BusinessDay 18 Mar 2019

NEWS YOU CAN TRUST I **MONDAY 18 MARCH 2019 I VOL. 15, NO 268 I N300

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ANALYSIS

To-do list for Nigeria’s next petroleum minister ...PIB, oil licensing rounds, fuel subsidy removal top key actions

ISAAC ANYAOGU

rawing up competitive fiscal and regulatory terms for the oil and gas sector, organising transparent oil licensing bid rounds, removing fuel subsidy, and liberalising gas prices are some of the most urgent tasks awaiting the next Nigerian petroleum minister after a dreary performance in the past four years.

For a country mired in debt, spending N5.74 billion daily

LOLADE AKINMURELE

odern Monetary Theory (MMT) has been called garbage by BlackRock Chief Executive Officer Larry Fink; former New York Fed President Bill Dudley called it a “crackpot theory”, while it’s a “dangerous proposition”, according to the European Central Bank (ECB).

The theory’s headline argument is that governments with their own currencies have more room to spend than is generally supposed, and don’t have to finance it all with taxes. According to this view, there’s no risk of a government being forced into default, because it can create/ print the money it needs to meet any obligations.

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Inside UBA earnings hit N494bn with significant asset growth across Africa P. A8 L-R: Emmanul Nnorom, director, Transcorp plc; Helen Iwuchukwu, group company secretary, Transnational Corporation of Nigeria plc (Transcorp); Tony Elumelu, chairman, and Valentine Ozigbo, president/CEO, at the 13th Annual General Meeting of the company in Abuja.

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Nigeria’s IPO drought enters 4th year amid voluntary delisting of firms MICHEAL ANI

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he drought in Nigeria’s Initial Public Offering (IPO) market entered its fourth year in January 2019 even as companies already listed on the Nigerian Stock Exchange (NSE) are voluntarily exiting the bourse.

Between 2014 and 2018, the country recorded a total of three IPOs valued at $571 million, according to data compiled by PricewaterhouseCoopers (PwC), a global consulting firm. The listings are Seplat Petroleum Development Co., an indigenous oil and gas firm, which listed on both the NSE and the London Stock Exchange (LSE) in 2014; Haldane McCall Real Estate Investment Trust (HMK REIT) in 2014, and Transcorp Hotels in January 2015.

While there has been no new listing in the market since January 2015, BusinessDay checks show that no fewer than 13 companies earlier listed on the NSE voluntarily delisted from the Daily Official List of the Exchange between 2011 and 2018. Newrest ASL Nigeria plc recently notified the Exchange of its plans to delist in 2019.

“The drought we are seeing is not surprising as it is a reflection of what is happening in the economy,” said Paul Uzum, a stockbroker at Halo Nigerian Capital Limited.

“If the economy is booming with more activities and the private sector is strengthened, you will see more companies having more confidence to come into the market to get listed,” Uzum said.

In terms of the value of deals within this period, Nigeria came third in dollar terms behind South Africa and Egypt whose deals were

valued at $5.9 billion and $1.57 billion, respectively.

The Casablanca exchange of Morocco and the Abidjan-based BRVM exchange came next behind Nigeria at $498 million and $400 million, respectively, while Zimbabwe, Zambia and Namibia recorded the least deals in monetary terms that were valued at $1 million, $9 million and $21 million, respectively. Nigeria was, however, ranked among the least countries in terms of the number of IPOs within the review period.

MTN, South African telecommunication giant and Nigeria’s biggest non-oil foreign direct investor, planned to list its Nigerian unit on the Lagos bourse in 2018. But a fiasco between MTN and the Central Bank of Nigeria slowed the telco’s planned listing. MTN last year already flagged off the listing of its Ghanaian unit.

MTN in 2018 dragged the CBN to courtaftertheapexbankdemandedthe return $8.1 billion the telco repatriated as dividend to its shareholders. MTN denied any wrongdoing. The fiasco cooled off after the telco settled some $53 million payment late last year. Both parties confirmed the payment.

The firm is planning to list by introduction sometime around May this year, Rob Shuter, president and CEO, MTN Group, said in an exclusive interview with BusinessDay. “What has happened is that the Nigerian capital market for the past four years, apart from 2017 when it recorded 42 percent capital gains, has been on a negative performance,” said Johnson Chukwu, managing director/CEO, Lagos-based Cowry Asset Management Limited.

•Continues online at www.businessday.ng

S&P affirms Nigeria’s B/B rating with stable outlook …says stable FX regime helped grow non-oil sector

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he global ratings firm S&P has affirmed Nigeria’s ranking of B/B with a stable outlook, but it also warns that this rating could be lowered if Nigeria’s foreign exchange reserves were to decline markedly and if the country’s external debt rises faster than first estimated.

In a detailed report made available to BusinessDay, S&P said, “The ratings remain constrained by the country’s low economic wealth, weak institutional capacity and lower real GDP per capital trend growth rates than peers at similar development levels.”

The report noted President Muhammadu Buhari’s centralised decision-making style and its choking effect but said his re-election gives the leader of Africa’s most populous nation an opportunity to make amends by strengthening his government’s economic policy framework and consolidating public finances.

S&P, however, noted one positive trend, saying, “In our view, the increase in the availability of foreign currency and the flexible exchange rate have helped the non-oil sector grow.”

The report said it is not expected that Nigeria will formulate any policy to merge the various exchange rate windows.

The agency said it sees net external debt rising over the 2019-2022 “if fiscal financing remains externally

funded and external buffers stay at current levels”.

It said it expects Nigeria to issue further Eurobonds before moderating issuance levels in 2020-2022 and assumes that the nation’s reserves will remain at current levels.

On debt, S&P said, “We project the general government deficit which combines deficits at the federal, state and local government levels will remain above 3 percent of GDP this year. …we project average debt-servicing costs for 2019-2022 of 30 percent of general government revenues.”

On the banking sector, S&P said, “The banking sector has been operating under difficult economic and regulatory circumstances. We still consider the Nigerian banking sector to be in a correction phase.

It suffered high credit losses of 2.5 percent-3 percent over the past two years and we expect flat or negative credit growth in 2019-2020.

“That said, the banking sector has stabilized since the 2016 oil price shock–we think material change unlikely in the next 12-24 months.

We also expect profitability at the top-tier banks to remain resilient to the credit cycle.

“In 2018, Nigerian banks implemented International Financial Reporting Standards (IFRS) 9 using their regulatory risk reserves, thus shielding their capital ratios from breaching the minimum capital requirements.”

L-R: Prince Akamadu, chief audit executive, Heritage Bank; Ikenna Imo, divisional head, innovative partnership; Wunmi Adeniji, chief compliance officer; Jude Monye, executive director; Osepiribo Ben-Willie, head, south-south and south-east directorate; Dumiri Dike, regional executive, Lagos and south-west; Ike Williams, directorate head, service bank/chief information officer; Fela Ibidapo, head, corporate communication, and Kolapo Kola-Daisi, head, treasury, during the maiden edition of the bank’s HB Launch in Lagos.

Lack of capacity, technology may hamper NNPC takeover of OML 11 operatorship …experts concerned about legality, damage to business climate DIPO OLADEHINDE

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myriad of bottlenecks are piling against the ability of the Nigeria National Petroleum Corporation (NNPC) to take over from Royal Dutch Shell plc operatorship of the $2 billion Oil Mining Licence (OML) 11 in Ogoniland, in the heart of the Niger Delta, where environmental and human rights controversies have prevented Shell from operating over the years.

Beyond lack of capacity and technology on the part of NNPC and its upstream arm, Nigeria Petroleum Development Company (NPDC), to run OML 11, experts who spoke to BusinessDay said there may also be legal questions around the Federal Government’s directive to the stateowned oil firm.

“There are questions about parties’ obligations, which due process has to be followed for change in

operatorship and possible breach of the Joint Operating Agreement (JOA) and/or any other underlying contractual or commercial arrangement put in place for the purpose of the operatorship,” Joseph Onele, energy lawyer and policy consultant at Bloomfield law practice, said.

President Muhammadu Buhari had in a letter dated March 1, 2019, through the office of the Chief of Staff Abba Kyari, directed the state-owned oil company and its upstream arm, NPDC, to take over operatorship of the entire oil blocks in OML 11 not later than April 30, 2019 and also ensure smooth re-entry given the delicate situation in Ogoniland.

OML 11 lies in the south-eastern Niger Delta and contains 33 oil and gas fields of which eight are producing as per 2017. In terms of production, it is one of the most important blocks in Nigeria as the terrain is swamp to the south with numerous rivers and creeks (Ogoniland).

But experts strongly doubt the capacity of NNPC/NPDC to operate the field.

“It’s an open secret that NPDC doesn’t have the financial capability to run those assets. Even the ones they are holding now they are looking for third party financing,” Luqman Agboola, head of energy infrastructure at Sofidam Capital, told BusinessDay. NPDC early this year said it was making efforts to raise $3.15 billion through third party financing to develop the 416 million barrels of reserves in OML 13 field located in Akwa Ibom which will go towards funding cash call debts.

OML 13, a field which the NNPC persuaded President Buhari to recover from its operators in 2016 citing non-compliance with the provision of the Petroleum Act on payment of signature bonus and irregular award, is

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Key areas FG should focus to achieve revenue diversification ISRAEL ODUBOLA

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hat Nigerian government needs to make revenue diversification a reality is no longer news. For more than three decades, oil has been the linchpin of the Nigerian economy, accounting for more than 80 percent of export earnings and 60 percent of total government revenue.

Nigeria, Africa’s second-biggest economy behind South Africa in dollar terms, is susceptible to oil price shocks as it relies on proceeds from the product. In Q2 2016, Nigeria experienced its first economic slump in a quarter of a century buoyed by falling oil prices to as low as $36/barrel. Although the economy exited recession in Q2 2017, growth still crawls.

Data sourced from the Central Bank of Nigeria Statistical Bulletin showed that oil revenue has been contributing more than half to aggregate federally collected revenue in Nigeria since as far back as 1972, except in 2016 when it accounted for 47 percent given

ANALYSIS that oil price slowed in that year.

The government has talked so much about diversification of the economy but its behaviour has shown the opposite. For instance, the share of oil revenue in the total amount available for the Federal Government budget increased from 42 percent in 2018 (passed budget) to 53 percent in the 2019 proposed budget.

Economists and stakeholders agree that the challenges of lower revenue in the country can be resolved by diversifying the economy to critical non-oil sectors. Economic development cannot be realised by being monolithic (dependence on one source of revenue), said Emmanuel Noko, lead economist at M&C Research Institute.

Financial Derivatives Company (FDC), a Lagos-based advisory and consulting firm, in its latest monthly Economic Update highlighted key areas government and its agencies

should focus to make a tangible impact on revenue generation.

Enhance tax administration The fraction of tax revenue in total government revenue is below 15 percent, a reflection that Nigeria is yet to leverage tax to augment revenue. The Federal Inland Revenue Services (FIRS) generatedN5.32billionin2018,thehighestsofar,andtargetsN8.3billionin2019.

“Tax is less than 12 percent of Federal Government revenue, which is a reflection of the leakages in the tax administration system,” FDC said in its latest monthly Economic Update.

“To guard the loopholes and curb the effect of oil shocks on government revenue, avenues for higher tax income such as improving tax compliance, employing necessary and appropriate technology, introducing other indirect taxes to capture a greater share of the non-formal economy and increasing the effective tax rate for the elites through VAT on luxury goods should be put in place,” it said.

•Continues online at www.businessday.ng

Monday 18 March 2019

BUSINESS DAY

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Lagos threatens to seize distressed buildings Ethiopian Airline crash: UBA earnings hit N494bn with DNA testing of remains JOSHUA BASSEY

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agos State government, on Sunday, threatened to seize distressed and structurally defective buildings across the state from their owners and developers if they fail to demolish such buildings.

The move followed last Wednesday’s collapse of a building on Massey Street, Ita-faji, Lagos Island, in which about 14 people, including school pupils, lost their lives and several others critically injured.

Meanwhile, the state government, through its agency, Lagos State Building Control Agency (LASBCA) will this week begin controlled demolition of buildings earlier marked as distressed but still standing and posing danger to their occupants and adjourning property.

Building collapse is a recurring decimal in Nigeria’s commercial city of Lagos, and has led to the death of several persons while properties worth billions of naira have also been destroyed in the process in the last one decade.

Rotimi Ogunleye, the state commissioner for

physical planning and urban development, who issued warning to property owners at the weekend, said all buildings marked must be vacated and pulled down or forfeited to the government.

While commiserating with families of victims of the latest collapse, Ogunleye called for the co-operation of members of the public in ridding the state of distressed structures.

He pointed out that the ministry had identified 149 distressed and defective buildings in different parts of the state of which 40 had been demolished in the first phase, adding that 38 others were slated for the second phase prior to last week’s unfortunate incident.

“In some instances where the owners and occupiers have been duly served with statutory notices and evacuated, people secretly return to re-occupy the buildings despite the sealing of the structures by the Lagos State Building Control Agency,” he said.

The commissioner said LASBCA would step up the ongoing removal of the affected buildings, adding that all parts of the state would be reached.

to take six months

IFEOMA OKEKE

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he Ethiopian carrier says DNA testing of the remains of the people on board flight 302 may take up to six months. In the meantime, it offered bereaved families charred earth from the plane crash site to bury at a mass burial in Addis Ababa on Sunday. Passengers from more than 30 nations were aboard.

Eight days ago, 157 persons on-board Ethiopian Airlines flight to Nairobi from Addis Ababa lost their lives in a fatal air crash.

Dagmawit Moges, Ethiopian minister of transport, told reporters in Addis Ababa that temporary death certificate had been given, and a final one would be issued in two weeks’ time, adding that collection of DNA samples from relatives had begun.

Moges assured that victim identification would be done to scientific international standards, and internationally recognised organisations such as Interpol were going to be involved in the process, she said.

significant asset growth across Africa

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an-African financial institution, United Bank for Africa (UBA) plc, has announced its audited 2018 financial results with impressive growths achieved across major financial lines.

According to the 2018 financials filed at the Nigerian Stock Exchange (NSE) on Tuesday, the Africa’s global bank’s gross earnings grew by 7 percent to N494.0 billion, compared with N461.6 billion recorded in the corresponding period of 2017. The bank’s total assets also grew by 19.7 percent to N4.9 trillion for the year under review.

These results, according to financial analysts, largely demonstrate the benefits of the Group’s Pan-African footprints with continued growth in market share in key countries of operation across Africa. The contributions of ex-Nigeria subsidiaries at 40 percent, again confirm the strong footing of the Group’s franchise in Africa.

Despite the challenging business environments in Nigeria and across key mar-

kets in Africa, the bank’s profit before tax was quite impressive at N106.8 billion, a 2.4 percent growth, compared with N104.2 billion in 2017 financial year.

In same vein, the profit after tax rose by 1.4 percent to N78.6 billion, compared with N77.5 billion recorded in 2017. Due to lower foreign exchange trading income, Operating Expenses grew by 4.1 percent to N197.3 billion, compared to N189.7 billion in 2017 Reflecting the modest appetite of the bank in the year under review as well as impact of IFRS 9 implementation, net loans recorded a prudent 3.9 percent growth to N1.72 trillion while Customer Deposits increased by a remarkable 22.5 percent to N3.3 trillion, compared to N2.7 trillion recorded in the corresponding period of 2017, reflecting increased customer confidence and enhanced service channels. Furthermore, Shareholders’ Funds decreased marginally by 4.8 percent to N502.6 billion, reflecting the impact of International Financial Reporting Standards 9 (IFRS

9) implementation.

Commenting on the result, Kennedy Uzoka, group managing director/CEO, noted that the year 2018 was important for the Group, as it gained further market share in many countries of operation. More so, the CEO was excited at strategic achievements made in the year, including the start of wholesale banking operations in London, as it seeks to leverage the Group’s unique network across Africa. UBA also opened its 20th African operation.

“Defying the relatively weak economic growth in Africa, earnings were positive and we grew our balance sheet by 20 percent, driven by the 23 percent growth in our deposit funding. In a period of economic uncertainty, we have focused on retail deposit mobilization, with exciting results.

“We recorded a 48 percent year-on-year growth in retail deposits and improved our CASA ratio to 77 percent, optimising our funding mix, which will enhance our net interest margin (NIM), over the medium term,” Uzoka said.

Monday 18 March 2019

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8 BUSINESS DAY NEWS Over 34% rise in pipeline vandalism worries NNPC … enjoys N12.13bn trading surplus in December HARRISON EDEH, Abuja

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igerian National Petroleum Corporation (NNPC) has decried activities of vandals whose deeds in December last year pushed pipeline breaches across Nigeria up by a whopping 34 percentage point.

Ndu Ughamadu, NNPC’s group general manager, group public affairs, in a statement on Sunday said the upward swing in the breaches was captured in the corporation’s Monthly Financial and Operations Report for December 2018, explaining that within the period, 257 pipeline points were vandalised, out of which one pipeline point failed to be welded and six pipeline points were ruptured.

NNPC affirmed further that it recorded 197 breaches on it pipelines in November last year.

Ibadan-Ilorin, MosimiIbadan, and Atlas CoveMosimi network accounted for 90, 69 and 57 compromised points, respectively, or approximately 34 percent, 26 percent and 22 percent of the vandalised points, respectively.

Aba-Enugu pipeline link accounted for 7 percent, with other locations accounting for the remaining 11 percent of the pipeline breaks.

Despite the activities of the pipeline marauders, the NNPC report said the corporation continued to diligently monitor the daily stock of Premium Motor Spirit (PMS), otherwise called petrol, to achieve smooth distribution of petroleum products and zero fuel queues across the nation.

The release disclosed that 1.80 billion litres of PMS, translating to 58.17m litres/day were supplied for the month.

Overall, during the month under review, 1.96 billion litres of white products were distributed and sold by NNPC Downstream subsidiary, Petroleum Products Marketing Company (PPMC), compared with 1.09 billion litres in the market in the November 2018.

This comprised 1.94 billion litres of PMS, 0.0070 billion litres of kerosene and 0.014 billion litres of diesel. Total sale of white products for the period, December 2017 to December 2018, stood at 21.84 billion litres and PMS accounted for 20.17 billion litres or 92.36 percent.

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Supply cuts, growing demand keep oil prices stable STEPHEN ONYEKWELU

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he six months deal ending in June among OPEC+ oil cartel to cut supply has yielded measurable market results as oil prices have been shored up from a low of $50 in December to an average of $64 since January.

In December 2018, major oil producers reached a deal to cut oil production and boost the market, following two days of gruelling negotiations and despite opposition from the United States of

America’s President Donald Trump. The Organisation of Petroleum Exporting Countries (OPEC) clinched the deal with allied oil-producing nations including Russia at its headquarters in Vienna.

Stable oil prices point to a far-reaching compliance among OPEC members. This has been helped along by US sanctions against Venezuela and Iran, which has created a slight deficit in global supply in the first quarter of 2019.

Brent crude oil futures were at $67.21 per barrel at 0559 GMT on Friday, virtually unchanged from their last

close, and within a dollar of the $68.14 2019-high reached the previous day.

Yet, prices have been prevented from rising further by concerns that an economic slowdown will soon start denting growth in fuel demand. US West Texas Intermediate (WTI) crude oil futures were at $58.58 per barrel, also close to their last settlement and not far off their 2019-high of $58.74 from the previous day. Since the start of the year, oil has rallied around a quarter since the start of the year.

“Oil continues to grind

higher, in response to ongoing production cuts from the OPEC+ group of producers as well as another (output) slump from a blacked-out Venezuela,” Ole Hansen, head of commodity strategy at Denmark’s Saxo Bank, said.

The alliance has taken 1.2 million barrels per day off the market for the first six months of 2019. The 15-member OPEC cartel has agreed to reduce its output by 800,000bpd, while Russia and the allied producers will contribute a 400,000bpd reduction.

OPEC+ ministers will meet at the group’s headquar-

ters in Vienna, Austria, on April 17-18 to decide output policy. Neil Atkinson, head of oil industry and markets division at the Paris-based International Energy Agency does not think OPEC+ will change its policy at the meet.

“Compliance with the deal among OPEC members is about 94 percent, so that is going quite well. The nonOPEC producers are coming in a little lower but the compliance rate is increasing also. I think the will look at the market and suppose their cuts have been successful so far” Atkinson said.

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9 NEWS

BUSINESS DAY

E-commerce: Mixed feelings, as customers relate experiences

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cross section of people who patronise online shops and ecommerce have expressed different feelings over the new trend as more Nigerians embrace Information Communication Technology (ICT). They made their views known in separate interviews with the News Agency of Ni-

geria on Friday in Abuja.

Shade Idem, an online customer, said e-commerce was one of the best things that had happened to her and the economy of the nation in general.

Idem said since the introduction of online buying, life had been easy for her as she could stay in any part of the country and make purchases

with ease, saying, “Online marketing is the easiest kind of buying you can do, when I go online, I select things that appeal to me and make the order and the sellers deliver to me at my doorstep.

“It takes less than a month for the order to be delivered and if they do not deliver according to my

specification, I don’t pay for the ordered items.

“You find that the things you buy online are cheaper than those people who bring to you to buy in offices or even sometimes in the market, so, online marketing for me is best.’’

Another respondent, Chioma Ojiem, a student

of University of Abuja, also commended operators of ecommerce marketing, saying that for her as a student, the system was just convenient for her.

Ojiem said she enjoyed it when she ordered for some of her learning materials from abroad and were delivered to her at the right time, noting,

“Some online shops are quite dependable.’’

Tolu Aiyegbusi, who also said she had been patronising online shops for some of her needs, added that the system had been working well for her.

According to Aiyegbusi, she enjoys the `Black Fridays’ and other periodic massive sales most.

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The black monk

Bashorun J.K Randle

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he “Black Monk” is the sequel to Max Chuck Black’s film: “The Black Roaring Lions” and it is a befitting extension of the theme – Generals with Nine Lives.

The opening scene captures MajorGeneral T.Y. Danjuma who was the General Officer Commanding (“GOC”) of the Third Division of the Nigerian Army with its base in Port Harcourt in the turbulent oil rich Niger-Delta area.

There he was entertaining a delegation of paramount chiefs led by the father of the Military Governor of the State (Rivers State) twenty-nine years old Lt. Commander Alfred Diette-Spiff (from the Navy) and a member of the Supreme Military Council.

What was hilarious was that the protocol officer who had been delegated to receive them ensured that they were given VIP treatment. Without any delay, they were ushered into the GOC’s waiting room reserved for very important visitors (VIPs).

As it was morning, the protocol officer promptly offered the visitors tea, coffee or soft drinks. The chiefs were furious. They did not mince words: “That is not what we drink in the morning. Tell your boss it has to be gin or schnapps, otherwise we are leaving.”

In next to no time, the GOC sent one of his orderlies to procure a carton of the “vital medicaments”. Thereafter, peace and goodwill ensued! However, this was not before the three chiefs had consumed one bottle each leaving nine bottles in the carton. The GOC offered profuse apologies for the slight delay in receiving them as he had been presiding over crucial

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security meetings; and also, for offering the wrong refreshments. Their response was very direct.

“You are a good man and a fine officer. Not to worry.”

They proceeded to make a dignified exit with each of them carrying a bottle of the medicament under each armpit plus an extra one in the pocket of their flowing gown/ wrapper. When they emerged from the “Military Zone”, they refused to address a press conference regarding the details of their discussions with the new GOC. Instead, the leader of the delegation issued a cryptic statement: “These military officers think they are the only tough guys in town.”

At intervals, the memorable words of General T.Y. Danjuma showed up on the screen: “No nation has ever survived two revolutions.”

The same repetition was accorded to Charles Darwin’s dictum: “It is not the strongest of the species that survives, nor the most intelligent but the most responsive to change.”

What followed was a flash back to the allegations by Dr. Obarogie Ohonbamu (who was a lecturer at the University of Lagos) against General Murtala Mohammed. He claimed in an article he wrote for his magazine “Africa Spark” that General Muhammed corruptly enriched himself, engaged in illicit acquisition of properties during the civil war and had purchased a row of buildings in Kano as well as a fleet of trailers.

This was sequenced with the heartwrenching cold-blooded assassination of General Murtala Mohammed on Friday 13th February 1976 before the matter could go to trial. The grief all over the nation was unprecedented. Special prayers were offered at Lagos Central Mosque.

Before the day was over, the corpse was conveyed in a military aircraft to Kano for burial. The film deftly compared the burial of Murtala Muhammed with that of General Sani Abacha whose corpse was dumped into the cargo hold of the plane that flew him from Abuja to Kano on 8th June 1998. By the time the plane landed, it was almost nightfall. If there was any outpouring of grief, the film missed it.

An interesting revelation was that General Abacha had left “The Villa” in the company of General Jerry Useni at about 3 a.m. to relax at his Guest House (House 7) within the Presidential Complex.

According to the film, there were two Indian ladies waiting for him. Also, on offer were some apples. It was no secret that Abacha loved apples. He could not resist picking up one of them. It was a fatal error of judgement (almost at par with Adam accepting the apple offered by Eve). The rest is history. Within a matter of minutes, Abacha was frothing in the mouth and gasping for breath.

His Chief Security Officer (“CSO”) Major Hamza Al-Mustapha delivered his own version of events as follows: “Contrary to insinuations, the sudden collapse of the health system of Abacha started on Sunday, 7th June, 1998 right from the Abuja International Airport, immediately after one of the white security operatives or personnel who accompanied President Yasser Arafat of Palestine shook hands with him, Abacha.”

Al-Mustapha said shortly after the hand shake, he “noticed the change in the countenance of the late Commanderin-Chief and I informed the Aide-deCamp, Lt. Col. Abdallah, accordingly. He, however, advised that we keep a close watch on the Head of State.

Later in the evening of 8th June, 1998, around 6p.m his doctor came around, administered an injection to stabilize him. He was advised to have a short rest.

Happily, enough, by 9p.m the Head of State was bouncing and receiving visitors until much later when General Jeremiah Timbut Useni, the then Minister of the Federal Capital Territory, came calling.

He was fond of the Head of State. They were very good friends.

They stayed and chatted together till about 3:35a.m. A friend of the house was with me in my office and as he was bidding me farewell, he came back to inform me that the FCT Minister, General Useni was out of the Head of State’s Guest House within the Villa. I then decided to inform the ADC and other security boys that I would be on my way home to prepare for the early morning event at the International Conference Centre.

At about 5a.m the security guards

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It is not the strongest of the species that survives, nor the most intelligent but the most responsive to change

ran to my quarters to inform me that the Head of State was very unstable. At first, I thought it was a coup attempt.

Immediately, I prepared myself fully for any eventuality. As an intelligence officer and the Chief Security Officer to the Head of State for that matter, I devised a means of diverting the attention of the security boys from my escape route by asking my wife to continue chatting with them at the door – she was in the house while the boys were outside. From there, I got to the Guest House of the Head of State before them.

When I got to the bedside of the Head of State, he was already gasping.

Ordinarily, I could not just touch him.

It was not allowed in our job. But under the situation on ground, I knelt close to him and shouted, ‘General Sani Abacha, Sir, please grant me permission to touch and carry you.’

I again knocked at the stool beside the bed and shouted in the same manner, yet he did not respond. I then realized there was a serious danger. I immediately called the Head of State’s personal physician, Dr. Wali, who arrived the place under eight minutes from his house. He immediately gave Oga – General Abacha –two doses of injection, one at the heart and another close to his neck.

This did not work apparently as the Head of State had turned very cold. He then told me that the Head of State was dead and nothing could be done after all. I there and then asked the personal physician to remain with the dead body while I dashed home to be fully prepared for the problems that might arise from the incident.

As soon as I informed my wife, she collapsed and burst into tears. I secured my house and then ran back. At that point, the Aide-de-Camp had been contacted by me and we decided that great caution must be taken in handling the grave situation.

Again, I must reiterate that the issue of my boss dying on top of women was a great lie just as the insinuation that General Sani Abacha ate and died of poisoned apples was equally a wicked lie.”

Randle is Chairman/Chief ExecutiveJK Randle Professional Services Chartered Accountants

Inclusive leadership: Confronting the look alike and think alike strategy

Olukunle A. Iyanda “If your actions inspire others to dream more, learn more, do more and become more, you are a leader ” -John Quincy Adams hat skills does a leader need to survive in the current age of constant disruption? In the age where everything seems to be in a state of flux and access to global information is just a smartphone away? What things should leaders do differently to transform their organisation into global players and a reservoir of talents and wisdom? These are some of the issues that I kept pondering on as I transverse various corporate offices in the last few weeks. I began to ask myself if some of the things present in these corporate offices could be sustained in the future. I saw lots of look-and-think-alike, I saw predominantly single-sex workplaces and workplaces dominated by people from the same village or tribe. I did not see offices with disable people and this

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proves to a large extent that there are no disability or diversity policies or rather, they are just on paper. What I see in offices and organisations is parochialism and there is a need for leaders to rise to the challenge and the realities of the twenty-first-century concept of business.

The advancement in technology confers on us the ability to break down silos. It gives us the opportunity to challenge the status quo and embrace multi-cultural views because the world has been transformed into a global village. Today, we could stay in the comfort of our room and embark on cross-cultural learning with our smartphone. The information technology also enables easy communication and access to a global pool of talents, and brighten our understanding of multi-cultural issues. The skill required of leaders and managers should be the ability to capture the opportunities and benefits of diversity and inclusion for the benefit of their organisations.

Parochialism, that is the growing norm today undermines the potentials of individuals or an organisation. Failure to harness the power of inclusion and manage diverse groups is a recipe for lacklustre performance. Sometimes leaders are consumed by prejudices and fall into the temptation of looking at their environment from a narrow lens of physical, gender, cultural, religion or ethnic bias. When stereotypes are accommodated or elevated with piety then inclusive growth, radical innovation and competitive edge become impossible to attain. An organisation that is dominated

by the look-alike and the-think-alike will soon struggle to succeed in the new economy where continuous disruption is inevitable, and policies and practices of exclusion are counterproductive and obsolete.

1. Diversity and inclusiveness: New leadership requirements What is inclusion and why is it so important today? Inclusion is a concept that allows everyone to contribute meaningfully to the growth of an organisation or the development of the society is given the opportunity, enlisted into a team and allowed to rise without limitation or self-imposed prejudice that comes in the form of gender, religion, ethnicity and physical disabilities.

No society achieves meaningful development without harnessing the power of diversity and inclusion, it has been argued severally that the greatest strength of the United States of America is in its immigration laws that enable it attract the best talents from all over the world. It is also proven in business that the most innovative and high performing organisations are those that find strength in diversity and joy in inclusiveness.

Scott Page in his book The Diversity Bonus says “If you don’t bring a lot of diverse lenses to bear, you’re likely to have blind spots and make mistakes.” The look-alike and think-alike strategy facilitates homogeneity, promotes exclusion, undermine potentials and breed agitations and unrest. A look-alike employment strategy is fast becoming a failure, so also are practices that exclude

either the silent majority or the silent minority.

Today’s leaders must live in the consciousness of being a connector and an aggregator; it is the skill that is required to lead a diverse group, An innovative leader includes in his team the majority and the minority, the vocal and the silent because in each of them lies the real ingredients for success.

2. Stereotyping is a mental mistake Stereotyping is in all of us, we categorise people into our bias groups that we have created in our minds. This makes leaders fall into the temptation of employing those from their comfort zones like the same ethnic group, same personality, extended family, friends, political ideology, philosophies, gender or physical status.

A manager who is only comfortable with people that speak the same language as he or she does is no longer needed in any organisation. Excellence is not contained in being homogenous but in inclusion. Stereotypes lead to exclusion which leads to underperformance in business and violence in the political landscape. Stereotype impedes collaboration, encourage the status quo, destroy bridges and promote mediocrity. Such leaders cannot grow an organisation into enviable heights.

Note: the rest of this article continues in the online edition of Business Day @https:// businessday.ng Dr Iyanda is Founder/Chief Executive Officer, BROOT Consulting, Lagos Email: iyanda@brootc.com. Tel: 08039788027

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How long can Bond Vigilantes go quiet amid Nigeria’s spiralling debt pile?

Patrick Atuanya

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ata from the 2019 budget estimates shows that the Federal Government (FG) plans to spend N2.1 trillion to pay interest on the outstanding debt alone, equivalent to 24 percent of total spending and 5 percent higher than in 2018.

The overall 2019 budget deficit is estimated at N1.859 trillion which would be financed to the tune of N1.649 trillion by domestic and foreign borrowing.

For 2018 the FG budgeted to spend N2.01 trillion for debt servicing, while the budget also had an embedded N2.01 trillion deficit largely to be financed by domestic and foreign borrowings.

Nigeria’s debt service costs have skyrocketed over time, as total debt outstanding ballooned.

The Federal Government’s domestic and external debt is up about 73 percent to N18.9 trillion as at September 2018 from N10.9 trillion in 2015, according to the Debt Management Office (DMO) data.

The foreign borrowings grew spectacularly by 40 percent in the 1-year period between September 2017 and September 2018 to $21.59 billion from $15.35 billion, recent data from the budget office show.

While the Government often touts a comfortable debt to GDP level of around 18 per cent , government revenues were a paltry 6 per cent of GDP, as of September 2018.

Meanwhile there is no hint from the markets (yet) that Nigeria is nearing a debt dynamic that’s unsustainable.

Bond traders aren’t sending Treasury bills and bond yields through the roof to compensate for higher issuance of Government paper.

The theory goes back to the notion of “bond vigilantes,” a term coined in the 1980s to describe how debt markets could punish governments for economically irresponsible policies.

Benchmark naira and dollar denominated bond yields have actually fallen since January.

Following the February 26 announcement of a second term for President Muhammadu Buhari in the 2019 general elections, dollar denominated government bonds rose to the highest in 5- 7 months.

Average yields on benchmark 5, 10 and 20 year sovereign domestic bonds have declined since the beginning of the year by some 113 basis points from 15.4 percent to 14.26 percent.

Yields on the more widely traded and liquid Treasury Bills sold by the Central Bank of Nigeria (CBN) have also fallen. Last week the CBN auctioned 91, 182 and 364 day paper at yields between 10.75 percent and 12.84 percent, as against 11.9 percent and 15 percent in February.

The CBN eventually allotted a total of N89.5 billion which was significantly oversubscribed by investors to the tune of N200.17 billion, indicating a bid to cover ratio of about 2.2.

At its last monthly bond auction held in February, the debt management office (DMO), offered three instruments of 5, 7 and 10-year tenors, with a total value of N150 billion, but received bids from investors in excess of N234 billion.

Clearly portfolio investors are bidding bonds and treasury bills to take advantage of high yields.

For offshore fund managers the appeal lies in the high real rate of returns

or ‘carry’ they earn, even as they bet that the dollar/naira exchange rate will not see a major move in the next six months at least.

So should the Government and investors be so sanguine about the worsening fiscal situation in Nigeria and have bond vigilantes lost their power to discipline non-fiscally responsible states?

Not quite.

For one the failure of investors to force a shift in Nigeria’s government fiscal habits may be due to the outsized real yields they can earn at a time when U.S and developed market interest rates are still at record lows.

The extra yield investors get to hold a 10 year Nigerian sovereign bond over similar tenor U.S Treasuries is close to 11.5 percent. Those are juicy real returns which some offshore investors will not mind risking some exposure to.

For domestic large and institutional investors such as Banks, Pension Funds, Money Managers and Insurance Companies, the dismal performance of the stock market over the past 4 years is an incentive to buy bonds, even if real returns are close to zero and have been negative in the recent past, with inflation still elevated at 11.3 percent for February.

However the Nigerian Government cannot keep running trillion naira deficits annually, financed by borrowing without hitting a brick wall soon.

The FGs total retained revenue as at September 2018, came in at N2.57 trillion, 52 percent lower than the N5.37 trillion, it expected to earn as at Q3, according to the latest budget implementation report from the Ministry of Budget and planning.

Total actual inflows, which include other financing sources, FX differentials and revenue from special accounts was N2.814 trillion for the 3 quarters, 47.6 percent less than was budgeted.

This compares to total debt service

‘

... the Nigerian Government cannot keep running trillion naira deficits annually, financed by borrowing without hitting a brick wall soon

expenditure (domestic and foreign) for the period of N1.769 trillion, equivalent to 62 percent of revenues.

Total actual expenditure was at N5.329 trillion (as at Q3, 2018), leaving a fiscal deficit of N2.51 trillion, which was financed to the tune of N908 billion by domestic (N608 billion) and foreign (N303.58 billion) borrowing.

There is a N1.6 trillion expenditure line or deficit spending (as at Q3, 2018) for which the financing was not made clear in the budget implementation report.

We suspect some form of monetary financing of the fiscal deficit which would be a continuation of the CBN’s actions of recent past.

The idea that government debt can be financed by the Central Bank increasingly referred to as modern monetary theory (MMT) has been dismissed by most serious economists, and called a ‘dangerous proposition’ by the European Central Bank (ECB).

Nigeria’s low oil production per capita means the country cannot delay reforms any longer while it hopes for a rebound in oil prices.

Amid the surge in borrowing, the economy has barely budged as GDP growth declined from 2.5 percent in 2015 to 1.9 percent in 2018.

That should signal some warning bells.

It is pertinent to note when investors finally begin to fret over the possibility of hyperinflation and economic turmoil in Nigeria, due to excessive deficits, borrowings and monetisation of the debt, the currency (naira) would be the first casualty as they unwind positions.

In that sense as bond vigilantes currently look the other way they might just be buying us some precious time to get our fiscal house in order.

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

Making data the nucleus of human resource management

Jude Adigwe

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.Edwards Deming said: “In God we trust. All others must bring data”. With the concept of big data taking centre stage in business domains, the importance of data is becoming obvious to many professionals especially those who shy away from it. For meaningful and sustainable progress to be made in organizations there is need for data – the right data properly analyzed and interpreted for the desired purpose(s). What has this got to do with human resource management? A lot. Being a profession that has its roots in the behavioural sciences, there is need to have sufficient insights into human behaviour and this would not be possible without data.

Thankfully, with the importance being placed on human resource metrics and analytics data is being taken seriously. Nonetheless, there is need for more effort.

Quantitative and qualitative data have unique advantages and they are complementary. It is important to understand when and how to collect each type. Beyond when and how is the question why. Why do you need data? A clear answer to this question would determine the type of data to collect and how to go about collecting it. Sometimes, all we need is basic details from a select individuals to determine what issues are worth exploring further on a larger scale. There are times we have to collect data concurrently or sequentially -- this speaks to mixed data which are by far more robust than qualitative or quantitative data when collected and analyzed separately. As regards data, it is essential to always pay attention to the respondents/participants (providing the data), the methods used in collecting the data and the tools used in analyzing the data. These could diminish the value of the data regardless of how much volume of data was obtained.

As human resource management professionals, we must go beyond rules-of-thumb and reliance on surveys (from primary and secondary sources) and explore the whole gamut of data collection and analysis. Three things are interesting to note: first, the unique situation an organization is faced with determines the type of data to collect and how to go about it -- there is need for openness to different research designs. Second, human beings (who make up organizations) are different hence their perspectives on a particu-

lar issue will vary -- these diverse views are necessary for obtaining rich insights. Third, no two organizations are the same hence the need to give sufficient attention to the data emanating from your organization instead of relying so much on data coming from national and global research reports. Never lose sight of the fact that organization, industry and sector are three different things though connected.

Know what is happening nationally and globally about different HR functions while you also develop your capacity to obtain robust data on what is happening in your organization with regards to the different HR functions.

Obtain robust data in areas of recruitment and selection, performance management, training and development, rewards, job satisfaction, work engagement, attrition and turnover et cetera. When conversations are had and data is the basis for arguments and decisions made, it gives a touch of professionalism to such engagements. Relying solely on experience (as if it is some sort of trend data) does not suffice -- you are better off relying on data that shows a trend/pattern over a specific period of time.

