is neither viable nor feasible to rely exclusively on the enhancement of the transmission and distribution networks connected to the national grid. Considering Nigeria’s landmass and population size, substantial improvements can only be seen through implementing a suite of centralised and decentralized solutions. As such, the implementation of the various phases of the Siemens Roadmap must be complemented by substantial support for decentralized/ distributed generation, or similar arrangements, by the FGN. The Rural Electrification Agency, supported by States and, indeed, Local Governments, should complement the current arrangements being implemented in the transmission grid and distribution networks with strong support given to a more robust energy mix utilization. All tiers of government should encourage and provide funding for communities to generate electricity using resources most commonly available in their environment which could also be the cheapest means. Technology can also be harnessed to improve decentralized generation through renewable means. The use of blockchain in

Perchstone & Graeys Energy Law Webinar Series — “Perspectives on Investing in 22 Nigeria’s Oil Marginal Fields”

supply arrangement is an idea which should also be developed and given support. Blockchain has been utilized in developing countries such as Bangladesh to develop peer-to-peer networks which enable customers trade surplus electricity with one another. An important example can be seen in the Bangladeshi company, Solshare which is connects solar home systems in remote areas in Bangladesh through a smart grid and it enables residents of these communities to trade excess energy generated from solar home system to one another. In many systems, the smart grids enable residents to pay trade through mobile money platforms which can cater to make them accessible to all residents in the community. The federal government appears to be headed in the right direction. However, some questions can be raised about the effectiveness of the FGN’s efforts at encouraging both centralised and decentralized power generation especially through renewable means. Questions exist concerning the power purchase agreement (“PPA”) signed in 2016 with fourteen (14) independent power producers to build 1,125 megawatts of installed solar capacity for the national grid. Till date there has been little or no progress and reports in 2018 showed that none of these projects had reached financial close. Nevertheless, the work of bodies such as the REA must be commended. The REA’s initiatives including the Nigeria Electrification Project which is funded by the World Bank and the AfDB and provides funding to companies deploying off grid electricity to MSMEs and households in rural communities through solar hybrid mini grids and solar home systems. However, more needs to be done to support distributed generation, off-grid arrangements, including the increased participation of other tiers of government especially the local government. Private sector participants throughout the electricity value-chain, should be carried along as the government cannot bear sole responsibility for improving the power sector Ayodele Oni (ayodele.oni@bloomfield-law.com), a lawyer, specializes in international energy investment law and policy.

Recapitalization of insurance companies in Nigeria: prospects of raising/attracting equity capital may prove difficult

www.legal.businessday.ng legalbusiness@businessday.ng

Thursday 18 June 2020

BUSINESS DAY

INTERVIEW

LegalBusiness

The NBA should have a sexual harassment policy In this interview, OSAI OJIGHO, Country Director, Amnesty International shares her perspective on the current buzz around rape and sexual assault in Nigeria. She discusses some of Amnesty’s work in this regard and the role that lawyers and the legal profession can play. EXCERPTS…

n recent times there has been quite a buzz about rape, sexual harassment, rape culture and so on. Do you think this is caused by widely reported cases such as those of Uwa and Barakat or can it be attributed to some other cause(s)? Its always been there. I think the difference this time is as a result of the groundwork that has been done in the past. There is now a lot of awareness on these issues. Unlike a few years back, people can now say rape without blushing. I think the “me too” movement has also contributed. But even more important than that are the small local wins such as; the “Monica” case - where an OAU lecturer was sentenced to a 24-month jail term for soliciting sexual benefits in exchange for marks - and the Adenekan case, where a supervisor in Chrisland School was sentenced to a 60 year jail term for serially defiling a child that was two years and 11 months at the time. Civil society groups are able to cite these successes and it encourages people to report more incidents. Then COVID happened. And all hell was let loose. I was speaking to a lady that runs a rape crisis center the other day and she told me that the calls they receive from victims have increased by 64%. The Lagos State Domestic and Sexual Violence Response Team (DSVRT) were getting nothing less than 13 calls per day on not just rape but also on gender- based violence. These increases are largely because unlike the situation prior to COVID and the related restrictions, many victims no longer have a means of escape. With COVID-19 restrictions, many victims were locked down with their abusers. There was more opportunity and time for the abusers and therefore an increase in the frequency of abuse. So many victims would call “Oh, I can’t cope anymore, come and get me”. There is also the fact that people generally seek the “perfect victim”; young girls, virgins and so on. This has always been a challenge in the fight and advocacy against rape and related offences. The cases of both Uwa and Barakat seem to fall into this category and therefore has broad appeal. One Christian, one Muslim, both religious, conservative, not found in night clubs and so on. People find many elements of their stories relatable and that in combination with the other factors have led to this seeming buzz. What does this Buzz mean for Amnesty? Has it created more attention to the work you do or provided an opportunity to do more? For us, it falls into some of the things we have been doing around criminal justice reforms. We have released statements in response to the current incidents. Also, prior to these recent statements we had released a number of outputs on rape and gender based violence. In 2005, we released a report called “ Unheard Voices” looking at gender based violence and domestic violence in Nigeria, then a few years

Osai Ojigho

after that we did a study on rape called “ The Silent Weapon”, looking at rape being used by the police in cases where people are kept in detention and things like that. We have also made submissions to the UN CEDAW Committee, that is the United Nations Committee on the Elimination of Discrimination Against Women. Our last report on Rape was in 2018 “They Betrayed Us”. It was focused on IDP camps and women who were raped by Boko Haram and also raped by soldiers in exchange for food and other benefits. Our latest report, which was on children, showed that even though they tried to call them “child brides”, basically what Boko haram was doing was raping children. Some of thems were still exposed (not as much as the women) while being detained after they had bee rescued from Boko Haram. All of these falls within our campaigns around Dignity. We find that for women, the greatest assault that can be committed against her dignity is rape. So, for us sexual and gender - based violence has to be viewed as taking away a woman’s right to her dignity. And the right to dignity is guaranteed by the Constitution. Every- body has a right to dignity and also to freedom from violence which Nigeria has been ignoring for a long time because of religion and culture. At Amnesty our focus is to see how the criminal justice system can respond in a positive manner for victims and secondly to highlight issues on discrimination against women and girls in Nigeria. Have there been any wins that you can attribute to Amnesty’s advocacy and campaigns? On one hand, government sometimes appears to vilify us. For instance, when we released “They Betrayed Us”, there was a lot of uproar and counter statements stating that soldiers don’t rape women and so on. But quietly, they did try to put certain things in place, to investigate and determine exactly www.businessday.ng

what was going on and how it could be addressed. With the current situation, the fastest impact we see, is that the Governor’s forum decided to accept and declare a state of emergency. As Amnesty, we had called for the declaration of a national crisis. But some groups called for a state of emergency and that is what the Governor’s forum have picked up. We therefore have the opportunity to continue to call on them to ensure that they fulfill the commitments that they have undertaken. The Attorney General of the Federation has also made a few commitments, including the establishment of an inter-ministerial gender-based violence committee. We have also seen that the Inspector General of Police has come up to say a few things as well. I am particularly interested in his contributions, because as you know, the police are the first point of contact for victims, so we need to get that right first. These are some immediate wins that I see, and once we finish collating the petitions from the online campaign which we are currently running on the girls that were raped, we can then be even more concrete and move the matter forward by writing to the Attorney General, thanking him for the commitments made so far, and proffering further recommendations. It is interesting that you mention the Attorney General, because as you can imagine our (Legal Business) audience are lawyers. What role do you think lawyers are playing or should be playing with regards to the issues of rape and sexual harassment? I do not know for sure if the NBA at the national level has put out any statements or carried out any campaigns relating to these recent cases. I am however aware that some branches such as the Ikorodu branch, did a few things to raise awareness and sent messages to their colleagues on the issues. In my opinion, one thing that

https://www.facebook.com/businessdayng

would be useful, would be for lawyers to see how they can contribute to whatever it is the AGF wants to do. I do not think the ministries of justice have enough lawyers. But are they willing to work with private lawyers? It would be good to see if the NBA can structure an arrangement for collaboration between law firms and the Ministries of Justice. Another thing, is that we tend to focus on the criminal aspects of rape, which is not bad, but there is nothing stopping us from also bringing civil suits. I think we can borrow a leaf from the Busola Dakolo case, where they have gone the criminal as well as civil route. Amnesty International is also exploring a human rights angle to these issues. Can women bring a type of class action suit relying for instance on the fact that they are not safe in Lagos, Abuja or some other place as a basis to say that their human right to be free from violence has been violated? This is an area that lawyers can also explore. But like I said, an immediate way that laws can intervene would be through contributions to the jurisprudence and support to the Attorneys General to ensure they have sufficient manpower. Another thing, could be Amicus Curiae, which is a practice Amnesty uses. Even though we have lawyers in our ranks, we work with law firms for this purpose. And one of the things we could be open to doing in Nigeria is submitting an Amicus Curiae through law firms in these cases, with a view to guiding the courts through a robust evaluation of the rape laws to ensure firm convictions of the alleged rapists. Last year, following a global survey, the International Bar Association released a landmark report, Us Too? Bullying and Sexual Harassment in the Legal Profession”, the report indicated that 1 in 3 women and 1 in 14 men had been sexually harassed in the legal workplace. One of the conclusions was that workplaces were not doing enough to respond to misconduct with policies on bullying and sexual harassment. Both the International Bar Association (IBA) and the Nigerian Bar Association (NBA) last year also held special showcases on this subject matter. Against this background, what do you think lawyers and law firms should be doing? The NBA by now should have a sexual harassment policy because that is one of the things, they had indicated would be done coming out of the conference last year. I don’t know how far they have gone with that. If the NBA had this policy, it would be easy to cascade to the law firms and offices. The truth is that there is a lot of harassment in the profession although lawyers find it difficult to admit. Being one of the oldest and most distinguished professions, a lot of people do not want to rock the boat. If they were to have a “Me Too” or an “Us Too” as the IBA called it, people would be shocked at the numbers. @Businessdayng

Someone shared that in Spain, a campaign was conducted where they sent a note to law firms stating” we want mentors and not abusers”. They wanted partners and senior lawyers to see that young people, male and female want to be mentored but that in that process, they are misunderstood, abused or taken advantage of and that needs to change. The old way of thinking “if you do not like it, leave” can no longer be obtainable, because it only emboldens abusers and results in job and income loss for the victim. We need to be at the place where, if a law firm does not ascribe to certain values, then it shouldn’t be respected. Clients should be able to say that we want to ensure that you are operating at the highest levels possible. “many times sexual harassment is actually more about power than sexual gratification”. We also need to find ways that people who come forward to share their stories can be protected. From my experience, most victims really do not want noise. They just want an apology, to be assured that such situations will not re-occur and to be able to exist and work in a safe space, free of reprisals. But in many cases, the abuser or his/her cronies can make the victims life a living hell and that is why many times sexual harassment is actually more about power than sexual gratification. If it were just sexual gratification, they could get it from any other person and it would not be matched with threats of harm or violence or things like that. People have also come out to say that women leaders have not come out strongly on sexual harassment issues. But I see it from the perspective that it is possible they were themselves harassed. So it could be, “look I survived and got here, I am not sure I am ready to be dealing with someone else’s issues. Another angle could also be that as women leaders, they have obtained a seat on the table of patriarchy and are not willing to risk their seat at the table because of some young person who can pick up the pieces and start again. However, I do not think this is a fight for women leaders, I have never supported that perspective. It is a fight for senior leaders. All senior lawyers, men and women who can, should come together in groups to speak out against these issues. The profession needs to be mindful that people are now talking a lot more and so to avoid disgrace this is the time to come together and seek concrete ways to address these issues to avoid the fall out. We are a very inter-connected world. Many firms are involved in big international transactions. It is important to be mindful of potential reputational damage and loss of business that could occur as a result of allegations of sexual harassment or even rape. So more than even before it is important that as a profession that should be fighting for equality and justice for the society, lawyers take steps to address these issues internally. To be continued next week