It is paramount to keep in mind that collecting and analyzing data is not an end itself rather it is a means to an end. There is need to keep our eyes on the big picture. Data is a strategic tool for organizational growth. Members of management make decisions that could make or break their companies hence the need to make decisions not predicated on conjectures

or rules-of-thumb but on data that is rich and reliable. This goes to say that the data collection process as well as the data obtained must be given equal importance. Data obtained must be interpreted and presented in a manner that aids decision making. To achieve this, one must prepare presentation materials with the wouldbe/target audience in mind -- the best presentations will always remain audience-centred.

To fully put data at the centre of human resource management practice, aspiring professionals would have to be thoroughly trained in this regard. Chartered Institute of Personnel Management Nigeria would have to look critically into this. It should be a course and knowledge should be tested appropriately.

This could also make a theme in any of the subsequent conferences. There should also be regular training on data management as it pertains human resource management -- the nexus between both should take centre stage going forward. Employers must also create the enabling environment because all these would amount to nothing without their support. Let us remember and reflect on the words of Todd Park: “Data by itself is useless. Data is only useful if you apply it.”

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

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How not to fight poverty

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t is no longer news that Nigeria is the new poverty capital of the world, with over 90 million of its people (approximately 44.2 percent) living in extreme poverty. The sad part is not the number of people living in poverty at the moment, but the number of people sliding into extreme poverty each day. According to the poverty world clock, six Nigerians slide into extreme poverty every minute, making the number 8640 every day. By 2030, the figure is expected to rise to 120 million, representing 45.5 percent of Nigeria’s population at the time.

One fact that both the government and most Nigerians have missed is that the numbers given are for Nigerians living in extreme poverty and not those of Nigerians living in poverty. As far back as 2010, the National Bureau of Statistics estimated that over 70 percent of Nigeria’s population (120 million then) live below the poverty line.

Surely, a government facing such existential threats will be preoccupied with formulating and implementing policies

that will lift people out of poverty. In the Nigerian case, such policies are not lacking, like the so-called trader money, conditional cash transfers and the charades that go on in states in the name of poverty alleviation programmes (PAP).

Experiences of other countries show that to effectively lift a larger population out of poverty, the government needs to either create such massive jobs that will absorb the larger majority of the unemployed and those willing to work or they will create and enforce policies to deliberately keep the prices of goods and food items consumed by the poor low.

A third means is through a wellcoordinated and planned cash transfer to help the poor afford the basic necessities of life.

In Nigeria, the government has not been able to do any of these. Rather, government’s policies help to worsen rather than alleviate the poverty problem. Rather than create an environment that supports and encourages businesses to grow and generate growth and employment, the government’s market-limiting policies have led to recession and slow growth leading to close down of busi-

nesses and a record unemployment rate of 23 percent. What is more, through its wrong-headed policy of banning imports and promoting local production, the government has effectively sacrificed its poor to selfish local producers who rob Nigerians by selling their inferior goods to them at exorbitant prices while being protected from international competition that necessarily leads to efficiency and customer satisfaction.

Take for instance government’s decision to ban importation of cement to allow local manufacturers thrive. The result is that while Nigeria produces some of the worst cement in the world, its price of 50 kg bag of cement is almost three times that of the average global price.

No wonder Nigerian cement companies are the most profitable in the world even if they are the most inefficient. It did not matter to the government that considering Nigeria’s housing deficit, the best thing that will happen to the housing sector is for the prices of building materials to be low. By allowing the cabal in the industry to artificially fix the prices of building materials, most Nigerians are un-

able to afford housing, the jobs that should have been created from a booming construction industry are lost and majority of Nigerians continue to wallow in poverty and joblessness while living in squalid conditions.

The same thing is happening in the rice market. Since the government effectively banned the importation of rice, one of the staple food in Nigeria, the price of a bag of rice has more than doubled. What has continued to keep the price of rice within the reach of Nigerians is the smuggling activities that go on across Nigeria’s borders. But the moment the government successfully stops the smuggling, the poor in Nigeria won’t be able to afford rice again.

We must stop chasing shadows. We cannot at one instance, be advocating free trade and be putting barriers to free trade all over. The government cannot be stifling competition just so to support and protect some inefficient but big cartels of local producers. The government cannot be claiming to be interested in addressing poverty and at the same time encouraging or supporting monopolies that always results in higher prices.

Bashir Ibrahim Hassan

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

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Transatlantic relations

Too many challengers No happy ending

Europe and America must work to stop their relationship unravelling Mar-a-Lago, massage parlours Worth fighting for

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HE ATLANTIC OCEAN is starting to look awfully wide. To Europeans the United States appears ever more remote, under a puzzling president who delights in bullying them, questions the future of the transatlantic alliance and sometimes shows more warmth towards dictators than democrats. Americans see an ageing continent that, though fine for tourists, is coming apart at the seams politically and falling behind economically—as feeble in growth as it is excessive in regulation. To Atlanticists, including this newspaper, such fatalism about the divisions between Europe and America is worrying. It is also misplaced.

True, some gaps are glaring.

America has abandoned the Paris climate accord and the nuclear deal with Iran, whereas Europe remains committed to both. Other disagreements threaten. President Donald Trump has called the European Union a “foe” on trade and is weighing up punitive tariffs on European cars. Trust has plummeted. Only one in ten Germans has confidence that Mr Trump will do the right thing in world affairs, down from nearly nine out of ten who trusted Barack Obama in 2016. Twenty years ago NATO celebrated its 50th anniversary with a three-day leaders’ summit.

Fear of another bust-up with Mr Trump has relegated plans for the alliance’s 70th birthday party on April 4th to a one-day meeting of foreign ministers.

Past intimacies are not enough to keep warm feelings going today.

Europe inevitably counts for less in American eyes than it once did.

The generation that formed bonds fighting side-by-side in the second world war is passing away and even the cold war is becoming a distant memory. Meanwhile, America is becoming less European. A century ago more than 80% of its foreign-born population came from Europe; now the figure is only

10%. Surging economies in Asia are tugging America’s attention away.

Yet, through its many ups and downs, the relationship has proved resilient. Trade flows between the EU and the United States remain the world’s biggest, worth more than $3bn a day. Shared democratic values, though wobbly in places, are a force for freedom. And, underpinning everything, the alliance provides stability in the face of a variety of threats, from terrorism to an aggressive Russia, that have given the alliance a new salience.

At the heart of this security partnership is NATO. By reaching its 70th birthday the alliance stands out as a survivor—in the past five centuries the average lifespan for collective-defence alliances is just 15 years. Even as European leaders wonder how long they can rely on America, the relationship on the ground is thriving. As our special report this week explains, this is thanks to NATO’s ability to change. No one imagined that the alliance’s Article 5 mutualdefence pledge would be invoked for the first, and so far only, time in response to a terrorist attack on America, in September 2001, or that Estonians, Latvians and Poles would be among NATO members to suffer casualties in Afghanistan. Since 2014 the allies have responded vigorously to Russia’s annexation of Ukraine. They have increased defence spending, moved multinational battlegroups

into the Baltic states and Poland, set ambitious targets for military readiness and conducted their biggest exercises since the cold war.

In America polls suggest that public opinion towards NATO has actually grown more positive since Mr Trump became president. In Congress, too, backing for the alliance is rock-solid, reflected in supportive votes and the presence at the Munich Security Conference last month of a record number of American lawmakers. Nancy Pelosi, the Democratic leader of the House of Representatives, has extended a bipartisan invitation to NATO’s secretary-general, Jens Stoltenberg, to address a joint session of Congress on the eve of the 70th anniversary.

NATO’s success holds lessons for the transatlantic relationship as a whole. To flourish in the future, it must not just survive Mr Trump, but change every bit as boldly as it has in the past.

First, this means building on its strengths, not undermining them: removing trade barriers rather than lapsing into tariff wars, for example. Mr Trump is right to badger his allies to live up to their defence-spending promises. But he is quite wrong to think of charging them cost-plus-50% for hosting American bases, as he is said to be contemplating. Such matters should not be treated like a “New York real-estate deal”, a former vice-president, Dick Cheney, told

the current one, Mike Pence, last week. Those European bases help America project power across the world (see article).

Second, realism should replace nostalgia. Europeans should not fool themselves that America’s next president will simply turn the clock back. Instead, to make themselves useful to America, Europeans need to become less dependent on it.

For instance, in defence, they have taken only baby steps towards plugging big gaps in their capabilities and avoiding wasteful duplication.

Their efforts should extend beyond the EU, whose members after Brexit will account for only 20% of NATO countries’ defence spending.

A more capable Europe would help with the third and biggest change: adjusting to China’s rise.

America’s focus will increasingly be on the rival superpower. Already China’s influence is making itself felt on the alliance, from the nuclear balance to the security implications of, say, Germany buying 5G kit from Huawei or Italy getting involved in the infrastructure projects of the Belt and Road Initiative.

Yet the allies have barely begun to think seriously about all this. A new paper from the European Commission that sees China as a “systemic rival” is at least a start.

Unfettered in deliberation If the allies worked hard on how best to pursue their shared interests in dealing with China, they could start to forge a new transatlantic partnership, with a division of labour designed to accommodate the pull of the Pacific. This would involve Europeans taking on more of the security burden in their own backyard in exchange for continued American protection, and co-ordination on the economic and technological challenge from China. Today the leadership to do this is lacking. But Europeans and Americans once before summoned the vision that brought decades of peace and prosperity. They need to do so again.

and selling access to the president The Trump administration collects chancers, influence peddlers—maybe

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VER SINCE diners at Mar-a-Lago snapped pictures of President Donald Trump plotting America’s response to a North Korean missile test with his Japanese counterpart, there have been national-security concerns about the president’s “Winter White House”. Yet reports about a Mar-a-Lago frequenter called Li Yang, who also goes

by Cindy Yang, suggest they underestimated the risks of Mr

Trump’s freewheeling style.

Bearing all the hallmarks of a Trump scandal, the revelations from the Miami Herald, Mother Jones and others are salacious, worrying and bizarre.

Ms Yang, a 45-year-old entrepreneur and immigrant from China, and her family have founded massage parlours across Florida. Robert Kraft, the owner of the New England Patriots, was charged last month with soliciting oral sex in one of them, Orchids of Asia, which the Yang family no longer owned. Mr Kraft is a longtime Trump pal; coincidentally, Ms Yang recently launched a business peddling access to the president and other Republican politicians to Chinese investors. Indeed, she was snapped alongside Mr Trump at a Super Bowl party in Mar-a-Lago, at which the president was supContinues on page 15

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A country in chaos

Oh **UK! What next for Brexit?

Britain’s political crisis has reached new depths. Parliament must seize the initiative

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HEN HISTORIANS come to write the tale of Britain’s attempts to leave the European Union, this week may be seen as the moment the country finally grasped the mess it was in. In the campaign, Leavers had promised voters that Brexit would be easy because Britain “holds all the cards”. This week Parliament was so scornful of the exit deal that Theresa May had spent two years negotiating and renegotiating in Brussels that MPs threw it out for a second time, by 149 votes—the fourth-biggest government defeat in modern parliamentary history. The next day MPs rejected what had once been her back-up plan of simply walking out without a deal. The prime minister has lost control. On Wednesday four cabinet ministers failed to back her in a crucial vote. Both main parties, long divided over Brexit, are seeing their factions splintering into ever-angrier sub-factions. And all this just two weeks before exit day.

Even by the chaotic standards of the three years since the referendum, the country is lost (see article). Mrs May boasted this week of “send[ing] a message to the whole world about the sort of country the United Kingdom will be”. She is not wrong: it is a laughing-stock. An unflappable place supposedly built on compromise and a stiff upper lip is consumed by accusations of treachery and betrayal. Yet the demolition of her plan offers Britain a chance to rethink its misguided approach to leaving the EU. Mrs May has made the worst of a bad job. This week’s chaos gives the country a shot at coming up with something better.

The immediate consequence of the rebellion in Westminster is that Brexit must be delayed.

As we went to press, Parliament was to vote for an extension of the March 29th deadline. For its own sake the EU should agree. A no-deal Brexit would hurt Britain grievously, but it would also hurt the EU—and Ireland as grievously as Britain.

Mrs May’s plan is to hold yet another vote on her deal and to cudgel Brexiteers into supporting it by threatening them with a long extension that she says risks the cancellation of Brexit altogether. At the same time she will twist the arms of moderates

by pointing out that a no-deal Brexit could still happen, because avoiding it depends on the agreement of the EU, which is losing patience. It is a desperate tactic from a prime minister who has lost her authority. It forces MPs to choose between options they find wretched when they are convinced that better alternatives are available. Even if it succeeds, it would deprive Britain of the stable, truly consenting majority that would serve as the foundation for the daunting series of votes needed to enact Brexit and for the even harder talks on the future relationship with the EU. To overcome the impasse created by today’s divisions, Britain needs a long extension. The question is how to use it to forge that stable, consenting majority in Parliament and the country.

An increasingly popular answer is: get rid of Mrs May. The prime minister’s deal has flopped and her authority is shot. A growing number of Tories believe that a new leader with a new mandate could break the logjam (see article). Yet there is a high risk that Conservative Party members would install a replacement who takes the country towards an ultra-hard Brexit. What’s more, replacing Mrs May would do little to solve the riddle of how to put together a deal. The parties are fundamentally split. To believe that a new tenant in Downing Street could put them back together again and engineer a majority is to believe the Brexiteers’ fantasy that theirs is a brilliant project that is merely being badly

executed.

Calls for a general election are equally misguided. The country is as divided as the parties. Britain could go through its fourth poll in as many years only to end up where it started. Tory MPs might fall into line if they had been elected on a manifesto promising to enact the deal. But would the Conservatives really go into an election based on Mrs May’s scheme, which has twice been given a drubbing by MPs and was described this week even by one supportive Tory MP as “the best turd that we have”? It does not have the ring of a successful campaign.

To break the logjam, Mrs May needs to do two things. The first is to consult Parliament, in a series of indicative votes that will reveal what form of Brexit can command a majority. The second is to call a referendum to make that choice legitimate. Today every faction sticks to its red lines, claiming to be speaking for the people. Only this combination can put those arguments to rest.

Take these steps in turn. Despite the gridlock, the outlines of a parliamentary compromise are visible. Labour wants permanent membership of the EU’s customs union, which is a bit closer to the EU than Mrs May’s deal.

Alternatively, MPs may favour a Norway-style set-up—which this newspaper has argued for and would keep Britain in the single market. The EU is open to both.

Only if Mrs May cannot establish a consensus should she return to her own much-criticised plan.

Getting votes for these or any other approach would require thinking beyond party lines. That does not come naturally in Britain’s adversarial, majoritarian politics. But the whipping system is breaking down. Party structures are fraying. Breakaway groups and parties-within-parties are forming on both sides of the Commons, and across it. Offering MPs free votes could foster cross-party support for a new approach.

The second step is a confirmatory referendum. Brexit requires Britain to trade off going its own way with maintaining profitable ties with the EU. Any new Brexit plan that Parliament concocts will inevitably demand compromises that disappoint many, perhaps most, voters. Mrs May and other critics argue that holding another referendum would be undemocratic (never mind that Mrs May is prepared to ask MPs to vote on her deal a third or even fourth time).

But the original referendum campaign utterly failed to capture the complexities of Brexit. The truly undemocratic course would be to deny voters the chance to vouch that, yes, they are content with how it has turned out.

And so any deal that Parliament approves must be put to the public for a final say. It will be decried by hardline Brexiteers as treasonous and by hardline Remainers as an act of self-harm.

Forget them. It is for the public to decide whether they are in favour of the new relationship with the EU—or whether, on reflection, they would rather stick with the one they already have.

Mar-a-Lago, massage parlours and selling...

Continued from page 14

porting Mr Kraft’s team.

Mr Kraft’s arrest caused a media storm. It followed a months-long police operation against massage parlours in Florida, which were alleged to be involved in trafficking sex workers. Yet on the evidence gathered from hidden police cameras, over 100 customers including Mr Kraft were arrested for soliciting, and a dozen employees on charges related to prostitution. No one has been charged with trafficking—or anything more serious than involvement in turning occasional tricks at a low-end massage joint. Ms Yang’s recent business ventures, which have been much less covered, appear far more troubling.

According to the Herald, she had no involvement in politics before the 2016 election; she had not voted for a decade.

Yet she suddenly became a fixture at high-level Republican events. Her Facebook page is filled with photos of Ms Yang alongside the president, his two sons, Florida’s governor, Ron DeSantis, and other senior Republicans. She and her relatives donated $58,000 to the president’s campaign and a related political action committee. And her efforts appear to have secured some of the influence her company, GY US Investments, claims to have.

Last year she was invited by the White House to take part in an event organised by Mr Trump’s Asian-American and PacificIslander Initiative. The Herald also reports that she arranged for Chinese businessmen to attend an exclusive Trump fund-raiser in Manhattan. It is not clear whether this amounts to an embarrassing mess or a serious security breach. Either way, it stinks.

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Failing grade

Syria’s broken schools will make it difficult to fix the country The uneducated are easy prey for the Assad regime and extremist groups

A

FTER EIGHT years of civil war, Syria’s education system is a wreck. Nearly 3m school-age children, a third of the total, do not attend classes. That is, in part, because 40% of schools are unusable.

Some have been damaged in the fighting; others are being used by armed groups or the displaced.

The schools that still function are crammed and there are fewer teachers to run them—around 150,000 have fled or been killed.

Unsurprisingly, students are way behind. Ten-year-olds in Syria read like five-year-olds in developed countries, says Save the Children, an aid agency. The literacy rate has plummeted.

The consequences are stark.

Syrians lack the skills needed to rebuild their country or to escape the grinding poverty in which 80% of them live. The uneducated are easier prey for jihadists and militiamen offering money and a bit

of power, or for Bashar al-Assad’s regime, which will gladly give them a spot in the army. Shattered schools are yet another reason for more affluent Syrians to leave the country—and for those who have fled to stay abroad. “We’ll see the catastrophic results over the next decade as children become adults,” says Riyad al-Najem of Hurras, a charity that supports

over 350 schools in Syria.

At least seven different curricula compete in Syria. Opponents of Mr Assad purged the state’s syllabus of its paeans to the ruling Baath party. But they sparred over a common curriculum to replace it. The Kurds, who rule the north-east, imposed their own curriculum, replacing adulation of the Assads with adulation of

Abdullah Ocalan, a jailed leader of Turkey’s Kurds. The Turks, meanwhile, have opened 11 religious secondary schools in the strip of Syria that they control. The Syriac Orthodox church and the jihadists of Hayat Tahrir al-Sham (HTS) and Islamic State have opened their own schools, too.

As the frontlines of the war shifted, children lurched between curricula. Certificates earned in one place are often not recognised by the authorities in other parts. That makes it hard for students to get into universities, almost all of which are in regime-held areas. Many simply drop out. In some parts of the country 50% of kids leave school by the age of 13 and 80% by the age of 16. Sometimes parents pull their children out in order to marry them off or have them work on the streets. “They’ll make the same wages for their rest of their lives and bring up their children to do the same,” says Harun Onder of

the World Bank.

Western donors have withheld aid from rebel-held areas in order to avoid helping terrorist groups, such as HTS, which controls Idlib province. In 2017 the European Union, which has invested €2bn in Syrian education since 2012, stopped all but emergency relief in areas controlled by the regime. A scheme to train teachers from Syria at the American University in Beirut was postponed after the EU backed away.

“We don’t want to do anything which would legitimise the regime or the terrorists,” says an EU official.

But withholding aid may help them. Syrians are being pushed into the arms of militants, says Mr Najem, who fears a rash of school closures. Massa Mufti, an education expert from Damascus who advises the UN, worries that there will be more bloodshed: “We are generating another cycle of radicalisation and violence.”

Ink by the barrel in Addis

Press freedom in Ethiopia has blossomed. Will it last?

A less autocratic leader lets newspapers thrive

E

SKINDER NEGA founded his first newspaper, Ethiopis, in 1993. After seven issues it was forced to close, the first paper charged under a muzzling law introduced by the Ethiopian People’s Revolutionary Democratic Front (EPRDF), which had shot its way to power two years before. Three more of Eskinder’s newspapers were shut down by the courts. In 2012 he was sentenced to 18 years in prison on charges of terrorism. He was released last year as part of an amnesty for political prisoners.

Ethiopis is back in business, its return symbolising the start of a more hopeful era for press freedom.

Hundreds of websites, blogs and satellite-TV channels have been unblocked since Abiy Ahmed took office as prime minister in April last year. For the first time in 13 years there are no journalists in prison; no fewer than 23 publications and six privately owned satellite channels have been given licences by the Ethiopian Broadcasting Authority since July.

New provincial titles are emerging, too, including the first ever independent newspaper in Ethiopia’s troubled Somali region. Even state broadcasters are loosening up and giving airtime to opposition politicians. A new media bill is expected soon. It will probably soften criminal penalties for libel and lift some restrictions on private ownership that have crimped investment.

Ababa. “When this honeymoon ends I think we will have problems,” he says. Ominously, two local journalists reporting on controversial home demolitions near the capital were arrested last month. Upon release they were attacked by a mob outside the police station.

Correction (March 15th 2019): An earlier version of this article said the Addis Standard had operated in exile until last year. In fact it had suspended print operations in 2016 citing censorship but has continued publishing online.

This is not the first blossoming of free media. The EPRDF liberalised the press after it snatched power from a Marxist junta known as the Derg in 1991. More than 200 newspapers and 87 magazines were launched between 1992 and 1997.

That did not last. Since 2001, 120 newspapers and 297 magazines received licences—but 261 of them were cancelled. At least 60 journalists fled the country between 2010 and 2015.

Repression is one challenge for Ethiopia’s would-be press barons; a tough business environment is another. The average lifespan of

an Ethiopian newspaper is nine months, reckons Endalk Chala, an academic who has studied the trade.

Addis Zeybe, which was launched in October, stopped after only four issues. Advertisers “don’t want to be associated with media that is critical of the government”, says its founder, Abel Wabella.

New titles face especially long odds. The state owns the main printing press, which can pulp issues the government does not like and which increased prices by almost 50% in December. “It’s a death blow,” says Eskinder. Abiy has spoken of the importance to democracy of a vibrant

press, but state media still dominate, says Tsedale Lemma, the editor of Addis Standard, a feisty local which suspended print operations in 2016 citing censorship.

Two tests of the new opening loom. The first is the willingness of state media to give equal time to the prime minister and his opponents in elections next year. Another will be the openness of Abiy himself to scrutiny: he has given only one press conference and few interviews.

Eskinder recalls the aftermath of the election in 2005, when the EPRDF blamed newspapers for its failure to win a majority in Addis

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GEEP extends TraderMoni repayment scratchcards to MarketMoni, eyes national roll-out

F

ollowing a successful pilot and significant uptick in repayments after the launch of the TraderMoni repayment scratch cards in January 2019, the GEEP team have now extended the cards for MarketMoni loan repayments and have commenced efforts to roll them out on a national scale.

According to the Bank of Industry, the scratch cards were developed because most beneficiaries of the scheme do not have access to banks. The nearest bank to some of the markets is sometimes 20 kilometres or more away. As such, collection channels with wide coverage is required to drive collection.

The new method of repayment leverages vouchers or scratch cards sold at key cluster/market locations with high numbers of petty traders. The cards are loaded the same way Telco recharge cards are loaded; loading the card automatically credits the beneficiary’s loan account, and updates their loan position.

Also, beneficiaries can pay back their loans at any commercial bank in the country through the PayDirect platform.

All a beneficiary has to do is walk into any bank and tell the Teller they want to pay their BOI-GEEP loan and give the teller their phone number and the repayment amount. With this, beneficiaries now have options for repaying their loans.

In addition, based on the success of the scratch card pilot, BOI has confirmed its decision to roll out similar voucher/ scratch cards for MarketMoni loan repayments. MarketMoni loans start at N50,000 and are for traders with significantly more inventory size than their TraderMoni counterparts. The criteria for MarketMoni loans include having a bank account (and BVN), and belonging to a market association or cooperative society.

TraderMoni and MarketMoni are two of the three interest free, collateral free products under the Government Enterprise and Empowerment Program executed by the Bank of Industry. The third interest free loan program, FarmerMoni, is targeted at farmers within farming clusters; each FarmerMoni loan go from

TraderMoni agent in a market in Lagos state.

N100,000 to N300,000 depending on the crop being cultivated TraderMoni loans, which range from N10,000 to N25,000, do not require any collateral for beneficiaries to participate.

However, TraderMoni beneficiaries are required to have a mobile phone and must be active petty traders in a designated cluster/market location. This collateral free approach goes against conventional “loan-wisdom”. As such, critics of the TraderMoni program often base their arguments on the feasibility of repayments and the sustainability of the program.

BOI in their responses have often

cited the Government’s preference for a carrot approach to drive repayments; the carrot being that whereas the loan starts at N10,000, beneficiaries who pay back automatically qualify for N15,000.

Those who pay back their N15,000 qualify for N20,000 and those who pay their N20,000 qualify for N25,000. Ultimately, beneficiaries who pay back the N25,000 get migrated into the N50,000 MarketMoni program. Over the course of this journey, successful beneficiaries would have received up to N195,000 in affordable credit hitherto unavailable to them and their businesses.

BOI recognizes that there is a higher

risk of default as a beneficiary climbs up the ladder; however, to mitigate this risk, the GEEP team has introduced a new requirement for accessing the N20,000 TraderMoni loan: a bank account (and BVN). This helps the program achieve two broad goals: Financial Inclusion and Repayment Compliance.

Whilst financial inclusion is easily understood – seeing as a significant portion of the 36million financially excluded Nigerian adults are petty traders and artisans; we view the new concept of using the BVN as a digital collateral to drive repayment compliance, if well implemented, as simply brilliant.

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COMPANIES & MARKETS C O M PA N Y N E W S A N A LY S I S A N D I N S I G H T

ENTERTAINMENT

Ebonylife movies gross N1.4bn in box office in 5 years …earnings to further rise with Netflix deal OBINNA EMELIKE

S

ince venturing into the Nigerian movie industry a few years ago, Ebonylife Films has changed the business of film production with quality movies that have grossed over N1.4 billion in the box office in less than five years.

The remarkable grossing was achieved with five blockbuster movies, watched by over 20 million people in top cinemas across Nigeria and the world.

Foremost of the five movies is ‘The Wedding Party 2-Destination Dubai (WP2)’, which cost N300 million to produce in 2017, excluding publicity, but grossed over N500 million, the highest grossing movie in the Nollywood so far.

Following behind, in terms of grossing, is ‘The Wedding Party 1’. The movie, which cost about N150 million to produce in 2016, earned N453.05 million in box office.

As well, ‘Chief Daddy’, the latest blockbuster from

the stables of Ebonylife Films, has grossed N386.1 million so far, and hopes to make more money at the cinemas and on Netflix.

However, ‘Fifty’, a movie produced in 2015, and ‘The Royal Hibiscus Hotel’, produced in 2018, grossed only N94.03 million and N59 million, respectively.

The movies are set to even gross more with the acquisition by Netflix, the foremost global streaming platform based in the United States of America.

According to EbonyLife Films, ‘Chief Daddy’ will be available on Netflix worldwide from March 15, 2019, and would further earn more money from global viewers on Netflix.

‘Chief Daddy’, which was third-highest grossing movie in Nollywood box office history and No. 1 Nollywood film of 2018, is the third EbonyLife Films’ title to be acquired by Netflix, following the successful acquisition of ‘Fifty’ (2015) and ‘The Wedding Party’ (2016). With the partnership, Netflix takes another box office sensation from the EbonyLife Films’ sta-

bles to a global audience.

“In the resurgence for telling the story of a new Africa, our first feature film, ‘Fifty’, allowed us to create an honest insight of Africa in contrast to the stereotypical fatalistic stories filmmakers tend to tell of the continent,” said Mo Abudu, founder/CEO, EbonyLife Films.

Abudu said good movies take huge resources to produce, but to attract partners and even banks to buy into one’s idea, a moviemaker has to show from a business plan how to recoup the money.

Abudu is excited that the African Diaspora will finally be able to access ‘Chief Daddy’ as it hosts on Netflix. “ We a re e xt re m e l y thrilled by this wonderful opportunity to bring another great movie to the global audience even while it continues its spectacular run at the cinema. We are pleased by the opportunity that this Netflix partnership provides to meet the huge interest in the diasporan community in ‘Chief Daddy’,” she said.

Moses Babatope, man-

L-R: Dimeji Osingunwa, commercial director, Mouka Limited; Folasade Wilhelm, Mouka Distributor; Raymond Murphy, managing director, Mouka Limited; Tolu Olanipekun, senior marketing manager, and Rufai Ahmad, President, Nigeria Association of Physiotherapy, during the celebration of World Sleep Day in Lagos.

Picture by Olawale Amoo

aging director, FilmOne Distribution and Production Limited, distributors of Ebonylife movies, contents from the stables of Ebonylife Films have positively changed the narrative of the Nigerian movie industry both within and outside the country and are good contents for distribution.

“The Ebonylife movies have shown that it is possible in Nigeria today

to create a movie that can entertain, sell and make money. So, it is not surprise the huge grossing in box office,” Babatope said.

The collaboration in producing most of Ebonylife films has also proven that it is possible to make money from all the value chains in the industry, even in the midst of piracy threats.

“The producers of Eb-

onylife films looked at what the audience enjoys in cinemas, and created scripts of topical issues that people can identify with and have fun identifying with those things,” Ebie Macaulay, a Nollywood critic and showbiz promoter, said.

He thinks the recent acquisition by Netflix would soar the earnings as more viewers now see and enjoy Nigerian movies.

TELECOMS

Eland to acquire additional $50 million credit from Stanbic IBTC in expansion drive ISRAEL ODUBOLA

M

id-tier Nigerian lender, Stanbic IBTC, in collaboration with its Johannesburgbased Standard Bank Group, has disclosed plans to provide a new facility worth $50 million to Eland Oil & Gas Plc, an upstream Nigerian oil firm listed on the London Stock Exchange.

According to Stanbic, the agreement serves as an opportunity to support the expansion quest of the oil firm.

The credit facility will see Eland increase its borrowing base by $50million to $125 million. The Nigerian lender said on Thursday the facility is being underwritten by Stanbic IBTC Bank and Standard Bank, while Stanbic IBTC would act as a joint book runner.

The bank explained that an accordion facility is an incremental facility, which permits a borrower to acquire

additional facility over and above the initial agreement with the financier on the same terms as the original facility for expansion purpose.

From another perspective, an accordion facility is a provision that allows a borrower to elevate the maximum amount allowed on a credit line or add a term loan to a credit agreement.

Loan terms with accordion features are well-suited for situations where a business shows great potentials for rapid growth.

Commenting about the agreement, Ron Bain, Chief Financial Officer of Eland Oil & Gas, said his company is pleased to have an increased borrowing base on their RBL facility which reflects the huge accretive quality of the new wells drilled on OML asset and the value addition they generate for shareholders.

“Since refinancing the reser ve-based lending

(RBL) in 2018 into a longer-term facility, we have the flexibility to diversify the capital structure of the company leveraging our position comfortably within our debt parameters and reducing our cost of capital”, said Bain.

The oil & gas firm announced five months ago that it had refinanced its existing RBL facility with a new 5-year syndicated RBL facility in an amount of $75 million, with the option to raise it to $200 million through an accordion, however, subjected to incremental production.

The oil firm announced with this, its borrowing base amount notched up to $134 million from $103 million, and an initial accordion rise of $50 million will raise its debt commitment under the facility from $75 million to $125 million.

Stanbic IBTC said it will continue to exploit its good

track investment banking record and the strength of its group, Standard Bank of South Africa Limited, the biggest lender in the continent by assets, to support the expansion pursuit of various businesses.

Shares of Stanbic IBTC advanced 0.21 percent to N48.10 after Friday’s trading, making it the third-best performer after the close of Friday’s business. The tier2 lender has gained 0.31 percent since the start of

the year.

Eland Oil & Gas Plc is a Nigerian upstream oil and natural gas exploration and production company with offices in Abuja, Nigeria, and Aberdeen, Scotland’s third most populous city.

L-R: Adesoji Olasoko, general secretary, Risk Management Association of Nigeria (RIMAN); Kolawole Ajimoko, 1st vice president, RIMAN; Obeahon Ohiwerei, managing director/CEO, Keystone Bank; Magnus Nnoka, president, RIMAN; Victor Olannye, executive secretary, RIMAN, and Tijjani Aliyu, chief risk officer, Keystone Bank, at courtesy visit of RIMAN executives to Keystone Bank in Lagos, recently...

Edited by LOLADE AKINMURELE (loladeakinmurele@gmail.com) Graphics: David Ogar

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Week Ahead

BUSINESS DAY

Watchlist

GTBank records lower cost to income ratio compared to peers BALA AUGIE

I

nvestors are attracted to banks that trim costs while growing profit because such strategy is tantamount to magnifying their earnings amid a tough and unpredictable macroeconomic environment.

A first glimpse of the financial statements of four largest banks shows Guaranty Trust Bank (GTBank) is the most efficient lender in the banking industry.

For instance, GTBank has a cost to income ratio of 36.30 percent as at December 2018, this compares with Zenith Bank’s ratio of 49.30 percent, Access Bank, (62.20 percent); and United Bank for Africa (UBA), 64.0 percent.

Lenders in Nigeria have been struggling with regulatory induced costs like Asset Management Corporation of Nigeria Charge (AMCON) charge while overhead costs continue to spiral.

Analysts are of the view that since earnings has been growing at slow pace due to a low yield environment, banks will have to be more efficient in the area of cost controls so that they bolster bottom line (profit).

GTBank has an excellent automated system that ensures operations are carried out an expeditious and efficient manner; even though it

has fewer branches than peers.

However, some lender recorded an improvement in efficiency levels as evidenced in reduction in cost to income ratio.

For instance, Zenith Bank’s cost to income ratio fell to 49.30 percent in December 2018 as against 52.70 percent the previous year. The lender’s total operating expenses were up 0.90 percent to N222.50 billion as at December 2018, below the 11.38 percent inflation figure.

GTBank’s cost to income ratio fell to 36.30 percent in December 2018 as against 38.10 percent as at December 2017 while total operating expenses were up 0.10 percent to N127.10 percent in the period under review as against N125.80 billion the previous year.

However, some lenders saw their cost to income ratio increase.

Access Bank’s cost to income ratio increased to 62.20 percent in the period under review as against 62.10 percent

as at December 2017 while total operating expenses were up 0.60 percent to N194.0 billion in the period under review as against N182.28 billion the previous year.

UBA’s cost to income ratio moved to 64 percent in December 2018 as against 57.80 percent as at December 2017 while total operating expenses increased by 4 percent to N189.65 billion in December 2018 from N197.74 billion as at December 2017.

The analysis of banks financial statement showed expenses grew at a single digit and below inflation figure compared to the recession period.

The major driver of cost was Asset Management Corporation charge (AMCON) while staff costs and miscellaneous expenses have been curtailed.

The regulator charge has made banks sweat some assets, but the growths in levies have been growing in tandem with total assets.

Yields on Nigeria’s Eurobond decline on favourable global, domestic factors …as slowing global growth worry experts SEGUN ADAMS

A

verage Yields on Nigeria’s Dollar-denominated bonds are 1.37 percentage points lower than it stood at the beginning of the year, as a mix of global and domestic factors play out in the favour of emerging markets although slowing global growth may remain a double-edged sword, experts say.

At the start of 2019, yields up to 8.25 per cent were offered for Eurobonds by the

Nigerian government and the figure broadly speaking has trended downward since.

Data from FMDQ showed average yield on Eurobond fell by 4.18 basis points to an average figure of 6.88 per cent, Thursday last week.

“A lot of factors both on the domestic front and globally have contributed in varying degrees to the rally across the emerging market,” Nnamdi Olisaeloka, a Lagosbased fixed-income analyst at Zedcrest explained.

Since the pause of rate hike by the United State Feds

earlier in January, emerging markets have seen the renewed interest of Foreign Portfolio Investors (FPI), with carry trade intensifying relative to activities last year.

In February, Bloomberg reported that African markets dominated the top gainers’ list for Eurobond outperforming other emerging market.

For Nigeria, a positive Brent market so far in the year has seen investors’ confidence in the country’s debt sustainability rise. Brent has been above Nigeria’s benchmark of $60bp since January

28 and closed at $67.20 on Thursday.

More so, data from the National Bureau of statistics suggest an improving macroeconomic environment as Gross Domestic Product for 2018 Q4 show a 2.34 per cent growth rate, the most since Q3 2015 while inflation eased 0.06 percentage points to 11.31 per cent in February according to the state-funded data agency.

Nigeria’s reserve is near $42 billion and the naira has strengthened on the back of stronger inflow which has

helped the stability of the naira currently at N360/$ in the parallel market on Thursday, compared to N363/$ at the beginning of the year.

In Africa, political risks in South Africa which have a presidential election at hand and Ghana’s weakening cedi’s triggered by an unadvised rate hike earlier in the year has increased Nigeria’s attractiveness for FPI alongside Kenya.

However, even though

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P.E

SHORT TAKES N70.50 billion The Central Bank of Nigeria offered a total of N70.50 billion for 365-day Treasury bill auctioned Wednesday March 13, 2019 at the rate of 12.85%. The offer was oversubscribed by N539.68 billion at the bid range rate between 12.25% and 15.99%.

Stop rates for 91-day and 182-day tenors stood at 10.75% and 12.50% respectively.

$26 billion Foreign funds flows to Emerging markets (EMs) plunged 49.1% to $26 billion in February 2019 compared with $51.1 billion attracted in January. Equity inflows to EMs fell to $14 billion in the second month of 2019 from $33 billion in January. Debt inflows in February dip $12 billion from $18 billion in January.

$42.93 billion Nigeria’s external reserves as at Wednesday, March 13, 2019, stood at $42.93 billion, representing 0.14% increase over $42.87 billion on Tuesday, March 12, 2o19.

Last Wednesday, the liquid and block components were $41.84 billion and $1.08 billion respectively.

Continues on page 26

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

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

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Markets Intelligence

Naira, Egyptian Pound, Kenyan Shilling amongst best performing currencies in Africa IFEANYI JOHN

I

t has been a slow start for currencies in Africa this year as 7 out of the 10 largest economies in the continent have seen their currencies depreciate against the dollar, while the remaining 3 countries saw their currencies rally by less than 4 percent since the beginning of the year.

The best performing currency among Africa’s top economies so far this year was the Egyptian pound which produced a modest return of around 3.14 percent.

After suffering a severe currency crisis in 2017, the Egyptian pound has stabilized in the currency market as investor’s confidence in the currency and the Egyptian economy was strengthened by the IMF-backed market reform to freely float the currency which caused the pound to roughly half in value.

Governor of the Central Bank of Egypt (CBE) Tarek Amer pointed out in January that he expected the Egyptian pound to appreciate modestly against the dollar following the implementation of the mechanism of foreign cash-transfer via banks. Egypt had put in place strict controls on the movement of foreign currency after its 2011 political

uprising to limit the flight of capital which ended up backfiring and caused investors to flee the country.

Behind the Egyptian pound was the Kenyan Shilling which appreciated by 1.55 percent against the dollar since the beginning of the year. According to Reuters, The Kenyan shilling strengthened against the dollar to close at its highest level in four years during the first week of March buoyed by

increased hard currency inflows and a drop in demand for imports.

However, the Shilling lost some of its gains during the past week as the currency cooled after a week of strong gains.

Naira which returned 0.43 percent year to date is currently the third best performing currency in Africa, not as a result of a strong appreciation but rather due to stability as Central Bank interventions in the foreign ex-

Big banks to payout N212.15 bn as dividend in 2018 BALA AUGIE

N

igeria’s largest banks otherwise known as tier 1 lenders will pay a total dividend (both interim and final dividend) of N212.15 billion for the 2018 financial year.

The banks are: Guaranty Trust Bank (GTBank), Zenith Bank, Access Bank, and United Bank for Africa (UBA).