Thursday 18 June 2020

BUSINESS DAY

INDUSTRYFILE

LegalBusiness

Legal Business set to hold 2nd edition of ELIR digital conversations CHUBA AGBU

he legal business is set to hold the second edition of its digital conversation in collaboration with Employment, Labour and Industrial Relations (ELIR) committee of the Nigerian Bar Association Section on Business Law (NBASBL) on the 22nd of June 2020. The International Labour Organization projects that there will be about 305 million jobs lost due to the COVID-19 pandemic. Following WHO social distancing guidelines, most organisations have instituted remote working solutions, or have had to shut down completely. Despite this, the pandemic has also thrown up new vistas of work in various other industries. In view of this, BusinessDay Legal Business and the NBA Section on Business Law, Employment, Labour and Industrial Relations Committee (“ELIR”) launched an exclusive web series focused

on new paradigms in the employment sector. This will be the second in our monthly series and the

theme is “Mental Health, return to work and employer obligations. Speaking at this webinar will

be, Godwin Omoaka, SAN, Partner, dispute resolution group, Templars, Maymunah Kadiri, ( MS. BS; FMCPSYCH) Founder Pinnacle, Medical Service and Host, ThePhysician’s NG, Folabi Kuti, Partner, Perchstone & Graeys, while the session wil;l be moderated by Ose Okpeku, Chairman of the NBA-SBL, Employment Committee and Partner at the Law Crest LLP. In the wake of the COVID-19 pandemic, much was stated about the importance of boosting one’s immunity through the practice of a healthy and balanced lifestyle exercise, nutrient-rich food vitamins and minerals and sleep. However, there is a less conspicuous plague that has concurrently crept into the corporate frame during the pandemic and it is the issue of mental illness. Be it through the sharp change of working conditions, the uncertainty of times or the fear of being laid off, many are facing unique challenges that can take a massive toll on the mental

health and consequently affect productivity. Panellists will dissect this overlooked issue within the context of the theme and proffer practical solutions for both employer and employee. Our last webinar titled “Remote working as the new normal: practical and legal realities” in collaboration with the ELIR committee of the NBA-SBL, was well attended with 1,000 registered delegates, 700 attendees, 421 engaging participants and over 50 questions submitted. Panellist discussed remote working, the governance of the employee & employer relationship. This webinar concluded with panellist agreeing that organizations must institute empathetic responses such as employee helplines, employee assistance programs, and counselling amongst other notions. Off the success of the first and with the stellar of line-up of erudite panellists the second edition promises to be a bountifully informative affair

Perchstone & Graeys Energy Law Webinar Series — “Perspectives on Investing in Nigeria’s Oil Marginal Fields”

he Department of Petroleum Resources (DPR) recently launched the new marginal field bid round. The first marginal field bid process occurred in 2002. At the end of that process, 24 marginal fields were awarded to 32 companies. Other bid attempts following the 2002 event were unsuccessful. To facilitate the 2020 bid round, the DPR revoked previously awarded marginal fields and has made 57 marginal fields available for bidding. The DPR has also released the 2020 Guidelines which set out a roadmap of sorts for this bidding process. The process is delineated into 7 stages; from the application by interested bidders to the announcement of winning bidders. Recognizing the importance of key stakeholder engagement in this defining bid round, Perchstone & Graeys LP, a commercial law firm in Lagos organized a webinar tagged “Perspectives on Investing in Nigeria’s Oil Marginal Fields”. Marginal fields are expected to continue to play a significant role in the Oil & Gas sector, including the promotion of indigenous participation,

increased oil production capacity and gas reserves, as well as growth in the employment of competent Nigerians. The webinar discussion therefore focused on key issues surrounding the ownership of marginal oil fields in Nigeria, investment considerations, associated risks, and projections regarding the 2020 Guidelines. The session was moderated by Mr. Tolu Aderemi, Partner at Perchstone & Graeys LP, and head of the firm’s Energy & Infrastructure team. Other speakers who joined Aderemi were Mr. Osten Olorunshola, former Director, Department of Petroleum Resources; Mr. Abiye www.businessday.ng

Membere, Former Group Executive Director Exploration and Production, NNPC; Mr. Glossner, CEO & Founder of Domusaurea Consulting; and Mr. Ashu Shinghal, Chief General Manager, Corporate Strategy Planning & Advocacy GAIL (India) Ltd. Mr. Olorunshola, the webinar’s keynote speaker, suggested that a timely legislative intervention such as the passage of the Petroleum Industry Bill, would come in handy at a time like this to encourage participation. He cited demand reduction and destruction, price war, and market damage as contributing factors to the present dearth of investment in the sector. He however, encouraged industry players to look beyond and strive to gain market share now as there are still untapped resources to be harnessed in the sector. Addressing the critical investment considerations and actions for any successful marginal field in Nigeria, the speaker advised investors to pay close attention to bankable reserves, technical personnel, financing methods, and strategic partnership arrangements to mitigate the associated risks that have contributed to the abysmal failure of marginal fields.

https://www.facebook.com/businessdayng

Commenting on critical considerations in the marginal oil field, Mr. Glossner of Domusaurea Consulting, Germany stated that financing and security are important for potential foreign investors and if foreign investors must come, the cost of production has to be kept low given the current global crude prices. He further stressed the need for sustainable policies and for Nigeria to look into other energy sources that are aimed at a “Green Future.” Mr. Membere emphasized that success in the 2020 marginal field bid round hinges on the ability to capitalize on lessons learned from the 2002 bid round. He commended the incorporation of community and state participation as a requirement under the new bid round guidelines, describing it as a welcome development. However, Mr. Membere recommended that a regulatory mechanism to checkmate the extent of community participation be set up to achieve the intention of this new condition. Mr. Ashu Shinghal of GAIL (India) Ltd, commented on investment strategy. Mr. Shinghal noted that a probable incentive for investing in marginal fields @Businessdayng

during the pandemic would be in gas commercialization and utilization. He pointed to the steady increase in gas consumption in India and the government’s increasing support in gas commercialization. Mr Shinghal urged the Nigerian government to introduce fiscal incentives for the gas commercialization industry to encourage marginal field investors. On his part, Mr. Aderemi noted that the need for potential investors to engage professionals at every stage of the bidding process given that the failures of the last marginal field bid rounds could largely be attributed to toxic partnerships and failure of investors to engage the right advisory team before investing. He also urged the Federal government to ensure transparency of the process to give credibility to the award process. In his closing remarks, Aderemi, like other speakers, agreed the timing of the bid-round was apt. He however noted that there is an urgent need for a policy thrust that de-prioritizes the revenue generation motive of the bid-round which appears evident in the exorbitant fees and signature bonuses for the bid rounds.

Thursday 11 June 2020

BUSINESS DAY

LEGALINSIGHT

Recapitalization of insurance companies in Nigeria: prospects of raising/attracting equity capital may prove difficult

here has been recurring clamour for recapitalisation of the Insurance sector in Nigeria owing to what has been perceived as declining public confidence in the sector’s integrity, ability to honour insurance claims and general state of well-being. In other to arrest this loss of confidence, NAICOM has introduced a TierBased Minimum Solvency Capital (TBMSC) framework for recapitalization of insurance companies. The TBMSC methodology is a multi-level capitalization structure which proposes proportionate capital requirement designed to support the nature, scale and complexity of the businesses conducted by insurance companies. Consequently, NAICOM issued a Circular No. NAICOM /DPR/CIR/25/2019 dated May 20, 2019 on the minimum paid-up share capital requirement for insurance and reinsurance companies in Nigeria which, in effect, increased the minimum paid up share capital of both insurance and reinsurance companies (except those of Takaful and Microinsurance companies) effective May 20, 2019 with respect to new applications for insurance licenses, while existing insurance and reinsurance companies were required to comply no later than June 30, 2020.

The table below shows the increased minimum paid up capital requirements vis-a-vis

existing limits:

Circulars Extending Deadlines Further to the Circular dated May 20, 2019, NAICOM issued Circular NAICOM/DPR/ CIR/25-01/2019 dated July 23, 2019 making clarifications on how existing insurance and

reinsurance companies could effectively be recapitalized. The salient directives in the Circular are summarized as follows: (1) The minimum share capital recapitalization can be achieved through any or a combination of: a. Existing paid up share capital; b. Cash payment for new shares issued; c. Retained earnings-capitalization of undistributed profits; d. Payments in kind (other than by way of cash) for new shares issued such as properties, Treasury Bills, Bonds which must be converted into cash not later than 3 months to the deadline for recapitalization; and e. Share premium.

the feedback from stakeholders. Due to the incidence of the Covid-19 Pandemic that has and continues to disrupt economic and financial systems across the globe, including Nigeria, it became necessary for NAICOM to intervene once again, by relaxing the earlier deadline and conditions for recapitalization in the industry. Consequently, by virtue of Circular No. NAICOM/DPR/CIR/25Q4/2020 issued on June 03 2020, NAICOM has directed the extension of the deadline and segmentation of the recapitalization process into two phases as follows: (A) 50 % of the minimum paid up for insurance and 60 % for reinsurance shall be met by 31st December 2020; (B) Insurance companies are required to fully

that global economic and financial systems are still developing coping mechanisms to remain afloat. The capacity of businesses, especially those within an already unattractive insurance industry, to raise much required capital has only been made that much more difficult.

comply with the approved minimum paid up capital not later than 31st September 2021. In summary, insurance companies are now required to comply with a two-phase deadline in pursuit of ramping up their minimum share capital obligations in satisfaction of the recapitalization policy of NAICIOM, as shown in the table below: NAICOM has emphasized that insurance companies that fail to comply with the required minimum paid-up capital by the end of 31st December 2020 may be restricted on the scope of businesses they will be allowed to transact. All other terms and conditions contained in the previous circulars on recapitalization have been retained. We are of the firm view that the decision to revise the recapitalisation conditions and extend the deadline is a well thought out one. Suffice it to reiterate that the Covid-19 pandemic has caused geo-political disruptions and ravaged economies across the globe, such

table avenue for helping industry participants ramp up their capital and satisfy the new minimum capitalisation requirements would be to consider the model of mergers, acquisitions and reorganisations. This methodology could help attract increased value generation, maximisation of cost efficiencies and increased market share. Expectedly, the Federal Competition and Consumer Protection Commission (FCCPC) would be required to play an active moderating and stabilizing role in this process in order to minimize the incidence of monopolies, higher cost of insurance products and abuse of dominant position. In creating a level-playing field for all players, the FCCPC would facilitate healthy competition in this space and prioritise consumer protection.

Conclusion It bears mentioning that, with some industry players currently carrying negative book values of equity, the prospects of raising/attracting equity capital may prove extremely difficult, even as we note that a number of other stakeholders may have initiated the process of raising the desired additional capital from existing shareholders by means of right issues. That being said, it would seem that a veri-

(2) The recapitalization can be achieved through merger and acquisition which shall be concluded not later than 60 days to the deadline for the recapitalization. (3) Escrow account must be opened with the Central Bank of Nigeria for the deposit of cash payment of shares. Thereafter, deposited funds shall be released not later than 30 days after the confirmation and issuance of a new license. (4) Shareholders fund as at the last date of recapitalization of existing insurance/reinsurance companies shall not be less than the

minimum paid-up share capital. (5) Statutory deposit in line with the provisions of the Insurance Act 2003 shall be made not later than 30 days to the deadline for the recapitalization. On December 30, 2019, NAICOM issued a further Circular No. NAICOM/DPR/CIR/2503/2019 which extended the deadline for recapitalization to December 31, 2020 due to

This article has been authored by Rose Adaji (Senior Associate) who practices at Alliance Law Firm

DISPUTERESOLUTION

Shareholder Disputes in Nigeria – Arbitrable or Not? PERENAMI MOMODU

hile parties in commercial relationships are generally at liberty to resolve their disputes by arbitration, there may be some uncertainty in this regard for shareholders disputes. So, are disputes among shareholders, between shareholders and their company or between shareholders and third parties, determinable by means other than the regular court? Put differently, are shareholders disputes arbitrable in Nigeria? Shareholders disputes could arise from statutory obligations stemming from the applicable Companies Act, as well as from purely contractual arrangements such as shareholders agreement, share purchase agreement or joint venture agreements. Some of these agreements may contemplate arbitration as the dispute resolution mechanism. Generally, the freedom to arbitrate in Nigeria is limited by statute and case law. Criminal matters, disputes

arising or related to illegal contracts; agreements voided as being by way of gaming or wagering; change of status and any agreement purporting to give an arbitrator the right to give judgment in rem are not arbitrable. Recently, tax matters have been included in the list of non-arbitrable matters. One of the considerations for www.businessday.ng

the Nigerian courts declaring tax matters non-arbitrable was that by virtue of section 251 of the Nigerian constitution, the Federal High Court is vested with exclusive jurisdiction over tax matters. Since the same section 251 vests exclusive jurisdiction over matters regulated by the Companies and Allied Matters Act, Chapter C20, Laws of the Federation of Nigeria, 2004 (CAMA) on the Federal High Court, it is often wondered if the same principle which the courts applied in determining the arbitrability of tax disputes in Nigeria will be applied to shareholders disputes since companies are regulated by CAMA. Different jurisdictions have taken different approaches on the arbitrability of shareholders disputes. While some have legislations permitting arbitration, others have by their judicial decisions created a pathway for arbitration of shareholders disputes. In England, the courts have held that unfair prejudice petitions under the

https://www.facebook.com/businessdayng

English Companies Act are arbitrable. In China, the court’s position is that although an arbitral tribunal cannot grant a winding up order, disputes arising out of shareholders conduct leading to a winding up petition are arbitrable. In Singapore, the courts have taken the position that minority oppression claims of shareholders under the Singapore Companies Act may or may not be arbitrable depending on the claim and how it is couched. In India, the courts have held that an action for oppression or mismanagement had the “flavour” of being in rem since the reliefs under the Indian Companies Act were all remedies in rem. The Indian court’s position is that arbitral tribunals have no power to grant reliefs in a similar fashion to that available under the Indian Companies Act and therefore oppression or mismanagement petitions are non-arbitrable.

@Businessdayng

To be continued next week

Thursday 18 June 2020

BUSINESS DAY

FEATURE Global Citizen, NSIA to launch Nigeria’s Solidarity Fund to tackle Covid-19 Aigboje Aig-Imoukhuede, Vice -Chairman Global Citizen Nigeria, writes in this report about the partnership that seeks to raise billions of naira from Nigerians at home and abroad to combat the coronavirus pandemic and other public health challenges

t a time of global economic and political upheaval when business and political leaders are looked upon to provide solution as a result of the Coronavirus pandemic, Global Citizen[OI1] , an international citizens’ actionled advocacy organisation that is working with the United Nations is partneringwith the Nigeria Sovereign Investment Authority (NSIA) to launch a Covid-19 Solidarity Fund in Nigeria. A virtual press conference to announce the Fund on Thursday 14th May, 2019 had the Vice President, Professor Yemi Osinbajo, SAN, Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, Chairman of Global Citizen in Nigeria, Mr. Tunde Folawiyo, Vice Chairman, Mr. Aigboje AigImoukhuede and Global Citizen Chief Policy Officer, Mr. Michael Sheldrick as participants. Representing the NSIA were the Chairman of the Board of Directors, Mr. Jide Zeitlin and Managing Director of NSIA, Mr. Uche Orji. Ms. Kadaria Ahmed, a former BBC Journalist moderated the virtualmedia briefing where it was revealed that the Nigeria Solidarity Support Fund wasdesigned to provide additional support for Nigeria’s response to the COVID-19 pandemic. The Fund, according to Mr. Folawiyo, will enable Nigerian Citizens resident at home or in the diaspora as well as international donors to come together and directly contribute to Nigeria’s fight against the pandemic. Globally, there are nearly 7 million confirmed cases and over 440,000 deaths. As political, business and public health leaders are balancing every decision to ensure life can return to normal, the pandemic and its negative impact on socioeconomic activities has not abated. The number of reported cases in Nigeria is inching towards 10,000 and this has made the Presidential Task Force on COVID-19, led by the Secretary to the Government of the Federation, Mr. Boss Mustapha, to impose another round of two weeks limited easing of lockdown on the country. Since Nigeria recorded the index case on the 27th of February 2020, the virus has spread to 35 of the 36 states in the country. The spread of the virus has brought to light the weak capacity of our health care systems and the likelihood of this exacerbating the impact of the pandemic onthe Nigerian economy. Monetary and fiscal authorities are scrambling for different measures to reduce economic hardshipthat will follow.

Aigboje Aig-Imoukhuede

Many private organisations and individuals have contributed money to support Federal and State governments’ efforts in the last 3 months but none of the supports have taken the form and shape of what Global Citizen and NSIA have put in place in terms of structure and scope. Before the outbreak of Covid-19, Global Citizen Nigeria at a Policy Dialogue held in December of 2019 in Lagos unveiled a plan to intervene in Primary Healthcare delivery in 774 Local Governments in the country. The Covid-19 pandemic has made the intervention more compelling according to the Vice Chairman, Mr. Aigboje Aig-Imoukhuede who raised other public health challenges Nigeria and Africa still face like Malaria, HIV/AIDS, and Tuberculosis all of which, he said, require attention. In the words of the Global Citizen Nigeria Vice Chairman, over 500,000 HIV/AIDS patients have not been able to access treatment since the outbreak of COVID-19 in many African countries because government efforts across the continent have shifted to combating the scourge of coronavirus. The problem with this approach is that inability to provide antiretroviral treatments and other healthcare needs of these patients for up to a period of 6 months could result in deaths, almost at the scale African Countries recorded over a decade ago. The COVID-19 pandemic has presented significant health, social and economic challenges across the world. The Federal Government of Nigeria instituted measures such as increasing access to testing, contact tracing, isolation and implementing www.businessday.ng

social distancing protocol to contain the potentially devastating impact of this deadly virus; however, more support is needed. Given the unprecedented nature of this global pandemic, both in its impact and severity, it is clear that this is a challenge that the Public Sector cannot tackle alone. The virus can only be defeated through careful coordination and collaborative efforts of the Public Sector, Private Sector, and Philanthropists. As the pandemic’s impact is unprecedented; so too is the commitment of Nigerians both at home and abroad who have rallied to help one another and stand in solidarity against this deadly virus. The Nigeria Solidarity Support Fund will be incorporated as a nongovernment charitable foundation. In line with global best practices, it will be professionally managed and transparently governed through a strong Advisor Board comprising eminently qualified men and women to ensure that the funds are effectively used and properly accounted for. This stakeholder led-and-resourced mechanism will provide tools to augment ongoing efforts to respond to COVID-19 in communities across Nigeria, as well as to strengthen health systems in the aftermath of the acute pandemic response. “The Government of Nigeria is delighted that the Nigeria Sovereign Investment Authority (NSIA), together with the world’s leading international advocacy organization, Global Citizen, and their partners, have embarked on a process to set up a new funding vehicle. The Nigeria

https://www.facebook.com/businessdayng

Solidarity Support Fund (NSSF) will provide support to our most vulnerable communities in the fight against COVID-19”. - said Vice President of the Federal Republic of Nigeria, Professor Yemi Osinbajo The NSIA plays a leading role in driving Nigeria’s sustained economic development through the careful implementation of its three core mandates: building a savings base for the Nigerian people, development of infrastructure and providing stabilization in times of economic stress. “As the SWF of the most populous country on the continent, it is important for the Board of the NSIA to support collaborations of this nature which further strengthens the nation’s response to the Covid-19 pandemic. The unprecedented challenge posed by the outbreak demands that we embrace flexibility as never before on partnerships with the right organizations to help mobilize support for the fund as well as building sustainable systems in our communities.” – said Mr. Jide Zeitlin, Board Chairman, NSIA. The Chief Executive of NSIA noted in his presentation at the media briefing that Coronavirus has already put a major strain on public health infrastructure coupled with dislocation it has caused for social and economic activities adding that working with the Global Citizen will help to bring much needed relief. Mr. Orji said, “The COVID-19 pandemic has strained the nation’s health, social and economic systems, yet our resolve to work together to contain it remains unflinching. Against this background, we are thrilled to partner with Global Citizen in launching the Nigeria Solidarity Support Fund, as the Fund Manager.” NSIA’s long term infrastructure investment strategy entails creating model tertiary healthcare facilities designed and equipped to international standards to reduce the foreign exchange burden of medical tourism and to develop domestic expertise in tertiary healthcare. The collaboration with Global Citizen will help extend the agency’s primary care footprint in healthcare. The Solidarity Support Fund will enable the expansion of primary health care, thereby improving access, building capacity, and enhancing the resilience of Nigeria’s health delivery, especially in rural and underserved communities Global Citizen is the world’s largest movement of action takers and impact makers dedicated to ending extreme poverty by 2030. With over @Businessdayng

10 million monthly advocates, Global Citizen’s voices have the power to drive lasting change around sustainability, equality, and humanity. The organization’s work with partners, the actions of its global community, along with high-level advocacy efforts, has resulted in commitments and policy announcements from world leaders valued at over US$48 billion (N18.7 trillion), affecting the lives of more than 2.25 billion people across the globe by 2030. “Global Citizen’s ongoing commitment to the African continent and, in particular, Nigeria is motivated by two key factors: The shift in geopolitical power towards emerging markets, and the recognition that developing countries want and need to have agency over their own development, this makes a presence in the sub-Saharan region vital to the long-term success of any initiative seeking to end extreme poverty” Mr. Michael Sheldrick Chief Policy Officer Global Citizen. “As we embark upon our work in Nigeria, Global Citizen will mobilize Nigerians, Nigerians in the diaspora, global partners, together with the philanthropic and private sectors in our nation’s fight against COVID-19.” -Tunde Folawiyo, Chairman Global Citizen Nigeria Nigeria’s recovery from the COVID-19 pandemic requires individual and collective commitment. Through the Nigeria Solidarity Support Fund, together, and in solidarity, the nation will rebuild towards a more responsive and resilient Nigeria in the aftermath of this disaster. “Our efforts must ensure that we are able to envision and meet the demands that will emerge in the aftermath of the COVID-19 pandemic. This is imperative as the nation adjusts to the realities of a changing economy, transitions to a “new normal” and embraces the Nigeria of the future”. - Aigboje Aig-Imoukhuede, Vice -Chairman Global Citizen Nigeria The COVID- 19 pandemic manifests primarily as a global health challenge. It is clear however that its impact far exceeds the health sector. Mitigation efforts, therefore, must not be limited to the acute health sector needs. To effectively support Nigeria’s response and to emerge from this as a more resilient nation, efforts must take an integrated, systems approach at the center of which is a mandate to support the most vulnerable communities. Details on how to make contributions will be available on the Fund’s website and via public announcements following the upcoming official Launch.

Thursday 18 June 2020

BUSINESS DAY

Corporate Social Impact

Onuwa Lucky Joseph Editor, (08023314782)

FG says it received N1.69b COVID-19 donations: Mum on CACOVID donations update ONUWA LUCKY JOSEPH

he Federal Government received a total sum of N1.69 billion as COVID-19 eradication support donations from April 1 to May 31. Mr. Henshaw Ogubike, Director, Information, Press and Public Relations, Office of the Accountant General of the Federation (AGF), made the disclosure in a statement on Monday in Abuja. Ogubuike said that the donations were received through designated commercial bank accounts and the Central Bank of Nigeria/Treasury Single Account (CBN/TSA). He recalled that recently, the federal government, through the office of the accountant general of the federation, opened accounts with some commercial banks, through which the donations could be made. According to him, this was in addition to the CBN/TSA account, to ensure effective and efficient coordination and management of the funds. There is no update how-

ever on the private sector led CACOVID Initiative which as at April 27th had netted N27.1 Billion in donations, out of which, according to Isaac Okoroafor, CBN Director of Corporate Communications, N23Billion had been spent on food purchase. The CBN had in its last statement on the matter, on the 23rd of April, 2020, published a comprehensive list of 123 organisations and individuals who had supported

the cause by contributing amounts in the billion, millions, thousands and hundreds of Naira. That list is clearly in need of an update either by CBN or by CACOVID itself whose website had no information on the issue. The strong spirit of transparency that was evident when Cacovid began should be sustained. That’s the only way to keep interest from waning as people combat Covid 19 fatigue.