A breakdown of the figure shows GTBank will pay final dividend (both interim and final) of N80.93 billion or 2.75 per share for 2018 financial year, representing a 1.78

percent reduction from the N82.40 billion or N2.80 per share paid out in 2017.

Zenith Bank’s total distribution from profit (both interim and final) was up 3.57 percent to N87.92 billion or N2.80 per share in 2018 from N84.78 billion or 2.70 per share paid out in 2017.

Access Bank’s total distribution from profit (both interim and final) was down 2.30 percent to N14.46 billion or N0.60 per share in 2018 from N18.80 billon or N0.65 per share paid out in 2017.

UBA’s payout as dividend remained flat at N29.05 billion or N0.85 per share in the period under review.

Experts say some lenders embarked on dividend cuts due to the stringent rules on distribution by the central bank at the height of rising Non Performing Loans (NPLs) that threatened earnings.

“They need to conserve capital so that they can sustain their capital adequacy ratio. Also the limits on payment by the central bank of Nigeria are also responsible for a conservative policy,” said Wale Olusi, equity research analysts with United Capital Ltd. Zenith Bank had a dividend yield of 12.73 percent, UBA 11.41 percent, Access Bank 8.62 percent and GTB 7.82 percent as at Friday March 03, 2019.

change market has helped keep the Naira stable since the last devaluation in mid-2016. Central Bank of Nigeria (CBN) Governor, Godwin Emefiele told the press in January that “on the issue of free float, the monetary policy committee has said it is wrong – it will certainly lead to capital flight and it will lead to a massive depreciation of the valuation of our currency, and ultimately to currency crisis in Nigeria.” Since

2016, Nigeria has avoided going the way of Egypt to freely float its currency in the market and take the short term hit in order to benefit long term gains.

The poorly performing currencies in Africa since the beginning of the year were Morrocan Dirham (-0.45%), Rwandan Franc (-0.55%), Ethiopian Birr (-0.65%), Algerian Dinar (-0.72%), South African Rand (0.74%), Angolan Kwanza (-2.45%) and Ghanian Cedis (-14.88%). While most of the currencies have remained relatively stable this year, Ghanian Cedis has been hammered in the market. Ghana’s currency slumped to a record low against the dollar after the central bank unexpectedly cut its benchmark rate in January and signaled more easing may be in store causing foreign investors to shy away from Ghana’s fixed income markets.

Bloomberg reported that out of the 2.1 billion cedis ($391 million) of two-year and longer-dated maturities sold by the government through Jan. 31 this year, foreign investors bought just 6.3 percent.

This compares to 30 percent in 2018.

In response, the Government last Wednesday announced that it was adopting a number of measures, this month to reverse the depreciation of the cedi.

Yields on Nigeria’s Eurobond ...

Source: FMDQ Continued from page 25 the decision of major central Bankers across the globe to lower or hold their policy rates on the back of a gloomy global economy forecast by international organisations have favoured emerging market assets, experts including the Organisation for Economic Co-operation and Development (OECD) which released new growth figures recently believe a tepid global economic growth might bite financial markets across the world.

Olisaeloka says for now the only headwind confronting the rally in emerging markets is the slowdown in global growth expectations es-

pecially in Europe and China over trade tensions, Brexit, negative economic growth in Italy, and concerns in Germany which make investors mull safe-haven assets. ‘’Fears of a recession, for now, is making portfolio managers more cautious in emerging markets was they are now cherry-picking countries with relatively strong macro fundamentals,’’ the fixed income analyst said.

Nevertheless, given that positive indicators still, outweigh the downside risk of a slowing global economy and oil price along with other factors remain favourable, Olisaeloka maintains a positive expectation on Nigeria’s Eurobond in the near term.

BUSINESS DAY

Monday 18 March 2019

27

CITYFile How CRUTECH student killed colleague on campus MIKE ABANG, Calabar

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A female potter puts finishing touches to her ceramic wares ahead of Saturday’s postponed Presidential and National Assembly elections, at Dada Pottery Centre, Oke Lele area of Ilorin in Kwara State.

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Army begins probe into allegations of soldiers’ misconduct in 2019 elections JOSHUA BASSEY

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he Nigerian Army is set to dig into the allegations of unprofessional disposition and misconduct levelled against its personnel during the 2019 general elections, with a view to establishing the truth and meting out appropriate sanctions.

Already, the army has constituted a nineman committee, headed by T.A. Gagariga, a Major General to probe the the allegations, including the killings in Bayelsa, Rivers and other places during the elections.

According to a statement by the spokesman of the army, Sagir Musa, other members of the committee are J.M. Ali, G.O. Adeshina, and M.A. Obari.

Musa listed other members to include A.T. Bitiyong, A. Tanko and W.A. Bakare, while P.A.J. Ebuk would serve as the committee’s secretary.

The committee had been inaugurated by the chief of administration, Nigerian Army, K.A.Y. Isiyaku, a Major General, on behalf of

the chief of army staff, Tukur Yusuf Buratai, Lt. General and had begun work.

Musa quoted the army chief to have admonished the nine-man committee to carry out its duties objectively, fairly and transparently.

He said the committee’s terms of reference include thorough investigation into the activities, actions and/or inactions of personnel in all states that alleged one infraction/wrong doing or the other.

It is also to collate and thoroughly analyse all reports to determine the veracity of the allegations, including the alleged assassination attempt on Rivers State governor, Nysom Wike.

The other terms of reference, he said were circumstances that led to the shooting to death of an army officer, and serious injuries to some soldiers during the election.

It would be recalled that there was a crisis at Abonema in Akuku Toru local government area of Rivers State during the Presidential and National Assembly elections on February 23, leading to the death of an army officers and civilians.

The army spokesman said that the committee was further mandated to visit all states, where issues had been raised about the conduct of army personnel during and after the elections.

He added that it would interact with Civil Society Organisations (CSOs), sister security agencies and state governors with claims against the army.

The head of the committee assured Buratai and Nigerians of members’ commitment, resolve and determination to objectively and professionally address the issues as contained in the terms of reference.

The committee is expected to submit its report on or before March 31.

The Nigerian Army deployed its troops under “Operation Safe Conduct’’ to support the police and other security agencies to ensure hitch-free and successful conduct of the general elections.

The chief of army staff, Buratai had charged personnel to “remain apolitical, respect human rights and abide by the rule of law in all engagements within or outside Nigeria and in or out of conflict situation.’’

Kajuru attacks displace 3,000 residents

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t least 3,000 people have been displaced by the recent attacks on some communities by unknown gunmen in Kajuru local government area of Kaduna State, the council chairman, Cafra Caino has said.

Caino, who addressed a news conference in Kajuru on Friday, said that steps have been taken to check the incessant attacks and wanton killings by hoodlums and criminals in the area.

According to him, the local government has also held a stakeholders security summit, attended by sons and daughters of the council to find lasting solution to the bloody crises affecting the area.

The council chairman said that the people, including the Adara, Hausa and the Fulanis, have agreed to continuous consultations with stakeholders for lasting peace.

“The people, who agreed to live in peace

and harmony with one another, also noted the need for more security intelligence gathering in the area.

“They have also agreed that a truth and reconciliation committee be established to receive memorandum from all the people living in the LGA on what is causing the crises and the way forward.

“The people equally took a collective step to ensure seize fire in all communities affected in the crises and called on the state government to ensure equity and fairness to all people in the LGA. “They equally resolved that incessant killings and burning of houses and properties must be stopped, and to also hold quarterly stakeholder’s security meetings as mitigation measures.”

According to Caino, the use of social media to send fake news about the crises also aggra-

vated the crises rather than helping to restore peace in the area.

He equally identified lack of good road network and telecommunication networks in most interior communities of the LGA as challenges to security in the area.

Caino lauded the state government and security agencies and State Emergency Management Agency (SEMA) for prompt response, intervention and support, adding that support from National Emergency Management Agency (NEMA) was still being expected It would be recalled that since February 10, 2019 there have been attacks and reprisal attacks in some communities in Kajuru, leading to several deaths, including women and children.

The state governor, Nasir El-Rufa’i had on March 2, announced plans to set up a judicial commission of inquiry into the killings in the area.

tudents in the civil engineering department of Cross River University of Science and Technology (CRUTECH), were at the weekend, thrown into mourning when their colleague, Joseph Agbor, a 400-level student was crushed to dead by a moving vehicle in the main campus of the university in Calabar.

Investigations by our reporter revealed that Agbor was killed by a vehicle driven by a 200-level student of the same institution.

Some sources said that Agbor was seated in an empty gutter waiting for the commencement of his lecture when he was crushed by the vehicle.

The public relations officer of the university, Onen Ebri Onen confirmed the incident on telephone conversation with Businessday on Friday.

According to Onen, the owner of the car was in class for lectures when his friend, who had some items in the boot of the car requested that his friend (name withheld) should give him the car key to remove the items in the car.

His friend willingly gave the key to him but instead of removing the items in the boot, the frined decided to drive the car and unfortunately, hit the victim.

Spokesperson of the police in Cross River State, Irene Ugbo also confirmed the incident. Ugbo said it was an accident caused by recklessness.

“We have arrested the reckless driver and impounded the vehicle for further investigation,” she said.

Meanwhile, the body of the deceased has been deposited in the mortuary.

Delta: Police smash robbery syndicate, recover arms

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elta police command says it has apprehended a member of a robbery syndicate terrorising three local government areas in the state.

The acting police public relations officer (PPRO) of the command, Chuks Orisewezie said that the suspect, Emmanuel Patrick, was apprehended on March 6, by team of Anti-robbery Squad led by SP Masoyi Dadi.

The spokesman said upon interrogation, the 32-year suspect confessed to the crime and also gave the names of members of his gang.

“The suspect admitted partaking in three armed robbery operations at Uvwie, Ughelli and Udu local government areas of Delta. He has also led the police to the gangs armory where two other pump action guns, four double barrel guns, one single barrel gun, one Air gun, 274 cartridges, two bullet proofs and four bullet holders were recovered.”

The gang’s armourer, who identified himself as Udenmba Ben, according to the police, has also been arrested.

“He admitted being in charge of servicing of the gangs arms and also supplying them with ammunitions. The armourer said he does not manufacture guns, but repairs, buys and sells arms and ammunitions,” Orisewezie said.

He added that the police was intensifying effort towards nabbing other fleeing gang members.

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BUSINESS DAY

C002D5556

CEO INTERVIEW

Monday 18 March 2019

Monday 18 March 2019

C002D5556

BUSINESS DAY

29

AIGBOJE AIG-IMOUKHUEDE Founder of Africa Initiative for Governance (AIG) and Coronation Capital

Interview with Private Sector Leaders

‘If we don’t fix human capital deficits in public sector, businesses will suffer’

AIGBOJE AIG-IMOUKHUEDE, founder of Africa Initiative for Governance (AIG) and Coronation Capital, in this interview at the Oxford Business Forum on Saturday speaks on fixing Nigeria’s civil service and why private sector should get involved. BusinessDay’s FRANK ELEANYA captured the interview.

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ell us about your journey in the banking sector.

People describe me as a banker, entrepreneur. I think that the history of individuals has a profound effect on what they become. The reality of your growing up and your circumstances influences you in one way or the other. I am an Africa. All my schooling was done in Nigeria. I studied law. At the time of my birth and schooling, we were trained as Nigerians to think that the Nigerian could be as productive, as effective and as important as any individual from any other part of the world in any chosen field of endeavour. There is a lot of evidence of that: I was born to civil servants as parents.

Growing up, the best in Nigeria went to the civil service. As a child, that was what I understood as the talent pool in Nigeria.

For reasons best known to the military, they decided to stop investing in the civil service. I saw the effect on great men and women who have done great things and this near decimation of their relevance and contribution. I decided I was not going to work for government. I was in primary school by the time I made the decision. I looked at the private sector, I said to myself “I will lead a multinational.” That is what led me to study law.

The multinationals that were doing well in Nigeria at the time were either oil companies or fast moving consumer goods (FMCG) companies and most of them picked lawyers as their CEOs. I left school quite early and I went to law school. While there, I had friends who’ve gone into banking.

They told me about what it was like to work in a multinational merchant bank in Nigeria at the time. That got me thinking of working in the banking industry at least for the Youth Corps period.

I got into what was Chase, where my life changed. Youth Corpers were not meant to do the kind of things I found myself doing at Chase. There was some talent spotting mechanism which got a Youth Corps member in places like the board room and deals. From that point till now, my life has been one where people look at my talent and basically put me at things.

I was doing things at the age of 22 that most people did when they were 35 to 40. As a result, no employer could allow me to go back to graduate school. I could go for training inasmuch as it was not longer than one month.

I did not have the opportunity to sit in a classroom like this. But certainly my talent and capital were developed.

It was particularly honed in a bank called GTBank. I joined it as a startup, pioneer staff and the bank has gone from about $1 million or less to about $3 billion in value today. I was part of the team that built the bank.

I became very unhappy at the age of about 30-32. I did not know why but I remember telling my mother, “Look,I am very unhappy.” Her response was, “You are completely mad!” They allowed me go for three months to Harvard for an executive programme.

At the time my brother-in-law who has passed away had just finished his MBA and was organising a conference. He looked at me and kind of understood where I was. He gave me a book titled ‘Buy Out’ and it changed my life.

“

We are building in Nigeria an institute of the quality of Brooklyn’s, where civil servants in Nigeria will be trained out of their brains. I think that as we do this, others will begin to do the same. If we don’t fix the human capital deficits in the public sector, we will be limiting Africa’s opportunities

The book speaks to two types of entrepreneurs: people who will do great things as part of teams in salaried employment, and those who will do great things as ownermanagers or owners of teams. It might be for profit or non-profit, it does not matter. I wanted to be an owner after I finished the book in 2 hours. I said I was coming back to Nigeria to buy my own bank. I was 32 at the time.

I saw a tag team of two-owner managers in Guarantee Trust Bank, so I knew the power of it.

But what was important to me was that this bank was the beginning of something. It was not the end. I was going to buy my own bank, but it was not about building my life around that bank. So I knew I needed to search for the right partner who would together with me and a larger team basically change the way the financial services industry in Africa worked. We would start with this bank and it would go on and on.

I also felt that this was not about me and I wanted it to continue when I am not here. That notion of sustainability runs through everything I do.

We started trying to buy banks like GTBank; it was the best, but maybe banks just one-rung below. We found that it was a bridge too far; it was either too expensive or something else. We were both worth $2.5 million at the time. We went to the opposite side of the ranking spectrum, bottom of the barrel. The bank we eventually bought – Access Bank - was even below the rung. The best way to describe the bank was our $2 million plus $8 million of leverage bought us 52 per cent of the bank. The bank had a foreign balance sheet that was less than - at the time - Aliko Dangote’s credit card limit.

I ran the bank till 2013. We have grown in organic and inorganic fashion. With the last deal that we are just closing, the bank will rank the largest bank in Africa in terms of customer base; it would have about $20 billion in assets and $2 billion in capital.

How do you turn a bottom performer into one that Access Bank has become?

First it is about talent. You can have the right strategies and the right resources but if you do not have the right talent, forget it. You

can also have the right talent and nothing, but every other thing will fall into place. So it is about the talent. Fortunately, this was an area where we had both domain expertise and local knowledge. We asked ourselves, “What is the Access Bank person?” We said “It wasn’t a GTBank person.”

We wanted to grow faster than GTBank. It had to be a mix of a GTBank person and a Citi Bank person. We felt that the Citi Bank back office was the gold standard.

We also wanted a mixture of top four McKinsey type.

What is great is that those people, the Access person, can be sent to any task you can think of in their area of expertise and they will excel in it. Access UK for instance which we started ten years ago is the most successful challenger bank in the UK. Explain the Black Rock project?

This was never a story about

a bank. This is a story about really changing the way the financial services operate across Africa. The one thing that is not done enough in Africa is understanding the customer and the pain they feel and providing solutions to that pain; whether from a private sector perspective or from a government perspective. I think that is what is going to trigger the African potential and how to realise that potential. At the short end of life, if you look at the development of the human being and what Maslow told us, he said at the very base level the human being’s needs is around shelter, clothing and food. Until those things are satisfied, the human being’s thought process does not go beyond that. When you say you want to change Africa or vote based on philosophy, the person has not eaten.

For Africa to pup, for the private sector to truly enjoy Africa, you have got to lift the human beings. When you look at the 1.2 billion and maybe in 2040 it is going to be a 2 billion market, will it be a 2 billion that is still

thinking about how to eat or one that has been lifted beyond that point and are making choices around real value?

I know what type of Africa I want. We realise that in terms of solutions we provided as commercial retail bankers which is around savings and the notion of transfer of funds and loans.

It is interesting but it is not going to lift us. Until we start getting Africans to invest and provide a real return on that investment, we will move but not very far.

One of the big reasons Africans are not investing is that the financial services market has developed in the short end. Great things like MPesa have happened, but that is not going to develop Kenya. To get Kenya developed, the capital market has to develop and you have to mobilise savings into investment, not keep money on an MPesa phone wallet. To do that, you need public sector institutions and intermediaries that have the capacity and the clout. Mobilising private capital makes a lot of sense.

In building Access Bank, I never

once had a conversation with a private equity player. Yet, we have mobilised more capital as Access Bank than probably the entirety of private equity industry did at the time. If you think about people like Aliko Dangote, private equity is actually not relevant to the true growth stories of Africa in the way it is offered. But I love the idea and the talent and skill that go into private equity. It is relevant if we do it the African way.

Hence, we want to create a platform that takes all the domain expertise of private equity, venture capital, insurance, asset management and put it into a project, Africa’s Black Rock. We have been working on it for a while with McKinsey. The notion is that over the next ten years, we create this model that allows investment management in Africa to work. We do not want to be the only players. We want others to follow that model. We will love to have it replicated across Africa.

How do you think about the asset management business going forward in Africa, bearing in mind that the metaphor of Africa’s Black Rock is great but it may look very different from Black Rock?

Why Black Rock? Simple: technology. Technology in Africa is a transformational force that is much more relevant than it is in Asia and elsewhere because the infrastructural constraints in Africa are huge. The costs to overcome those constraints are beyond capacity of the capital available within the country and the capital outside the country that is ready to come. What we find is that the most viable means of overcoming or leapfrogging those challenges has been in technology.

The journey from a typical African asset manager to a worldclass asset manager operation today can be cut short from ten years to 18 months using technology. I can create for you a worldclass asset manager anywhere in Africa simply by having the technology, infrastructure and having people to operate the technology.

This includes all side of the asset management business. It is one thing to have the firm and another thing to have the people to operate the firm. The technology bit was not easy to overcome at first. But we are well on solving it.

The challenge is talent.

When you are building out an enterprise, there are two types of people you need, both must be smart. You need people who have such a complete mastery of the subject matter that their contributions are going to be striking. But there are certain roles where those contributions are not enough. So you need people who have strong local knowledge, domain command and control. Their intuition and innovation in a local knowledge is amazing. Our first 18 months we are looking at 250 people. A 100 are in the first category which means recruit from outside Nigeria while 150 are local. If we are successful over the next five to seven years we are going to need a total of 1,000 people, the same ratio. One of the things we would have to do is for instance, those who we are recruiting locally,

we probably have to send like 20 people to schools like this every year. I am not doing this only to make money; there is a larger goal which is providing transformational solutions to Africa’s very unique challenges.

What is the African Initiative for Government about?

How does governance impact the private sector?

I have known Africa when it worked. Chinua Achebe is the most publicised author in the world. Did you know that he wrote five of those books as a civil servant in the Nigerian Broadcasting Corporation (NBC)? He was doing his job as a broadcaster and writing books that will change the world at the same time. That is the quality of talent.

It is no surprise that the University of Ibadan, the first university and NBC in the early 60s hosted people from all over the world including Lee Kuan Yew, to understand what standards of running a country were about. The schools were good, the policies around forming a country made

“

One of the big reasons Africans are not investing is that the financial services market has developed in the short end sense, and then there were interruptions.

What is obvious is that the correlation between economic development and the quality of government is perfect. Even from a selfish standpoint, as a businessman, I have seen what has happened when you have the right policy context. Every example of a great economic opportunity that you can point to anywhere in the world, has behind it the right policy context

and behind that right policy context is a public servant elected or bureaucrat who has done a great thing. The MPesa, contrary to what many think about it, is not a private sector story. It is a story of a Central Banker who had a vision of life beyond traditional banking and who was ready to take risks to recreate and reengineer the way Kenya worked.

You then had a private sector that embraced it.

The story of telecoms in Nigeria is similar to that; a country with 60 – 70 million people, but only 400,000 phone lines which operated that way for 30-40 years.

Then you have a president who says, “I have gone across the world and I see this device called a mobile phone, why don’t we have it in the millions that you have across the world?” He appoints a public servant and the rest is history.

My investment thesis is that in Africa, if you can meet a welldeveloped public servant who knows how to traverse the issues of reform, you are going to make a lot of money. In my personal life, I have had challenges and in my business life I have had challenges that almost took my life.

To change Africa, the private sector alone cannot do it. We need public sector partners and we need capacity in the public sector - of a level that is actually stronger and higher than we have in the private sector. Hence, scholarships, fellowships can become vehicles for us. Part of the reason I try to make money is to make investments in places where countries are not investing. African countries are not investing in public servants, it is not enough but I think it is a start.

It is significant enough to have gotten the Nigerian government to embark on a public sector reform process which was signed off about a year and half ago. But in implementing that process there are challenges. That is what it is all about.

We are building in Nigeria an institute of the quality of Brooklyn’s, where civil servants in Nigeria will be trained out of their brains. I think that as we do this, others will begin to do the same. If we don’t fix the human capital deficits in the public sector, we will be limiting Africa’s opportunities.

30

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Inside Flour Mills’ Golden Sugar refinery

ensure that when it comes to sugar, both in ingredients and products, all the suppliers are truly excellent,” he said.

He stated that the award entry was a completely voluntary exercise as the company asked to be audited and assessed.

“We did that because we believe this kind of challenge makes us better. We are very well known to be suppliers of first quality products. We have known that pursuing excellence and high quality are extremely rewarding to the company,” he noted.

He explained that the company had the latest and most modern refinery in Nigeria and had the luxury of adopting the latest technologies.

“Our sugar does exhibit

certain characteristics that are unique,” he said.

“The first of those characteristics is the whiteness of our sugar. Our sugar is known to be super white, not only by Nigerians but by players in the international market,” he said.

He stated that the market recognised Golden Sugar product as the whitest in the market.

Another distinguishing feature, he said, was the dryness of the sugar.

“Our sugar is much dryer than any other sugar in the market. Again, this is a result of our adoption of latest technologies as we erected our factory lately. Dryness of sugar gives a considerable advantage to users of sugar in the market,” he said.

On raw sugar, he said all sugar refineries in Nigeria sourced their raw sugar from the international market.

“Most of the raw sugar used in Nigeria originates from Latin America. However, the government has mandated backward integration, whereby all sugar refiners are mandated to invest in backward integration by ensuring that sugarcane is locally grown, crushed and used as raw materials for our refineries. We look forward to a near future where our raw materials will come from Nigerian-grown sugar.”

He pointed out that Golden Sugar’s Sunti plantation had already started producing raw sugar.

“This year, we look forward to harvesting approximately 6,000 tons. This quantity will be multiplied exponentially going forward as more and more cane is planted,” he added.

mitment to providing the best mattresses, pillows and other products to enhance quality sleep.

Emphasising the importance of quality sleep to overall health at any age, Tolu Olanipekun, senior marketing manager, Mouka Limited, showcased Mouka’s range of products specially design for different phases of life.

From the Dreamtime mattresses for children, which are water resistant and breathable, to the Regal

orthopaedic mattress, Mouka has different offerings from cradle to adulthood.

Explaining the features of Mouka’s Sleep Galleries, Dimeji Osingunwa, commercial director of Mouka Limited, said consumers can experience Mouka’s wide range of products while experts help them choose the right mattress, pillows, beds, beddings and other lifestyle products to suit their physiological needs, style and budget.

Odinaka Anudu

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ntering Apapa Bulk Terminal Limited (ABTL) last Wednesday was neither simple nor complex. Visitors are often mandated to pass through some protocol for their own safety and that of firms operating within the terminal.

I passed through the protocol and moved to the Golden Sugar Company’s entry point. Visitors are asked to use the hand washing and sterilising machines. If you wish to move further into the refinery, then you have to dip your shoes in some chemical to detoxify it. At any point at the factory, workers are conscious of their hygiene.

Little wonder Golden Sugar Company Limited, a subsidiary of Flour Mills of Nigeria (FMN), recently won ‘The Global Food Safety Initiative (GFSI) Awards’ in Nice, France.

At the factory, production is zoned basically because of hygiene issues. The factory has the low, the middle and the high hygiene areas. Low hygiene area is where raw sugar is being processed. At this stage, it is easier to recycle sugar in case anything happens.

But this is not the case at the middle hygiene area, where sugar is already packaged. On the other hand, anyone can see sugar at the high hygiene area.

The factory has a metal detector, which ensures that any metal or foreign body that penetrates into the sugar pack is rejected. The detector closes the system once it detects any foreign body in the sugar, explained

Veronica Kalu-Ufe, quality assurance manager.

Kalu-Ufe said the management of the section checked the detector at four-hour intervals to ensure that it was still working efficiently.

Like many other manufacturers, Golden Sugar has a distinct way of stitching its packaging materials to guard against faking by unscrupulous elements.

At the factory, you will find 56 microwaves and all sugar packs must pass through at least 36.

One thing that stood out at the factory was that visitors were often mandated to put on all the safety kits without exception. You would also be reminded that since the factory produces sugar, which is food, hygiene is not compro-

mised.

John Ioannis Maniatis, deputy general manager, Golden Sugar Company, explained that the sweetener maker could not have got the award if it was not adhering to international specifications.

“The Global Food Safety Initiative (GFSI) Awards is a major international award given to companies in developing countries that excel in food safety,” he said.

“We are the only company from Africa that met the requirements. The award is an initiative of major manufacturing companies that constitute our main customer body, with the intention of incentivizing companies, again mostly to the developing world for adopting

world food standards,” he explained.

He said it was a culmination of many years of efforts as it entailed a lot of investments in material and non-materials.

“It means we not only meet the regular national standards, which we do not take for granted, but we exceed it. That communicates to the Nigerian consuming public that the products produced by us are of extreme quality.”

He explained that competition would often force people to try to excel, urging competitors to follow suit by ensuring they met international specifications at all times.

“We hope that this excellence will be equally adopted and emulated by our competitors in order to

Mouka expands operations, opens more sleep galleries ODINAKA ANUDU

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ouka Limited, Nigeria’s leading foam maker, has continued expansion and deepening of the foam market by opening another world-class sleep gallery at its corporate head office in Lagos. The Ikeja Sleep Gallery is an addition to seven others across the nation.

The opening was done as part of 2019 World Sleep

Day, an initiative of the World Sleep Society to recognise the impact of sleep on human health.

Speaking at the World Sleep Day press conference last Thursday, Raymond Murphy, CEO of Mouka Limited, said quality sleep is a treasured function and one of the core pillars of health.

He pointed out that when sleep fails, health declines, decreasing the quality of life, which explains his company’s relentless com-

Monday 18 March 2019

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31

real sector watch

FG eyes 30% manufacturing GDP, calls for increased R&D Gbemi Faminu & Maurice Ogu

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gbonnaya Onu, minister of the Federal Ministry of Science and Technology, wants the manufacturing sector’s contribution to Nigeria’s gross domestic product (GDP) to move from eight to nine percent currently to 18 to 30 percent to drive growth and jobs.

Onu, who stated this at the closing ceremony of the 4th edition of the Nigeria Manufacturing & Equipment Expo, advised that the capacity of the manufacturing sector should be well utilised to give the country economic prosperity, considering the abundance of raw materials and large market the country has.

“Imagine the impact we will have in the economy if manufacturing can move from 9 percent to 15 or 18 or 30 percent,” he said. “We will be in a position to pro-

L-R: Joseph Out-Oru, event manager, Clarion Events West Africa; Zainab Hammangar, director, investment and consultancy services department, Raw Materials Research & Development Council (RMRDC); Ogbonnaya Onu, minister of science and technology; Mansur Ahmed, president, Manufacturers Association of Nigeria (MAN); Segun Ajayi Kadir, dg, MAN. At the just concluded Manufacturing & Equipment Expo held in Lagos last week

vide jobs, we will grow our economy and increase the gross domestic product of the country considerably.”

Manufacturing contribution to real GDP in the fourth quarter of 2018 was 8.86 percent, the National Bureau of Statistics said.

Capacity utilisation in the manufacturing sector stood at 54.6 percent in the first half of 2018, according to the Manufacturers Association of Nigeria (MAN).

“We have a national strategy aimed at improving competitiveness in raw ma-

Nigeria can save over N6bn growing industrial sugarcane –NSDC Odinaka Anudu, Joseph Maurice Ogu & Gbemi Faminu

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nuwa Usman, general manager, Sugarcane Bio Factory, National Sugar Development Council (NSDC), has said Nigeria is capable of saving more than N6 billion annually if more attention is given to the plantation of industrial sugarcane.

Usman, who is a professor, said for the consumption of sugar alone, the nation can replace importation of this commodity by placing priority on the plantation of industrial sugarcane, thereby saving the nation a huge sum which could have been used in sugar importation.

“Nigeria’s sugar consumption is placed at 130 million metric tons per annum. If we grow industrial sugarcane, all the money we use in importing sugar to this country will be saved, which can save the nation N6bn per annum,” Usman told BusinessDay in an exclusive interview at the just concluded Manufacturing & Equipment Expo held in Lagos.

The most popular form

of sugarcane in Nigeria is the chewing sugarcane, whose juice is ordinarily consumed through chewing. According to Usman, if it is not processed, it is like any other juice without any benefit therein.

“But industrial sugarcane has a lot of economic importance because we produce a lot of industrial products from it,” he said.

Nigeria’s sugar production rose from 14,918 metric tonnes (MT) in 2017 to 30,000MT in 2018, according to the NSDC. Sugar import fell from $459.36 million in 2017 to $337.31 million in 2018.

Consumption also fell from 1.301 million MT to 1.246 million MT in 2018.

“Seventy percent of world sugar now comes from this sugarcane,” Usman said.

He said there is also bioethanol, which is currently used as a substitute to petroleum.

“There is a policy on ground for ethene brand of petroleum which uses ten percent of bioethanol. The petroleum we use is supposed to have ethene standard. The industrial sugarcane is the

raw material for bioethanol in making the ethene brand of petroleum. This is also being imported,” he explained.

He further said that while the country sources its sugar consumption locally, it equally contributes to greener energy through the consumption of bioethanol energy. ”We can also use it to generate electricity. It is called electric co-generation, to solve national power problems. So, it can contribute towards solving that.

“We can also get bio-plastics from this sugarcane. The present plastic we are using is not bio-gradable. From this sugarcane we can produce plastics that are bio-gradable, which are eco-friendly,” he said, adding that organic fertilizers can also be produced from it.

“Other products which can be produced from industrial sugarcane include paper, activated charcoal, feeds for livestock for cattle and fish, among others,” he stated.

He said according to his organisation’s it has been proven that the country can produce 20 different products from industrial sugarcane.

terials and products development in the economy,” Onu said.

“The raw materials we have in Nigeria must be put in the form that they can compete with the very best anywhere in the world,” he added.

“We can double our GDP in a few years if we continue to improve on our competitiveness, improve on the productivity that we have in our industries,” he said.

He added that there is a need for more research which must be industrydriven to meet the national needs of the country. Onu further said the problems of the manufacturing sector must be addressed and solved, adding that collaborations between the manufacturing sector, research institutions and government agencies would foster development at a faster pace.

Mansur Ahmed, president of MAN, said manufacturers can work together to transform the basic raw materials into finished goods for the market to grow the economy.

Hussaini Ibrahim, director general, Raw Materials Research and Development Council (RMRDC), said the objective of the expo was achieved as many of

the participants were able to record good experiences and widen their peoplenetwork.

Hussaini, represented by Zainab Hammangar, director, investment and consultancy services department, added that it was a big plus for the Micro Small and Medium Scale Enterprises (MSMEs) as they were able to meet other stakeholders in the manufacturing space, build human network and meet prospective partners.

Prudence Onyenemezu, a sales executive at Zenith Shipping Company Limited, stated that the expo was a good opportunity to meet other importers and shipping companies as well as increase opportunities to publicise the business and get new clients as well as partners.

“It has also put our attention to the default which we will correct for future purpose.” She advised the event patrons to put in more publicity in order to attract more participants in the

Facilitate investments in pharma industry to drive economy, experts tell FG SIKIRAT SHEHU

A

began Bambe, Kwara State chairman of Association of Industrial Pharmacists of Nigeria (NAIP), has stressed the need for the government to facilitate investments in the pharmaceutical sector to enable it to thrive and drive the economy.

Bambe stated this while delivering his speech entitled ‘Creating an Enabling Environment with Modern Technology for Pharma Industrial Revolution in Nigeria’ at the 5th Annual NAIP Day held in Ilorin, the state capital.

He said the biggest challenge now is for the industry to align with technology. “ Te c h n o l o g i c a l a d vancement had become increasingly critical for firms, including pharmaceutical campaniles, in order to achieve competitive advantage and contribute its quota to the national economy,” he said.

“With digital transforma-

tion, doctors and pharmacists now have the ability to see how their patients are doing with their sugar levels.

In Nigeria, it is slow and in most parts has been missing out. We need to take the technological breakthrough in developed societies where technological tools are employed,” he added.

Bambe pointed out that the advent of high tech machines and its application would increase output and improve quality management system of the entire facility, while reducing development costs.

“Creating an enabling environment with modern technologies requires money. Funding is key in meeting the demand posed by the dynamics in the industry,” he explained.

He said that absence of stable electricity has forced manufacturing companies into spending huge sums of money in alternative sources of power, adding that poor access to low interest is another major constraint being encountered by operators in the pharma industry.

“Nigeria pharma industr ies depend largely on pharma technologically advanced nations like China, India for her API’s and excipient. There need for investment in this area.”

Abiodun Shittu, a professor at the University of Ilorin, in his submission, recommended creation of incentives to encourage partnership between public research institutes/universities and the private sector for the purpose of attracting private sector investment into biotechnology based start-up firms.

He also called for tax waivers on research materials and equipment while encouraging specialised technological financing agencies to provide loans to firms and research institutions.

Ahmed Gana, who represented the national chairman of association, Ignatius Anukwu, said that 70 percent of drugs used in Nigeria are imported and 90 percent of mater ials used for drugs produced in Nigeria are imported from other countries.

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Live @ The Exchanges Market Statistics as at Friday 15 March 2019

Top Gainers/Losers as at Friday 15 March 2019 LOSERS

GAINERS Company

Change

Company

Opening

N166

1

AFRIPRUD

N7

0.15

IKEJAHOTEL

N5.75

N5.85

0.1

N48

N48.1

0.1

N6

N6.05

0.05

Opening

Closing

MOBIL

N165

UBN

N6.85

OANDO STANBIC CUSTODIAN

Change

N4.05

N3.8

-0.25

DEALS (Numbers)

N2.3

N2.07

-0.23

UBA

N7.65

N7.45

-0.2

VOLUME (Numbers)

ZENITHBANK

N22.2

N22

-0.2

VALUE (N billion)

N3

N2.8

-0.2

MARKET CAP (N Trn)

UCAP

Access Bank’s full year profit increases by 58% to N95bn …amid gross earning of N528.7bn Stories by Iheanyi Nwachukwu

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ccess Bank Plc has released its audited financial statement for the full year ended December 31, 2018. The results released to the investment public at the Nigerian Stock Exchange (NSE) shows Access Bank Plc grew its Profit After Tax (PAT) by 58.07percent to N95billion as against N60.1billion recorded in 2017.

The bank’s Gross Earnings rose 15percent to N528.7 billion in FY 2018, compared to N459.1 billion in 2017, with interest and non-interest income contributing 72percent and 26percent respectively.

Profit before Tax (PBT) for the period was N103.2 billion, showing 32percent growth from N78.2 billion in 2017 while Return on Average Equity (ROAE) stood at 19percent with a Return on Asset of 2.1percent in FY 2018. The Bank has proposed a final dividend of 20 kobo per share bringing the total dividend for the financial year ended December 31, 2018 to 50 kobo.

The asset base of the Access Bank remained strong and diversified with growth of 21percent year-to-date (YtD) in total assets to N4.95 trillion in December 2018 from N4.10 trillion in December 2017.

Loans and Advances totaled N2.14 trillion as at December 2018 (December 2017: N2.06 trillion). Customer deposits increased by 14percent to N2.57trillion in December 2018, from N2.25trillion recorded in December 2017.

Capital Adequacy (CAR) remained adequate at 20.8percent, taking into consideration the regulatory transitional arrangement of IFRS 9 implementation. On a full

ASI (Points)

Closing

impact basis, CAR stood at 19.9percent. Similarly, liquidity ratios of 50.9percent against December 2017 level of 47.2percent remained well above regulatory requirements.

Commenting on the bank’s performance during the period, Herbert Wigwe, Group Managing Director/CEO Access Bank Plc said, “2018 marked a significant year of progress for the Bank amidst an unfavourable macro climate.

We made solid progress throughout 2018 in line with our 2018-2022 fiveyear strategy, and we remain committed to the achievement of our stra-

tegic imperatives going forward; as we continue to invest in our people and technology in order to improve operational efficiency and service touch points with earnings growth in 2019.”

According to him, the contribution of the bank’s subsidiaries to Group profits grew 116percent to N27.9 billion, underlined by the effective implementation of overall strategy.

“In pursuit of our vision to be one of the leading Banks in Nigeria, we took accelerated strides in the last quarter of the year towards achieving our overall retail strategy.

31,142.72 3,022.00 209,618,619.00 3.329 10.642

Global market indicators FTSE 100 Index 7,237.93GBP +52.50+0.73% S&P 500 Index 2,826.82USD +18.34+0.65% Generic 1st ‘DM’ Future 25,934.00USD +191.00+0.74%

Deutsche Boerse AG German Stock Index DAX 11,672.03EUR +84.56+0.73% Nikkei 225 21,450.85JPY +163.83+0.77% Shanghai Stock Exchange Composite Index 3,021.75CNY +31.07+1.04%

UBA reports N106.8bn full year pretax profit

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he United Bank of Africa (UBA) Plc has released its audited financial results for the year ended December 31, 2018.

The results at the Nigerian Stock Exchange show the bank proposed a final dividend of 65kobo making a total dividend of 85kobo for 2018 financial year end (interim: 20kobo).

Key highlights of the results show its gross earnings rose by 7.04percent, from N461.6billion in 2017 to N494billion. Impairment charges declined largely by 86.2percent, from N32.9billion in 2017 to N4.5billion in 2018 while net interest income reduced by 0.96percent.

Profit Before Tax (PBT) increased slightly by 1.9percent, from N104.2billion in 2017 to N106.8billion while profit after tax (PAT) was marginally up by 0.65percent at a

record of N78billion against N77.6billion in 2017.

Total Asset of N4.869trillion against N4.069trillion in 2017 represents an increase of 19.67percent.

Monday 18 March 2019

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This is M NEY A guide to your Personal Finance

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

Why true financial freedom can never be found in the corporate world The Solid Wealth Messenger

Grace Agada

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his topic might already spark certain resentment, especially for those who live and breathe in the corporate world and it is nothing short of expected. For one, our culture has made the ‘go to school and get a job’ system, the generally acceptable standard for success. However, I can tell you for a fact that we have been sold a lie. This lie has permeated our culture, and it is the reason why many people are stuck financially today. Many have chosen the path to financial freedom that waste their youth, sacrifice their health, deprive them of their most important relationship and is destined to fail. This highly expensive route to financial freedom has overstayed its welcome.

It took me seven years of being a victim of this lie before I realized the truth and made a total 360 degree turn. To start, let me explain why financial freedom and true happiness is lacking in the corporate world.