Platform Capital Raises Unilag with Ultra-Modern Lecture Halls ONUWA LUCKY JOSEPH

he University of Lagos, simply by reason of its strategic location, rich history and alumni network has had the good fortune of attracting funding and projects that enable the school run much better than some of its peers. There’s also no doubt that organisations that support the school also have an eye to harvesting some of the choice graduates as they make their move from classroom to the work force. Platform Capital did its own bit recently when it restored and donated 3 eLearning compliant lecture halls for the University of Lagos Business School, ULBS, Executive MBA Programme. With the completion of the comprehensive renovation programme, this just being phase one according to the proud chairman of Platform Capital, Akintoye Akindele, “From these lecture halls, we can run programmes from Harvard to Silicon Valley Business School to ISM Paris and many more business schools online and real time for our best and brightest on the continent”. Getting more expansive, he wondered aloud, “if we educate and expose one mind who goes, innovates and solves a problem, imagine the

‘For Thou Shall Work Remotely and be Fulfilled’ Abubakar Suleiman, MD Sterling Bank, pens a homily for work and life under the Covid 19 dispensation

will skip all the analyses and tell you what you could do about what is coming, and what is already here (1) First, you must conserve, be it energy, resources, food…there’s less room for waste. Time to shrink your spending because the pie (GDP) is shrinking. The time to be expansive will come. Buy only what you really need. All the extras can wait, save your gun powder…we can’t spend our way out of this. We will have to produce our way out (2) Buy local. The true cost of the oil gloom is less foreign currency to import things. Start by cancelling foreign vacations, non essential dollar (or any foreign currency) subscriptions, those online purchases you can live without. (3) Same as 2, but harder. If you have FX commitments such as kids schooling abroad and you only earn Naira, time to think rationally about it. Unless you have serious savings, your earnings could come under pressure. Be realistic. (4) Rethink your business – If people are cutting luxuries, is that what you are selling? Move towards essentials, things people can’t live without. Beware of the risk of currency volatility, don’t be caught exposed. Source locally. (5) If you are in employment, how can you do more remotely rather than less? Employers don’t want to shrink. If you can keep the business healthy, they will keep you. Think inside your isolation box, you may be surprised at what is possible. (6) Hold the cash you need, but no more. If you have anything to spare, buy earning assets. (Speak to your financial adviser). If and when inflation escalates, some

assets still retain their value. And give what you can. It is good for our mental health to help others. (7) Stay healthy. Cut out excessive focus on Covid 19 infection data and get fit. Leave what you can’t control for what you can. Change your diet if necessary – cut out processed sugar, and if you’re ambitious, meat. (8) Stay engaged. With family, friends, work. If you serve customers, engage them. Find out how their needs are changing, and if you can, serve them remotely. It will earn you goodwill post Covid 19. (9) Plan for the long haul. This is not going away ‘just like that’ – it will take time. Even if the virus is defeated, our ways won’t return to what it used to be. Add digital blackout to your calendar, the risk of being over-wired is real. (10) Stay ambitious and plan for life after Covid19. Like all plagues, this too is headed for the history books. Start educating yourself for the life after – understand the application of technology (and yes, data) for operations, marketing, fulfillment, logistics and customer care. These are the new (required) skills for entrepreneurs and employees alike.

Social Service Message from Social Media:

Before You Act Based on a Text Message, Call To Confirm!

compound effect of that on Africa.” True, the compound effect would be massive. Which is why it’s a good thing for organisations to always earmark portions of their resources, ab initio, for projects that enable the new generation build on the successes of the old in a sustainable manner. It is even more heartwarming to hear the laudable plans of Platform Capital as the Chairman promised a $10,000 prize to the best graduating student as well as automatic employment to the three best graduating students. Clearly, Mr Akindele enjoys making everything he does inwww.businessday.ng

ternational standard compliant. $10,000 is a prize worth working hard for, quite unlike the measly amounts that go to best graduating students, figures that have remained unchanged for millennia. The whole point of prizes is for motivation, so students can endure the hard work knowing that what’s ahead would be worth it. We encourage more corporates to toe this line and give our students a good reason to put in their best. And this in an environment conducive to learning and accommodating of the current reality and standards with regards to eLearning.

https://www.facebook.com/businessdayng

lady’s handbag which contained her cell phone, credit card, purse etc. was stolen. Thirty minutes later she managed to call her husband from her friend’s telephone, telling him what happened. Her husband said, “I just received your text message asking me to remind you of your ATM PIN and I have replied a little while ago”. When they rushed to the bank, the staff told them money had already been withdrawn. The thief had used the stolen cell phone to text her husband and gotten hold of her PIN. Within twenty minutes said thief had withdrawn her money from the bank account. Please when sensitive information is being requested through text message, confirm by calling back. Also, when being texted by friends or family to meet them somewhere, be sure to call back to confirm that the message came from them. @Businessdayng

If you do not reach them, be very careful about going places to meet family and friends who text you. (Kindly send feedback to 08023314782 / csrmomentum@gmail.com)

Thursday 18 June 2020

BUSINESS DAY

POLITICS & POLICY

APC leadership crisis deepens as two chairmen emerged one day ...Giadom’s faction orders fresh screening of Edo guber aspirants ...Eta’s faction appoints Uzodinma Chair of Edo primary panel James Kwen, Abuja

he All Progressives Congress (APC) has been throw n into a serious political turmoil over who to take over as Acting National Chairman, following the affirmation of the suspension of the immediate past National Chairman, Adams Oshiomhole by Appeal Court. After the Appeal Court judgment, APC National Working Committee (NWC) late Tuesday night announced that the party’s Deputy National Chairman (South), Abiola Ajimobi has assumed the position of Acting National Chairman in line with Section 14.2 (iii) of the APC constitution which states that: “The Deputy National Chairman, North/South shall act as the National Chairman in the absence of the National Chairman from his zone”. However, two Acting National Chairmen, namely Victor Giadom, APC Deputy National Secretary, and Hilliard Eta, APC National Vice Chairman South/South emerged in a space of one hour Wednesday morning.

Victor Giadom

Abiola Ajimobi

Hilliard Eta

Adams Oshiomhole

Giadom, the leader of anti-Oshiomhole forces who first assumed the position of Acting National Chairman said his emergence was based on: “A notice that on the 16th of March 2020, Justice S.U. Bature in suit no FCT/HC/M/6447/2020 had ordered that with the earlier suspension of Oshiomhole, Giadom should act as National Chairman of our great party.” “That order could not be immediately effected at that time because of the temporary reprieve Adams Oshiomhole got from the Court of Appeal on the same date. However, having removed the temporary reprieve yesterday by the Court of Appeal and considering the fact that we cannot allow for a vacuum, I

most humbly inform you that I have assumed office as Acting National Chairman of our great party in compliance with the order of the court,” he said. Giadom cancelled the decision of the Screening and Appeal Committees of the former Chairman of the party on the Edo primaries, in strict compliance with the provisions of the Constitution of the Federal Republic of Nigeria that forbids anyone who is interested in a cause to be a judge in that same cause. He directed all aspirants in the Governorship Primaries to report for a fresh screening between Wednesday and Thursday and called on all aspirants to remain in APC as his leadership would guarantee fairness and justice to all concerned, adding that

schedule and time for screening of each aspirant shall be communicated. “It is a brazen rape on the Rule of Law and the Constitution of the Federal Republic of Nigeria for the former Chairman, Comrade Adams Oshiomhole to preside and select Committees in respect to the Governorship primaries in Edo State being a key player in the crisis in that state. “Whatever role the former Chairman was given to play in that process by the APC constitution, it cannot override the provisions of the Constitution of the Federal Republic of Nigeria which governs all of us,” Giadom said. He further directed that the Deputy Organising Secretary, Muhammad Ibrahim should immediately resume

office as the Acting National Organising Secretary in compliance with the judgment of the Federal High Court in suit no: FHC/ABJ/CS/733/2018 which removed the former National Organising Secretary, Emmanuel Ibediro since 24th of September 2018. Soon after, Eta who led the pro-Oshiomhole faction to a press briefing at the party’s National Secretariat, Abuja said that the NWC at a meeting properly attended by 15 out of 21 members re-affirmed Ajimobi as the acting National Chairman of the party. He said the meeting however, resolved that in Ajimobi’s absence, Eta, national vice chairman (Eta) of the party from the zone of which the National Chairman hails from

Oshiomhole’s suspension: Ojezua, Odubu differ on Appeal Court’s judgment IDRIS UMAR MOMOH & CHURCHILL OKORO, Benin

n s e l m O j e z u a, the factional chairman of the All Progressives Congress (APC) in Edo State and Pius Odubu, the immediate past deputy governor of the state, on Wednesday expressed divergent views on the Court of Appeal judgment that upheld the suspension of Adams Oshiomhole as the National Chairman of the party. Ojezua described the judgment as a positive step in the process of bringing sanity to the party, while Pius Odubu, who expressed confidence that the decision will be overturned, said it was unfortunate the judgment was delivered at a time the party is preparing for the

governorship election. According to Ojezua, the Court of Appeal that upheld the suspension of Adams Oshiomhole as the national chairman of the party is a welcome development and good for the party; going forward all the actions he had taken would have been nullified, otherwise that would have been disastrous. He urged the National Working Committee of the party to quickly undo all that was allegedly done by Adams Oshiomhole. He also urged the NWC to clean up the slate, start afresh and fast-track the process that will bring the party back on track. On the possibility of the state Governor, Godwin Obaseki returning back to the party, he said: “Well, I haven’t discussed that with www.businessday.ng

him and I won’t know the decision he will take but as the state chairman of the party I am telling you what is good for the party.” He however, added that he was not resigning from the party with the governor because he had only spent two years out of his four years as the state chairman of the party. On his part, Pius Odubu, who was deputy governor to Adams Oshiomhole was optimistic that the Supreme Court would reverse the decision made by the Court of Appeal. “It is unfortunate and unnecessary at this point in time, and I hope that the Supreme Court will do justice to the case and restate him back as the national chairman of the party, APC,” he added.

and in this case, the SouthSouth, acts on his behalf. Eta disclosed that the NWC has constituted a seven-man election Panel for the Edo primary elections headed by Imo State Governor, Hope Uzodinma as well as election appeal Committee, chaired by Mustapha Bello. “The NWC also noted that the order was delivered in Port Harcourt in respect of the Rivers State Executive Committee of our party, the NWC is aware of the fact that the court agreed that Igo Aguma should held the caretaker Committee in Rivers State and the NWC as obliged and would obey that court order. We will all make plans in due time to have the Congress of our party from the Ward culminating at the state level in Rivers State. “It is also noted that Chief Victor Giadom had resigned to contest as Deputy Governor of the party in the last election and that the party has no recollection that the South-south zone of the party had re-presented him. Therefore, the NWC has now asked the South-south of the party to present a member of the party to fill this position,” Eta.

Edo guber: I am yet to decide on a political platform - Obaseki …As EDHA shut for 14 days for fumigation IDRIS UMAR MOMOH & CHURCHILL OKORO, Benin

do State Governor, Godwin Obaseki says he is yet to decide on the platform on which he would seek reelection for a second term in office. The governor noted that the health of Edo people is of paramount importance in the wake of the rising cases of coronavirus disease ravaging the world. Obaseki, who disclosed this on his official Twitter handle on Wednesday, said: “I have not moved to a new platform yet to seek re-election.” He said his major focus at the moment was to control the spread of the coronavirus (COVID-19) pandemic, which is ravaging the country and threatening healthcare

https://www.facebook.com/businessdayng

Godwin Obaseki

system. Recall that Godwin Obaseki and Philip Shaibu had resigned their membership from the All Progressives Congress (APC). Meanwhile, the State House of Assembly has been shut down for 14 days for fumigation of the assembly complex. A statement by the acting director, Administration and Supplies, Stephen Guobadia, on behalf of the Clerk of the @Businessdayng

House, directed all management staff of the assembly to remain at home from Tuesday, 16th June, 2020, until after the exercise. He said that “this is as a result of the fumigation exercise to be carried out in the Assembly Complex at three different times.” “All Management Staff are advised to leave their phones open in case of further information,” he said.

Thursday 18 June 2020

BUSINESS DAY

COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

MANUFACTURING

GBfoods completes N20bn Tomato Processing Factory in Kebbi SEGUN ADAMS

Bfoods, a global leader in culinar y product manufacturing, in partnership with the Central Bank of Nigeria (CBN), Kebbi State Government and the Emirate of Yauri has commissoned its N20 billion Tomato processing factory, in Kebbi State. The tomato factory will convert fresh tomatoes into tomato concentrate used for producing Gino Tomatoes Paste and Gino Tomato Pepper Onion Paste while the soya bean will be used to process soya-bean oil which is a critical ingredient for GBfoods’ Bama and Jago Mayonnaise. The factory is said to be the second-largest in Nigeria and the only fully backward integrated plant in ECOWAS – and has the largest single tomatoes farm in Nigeria. When all phases of the project are finished, the factory will be the largest fresh tomatoes processing factory in SubSaharan Africa. “The commissioning of this processing factory is a great milestone for us,” said Vincent Egbe, the Country Manager, GBfoods. “It further demonstrates the company’s commitment towards helping Nigeria achieve its food secu-

rity ambitions, in this case, of self-sufficiency in tomato concentrate production.” Egbe said GBfoods is dedicated to reducing pre and post-harvest losses, and also developing the value chain so as to improve revenue streams for tomato farmers. “Over the past three years, in the three states of Kaduna,

Katsina and Kebbi, GBfoods has worked with smallholder out-growers to boost their incomes by providing seedlings, fertilizers, training, and irrigation pumps, further to reduce post-harvest losses GBfoods also provided free plastic crates to farmers,” he said. The investment, in the world-class factory and ad-

joining farm, includes drip irrigation and fertigation infrastructure, greenhouses, seed planting robots, an incubation chambers and a plethora of agricultural machinery. The farm will serve a dual purpose, it will produce industrial tomatoes in the dry season and soya beans in the raining season.

The company said the project has created over 1,000 jobs including 500 farming jobs, 150 factory jobs and 150 construction jobs. The factory is fully backwardly integrated to the company’s farm and dedicated out-growers. In the coming tomatoes season, the plant will also source most of its raw mate-

L-R: Taiwo Adewunmi, past district governor, Lions Club International Association, 404B2 Nigeria; Adefunke Owonifari, 2nd vice president, Lagos Apex Lions Club; Wesley Kafidiya, district governor, Lions Club International Association, 404B2 Nigeria, presenting award of competent leader to Blessing Umebali, region 6 chairperson/convener of region 6 Mark of Excellence Awards; Kayode Oshinuga, 2nd vice district governor; Cynthia Saka, president, Lagos Apex Lions Club, initiator of the award, and Marce Anyanwu, zone 6B chairperson, during the Lions Clubs International Association Region 6 Mark of Excellence Awards in Lagos.

rial from out-growers who will grow the tomatoes on their own farms and from GBfoods’ owned and operated farm. The factory is engaging over 5,000 smallholder farmers as out-growers, in the coming tomatoes season, to grow fresh tomatoes. Additional land is expected in September 2020 to be cleared and prepared for the farming season of October 2021. This expansion will be similarly accompanied by an upgrade in the factory’s capacity and creation of new jobs, the company said. The CEO of GBfoods Africa, Vicenç Bosch, commended the FG, CBN, the State and Local governments as well the MDAs that ensured the successful completion of the factory. Bosch said GBFoods’ team of extension workers, consultants and agronomists are ensuring that the Nigerian farmers benefit from the technology transfer of our best practices and know-how built through over 40 years of successful tomato operations in Italy and Spain. GBfoods is the maker of popular brands in Gino Tomatoes Mix, Gino Pepper Onion, Gino Thyme, Gino Curry, Gino Chicken and Beef Cubes, Bama Mayonnaise as well as Jago Mayonnaise.

CONSUMER GOODS AIICO shareholders see opportunity to increase returns in firm’s new growth phase Rentsmallsmall introduces Cotel to tackle Covid 19 challenges MODESTUS ANAESORONYE

…as insurer floats new Right Issue

hareholders of AIICO Insurance Plc now have another opportunity to increase their returns on investment in the fast growing underwriter, as firm secures Nigerian Stock Exchange’s approval to float a new rights issue. AIICO is way ahead with its recapitalization plans, having kicked off another phase in its recapitalization strategy and has submitted application to the NSE on 15 June 2020, for the approval and listing of its 4,357,770,954 ordinary shares of Fifty Kobo (N0.50) each at Eighty Kobo (N0.80) per share, on the basis of five (5) new ordinary shares for every thirteen (13) ordinary shares held. AIICO’s recapitalization journey started in earnest when the insurance regulator, the National Insurance Commission (NAICOM) set a strategic plan to increase the capacity of the industry to take on more risks. Responding to this, AIICO quickly articulated a clear path to meet the new minimum

regulatory capital requirement. The Company followed through with regular communications at all stages in the execution of the strategy with its shareholders, who have been supportive of the efforts. In February 2020, the Company completed its private placement successfully with 38.83 percent of its shares snapped up by two strategic investors; LeapFrog Nigeria Insurance Holdings Limited (28.24 percent) and AIICO Bahamas Nigeria Limited (10.59 percent), raising the share capital from N6.1bn to N11.3 billion. The Rights Issue is expected to generate N3.5 billion, bringing the Company closer to meeting the required minimum paid-up capital of N18 billion. The exercise will be followed subsequently with a capitalisation (bonus) issue, which has a qualification date of 23 September 2020. The industry, as with others, is facing daunting challenges as a result of the pandemic. As a result, NAICOM recently revised

its recapitalization guidelines; 50 percent of the new minimum capital to be achieved by December 31, 2020, whiles the deadline for overall completion has been extended till September 30, 2021. AIICO has however maintained an unbroken focus on its journey to its recapitalization. The Company also provided updates on the convertible loan instrument with the International Finance Corporation (IFC). It obtained a loan of $7million from the IFC on June 30, 2015, at an interest rate of 6.5 percent plus 6-month LIBOR for seven years with a moratorium period of 4 years on the principal. The loan had an embedded derivative (a conversion option) whereby IFC had the right to convert all or a portion of the outstanding principal amount into the equivalent number of shares of the Company. The loan repayment is in six (6) equal installments starting in March 2020 and is expected to end in September 2022 except if prepaid before then.

www.businessday.ng

IFEOMA OKEKE

entSmallSmall, Nigeria’s leading Prop-Tech company providing on-demand Home Rental Solution with flexible rent payment has introduced a hospitality focused work and live solution, Cotel. Cotel furnishes its subscribers the flexibility to enjoy hotel-type ambience residences whilst catering to their work space needs, thereby helping professionals thrive during and beyond the COVID19 season. Speaking on this novel product, Tunde Balogun, co-founder and chief executive officer of RentSmallSmall, said the company came up with this innovation to help professionals work and live better without exposing themselves to Corona Virus. “In line with the present realities, there is a current lacuna in most home spaces that doesn’t give the perfect

https://www.facebook.com/businessdayng

ambience for productivity. RentSmallSmall has proactively and disruptively charged itself to provide this solution that aids entrepreneurs and upwardly mobile professionals work to live better and ‘still carry out office functions remotely from the comfort of their home especially at a time like this when COVID19 is still an active threat.’’ Balogun stressed that the Cotel is not a hotel adding that the price of an hotel room is not what mattered but the comfort and Convenience one can get from it. “Our pilot Cotel property is a 17units Condo, with swimming pool, gym, indoor and outdoor lounge, room service, guest waiting area, work room, and much more. “The two key things we promise are: seamless comfort and convenience as you live and work. Cotel is not just the physical space in itself, it’s an exclusive community of brilliant, like minds who revel in simpli@Businessdayng

fied work and living systems. This is a new normal for greatness, everything under your roof while you exceed your work goals,” he said. Launched October 2018, RentSmallSmall provides hassle free mechanisms for renting an apartment in Lagos. The startup serves as an intermediary to help people find a property for rent (within 48 hours) and pay monthly; whilst providing landlords with steady income throughout the year. “The reviews we’ve gotten from our landlords on what they enjoy most about RentSmallSmall is not our rent insurance, our hands-on property management culture, but rather the monthly steady income they get. I’m glad we can make both our Tenants and Landlords happy with our product and we believe Cotel will be another exciting product in the market’’. The firm was listed in connect Nigeria top 100 emerging SME’s 2019.

Thursday 18 June 2020

BUSINESS DAY

news

Jumia sees high numbers active vendors, onsite customers during COVID-19 lockdown months

Nigeria’s May inflation rate rises to 25-month high at 12.4%

…records over 30% MoM increase in food orders since March

BUNMI BAILEY

Jumoke Akiyode-Lawanson

-commerce company, Jumia, reveals that the months of May and June saw its highest amounts of active vendors, most amounts of customers onsite and increased amount of unique product purchases on the platform so far in the year 2020. According to Massimiliano Spalazzi, CEO, Jumia Nigeria, the online retail store saw a drop in numbers at the beginning of the lockdown across many states in Nigeria as a result of the COVID-19 pandemic. However, the company stabilised at the beginning of May, with the ease of lockdown, and saw a significant spike in numbers of purchases for essential goods such as groceries and household items. Speaking during a webinar on Wednesday to announce Jumia’s plans for its eighth year anniversary with members of the media, Spalazzi said, “We definitely had challenges due to the COVID-19 lockdown, currency devaluation and prices of goods increase in this market. However, with our contactless delivery initiatives, contactless payment via Jumia Pay and partnerships with several companies that produce consumer goods, we saw more new and old customers come on our platform to shop in safety.” Tolulope George-Yanwah, country manager, Jumia services, said, “Our delivery partners increased year on year (YoY) by 73 percent, delivery associate community saw a

65 percent increase YoY and our pick up points and ware houses increase YoY by 109 percent with over 200 hubs. This shows that our delivery methods have significantly improved with higher volumes of purchases and deliveries made.” For its eighth year anniversary, themed ‘Stronger Together,’ Jumia has put in place different marketing initiatives to further drive engagement, sales and reward customers. Omolola Oladunjoye, chief commercial officer, Jumia Nigeria, explained that the flash sales, seven days Jumia Prime free trial, discount vouchers and treasure hunts with discounted items of up to 99percent, will be available on the platform for customers from June 22, till July 5, 2020. On ensuring optimum quality of goods sold on the online platform, Jumia says it has various levels of quality control checks in place in all its shipping hubs and sellers of fake goods are penalized N70, 000 and products identified as substandard or fake are usually returned. Speaking on progress recorded on Jumia Food during the lockdown, Spalazzi said the growth on Jumia Food platform has been very fast, and that the company has also noticed very interesting consumer patterns during the lockdown. “Unlike before, when we used to get a lot of food deliveries to the island where most people work, we have noticed that food requests have now moved to the mainland where most people reside rather than the workplace. I think it’s

igeria’s Consumer Prices Index (CPI), commonly known as inflation rate, accelerated by 12.40 percent in May 2020, marking the nine-consecutive uptrend since September 2019 and the highest in 25 months, a BusinessDay analysis shows. Data from the May 2020 inflation report by the National Bureau of Statistics (NBS) released Wednesday, show that inflation rose month-on-month by 12.40 percent, which was 0.06 percentage points higher than the rate recorded in April 2020 (12.34%). Also, the percentage difference of 1.17 is the highest recorded since June 2018. Food inflation rose by 15.04 percent year-on-year in May 2020 compared with 15.03 percent in April 2020. This rise in the food index was caused by increases in prices of Bread and Cereals, Potatoes, Yam and other tubers, Oils and Fats, Fruits, Fish and Meat. According to Abiodun

Keripe, an analyst at Afrinvest Limited, the increase in the May headline inflation rate was majorly driven by the core inflation index that rose at a faster pace of 10.12 percent year-on-year, 14 basis points above the 9.98 percent recorded in April. “We attribute this sharp jump a year-on-year base effect even has prices of pharmaceutical products and medical services drove the core index higher. However, the monthon-month trend in the core inflation rose by 0.88 percent, 5 basis points slower than the 0.93 percent posted in April. Despite the composition of the food basket, food inflation rose at a muted (1basis points) rate to 15.0 percent,” Keripe says. The average annual rate of change of the food sub-index for the 12-month period ending May 2020 over the previous twelve-month average was 14.33 percent, 0.11 points from the average annual rate of change recorded in April 2020 (14.22%). On month-on-month basis, the food sub-index increased by 1.42 percent in May

2020, up by 0.24 percent points from 1.18 percent recorded in April 2020. The ‘’All items less farm produce’’ or Core inflation, which excludes the prices of volatile agricultural produce stood at 10.12 percent in May 2020, up by 0.14 percent when compared with 9.98 percent recorded in April 2020. On month-onmonth basis, the core sub-index increased by 0.88 percent in May 2020. This was down by 0.05 percent when compared with 0.93 percent recorded in April 2020. The highest increases were recorded in prices of pharmaceutical products, medical services, repair of furniture, hospital services, passenger transport by road, motor car, bicycles, maintenance and repair of personal transport equipment, passenger transport by sea and inland waterways, paramedical services, motor cycles and hairdressing salons and personal grooming establishment. But Damilola Adewale, a Lagos-based research economist, believes that the uptrend in inflation was essentially driven

by intense pressure on food commodities, evidenced by the sharp acceleration in the food sub-index. “Activities of non-state actors disrupted easy conveyance of food products despite exemptions on essential commodities. This combines with planting season effect and border closure, widened the food supply gap,” Adewale states. Urban inflation rate increased by 13.03 percent yearon-year in May 2020 from 13.01 percent recorded in April 2020, while the rural inflation rate increased by 11.83 percent in May 2020 from 11.73 percent in April 2020. “For June inflation rate, we expect that the gradual easing of the lockdown measures as well as the commencement of planting activities would drive a faster increase in domestic consumer prices. Thus, we anticipate subsequent inflation figures to more reflect the impact of the trade restrictions, exchange rate weakening, and the recent VAT increase,” Keripe notes.