The corporate world is a ‘breadeater’ community. A bread-eater, in this context, is someone that depends on somebody else for their survival and livelihood. The Problem with bread-eaters is that they never get enough bread. The bread-giver would always be in control and he alone determines how much bread each person gets.

The other problem is that the

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

bread-eater is always dependent on the bread giver. He or she cannot stand on his or her own two feet. Which is why it is difficult for most people to leave and survive outside the corporate world.

Lastly you cannot truly multiply bread. Bread gets eaten and destroyed and the reason why you keep going back to get more.

Without the replacement of the bread you will remain a prisoner of the bread-giver I studied the wealthy for about four years; I wanted to know the underlying factor that made them wealthy. The goal of my search was to determine if there were qualities shared by these people.

Here is one thing I found: there has never been any bread-eater on the Forbes rich list from the inception of Forbes till date.

And who is on the rich list? The seed-sower.

The seed-sower is a person who has identified their gift, purpose, and passion. He is also the person who has an idea or a solution that can solve a problem and has gone ahead to sow that seed, nurtured it, until it produced fruits that the world is willing to pay for.

The seed has within it the capacity to multiply and this is why the seed sower is financially self-sufficient and independent of bread. In fact, the seed sower is also the bread-giver. He gives every other person his bread but never takes one himself.

He understands that wealth is a reward for sowing a seed. So, he keeps finding new seeds to sow so he can expand his wealth and business. Thankfully, everyone was born with at least one seed. The problem is that it takes some strategic attention to discover your seed and not everyone knows how to pay attention to themselves. The corporate world

is so busy and noisy that it may require a complete isolation from it to discover your true seed.

How does a bread-eater transition into a seed-sower? Two ways.

The first way is the ‘skill’ way and the second is the ‘business’ way. You might have no plans to start a business right now or to exit paid employment. That’s your choice to make. However, rather than investing so much time and spending your entire life building technical or career skills that are of little value in the real world, I want you to invest that time building the FIVE evergreen money skills that are relevant within and outside the corporate world.

We call them the evergreen money skills because even if you are placed in the desert with these skills, as long as there are human beings there you can turn these skills into money. You goal in the next few months is to focus on acquiring any of these skills.

They include: Writing, Speaking, Marketing, Positioning, and Leadership.

The other route from breadeater to seed-sower is to start your own business. Within the corporate world, the idea of starting your own business is a dreaded concept. There is so much fear of the unknown coupled with the high mortality rate of businesses.

As much as this is true, there is a reason why so many businesses fail. With the right education counsel and support system, you can navigate your way and avoid many of the business potholes.

This is the only truly proven way to financial freedom so fear should not hinder you from it.

To ensure you are successful in the business world, there are five

‘

The truth is until you find a replacement for your bread you cannot truly be free to step out

steps to follow: The first is to make a decision. You need to make up your mind to be a seed-sower.

The second is to possess the right mind nutrient. You need a total mindset makeover. The mindset of a bread-eater is totally different from the mindset of a seed-sower.

The third thing is to be in the right environment. Without the right environment no seed can survive long-term. The fourth is to pay the right price: The seed has to pay a price in order to grow into a tree. There is a part of you that must bow for that change to take place. Finally, you need the right relationships: You need the right kind of people to water your seed and make it grow.

This article is not enough to help you make the transition from bread eater to seed sower.

You need a grooming, planning and support period. The truth is until you find a replacement for your bread you cannot truly be free to step out. This is why I have decided to put together a Webinar called the ‘Six Steps to Financial Success’ that will dive deep into how you can build the raw material that will be a solid replacement for bread so you can be finally free from the bread-giver. It is free but the seats are limited. To register kindly SMS Webinar to 081001860042 for more details When the bread is not sufficient the best thing to do is to convert it into a seed.

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

Email:info@createsolidwealth.com Tel: 08101860042

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Leading Investment Banking Institutions to Watch Out For 2019

‘The treatment of existing investors by a nation is a powerful message to prospective investors’

What changes do you expect to see in the investment banking sector in Nigeria this year? To answer this question, TELIAT ABIODUN SULE and CHIJIOKE ONYEOGUBALU had a chat with FUNSO AKERE, the Chief Executive of Stanbic IBTC Capital on the contributions of his firm to the nation’s investing banking space and what to watch out for in 2019. Excerpts:

K

indly give us an over view of investment banking in Nigeria?

Investment banks in Nigeria specialise in the provision of advisory, capital markets and financing services to corporate and government entities. Most investment banking transactions in Nigeria are under the purview of the Securities & Exchange Commission(SEC), which is the apex regulator of the Nigerian capital markets. The volume and value of transactions undertaken yearly are largely influenced by clients’ growth plans and investor sentiment, which are both positively correlated with political stability, economic activity, and a stable foreign exchange market.

Sector themes also play a big role in driving investment banking activity such as the privatisation drive in the early 2000s, the banking sector recapitalisation in 2004/2005, the insurance sector recapitalisation in 2007, the opening up of the domestic debt capital markets to state governments and corporate issuers in 2009/2010 as a result of tax waivers, the divestments of assets by international oil companies in 2011/2012, the power sector privatisation in 2013 and the establishment of FMDQ in 2014.

Investment banking in Nigeria is very competitive, with firms competing on heritage, breadth of offering, sector and product expertise, talent and connectivity. On large transactions, it is common to see a mix of “briefcase” global investment banks, regional/global investment banks with a strong local presence, domestic investment banks and boutiques, etc., competing for available roles.

Could you please give us an insight into Stanbic IBTC Capital?

Stanbic IBTC Capital is the leading investment banking institution in Nigeria, which offers a complete suite of innovative advisory, capital raising and debt structuring solutions to a diversified client base that includes leading local corporates, multinationals and government entities operating in Nigeria.

We are a wholly owned subsidiary of Stanbic IBTC Holdings Plc , an endto-end financial services company listed on The Nigerian Stock Exchange with a market capitalisation of about N492 billion as at 7 March 2019.

Stanbic IBTC is a member of Standard Bank Group, Africa’s leading financial services group with a track record of over 150 years and a presence in 20 sub-Saharan Africa countries.

To what extent was your institution affected by the recession?

Our institution is built around serving our clients who operate across various sectors of the Nigerian economy, so whatever affects our clients also affects us. I like to say that we are “joined at the hip” with our clients. The foreign exchange liquidity challenges in 2015 and 2016 on the back of the sharp drop in crude oil prices and the resultant recession negatively impacted most

investors and high net worth individuals, and the debut issuance was 112% subscribed. Whilst our distribution capabilities played an important role in positioning the transaction appropriately in the market, the overwhelming success of the transaction was evidence of strong investor confidence in Dangote Cement. We subsequently advised Dangote Cement on a N50 billion Series 3 and 4 CP issuance in August 2018, which recorded even greater success with a subscription level of 158%.

Funso Akere

sectors. Our clients had to deal with issues such as the unavailability of raw materials, rising input costs, rising interest rates and a sharp drop in crude oil prices on one hand, and muted demand for their products as a result of the challenging economic and business environment on the other hand.

That notwithstanding, we had to put on our thinking hats and come up with innovative solutions to enable our clients continue to serve their customers and meet their financial targets, despite the challenging macro and business environment.

We successfully completed about 50 transactions for clients in 2016 and 2017, some of which were undertaken to reduce overall financing costs by raising cheaper debt funding from the capital markets, or to reduce leverage by issuing equity to shareholders and using the proceeds to repay debt. For example, we were sole Issuing House and Adviser to Rights Issues by Guinness Nigeria Plc (N40 billion) and Unilever Nigeria Plc (N59 billion) in 2017, the proceeds of which were largely used to repay debt.

In the 2018 EMEA Finance African Banking awards, you won the following awards: Best Foreign Investment Bank, Best Debt House, Best Equity House and Best Loan House. Please tell us how you achieved this feat? Tell us about other awards too.

We have won the EMEA Finance “Best Foreign Investment Bank” and “Best Debt House” in Nigeria awards for the last 3 years (2016 to 2018), in addition to winning the “Best Equity House” and “Best Loan House” awards last year. These awards affirm our market leading position and our commitment to deliver innovative and best-in-class investment bank-

ing solutions to our clients. We also won 12 other industry awards last year including the Euromoney “Best Investment Bank in Nigeria” award, The Nigerian Stock Exchange CEO awards for the highest number of primary equity issuance, the highest number of corporate bond issuances and the largest transaction by value, the FMDQ Gold awards for the highest value of non-sovereign local currency securities quotations and the highest value of commercial paper quotations, and the Association of Issuing Houses of Nigeria awards for “Best Debt Capital Markets House” and “Best Mergers & Acquisition House.”

Among other deals, you served as advisor to Dangote Cement Plc on a N50 billion Series 1 and 2 commercial paper issuance, the largest ever CP issuance by a Nigerian company, which was oversubscribed. Tell us about this.

The Dangote Group is an extremely important client for Stanbic IBTC. We acted as a lead issuing house to the first public equity offering by a Dangote Group subsidiary - the N54 billion Dangote Sugar Refinery Plc Initial Public Offering (IPO) in 2006, which was 140% subscribed. We were therefore extremely delighted to have acted as Sole Arranger and Dealer to the N50 billion Dangote Cement Plc Series 1 and 2 CP issuance in June 2018, which was the first public debt offering by a Dangote Group subsidiary and the debut issuance under Dangote Cement’s N150 billion CP Programme.

180-day and 270-day notes were issued at 12.40% and 12.65% respectively, equating to tight spreads of about 25bps and 50bps above the relevant money market benchmarks at the time. There was record participation from domestic institutional

What strategies do you advise this government to put in place to bring back foreign investors?

In an environment of low savings rates, we believe that foreign direct investment is critical to drive capex expansion for existing companies and the investments in new sectors that government needs to meet their economic diversification agenda.

Net FDI into Nigeria has been on a declining trend over the past 8 years ($1.9billion in 2018 vs an average of $5.8billion over the eight-year period), while Ghana, on the other hand, has been more stable ($3.3billion in 2018 vs an average of $3.1billion over the eight-year period).So one may argue that government has to provide a more conducive investment climate to be even in competition for capital coming to Africa. Initiatives such as the Presidential Enabling Business Environment Council (PEBEC) which is focused on removing critical bottlenecks and bureaucratic constraints, amongst other things, is a step in the right direction. Laws and a legal system that ensures contracts terms are legally enforceable and protected also help to improve the investment climate. Lastly, the message that government sends to all investors by the treatment of existing investors is very subtle but powerful.

What is your major strength in the industry? How have you handled competition and what are you doing differently?

We have a number of unique strengths which sets us apart from the rest of the industry. Firstly, we are part of an end-to-end financial services group in Nigeria which has in its stable the leading pension fund administrator, the leading asset management firm, the leading stockbroking firm, the leading asset custodian business, the leading global markets business, a leading trade finance business, bank branches in every state in Nigeria, and other financial services solutions for various businesses and sectors.

Secondly, as a member of Standard Bank Group we are able to provide our clients with unique access to the 20 African countries which Standard Bank operates in, as well as key regional financial centres including London, Beijing, New York and Dubai. In addition, Standard Bank’s relationship with Industrial and Commercial Bank of China Limited (ICBC), the largest

bank in the world by total assets, provides further international reach and strengthens our access to China which is a very important partner in trade, investment and infrastructure financing.

Lastly, we have a deep pool of talented individuals who have been with the organisation for a significant part of their professional careers and have developed deep sector insight, regulatory knowledge and execution expertise through working on complex and innovative investment banking transactions. For example, I have been with Stanbic IBTC for 19 years, all of which have been spent in investment banking. Oyinda Akinyemi, who heads our equity capital markets business has been with us for 18 years, while Tola Akinhanmi who heads our real estate finance business has been with us for over 13 years. There are other members of my team who have spent over a decade with us. We are also able to leverage global resources within Standard Bank Group to provide bespoke financial and cross-border solutions to our clients, in line with international best practices.

What are your investment strategies and expectation for the future? What are your plans for this year?

We will continue to support our clients to achieve their growth aspirations. We expect an improvement in the macro and business environment in the coming months and this should drive investment banking activity more broadly. We should see an increase in mergers and acquisitions (M&A) and capital markets activities driven largely by increased foreign investor interest in Nigeria, while the drive for growth in corporate earnings in 2019 should provide interesting opportunities for investment banking.

Where do you see Stanbic IBTC Capital in the next 5 years?

We expect to see a shift in industry dynamics over the next 5 years driven by innovation and digitisation, especially as our clients seek to take advantage of technological advancements to build scale quicker and serve their customers more efficiently. Stanbic IBTC Capital will continue to make the necessary investments in people and technology, so we can provide our clients with innovative and best-in-class advice, execution excellence and thought leadership, and maintain our leadership position in investment banking in Nigeria.

I see Stanbic IBTC Capital as a catalyst for driving Nigeria’s growth agenda in the next 5 years, working with the private and public sectors on critical areas such as attracting FDI into Nigeria, raising equity and/or debt funding for expansion, energy and infrastructure financing, privatisation and real estate financing. We expect to connect Nigeria to the rest of the world and the rest of the world to Nigeria.

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Leading Investment Banking Institutions to Watch Out For 2019

‘FBNQuest Merchant Bank was involved in most investment banking transactions either as lead or joint advisers’ KAYODE AKINKUGBE is the Managing Director of FBNQuest Merchant Bank. In a chat with TELIAT ABIODUN SULE and CHIJIOKE ONYEOGUBALU, he highlighted the progress his firm has made particularly when measured by the values of deals structured, sectors of coverage as well as the future outlook for the investment banking sector in Nigeria. Excerpts:

Y

ou are a m a j o r player in the nation’s investment banking space. Could you give us an overview of what investment banking is in Nigeria, and what is your experience like about this practice at FBNQuest Merchant Bank?

The investment banking (“IB”) sector in Nigeria has developed quite significantly over the last decade with activities skewed more towards debt capital markets and structured syndicated lending transactions (Reserve Base Lending, Acquisition Finance, etc.). Notwithstanding the foregoing, Nigeria’s i nv e s t m e n t b a n k i n g market remains relatively small when compared to the size of the economy and the pent up demand for opportunities. The equity capital markets, including mergers & acquisitions are IB sub-sectors that have not been as active compared to debt capital markets and or syndicated lending. The IB market is dominated by a few select Nigerian based investment banks that feature on most of the landmark transactions, however, the sovereign deals generally tend to have a combined local and international financial advisers, given the expanded liquidity markets / investors to be accessed.

Looking at the different sectors of the Nigerian economy, which ones would you say have benefited your business the most in the last two years?

A historic snap-shot of the Nigerian IB market is required in order to put a response into context. Between 2012 and 2016 the power, oil & gas

execute and close challenging assignments in record time. Innovation and speed remain at the centre of what we do and this has kept us ahead of “the competition”.

estate, FMCG and various infrastructure asset classes.

In 2018, FBNQuest Merchant Bank Limited was assigned an ‘’A’’ rating by Agusto & Co. What exactly does this rating mean for your organisation and how will it impact on the quality of your services?

The rating recognises FBNQuest Merchant Bank’s strong capitalisation and profitability during the period, supported by its acceptable asset quality, investment banking expertise and tradingactivities as well as its experienced management team. It also reflects the bank’s affiliation with FBN Holdings, the nonoperating holding company of one of the largest banking and financial services organisations in Africa. All of the above qualities ensure that we offer bespoke world class investment services to our clientele.

As one of the investment banking institutions to watch out for in 2019, what would you say are your strengths and your areas of core competence? How have you handled competition and what are you doing differently?

FBNQ MB has been involved in most of the IB transactions undertaken in the country, mandated by our clients as either lead or joint advisers.

Our strengths remain swift execution capacity, extensive reach in terms of distribution and innovative financing structures brought to the market. We have the largest team of experienced IB specialists in the country which has enabled us to

FBNQuest Merchant Bank has won awards from reputable institutions both locally & internationally.

In 2018, apart from winning four EMEA finance awards, you equally won the African Banker’s Deal of the Year for the FGN’s $300m Diaspora Bond and The Banker’s Deal of the Year-Africa due to Islamic Finance for the FGN’s N100bn Inaugural Sovereign Sukuk. Please tell us about these awards and what they mean to your bank?

We a re p a r t i c u l a r l y proud to be recognised for our contribution to social development especially in funding of

Prof. Charles Inyangete Kayode Akinkugbe

‘‘

Notwithstanding being ranked number 1 and amongst the top 3 across various investment banking services in Nigeria, our focus for the next 5 years is to have a broader footprint across key sectors of the economy and in particular, being the “go to” investment bank

sectors dominated domestic market activity as investment banks were actively involved in initiatives skewed towards the foregoing sectors at that time, and the private sector “led the charge” in terms of accessing investment banking products and services.The IB market experienced a major slowdown in activity from 2017 on the back of depressed oil prices, sharp adverse movements in exchange rates and the economy sliding into a recession.

Save for the debt capital markets, private sector activity across other IB verticals significantly reduced over the last 24 months (i.e. compared to the 2012 to 2016 period), with the public sector now taking centre stage in terms of mandates. In terms of specific sectors, we have seen increasing activity across real

the development of affordable housing to Nigerians and in our little way provide solutions to the country’s housing deficit. We are also pleased to have advised the Federal Government on two Sukuk issuances for the development of roads infrastructure in the country – another critical segment of the country. We pride ourselves in developing unique financing structures that are attractive to the investment community and meet the demands of the issuers.

We have an extensive distribution platform which distributes the instruments to major investors such as the pension funds, banks, asset managers, high network individuals and corporate treasurers.

We have a good relationship with our regulators for prompt reviews and approvals and collaborations on market development initiatives.

We strive to have a good understanding of each sector by leveraging extensive research provided by our in-house team, which enables us propose bespoke solutions that meet our client’s demands. Indeed, the bank is honoured to have advised on the transactions that earned reputable accolades and we remain committed to providing bespoke financing solutions to our esteemed clients whilst working towards the development of the capital markets.

Where do you see your bank five years from now?

Notwithstanding being ranked number 1 and amongst the top 3 across various investment banking services in Nigeria, our focus for the next 5 years is to have a broader footprint across key sectors of the economy and in particular, being the “go to” investment bank.

Monday 18 March 2019

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Monday 18 March 2019

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

KEY MACROECONOMIC INDICATORS GDP Growth (%)

2.38

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

Broad Money Supply (M2) (N’ trillion)

27.07

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

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

22.72 23.29

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

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

11.31 14 14 (+2/-5) 42.93 66.03

Decreased to 11.31% in February 2019 from 11.37% in January 2018 Raised to 14% in July ’2016 from 12% Lending rate changed to 16% & Deposit rate 9% March 13, 2019 figure — an increase of 0.34% from March start March 15, 2019 figure— no change from the prior week

Oil Production mbpd (OPEC)

1.74

February 2019 figure — an increase of 0.58% from January 2019 figure

COMMODITIES MARKET

STOCK MARKET Indicators

Friday

Friday

Change(%)

15/03/19

08/03/19

31,142.72 11.61

31,924.51 11.91

(2.45) (2.45)

Volume (bn)

0.21

0.23

(10.15)

Value (N’bn)

3.33

2.27

46.60

Friday Rate

Friday Rate

Change (Basis Point)

NSE ASI Market Cap(N’tr)

15/03/19

1-week Change

YTD Change

(%)

MONEY MARKET NIBOR Tenor

Indicators

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

Cotton ($/lb.)

Sugar ($/lb.)

Wheat ($/bu.)

Metals Gold ($/t oz.)

Silver ($/t oz.)

Copper ($/lb.)

(%)

66.03 2.85

0.00 (1.38)

2.44 (6.74)

2221.00 97.30 74.75 12.47 451.00

1.37 (0.05) 2.38 2.89 2.44

14.72 (25.27) (3.55) (18.66) 4.04

1302.76 15.37 290.35

0.62 1.59 0.57

(1.12) (10.59) (11.42)

(%)

(%)

15/03/19

08/03/19

OBB

11.1700

9.1700

200

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

O/N CALL 30 Days

11.6700 12.0000 10.3767

10.0800 10.2500 10.9966

159 175 (62)

Tenor

(40)

1 Mnth 3 Mnths

10.31 11.88

9.46 10.64

85 123

6 Mnths 9 Mnths 12 Mnths

13.96 14.45 14.41

13.04 14.87 15.70

92 (42) (128)

90 Days

12.6254

13.0269

FOREIGN EXCHANGE MARKET Market

Friday

Friday

1 Month

(N/$)

Rate (N/$)

(N/$)

15/03/19

08/03/19

Friday

Friday

Change

(%)

(%)

(Basis Point)

15/03/19

08/03/19

15/02/19

Official (N) Inter-Bank (N)

306.95 360.36

306.90 360.23

306.75 361.65

BDC (N) Parallel (N)

0.00 360.00

0.00 360.00

0.00 362.00

ACCESS BANK NIGERIAN GOV’T BOND INDEX

Indicators

Friday

Friday

Change

(%)

(%)

(Basis Point)

BOND MARKET AVERAGE YIELDS Tenor

Friday

Friday

Change

(%)

(%)

(Basis Point)

15/03/19

08/03/19

3-Year 5-Year

0.00 14.62

0.00 14.77

0 (16)

7-Year 10-Year 20-Year

14.30 14.42 14.23

14.29 14.30 14.28

1 12 (5)

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

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

15/03/19

08/03/19

2,801.05

2,798.65

0.09

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

8.40 5.28

8.39 5.29

0.08 (0.13)

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

14.03 -41.78

13.93 -41.86

Index

0.10 0.08

TREASURY BILLS (MATURITIES) Tenor

Amount (N' million)

Rate(%)

Date

91 Day 182 Day

50,752.80 61.40

11.84 11.9

14-Mar-2019 8-Mar-2019

364 Day

163,070.00

13.44

8-Mar-2019

Global Economy In the US, job growth slowed sharply in February. The job growth reported by the Labour Department was the weakest since September 2017. Nonfarm payrolls increased by 20,000, far below January's (upwardly revised) gain of 311,000 jobs. Some of the weakness can be attributed to poor weather.

The Labour Department suggested that the government shutdown also contributed to the lower unemployment rate. The unemployment rate fell to 3.8%, as fewer unemployed people were looking for work. In a separate development, China reported worse-thanexpected trade data for February. On an annual basis, dollar-denominated exports plunged by 20.7%, whereas imports declined by 5.2%.

China's overall trade surplus came in at $4.12bn.

China's trade surplus with the US narrowed sharply to $14.7bn, from $27.3bn in January.

The latest trade figures from China confirm that global, as well as domestic, demand, is cooling.

Elsewhere, the European Central Bank (ECB) announced the biggest downward revision to its growth outlook since the start of quantitative easing (QE) in 2015. The ECB now expects the Eurozone economy to expand by only 1.1% in 2019, down from the 1.7% previously expected. Growth rates of 1.6% and 1.5% are now expected for 2020 and 2021 respectively. ECB president Mario Draghi indicated that “the risk surrounding the Eurozone growth outlook are still tilted to the downside”. This has prompted the ECB to introduce new stimulus measures, barely three months after they announced the end of their bond-buying programme.

Domestic Economy The Consumer Price Index (CPI) which measures inflation rose by 11.31% year-onyear in the month of February 2019, which is 0.06% points lower than the 11.37% recorded in January 2019. The food index increased by 13.47% (year-on-year) in the reference month, slightly lower than 13.51% recorded in January, thus indicating declining pressure in the prices of food items. The core sub-index, which excludes prices of farm produce declined by 0.1% to settle at 9.8% in February 2019 from the previous month's figure of 9.9% year-onyear. During the month, the highest increases were seen in the prices of fish, bread and cereals, vegetables, meat, fruits, potatoes, yam and other tubers, oils and fats. Others are domestic services and household services, tobacco, major household appliances whether electronic or not, medical and dental services, garments, cleaning, repair and hire of clothing.

In a separate development, The Nigerian Stock Exchange (NSE) in its monthly Domestic & Foreign Portfolio Investment report for the month of January 2019 revealed that transactions at the nation's bourse shrank by 3% to N122.08 billion from N125.86 billion recorded in December 2018. Total foreign transactions climbed by 11.27% to N66.85 billion from N60.08 billion the previous month.

In the same light, total domestic transactions jumped by 6.27% to N29.66 billion from N27.91 billion in December. A breakdown of foreign transactions showed that there was increase in foreign inflows in the month under review by 21.07% to N27.81 billion from N22.97 billion in the prior month. In the same vein, foreign outflows edged up by 5.20% to N39.04 billion in January from N37.11 billion in the preceding month. The performance of the current month when compared to the performance of the same period (January 2018) in the prior year revealed that total transactions reduced by 69.05%.

points from 31,924.51 points the preceding week. Similarly, Market capitalization contracted by 2.45% to N11.61 trillion from N11.90 trillion the prior week. This week, we envisage the market may return to positive territory as attractively priced stocks lure the bulls back.

Money Market Rates in the money market trended upwards in the week ended March 15, 2019. The market was a bit illiquid due to Secondary Market Intervention Sales (SMIS) and FX auction. Accordingly, short-dated placements such as Open Buy Back (OBB) and Over Night (O/N) rates climbed to 11.17% and 11.67% from 9.17% and 10.08% respectively the previous week. Conversely, longer-tenured interbank rates, such as the 30- and 90-day NIBOR declined to 10.38% and 12.63% from 11% and 13.03% the previous week. This week, rates are expected to trend around prevailing levels.

Foreign Exchange Market The local unit depreciated against the green back across most segments last week. At the Investors' and Exporters window, it lost 13 kobo to settle at N360.36/$ from N360.23/$ the previous week. Similarly at the official window, it dipped by 5 kobo to settle at N306.95/$ compared to N306.9/$ the prior week. The parallel market remained unchanged at N360/$ from the prior week. The weakening seen in the official and interbank markets comes despite sustained intervention in the FX market by the monetary regulator. This week, we expect the naira to continue trading within current rates in all markets as the CBN continues to supply FX. Bond Market The previous week saw a moderation in bond yields as counterparties engaged in a bit of buying due to the lower stop rate on treasury bills. Yields on the five-, and twenty year- debt papers closed lower at 14.62% and 14.42% from 14.77% and 14.30% respectively the preceeding week. In contrast, yields on the seven-, and ten year debt paper settled higher at 14.30% and 14.23% from 14.29% and 14.28% the prior week. The Access Bank Bond index increased slightly by 2.4 points to close at 2,801.05 points from 2,798.65 points the previous week. A higher demand on bond is expected in this new week due to anticipated coupon payment as well as reduced supply during the bond auction coming up on the 27th of this month.

Commodities Oil prices rallied last week lifted by a fall in the number of oil rigs in in the US and comments that suggest a continuation of OPEC supply cuts until at least the middle of the year. OPEC benchmark crude, gained $1.72 to close at $67.29 a barrel, 3% higher from the previous week. In a similar light, precious metal prices edged up even after tensions and uncertainty over Brexit seemed to have eased.

Consequently, gold prices increased slightly by 0.62% to $1,302.76 per ounce last week. Silver prices also notched higher by 24 cents, or 1.6%, to $15.37 per ounce. This week, we expect crude oil prices to retreat slightly on continued fears of slowing oil demand amid global growth concerns. For precious metals, prices are likely to rise, buoyed by recent dovish comments by the US Federal Reserve chairman.

MONTHLY MACRO ECONOMIC FORECASTS Variables

Stock Market The Nigeria Stock Exchange witnessed significant sell-offs throughout the week largely in most bellwether counters. The All Share Index (ASI) dipped by 2.45% to 31,142.72

Mar’19

Apr’19

May’19

Exchange Rate (Interbank) (N/$)

364

364

365

Inflation Rate (%)

11.5

11.55

11.6

Crude Oil Price (US$/Barrel)

60

59

62

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

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5 businesses Nigerians can set up with N50, 000 ODINAKA ANUDU

T

ough business environment has forced many Nigerians into believing that N50, 000 is worth absolutely nothing. Many Nigerians look at inflation and weakness of the naira against other currencies, and then conclude that there is nothing that amount of money can achieve.

But the good news is that there are some businesses you can set up with N50, 000. Today, we intend to let you into some of the businesses you can easily establish with that amount of money and what you need to start them.

Fashion & Design Even though fashion & design seems common in the today’s Nigeria, opportunities in the industry are not yet exhausted.

According to Nigeria’s Textile Manufacturers Association, about 85 percent of the $1.4 billion worth of textiles that flood the country’s market is smuggled, mainly from neighbouring countries. This shows that local demand is huge, with the country having a population of almost 200 million people, growing at 2.6 percent annually.

To start a fashion & design business, you need a sewing machine, which costs less than N50, 000. You also need a measuring tape and a pair of scissors.

You can stay at home to work, as you do not necessarily need to have a shop as a start-up. The easiest way to grow in this business is to patiently learn it for six months to

two years. The longer you learn, the smarter you become. The key word here is ‘patience’. After your fashion school, try your skills on the people around you, even if it is for free. If you do good jobs, you will get referrals even if you work at home.

and catering services, said the business of event planning requires tact and creativity.

“Let’s assume that it’s a corporate event. You must try to find out what the company is trying to achieve. If the company wants to change its logo, you now ask, ‘Since you are changing your logo, do you have any corporate colour in mind or are you changing your colour?”

“Another question to ask is, ‘where do you want the event to take place?’ Some companies can say they want a five-star treatment. If they want something for the masses in places like Mushin or Ajegunle, the planning will be different. You can also ask them of their target market. You must find out if the programme appeals to the youths, the elderly, the middle income or to the super rich. With this, you will be able to plan. If it has to do with the youths, you can come up with music and fashion,” she said.

Laundry Laundry requires soaps, iron, laundry basket, starch, regular water supply and electricity. All is needed is to ensure you use the iron any moment there is electricity supply. What matters most in this business is your ability to handle clothes or dresses carefully. There is a huge market yet to be exploited in this industry. A number of motels, guest houses and hotels do not have laundries so there are still opportunities for anybody who liaises with them to take care of guests’ dresses or clothes.

Cleaning and environment Nigerian graduates do not need to walk the streets of Lagos, Abuja, Kano, Enugu, Onitsha and Port Harcourt in search of phantom jobs.

There is a great opportunity in cleaning of schools, public places and event centres. You can also render post-construction cleaning services.

The demand here is overwhelming because many young Nigerians are not looking this way.

Keji Olufemi Ogunjobi, chief executive officer of Easiclean Top Managers, which focuses on general cleaning and fumigation services, told Start-Up Digest that this is a big business.

“In this business, money is not a problem. It is your ability to get people’s approval. Social media can also contribute, but, initially when

I started, I had to approach people and convince them. I later had to narrow it down to post-construction cleaning and then I went to sites to hand out my flyers and I followed up,” she said.

“It is a wide spectrum business with so many horizons and if you channel your energy right, it is a profitable business,” she added. It is also important to understand that you do not need an office to start this business. In fact, you do not need money to. Your client will mobilise you, from which you will buy cleaning materials such as detergents.

Most people in this business do it informally. This is why their success is limited. If it is done carefully and

formally, demand will overshoot supply.

Event Planning Event planning, like other businesses mentioned, requires a lot of money. You need to have items at home permanently. However, startups do not necessarily need to have these things as it is easy to hire them.

There are weddings, burials, political gatherings and other social events every week. These require efficient planners that can satisfy guests with minimal resources.

Mosunmola Olalekan-Otun, chief executive officer of Minds and Brains Limited, an experienced hand in event planning, decoration

Online marketing The social media has become a good advertising avenue for start-ups.

It is cheaper and gets immediate responses. If you wish to try, put a nice piece of dress on your Twitter handle and you may have 10 to 15 people asking who your tailor is.

All is needed is to take time to grow your followership. If you have a high number of followership and your followers consider you credible or a source of hope, companies can hire you to market products for them.

Apart from the social media, you can market products on different online platforms for firms and earn a lot of money from doing so.

Oyo partners Tech-U to train 100 youths in vocational skills in Ibadan Akinremi Feyisipo, Ibadan

O

yo State government in partnership with First Technical University [Tech-U] has trained one hundred youths in various vocational skills.

The youths from Ona Ara local government of the state were trained in vocations such as film production and photography, fashion designing, agro-allied industry, paint-making, cosmetology as well as system security, on board diagnosing (OBD2),global system positioning( GPS), close circuit television (CCTV) installation, and private branch exchange.

Speaking during the certificate presentation ceremony after the two-week training programme tagged, ‘Oyo State Youth Empowerment and Contract Recruitment Programme’ , Ayobami Salami, vice chancellor of Tech U, said the programme represented one way by which the institution hoped to contribute to the socio-economic development process of the country through building an entrepreneurially literate society and strengthening the industrial base of Nigeria in general and Oyo state in particular.

Salami stated that the programme was essentially designed to develop

the capacity of participants in industry relevant technical,vocational and entrepreneurial skills,necessary to start and effectively manage based micro-and small-size enterprises.

“This is with the view of reducing the scourge of youth unemployment in the state and its associated socioeconomic consequences” he added.

He reiterated the commitment of the institution to provide sustainable alternatives to the crisis of unemployment in the country through

training in various marketable skills for the nation’s youths.

‘For us at Tech- U, this ceremony demonstrates our commitment to providing sustainable alternatives to the crisis of unemployment in our country. In many ways, the rising rate of unemployment in our country today, which is currently put at 23.1 per cent, should task genuinely concerned observer to get to work and think of innovative ways out of the very worrisome situation. Our

L-R: Ayobami Salami, vice chancellor, First Technical University, Ibadan, presenting a certificate to one of the beneficiaries of the Oyo State Youth Empowerment and Contract Recruitment Programme, with Abimbola Adekanmbi , commissioner for budget and finance, Oyo State during the exhibition and presentation of award ceremony in Ibadan recently

university is adequately equipped to offer evidence-based solutions in this regard,’’ the don said.

While saying that empowering the youth would reduce unemployment and poverty, he said the university was adequately equipped to offer evidence-based solutions to the problem of joblessness in the country.

“We hold the conviction that by working assiduously to empower our young people, we would not only deal a huge blow on poverty and unemployment in the country, but also bridge the yawning skills gap that consistently makes it impossible for the nation to join the league of truly productive economies globally’.

While disclosing that the programme was the university’s first series, the vice chancellor said the university would undertake similar training for the other youths in the state and country at large.

He pointed out that not only did the participants acquire mastery in one vocation or the other, some had been found qualified to join the team of the university in conducting similar training in the future through contract appointment.

The programme, he disclosed, was being run based on PublicPrivate Partnership (PPP) model.

Salami however said the partner-

ship was an invaluable one borne out of shared values for the sustainable empowerment of the people.

Speaking at the event, Abimbola Adekanmbi, Oyo State commissioner of finance and budget, said the training was to equip the youth with marketable skills. He said the tools would be provided for them, adding that their services would be needed by the state government. The commissioner ,who donated N500,000 as seed fund for the empowerment, urged political leaders to emulate the gesture.

Start-Up Digest Team Odinaka Anudu Editor

odinaka.anudu@businessdayonline.com 08067478413

Reporters Josephine Okojie Bummi Bailey Gbemi Faminu Joel Samson Graphics

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Start-Up Digest

Ovio-Onoweya takes logistics industry by the storm ODINAKA ANUDU

K

eturah Ovio-Onoweya is a young serial entrepreneur. She is the face behind Qeturah.com, which is often described as a marketplace.

The Delta State-born entrepreneur has now taken the logistics industry by the storm with what she calls ‘Fulfilment By Qeturah’ (FBQ). This platform makes it easy for individuals and businesses anywhere in Nigeria to send documents, parcels and products to any destination within Nigeria and the world. Her services are five to 65 percent cheaper than the industry average or what is obtained at major logistics firms.

“We offer door-to-door and soon enough, drop off points to make it easy for our customers,” she tells Start-Up Digest.

“We pick, pack, and deliver to your customers in a timely and efficient fashion,” she adds.

Keturah was motivated to set up the logistics business by the experience she and her team had.

“It stemmed out of a problem we faced as a company when we still fully ran our marketplace, Qeturah.com,” she says.

“It was difficult and expensive for a while to deliver orders to customers nationwide and internationally. Then we found a fix, and we realised that our current merchants and other businesses alike, as well as individuals, need our solution,” she explains.

Keturah Ovio-Onoweya

“We thought we would be leaving money on the table if we don’t open this up to everyone and make it super easy for them to ship,” she notes.

She explains that today, from the comfort of anyone’s home, office, or shop, they can make requests on FBQ via online and get them within the shortest possible time. She works with a number of local and international partners to ensure efficiency and effectiveness of delivery.

Her style is simple: If you need

to send a document to Switzerland, you will drop your document at a partner location nearest to you. The FBQ team will pick it up for onward delivery.

“We will pick up from you and deliver to wherever your customers/receivers are, anywhere in the world, including Nigeria,” she assures.

Keturah explains that technology has made it easy for companies to hit unicorn ($1 billion-dollar) status in recent times. She herself is also planning to build a $1 bil-

lion business.

“I am a strong believer in the fact that if you build a solution that solves a pain-point, your customers will throw their money at you,” she says.

“My vision is to continually seek out problems in business and consumer markets, and provide hassle-free tech and tech-enabled solutions for them,” she adds.

A Software Engineering graduate of Nottingham Trent University, UK, the 27-year-old entrepreneur worked for Grabit, a

South-East Asian tech company, where she was exposed to so much information that gave her confidence to found Qeturah. com.

Keturah wants to retire at age of 40 to pursue her dream of travelling to many parts of the world.

“I’ve always joked around that I should be retired before I turn 40, but then again, life is long,” she quips.

“What would give me absolute joy in 10 years is to be vacationing somewhere in an emerging market, and I meet people whose businesses are effectively powered by solutions my company provides.”

She says that her logistics business is unique because her team understand tech and have the right partnerships “We are an aggregator; we work with international as well as local logistics providers to ensure we deliver on our promise,” she says.

“We offer near-best price in the market in which we play in. We are apt on our ETA promises; next day delivery within same state; three days delivery anywhere in Nigeria; five days delivery anywhere in the world,” she discloses.

She says everything from shipment requests to payments and status tracking can be done online via web/mobile, http://qeturah. com/fulfilment.

Today, she is surer of the direction to take than two years ago and understands the kind of business she wants to build.

Ikudehinbu: Fruit juice maker, with eye on event planning Gbemi Faminu

I

kudehinbu Josephine is one of Nigeria’s energetic and hardworking young entrepreneurs. She is the chief executive officer (CEO) of Phinny’s Fruity. People call her a fruit juice expert because she produces diverse flavours of drinks from fresh fruits.

A holder of both bachelor’s and master’s degrees in Music Education from the University of Lagos, she started her business in December 2017 with N50,000 while undergoing her master’s degree programme.

Josephine was encouraged to start this business by her family and friends who she says saw the prospects of what she regarded as a hobby.

“I don’t like eating fruits so I prefer to produce juices and drink it while adding flavours,” she says.

“I made it for people and I was encouraged to commercialise it so I do not remain idle,” she adds.

Evaluating her business growth so far, the young entrepreneur

says that the business has been good enough as she does home delivery in addition to the fruit juice business.

The entrepreneur believes her products are always unique because of the way she applies special ingredients. She gets her ingredients from major markets in Lagos such as Ketu, Mile 12, and Ojota, among others.

“I operate under a very clean environment to avoid the risk of making harmful products, given that my goods are consumables,” she says.

When asked about plans to expand her business, the entrepreneur says that she has a strong expansion vision.

“In the coming years, I hope to incorporate full catering and event management services, although this is a long-term goal,” she discloses.

“My short-term goal is to see the business boom and become the best at what it was established for, compared with other companies,” she says.

“Currently, I do not have any employee, but I look forward to

getting a bigger place for production and sales and also becoming an employer of labour so as to reduce the rate of unemployed

Ikudehinbu Josephine

youths in my own little way,” she adds.

Josephine is working on acquiring certificates and attending

trainings to gain more knowledge and expertise that will help her business to grow.

Speaking on some of the major challenges confronting her business, she complains about poor electricity supply, lack of necessary equipment and inability to access loans and funds for expansion purposes.