Doctors strike: FG begins payment of April, May hazard allowances to healthcare workers Innocent Odoh, Abuja

ederal Government has begun the disbursement of the April and May hazard and inducements allowances to healthcare workers apparently to persuade members of the National Association of Resident Doctors (NARD) to suspend the indefinite nationwide strike they embarked upon on Monday. According to a statement issued on Wednesday by the deputy director and head of press and public relations, Charles Akpan, minister for labour and employment, Chris Ngige, stated this in Abuja at the end of a meeting between the Federal Government and members of NARD. He disclosed that the meeting ended on a positive note as the government side had shown evidence to the Association of the payment of the hazard and inducement allowances. The NARD had on Monday embarked on a nationwide strike after the expiration of a 14-day ultimatum following the delay by the Federal Government in meeting its demands on the payment of hazard allowances and other

matters. The minister said, “We have paid those allowances since last night and it was directly paid into the account of recipients. So, we are hopeful that between the Integrated Payroll and Personnel Information System (IPPIS) office and the Central Bank, before the end of 24 hours, the accounts of the health care workers would all be credited for April and May. “The payment is not for only Resident Doctors, but also for consultants, nurses, pharmacists, physiologists, mortuary attendants, Intensive Care Unit (ICU) centres attendants, and all health care workers in COVID-19 designated hospitals and all Federal Medical Centres in designated states.” Ngige stated that the Federal Government had taken care of all the major issues raised by NARD, and disclosed that the appropriation for residence programme had been captured in the 2021 budget and would roll over from 2020. Also speaking, the minister of health, Ehanire Osagie, appreciated the essential services of the health workforce in keeping Nigerians healthy, especially during this global pandemic of Covid-19. www.businessday.ng

L-R: Fola Ebenezer Ali, group general manager/HR, Dangote Projects, presenting the scholarship awards to Mufutau Yusuf (Erinkilola 1) Sopenlukale of Oke Sopen, Ijebu-Igbo, to be presented to the beneficiaries, Dangote Granite Mines, Ijebu-Igbo, and Fanikasi Akinwale, principal administrative officer, at the Dangote Granite Mines’ presentation of scholarship awards to the host communities in Ijebu-Igbo, Ogun State.

Propertymart commits to integrity, decries aide’s defamatory remarks Chuka Uroko

anagement of P ro p e r t y m a r t Real Estate Investment Limited, a frontline property development company in Nigeria, says it is committed to integrity and industry best practices in dealing with its numerous customers, clients and stakeholders. The company notes that despite the challenges in the real estate industry coupled with the fluctuations in the Nigerian economy, it took over 12 years to attain an enviable height which only a few real estate companies in the country can boast of. In a statement in Lagos signed by Oyelami Sogo, head, legal and counsel, obtained by BusinessDay, Propertymart stressed that as a reputable company with

over a decade experience in the real estate sector, it would never engage in unwholesome practices. For these reasons and more, Sogo expressed surprise over an alleged defamatory statement credited to Toke Benson-Awoyinka, special adviser on Housing to Lagos State governor, Babajide Sanwo-Olu. Sogo alleged that the special adviser had, while launching a website and database of the Lagos State Real Estate Regulatory Authority (LASRERA), on Thursday, June 11, allegedly noted that Propertymart defrauded a prospective home-owner. He reasoned that the matter should have been diligently investigated before the special adviser came to that conclusion or questioned the integrity of the company. “We shudder at how the

https://www.facebook.com/businessdayng

Special Adviser became the investigator, the prosecutor and the judge in a case that was yet to be investigated or follow the expected due process,” Sogo said, stressing that “Propertymart was properly established with a Board and Management comprising highly accomplished Nigerians from different walks of life. “We wish to place on record that we are not a flight by night briefcase company. As a responsible corporate citizen, Propertymart supports LASRERA to achieve its objective as we believe this will be to our advantage. This move will help to improve the reputation and general outlook of the industry while unfounded cowboys will be exposed if the right steps are taken,” he assured. Continuing, Sogo disclosed, “Propertymart has delivered over 6,000 housing @Businessdayng

units and serviced plots to customers in Lagos, Ogun and the Federal Capital Territory (FCT) since 2008. It is one of the big operators helping the government to meet the housing needs of Nigerians and creating jobs for thousands.” He disclosed further that, within the group, the company had direct staff strength of over 150 Nigerians and had generated employment for over 5,000 indirectly across the housing delivery value chain. Some of Propertymart’s completed and ongoing housing projects include Citiview Estate, Arepo, Ogun; Fairmont Hilltop, Alagbado; Cranbel Court, New Makun City, OPIC; Cranbel Edge 1 & 2, Lekki Ajah; Edensville Estate, Simawa; Mitchel Mews 1 & 2, Magodo, Lagos; Micheville Estate and Bel Terraces in Abuja.

Thursday 18 June 2020

BUSINESS DAY

news Recession, job losses, FX, taxes worry... Continued from page 1

and Industry (LCCI) on Wednesday. “In the short to medium term, I think there will be importation of raw materials and pressure of the naira. Secondly, we need to look at what we can do to retain our jobs,” Deepanjan, who manages the company recently acquired by CocaCola, said. He called for palliatives to factories to enable them stay afloat and save the country from its worst unemployment crisis since Independence. COVID-19 is peaking in Nigeria with a total of 17,148 cases and 455 deaths as at Wednesday. Lagos has 44 percent of all the cases and about 18 percent of all the deaths. The state is significant, being the country’s biggest economy with 8.4 million small businesses, and headquarters most of the large enterprises. The country is certain to fall into its worst recession in 30 years, according to the International Monetary Fund (IMF) projections, and Lagos would be the hardest as it has the largest concentration of businesses. Heads of businesses are seeing erosion of their revenues and profits due to the pandemic, and fear the worst impact of recession, continuing job losses and taxes on their survival. “We see visits of different agencies coming to do inspections,” said Prakash Keswani, CEO of Artee Group, owners of the retail Park ‘n’ Shop. “As the owner of a retail shop, I do get a lot of calls from these agencies. I think government has to come out with clear guidelines as to who is responsible,” he said. According to Oyeyimika Adeboye, CEO of Cadbury Nigeria, the concern is how Lagos State will manage the imminent recession to ensure it does decapitate businesses in the state. Toki Mabogunje, president of the LCCI, is worried that the pandemic and the various containment measures have caused severe dislocations and losses to businesses, and it will take a while for many firms to recover from the consequential shocks. Mabogunje explained that the situation has led to breach of contracts, inability to retain staff, cost escalation due to naira depreciation, burden of loan repayment and loss of consumer purchasing power. “We will appreciate the

intervention and consideration of the state government in supporting the recovery of businesses from these disruptions and dislocations,” she recommended. Alan Sinfield, CEO of telecoms firm 9Mobile, said naira depreciation is hurting the firm as it does most of its network infrastructure transactions in dollars. COVID-19 has forced down oil prices as countries retreat from purchases, concentrating rather on halting the spread of the virus. Brent crude price was $40.74 per barrel at 2.48pm on Wednesday, according to Bloomberg data, representing a 33 percent drop from early in 2020. This is hurting Nigeria, a mono-product economy, which depends on oil for over 70 percent of foreign exchange and revenue. Oil inflows into Nigeria have slowed, leading to naira depreciation and high foreign debt profile. Manufacturers are scrambling for FX to import inputs. Nigeria is already battling high unemployment estimated at 23.1 percent in the third quarter of 2018. The private sector predicts a 40-45 percent unemployment rate by end of 2020 due to the continuing spread of the pandemic, its worst since 1960. The Federal Ministry of Finance has predicted 8.9 percent cut in GDP growth in 2020. Boye Olusanya, chief operating officer, Flour Mills of Nigeria plc, stressed the importance of ramping up testing in the state to clear uncertainties. He further said that the private sector’s biggest headache is restarting the Lagos economy to avoid the damaging impact of job losses. The private sector particularly commended Governor Babajide Sanwo-Olu of Lagos for taking proactive steps to curb the spread of the virus. Sanwo-Olu, on his part, said absence of data has fuelled the spread of COVID-19 as it was impossible to verify fake data given by returnees who had contacts with the index case. He explained that the state plans to triple testing from the current 1,000 to 1,200 every day and would raise molecular labs from five to 12 in the coming weeks. He assured the private sector that he would take the conversation of cooling down taxes and fees with relevant heads, disclosing that the state is building the biggest rice mill that would take care of 25 percent of its rice demand. www.businessday.ng

L-R: Sa’adat Hassan, comptroller of Nigerian Immigration Service (NIS), Nnamdi Azikiwe International Airport; Tolulope Akande-Sadipe, chairman, House of Representatives Committee on Diaspora; Olubukola Oyewu, deputy chairman of the committee, and other committee and immigration officials during the committee’s oversight visit to the NIS Office at Nnamdi Azikiwe International Airport, in Abuja, yesterday. NAN

Cement, telecoms, pensions successes... Continued from page 1

tions Commission (NCC),

at the panel session tagged ‘Success Stories in Nigeria’. Ndukwe said the government must be mindful that it cannot be an operator and a regulator at the same time in any sector that it desires to improve. According to Ndukwe, who helped improve Nigeria’s telecom landscape during the early 2000s, “The tailwinds of that landmark achievement for Nigeria were honesty of purpose and shielding from political influence and interference in critical decision makings.” Also speaking to the issue of regulation, Dave Uduanu, chief executive officer, Sigma Pensions Limited, said, “One of the lessons of history is that your regulators and your rule setters should be the smartest people in the room because essentially they write the rules and superintend over them.” As countries across the globe continue to battle with

COVID-19 pandemic, crash in the price of crude oil and dwindling revenues as a result of the impact of the pandemic have put some more pressure on Nigeria’s oil-dependent reserves. According to Uduanu, a framework that ensured excellent corporate governance, employed extensive consultation and communicated its intentions clearly helped the take-off of the pensions industry in Nigeria. Nigeria’s pension industry is now the biggest in Africa after South Africa’s. While citing political will as one of the key ingredients needed to move some of Nigeria’s failing industries into the Promises Land, Baba Gana, pioneer deputy managing director, Nigeria LNG Limited, referred to the NLNG project. “The political will of the government of that time to implement the project was one of the two things the government did right to make NLNG a success,” Gana said, adding that the decree that

Nigeria’s development depends... Continued from page 30

ing local problems. It constituted an embarrassment that graduates left school and were stranded,” Bogoro said. In terms of jobs and livelihoods among Nigerian youths, it is estimated 28 million Nigerian youths are jobless. There is another set of 100 million Nigerian youths below 18 years old who are on the way. This is why it is critical to ask the question of what education is for in addition to how well it is delivered, the experts said. “We need to look at the curriculum and personal mastery. When you map high school achievement numbers on conflict zones in Nigeria, you find that they map 100 percent – the northeast accounts for less than 7 percent of high school achievement

numbers. We need to improve on access, quality of teaching and what is being taught,” Adegbesan said. Otto Orondaam, founder of Slum2School, stressed the need “to look at the roots of the problems in education and not the resultant effects”. “Why are we educating? Our education system needs to be tied to a national vision,” Orondaam said. He said Nigeria needs to refocus the conversation about developing this critical sector by focusing on having an identified national education vision that will drive processes and investment going forward. According to Orondaam, it is very imperative that as a nation, Nigeria’s education is tied to what is called a national vision. “Why are primary, sec-

https://www.facebook.com/businessdayng

guaranteed certain privileges to investors was the second catalyst. Gana explained that while crude oil price stood at an average of $12/barrel in four years during the military regime of Sani Abacha, the government at the time was able to fund NLNG project with $3 billion. “This is not a decision many people can take today – in a country of 200 million people producing 2 million bpd and you can give out that amount to fund one project. It was a very courageous decision for any head of state,” Gana said. Also speaking to good governance, Devakumar Edwin, group executive director, Dangote Industries Ltd, said, “President Obasanjo queried us on why Nigeria was still importing cement while it had gas, limestone, coal and other materials needed for manufacturing its cement.” Citing the success story of Nigeria’s cement industry, Edwin said the current price of a bag of cement in dollar terms is 60 percent less than

what it was sold in 2000. “We have to encourage local investors. If local investors are not encouraged to invest, no foreign investor will come in,” Edwin said. With undying economic challenges, Nigeria’s economy is expected to take a hit from the impact of COVID-19 on the global economy to post a 3.4 percent contraction in 2020. Meanwhile, since 2017 when oil-dependent Nigeria emerged from its economic recession, not only has the country’s economic growth been sluggish but only a few sectors triggered the expansion, further undermining the country’s capacity to create enough jobs to meet the growing number of labour market entrants. “Unless and until we change our mindset, look inwards and imbibe principles that will propel us comprehensively as a country, we are still going to be out of the league of those countries that have made it,” Salamatu Hussaini Suleiman, former minister of state for foreign affairs, said.

ondary and universities going to school? And how will their education impact the economy or the vision of the nation?” he said. Orondaam observed that government, private and nonfor-profit organisations over the years have been working in silos, by not pooling resources to achieve a very clear impact, adding that if managers of the economy don’t address this root cause, the country will continue going in cycles. “It is important that we refocus our conversation. Data shows that Nigeria has the youngest population in the world and this population will continue to increase. Over 75 percent of people below 35 years are in Nigeria. The next 30 years, that number is going to increase with huge potential,” Orondaam said. “For Nigeria, what I think is the greatest resource that we

can tap and maximise is her human resources and the only way we can achieve that is by delivering quality education to young people.” On his part, Adekunle Sonola, executive director, commercial banking, Union Bank, said there is a need for organisations and those who are capable to make the decision to weigh in on a critical sector like education to transform the country. Commenting on the contribution of the financial sector, Sonola stated that in the short term, Union Bank has trained over 1,100 teachers, organised 23 workshops and over 38 panel sessions all geared towards contributing to the improvement in the education sector. Patrick Nwakogo, country director, CEO, Dale Carnegie Nigeria, said an average bank spends about three months in training graduates on communication skills.

@Businessdayng

Thursday 18 June 2020

BUSINESS DAY

BusinessDay national conversation on Nigeria’s COVID-19 response development depends on reconnecting COVID-19: Unlocking financing for gas Nigeria’s education to local problem solving, private capital investment way out of economic woes KELECHI EWUZIE & STEPHEN ONYEKWELU

ISAAC ANYAOGU, HARRISON EDEH & DIPO OLADEHINDE

he ability to secure financing to unlock gas investments is critical to put into use Nigeria’s 202 Trillion Cubic Feet (TCF) of gas reserves which could power industries and act as economic enabler postCOVID-19, energy experts have said. The experts who spoke during a panel session on economic diversification and reigniting the energy sector at the BusinessDay digital dialogues with the theme ‘A National Conversation: Mapping Nigeria’s Response to COVID-19’, noted that Nigeria’s energy security lies in enacting the right regulatory and fiscal frameworks to attract investments, build requisite infrastructure to

harness gas resources. Rolake AkinkugbeFilani, managing director of EnergyInc Advisors, said Nigeria should look for creative ways to finance gas projects in an era when the credit space for hydrocarbon on the global space is currently squeezed out by other transitional energy like renewable energy. “We need a single-digit long-term financing in local currency which our market is still, unfortunately, playing catch-up with,” Akinkugbe-Filani said. Akinkugbe-Filani said local currency fund can be secured with clearer regulation and there needs to be more synergy with other sectors, most especially the health sector. Due to the impact of the coronavirus pandemic, Austin Avuru, CEO of Seplat, said Nigeria is gradu-

ally shifting from oil and gas being just a rental revenue to fund the budget to gas being an enabler of economic development. “We have made over $1.5 billion investment in the gas market which we don’t regret, because it’s profitable business for us but it has to be expanded and linked to the electricity market which will lead to 3 Billion Cubic Feet (BCF) of domestic consumption unlike the less than 1 BCF we currently do,” Avuru said. Though natural gas has the potential to diversify and grow the Nigerian economy, successive governments have treated gas as a nuisance to overcome on the way to extract oil. Now that oil is unravelling, marked by depressed demands amidst runway production, Nigeria is playing catch-up.

Onyeche Tifase, CEO of Siemens Nigeria, said that there is a massive power deficit in Nigeria even though the bulk of the power is generated from gas. Therefore, the journey towards diversification starts from having stable electricity which will lead to a more export-driven economy. “Nigeria should be targeting electricity distribution of 200 gigawatts; we need to develop gas infrastructure in order to transmit electricity to the end consumers,” Tifase said. Timipre Sylva, minister of state for petroleum resources, declared 2020 as Nigeria’s Year of Gas, an indication that the neglected commodity will feature prominently in the government’s plans, but Continues on page 31

President Muhammadu Buhari (m), participating at the virtual Extraordinary China-Africa Summit on Solidarity against COVID-19, at the Presidential Villa in Abuja, yesterday.

oronavirus pandemic has shown in a dramatic way how unprepared Nigeria’s education system is for the 21st-century environment driven by innovation and digital technologies. Africa’s largest economy requires inclusive development, collaboration and collective funding for its education sector to be relevant and globally competitive post Covid-19, according to panellists at the BusinessDay national discourse on Nigeria’s COVID-19 response, Wednesday. The session, ‘Nigeria education system in the era of virtual classrooms’, was moderated by Remi Adekoya, former Political Editor, Warsaw Business Journal. The education sector has been one of the biggest losers since the outbreak of the coronavirus pandemic forced the government to enact a total closure and disruption of academic activities across the country. Decades of government underfunding of education has left the sector to solve 21stcentury problems with an educational system designed for the 19th century. The panellists comprising of educationists, technologists, government educational policy designers and financial experts said for Nigeria to overcome the various challenges around access, funding, teacher quality and inequity that its education sector grapples with, there must be a shift around the narrative of funding in the education space. To tackle the challenge of upgrading teaching and learning processes in Nigerian schools, the panellists were unanimous in suggesting the educational system needs to climb out of the woods of an educational system designed

for the Industrial Age. The 19th-century approach had insisted every learner has to process in lockstep. But the approach is failing to achieve efficient and effective learning. “The old industrial way of learning was rigid and failed to develop individuality. Digital tools enable highly personalised learning processes, guarantee efficient investment and improve performance,” Sim Shagaya, founder of uLesson, a digital learning platform, said. “Roofs, buildings and benches are not the real measures of educational achievement. The problem is less a lack of vision as it is a lack of willingness to apply vision.” Technology is not the only problem to be solved. The educational sector has many other challenges with institutions, teachers and learners. These have always been there and need to be tackled. “The education sector needs at least N2 trillion every year to make the 21st century-compliant. If we want to do things, those things cost money. We need to spend more on education and we need to do this smartly,” Tunji Adegbesan, founder of GidiMobile, a digital learning application, said. The government needs to partner with the private sector to facilitate a fresh injection of capital into the sector, he said. However, according Suleiman Elias Bogoro, executive secretary of TETFund, at all levels, from the basic to tertiary, the first thing in respect of content is curriculum, then pedagogy, which is used as the instrument to implement the curricular policy approved by the regulatory agencies. “Over the last 10 to 15 years, entrepreneurship was considered very important and introduced to ensure our graduates are relevant in solv-

Continues on page 29

Nigeria faces task of skilling its young population as COVID-19 upsets jobs ODINAKA ANUDU, MCHAEL ANI & GBEMI FAMINU

igeria must begin to invest in its young population as Covid-19 provides a reality check for Africa’s largest economy by changing job patterns and upsetting conventional employment. Panellists at the BusinessDay national conversation on Nigeria’s response to Covid-19, Wednesday, said the country must address skills gap and the content of its education curricula while leveraging technology to boost entrepreneurship. At a panel session entitled ‘Investing in Nigeria’s Future’, Lucy Newman, an indepen-

dent director, governance & performance improvement advisor, said Nigeria has a scary unemployment rate not only due to a lack of jobs but also inadequate skills to match the few jobs that are available. “Until the country is able to address the skills gap, it won’t make headway in tackling unemployment,” she said. Newman noted that over 24 million jobs would be lost by 2030 while some 130 million would be created, but noted that Nigeria was not preparing its population to match the skills required in the workplace. “The Covid-19 has given us a wonderful opportunity to see the gains of investing www.businessday.ng

in people, and it should be seen as a wake-up call for all,” she said. Newman explained that work was changing and indications had shown that employers of labour were cutting down on capacity building for their employees and would prefer those who skilled up themselves as it cuts costs for firms. The United Nations Population Fund said in a 2017 report that one-third of the Nigerian population was less than 25 years. The UN projects that Nigeria’s demography will hit 440 million by 2050, making it world’s third largest population. Official data show that 55.4 percent of Nigerian youths are unemployed or

under-employed. A 2017 Skills Gap Assessment in Nigeria reported that 80.9 percent of employers surveyed for the report noted that skills gap was a major problem among Nigerian employees and had a major impact on their performance, leading to loss of business. Haruna Jalo-Waziri, CEO, Central Securities Clearing System, while reacting to question around Nigeria’s reduction of statutory transfer of the Universal Basic Transfer in the 2020 budget amid the already dilapidated infrastructure, said the country tended to focus too much on the formal aspect of education ignoring the informal. “What makes a good edu-

https://www.facebook.com/businessdayng

cation system is the context of what is taught,” he said. “If we don’t look into the country’s academic curriculum, we are wasting our time.” According to him, the statistics around Nigeria’s education system was horrible both in terms of the output produced as well as out-ofschool children. He noted that the legislation around basic education needed to be looked into, and it should be focused on reality and not around abstract thinking. On the issue of attracting FDI, Haruna called for funds into sectors with multiplier effects, noting that at present, the pool of funds in Nigeria was on fixed income rather @Businessdayng

than on infrastructure. Covid-19 has pushed most jobs online, with many firms finding no need to engage many people. This will fuel unemployment in Nigeria, which is already at a sky-high 23.2 percent. The World Economic Forum said in 2017 that 46 percent of jobs in Nigeria were susceptible to automation. Debola Williams, CEO, Red Media Africa, said going forward and recovering from the pandemic, entrepreneurs must leverage and effectively utilise technology in their businesses in order to grow. “We need to pay more attention to technology and

Continues on page 31

Thursday 18 June 2020

BUSINESS DAY

BusinessDay national conversation on Nigeria’s COVID-19 response

COVID-19 crippling agriculture, presents opportunity to rebuild, fix inadequacies cry about rice production, there is no statistic to show how much was produced last year, previous years or even the coming year. What is our plan?” Dangote asked. “If we look at the Ministry of Agriculture, what are they planning for the next year or even for this year? What is the Ministry of Water’s plan for the reservoirs and the dams? The Ministry of Agriculture is completely disconnected from the Ministry of Water Resources,” he said. He further lamented the lack of data required for planning in the country. “There is no proper statistic to show the smallholder farmers we are working with through different intervention programmes with the CBN,” he said. The pandemic has brought to the fore many of the existing structural challenges, and now requiring the country takes it as an opportunity to fix the inadequacies across the value chain in order to meet food security needs, support raw material needs for industries, and earn foreign exchange for the country through exports. Describing the impact of COVID-19 on agriculture in Nigeria, Ndidi Nwuneli, managing partner, Sahel Consulting Agriculture & Nutrition Ltd, said “the ecosystem was already fragile before COVID-19 hit” but the outbreak has worsened the condition. Before COVID-19 hit, there were already challenges around productivity, infrastructure, post-harvest losses, etc. However, through the lockdowns, restrictions in movements, disruptions

to supply chain and trade as well as challenges in transporting inputs to farmers and farmers transporting produce to markets, the pandemic further weakened the agricultural ecosystem in Nigeria. “COVID-19 presents us with a wonderful opportunity to re-imagine, retool and rebuild. It is painful, but we have to create an ecosystem that is strong and Nigeria has to commit to feeding itself and the rest of Africa,” said Nwuneli. In 1980, Thailand and Nigeria had the same per capita GDP, but today Thailand has a GDP four times that of Nigeria and has one of the lowest unemployment rates on the planet, about 0.7 percent unemployment

COVID-19: Unlocking financing for...

“The erosion of capital in the power sector due to the absence of a credible market and poor tariffs are some of its biggest challenges,” said Eyo Ekpo, CEO of Excerdite Consulting Limited. Ekpo excoriated market participants for flouting rules governing the market, the lack of governance, and poor leadership from the sector regulator. The two-day BusinessDay national conversation offered an opportunity for both the private and public sectors as well as the populace to discuss solutions to the country’s economic challenges worsened by the coronavirus pandemic.