She urges the government to ease the business environment, especially for small and medium scale enterprises. She also wants the authorities to make policies that will support start-ups, while calling on the government to provide stable electricity and necessary infrastructure for effective and easy production and mobility.

Her role model is Aliko Dangote whom she hopes to meet and converse with. Her life’s values are hard work, consistency and determination.

On advice to other entrepreneurs, she says, “Remain hardworking, make a conscious effort to develop yourself regularly, ensure you grow your peoplenetwork and always believe in yourself.”

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Start-Up Digest

Meet Elizabeth Erinle, the creative fashion designer Gbemi Faminu

O

labowale Elizabeth Erinle is a young and innovative fashion designer. She is the chief executive officer of Zabethrin Clothing, which is a fashion house where custommade outfits are designed and created at affordable prices.

Although she has her bachelor’s degree in Estate Management from the University of Lagos, She enrolled in a fashion house to pursue her passion for fashion. She started her business in October 2017 after her National Youth Service.

She was inspired to go into the fashion world because of her love for fashion and modesty. “I was inspired by my love for fashion and penchant for transforming ordinary pieces of fabric into remarkable attires,” she tells Start-Up Digest.

She says that her love for what she does gives her inspirations to make innovative and beautiful designs from any piece of fabric.

She learnt the art of cloth-making from a fashion designer close to her while she developed herself using her mum’s sewing machine.

She made outfits for herself and later started getting orders from others. She then built her clientele from there and eventually set up this business with N500, 000, which she got from her savings, from her siblings and profits from few jobs she got initially.

Elizabeth Erinle

Elizabeth believes that her company creates affordable outfits to suit her clients’ tastes while being prompt both in delivery and in making distinctive designs. This, she says, is why her customers keep coming back while also recommending others.

She further states that since its establishment, the company has recorded tremendous growth both in terms of profits and number of customers. She has been able to register her business legally and has employed four full-time staff members.

LCCI wants policies to ease Nigeria’s business environment Gbemi Faminu

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abatunde Paul Ruwase, president of the Lagos Chamber Of Commerce and Industry (LCCI), has urged the federal government to pay more attention to the ease of doing business and also apply policies that will attract investors to the economy.

He congratulated the president on his re-election and commended the incumbent administration for its efforts in facilitating an enabling environment to conduct businesses in the country.

Speaking to journalists at the agenda setting forum for the reelected government in Lagos, Ruwase urged the government to implement policies that would accelerate economic growth to enable it surpass the growth rate of the population. He further advised that the business environment be modified to make it better and more attractive for foreign direct investments, and stressed the need to ease the businesses environment for local business owners.

On the ease of doing business initiatives, he said, “We are of the firm belief that the Presidential Enabling Business Environment Council (PEBEC) is one of the best performing initiatives of the present administration from the business point of view.

“We request that the PEBEC secretariat should be further strengthened and the scope of its activities broadened to cover all sectors of the economy and all agencies of the government that interface with the private sector.”

He stated that infrastructure problems, overregulation of government agencies, credit access for business owners and many other hitches have made the business environment challenging.

Speaking on the infrastructure problems, he mentioned that infrastructure deficit is causing problems for business owners, especially in the area of transportation.

“The need for a functional and modern rail network cannot be over emphasised,” eh said. “It will facilitate the movement of people and goods whilst reducing the cost of transportation, logistics and freight.”

He further said that the issue of poor road maintenance needs to be addressed in a sustainable manner.

He advised that the Nigerian Investment Promotion Commission (NIPC) be set up in Lagos, as Lagos is the commercial nerve centre of Nigeria. He added that branch of the NIPC would grant investors easy access to investmentrelated issues while reducing the constant shuttling between Lagos and Abuja.

Another challenge, he said, was

the access and cost of credit for business owners, especially the micro, small and medium scale enterprises (MSMEs). “The SMEs which contribute about 90 percent of business activities in Nigeria do not have sufficient access to capital,” Ruwase said.

“We need to encourage commercial banks to increase lending to SMEs,” he stated.

“Credit guarantee scheme for MSMEs will promote lending and provide guarantee of loan repayments,” he added.

He further explained that another challenge facing the business environment is the Nigeria Customs Service, which has not fully adhered to the executive orders and policies on the ease of doing business in the country. He advised that the agency prioritise its trade facilitation role while also performing its duties as a security outfit.

He said for the country to attract more foreign direct investments, the visa policy should be liberalised and citizens of advanced economics be granted a 30-day visa free entry into Nigeria. He said that this scheme is practised in other emerging countries and has been beneficial to the economic development of the countries. Ruwase advised that Nigeria should follow suit as it would impact positively on the foreign direct investment, and the tourism and hospitality industry.

She operates in Lagos and gets her materials locally from major markets and also online platforms.

With the aid of social media, she is able to advertise her products and get more customers. These have helped grow her business to succeed.

Speaking about her business expansion plan, she says, “I intend to create an affordable, ready-to-wear outfit, easily accessible to people, and establish a fashion empire that will serve as an institute. I also want to incorporate sale of fabrics too.”

Elizabeth also attends trainings and workshops both digitally and physically as she believes there is still room for improvement. She gets these trainings and certifications to improve herself and her business.

Despite the love for her work, Elizabeth still faces some challenges.

“I find it difficult to access adequate and necessary funds to acquire some important tools. Cost of production is also high for me due to the epileptic power supply,” she says.

Although she is able to work round these challenges, she asks that the federal government and capable organisations help micro, small and medium enterprises (MSMEs) through grants, lowinterest loans, workshops, and sponsored trainings. She also asks that they set up necessary infrastructure to reduce the cost of production and aid faster and neater work.

The entrepreneur says she is inspired by God and herself. Her life values are hard work, honesty, consistency and self-development.

She advises other entrepreneurs to build their people- network, be courageous, take risks and dare to be different.

SSE Angel Network makes N9.2m investment in two eastern start-ups Josephine Okojie

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he SSE Angel Network has made its first investment of N9.2 million in Alphotazi Farms and Greenage Technologies that are based in the southeastern part of the country.

Greenage Technologies, an inveter and solar panel equipment manufacturer based in Enugu, g ot N7.2 million ($20,000) of the investment.

Alphotazi Farms,a modular cassava processing company based in Nsukka, got the remaining.

Speaking on the investment, Charles Emembolu, CEO of Crestsage Ltd, said in a statement made available to BusinessDay, “I believe the teams are solving global problems

with local resources and will scale with the right support, mentoring and a more inclusive ecosystem.”

With the investment, Greenage will produce and distribute more high quality inver ter.

The company started at Nsukka, when five undergraduates friends started the production of off-grip power solutions to help bridge the huge energy gaps in the country.

Similarly, Alphotazi Farms will increase its processing capacity of raw cassava tubers by building a modular processing plant.

Also speaking during the investment event, Owanari Batubo, CEO of Cobbs Engineering, advised start-up founders in the region to take advantage of the network.

Batubo called on experienced entrepreneurs in the region to join the network and help entrench innovation and entrepreneurial culture in their various societies.

SSEAN was setup in 2018 by a group of professionals to invest, mentor and support start-ups in the South-East/South-South of Nigeria.

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As long as we associate leadership with masculinity, women will be overlooked TOMAS CHAMORRO-PREMUZIC

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ix years ago, I wrote an article arguing that women were unrepresented in the leadership ranks not because of their unwillingness or inability to lead, but because of our failure to effectively weed outincompetent men. In that article, which has become one of HBR’s most-read pieces, I argued that instead of lowering our standards for women, we had to raise the bar for men. That article touched a nerve, and it continues to do so.

In an ideal world, leaders would follow sciencebased practices and prioritize engaging with and inspiring their employees, and providing them with a sense of meaning and purpose. Instead, we continue to see that the average performance of leaders and

managers is pretty disappointing.

So long as we continue to associate leadership with masculine features, we can expect female leaders to be

evaluated more negatively even when their performance is better than that of their male counterparts, and even when those who evaluate them are women.

While overall gender differences in leadership effectiveness are generally nonexistent, meta-analytic studies show that men tend to perform better when the

focus is on managing tasks, while women tend to perform better when the focus is on managing people, which includes attending to people’s attitudes, values and motivation.

Yet, even though women don’t demonstrate motivation or ability deficits that inhibit their capacity for leadership, we still have a lot of work to do if we want to see a bigger proportion of talented women reach positions of leadership.

Indeed, as much as we understand the theoretical importance of leadership as a key driver of organizational, business and societal success, we are still living in a world where most leaders are not evaluated objectively, and where discussions around the performance of leaders tend to be diluted to a matter of preferences, politics or ideology. Subjective evaluations rule, and perceptions trump reality.

Until this is fixed, there is not much benefit in improving our leader selection process. Even if we were using a data-driven system that objectively selected leaders based on their actual potential — paying attention to competence, humility and integrity rather than confidence, charisma and narcissism — it wouldn’t do much good if we proceeded to judge the performance of those same leaders via subjective, prejudiced or biased human opinions.

In sum, too many leadership roles are given to incompetent men when there are better women, as well as men, who continue to be overlooked.

(Tomas Chamorro-Premuzic is the chief talent scientist at ManpowerGroup and a professor at University College London and Columbia University.)

Better-managed companies pay employees more equally NICHOLAS BLOOM, SCOTT OHLMACHER, CRISTINA TELLOTRILLO AND MELANIE WALLSKOG

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ompanies that implement more structured management practices pay their employees more equally. Our research is preliminary and ongoing, but the finding is striking.

To be honest, it surprised us.

For 2010 and 2015, the U.S. Census Bureau fielded the Management and Organizational Practices Survey in partnership with a research team. The survey collects information on the use of management practices related to monitoring (collecting and ana-

lyzing performance data), targets (setting tough, but achievable, goals) and incentives (rewarding high performers) at a representative sample of approximately 50,000 U.S. manufacturing plants per survey wave. We refer to practices that are more explicit, formal, frequent or specific as “more structured practices.”

We had hypothesized that more structured management would lead to rewarding high-performers over others, therefore leading to a rise in inequality inside of the firm.

The reality is exactly the reverse, and that remains true even after controlling for employment, capital usage, firm age, industry,

creased efficiency. Finally, it could also be that firms with more structured practices are more focused on specific tasks and rely more on outsourcing.

Setting goals, aligning people to achieve those goals and monitoring their progress toward those goals are hallmarks of successful companies.

And, whatever the reason, those practices also seem to go hand-in-hand with more equal pay.

state and employee education.

What’s going on here?

We have a few hypotheses.

Previous research

shows that firms with more structured management practices are more profitable on average, and there’s long been evidence

that when companies make extra profits they share some of them with workers. The relationship could also result from in-

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

Expertise It’s in our DNA www.firstbanknigeria.com

FirstBankofNigeria

In an ever changing economy, with 125 years of serving YOU, we remain strong, trustworthy, dependable, safe and consistent.

You can be confident that we will continue to deliver innovative banking products and services which seamlessly and conveniently suit your lifestyle needs.

Visit www.firstbanknigeria.com to learn more about us.

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(Nicholas Bloom is a professor at Stanford University.

Scott Ohlmacher and Cristina Tello-Trillo are economists at the U.S. Census Bureau. Melanie Wallskog is a doctoral student at Stanford University.)

Monday 18 March 2019

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Odunayo Oyasiji

Written by Temidayo Adewoye, an Associate in the Employment Law Group of Perchstone & Graeys.

Artificial intelligence in the workplace: bracing up for the revolution

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he Fourth Industrial Revolution as touted by tech pundits is expected to usher in an era where artificial intelligence (AI) and robotics will significantly change every aspect of human life.

The idea of a machine that will be able to think and act like humans, provoked by A. M. Turing’s popular 1950 essay titled ‘Computing Machinery and Intelligence”, where he posed the question: “Can machines think?”, has been the obsession of computer experts/researchers. The ultimate goal is to make computers that learn like a child. The concomitant effect of this is that robots are being programmed to learn by simple algorithm and to carry out cognitive tasks. Thus, many tasks in diverse fields are now subject to Robotic Process Automation (RPA).

The deployment of intelligent machines to the world to work is no exception; a welcome development to employers in the drive for greater profitability, albeit a kickstart in what looks to be an endless contest between employees and their new robotic rivals.

Evidently, the future where robotic workers will cause a structural change in the nature, pattern and availability of jobs is here, maybe even earlier than anticipated.

The New York Times reports that since 2014, Amazon has deployed over 100, 000 robotic Arms to its centres around the world. In 2017, Alibaba, the largest retail shop in Asia, deployed sixty Greet+ robots which carried out 70% of tasks in its warehouses. According to a World Economic Forum publication,

by May 2018, Shenzhen Evenwin Precision Technology, a manufacturing company based in China, would have replaced 90% of its 1, 800 employees with machines; this being its aim. The advent of robotic/AI driven cars/taxis also comes to mind.

The trend is unlikely to stop or even slow down. The Vice President of the Federal Republic of Nigeria, Professor Yemi Osinbajo, at the Closing Ceremony of the 50th Anniversary Celebrations and Annual Conference of the Chartered Institute of Personnel Management (CIPM) late last year, raised a concern over this growing threat, noting that technology is redefining the structure of industry and commerce, and the skills required to function in them. From the way services are secured and solutions garnered these days, and the use of apps and AI Chatbots (such as Diamond Bank’s Ada), it can be said the words/concerns of the Vice President are not overreaching.

It is difficult to forget the slow but sure advents of paralegals.

KPMG reports that it might “sound like science fiction but sophisticated AI like this is already in place at legal firms and is very close indeed for tax.” With the advantage of speed, accuracy and lower cost of maintenance, the preference for machines indeed poses a threat to job availability for human workers.

However, what would appear to be

a loss to the worker, may be a gai not the employer, with AI deployment having little or not regulatory infraction.

The above considered, where should the law stand, especially in a developing nation like Nigeria, in creating a balance between the rights and obligations of the employer and the seemingly vulnerable human employee in what seems certain to be an increasingly AI dominated future?

Legal Matters The preference for machines over humans will effectively necessitate layoffs. An example that quickly comes to mind was the technological unemployment caused by electronic/mobile banking, Automated Teller Machines and other sophisticated banking methods in the Nigerian banking industry. Undoubtedly, in integrating robots into the workplace, employers will be faced with the dilemma of choosing between their human workers and the robots. It is likely that the employer will lean in favour of the robots for a number

‘

Regulations, legal structures and laws must also be revisited to prepare the playing field and protect what each nation stands for.

The AI revolution is here and cannot be overlooked. It must therefore be holistically and cautiously prepared for.

of reasons, considering that robots would fee the employer from salaries, obligations, regulatory remittances, benefits/allowances, leave days, etc.

In a possible bid to hastily replace human workers with robots, employers might be tempted to throw caution to the wind and implement mass layoffs without complying with procedure(s) laid down in the respective employment contracts, handbooks/ policies and laws. This would be unwise for reasons that will be shortly expounded. Declarations of redundancies may also be in the cards, as the law permits employers to declare a redundancy where it is manifest that there is an ‘excess’ of manpower. However, the power of the employer to declare an employee redundant is not unfettered and as such, it is imperative that the employer abides by its duty to comply with the provisions of the prevalent Labour Act/regulations, policies and terms of contract.

Where a redundancy is to be declared, the Nigerian Labour Act makes it mandatory for the employer to notify the trade union or workers’ representation concerned of the reasons for and the extent of the anticipated redundancy; in some industries, consent must be secured from the regulator before proceeding with the redundancy process. Also, the rile of laying off workers in the order of their date of employment, popularly known as ‘last in, first out’, and the negotiation with, and payment of severance packages to the employee are procedural steps which the employer must take. The employer may be liable in damages for not complying with these provisions of the Act. A further consideration is the likely attitude of the National Industrial Courts on matters of redundancy induced by preference for machine workers in the future.

In some quarters it is believed that the NIC’s usual application of international best practices and stance against unfair labour practices, may predispose the court to adopt the protectionist posture of

the International Labour Organisation in favour of human workers.

A more detailed review of the rationale for the court’s decisions would however suggest that this outcome is unlikely at best. The NIC has tended to adopt a very fact-based approach to judicial determination in recent times. As such, it is more likely that the NIC would consider each case based on the peculiar facts before it; for example, whether the employer was justified to subject the employee to redundancy. Therefore, even in revisiting the employment portfolio for business interest reasons, the employer must be seen to abide by the applicable regulations and internal policies in order to avoid unpleasant and potentially unfavourable litigation.

For a bit of context, it can be helpful to consider some examples of the jurisprudence on this subject matter in some foreign jurisdictions. In the Australian case of Joe Solari v RLA Polymers Pty Ltd (U2010/5787), the court upheld the redundancy of a worker because of his inability to cope with the operational reorganisation of his work plant. Also, in Packman v Fauchon [2012] UKEAT/0017/12, an English Court held that subjecting a worker to a redundancy due to the employer’s adoption of accounting software technology was not unfair in the circumstance. Thus, it seems that without an infraction of the provision of the labour laws on redundancy, employees displaced because of adoption of better technologies may not successfully challenge their redundancy.

What Next?

There are different schools of thoughts on the subject of deployment of robots into the labour market. While the positive theorists believe that AI will not necessarily create unemployment but will cause a structural shirt in the nature and dynamics of labour in the future, the realists believe that AI will adversely affect the nature of jobs that will be available to humans, as it might result in the workplace survival of only those persons who have the requisite skills to interact with and operate computers and use the internet.

A unifying point is that the AI revolution will disrupt labour practices and workplace norms.

In a bid to prepare for these disruptions, employees must make sure to specialize in areas that are, to some degree, practically irreplaceable by AI. The government, as with the courts, must also recognize its role in maintaining the balance between the rights of the employer and the employee, whilst permitting positive business advancements by the employer. For example, government may have to consider making legislations which would require employers to maintain a quota of human employees, whilst permitting the influx of AI robots. Also, it may create tax incentives for employers meeting a defined quota of human

employees. The definition of ‘redundancy’ must also be revisited to take into account nuances of the new workplace paradigm.

The Regulators should also have the additional duty to ensure that the influx of robotic workers into the country is regulated and necessary at each point. The scope of statutory responsibilities of the National Office for Technology Acquisition and Promotion (NOTAP) in Nigeria for example, under the National Office for Technology Acquisition and Promotion Act, may have to be expanded to include oversight on importation of robotic workers so that Nigeria will not become a dumping site for hazardous or marauding robots.

As already alluded one of the major effects of the deployment of robotic workers is the structural shift from the demand for the traditional white/blue collar worker to a ‘new worker’. A greater emphasis will be placed on ‘technological’ skill as against a formal university education; both however providing an advantage. There will therefore be a need to revisit even school curriculums, to impart skills that make them even more employable.

As coined in the letter of the CEO of IBM, Ginni Rometty, to the then president-elect the United States, Donald Trump, greater focus must be placed to secure training for technological roles such “cloud computing, technicians, database managers, cybersecurity analysts, user interface designers, and other assorted IT roles.” Employers will also do well to make policy directives that help track and attract workers with skills relevant to emerging realities orchestrated by disruptive technologies.

Conclusion The fierce competition that intelligent machine workers will bring to the world of work will be unprecedented. As in the early days of the Industrial Revolution, when the use of machines gave farmers amenable to change an ‘undue’ advantage over others that stuck to their crude implements, it is expected that there will be some employers/ employees who will prepare to be innovative and in so doing, will remain relevant and poised to take advantage of the opportunities AI presents. There is however likely to be a gap far greater than that seen in the Industrial Revolution.

As Larry Boyer once said, “the key to successfully navigating the Fourth Industrial Revolution is more than simply learning new skills. It is knowing yourself and the unique value you have to offer any potential customer or employer.”

Thus, re-training, restructuring and rebranding are activities that are key to preparing for this revolution.

Regulations, legal structures and laws must also be revisited to prepare the playing field and protect what each nation stands for. The AI revolution is here and cannot be overlooked. It must therefore be holistically and cautiously prepared for.

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Insurers’ profit margins to improve in 2019 on reduced claims BALA AUGIE

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rofit margins of insurance companies in Africa’s largest economy could improve this year because there were reductions in obligation to policy holders in 2018.

Analysts say firms had paid the large part of

claims incurred in 2017 in 2018 financial year and that ebbing inflation rates and an improved economy are expected to underpin industry’s underwriting capacity.

Of course rising claims erodes profitability of insurers in Nigeria and other countries in Europe, Asia, Europe and the United States as combined ratios spikes.

However, companies

that have the capital to take on more risks or invest in fixed income securities, equities, and real estate are in a better position to bolster margins.

Twenty largest listed insurers that have released third quarter financial statement saw combined total claims increased by 12.29 percent to N62.98 billion as against N54.63 billion as at September

2017.

Expectedly, net profit of these firms was down 12.32 percent to N13.77 billion in September 2018 from N15.72 billion as at September 2017 while net profit margins fell to 12.17 percent in the period under review as against 20.12 percent the previous year, based on data gathered by BusinessDay. “I don’t think there were serious claims out-

invested in sales into higher profit as premium income has not been growing at a blistering pace while investment income has been low.

Investment income help add impetus to the bottom line (profit) of insurers in the United States, Europe, and Asia where underwriting profit has been battered by rising claims arising from cata-

standing that can impact the bottom line this year as most obligations have been being honoured,” said an actuarial scientist who didn’t want his name mentioned.

“Insurers need to work on their shareholder’ fund to enable them take on more risk and magnify owners’ earnings,” said the analyst.

It’s been difficult for insurers to turn each Naira

strophic events like hurricanes, wildfires, earthquakes, and tornadoes.

Experts say companies in Nigeria should work on their shareholders fund so that they could write more risk and take advantage of the interest rates environment to improve profit.

They are upbeat about industry outlook for 2019 as the economy continues to improve while political risks have reduced on the aftermath of a peaceful election.

Nigeria’s economy grew at about 2.38 percent in the fourth quarter of 2018, according to the Nigerian Bureau of Statistics (NBS).

Crude oil price has been improving since OPEC+ allies agreed an output cut as brent has be e n above Nige r ia’s benchmark budget price of $60bp since January 28 and closed at $67.20 on Thursday, 14 March.

Inflation eased to 11.31

percent year on year (y/y) in February from 11.37% y/y in January 2019, sustaining its deceleration for the second consecutive month, latest data from the National Bureau of Statistics (NBS) revealed.

Agusto & Co Limited, leading Pan African credit rating agency in Nigeria for over 26 years has assigned a “Bb“rating to the Insurance Industry in its newly published 2019 Nigerian Insurance Industry report.

The performance of underwriters is expected to improve as political uncertainties subside and business operations pick up in the second half of the year. Buoyed by stronger regulatory support and anticipated recapitalisation requirements from the National Insurance Commission (NAICOM), the Insurance Industry’s underwriting capacity is expected to improve in the

medium to long term, according to the report.

While a gradual economic recovery and a benign political environment are expected to bolster underwriting performance, rising unemployment and rates continues to damp consumer appetite for insurance.

For instance, insurance penetration to the economy is less than 1 percent, one the lowest among subSaharan countries.

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

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

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Prestige parleys brokers and clients for greater market share

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L-R: Balla Swamy managing director, Prestige Assurance Plc; Funmi Oyetunji director, Prestige; Doyin Salami, chairman, Prestige; Sola Tinubu of NCRIB; Muftau Oyegunle director, Prestige; and Sarbeswar Sahoo executive director, Prestige, at the stakeholders meeting and official launch of a new product known as the Prestige Agricultural Insurance Products in Lagos.

Bad for Boeing insurers as more countries ground planes Stories by Modestus Anaesoronye

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oeing Co’s insurers will potentially face large claims following the recent Ethiopian Airlines crash, which was the second to involve a 737 Max 8 model in five months, according to insurance and aviation sources at Reuters.

The reports come as the US becomes the latest country to suspend the Boeing model from operating in its airspace, joining Malaysia, Singapore, China, Australia and Nigeria.

While the cause of the

Ethiopian Airlines crash is not yet clear, an automated anti-stall system on the newly commissioned Boeing aircraft has come under scrutiny.

The system was also identified as a possible cause of the Lion Air crash in Indonesia last October, which similarly involved a Boeing 737 Max 8 plane.

Boeing said that it would develop software updates for the aircraft following the incident.

While the initial insurance payments from the recent crash will be made

by Ethiopian Airlines’ insurers, they may look to recoup their money from Boeing’s insurers if they

can prove that the aircraft was faulty, sources told Reuters.

A spokeswoman from Willis Towers Watson confirmed yesterday that the firm was the insurance broker for Ethiopian Airlines, while Chubb was the lead insurer.

Britain’s Global Aerospace has also been identified as the lead insurer for Boeing and also for Lion Air, while Marsh is Boeing’s insurance broker, according to Reuters’ sources.

No financial details of the relevant policies are currently available, although losses from the Ethiopian Airlines crash

are speculated to be in the region of $50-60 million.

However, payouts could be much higher if families of the victims pursue legal claims against Boeing, particularly through U.S courts.

“If there were to be anything defective in terms of the plane or any of its components, then it would be possible to bring a claim against the manufacturer, as well as the airline,” one legal expert told Reuters.

All 157 passengers were killed after Ethiopian Airlines flight ET302 crashed six minutes after take-off from Addis Ababa, en route to the Kenyan capital of Nairobi.

ursuant to the company’s determination to increase its market share, compete favourably for growth and strengthen ties with industry stakeholders, Prestige Assurance Plc has hosted her stakeholders in Lagos. The company had been reputed for its brokerfriendly disposition over the years and working in a close alliance with brokers and clients which is a situation that had assisted it in entrenching its reputation in the market.

Balla Swamy, managing director/CEO of Prestige Assurance Plc in his opening remark, highlighted the giant strides taken by the company to meet client’s aspirations.

Swamy expressed his appreciation to all the brokers and customers for reposing confidence in Prestige, which remains one of the reputable brands in providing timely service delivery and customised insurance products. He particularly thanked the parent company, the New India Assurance Company Ltd and the Reinsurers for their support in settling over N1.5 billion claims settlement in 2018.

Swamy seized the opportunity to introduce the new Chairman of the Board of Directors, Doyin Salami, a renowned economist and a professor at the Lagos Business School with over 25 year experience of solid financial management, economic expertise and business development.

Salami presented a lec-

ture on the 2019 Economic Outlook. In his concluding remarks, he thanked the brokers for their unflinching support and patronage in the past. He further stated that the company desires to be the preferred insurance company in Nigeria and urged them to support the company to have a more robust and mutually rewarding and beneficial relationship.

The evening was rounded-off with the official launch of a new product known as “the Prestige Agricultural Insurance Product which has been earlier approved by our apex regulator, the National Insurance Commission (NAICOM).

“The thrust of the product is to address the yearnings of the general public and farmers in particular for a tested insurer who would protect them against losses at affordable prices.

Speaking on the company’s preparedness to underwrite agricultural insurance, the Prestige CEO stated that NAICOM’s approval is a testimonial to the company’s capacity, competence and sincerity in supporting the growth of agriculture in Nigeria. He said the company, acting as burden bearer, intends to take the worries off the players in the agricultural sector and give them opportunity to make wealth.

He further observed that the disasters that befall the farmers anytime there is a natural calamity, have serious adverse effects on the financial position of the nation.

Women are better empowered with an insurance plan - Old Mutual

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s millions across the world commemorate the 2019 International Women’s Day (IWD), a day dedicated to celebrating the social, economic, cultural and political achievements of women globally, the marketing and customer executive, Old Mutual, Alero Ladipo said that the organisation is committed to promoting gender parity at all levels, just as it is supportive of women in its workforce towards achieving career goals.

She reiterates that the organization, in its support for women and the desire for a balanced society, launched the Old Mutual Women’s Network (OWN), a company initiative estab-

lished to enhance healthy engagement amongst women and to create a mentoring and empowering work environment.

Speaking on the occasion of the IWD, Alero Ladipo stated that; “We must understand that women are pivotal to societal growth and are an integral part to the success of any unit. As an organisation, we have put adequate policies and processes in place to deepen equal gender participation in decision making at every leadership cadre across the Old Mutual Group. I make bold to say that Old Mutual is a fantastic place for women to work in Nigeria and across our group internationally.

“We understand that women at all levels add ex-

Alero Ladipo

traordinary value to enterprise; are capable of making smart decisions that can propel wealth creation, hence their contributions to growth have to be in focus in setting strategies and business agenda. I believe that to promote a gender balanced society, the woman must be able to attain financial security like their male counterparts.

“In the light of this context, I posit that no financial plan better empowers a woman than an insurance plan. In the insurance space, all genders are equally insured with same expectation in terms of compensation, which allows for a balanced society and further propels women to achieving greater goals.”

Citing vehicle insurance for instance, Ladipo added that an insured female carowner, who is incidentally involved in a road mishap is confident that her insurer will come through for her.

She knows that with her insurance policy the damages to a third party will be effectively repaired. She fears no harassment. Mothers who have dreams for their loved ones, irrespective of class or status in the society, can procure a unique savings plan that can help them realise their dreams and also provide certain guarantees, a beneficiary will not be short-changed or prevented from reaching an educational goal. Such plan also affords them access to money in case of surprises or other emergencies.”

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Stanbic IBTC, FBN Capital, ARM continue to dominate money market …control 86.75% of funds IFEANYI JOHN

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L-R: Chibuzo Ohiagu, Corporate Relationship Manager, Rome Business School; Oshoke Ayebae Head, Business Development Fidson Health Care PLC; Humphrey Akanazu, Country Manager, Rome Business School; Shina Alabede, Faculty member, Rome Business School; Adejoke Alli, Head Human Resources, Fidson Health Care PLC and some students in a group photograph during Masters in Marketing and Communications students of Rome Business School Nigeria led by the Country Manager visited Fidson Health Care PLC recently in Lagos.

Rome Business School Nigeria’s Masters’ students visit Fidson Health Care DANIEL OBI

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n its commitment at producing better managers for a better world, Rome Business School and its Nigeria’s Masters in Marketing and Communications students have paid an industrial visit to Fidson Health Care Plc in Lagos.

Rome Business School (RBS) management says the visit is part of its operational priorities, and as a managerial training and research institute it makes its programmes as practical as possible, constantly keeping its students in touch with reality in a constantly evolving world.

“In so doing, the company visit activity was inculcated as a compulsory part of our Master Programmes.

The company visit is the

platform where our students visit companies in groups to understand the practicality of the programmes they are involved in thus linking class to reality, enhancing better understanding and globally accepted standards,” RBS management states.

During their visit, the students were exposed to practical and applicable contexts as it was presented during in-class lectures; they were involved in interactive engagements, case studies, and practical analysis, networking opportunities as well as recommendations.

“They were able to identify ways to communicate effectively in a business environment (internal and external), understand the importance of the presentation skills and public speaking in the busi-

ness world, understand how the departments within an organisation such as Human Resource, Accounting and Financial, Marketing and Sales join their forces to achieve the business’ goals and meet deadlines, understand how important it is for each organisation to have corporate culture and CSR strategies, identify the scope of internal policies and how they can be applied to benefit the organisation, understand how to work and to collaborate with others in teams and develop networking skills”.

According to the company, the visit is one of the most anticipated activities of its students and we are committed to making the learning experience of our students to be world class and highly memorable.

Fidson Health Care Plc

Ibrahim governance confab to seek solutions to Africa’s developmental challenges TEMITAYO AYETOTO

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ecision-makers from across Africa who will gather at this year’s Ibrahim Governance Weekend (IGW) will be charting course on issues around leadership and public governance on the continent.

The flagship annual event of the Mo Ibrahim Foundation (MIF) billed for April 5-7 in Abidjan, Côte d’Ivoire, will particularly seek ways out of problems holding many African countries back in the cycle of global development.

The Foundation has concluded plans to honour the legacy of Kofi Atta Annan, the late Ghanaian diplomat and sevnth Secretary-Gen-

eral of the United Nations, with the IGW. To lead discussions are leaders in public and private sectors such as Akinwumi Adesina, president, African Development Bank; Abdourahmane Cissé, Cote d’Ivoire’s former minister of budget and State-Owned Entities, and Aliko Dangote, African business magnate.

Others include Hailemariam Desalegn, immediate past Ethiopian Prime Minister, as well as Ibrahim Mayaki, Oumar Seydi, Ellen Johnson Sirleaf and Alex Soros.

The annual Ibrahim Leadership Ceremony will dedicate April 5 to the celebration of Kofi Annan, looking back at his leadership style. Also on April 5, the Now Generation Forum

(NGF), gathering young people from all over the continent, will see African youths debate issues that lay bare analysis, expectations and potential solutions. Three NGF representatives will then participate in the April 6 High-level Forum.

On April 6, focus will shift to the key topic of African migrations.

“Migration, whether referring to economic migrants or refugees and related issues, is currently too often the subject of an emotional or politically-driven debate, especially outside the continent, that overlooks both the real dynamics and the African viewpoint,” MIF said in a statement made available to BusinessDay.

is a leading pharmaceutical manufacturing company in Nigeria. The company is into a technical collaboration with various overseas manufacturers, most of who are market leaders in their areas of specialisation in order to deliver unique products and cost-effective services.

Fidson has over the years of its existence, crafted the pharmaceutical architecture of the industry, playing very defining roles in the emergence of the new generation of industry players. The tremendous and phenomenal growth of Fidson, without a doubt, has been guided by Providence and a team of young, passionate, dedicated and goal-driven field personnel, seasoned managers and a visionary management team driven by a passion for excellence and credibility.

he continued dysphoria in equity market performance has failed to help equity enthusiasts justify the argument to “buy low and sell high”.

On the flipside, the net asset value of money market funds keeps rising and Stanbic IBTC, FBN Capital and ARM continue to control a significant portion to the total money market funds.

A total of N494.91 billion was last reported by the Securities and Exchange Commission (SEC) as the combined net asset value (NAV) of 19 money market funds. However, three funds have continued to completely overshadow other market participants as Stanbic IBTC, FBN and ARM money market funds have a combined NAV of N429.34 billion, a whopping 86.75 percent of the total market value controlled by 15.7 percent of market participants.

As open-ended mutual funds, Money Market Funds invest in a broadly diversified portfolio of short-term, high-quality money market securities such as Treasury Bills, Commercial Papers, Bankers Acceptances and Certificate of Deposits issued by rated banks in Nigeria.

With over N235.37 billion under management, Stanbic IBTC’s dominance of the money market is unquestionable with 47.56 percent of total money market assets. As impressive as the numbers are, other funds are gearing up to contend for dominance.

The absolute net asset value of Stanbic IBTC money market fund had improved by 2.81 percent from the beginning of the year, but this slight increase left them shedding their market share from 49.21 percent at the beginning of the year.

FBN Capital Asset Mgmt.

Limited had to grow its money market fund by 15 percent to

maintain its 29.02 percent market share posting slight increase from 26.8 percent recorded at the end of 2018. Controlling N143.6 billion, FBN Capital is comfortably the second in command of the money market funds as at the last filing of results by SEC on February 15, 2019.

ARM’s 10.39 percent market share at the end of 2018 also shrunk to 10.18 percent midFebruary even as it grew its net assets by 4.16 percent. The N50.36 billion under management is enough to guarantee its spot in the top three money market fund managers in the country as the closest to it is AXA Mansard Money Market Fund with N22.81 billion under management.

The fastest growing fund from the end of 2018 to midFebruary was United Capital Money Market Fund with a growth of 137.02 percent to improve its total assets under management to N2.77 billion from N1.17 billion. This growth shot its market share from 0.25 percent to 0.56 percent.

The closest fund on this growth trajectory was Chapel Hill Denham Money Market Fund which grew by 46.9 percent and grew market share by 0.07 percent.

The total net assets value of all money market funds grew by 6.63 percent from N465.24 billion to N494.91 billion majorly affected by the addition of First City Asset Mgmt Plc’s Legacy Money Market Fund to the pool of funds.

The Nigerian Stock Exchange (“the Exchange” or “NSE”) in conjunction with Fund Managers Association of Nigeria (FMAN), Association of Stockbroking Houses of Nigeria (ASHON) and The Central Securities Clearing System (CSCS) Plc launched the NSE Mutual Fund Trading and Distribution Platform on February 22, 2019 at the NSE in Lagos.

Glo explains support for Africa CEO Forum

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igeria’s national telecoms carrier, Globacom, says it decided to sponsor the 2019 Africa CEO Forum because of its desire to help Africa transform its huge potential into economic prosperity.

The event, the company said, will provide a platform for chief executives of African businesses, international investors and policymakers to champion private sector-led growth on the continent.

“We share Africa CEO Forum’s objective of using regional integration to drive private sector growth and create more African champions,” Globacom said in a statement in Lagos.

Globacom is the 2019

Apex Diamond partner of the event. The company’s executive vice chairman (EVC), Bella Disu, will also play a prominent role at the forum as chair of the ‘Women in Business Initiative’ session.

“This is part of our efforts to empower African businesses and spur economic growth in the region. Since we started operations in 2003, we have been in the forefront of promoting economic growth. We have continuously invested heavily in building reliable communication infrastructure to support economic freedom,” the company said.

“We became the first company to single-handedly build an international submarine cable, Glo 1, to pro-

vide sufficient bandwidth to drive internet penetration,” it said, adding that “the 9,800-km-long cable has landing points in Lagos, Nigeria; Accra, Ghana; Dakar, Senegal; Nouakchott, Mauritania; Casablanca, Morocco; Sesimbra, Portugal; Vigo, Spain, and Bude in England”.

Globacom, which prides itself as the grandmasters of data, also expressed the hope that the forum will galvanise the continent towards prosperity, given the profile of participants and the range of issues to be tackled.

The two-day event will feature over 40 panel discussions, public-private workshops and case studies by business leaders, shareholders, investors, heads of state and ministers.

Monday 18 March 2019

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Politics & Policy

Prioritise welfare of Ogun people as compensation ADP issues IGP, DSS boss 48-hour for their support - Ajimobi advises Abiodun to fish out Olatoye’s killers Akinremi Feyisipo, Ibadan

...Warns against manipulation in rerun polls

overnor,Abiola Ajimobi of Oyo State has advised the Ogun State Governor-elect, Dapo Abiodun, to prioritize the welfare of the people of his state as a way of compensating them for their overwhelming support.

He gave the advice when Abiodun paid him a courtesy visit at his Oluyole Estate, Ibadan, private residence, on Saturday.

On Abiodun’s entourage were the Deputy Governor-elect, Noimot Salako-Oyedele; Senator Lanre Tejuoso; a former Deputy Governor of the state, Segun Adesegun; Tunde Osibodu; Tunde Osinowo; and Afolabi Salisu, among others.

Ajimobi, who expressed appreciation to the people of Ogun State for electing Abiodun, urged the governor-elect to see his election as a rare opportunity to serve his people and better their lots.

While congratulating Abiodun, who he said was his brother and close family friend, the governor described him as gentle, kind-hearted and an epitome of humility.

The governor said, “When my brother, Dapo Abiodun, intimated me about his intension to contest for the Ogun State governorship election, I told him that he should go ahead and that he would be victorious, by the grace of God. “I therefore thank God that today he has become the governor-elect of Ogun State. I have every cause to glorify God on his behalf. In the affairs of man, God has always been present. It is this divine presence that has brought him this victory.

“Dapo is gentle, kind-hearted and an epitome of humility. All these he has demonstrated here today through this visit. While I’m congratulating you on this victory,

Innocent Odoh, Abuja

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L-R: Noimot Salako-Oyedele, Ogun State deputy governor-elect; Dapo Abiodun, governor-elect; Abiola Ajimobi, Oyo State governor, and his wife, Florence, during Abiodun’s courtesy visit to the governor, at his private residence, Oluyole, Ibadan... on Saturday.

let me state that an opportunity to serve is an opportunity to be Godly.

“You must therefore do everything humanly possible to prioritize the welfare of your people as a way of compensating them for the overwhelming support they gave you which led to your emergence as governor-elect.”

The governor told Abiodun to be ready and prepared to step on toes if he wanted to record meaningful achievements and make a change during his tenure.

He said: “If you want to be a good leader and make a change, you must be ready and prepared to step on toes. When you step on toes, the toes will kick you back. Just forge ahead.

“If you really want to make a change, study your environment; have courage, not only to envision but also to make a difference. Put Godliness above all things and ensure that whatever you do is in the best interest of the people.

“While I will tell you that you should not under-estimate your enemies, let me however say that you should not be deterred by their

Election petition: PDP accuses INEC of refusing Atiku access to inspect election materials OWEDE AGBAJILEKE, Abuja

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he People’s Democratic Party (PDP) has accused the leadership of the Independent National Electoral Commission (INEC) of disobeying the Appeal Court ruling which directed the Commission to allow it access to inspect the documents and materials used in the February 23, 2019 Presidential election.

The main opposition party accused the Mahmood Yakubu-led INEC of working with the governing All Progressives Congress (APC) to frustrate its bid to expeditiously file its petition before the Presidential Election Petition Tribunal.

It would be recalled that the Appeal Court had on March 6 ordered the INEC to allow the PDP and its candidate, Atiku Abubakar, access to inspect the documents and materials used in the presidential election.

A statement by Kola Ologbondiyan, PDP National Publicity Secretary, on Saturday, insisted that the Commission has so far denied the party’s legal team access to the election materials

despite the urgency of the matter.

The statement reads: “It is imperative to inform Nigerians that upon obtaining the lawful order of the Court, directing INEC to forthwith, avail Atiku Abubakar and the PDP copies of all the documents and other materials used for the Presidential election, our legal team wrote to the INEC Chairman on the 11th and 12th of March 2019 respectively, causing the Order to be served on INEC and requesting access to the said documents and materials.

“Despite being served with the Order and several follow-ups, the leadership of INEC has refused to grant the PDP and Atiku Abubakar access to the materials and documents, notwithstanding the urgency of the matter.

“This action by the leadership of INEC has further exposed that it has been heavily compromised by the Buhari Presidency to rig the February 23, 2019 Presidential election and to frustrate the quest by Nigerians to reclaim the mandate from President Muhammadu Buhari and save the nation from the crisis of an illegitimate government.

antics. You can lose a battle but you must win the war.

“You will have sycophants along the way but you must remain focussed. I have no doubt that with the level of your intellectual disposition, you will succeed.

The governor said that notwithstanding his defeat at the Oyo South Senatorial District election, he had not lost anything other than the opportunity to serve his people and give them good representation at the Red Chamber.

“When I look at my life, I can say without any equivocation that God has been so kind to me. He gave me the opportunity to serve as a Senator and as governor of Oyo State for two consecutive terms.

Speaking earlier, the governorelect said the purpose of the visit was to thank Ajimobi for his support during the election and to seek his ‘wise counsel’.

While giving glory to God for his victory, Abiodun said that ‘some forces’ did everything possible to scuttle his victory, adding however that God, in His infinite mercy, had given him the grace to win.

he Action Democratic Party (ADP) has issued a 48-hour ultimatum to the Inspector General of Police (IGP), Mohammed Adamu and the Director General of the Department of State Ser vice (DSS), Yusuf Bichi, to fish out the killers of a federal lawmaker, Temitop e O latoye, who was brutally murdered by thugs allegedly loyal to his political rival on March 9 in Ibadan, Oyo State.

The ADP gave this ultimatum during a press conference to express its grief over the murder in Abuja at the weekend.

National Chairman of ADP, Yusuf Yabagi Sani, who read a statement on behalf of the party, lamented that Olatoye, a member of the party, was brutally murdered in broad day light, and to the utter dismay of the party, no visible action has been taken by the relevant security authorities despite the promises they made to secure the citizens before, during and after the polls.

The slain Olatoye was a serving member of the House of Representatives representing Lagelu/ Akinyele Federal Constituency of Oyo State. He contested a Senatorial Election under the platform of the ADP and was said to have convincingly won before the results were allegedly upturned. He was reportedly shot at close range and later died at the Intensive Care Unit (ICU) of the University College Hospital, Ibadan.

The ADP decried that “Olatoye’s death was one among others perpetrated by desper-

ate politicians for selfish and ill-motivated interests. This condemnable act of killings and the impunity with which they are carried have appalled Nigerians and members of the International election Observers, who have also denounced the killings and irregularities that characterised the elections, especially the March 9th Governorship and State Houses of Assembly elections.

“The violence of the 2019 elections has once again proved that some political actors in Nigeria have accepted do-or-die politics as the norm, which has continued to bring death and destruction of property in every election cycle”, the party said.

The ADP condoled with the family, friends and assocites of the deceased and urged them to find solace in the fact that Olatoye was an “ astute and principled politician, a peace maker and a philanthropist per excellence”.

O n th e res ch e du le d ele ctions in some states of the federation, the ADP, warned the Federal Government and the Independent National Electoral Commission ( INEC), against circumventing the process to return unpopular candidates, which that party said could trigger deeper political crisis in the country.

The ADP also called for comprehensive reforms of the electoral process and advised President Muhammadu Buhari, to sign the amended Electoral Act into law to strengthen the process and make it more efficient and effective.

N3b campaign funds tears Delta APC apart Francis Sadhere, Warri

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he crisis rocking the All Progress Congress (APC), Delta state chapter, has gotten messier as an alleged N3 billion campaign funds provided to the party’s gubernatorial candidate, Chief Great Ogboru, was said not be used for the campaigns.

A group under the auspices of Coalition of Delta All Progressives Congress (APC) Support Groups, who made this allegation during a press conference in Warri has therefore, demanded for the probe of Chief Ogboru.

According to the converner of the support group, Prince Daniel Ekiugbo, not up to N1 billion of the alleged N3 billion budget made available for the campaign was expended.

The group urged President Muhammadu Buhari and the National Chairman of the APC, Adams Oshiomole, to set up machinery to find out the true expenditure of the funds provided for the campaign.

The support group also accused Chief Ogboru of refusing to disburse funds for “intensive grassroots” rallies

during the just concluded election.

They further claimed that the refusal of Chief Ogboru to heed to the calls of the national working committee to unite with other party stakeholders, led to the gross failure of the party in the governorship polls, where it scored 215,938 against the Peoples Democratic Party’s (PDP) 925,274 votes.

“We call on the National Leader of the Party, His Excellency, President Muhammadu Buhari and our National Working Committee led

by Comrade Adams Oshiomhole to immediately set inquiry for Chief Great Ovedje Ogboru to explain the whereabouts of the huge Financial Provisions for the entire 2019 General Elections.

“It is of public knowledge that Great Ogboru presented a budget of over three billion naira, which budget was over funded and availed to him.

“There was no evidence anywhere that he spent N1 billion for the elections. He refused to properly disburse and chose to release paltry amounts only to his few chosen supporters.

“Even for his LGA rallies, he never released one Kobo, instead he direct-

ed that local leaders and supporters task themselves to fund such rallies, and because most leaders couldn’t raise such funds, a lot of LGA rallies were either abandoned or turn out to be huge flops!

“We also have it on good authority that commissioner positions were sold N50 million each in advance to raise funds that were diverted from the campaigns!

“APC, as a mega political party, cannot be brought to the low level of mushroom political parties where Ogboru has been practicing his hit-and-run politics of election racketeering and getting away with the dubious acts. Ogboru should be probed,” the support groups stated.

Congratulating President Buhari and his vice, Prof Yemi Osibanjo on their reelection, they pointed out that it is the good governance of the Buhari-led administration that made Nigerians cast their votes for the party again.

All efforts to get reaction from the Delta governorship candidate proved abortive as call and SMS sent to his telephone line had not been replied at the time of filing this report.

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MMT at home in Nigeria as CBN continues...

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It’s been denounced by economists from Larry Summers to Paul Krugman, but might have found a home in Nigeria as the (CBN) continues to directly finance operations of the Federal Government through Ways and Means or money printing.

Data in the Budget Office’s third quarter (Q3) 2018 implementation report published last week shows that the CBN probably funded the Federal Government to the tune of N1.6 trillion as at the end of September 2018.

According to the numbers, the Federal Government spent N5.3 trillion in the three quarters through September 2018, almost twice the N2.8 trillion earned in that period, thereby creating an initial fiscal deficit of N2.5 trillion.

Local and foreign borrowing of N605 billion and N303 billion, respectively, which comes to a total of N908.5 billion, is used to partially finance the deficit leaving a gap of N1.6 trillion.

The report, which is on the website of the Budget Office, does not give any information on where the extra N1.6 trillion the government spent in the period came from.

Isaac Okorafor, spokesperson of the CBN, was not immediately available to comment Friday, as his phone was switched off.

“The CBN is still lending to the Federal Government to make for its revenue shortfall and it’s not on the implementation report probably because they are trying to conceal it,” a former deputy central bank governor told BusinessDay.

“It’s called ways and means advances but it has stayed too long and it has dire implications on the economy,” the person said.

In the Budget Office’s implementation report, there was a line item that read “Interest on Ways & Means”.

In the first quarter of 2018, the government paid N6.74 billion. The amount doubled to N13 billion in the second quarter and settled at N16.6 billion in the third quarter, for a total of N36.39 billion.

The CBN has not published data on overdrafts to the Federal Government since 2017. The last time it did, in June 2017, the apex bank’s overdrafts to the FG was close to N3 trillion, sparking widespread concerns.

Notable among the critics of the CBN’s lending to the FG was the International Monetary Fund (IMF).

An IMF team in 2017, led by Senior Resident Representative and

L-R: Olufisayo Kolawole, head, merchant acquiring and business expansion, Paystack; Wole Adeniyi, executive director, personal and business banking, Stanbic IBTC Bank plc; Lincoln Mali, group head, card and emerging payments, Standard Bank: Khadijah Abu, product partnerships lead, Paystack, and Henry Uku, product manager, Paylater, at Stanbic IBTC Bank’s digital breakfast session in Lagos.

To-do list for Nigeria’s next petroleum...

Continued from page 1

paying interest on money borrowed from foreign and local lend-

ers, whose GDP is forecast to grow by a marginal 2 percent if oil prices find a floor around $60, reforming the oil and gas sector responsible for 90 percent of its revenue to attract investments is a critical necessity, experts say.

“The most important agenda for the next petroleum minister is ensuring the PIB is passed to provide transparency in the sector, reform the NNPC and provide clarity for fiscal, regulatory terms so the oil sector can conform to international standards,” said Adeola Adenikinju, director, Centre for Petroleum and Energy Economics and Law and member of the Central Bank of Nigeria Monetary Policy Committee.

Half a dozen experts in the oil and gas sector surveyed by BusinessDay ranked reforming fiscal and regulatory terms by passing into law a competitive petroleum industry bill as the most urgent task facing the government. Next is leveraging the oil and gas sector to provide linkages across the economy and creating efficiency in the oil and gas sector.

President Muhammadu Buhari withheld assent to the PIGB over concerns that the regulatory agency it sought to create, the Petroleum Regulatory Commission retaining 10 percent of generated revenue, could affect other tiers of government.

However, the Nigerian Extractive Industries Transparency Initiative (NEITI) said the absence of the PIB costs Nigeria $15 billion yearly in investments.

NEITI, in a joint study with Open

Oil, a Berlin-based extractive sector transparency group, also found that Nigeria lost at least $16 billion over the period 2008-2017 due to non-review of the 1993 Production Sharing Contracts (PSCs) with oil companies. Nigeria’s Deep Offshore and Inland Basin Production Sharing Contracts Acts said that terms should be reviewed if oil prices exceeded $20 per barrel and 15 years from the commencement of the PSC Act. “In the past, the executive left the industry bill to the legislature, they need to show more interest this time around,” Taiwo Oyedele, head of tax at PwC Nigeria, said.

Oyedele further said the next petroleum minister should reform the NNPC to make it more transparent, adding, “There has been progress in this area in the past, but more work needs to be done.”

He said that capacity development for the NNPC should be another critical focus.

Henry Biose, a petroleum economist based in Port Harcourt, said a petroleum industry law is a critical framework that will drive investments followed by actions to liberalise the gas sector.

“Our current laws are outdated and if the PIB is not passed, uncertainty in the sector will increase and investors will stay away due to absence of law to protect their investments,” Biose said.

Last year Madagascar, Algeria and Ghana were some African countries that started oil licensing rounds to boost their reserves, increase revenue as well as their capacity to take advantage of soaring oil prices, but Africa’s biggest producer has been

unable to finalise bid round plans started since 2016. Over 186 marginal fields lie fallow because bid rounds have not been conducted leading to loss of billions of naira in revenue.

In 2017, cash-strapped Federal Government said it would conduct bid rounds for its marginal fields to raise funds to mitigate a slump in crude earnings and finance the N7.4 trillion budget. But with the rise of oil prices above $80 per barrel towards the end of the year, more cash lessened the urgency for a new bid round.

Austin Avuru, CEO of Seplat, has often advocated that oil should play the role of an enabler to other sectors of the economy, providing linkages with other sectors that will grow jobs.

He identified gas as next goldmine if reforms are enacted.

Though responsible for 90 percent of Nigeria’s foreign exchange earnings, the oil sector contributes little to grow the GDP. Contribution has remained in the one-digit margin, with all-time highest contribution of 9.84 percent in Q3 2017.

Analysts say the new petroleum minister should make this a priority.

“The minister should ensure that it galvanises the rest of the economy by creating wealth through harnessing the gas sector,” Adenikinju said.

Experts also said the new petroleum minister must boldly reform the downstream sector and abolish wasteful fuel subsidies. The Federal Government spent N2.95 trillion importing petrol to augment supply from the country’s rickety refineries in 2018, data from the National Bureau of Statistics (NBS) show.

“It is a big shame that we are one of the world’s biggest producers of crude oil and still the world’s biggest importer of petrol. The new minister must change this,” Adenikinju said.

Mission Chief for Nigeria, Amine Mati, said the practice was unsustainable.

The team warned the CBN against financing government projects outside budgetary provisions.

“Acting on an appropriate and coherent set of policies to enhance an economic recovery remains urgent.

This includes implementing immediately specific priorities that will help achieve the goals of the ERGP. In the near term, a stronger push for front-loaded fiscal consolidation through a sustainable increase in non-oil revenues would be needed to create space for infrastructure spending, social protection, and private sector credit.

“This should be simultaneously accompanied by a monetary policy that avoids direct financing of the government and is kept sufficiently tight, a unified and market-based exchange rate, and rapid implementation of structural reforms,” Mati and her team said.

Central banks sometimes finance government in period of temporary budget shortfalls through Ways and Means Advances. However, what should be a temporary and small effort has become increasingly permanent and growing fast in Nigeria.

Large expansions of central bank balance sheets have implications both for the real and financial sectors of the economy.

This is because any accumulation of assets implies an increase in corresponding liabilities. Also, expanding the CBN balance sheet in order to finance government spending often leads to inflationary outcomes.

The precarious state of the Federal Government’s revenue only lends itself to why the CBN has continued this unconventional practice, according to Johnson Chukwu, MD of financial advisory services company, Cowry Assets.

“It’s clear why the CBN is still financing the Federal Government, the question is when it will stop because it has to if we must guard against the ugly outcome from such a practice,” Chukwu said.

Ahead of full-year 2018 budget

Monday 18 March 2019

implementation report, the FG probably recorded a third straight year of lower-than-planned revenues.

The government could only manage N2.8 trillion in the first eight months of 2018, according to data obtained from the Q3 implementation report; about half of the N4.77 trillion it should have raised in that period to meet a full-year revenue target of N7.165 trillion.

Except government expenditure takes a haircut, lower-than-planned revenues could leave the country with a record budget deficit of N6.6 trillion, more than three times higher than the projected N1.9 trillion deficit and 74 percent higher than an actual deficit of N3.8 trillion in 2017.

Two straight years of lower-thanplanned revenues in 2016 and 2017 pushed the government’s fiscal deficit to worrying levels and a third straight year of weak revenues would only leave the Federal Government’s finances in more precarious state.

In 2016, the government budgeted N3 trillion but earned only 56 percent, with revenues of N1.7 trillion.

In 2017, actual revenue of N2.7 trillion was only 54 percent of a N5 trillion target, according to data from the Budget Office.

The government turned to borrowing to cushion the revenue shortfall, which was largely driven by weak oil revenues in 2016 and underperforming non-oil receipts in 2017, and has signalled intentions to continue on the path of more borrowing despite warnings from the international and local community over the sustainability of the country’s rising debt stock.

In a three-year spending plan, called the Medium Term Expenditure Framework (MTEF), the Federal Government targets fresh borrowing of N8 trillion between 2018 and 2021.

That would take the Federal Government’s total debt to N26 trillion by 2021, about a third of 2017 GDP. The debt stock could be higher if the government’s over-ambitious revenue projections through those years are not met as has been the case in the past.

Lack of capacity, technology may hamper...

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currently operated by Sterling Energy and Exploration Production Limited, an Indian group on behalf of NPDC. Kelvin Atafiri, who runs Cavazanni Human Capital Limited, an investment firm exposed to the oil and gas sector, agreed that NPDC in its current state does not have the capacity and technology to run OML 11.

The experts also said for a country in dire need of foreign investments, the directive from the Presidency was damaging to Nigeria’s business climate and could chase away potential investors or even discourage some existing ones.

“Yes, there are issues relating to Ogoniland, but the government also cannot resolve it by just directing Shell and its partners which include NNPC. Going public with what seems like a power display is bad for the industry; it scares away investors and should not be encouraged,” said a Lagos-based oil and gas expert who craved anonymity because of his closeness to the issue.

Atafiri said the directive was a bad decision at a time when “economy is unstable and dwindling”.

Foreign investment inflow into the Nigeria petroleum industry hit a three-year low of $133 million in 2018, a sharp decline of 59.82 percent compared to $331 million recorded in the same period in 2017, according to data from National Bureau of Statistics (NBS).

Capital importation into the oil and gas sector is yet to reach its 2016 peak of $720.15 million, which was lower compared to $331.36 million in 2017 as 2014 and 2015 figures stood at $208.18 millionand$29.76million,respectively.

“This is why some of us keep advocating for effective industry governance. It is a strong arrogation of power on the part of the Chief of Staff. I am not sure he has the authority legally,” said Wummi Iledare, a professor of Petroleum Economics and Policy Research at the Centre for Petroleum Energy Economics and Law, University of Ibadan, in an emailed response.

Askedwhetheritmightaffectinvestments in the oil and gas sector, Iledare responded,“Honestly,wearenotlearning from Venezuela experience.”

While some of the experts agreed that government has the right to revoke or renew any licence at any point in time when there is a breach of operation, others said there is also the possibility of Shell triggering the dispute resolution clause or mechanism in the underlying contract and seeking remedies for breach.

Asked if Shell is entitled to any compensation, Agboola said, “Government can value the current infrastructural properties of Shell on the assets and pay them some money or wait for the assets to start producing before giving them some barrels of oil as compensation.”

•Continues online at www.businessday.ng

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Global wheat production to rise 4% as trade slows - FAO TEMITAYO AYETOTO

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orld wheat production for 2019 has been projected to rise 4 percent above the level attained in 2018 as Food and Agricultural Organisation’s (FAO) first forecast on wheat this year bet on production to hit 757 million metric tons, as it sees trade declining.

At almost 171 million tons, the forecast of global wheat trade trimmed by about 800,000 tons since February on account of lower than anticipated purchases by several Asian and South American countries.

With this, world wheat trade would be down 3.3 percent from the 2017/18 record level. The total trade in coarse grains is also seen contracting by 0.7 percent from 2017/18 to around 195 million tons in 2018/19.

The latest indicates a 1.1

Bank treasurers seek insights as Union Bank hosts market dealers DANIEL OBI

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nion Bank recently hosted the quarterly general meeting of the Financial Markets Dealers Association (FMDA) in Lagos.

The meeting was an opportunity for treasurers of Money Deposit Banks (MDBs), market players and their institutions to exchange ideas, share information and deepen business relationships for the development of the financial markets.

According to a statement, Union Bank’s head of corporate banking and treasury, Emeka Okonkwo and other senior executives were joined by dignitaries including the governor-elect of Lagos State, Babajide SanwoOlu, represented by Yomi Oluyomi, and the president, Chartered Institute of Bankers of Nigeria (CIBN), Uche Olowu.

The programme featured an informative presentation by economist, Doyin Salami, on the topic ‘Navigating the Next Level for the Economy and Markets.’ Salami shared insights into the 2019 economic outlook, to assist market players and Union Bank customers as they position themselves for the year.

Delivering his remarks, Okonkwo, who spoke on behalf of the CEO of Union Bank, highlighted the key role of the FMDA in boosting the growth and development of the financial markets and the Nigerian economy.

million tons drop from February, as a downward adjustment to global trade in barley - reflecting further cuts in China’s imports - should more than offset an expected increase in maize trade.

For coarse grains, harvesting of the 2019 crops in southern hemisphere countries including Argentina and Australia is expected to begin in the coming months, while planting operations will commence in May in the northern hemisphere.

Also following the downward revision of the 2018 world cereal production, the forecast of global cereal utilisation in 2018/19 has also been lowered to 2.65 million tons, with most of the revision driven by expected cuts in the feed use of major coarse grains, especially in the United States.

However, world utilisation of coarse grains in 2018/19 is still set at 2.0 percent above the previous

season’s level, while global utilisation of rice is seen to expand by 0.9 percent and that of wheat by 0.5 percent.

FAO’s forecast of global cereal stocks for crop years ending in 2019 has been lowered since February to 766.5 million tons. At these forecast levels, the ratio of global cereal carryovers to utilisation in 2018/19 would fall from 30.5 percent in 2017/18 to 28.3 percent in 2018/19, which still represents a relatively high level.

The latest downward adjustment mostly concerns the inventories of wheat and maize, while forecasts for end-season stocks of barley and rice have been raised since the previous report.

Larger than earlier anticipated drawdowns of maize stocks in southern hemisphere countries and the United States are also seen to push down total coarse grains stocks in 2018/19 by almost 11 percent.

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Obaseki advocates sports development as tool for youth empowerment, economic diversification

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do State governor, Godwin Obaseki, says the state government will harness the sporting talent in the state as a tool for youth empowerment and economic diversification.

Governor Obaseki said this while delivering a welcome address at the Extra-ordinary Meeting of the National Council on Sports, in Benin City, the Edo State capital.

According to Obaseki, Edo State is reputed for putting up superlative performance in sports, which was reaffirmed during the 19th National Sports Festival (NSF) held in Abuja last year.

The administration places high premium on sports development, which influenced the decision to bid for the hosting right of the National Sports Festival, the governor said, noting, “We took deliberate

decision to revamp all sporting facilities across the state, before putting in the bid.”

He said, “We took the decision to build one mini-stadium in each local government area across the state and realised that to be a sporting state, facilities must be provided at the grassroots to tap talent.”

On the state’s preparedness for the 2020 National Sports Festival, the governor said, “After your meeting today, we shall be publishing the list of our formidable Local Organising Committee and sub-committees to drive the process.”

He said after the state government got the hosting right for the National Sports Festival, the scope of work at the Samuel Ogbemudia Stadium was expanded, adding that the state government has streamlined her security architecture to

ensure visitors, who will be in the state for the Sports Festival are secure and safe during their stay.

Obaseki commended the Minister of Youth and Sports Development, Solomon Dalung, for reviving the National Sports Festival, which was not held for over six years before his appointment, and reassured the minister and other participants at the meeting that his administration will put up a good showing next year.

On his part, Dalung commended the Edo State Government and the people for the successful hosting of the Extra-ordinary Meeting of the National Council on Sports, and explained that the session focused on efforts to advance sports in Nigeria as well as the successful hosting of the 20th edition of the Sports Festival scheduled to hold in 2020, in Edo State.

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APC rejects conclusion of Bauchi guber polls, suspension of Rivers election

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Shippers Council frowns at shipping lines introducing new surcharges

... claims victory in states declared inconclusive … threatens to take case to global shippers’ forum JAMES KWEN, Abuja

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uling All Progressives Congress (APC) has rejected the conclusion of collation of results for Tafawa Balewa Local Government Area of Bauchi State scheduled for Tuesday, March 19, 2019.

The Independent National Electoral Commission (INEC) had declared Bauchi governorship election inconclusive following the cancellation of results from Tafawa Balewa LGA on account of violence and other irregularities and rescheduled supplementary polls, but rescinded the decision in line with the report of a Committee of Inquiry.

APC in a statement signed

by Lanre Issa-Onilu, the party’s national publicity secretary, on Sunday described the decision as illegal, biased and a ploy to favour the main opposition People’s Democratic Party (PDP) to the detriment of the APC. “INEC’s decision is illegal as the electoral body and contravenes the provisions of the Electoral Act 2010 as amended. We reiterate that according to Nigeria’s 1999 Constitution (as amended)

and INEC Guidelines for 2019 General Elections, the electoral body is not empowered to reverse any decision taken at the Collation Centre by the Returning Officer appointed for that purpose.

Such decisions can only be reversed by a court of law, especially when INEC cannot approbate and reprobate,” the statement said.

APC also condemned INEC’s decision to suspend the Rivers State election and the plan to fix a new date for the polls. It accused the Commission of playing PDP script in the oil-rich state.

“We are concerned and deeply troubled by the unfolding events in Rivers State. The APC strongly condemns this horrid dance in Rivers State.

This unholy alliance between Governor Nyesom Wike, PDP and INEC is to prevent Rivers people from electing a candidate of their choice by imposing Wike, the PDP candidate on them. It was glaring that Wike was losing until INEC stepped in to halt the process apparently to save Wike from impending defeat. INEC must put a halt to this madness and brazen illegality,” APC said in the statement.

AMAKA ANAGOR-EWUZIE

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igerian Shippers Council (NSC) has condemned the imposition of several surcharges by multi-national shipping liners bringing cargoes into Nigeria.

The Council, which is the port economic regulator, is particularly worried that most of the surcharges were imposed on Nigerian shippers contrary to the provisions of the United Nations Conference on Trade and Development (UNCTAD).

It listed some of the surcharges to include Peak Season Surcharge (PSS); Extra Risk Insurance (ERI)/ Carrier Security Fee (CSF) surcharge; Congestion Surcharge (CS); Freight Tax Surcharge (FTS); Operations Cost Recovery (OCR); Low Sulphur surcharge (LSS); Bunker Adjustment Surcharge (BAS), and Currency Adjustment Surcharge (CAS).

Hassan Bello, executive secretary, NSC, who described the surcharges as unjustifiable, said the Council would take the matter up with the Global

Shippers Forum (GSF), and advised the global body to call the shipping lines and their agents to order.

Bello explained that while some of the charges were supposed to be temporary, reduced or cancelled as allowed by UNCTAD and as the situation in the ports changes, the shipping lines had maintained a permanent imposition of the charges on helpless Nigerian shippers.

According to Bello, the incidents of piracy that have nothing to do with Nigeria are given different colorations in order to ride on the risk created by increase rate of piracy to place a surcharge on cargoes coming to Nigeria.

“Everything that happens, even if it is in Togo or Benin Republic, it is attributed to have taken place in Nigeria.

Even local infractions like somebody just enters the ship illegally even without weapons; it is reported as incidence of piracy in Nigeria. But, that is not piracy, it is probably robbery incident.

Piracy is total command of the ship on the high sea,” Bello said.

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FG explains reasons over suspension of Iju-Abeokuta SGR free train service STELLA ENENCHE, Abuja

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igerian minister of transportation, Rotimi Amaechi, says the China Civil Engineering Construction Corporation (CCECC) suspended the free train ride from Lagos - Abeokuta on the partly completed Standard Gauge Rail line over safety concerns during the just concluded general elections in Nigeria.

Amaechi, who gave reasons for the slow pace of work on the Lagos - Ibadan rail project, however, apologised to the public.

The minister, who gave the explanation in Ibadan on Friday at the inspection of the ongoing Lagos - Ibadan rail project, said the CCECC suspended the ride because the second line was yet to be completed.

“The slowdown of work was due to the elections as their company policy because most of them travelled back to their country for the elections, but they are just coming back and the speed will increase.

“It was suspended by the Chinese and the excuse they gave me was that they cannot allow it run because of safety

since they have not completed the second line but they are almost through with it.

It is almost completed from nearly Iju to Abeokuta.

“I want to apologise to Nigerians that they suspended it when they left the country which I didn’t envisage.

I think I should go back,” he said.

The minister also assured that by the second week of April, laying of track would have reached 95 per cent; very close to Ibadan.

His words: “You can see that they are back to work and they are already doing civil work before the rains that means that by the time we come on the 28th, they would have gone far with the civil works. Some areas they will complete it to what they call MC one level before they lay the tracks.

“They promised that by the time we come by 28th, they should be able to get to kilometre 95 track laying. So that by second week in April, they will be very close to Ibadan with track laying’’.

The minister said, it has always been an issue about gangs whereby some gangs don’t have equipment, which is at section three which is kilometre 120.

Monday 18 March 2019

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63

INSIGHT

S&P rates Nigeria ‘B/B’; Outlook stable Overview

• Nigeria’s economic performance remains weak and its external debt moderate. We consider fiscal consolidation will be key in the period ahead.

President Buhari has secured a second term, which provides his government with another opportunity to strengthen economic policy framework and consolidate public finances.

• We are therefore affirming our ‘B/B’ sovereign credit ratings and ‘ngA/ngA-1’ Nigeria national scale ratings on Nigeria.

• The outlook is stable.

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Rating action & outlook n March 15, 2019, S&P Global Ratings affirmed its ‘B/B’ long- and shortt e r m s ov e re i g n credit ratings on Nigeria. The outlook is stable. At the same time, we affirmed our long- and short-term Nigeria national scale ratings at ‘ngA/ngA-1’. The stable outlook balances the risks associated with Nigeria’s still-weak economy against its moderate external debt and external buffers. We may lower the ratings if Nigeria’s international reserves were to decline markedly and at the same time its external debt rose much faster than we currently expect. We could raise our ratings if Nigeria’s economic performance were to improve markedly more than our base case--for example, if it saw positive real per capita growth, or it consolidated its fiscal deficits more quickly.

Rationale The ratings on Nigeria are supported by its relatively low general government debt stock, the country’s moderate external indebtedness, and its moderate international reserves. The ratings remain constrained, in our view, by the country’s low economic wealth, weak institutional capacity, and lower real GDP per capita trend growth rates than peers at similar development levels.

Institutional and Economic Profile: Weak economic performance, with slower trend growth than peers: • By securing a second term as leader of Nigeria, Mr. Buhari has gained another opportunity for his government to improve the economy and stabilize public finances.

• The economy is growing more slowly than that of peers that have similar wealth levels.

Nigeria has a democratic political system and has tested its ability to transfer power between different political parties. However, we regard its institutions as weak and policy predictability as low. Fiscal budgets are

frequently passed well after the year has begun, which impedes the government’s responsiveness to economic challenges.

Buhari’s centralized decision making Decision-making at the federal level has largely been centralized in the office of President Buhari, although we consider that his government’s federal system does help to redistribute wealth and spread power, to some extent.

Security Security risks from Boko Haram in the northeast have abated slightly, compared with the past three years, but there are still sporadic attacks on oil pipelines in the Niger delta.

Elections In the general elections held on Feb. 23, 2019, Mr. Buhari won a second term with 56% of the votes.

His nearest challenger, Mr. Atiku Abubakar, garnered 41% of the votes and is contesting the election outcome in courts. State and local elections were held on March 9 and the final results are still being collated.

Our base case is that Mr. Buhari and the APC coalition he has so far led will form a new government within the next few weeks, and that the policy framework will not change significantly.

The result of the presidential elections provides Mr. Buhari’s government with another opportunity to strengthen the economic policy framework and consolidate public finances.

Weak economic performance Nigeria’s economic performance has been weak--GDP per

“

capita has been negative and debt-servicing costs absorb at least 30% of the country’s fiscal revenues, which constrains its fiscal flexibility. Nigeria is a sizable producer of hydrocarbons.

The oil sector’s direct share of nominal GDP is officially estimated at about 10%, but oil and gas account for over 90% of exports and at least half of fiscal revenues. Economic data released by Nigeria’s National Bureau of Statistics show that Nigeria’s economy grew by 1.9% during 2018, based on improving performance in non-oil sectors

Nigeria’s economic performance has been weak--GDP per capita has been negative and debt-servicing costs absorb at least 30% of the country’s fiscal revenues, which constrains its fiscal flexibility

as well as rising oil prices. Agriculture, manufacturing, and services (which comprise the transport, information, communication, and technology sectors) have helped the economy grow faster in 2018 than the 1% it achieved in 2017.

In our view, the increase in the availability of foreign currency and the flexible exchange rate have helped the non-oil sector grow.

That said, average oil production is close to 2 million barrels per day and we forecast that oil prices will decline over 2019 and 2020 (see “S&P Global Ratings Lowers Brent And WTI Oil Price Assumptions For 2019 Through 2020; Natural Gas Price Assumptions Are Unchanged,” published on Jan.3, 2019). Low oil prices are likely to present fiscal pressures and limit growth, stimulating government expenditure.

In the medium term, we expect improvements in the non-oil sector to support our forecast of economic growth rising to at least 2% in real terms. However, when we use 10-year weightedaverage growth rates to estimate real per capita GDP growth, we calculate that the real economy is shrinking by 0.7% a year, well below the economic performance of peers that have similar wealth levels. Nigeria has significant infrastructure shortfalls and low income levels, with GDP per capita

estimated at US$1,800 in 2018.

Flexibility and Performance Profile: The post-election period provides an opportunity for the government to pursue fiscal consolidation: • Net external debt is likely to increase over 2019-2022 if fiscal financing remains externally funded and external buffers stay at current levels.

• After the elections, Nigeria could consolidate its fiscal position if it increases non-oil revenues while moderating capital spending.

Although oil revenues support the economy when prices are high, they expose Nigeria to significant volatility in terms of trade and government revenues.

Consequently, Nigeria’s trade balance is significantly affected by changes in the price of oil.

Nigeria also consistently runs substantial deficits on the service and income balances.

The most consistently supportive feature of Nigeria’s current account is the surplus on net transfers, largely based on diaspora remittances by Nigerians living abroad.

In 2018, oil prices increased by close to 30%, boosting Nigeria’s export revenues.

However, imports of goods and services surged at the same time. We estimate that the current account surplus in 2018 may be only 2% of GDP; in 2017, when oil prices were lower and imports were compressed, it reached 3% of GDP. Over 20192022, we assume that oil prices will decline, which will reduce export revenues. We also expect imports to moderate, albeit more slowly. Our overall forecast of the current account is a near balance, averaging -0.4% over 2019-2022.

We now estimate gross external financing needs will average close to 100% of current account receipts (CARs) plus usable reserves during 2019-2022. The government is likely to cover its external financing needs through a combination of concessional credit lines and the international capital markets.As part of exchanging expensive domestic debt for

cheaper foreign currency debt and general external financing needs, the government last year issued Eurobonds worth about $6 billion. The impact of rising net external debt in 2018 was moderated by improving foreign exchange reserves at the Central Bank of Nigeria (CBN).

Expect more eurobond In 2019, we expect Nigeria’s government to issue further Eurobonds before moderating issuance levels in 2020-2022. We assume central bank reserves will remain at the current levels. The government drew down some of its savings in 2018 from the excess crude account (ECA). It was above US$2 billion at the start of 2018, and is now estimated to be close to US$1 billion. We add government savings from the ECA plus the Nigeria sovereign wealth fund (which stands at about US$2 billion in 2019) to calculate public sector liquid external assets.

We expect a reduction in external assets, combined with rising external indebtedness, to weaken Nigeria’s net external position. Therefore, we estimate narrow net external debt (external debt minus liquid external assets) will likely rise from an average of about 30% of CARs in 2018 to 45% over 2019-2022.

Government deficit Although Nigeria produces an international investment position (external asset and liability position), our analysis of Nigeria’s external accounts is hampered by discrepancies in the data that average 20% of CARs. The discrepancies occur between changes in the external stocks and changes in the balance of payments.

Higher oil prices in 2018 have helped increase government revenue, largely offsetting weak nonoil revenue growth. However, projects requiring capital expenditure have been implemented more quickly and deficits remain at the state and local government levels. As a result, we project the general government deficit (which combines deficits at the federal, state, and local government levels)

“

Inflation is declining in Nigeria, although it remains high. It averaged 12% in 2018, down from 16.5% in 2017. We anticipate that it will fall further to 10% in 2019, and average around 9% over the medium term

will remain above 3% of GDP this year. Our forecast shows oil prices declining and capital expenditure moderating after the election cycle. At the same time, a pickup in non-oil economic activity should help grow non-oil revenues. These factors should help Nigeria consolidate its fiscal positon, as headline deficits decline closer to 2% of GDP by 2022. We estimate the annual change in net general government debt will average 2.65% of GDP in 2019-2022.

In projecting the overall general government deficit, we exclude the clearance of fiscal arrears to contractors, suppliers, and lower levels of government that have yet to be reconciled. Fiscal arrears are estimated at 2%-3% of GDP. A plan to clear them by issuing debt securities denominated in Nigerian naira (NGN) in 2019 has been proposed--if the national assembly approves the plan, our deficit and debt projections could increase by the same margin.

Overall, we forecast that Nigeria’s gross general government debt stock (consolidating debt at the federal, state, and local government levels) will average 26% of GDP for 2019-2022, which compares favorably with peer countries’ ratios. We also anticipate that general government debt, net of liquid assets, will average close to 20% of GDP in 2019-2022.

The government created the Asset Management Corporation of Nigeria to resolve the nonperforming loan assets of Nigerian banks.

We include its debt, which comprised about 3% of GDP in 2019, in our calculations of gross and net debt. Over 70% of government debt is denominated in naira, which limits exchange rate risk.

Debt service Despite the relatively low amount of government debt, the cost of servicing it is relatively high, as a percentage of revenue, because of the high coupon on local currency treasury bills and bonds. In our view, the high debtservicing costs--projected to remain over 40% of revenue at the central government level--limit fiscal flexibility. We project average debt-servicing costs for 20192022 of 30% of general government revenues. This represents a steep increase from just 10% in 2014.

Not only are oil revenues lower than they were in 2014, borrowing costs in the domestic market have also risen.

To reduce its borrowing costs, the government has borrowed externally to fund maturing shortterm domestic debt obligations.

FX markets We assess the exchange rate regime as a managed float.

The CBN currently operates multiple exchange rate windows.The main exchange rate windows are the official CBN rate for government transactions, CBN window for banks and manufacturing companies, and the Nigerian Autonomous Foreign Exchange Fixing Mechanism (Nafex) window for all other autonomous transactions. Apart from the official rate, all other rates have converged to the Nafex window, averaging NGN362 to US$1 in 2018. We do not expect any policy decision to merge the various exchange rate windows.

Inflation Inflation is declining in Nigeria, although it remains high. It averaged 12% in 2018, down from 16.5% in 2017. We anticipate that it will fall further to 10% in 2019, and average around 9% over the medium term. Good performance in agriculture has helped by increasing crop outputs and the food supply. Lower food prices, combined with lower oil prices and a stable exchange rate, has kept import costs stable and relatively low.

Banking sector The banking sector has been operating under difficult economic and regulatory circumstances. We still consider the Nigerian banking sector to be in a correction phase. It suffered high credit losses of 2.5%-3% over the past two years and we expect flat or negative credit growth in 2019-2020. That said, the banking sector has stabilized since the 2016 oil price shock--we think material change unlikely in the next 12-24 months. We also expect profitability at the top-tier banks to remain resilient to the credit cycle.

In 2018, Nigerian banks implemented International Financial Reporting Standards (IFRS) 9 using their regulatory risk reserves, thus shielding their capital ratios from breaching the minimum capital requirements.

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Demonstrate political will in open governance partnership, Centre LSD tells FG HARRISON EDEH, Abuja

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frican Centre for Leadership, strategy and Development (Centre LSD), a civil liberty organisation, weekend said the Federal Government of Nigeria had shown low level of political support and commitment to the Open Government Partnership (OGP), which it signed into law in 2016.