CALEB OJEWALE & BUNMI BAILEY

he COVID-19 pandemic is offering Nigeria an opportunity to restrategise and rebuild the agriculture sector to meet the country’s food security needs, even though food production and the supply chain in the country have been severely hit by the pandemic. While government rhetoric over the years has suggested substantial attention and resources are being committed to agricultural development, it appears there has been a lack of coordination in driving agricultural programmes and policies, making it difficult to accurately measure whether or not the sector is indeed growing relative to all the rhetoric. These were some of the critical points made by panellists during a session on ‘Agricultural credit and national food security in an economic downturn’ at the BusinessDay digital dialogue, Wednesday. “We have never been serious to face the issue of food security. We are 200 million people and when we talk about food security, it is not just about what we have to consume but what we have in case of any crisis,” said Sanni Dangote, vice president, Dangote Group. The issue of food security, he said, is a reality the country has to come to realise with the pandemic and one the country has not faced squarely. “If you look at the whole

Continued from page 30

the government is yet to fully back it up with the right fiscal and regulatory terms, analysts say. “The year of gas has been on for the last seven years with nothing tangible to show on it,” Henry Adigun, team lead of Facility for Oil Sector Transformation in Nigeria (FOSTER), said. Top on the list of the industry concern is the inability to liberalise gas pricing and de-couple gas from the floundering power sector which hemorrhages money on account of an ineffectual market. Gas is heavily linked to the power sector, so

Nigeria’s weak electricity market which loses on average about N40 billion every month due to tariffs that do not guarantee commercial returns and DisCos’ inability to fully collect bills means that gas projects cannot proceed. Several projects, including the 614km-long Ajaokuta-Kaduna-Kano (AKK) pipeline, which began seven years after it was first proposed, the $20bn Brass LNG project in Bayelsa State, the $9.8bn Olokola LNG in Ogu, and the 5,000km Nigeria-Morocco offshore gas pipeline, have a long wait. www.businessday.ng

rate, while Nigeria is on track to have 25-57 percent unemployment rate, according to Kola Masha, CEO/founder, Babban Gona. Models adopted for agricultural development in Asian countries such as Thailand, he reckoned, can also help Nigeria in improving the productivity and profitability of farmers. As part of a strategic process, the country devalued its currency to enable farmers to be competitive on the global market so they could start exporting significant volumes of commodities. Today, he said, the country has become a major manufacturing hub itself and Nigeria can learn from it. Aliyu Abdulhameed, managing director, NIRSAL plc, also buttressed the point about adopting models that

have worked in other countries and adopting them to scale productivity in Nigeria. “With all the efforts that we are making, bank lending to agriculture accounts for 4.4 percent as at Q4 2019,” said Abdulhameed. Eighty percent of the population is involved in agriculture, and it contributes 23 percent to GDP. He reiterated that now is the time for Nigeria to ramp up food production and build up strategic grains reserve. “Other countries are keeping their food, nobody will sell food to you at any scale and even if you have, where are the dollars since oil price is low?” he asked. Boye Olusanya, Group COO, Flour Mills of Nigeria plc, identified the need for a structured and developed ecosystem that supports

the entire agricultural value chain in Nigeria, as a way to improve productivity. According to him, one of the implications of the lack of structure and processes as it pertains to agriculture in Nigeria is that while there has been an increase in area under cultivation, there has been decrease in yield. “We have been putting a lot of people to farm, but making them poorer which is the biggest disincentive for anyone going into farming,” he said. The pandemic, the panellists noted, is presenting an opportunity to rebuild the country’s agriculture landscape through private and public sector collaborations, while also ensuring there is credible data regarding food production and markets.

Zainab Ahmed (r), minister of finance, budget and national planning, arrives the National Assembly with Aliyu Ahmed, permanent secretary, special duties, for the power sector recovery plan and impact of Covid-19 pandemic.

Nigeria faces task of skilling its young... Continued from page 30

human resources to develop, taking cue from China. As a country, Nigeria needs to invest in technology and policy. We need to be more deliberate about creating and utilising opportunities,” Williams said. “2020 is a year of dismantling stereotypes and birthing new ideas as well as collective action,” he said. Education and employment will determine the livelihoods of sub-Saharan Africa, according to WEF. But the country has 10.5 million out-of-school children aged between five and 14, according to UNICEF. The majority of Nigeria’s young population prefers white-collar jobs amid high unemployment rate estimated at 23 percent. However,

https://www.facebook.com/businessdayng

the current situation shows that jobs are becoming scarcer. Efosa Ojomo, global prosperity research group leader, Clayton Christensen Institute for Disruptive Innovation, said that the outbreak of the pandemic had enforced a new normal that called for a reformation in all activities in the economy. “COVID-19 is unprecedented and has called for reorganisation. It is time to change the paradigm and employ new forms of doing things, it is necessary to leverage technology and engage in innovative activities,” Ojomo said. Teju Abisoye, acting executive secretary, Lagos State Employment Trust Fund, while noting the importance of SMEs to the growth of the country, said 86 percent of @Businessdayng

employment was created by businesses in the segment. She explained that due to the importance of MSMEs in creating jobs, the LETF was providing subsidised funding to businesses to enable them to expand their operations. According to her, the agency had supported 11,000 SMEs. Abisoye explained that due to the pandemic, the agency was more focused on protecting employment rather than on trying to create a new one. “One of the ways we are solving the unemployment issue is by creating funds and supporting businesses that are resilient and warehouse a large number of the population,” she said. “We are also supporting women entrepreneurs as our survey has shown that businesses in that terrain create 6-7 percent of jobs as against the 4 percent created in others.”

Thebigread

BUSINESS DAY Thursday 18 June 2020 www.businessday.ng

The long road to a Covid-19 vaccine The world is waiting for a breakthrough that will allow a return to normality but there are possible risks attached Anjana Ahuja

t was hailed as a breakthrough vaccine for dengue fever, a neglected tropical disease that kills about 20,000 people each year. Dengvaxia, made by Sanofi Pasteur, was being rolled out to more than 800,000 schoolchildren in the Philippines when reports began trickling in of vaccinated children falling seriously ill, and some dying. The 2017 rollout was halted; the country’s health minister, along with other officials and six Sanofi employees now await trial on charges of “reckless imprudence resulting in homicide”. All the accused deny the charges and the company insists the vaccine is safe. But there remains an unresolved scientific mystery at the heart of the Dengvaxia tragedy: in a small subset of people, can a vaccine make an infection worse rather than better? That question has never been more apposite. A post-coronavirus world depends on a Covid-19 vaccine. Without it, a return to normality carries the peril of more deaths from a novel respiratory virus to which humans carry no prior immunity and for which there are no life-saving treatments. One drug authorised for treating Covid-19 patients, remdesivir, is not a game changer: it shortens recovery time but does not boost survival chances. But a shadow looms over the global race to develop a pandemic vaccine: a little-known phenomenon called antibodydependent enhancement (ADE), also known as disease enhancement or immune enhancement. It refers to a counter-intuitive and potentially dangerous situation: when the presence of antibodies, which are supposed to vanquish disease, worsens rather than quells an infection. It is a rare but not idle concern. The pandemic virus belongs to the same family of coronaviruses that causes Sars (severe acute respiratory syndrome) and Mers (Middle East respiratory syndrome). The hunt for vaccines for these 21st-century diseases — Sars appeared in 2002, Mers in 2012 — has been stymied by evidence of ADE. Some animals that were given experimental Sars vaccines suffered more severe lung inflammation than unvaccinated animals when subsequently infected. Those trials stopped and there is still no effective Sars vaccine. Beate Kampmann, director of the Vaccine Centre at the London School of Hygiene &

Tropical Medicine (LSHTM), says that observations of ADE with previous coronaviruses mean vaccinologists must tread carefully. “We don’t want to blow the risks out of proportion but nobody can give a 100 per cent guarantee that disease enhancement won’t happen. If it does emerge here, it would be a very serious challenge.” The emergence of ADE would be a setback for any candidate vaccine — and a cruel plot twist in the tale of Covid-19, which has turned out to be a more disruptive contagion than either Sars or Mers. Where Sars infected about 8,000 people over eight months, Covid-19 has infected a confirmed seven million in about six months. Of those, more than 400,000 have died. The latter figures are likely to be underestimates. The devastating health impacts go hand in hand with the biggest economic crisis since the Great Depression. Manufacturing has seen global supply chains snap; industries such as aviation, tourism, leisure and hospitality have been decimated by stay-at-home orders and social distancing; school and office closures mean missed education and precarious employment, each bringing its own long-term health consequences. The finding that black and

minority ethnic communities suffer disproportionately from the virus adds a grim social and political dimension. A vaccine that allows people to live, work, travel, learn and socialise together safely again is the best long-term exit strategy from lockdown. This is recognised in the unprecedented number of Covid-19 vaccine projects under way: 183 by June 10, according to the LSHTM tracker. The chances that one of those will come good seem hopeful but success is not guaranteed. There is still no vaccine against HIV, a plague that has now been with us for 40 years. When you encounter a virus naturally, your body puts up a generalised fight to try to stop it from entering cells, which the virus needs to do to make copies of itself. In some people, that is enough to prevent symptoms and illness. Within a week or two, a more “adaptive” response emerges: your body makes bespoke antibodies, which bind specifically to the virus, and T-cells, which remove cells that have already been infected. Vaccines are designed to elicit this adaptive response artificially: by serving up a safe molecular doppelganger of the virus to the immune system. This masquerade tricks the immune system into generating the same

‘‘

One drug authorised for treating Covid-19 patients, remdesivir, is not a game changer: it shortens recovery time but does not boost survival chances

antibodies and T-cells that the natural virus would. Vaccination builds a biological “memory” of the virus but without the danger of natural infection. If the virus does come knocking, a vaccinated body should be primed and ready to fight back. In ADE, that priming goes wrong. Instead of keeping the virus at bay, the immune system aids and abets the invader; the vaccine, which should prevent disease or make it milder, results in more severe symptoms. When the phenomenon appeared in Sars research, vaccine development halted. But scientists cannot be sure it will always emerge during testing. “It was only when Dengvaxia was rolled out to thousands of people that the problem of enhancement was picked up,” says Mike Turner, head of major science investments at the Wellcome Trust biomedical charity, which funds global vaccine research and played a significant role in the race for an Ebola vaccine. If I did find people were cutting corners, I would blow the whistle. You’d get half the world refusing to take a vaccine and that’s not a risk worth taking Mike Turner of the Wellcome Trust The risk that an experimental coronavirus vaccine could leave a person clinically worse off is acknowledged as a “theoretical concern” in current trials. Volunteers offering to receive Oxford University’s Jenner Institute vaccine are warned in an information sheet that their safety cannot be wholly assured. Encouragingly, the Oxford scientists reported last month that six animals given its experimental vaccine did not suffer immune enhancement when later infected. Humans, though, are not

macaque monkeys: the real test always comes when vaccinated human volunteers encounter the virus. Anthony Fauci, who leads the US research response to Covid-19, said as much when interviewed about another eagerly anticipated vaccine, from the US company Moderna. He spoke of the need to balance the lives saved with those that might be endangered by ADE: “So, if for every one that has enhanced illness, you save a thousand lives, I’ll take that, right?” It is a trade-off society might be forced to consider. Pandemic vaccines are, necessarily, developed on the back of incomplete knowledge. “We have only had this virus for six months,” cautions Zania Stamataki, a senior lecturer in viral immunology at Birmingham University who is assisting the UK’s national testing effort. “That is not enough time to evaluate if you can become infected, raise protective immunity or become reinfected again. If people can be reinfected and get worse symptoms than the first time round, that’s a telling sign that we might be dealing with disease enhancement. There is a low probability of this for Covid-19.” The virus that causes Covid-19 is named Sars-Cov-2, for its genetic similarity to the Sars virus. It is, relatively speaking, still an immunological mystery: it is not entirely clear which parts of the immune system are triggered by the virus for some people, nor why individuals react to it so differently. Why, for example, do some healthy young people succumb while some infected centenarians survive? When I ask Danny Altmann, a professor of immunology at Imperial College in London who co-wrote a Lancet summary on coronavirus, to rate how much we know about the immunological profile of Sars-Cov-2 on a sliding scale of zero to 10, he plumps for five. While that still represents remarkable progress for such a new virus, he says: “It’s the missing five that matters.” Key puzzles include: which bit of the immune system delivers the killer blow to the Covid-19 virus; what is the relationship between antibodies and immunity; how long does immunity last; can someone be infected twice; what happens if there is a second wave of infection? For example, in Covid-19, high antibody levels seem to correlate with more serious illness. Recovered coronavirus patients, in contrast, can sometimes have low or undetectable levels of antibodies in their blood.

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Advert Hotline: 08033225506. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Patrick Atuanya. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.