The centre stressed that the President Buhariled government had not achieved much in the first two and half year of the National Action Plan (NAP) of the OGP, which expires June, despite committing to the pact in the London anticorruption summit in 2016.

The programme coordinator, Centre LSD, Uchenna Arisukwu, speaking at a media briefing on Friday to commemorate the 2019 OGP week, recalled that Nigeria became the 70th member and the 12th African country to join the OGP process committed to open contracting. “An approach that ensures that transparency frameworks are ap-

plied to procurement systems,” Arisukwu explained.

Arisukwu said since the signing into law the OGP

by President Buhari, Nigeria had recorded modest achievements in the area of open budgeting, assets recovery, open procurement, access to information, citizens engagement and use of technology.

He however stressed that despite the “achievements” there was much still left to be achieved with the OGP, especially as the process for the development of the second NAP was underway.

To this end, the centre stressed the need for the Federal Government to demonstrate a high level political commitment to the process by ensuring that the policy objectives of the government draw from and support the commitments of the OGP NAP and that highlevel commitment officials prioritise OGP events and programmes.

The centre also called for an increased access to government programmes and policies around anti corruption, fiscal management, social investments and that

technology platforms and systems need to enhance access is improved upon.

Furthermore, the centre also stressed the need to deepen citizen participation with budget process, procurement process and anti-corruption strategy implementation and for government to ensure high level engagement with citizens in the development of the second OGP NAP. “There should be a strategic and systematic approach for citizens at all levels to be actively involved in the process from start to finish,” he said. He said, “ there should be a dedicated avenue in form of websites and at form where citizens can engage the process by making inputs into what they want see in the plan.

“A thorough review of the first NAP should be carried out to identify areas of weakness than can be strengthened in the second plan.”

The centre commended Kaduna, Kano, Anambra, Ebonyi, Abia, Enugu, Niger, Edo, and Adamawa for signing up and domesticating the OGP and developing states action plan.

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World Business Newspaper

US college cheating scandal snares fund sector executives Big names in asset management are among the accused JENNIFER THOMPSON

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ollywood actors grabbed the headlines but a clutch of big names in asset management featured in the group of wealthy parents accused of paying millions of dollars to buy places for their children at elite American universities.

Those charged as part of Operation Varsity Blues include Douglas Hodge, former chief executive of investment manager Pimco, John Wilson, former independent member at one of Franklin Templeton’s fund boards, and Bill McGlashan, a former top executive at private equity firm TPG and poster boy for the impact investing sector.

In a criminal complaint filed in Boston, the Department of Justice accused 50 individuals of engaging in a scheme to bribe college entrance-exam administrators and university coaches.

An FBI affidavit filed in support of the complaint listed Georgetown, Stanford and Yale among the eight institutions affected in one of the biggest cheating scandals in US higher education.

Mr Hodge, a Pimco veteran who led the $1.7tn California investment group between 2014 and 2016 before retiring, is alleged to have used bribery to get two of his children into college “as purported athletic

recruits” and to have considered the use of bribery to help a third child into college.

Mr Wilson is the chief executive of Hyannis Port Capital, a private equity and commercial property group he founded in 2002. He was also lead independent trustee of the Franklin funds board and chair of its audit committee. He no longer holds these positions, according to a statement from Franklin, which did not provide further detail.

Mr Wilson is accused of conspiring to bribe a water-polo coach at the University of Southern California to help his son gain admission, as well as seeking to use bribes to help his daughters gain admission to Harvard and Stanford as athletes.

“Thanks again for making this happen! Pls give me the invoice,” Mr Wilson wrote a day after his son was admitted to USC in 2014.

The DoJ’s criminal complaint alleged that Mr McGlashan paid a university admissions consultant $250,000 to find a “side door” into USC for his son.

The affair has cost him his roles at TPG Growth and the Rise Fund, an ethical investment vehicle. News of his departure came in clashing statements from the two sides. Mr McGlashan told fellow directors he had resigned but TPG said his employment had been terminated.

Correspondence reviewed by the Financial Times appeared to

Chancellor raises prospect of delay to third vote on Brexit Deal will only be brought to Commons if it has enough support, warns Philip Hammond LAURA HUGHES

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he third parliamentary vote on Theresa May’s Brexit deal may not go ahead next week if the government does not believe it can win, the UK chancellor Philip Hammond has warned.

The UK prime minister is expected to table a third Commons vote on her Brexit deal next week — probably on Tuesday. But it has already been heavily defeated twice after large-scale rebellions by Eurosceptic Conservative MPs and the persistent opposition of the Democratic Unionist party’s 10 MPs. Mr Hammond told BBC One’s The Andrew Marr Show on Sunday the vote would “not definitely” be held before a European Council summit on Thursday.

“We will only bring the deal back if we are confident that enough of our colleagues and the DUP are prepared to support it so that we can get it through Parliament,” he said. “We are not just going to keep presenting it if we haven’t moved the dial.”

Mr Hammond added it was now “physically impossible” to leave the EU on March 29, as a “short extension” would be required to see the necessary legislation passes through the Commons.

His views were echoed by Liam Fox, the international trade secretary, who told Sky News’ Sophy Ridge: “It would be difficult to justify having a vote if we knew we were gong to lose it.”

Downing Street officials con-

firmed the government would not hold a third meaningful vote next week unless they had a “high degree of confidence in winning it”.

The DUP leadership, which has been in discussions with the government over the weekend, said there were “still issues to be discussed” before it could support the agreement.

Mrs May’s allies believe that if the DUP backs the deal, it will convince rebel Tory Eurosceptics to fall into line next week.

The DUP held talks on Friday with senior government figures, including Mr Hammond, in a possible sign Mrs May may be preparing to make a more generous financial offer to the party in return for its continued support of Mrs May’s minority administration after its current agreement expires next year.

Mr Hammond denied that an offer of extra cash was part of his discussions with the DUP, but added: “We are coming up to a spending review . . . we will have to look at all devolved budgets.”

A vote on Tuesday would require the government to table an emergency business motion on Monday.

Asked if the government had secured enough support, Mr Hammond told the BBC: “Not yet, it is a work in progress.”

The DUP is expected to continue its discussions with the government on Monday morning and Downing Street officials confirmed the government is “constantly” talking to backbench Tory MPs to get them “over the line”.

Douglas Hodge, formerly chief of Pimco, is said to have used bribery (Anthony Kwan/Bloomberg)

confirm that Mr McGlashan had submitted his resignation by the time he received notice.

Mr McGlashan is a founder of the Rise Fund with singer Bono and recently received an industry award for his work.

The fund, whose mandate is to achieve “social and environmental impact alongside competitive financial returns” invests in several education businesses in the US, Argentina and India.

These include Renaissance and Dreambox, which both provide educational software and learning

materials to US schools. “Dreambox provides students the opportunity to receive high-quality learning tools, regardless of their background,” the fund’s website states.

There has been a surge in the number of sustainable and ethical investment product launches as investment managers seek to burnish their image as responsible investors.

“What asset managers cannot do is preach the virtues of ethical investing to their clients but in their private lives do something quite different,” said Amin Rajan, chief executive of Create-Research, the

consultancy.

Mr Rajan said that although TPG had acted swiftly to contain the risk of reputational fallout there would still be some damage. “These sorts of things do undermine faith in asset managers.”

Mr McGlashan and TPG were relatively new entrants to impact investing but were notable for securing $2bn in their first fundraising, said Fran Seegull, executive director of the US Impact Investing Alliance, a non-profit that promotes environmental and social considerations in investing.

Deutsche and Commerzbank begin merger talks Germany’s two largest listed lenders agree to evaluate tie-up after government signals support OLAF STORBECK AND ARASH MASSOUDI

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he senior management of Deutsche Bank and Commerzbank have begun exploratory merger talks on Sunday after the executive boards of Germany’s two largest listed lenders agreed to evaluate the benefits of a tie-up.

“We confirm that we are engaging in discussions with Commerzbank,” Deutsche Bank said at midday on Sunday in a regulatory statement, adding that “there is no certainty that any transaction will occur”.

Commerzbank informed investors that both lenders “have agreed today to start discussions with an open outcome on a potential merger”.

A person familiar with the process told the Financial Times that talks would start immediately, while a detailed due diligence process would commence next week when the banks would set up a number of committees to explore specific questions.

Another person briefed on the matter said that the exploratory talks “won’t be over in a week” but that he expected protracted negotiations over a deal that would create the eurozone’s second-largest lender after BNP Paribas, with €1.9tn in joined assets and more than 140,000 employees.

In a note to employees published, Deutsche Bank chief ex-

ecutive Christian Sewing said: “we will only pursue options that make economic sense”. He also referred to experience showing that thare were “a lot of potential economic and technical factors that could hinder or prevent” a merger.

German service sector union Verdi, which opposes the deal, expects that in a worst-case scenario, up to 30,000 jobs would be cut. “I think that’s a realistic number,” a senior manager at one of the banks told the FT, adding that he saw no outlook where unions would back the transaction.

The decision to start formal talks was taken by the boards on Sunday after the German government signalled over the weekend that it would support the restructuring needed to make a success of the tie-up.

According to a senior member of Germany’s government, Berlin’s priority is that the country’s largest banks address their chronic problems of bloated costs and measly returns on equity.

“A merger [of Deutsche Bank and Commerzbank] could be one of several options to do so,” this person told the FT, adding that the government was not “pushing” the two banks into a deal.

Deutsche Bank had informed a large shareholder over the weekend about Sunday’s board meeting, a person close to one top-five investor said, adding that the shareholder was still not entirely convinced about the merits of a tie-up with Com-

merzbank but was willing to back a deal under the right circumstances.

“This must be driven by compelling business arguments, not by political ones,” the person said.

So far, the only large Deutsche Bank shareholder backing a merger is Cerberus, which besides its 3 per cent stake in Germany’s largest lender also holds a 5 per cent stake in Commerzbank.

Deutsche Bank chief executive Christian Sewing dropped his opposition to exploring a multibillioneuro merger with its smaller rival last month and asked the management board for a formal mandate to sound out options.

Commerzbank chief executive Martin Zielke saw the merger as one of the few realistic options for consolidation, as a cross-border deal with another European lender would face high regulatory and political hurdles, according to people briefed on his thoughts. However Mr Zielke would insist on several key preconditions before backing a merger.

Future cuts to Deutsche Bank’s ailing investment bank could prove a sticking point. “[A merger] is a once-in-a-lifetime opportunity to put everything under scrutiny,” a person familiar with the Commerzbank chief’s thoughts said, adding that this process should lead to the closure of more lossmaking investment banking activities. In the decade after the financial crisis, Commerzbank almost entirely disposed of its own investment banking activities.

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NATIONAL NEWS

FT Macron under renewed pressure after another weekend of violence

South Sudan peace deal in jeopardy

President cuts short vacation as looters smash shops and set fire to restaurant

Integration process to end five-year conflict between President Kiir and rebel leader Machar yet to start

HARRIET AGNEW

TOM WILSON

F

rench president Emmanuel Macron has come under renewed pressure after another weekend of anti-government protests erupted into violence, with looters smashing scores of shops and setting fire to a restaurant in central Paris.

Mr Macron was forced to cut short a skiing holiday and return to the capital as an 18th consecutive Saturday of demonstrations by the gilets jaunes or yellow vests turned into a riot on the Champs-Elysées.

After violent protests threatened to derail his reform drive late last year, the president regained the political initiative with increases in pensions and in-work benefits and a nationwide debate on tax and public services. Saturday’s events have once again put him on the defensive, suggesting the debate has failed to defuse public anger and with opposition leaders decrying a breakdown in law and order.

“What happened today on the Champs-Elysées is no longer a demonstration,” Mr Macron said at an emergency meeting with ministers on Saturday on his return from the mountains. “All those who were on the avenue were “complicit in this”, he added. “Many things have been done since November, but today shows that on these matters we are not there. I want to make strong decisions as soon as possible so that this does not happen.”

Prime minister Edouard Philippe and Christophe Castaner, interior minister, are due to discuss new security measures later on Sunday.

Police made nearly 240 arrests during Saturday’s unrest, during which nearly 80 shops and restaurants including the historic brasserie Fouquet’s were burnt, looted or vandalised. Protesters threw stones at police, who fired tear gas and water cannon. There were claims the violence was committed by professional criminals masquerading as demonstrators. In total an estimated 32,000 gilets jaunes marched throughout France on Saturday, including 10,000 in Paris. The interior ministry said it identified about 1,500 demonstrators as violent.

The gilets jaunes movement began as an online protest against rising fuel taxes but quickly morphed into a wide-ranging revolt against higher taxes, declining living standards, and the president himself. In December last year, Mr Macron announced a €10bn package of economic measures aimed at defusing the protests and in January he embarked on a countrywide tour to hear the French people’s grievances as part of a nationwide consultation.

There were early signs that the great national debate had been a political success for Mr Macron, two months ahead of the European elections in May. Opinions polls before Saturday’s violence showed that he had recovered all the ground he lost after the first gilets jaunes demonstration in November.

However, the levels of violence on Saturday — which kicked off as Mr Macron was enjoying the ski slopes in the Pyrenees — prompted a new round of criticism from rivals.

A

Demonstrators wave the national flag in Algiers on Friday © Reuters

Algerians take to the streets in biggest government Protesters believe concessions by ruling elite were just a ploy to buy time HEBA SALEH

H

undreds of thousands of Algerians marched in cities across the country on Friday in the biggest protests yet, dashing regime hopes that President Abdulaziz Bouteflika’s pledge not to seek a fifth term would end the demonstrations.

After weeks of mass protests, Mr Bouteflika, who has been incapacitated since a stroke in 2013, said on Monday that elections scheduled for April 18 would be postponed and he would not stand for re-election. He said instead that he would oversee a transition period.

But many of those who have taken to the streets believe the concessions were a ploy by the ruling elite to buy time to install its chosen successor.

The demonstrations on Friday — the start of the weekend in the north African state — were viewed as the first test of popular sentiment after the government’s

concessions were announced.

In Algiers, the capital, hundreds of thousands of people packed into the city centre, many waving national flags and holding placards with slogans that demanded the 82-year-old president step down when his term officially ends on April 28.

“Take a rest Bouteflika and go to sleep, we have closed the door on your era,” read one of the signs.

Demonstrations were also held in cities from Batna in the mountains in the east of Africa’s largest country, to the port of Oran in the west.

Mr Bouteflika promised this week to oversee a political transition that would draft a new constitution and set another date for the presidential election.

The under-pressure government was also reshuffled this week in a bid to give the regime a new look. This included the dismissal of Ahmed Ouyahya, a much-hated three-time prime minister. He was replaced by Noureddine Bedoui, who said on Thursday that the

transition would be completed within a year.

But Mr Bouteflika’s support base appears to be crumbling with senior businessmen, veterans of the war of independence from France and even some leaders of the ruling FLN party abandoning him.

The protests began three weeks ago and are the largest in Algeria for decades as they have taken on a national tenor. During the 2011 Arab uprisings, the government was able to stem localised protests by pledging political and economic reforms.

But the regime’s decision that Mr Bouteflika — who has not spoken in public since his stroke six years ago — would seek a fifth term united the entire country in protests over what many Algerians view as an insult.

The protests in Africa’s top gas exporter have been overwhelmingly peaceful, with both the demonstrators and the security forces showing restraint.

Boeing’s woes will complicate US-China trade talks New plane purchases are crucial to Beijing’s proffered buying list LUCY HORNBY, XINNING LIU AND JAMES POLITI

T

he grounding of Boeing’s 737 Max 8 threatens to complicate US-China trade talks by making it more difficult for Beijing to present US president Donald Trump with a headline-grabbing boost to the value of goods it buys from the US. Chinese airlines and financial leasing companies have the largest order book outside the US for the 737 Max, which is under scrutiny from regulators worldwide after two deadly crashes within the last six months.

The model is also central to Boeing’s plans, accounting for 80 per cent of the undelivered aircraft in its pipeline.

Boeing has suspended delivery of the 737 Max after regulators grounded the plane in the wake of an Ethiopian Airlines crash last Sunday, which led to the deaths of all 157 people on board. An Indonesian Lion Air flight, involving the same type of aircraft, also crashed soon after take-off in October killing 189 people.

The uncertainty over the 737 Max creates a quandary for China’s trade

negotiators, who have responded to the Trump administration’s pressure over industrial policies by offering to buy an additional $1.2tn in US exports over six years. Boeing aircraft feature heavily on Beijing’s shopping list, which also includes more purchases of soyabeans, corn, natural gas and crude oil.

China is already struggling to reach that $1.2tn target, Washington-based sources say. A weak number on purchases could heighten perception of a bad deal and reduce political support for it in the US, even though most of the difficulty in reaching an agreement has centred on more intractable structural issues.

The crashes, and China’s swift move in grounding the model, make it hard for Beijing to offer to buy more 737 Max aircraft.

“We certainly cannot buy this model. It’s an issue of safety, not trade,” said He Weiwen, a former Chinese diplomat and now a senior researcher at the Center for China and Globalization in Beijing. “Other Boeing models do not have such issues, especially those that have been proven to have great quality after

operating for years. We can still purchase those, but without any doubt there should be stricter quality checks before acceptance.”

A meeting between President Donald Trump and his Chinese counterpart Xi Jinping has been pushed back to April — with the US president saying he was in “no rush” to strike a trade deal. Major issues have still not been ironed out, US trade representative Robert Lighthizer said last week, as the sides haggle over the enforcement mechanism, the fate of existing tariffs, and the scope of Chinese concessions on industrial subsidies and intellectual property. The delay offers Boeing some breathing room for it to introduce improvements to the 737 Max that could reduce concerns about possible purchases.

The Ethiopian Airlines crash has come at a particularly bad time for Boeing, which was hoping to benefit from the US-China trade deal. Just days before the disaster, Dennis Muilenburg, chief executive of Boeing said: “I think there’s an economic opportunity here for aeroplanes to be part of the ultimate deal and help further close the trade deficit gap.”

ngelina Teny, the opposition politician and wife of South Sudan’s first vice-president turned rebel leader, cuts a stately if anxious figure in a white dress and blue velvet headwrap.

Back in the half-built capital Juba for the first time in two years, the British-educated Ms Teny is working hard to implement a September peace deal that is hanging by a thread.

Signed by President Salva Kiir, her husband Riek Machar and myriad political and rebel leaders, the agreement was feted as a lasting solution to the five-year conflict between Mr Kiir and Mr Machar that has almost destroyed the world’s youngest country.

The deal provided for the integration of government and rebel forces into a national army by May 12 when Mr Machar was due to return from exile to Juba. Mr Machar will serve as one of five vice-presidents in a new unity government, ahead of general elections scheduled for 2022.

But after six months of talks the integration process has yet to start, fighting has continued in the south of the country and diplomats, analysts and anxious Sudanese citizens are worried that any mis-step will see a full-blown conflict erupt again.

“They have accomplished basically none of the tasks that were supposed to be done to enable the formation of the unity government,” said Alan Boswell, a South Sudan expert with the International Crisis Group. “With May 12 approaching they are very rapidly reaching the first critical test.”

That Ms Teny was sitting in one of Juba’s many unfinished four-star hotels was itself a sign of progress.

When she was last in South Sudan in 2016, an earlier peace deal collapsed and she and her husband were forced to flee, trekking for 40 days with 800 fighters to neighbouring Democratic Republic of Congo pursued by the president’s helicopter gunships.

Mr Machar’s retreat triggered the final phase in the conflict. Across the oil-rich nation, villages were razed and infrastructure ruined. Tens of thousands of victims now live in temporary camps protected by UN peacekeepers. At least 4.4m South Sudanese have fled their homes since 2013 and as many as 400,000 have been killed.

Ms Teny said conditions are different this time and insisted the new peace agreement could succeed.

“People are asking questions, they want to see something physical but we don’t want them to lose hope,” said Ms Teny, who represents the Sudan People’s Liberation Movement-in-Opposition. “There is a momentum created and that momentum must be continued.”

There are many challenges facing the deal. Rather than leading to demobilisation, the planned integration process has resulted in a new recruitment drive as some groups seek to increase their influence in the future army, Martin Elia, South Sudan’s highest ranking minister, told the Financial Times.

Monday 18 March 2019

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BUSINESS DAY

FINANCIAL TIMES

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COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

UK financial regulators are not as tough as they pretend

Cases of Metro Bank and equity release mortgages show reluctance to admit policy mistakes JONATHAN FORD

P

eople worry a lot about “regulatory capture” and how watchdogs can be turned by the very firms they’re supposed to be regulating. But a less observed phenomenon is no less pernicious. It’s when through some subtle medium — perhaps government influence or intellectual fashion — they somehow capture themselves and can’t easily change course.

Two current cases illustrate the phenomenon. One is the crisis involving Metro Bank, one of the UK’s so called “challenger” lenders, which was recently discovered to have miscalculated its risk weighted assets, and thus overstated its capital. The other involves a debate about capital adequacy in the market for equity release mortgages (ERMs), which allow older people to extract some value from their homes without selling up.

In both cases, regulators were lulled into encouraging outcomes that are now causing headaches.

Not, it should be said, purely because of industry lobbying. Public policy reasons also played a part.

Metro was set up in 2010, claiming to be the first new UK high-street bank for more than 150 years. It fulfilled a government need for more competition in the banking sector at a time when EU state aid rules threatened costly break-ups for the high-street banks in which the UK had just taken huge stakes.

Equity release enjoyed similar official blessing as a way to address the looming pension shortfall without the state having to step in and pick up the tab.

Now there’s little fundamentally wrong with injecting some competition and innovation into finance.

But history suggests a few caveats.

Take the US drive of two decades ago to spread home ownership to the less well-off, which led to sub-

prime lending. It’s a reminder that the road to financial perdition can be paved with the best-intentioned of thoughts.

As is common in such cases, the regulators looked on the projects with rose-tinted spectacles. Metro was founded by Vernon Hill, an entrepreneur whose previous venture Commerce Bancorp, while financially successful, ran into flak over its flaky governance. He resigned in 2007 after US regulators took umbrage at his tendency to rent the bank properties owned by his family interests, and get his wife’s branding business to design the branches.

This didn’t stop Mr Hill becoming chairman of Metro, or indeed using his wife’s business to design its new branches in Britain. He has used his dominant influence to expand the bank quickly, an approach that requires flawless execution. This is underpinned by a fan club of investors who supported Commerce Bancorp, and who have allowed Mr Hill to cement himself in place.

There was a similarly relaxed view to the rapid growth of ERMs. Firms were allowed to flog these complex products while hugely undervaluing the embedded guarantees contained within them, despite the baleful example of Equitable Life, the world’s oldest insurer, which hit the rocks in 2000 having made the same mistake. Unsurprisingly, ERMs proved highly popular with consumers and the market grew very quickly, ultimately forcing the UK’s Prudential Regulation Authority to re-examine the rules.

The problem with closing the stable door belatedly is that the horse has long bolted. Volumes of ERMs containing mispriced guarantees had already been sold. Capitalising those retrospectively is extremely difficult for the lender, and runs the risk of exposing less strongly-funded providers. Consequently the PRA chose to pull its punches.

Alan Miller: the star stockpicker who switched to ETFs Now better known as Gina’s husband, the CIO of SCM campaigns for fund transparency JENNIFER THOMPSON

I

n an industry where familiar female faces are in a minority, Alan Miller has no problem with being less recognisable than his spouse.

The investor and husband of Gina Miller, the anti-Brexit campaigner and his comrade-in-arms in taking the fund industry to task, hoots with laughter as he recalls how one publication once airbrushed him out of an image of the couple.

“I can’t claim any credit for what Gina has done,” he says. In the past three years his wife has become one of the most recognisable people in Britain. She campaigned for the country to remain in the EU, successfully took the British government to court to ensure parliament had a vote on the UK’s exit and has written a book. She is currently lobbying for a popular vote on a final deal.

Not that Mr Miller is a shrinking violet.He is vocal on industry issues such as the push for fee trans-

parency and is sharply critical of the UK financial regulator. Having been among the UK’s best-known stockpickers, he is now chief investment officer at SCM Direct, the boutique asset manager in London that he co-founded with Ms Miller.

The financial crisis triggered their decision to launch the business. Mr Miller retired in 2007to spend time with family and travel but the Millers set a new course when the chaos in global financial markets erupted.

“Everything unfolded with the credit crunch,” he says. “I had personal investments in something meant to be low risk. It turned out it was invested in unsecured credit card lending.”

The couple decided they could do better at providing financial services than many private wealth managers.

“When we saw the people managing private client portfolios, the degree to which they took advantage of the fact their clients are loyal and pay a higher fee . . . we thought actually there was a better way to manage money.”

Challenger bank Metro at its launch in London in 2010 © Getty

Do not let company founders hide from accountability

Lyft’s dual class structure will prevent shareholders from having reasonable input PAUL SINGER

R

ide-hailing company Lyft is expected to start a roadshow this week to promote its initial public offering. As executives meet investors, they will be attempting to sell a structure that would grant Lyft’s two founders 20 votes per share compared to just one vote per share for everyone else.

Lyft will no doubt argue that its founders need such lopsided corporate governance to protect them from activist investors — firms like mine, which are accused of demanding short-term results at the expense of long-term growth. In fact, studies show that companies with dual-class structures tend to underperform over the long term.

That is because shareholder accountability is often the best corrective for a company that has lost its way.

In my experience, this is especially true in the technology sector, where enthusiasm for dual-class structures runs highest.

My firm, Elliott Management, frequently encounters technology companies where founders or longtime managers created remarkable innovations but then struggled with the challenges of maturing products, expanding organisations or slowing growth.

They often respond by aggres-

sively seeking new sources of growth, paying richly for acquisitions that do not fit with their business models or allocating capital towards peripheral activities that fail to generate returns.

Worse, such efforts often damage the core businesses that brought success in the first place.

This is how Elliott found Citrix in 2015. Citrix’s main business of providing virtual workspaces had stopped growing. Its talented engineers and salespeople were distracted by noncore products and unsuccessful deals. In the three years before we got involved, the company made eight noncore acquisitions and the stock sharply underperformed the Nasdaq Composite.

In 2015 Elliott acquired a 7 per cent stake, one of our partners joined the board, and we worked with the company to address its problems.

The management team, supported by an engaged board, streamlined Citrix’s operations, separated out noncore businesses, and refocused on its strengths.

Today, Citrix is investing in innovation and revenue is growing faster than it has since 2014. Employee satisfaction is higher, staff turnover is down and the share price has outperformed.

Many companies are able to pull off these transitions without active shareholder involvement. But even

at the most successful tech groups, allegations of privacy violations and other abuses have been most acute at companies such as Facebook and Google where dual-class structures are in place.

Concerns about accountability are widespread. In fact, the battle against this second-class corporate citizenship is being led not by activist investors but rather the Council of Institutional Investors, whose members include well-known mutual fund managers, pension plans, foundations and endowments.

CII has asked US stock exchanges to require sunset provisions for all newlylisted companies with dual-class structures. Without time limits, investors of all stripes are rightly concerned that these structures will permanently limit their ability to hold chief executives of public companies to account for poor performance or bad behaviour.

As a cautionary tale, consider Lyft’s rival Uber, which is also planning an IPO this year. In 2017, Uber, then private, had a dual-class structure in place when serious questions were raised about then-CEO Travis Kalanick’s behaviour. The board, led by its early investors, lacked the votes to remove him so they turned to activist tactics.

They wrote public letters, made the case for change and persuaded him to step aside.

US retailers trump Warren Buffett with push into own brands Kraft Heinz’s $15bn writedown highlights pressure on some well-known consumer labels ALISTAIR GRAY AND SHANNON BOND

T

he balance of power is shifting between the biggest US retailers and their main suppliers.

New industry data show retailers such as Walmart, Costco and Target are boosting sales of their own products almost four times faster than famous American brands, winning over consumers with high quality goods at low prices.

Sales of so-called private label food and drink, toiletries and other consumer goods rose 4.3 per cent in US stores in the final three months of 2018, according to Nielsen. In contrast, sales of the 20 biggest brands eked out only a 1.2 per cent increase.

The rising popularity of private label is shaking old certainties about the value of established brands. Kraft Heinz, the Warren Buffett-backed consumer staples group behind HP Sauce and Philadelphia Cream Cheese, took a $15bn writedown last month, reflecting gloomier prospects for some of its

best known products.

“You have to deliver something that is superior,” said Stefan Descheemaeker, chief executive of Nomad Foods, the company behind Birds Eye and Findus. “If you don’t, then at some stage the question arises: why do you need brands?”

Executives at several of the biggest US retailers divulged more detail on how they were building up their own brands in products from milk to underwear as they presented earnings reports in recent weeks.

Kroger said it had introduced 1,022 own brand items to its supermarket shelves in 2018. While the grocer’s overall results disappointed Wall Street, the performance of its own brands impressed: sales of its Simple Truth line of products, which range from lip balm to popcorn, rose 15 per cent in 2018.

Rodney McMullen, chairman and chief executive, said the rationale for Kroger’s expansion was simple. “We make more profit than we do selling the national brands.”

Brian Cornell, chairman and

chief executive of Target, said the big box retailer’s efforts to develop its own brands had been so aggressive that the team responsible had completed “three or four years of work in about 18 months”.

The popularity of its house brands, which include Archer Farms food, Smartly staples and Opalhouse home decor, was a main reason why the chain was avoiding the gloom in the wider retail sector, he added. Target this month posted a 5 per cent rise in like-for-like sales for 2018, its biggest annual increase since 2005.

“It’s certainly been a big part of our market share gains,” said Mr Cornell.

Target’s expansion has been particularly ambitious, and the chief executive added that it was likely to slow in the months ahead.

But the big worry for Kraft Heinz and rivals, such as Campbell Soup and General Mills, is that the wider retail industry is only getting started.

“It’s going to keep getting bigger,” Mr Buffett said in a recent CNBC interview.

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ANALYSIS

Spanish start-up Spotahome moves headquarters to London

Property rental platform backed by Travis Kalanick aims to hire 200 staff in UK ALIYA RAM

A

US higher education crisis: lessons from the Chicago schools

Amid calls to make university tuition free, one city’s training model is boosting the jobs market EDWARD LUCE

M

aking college free is one of the biggest rallying cries among Democratic White House hopefuls. Given the lengths to which many wealthy parents go to game the system that is unsurprising. Last week’s FBI arrest of dozens of parents, coaches and college administrators shows just how valuable admission to the best universities has become.

One Yale applicant’s parents lavished $1.2m in bribes and fake profiles to gain entry.

The contrast to how the other 99 per cent fares could hardly be starker.

The price of US higher education has skyrocketed. A four-year college degree now costs anywhere between $80,000 and $300,000 for tuition alone, while America’s median household annual income is $61,000.

Meanwhile, a growing share of Americans have been dropping out.

Less than half of students complete their degree within six years. Many are saddled with debts, now totalling more than $1.5tn, that take a generation to pay off.

Led by Bernie Sanders, the “democratic socialist” who popularised the pledge when he first ran four years ago, free college has become a litmus test with the party’s base.

Yet the Democrats are silent about the deepest problems in American education. Even if tuition were free, many Americans still do not want to go to college because other costs are steep and not everyone is cut out for four years of college. Many fail to complete high school because the sole purpose of doing so is to qualify for university.

The result is a stubbornly large precariat of semi-skilled and underemployed Americans. “We don’t have a person to waste in America,” says Rahm Emanuel, Chicago’s outgoing mayor. “Too many kids are still slipping through the cracks.”

The solution, according to a growing number of governors and mayors, Republican and Democratic, is to reboot the antiquated system of technical education. Loosely speaking, America’s 1,332 community colleges are the equivalent of Germany’s vocational institutes. The biggest difference is that in Germany a trade is still highly valued. In America, the community college suffers from the “soft bigotry of low expectations”, says Bridget Gainer, a senior executive at Aon, the Chicago-based insurance

company.

“Everyone is in favour of community college — but for other people’s children, not their own,” says Janice Jackson, head of Chicago Public Schools.

Chicago has been leading the way in trying to retool the community college system. Since becoming mayor in 2011, Mr Emanuel has demonstrated two things. First, there is a large pent-up demand for technical education among young Americans, particularly in depressed urban areas. Second, it does not have to be free to all. Mr Emanuel’s model is to make vocational education free to any high school student who achieves reasonable grades. Following the German model, employers are integrated closely with the curriculum. The aim is to offer them marketable skills.

The results have been impressive. Students qualify for Chicago’s fully-funded Star Scholarship if they get a grade-point average of 3.0 or higher — roughly equivalent to a B grade. At just over 80 per cent since its launch in the autumn of 2015, the completion rate among Chicago “star scholars” from community college is roughly three times the national average. “People respond much better if they have skin in the game,” says Mr Emanuel.

The impact of the reforms is not just being felt in the further education system. High school students, even from Chicago’s deeply troubled south side, can also pick up vocational credits while still in high school. Chicago’s so-called “dual credit dual enrolment” system, allows kids still in high school to amass certifications at community college.

Since Mr Emanuel became mayor, the city’s high school graduation rate has leapt from 56 per cent in 2011 to 78 per cent in 2018 — the largest jump in the US, where a fifth of students fail to complete high school. Much of the credit goes to the dual-enrolment system, which gives students a very different incentive to finish high school.

“I am the first person in my family to go to college,” says Victoria Hernandez, a 17-year-old who is simultaneously studying to become a nurse and finishing high school.

That means her vocational training is free. Eventually she wants to be a radiologist. Her school day lasts from 8.45am until 2.45pm.

Her college day begins at 3pm and ends at 9pm. Her mother works at Walmart and her father at UPS.

She can expect to be earning more than either of them by the time she is 20. “The whole system is about giving you practical qualifications,” she says.

Much like the German system, Chicago’s City Colleges specialise in core skills. Each also has partnerships with nearby private sector employers who provide paid work experience to their students. For example, Malcolm X, one of the City Colleges, focuses on healthcare in partnership with the next door Rush Presbyterian hospital in Chicago’s medical district. Malcolm X recently opened one of America’s largest simulated hospitals. Richard J Daley college focuses on manufacturing.

Its recently-opened facility includes laser machines, robotic simulators and vinyl cutters. Harry S Truman, meanwhile, focuses on education.

Wilbur Wright specialises in information technology. And so on.

Big local employers, such as Accenture and Aon, have gone from being sceptical about vocational education to becoming cheerleaders. When he became mayor, Mr Emanuel would ask large gatherings of employers to raise their hands if they had hired anyone from a City College. None would go up.

Now plenty do. The fact that there is near full employment in the US has forced employers to become more inventive. Nowadays jobs go to people, rather than the other way round.

Both Accenture and Aon now sponsor apprentices in a Germanstyle system where they pay their tuition and employ them at the same time. “When we started to look closely we realised we had plenty of jobs that did not actually require a four-year degree,” says Ms Gainer.

“With the automation of HR, a fouryear college degree had become a proxy of safety — a way of screening people out. Today I can honestly say I would far prefer the drive of someone who doesn’t have a college degree who has shown the drive to be hired by us.”

Chicago’s universities, which used to look down on community colleges, have also changed their tune. All now accept transfers from community colleges. “The key to the system’s success is transferability,” says Juan Salgado, chancellor of the City Colleges. That means the credits that students earn from two years at a City College can count towards half of a full degree at Northwestern, the University of Illinois or even the University of Chicago.

Spanish start-up backed

by Travis Kalanick, the cofounder of Uber, is moving its headquarters to London in order to hire a string of top tech executives.

The five-year-old Spotahome says it will disrupt Europe’s property market by linking landlords to rental tenants through its website and app, which display floor plans and videos of available properties.

The company raised $40m last year at a valuation of $160m and plans to open in London in the next few months and unveil a new management team.

It has hired Angel Azcarraga, the former director of software development for search at Amazon; Cleo Sham, previously head of operations in China and Europe for Uber; and Balaji Nageswaran, former head of product management at Amazon.

said, because it has to balance supply and demand and deal with a patchwork of local regulations. It also makes use of freelance workers who are paid based on experience and the size of the house, according to Kamil, a 35-year-old homechecker who declined to share his last name.

Mr Artacho added that Uber had demonstrated how to expand rapidly across dozens of markets: “The Uber experience is so relevant for us,” he said. “It’s this speed mentality — the hyper energy.”

Ms Sham ran Uber’s operations in China, growing the city of Guangzhou into its busiest globally then overseeing the sale of the unit when it lost a bloody battle for market share with local rival Didi Chuxing. She said her job at Spotahome would be to help the start-up through “hypergrowth” as it targeted new markets

Spotahome founder Alejandro Artacho with Cleo Sham, previously head of operations in

Alejandro Artacho, Spotahome founder, said the decision to move headquarters from Madrid to London, and plans to hire a further 200 staff in the UK, were made because new executives wanted to be based there.

“I was talking to top executives and it happened either they were already in London or were more willing to relocate to London [than Madrid],” he said. “It is going to be a hub and city that is attracting talent anyway.”

He added that some of his cofounders had stepped aside from top management jobs to make way for the new joiners, a process that he described as “very difficult” and which saw him take advice from a management coach.

“I was always obsessed with surrounding ourselves with globalminded people and ambitious people,” he said. He added if necessary, he would also step aside: “They say there are two kinds of founders, mercenaries and missionaries. My co-founders and me are like missionaries.”

Spotahome co-founder Bryan McEire, previously chief technology officer, is now a technology adviser.

Bruno Bianchi, previously chief operating officer, has taken up a role working on strategy.

The move to London will coincide with a period of deep uncertainty in Brexit negotiations, but Mr Artacho said the referendum vote had not affected the UK’s ability to attract talented workers.

Spotahome’s model mirrors Uber’s car-booking app, Mr Artacho

and international expansion. “I like building . . . companies through hypergrowth,” she said.

Mr Nageswaran, who was also a senior vice-president at Berlinbased start-up HelloFresh, started at Spotahome in November. He said his focus would be on introducing new features such as enhanced security checks on tenants that use credit reference agencies.

Mr Azcarraga said his focus was on hiring. “I want to start tapping deeply into my connections and finding people that want to make a similar change for the same reasons,” he said. “Bringing in those people is going to be a huge focus for me.”

The company also has backing from investors including Drew Houston, co-founder of Dropbox; Passion Capital, a London-based venture capital firm; an unnamed Facebook executive; and Kleiner Perkins.

“Spotahome is an exciting new platform to drive much-needed innovation in this market,” said Mood Rowghani, who worked at KIeiner Perkins when it invested in the business but is now part of a spin-out firm.

“Residential real estate rental industry has been slow to evolve in the digital age. We have drawn inspiration from other great marketplace innovators: Booking.com and Airbnbreal (for real-time listings), OpenTable (for instant bookings and inventory management) and Uber and Deliveroo (for local operations and home-checking in each market).”

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PERSONAL FINANCE

DEALS

COVER

Financial planning

How intending couples can manage finance

80% of KPMG’s surveyed investors expect M&A increase next 2 years

Why liquidity matters in picking stocks to buy

Some 80 percent of respondents, comprising of foreign and local investors, surveyed by KPMG Advisory Services, expect Mergers and Acquisition (M&A) activity in Nigeria to increase over the next two years.

Nigerian stocks are proving that it will take more than the successful completion of general elections and stellar earnings season to shake off bearish investor sentiments.

What you need to know to better manage your finances

Peter, 27, and Deborah, 25, are soon-to-be couples whose wedding comes up in a month’s time.

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The Average Nigerian spends over 40 per cent of monthly earnings on food and beverage alone, according to a recent report by FBNQuest.

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Monday 18 March 2019

Personal Finance

How intending couples can manage finance ISRAEL ODUBOLA

P

eter, 27, and Deborah, 25, are soon-to-be couples whose wedding comes up in a month’s time.

Peter, a mid-level staff at the Lagos State Ministry of Justice, earns N120, 000 per month. Deborah, on the other hand, works with Heritage Bank as a customer service officer, and she is placed on a monthly pay of N80, 000.

The love birds have discussed how they want their new home to be, but they are yet to reach a consensus as regards their income will be managed.

Of course, it is somehow difficult to share one’s money with another person when one has spent most of his/her life managing it personally.

Managing finance as couples could also be tiresome especially if both parties lack similar financial mindset.

There are various methods couples can adopt to manage their finance but the fact remains none suits every couple across the globe.

Figuring out the best way to manage money as a couple takes a lot of discussions but as your relationship grows and changes, the way you handle money will grow and change too.

Here are some options intending couples may utilize to manage their finances while giving reasons why each option works.

One joint & separate account The couple combines all accounts but each person has a separate account.

A sum is transferred from their joint account into personal accounts every month.

The idea is that money can be spent guilt-free and there is no need to consult the other party. When one person wants to spend money but does not want to discuss the expense with the other party, they can use the money in their separate account to pay for it.

The hardest part of this method is deciding how much each person should transfer to the joint account.

Why it works: Having one separate account helps maintain a sense of independence while still working toward common financial goals. With this method, each party can spend within

their means and they need to get worried about how it affects the other party.

One pooled account The couple has one joint account and uses it for shared expenses such as food bill, rent and miscellaneous. A couple can either contribute an equal amount or different percentages to the joint account.

If both parties earn an equal amount or have similar taste, they may contribute the same amount to the joint account.

On the other hand, if one person earns significantly more or has higher tastes than the other party, they may want to consider contributing different percentages rather splitting the expenses equally.

For instance, if the family expense is N50, 000, Peter, with N120, 000 monthly payment is expected to contribute N30, 000, and picking up the remaining N20, 000. Each time a joint account needs to be paid, it is paid directly from the joint account.

Why it works: This approach helps couples plan what to spend each month.

It creates a sense of financial solidarity.

Some couples feel a greater sense of trust when all of the finances are combined into one account.

Live off one This technique is more effective when a couple focuses on saving together for shared goals such as house projects and is able to live off one salary. This approach makes saving easy and also gives the couple succor that is able to make ends meet with only one income.

Why it works: This approach makes saving easy especially if the couples are on the same page with spending and saving.

This eliminates the work needed to ensure that enough is set aside each month

‘

When finances are totally combined, each person needs to be really honest about how they want to spend and save for the future

’

to meet financial goals.

Completely separate When a couple moves in together or gets married and decides to keep things separate, they allow certain bills to themselves. For example, one person may pay the rent while the other person pays food bills and utilities. No accounts are combined and each person maintains complete control of their personal money.

Why it works: This is a good option for couples that are panicky about sharing finances for the first time or who do not want to share control of their money just yet.

Totally combined This approach creates a sense of total transparency. All accounts are combined and each person actively decides how funds are spent and saved. Here, both parties are responsible for planning for a joint financial future.

When finances are totally combined, each person needs to be really honest about how they want to spend and save for the future.

Why it works: This approach makes it easy for couples to work towards shared financial goals especially if they have a similar mindset about money should be managed. This method also provides absolute transparency about how money is being spent.

About BD Money: This finance supplement is targeted at investors and other readers keen to make their money work harder.

Team Members: Lolade Akinmurele (Lead); Hope Moses Ashike; Segun Adams; Oluwasegun Olakoyenikan; Temitayo Ayetoto; Israel Odubola; Olufikayo Owoeye; David Ibidapo; Graphics: Fifen - Famous

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Deals

80% of KPMG’s surveyed investors expect M&A increase next 2 years … 62% considering acquisition in Nigeria HOPE MOSES-ASHIKE

S

ome 80 percent of respondents, comprising of foreign and local investors, surveyed by KPMG Advisory Services, expect Mergers and Acquisition (M&A) activity in Nigeria to increase over the next two years.

KPMG on Wednesday released its latest report on doing deals in Nigeria 2019, which show that 56% percent of the respondents are envisioning activity to increase significantly and 62 percent are considering an acquisition in Nigeria over the next two years.

Dapo Okubadejo, partner and head, deal advisory and private equity, KPMG in Nigeria, explained that in Q3 2018, 50 senior business executives were surveyed, based on their experience of deal making in Nigeria.

Experience tends to breed a level of confidence in Nigeria’s M&A market as 78 percent of respondents say they are more

likely to invest in Nigeria as a result of their previous M&A experience in the country, while almost half (48%) further said they are now significantly more likely to invest in the country as a result.

“We have seen the success of the previous deal and understand that there are certain niche business opportunities in the country,” says an Europe, Middle East, and Africa (EMEA) based managing director of a private equity firm.

Speaking at the official presentation of the report in Lagos, Ijeoma Emezie-Ezigbo, partner, deal advisory, KPMG, said in 2018, the consume sector saw a boost in M&A activity over the previous two years, with consumer deals accounting for 33 percent of Nigeria’s total M&A value in 2017 and 2018 combined, compared with 21 percent in 2015 and 2016 combined.

“And this situation looks set to continue as three-quarters of respondents agree that the consumer sector will be the country’s most attractive sector for M&A over the next two years”, she said.

Financial services was named as the

second most attractive sector for Nigerian M&A over the next five years, with 40 percent of respondents citing this as producing attractive investment opportunities. It is estimated that only 40 percent of Nigerian adults have an account with a financial institution or a mobile money provider, leaving significant headroom for growth.

“Notwithstanding, the country is not without its challenges. Lower reporting standards can prove to be an obstacle for

some acquirers, as many private businesses in Nigeria are not subject to full-scale financial audits”, Okubadejo.

He added that “the survey responses and insights herein demonstrate that experienced local advisors, with an understanding of Nigeria’s regulatory and legal complexities and cultural sensitivities, are necessary in what continues to be one of the most promising M&A markets in Africa”.

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Cover Story Why liquidity matters in picking stocks to buy David Ibidapo & Segun Adams

N

igerian stocks are proving that it will take more than the successful completion of general elections and stellar earnings season to shake off bearish investor sentiments.

The performance of the market so far is an indication of low confidence of foreign investors (FPI) in the market and economy, according to Paul Uzum, a stockbroker on the floor of the NSE. The bearish performance of the market so far has necessitated the need for investors to exercise caution in making investment decisions and safety of investment value, as the medium to long term expectations of the market remains bleak against rally expectations.

The equities market has lost 3.42 percent since the result of the presidential polls was announced while Banking index, a preferred destination for FPIs has fared worse, losing 7.03 percent over the same period.

Most importantly, Uzum pointed out that ‘‘liquidity’’ should be the most important factor for investors in the market now. The broker advised that investors cherry pick stocks which allow for easy entry and exit, otherwise the returns earned on such assets may be pared or losses incurred, if the stock becomes illiquid and the holder is forced to sell at a significant discount.

According to weekly reports of the NSE, the financial service Industry led by deposit money banks dominates activities (measured by volume and value) on the exchange.

The report for week ended March 8 show that of a total turnover of 1.290 billion shares worth N13.873 billion traded, Financial services accounted for 84.06% and 83.70% to the total equity turnover volume and value respectively.

Our analysis of the Nigerian banking sector has shown that on the average, banks listed on the banking index have traded volumes amounting to 786.7

billion units’ year to date on a weekly basis.

Total volume traded week on week of all ten banks listed on the index stood at 6.29 billion units of shares.

However, in this analysis, we excluded Access bank and Diamond bank on the note that current merger talks and plans has seen their stocks activities unusual compared to other bank, hence, not a good basis for comparison.

Result shows that amongst peers, Zenith bank, a tier-1 lender, lead the chart of the most traded stock on the index so far in 2019. The tier-1 DMB led with average volumes of trade amounting to 159.10 million units and a total volume of 1.59 billion units of shares traded as at close of market on Friday.

Total value of shares traded

by Zenith Bank amounted to N37.72 billion in 2019 so far. Activities on the bank’s stock has been more of a sell pressure as stocks is down 4.56 percent Year to Date after stock price closed at N22 on Friday.

Amongst peers, Zenith bank stood as the worst performing stock in the index underperforming both the index and the all share index.

Furthermore the analysis shows that Tier-1 lenders; Zenith Bank, UBA, Access, GTB and First Bank, all outperformed the industry average of 1 billion units traded weekly making the stocks the most liquid among peers in the index.

However, the result shows more of a sell pressure on Zenith and UBA as these banks have lost 4.56 percent and 3.25 percent respectively to underperform both the banking index (0.39%) and the all share index (-0.92%).

On the other hand, First bank and GTB witnessed more of a buy pressure as stocks outperformed the banking index and the all share index gaining 3.14 percent and 2.76 percent respectively.

Stanbic IBTC on the other hand stood as the least traded stock on the banking index during the period under review. The bank traded a total of 58.56 million units of shares from January to date at an average of 5.8 mil-

lion units’ week on week.

Total value of trade during the period amounted to N2.76 billion YTD, while stock performance appreciated marginally by 0.31 percent during the same period.

While it is vital to ensure that your stock doesn’t trade low volume, you would find it useful to also consider other fundamentals on the stock especially if you are a long term investor.

Note that currently, the poor

performance of certain stocks has been driven largely by sentiments in spite of relatively impressive results for 2018 full year.

As such, certain other factors could change and drive the market in the opposite direction.

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Financial Planning What you need to know to better manage your finances SEGUN ADAMS

T

he Average Nigerian spends over 40 per cent of monthly earnings on food and beverage alone, according to a recent report by FBNQuest.

If we assume a salary of N100,000 for simplicity sake, that would mean Rose, our hypothetical average Nigerian has N60,000 left for transport, housing and utility bills, medicals, clothing, ‘’owanbe’’ and probably nothing tangible for savings at the end of the month.

Since you are not going to be working all your life you have to save and your income is already squeezed.

Not to worry, here are a few tips on managing your finance: You need a plan The first thing to do is to draw a plan. Yes! Like in every other business in life you need to set up a goal and outline simple steps to achieve that target.

Drawing a financial plan is simple and it should start with calculating your annual income so you get can a realistic savings target to meet at the end of the year then working your budget backwards to accommodate that goal.

In setting a savings target, there is the 50/30/20 rule which advice spending 50 per cent of your monthly income on necessities, 30 per cent on luxury and saving 20 per cent. Even though the rule is not a ‘’one fits all ’’ you should strive to meet a 1015 per cent minimum.

NB: if you have religious obligations, revise luxury downwards a bit but do not overly squeeze your luxury budget as it might come back to haunt you.

Create different wallets Human psychology plays an important role in our financial lives. Do not trust yourself to always be rational as habits and impulses would spring surprises on you sometimes.

To ensure you stay on track, treat your income as eggs and get different baskets for your

savings, necessities and luxury spending.

The basic idea is that when you have all your money in one plays, you might be led to believe that withdrawing a thousand naira would not derail you from your goal since the impact of that deduction on your account balance might be negligible.

However, when you have smaller pockets to spend from, each naira expended would be a larger proportion of that whole.

Importantly, it helps you stay focused and give Paul what is Paul’s.

Get help, automate your savings!

Things are easier said than done- you should agree with this universal truth if you have ever used the snooze button on your alarm. It is one thing to have a savings plan and another thing to actually save.

Although the list is much longer, applications that can help you save include Piggyvest, Kolopay, Esusu, and Cowrywise.

You should most especially go for the options that allow you to automate your savings so that the percentage you intend

to put away is deducted by your mini bank as soon as you get paid salary.

NB: If you want more traditional means, you could try giving a standing instruction to your bank or get an old fashioned piggy bank.

Cash or Card Rule Your payment option should factor in security as well as convenience. A lot of online platform offer discounts for payments made with card and that might present good bargain hunting opportunity- since you are getting the same value for less after all.

Since in Nigeria coins are not easy to come by, it might be difficult taking advantage of price discounts like N99.9, N47.50, N800.50 retail outlets like Shoprite often offer unless you pay with card.

Whenever you pay with cash make a conscious effort not to spend the change on frivolities.

Take your head out of the clouds Even though online retailing is here to stay, you should endeavour to stretch your legs and sometimes go to the mall.

The reason is that you may find cheaper deals, get a basis for comparing prices offered

for goods (and services) across different platforms and the cost of transacting might be significantly lower offline especially if the retailer is within your vicinity.

Another reason is for shopping offline every now and then is that some have argued that you may be more prone to spending spree online due to the convenience and artificial intelligence powered-advertising campaign you may find a difficult to resist online.

Cost to Benefit Analysis This is a classical economics principle for justifying your expenses and it simple considers everything as an investment which should add more to you than it takes from you. ‘’How much am I spending and how much am I getting back whether in a material form or otherwise’’, ‘’ would this expense save me money and prevent a future liability in whatever form?’’

Even though it is not very likely you’d always introspect like this, it is good you consider this approach when you want to spend a significant part of your income.

NB: One trick is to weigh cost, for example, is finding out

how much you make per hour or per day and gauge your expense in terms of efforts put into work e.g. a pizza is worth 5 hours of my labour.

Finally- Don’t Save, Invest!

Rose, our hypothetical average Nigerian, saved N200,000 naira in a Nigerian Bank in the year 2000 and she felt confident she had secured a great future for herself. Today the money has grown to around N400,000 because of a compounding interest but inflation rate has outpaced the growth in her wealth.

Keeping your money in a bank for a long time is not such a great idea especially when you consider the rate of interest offered on savings account and then the pace of inflation which would erode the value of money over time. ‘’ A naira today is worth two tomorrow ’’. Get an investment asset to put money in depending on your risk appetite.

Treasury bills and government bonds are always a safe bet but a whole lot of options exist today, including mobile savings applications that pay attractive interests on deposits.

NB: Keep a part of your savings liquid for emergencies.

Opps! Nothing goes as planned- Set up an emergency fund too Life happens! Ensure you have an emergency fund to fall back on if something urgent arises.

Back to our 50/30/20 rule, reassess your spending on necessities so it is about 50 per cent of your income, take 20 for luxury, 10 for emergency fund and save 20.

If there is need to tweak the ratio in case of other obligations (charity and religious dues), you could try the 50/15/10/10/15 (necessity/luxury/emergency fund/ other obligation/savings) variant.

NB: Feel free to try out different ratios but don’t make a habit of changing the mix too frequently and importantly pegged savings at 10-15 per cent minimum.

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Economy Inflation surprises positively, moderates to 11.31% yoy Omotola Abimbola

N

igeria’s consumer price index rose by 11.31% yoy in February vs.

11.37% yoy in January. The reading was a positive surprise, coming 11bps and 19bps below our estimate and consensus forecast of 11.42% and 11.50% respectively.

Similarly, on a mom basis, the headline reading slowed marginally by 1bps to 0.73%.

Both core and food prices, measured yoy, eased to 9.80% and 13.47% in February from 9.91% and 13.51% respectively, reflecting 1) tamer pressure on core prices -core inflation moderated to 0.65% mom in February from 0.81% in January, and 2) high base effect in the food segment, with a flat mom reading and a 4bps temperance on a yoy basis.

We cut our 2019 forecast to 11.5% on changing supply side reform expectations We are compelled to lower our average inflation forecast for 2019

to 11.5% from 14.1% as our expected inflation drivers in 2019 have changed. Our initial guidance was on the assumption that regulators will summon the political will to adjust power tariff and fuel prices post - elections to ease the liquidity crunch in the power sector and reduce large fiscal imbalances.

However, following a keenly contested presidential election, where leading political parties were forced to take on ideological positions on reforms, we believe the administration of President Muhammadu Buhari, which extended its mandate on a promise to sustain its welfare – focused policies, will be less keen on making these supply side adjustments so soon after the elections. This position is also supported by precedence; the administration, after its 2015 victory at the polls, adjusted power and fuel prices in the year after elections. Against this backdrop, our expectation is that energy price adjustments will, at best, be less aggressive in 2019 or, at worst, delayed un-

til 2020.

In addition, in the near term, we retain a stable NGN outlook.

Our outlook is supported by: 1) relative NGN stability in the SMIS and IEW segments, 2) stable balance of payment outlook reflecting high oil prices and increasing risk appetite for EM/FM assets, and 3) relatively robust level of external reserves sufficient to cover 7.0 months of goods and services imports.

The aforementioned factors (delay in supply side reforms

and stable NGN outlook) will likely lead to moderation in core inflation. In the food basket, recent de-escalation in pastoralists-farmers clashes in Nigeria’s agrarian belts could possibly set the stage for a return to aboveaverage harvest season.

Yield Compression: blow out or blow over?

Following the conclusion of the Presidential election on 23 February, Nigeria’s fixed income market went on a one – week bullish streak, which

saw yields compress 63bps on average across tenors to a level last seen in August 2018. Although the rally seems to have tapered off, following CBN’s aggressive OMO mop -up (N1.1tn sold on 28th February) and profit taking by traders, the bellwether 1-year rate has continued to drop following CBN’s decision to stop auctioning 1-year bills at OMO auctions. At the last NTB auction, the 1 -year rate compressed by 153bps due to high demand for the tenor (bid to cover of 7.1x vs.

2.9x for the 91- day).

We believe the CBN’s endgame is ultimately to reprice the level of the yield curve lower to reflect improved external financing conditions amid lower capital outflow pressures, which was a drain on external reserves in H2-2018. The primary anchor of CBN’s monetary policy remains exchange rate stability. However, benign inflation picture-reflected in investors changing inflation expectation - will help reinforce the CBN’s objective of lowering the borrowing cost of government in a period of improving external financial conditions. This is further supported the dovish policy tilt of the US Fed and ECB since the beginning of the year. Although we do not expect a reversal in yields, we believe the market is close to the trough at the short end of the curve as the current one – year yield (14.4%) is 70bps shy of our revised year – end target of 13.7%.

We believe short-term yields appear fully priced as the current primary market one-year real yield (3%) is close to the 2018 average of 2.4% and below long-term average of 4.0%.

In view of our expectation for further moderation in short term rates, we now a bull steepening of the yield curve from the current flat slope over the near term.

Omotola Abimbola oabimbola@chapelhilldenham. com

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Data

Federal government eurobond Yields on Eurobonds fell week on week by c.402bps to an average of 6.82 percent compared to 7.11 percent last week as global and domestic factors favour the Nigerian market.

Meanwhile Brent oil gained over the same period by 2.2 percent to close at $67.19, which is $7.19 above the benchmark of the proposed 2019 budget.

The National Bureau of Statistics reported that inflation fell 0.06 percent points to 11.31 percent in February.

Corporate eurobond Across board, yields on Nigerian Corporate Eurobonds rose by 3.32 percent to an average of 8.43 percent even though in the preceding week yields had fallen by 160bps.

Since the approval of the proposed merger of Diamond and Access Bank, Yields on Diamond’s Eurobonds have been declining as the fears of a default on the $500m, 8.75% which is soon to mature have been subdued.

Week on Week, Yields on Diamond Eurobond fell 4434 basis points to single-digit at 8.75 percent while Yields on Access Bank soared 4423 percent to 10.5 percent.

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BUSINESS DAY

Banking

Takeaways from Access Bank’s conference call

OLUFIKAYO OWOEYE

T

ier-1 lender, Access Bank on Friday held its investors/ analyst conference call. The call was moderated by top officials of the bank.

Among the highlights of the conference include the bank’s performance in the last financial year and outlook into the 2019 financial year.

Etisalat Loan repayment Tier-1 bank Access bank can now heave a sigh of relief as the value of loan incurred from the troublesome Etisalat deal has reduced by 62.8 percent from N70 billion at the initial stage to a remnant of N26 billion as the loan haircut has been written off.

The repayment of the loan

by Etisalat has reduced the bank’s exposure to the Information and communication sector to a meager 0.9 percent compared to a whopping 57.6 percent in 2017.

Growth in interest income driven by Investment securities.

The bank’s gross earnings grew 15% to ₦528.7billion in the full year 2018 compared to ₦459.1billion in the same period in 2017, buoyed by 19% growth in interest income and a 5% increase in non-interest income.

The growth in interest income was driven by 25percent year-on-year growth in income from investment securities, 332% year-on-year

growth in interest on cash and cash equivalents, on the back of a 90% increase in foreign currency and bank placements within the period, and 12percent year-onyear growth in interest on Loans and Advances.

The non-interested income was boosted by a 6percent year-on-year growth in net fee & Commission to ₦52.5bn underlined by the increase in commissions on virtual products up 168 percent, credit-related fees, and commissions increased 30 percent year-on-year, and Channels and E-business income increased by 45percent year-on-year.

Access/ Diamond ($600 million) Eurobond repayment The bank also assured that Access Bank will redeem a $400 million Eurobond, likewise the Diamond Bank $200 million Eurobond this year.

On the much talked about merger between Access/ Diamond merger, the bank noted that it is on the final countdown as the management assuring that the new entity will become operational on April 1, 2019.

Appreciable increase in customers’ deposit The bank’s customer deposits surged 14 percent to ₦2.57trn in 2018 as compared to ₦2.25trn in the same period 2017. Current and savings account deposits grew 19 percent year-onyear to ₦1.3trn compared to ₦1.1trn in December 2017, buoyed by massive deposit mobilization drive for sus-

tainable low-cost deposit growth. Also, Subsidiaries contribution accounted for 29percent of Group deposits of ₦1.07trn in 2018 with UK and Ghana accounting for 26% of total deposits against 25 percent in 2017 The bank official assured that it will pay more attention to retail banking services in 2019.

Operating expenses and Impairment Charges The bank’s operating expenses increased slightly by 6 percent to ₦194.0bn from ₦182.8bn in 2017, on account of a 20 percent increase in regulatory charges in the period. Also, on a quarterto-quarter basis, Operating expense increased by 6percent largely as a result of the additional AMCON charge of ₦2.5bn on off-balance sheet assets.

Loan Book and Advances The bank adopted a cautious loan book strategy while its loans and advances increased 3 percent at ₦2.14trn. The bank’s Nonperforming loan ratio down 230 basis points to 2.5percent in the period as compared to 4.8 percent in the full-year 2017.

Scorecard from its subsidiaries The officials of the bank noted with delight continued improvement from its subsidiaries to the group’s performance. Recording total subsidiary PBT of ₦27.9bn up 116percent year on year against ₦13bn recorded in 2017, accounting for 27 percent of Group’s PBT. With its UK and Ghana accounted for 88percent of total 2018 subsidiary PBT. 2019 financial targets of the bank The bank has set its 2019 return on equity at 20 percent, with its Non-performing loan ratio set less than 10 percent, cost of funds set at less than 5 percent and cost to income ratio less than 60 percent.

Week Ahead Week Ahead (Monday, 18th March – Friday, 22nd March, 2019) Commodities Cocoa – Improved weather condition in major producing countries (Ivory Coast & Ghana) is expected to boost cocoa production. The resulting increase in global supply would weigh on cocoa prices.

Sugar - Expectation of sugar output cut by India, Thailand and Europe to drive up prices in near term.

Fixed Income 364-day Treasury bills sold for N40 billion which was auctioned on March 21, 2019 will mature on Thursday, March 21, 2019.

2-year Federal Government bond with description “13.01 FGNSR 22-Mar 2019” issued on March 22, 2017, will mature on Friday, March 22, 2019.

Currency The local currency (naira) will maintain stability against the US dollar in the inter-bank, SMIS and Investors & Exporters’ market windows due to the regular intervention of the Apex bank.

Data Release National Bureau of Statistics (NBS) to release data on the sectoral distribution of Value Added Tax (VAT) on Friday, March 22, 2019.

Event The Board of Directors of Cap Plc will meet on Wednesday, March 20, 2019 to consider its 2018 Audited Financial Statements.

The Security and Exchange Commission will hold a Capital Market Committee (CMC) on Thursday, March 21, 2019 at Orchid Hall, Eko Hotels & Suites, Victoria Island, Lagos.

Chart of the week Inflation dips to lowest in 3 months, NBS data show

The rate of inflation eased year-on-year to 11.31 percent in February, 0.06 percent points lower than at the beginning of the New Year, as price level slows for the third consecutive month, National Bureau of Statistics (NBS) reported, Friday.

On month-on-month basis, the headline index increased by 0.73 percent in February 2019, lower than the 0.74 percent recorded in January 2019 by 0.01 percent points.

The percentage change in the average composite CPI for the twelve months period ending February 2019 over the average of the CPI for the previous twelve months period was 11.56 percent, showing 0.24 percent point from 11.80 percent recorded in January 2019.

Monday 18 March 2019

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Monday 18 March 2019

Live @ the Stock exchange Prices for Securities Traded as of Friday 15 March 2019 Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 167,782.24 5.80 -2.52 263 17,573,824 UNITED BANK FOR AFRICA PLC 254,785.69 7.45 -2.61 260 24,037,839 690,722.86 22.00 -0.90 311 39,600,019 ZENITH BANK PLC 834 81,211,682 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 294,341.40 8.20 -1.22 238 39,958,100 238 39,958,100 1,072 121,169,782 BUILDING MATERIALS DANGOTE CEMENT PLC 3,237,696.41 190.00 0.79 53 541,872 111,453.55 12.85 -0.39 56 596,701 LAFARGE AFRICA PLC. 109 1,138,573 109 1,138,573 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 351,242.56 596.90 - 13 12,962 13 12,962 13 12,962 1,194 122,321,317 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,900.00 95.00 - 0 0 11,300.89 45.20 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) UPDC REAL ESTATE INVESTMENT TRUST 14,408.66 5.40 - 1 3,500 1 3,500 1 3,500 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 1 3,500 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 76,312.80 80.00 - 4 1,000 OKOMU OIL PALM PLC. PRESCO PLC 75,000.00 75.00 - 1 3 5 1,003 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 511.20 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,800.00 0.60 - 7 75,850 7 75,850 12 76,853 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 820.66 0.31 - 2 202 JOHN HOLT PLC. 202.36 0.52 - 0 0 1,903.99 2.93 - 0 0 S C O A NIG. PLC. 50,809.99 1.25 1.63 49 11,615,946 TRANSNATIONAL CORPORATION OF NIGERIA PLC 22,330.05 7.75 -0.64 23 163,525 U A C N PLC. 74 11,779,673 74 11,779,673 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 36,300.00 27.50 - 9 41,102 165.00 6.60 - 0 0 ROADS NIG PLC. 9 41,102 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 5,066.87 1.95 - 5 27,755 5 27,755 14 68,857 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 12,135.72 1.55 - 1 20 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 1 2 GUINNESS NIG PLC 140,184.50 64.00 - 13 45,629 INTERNATIONAL BREWERIES PLC. 206,730.48 24.05 - 7 28,798 NIGERIAN BREW. PLC. 599,767.65 75.00 - 79 532,768 101 607,217 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 51,000.00 10.20 -0.97 87 1,935,596 DANGOTE SUGAR REFINERY PLC 167,400.00 13.95 - 26 210,248 FLOUR MILLS NIG. PLC. 77,907.21 19.00 -0.52 54 3,653,577 HONEYWELL FLOUR MILL PLC 9,674.84 1.22 - 14 284,285 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 1 6,000 NASCON ALLIED INDUSTRIES PLC 54,843.37 20.70 - 19 239,806 UNION DICON SALT PLC. 3,676.41 13.45 - 0 0 201 6,329,512 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 22,538.42 12.00 - 14 27,290 NESTLE NIGERIA PLC. 1,224,653.91 1,545.00 -0.97 72 298,755 86 326,045 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 4,978.36 3.98 - 10 178,397 10 178,397 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 43,675.25 11.00 - 9 30,911 UNILEVER NIGERIA PLC. 222,331.71 38.70 - 19 413,714 28 444,625 426 7,885,796 BANKING DIAMOND BANK PLC 56,742.95 2.45 -1.61 92 8,011,582 ECOBANK TRANSNATIONAL INCORPORATED 247,718.94 13.50 -1.10 25 1,818,436 FIDELITY BANK PLC 62,006.07 2.14 -1.83 73 2,696,538 GUARANTY TRUST BANK PLC. 1,041,863.74 35.40 -0.28 357 23,908,441 JAIZ BANK PLC 15,910.69 0.54 5.88 11 615,757 SKYE BANK PLC 10,687.83 0.77 - 0 0 66,505.87 2.31 -7.60 16 773,500 STERLING BANK PLC. UNION BANK NIG.PLC. 203,845.27 7.00 2.19 24 310,838 UNITY BANK PLC 9,468.36 0.81 - 3 171,810 WEMA BANK PLC. 29,702.34 0.77 -2.53 32 1,926,254 633 40,233,156 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 4,920.45 0.71 - 12 1,053,771 AXAMANSARD INSURANCE PLC 23,100.00 2.20 - 4 670 CONSOLIDATED HALLMARK INSURANCE PLC 2,357.70 0.29 - 3 48,500 19,811.94 1.91 - 0 0 CONTINENTAL REINSURANCE PLC CORNERSTONE INSURANCE PLC 3,093.20 0.21 - 1 14,000 GOLDLINK INSURANCE PLC 2,001.98 0.44 - 0 0 GUINEA INSURANCE PLC. 1,228.00 0.20 - 1 100 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 2,270.26 0.31 - 7 154,986 LASACO ASSURANCE PLC. LAW UNION AND ROCK INS. PLC. 2,191.13 0.51 - 4 24,092 LINKAGE ASSURANCE PLC 4,720.00 0.59 -1.67 37 1,656,677 MUTUAL BENEFITS ASSURANCE PLC. 1,920.00 0.24 -4.00 6 329,316 NEM INSURANCE PLC 13,201.26 2.50 - 12 201,875 1,702.69 0.22 - 5 166,700 NIGER INSURANCE PLC PRESTIGE ASSURANCE PLC 2,691.28 0.50 - 3 56,093 REGENCY ASSURANCE PLC 1,667.19 0.25 - 1 100,000 SOVEREIGN TRUST INSURANCE PLC 2,085.21 0.25 - 2 128,536 4,483.72 0.48 - 0 0 STACO INSURANCE PLC STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 4 100,002 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 2 299,000 VERITAS KAPITAL ASSURANCE PLC 2,912.00 0.21 - 0 0 WAPIC INSURANCE PLC 5,353.10 0.40 - 9 159,222 113 4,493,540 MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 3,429.96 1.50 - 2 12,566

Company 2 12,566 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 3,780.00 0.90 - 0 0 7,370.87 0.50 - 0 0 ASO SAVINGS AND LOANS PLC INFINITY TRUST MORTGAGE BANK PLC 5,922.05 1.42 - 0 0 2,265.95 0.20 - 0 0 RESORT SAVINGS & LOANS PLC UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 7,600.00 3.80 -6.17 48 1,007,329 35,585.28 6.05 0.83 16 1,103,789 CUSTODIAN INVESTMENT PLC DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 FCMB GROUP PLC. 36,635.01 1.85 -5.61 110 11,035,999 ROYAL EXCHANGE PLC. 1,800.88 0.35 9.38 5 155,000 STANBIC IBTC HOLDINGS PLC 492,570.60 48.10 0.21 56 2,690,180 16,800.00 2.80 -6.67 66 2,762,064 UNITED CAPITAL PLC 301 18,754,361 1,049 63,493,623 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 0 0 994.88 0.28 - 4 300,000 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 4 300,000 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 544.04 0.55 - 1 13,000 1 13,000 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 7,425.00 4.95 - 0 0 13,812.37 11.55 - 7 34,849 GLAXO SMITHKLINE CONSUMER NIG. PLC. MAY & BAKER NIGERIA PLC. 4,019.80 2.33 - 4 22,589 1,272.44 0.67 3.08 4 138,559 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 325.23 1.50 - 1 30,010 16 226,007 21 539,007 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 710.40 0.20 - 0 0 0 0 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 648.00 6.00 - 1 5,000 NCR (NIGERIA) PLC. TRIPPLE GEE AND COMPANY PLC. 381.11 0.77 - 2 5,002 3 10,002 PROCESSING SYSTEMS CHAMS PLC 939.21 0.20 - 3 698,200 11,088.00 2.64 - 0 0 E-TRANZACT INTERNATIONAL PLC 3 698,200 6 708,202 BUILDING MATERIALS BERGER PAINTS PLC 2,391.04 8.25 - 2 700 26,180.00 37.40 - 12 38,373 CAP PLC CEMENT CO. OF NORTH.NIG. PLC 249,726.52 19.00 - 8 41,800 590.90 0.28 -3.45 2 646,673 FIRST ALUMINIUM NIGERIA PLC MEYER PLC. 286.87 0.54 - 2 10,100 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,999.41 2.52 - 0 0 1,279.20 10.40 - 0 0 PREMIER PAINTS PLC. 26 737,646 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 3,962.97 2.25 - 10 23,150 10 23,150 PACKAGING/CONTAINERS BETA GLASS PLC. 39,497.79 79.00 - 4 2,045 GREIF NIGERIA PLC 388.02 9.10 - 0 0 4 2,045 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 40 762,841 CHEMICALS B.O.C. GASES PLC. 1,577.57 3.79 - 1 3,050 1 3,050 METALS ALUMINIUM EXTRUSION IND. PLC. 1,803.64 8.20 - 1 500 1 500 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 50.60 0.23 - 0 0 0 0 2 3,550 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 - 9 25,132 9 25,132 INTEGRATED OIL AND GAS SERVICES OANDO PLC 72,723.76 5.85 1.74 43 997,427 43 997,427 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 59,858.81 166.00 0.61 5 14,705 CONOIL PLC 15,960.90 23.00 - 18 27,027 ETERNA PLC. 5,738.24 4.40 - 19 111,198 FORTE OIL PLC. 36,469.47 28.00 - 12 17,159 MRS OIL NIGERIA PLC. 6,354.80 20.85 - 5 22,775 TOTAL NIGERIA PLC. 67,904.37 200.00 - 13 17,039 72 209,903 124 1,232,462 ADVERTISING AFROMEDIA PLC 2,219.52 0.50 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 16,576.10 1.70 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 411.72 0.35 - 1 2 1 2 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,947.48 5.00 - 0 0 TRANS-NATIONWIDE EXPRESS PLC. 304.75 0.65 - 1 300 1 300 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,801.22 3.10 - 0 0 IKEJA HOTEL PLC 4,303.11 2.07 -10.00 6 344,127 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 1 500 TRANSCORP HOTELS PLC 41,042.18 5.40 - 1 1,250 8 345,877 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 217.73 0.36 - 0 0 1,010.60 1.31 - 3 6,000 LEARN AFRICA PLC STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 862.82 2.00 - 0 0 3 6,000 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 895.16 0.54 - 3 1,850 3 1,850 SPECIALTY INTERLINKED TECHNOLOGIES PLC 766.91 3.24 - 0 0 SECURE ELECTRONIC TECHNOLOGY PLC 1,126.31 0.20 - 0 0 0 0

Monday 18 March 2019

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Insight Buhari’s legacy of credible polls is tainted by abuse of state power global Perspectives

OLU FASAN

P

resident Muhammadu Buhari recently said that he would leave a legacy of free, fair and credible elections in Nigeria. He was no doubt in a self-congratulatory mode, basking in the afterglow of what he believed to be a successful general election.

Sadly, Nigeria is a country of low ambitions.

What most other nations would regard as failures and beat themselves up about, Nigeria would consider as successes and toot its own whistle over. How would anyone describe elections so marred with irregularities and abuses as this year’s polls were as credible?

To be credible, an election must be free, fair, transparent and peaceful. This means, as Dennis and Ian Derbyshire point out in their book, The Political Systems of the World, the absence of voter intimidation, vote-buying, vote-miscounting etc. Yet, according to international and local observers, this year’s elections were characterised by heavy militarisation, widespread voter intimidation, political thuggery, extensive vote-buying, ballot-box snatching, disruption of the voting process and interference in the vote count. It’s a long list of electoral abuses. But they all produced the worst outcomes in this year’s general elections: widespread violence, unprecedented low voter-turnouts and high incidence of inconclusive elections.

Take the violence. According to one source, over 500 peoplewere killed between the start of campaigns on 16 November last year and the state elections on 9 March.

Thirty-nine people died during the rescheduled presidential and National Assembly

elections on 23 February, and, of course, the state elections were more violent than the national ones. On voter turn-outs, well, another analysis shows that the turnout for this year’s presidential election, at about 36%, is the lowest since 1999. Although there were 82m registered voters, only 73m collected their Permanent Voter Cards (PVCs), and only 29m of these voted in the presidential poll. Voter turn-out at the state elections even went down on the abysmally low level at the presidential election, due to voter apathy and heavy military presence at the polling units, which an international observer group, Pan-African Women (PAN) project, said “scared voters”.

Then, there was the phenomenon of inconclusive elections. Eight senatorial elections and six governorship polls – in Kano, Sokoto, Benue, Plateau, Bauchi and Adamawa – were declared inconclusive.

Under the electoral law, an election must be declared inconclusive if the number of votes separating the frontrunner and his or her closest rival is lower than the cancelled votes. It’s interesting that the People’s Democratic Party (PDP) was leading in five of the six states. In another state, Rivers, where the PDP was also leading, the election was suspended, due to violence and disruptions. Surely, there must be concerns about whether the ruling All Progressives Congress (APC) is trying to rob the PDP of victory in those states.

Of course, inconclusive elections are often orchestrated by the losing candidates who deliberately disrupt elections in order to force re-runs, with the intention of marshalling resources, including the federal might, for the re-run elections to manipulate the results. We saw this in the Osun State governorship election last year, which was declared inconclusive, even though the PDP was leading. By the time the re-run took place, the ruling APC had exploited its incumbency and the federal might to lure influential opposition leaders with inducements and indulge in vote-buying.

The APC eventually won the supplementary elections, thereby flipping the final outcome.

Tweeting recently, Matthew Page, a senior fellow with Chatham House and an expert

on Nigeria, said: “I am unsettled by the inconclusive results in several states. They mean that politicians can target a smaller set of polling units with an intense beam of rigging, vote buying and thuggery – or seek to spoil matters completely and seek victory from pay-for-play judges”. It’s hard to disagree with that damning assessment.

Sadly, all of this undermines the integrity and credibility of the electoral process in Nigeria, a point that’s not lost on several foreign governments. In a statement, the EU observer Mission noted an “urgent need to rebuild faith in the electoral process”. The Canadian government emphasised the “importance of strengthening democratic practices” in Nigeria, and both the US and the UK decried the militarisation of the elections.

But what are the reasons for what The Economist magazine described as “the rottenness of state politics in Nigeria”?

Well, the first reason is precisely because politics in Nigeria is rotten. There are intense, medieval-type, power struggles in virtually every state as politicians want to turn their states into personal empires. For instance, in Rivers State, it’s a do-or-die power struggle between former governor Rotimi Amaechi and the incumbent Nyeson Wike. In Kano State, it’s fight to the finish between former governor Rabiu Kwankwaso and his former deputy and current governor, Abdullahi Ganduje, with each amassing cult followers, the “Kwankwasiyya” and the “Gandujiyya”, who would kill and die for their masters. The fear of losing power or control in a state is so strong and morbid that politicians engage in desperate, violent and criminal behaviour.

However, the second, even more disturbing, reason is that the state-level power struggles are accentuated by the abuse of federal power. All politicians use political thugs, but those whose party runs the federal government have the security agencies at their beck and call. The federal government control the security agencies and can unleash them in any state in “the pursuit of law and order”. But the security forces are not neutral, and politicians whose party control the centre enjoy the advantage of their complicity.

‘

Surely, it’s not mere coincidence that five of the six states where elections were declared inconclusive are those in which PDP candidates are the frontrunner and where there is a heavy military presence

For instance, it’s difficult to believe that Rotimi Amaechi is not using the security services, with the tacit approval of the federal government, to influence the outcome of the elections in Rivers State. Following a court order, the APC fielded no candidate for the governorship election in Rivers State, yet Amaechi, who is backing a stooge under a new party, African Action Congress, is so desperate to unseat his arch rival, Wike, that he is alleged to have co-opted the security agencies to cause violence and disrupt the elections in the state.

Recently, the UK High Commission in Nigeria tweeted expressing concerns about the military’s role in the governorship elections. Predictably, the Army responded, warning against foreign interference, and blaming“hoodlums dressed in military uniform” for the violence. But hoodlums dressed in military fatigue are politically-linked and protected by the military. And, of course, politicians from the party controlling the centre are more able than opposition politicians to use state security forces to cause disruptions in elections they fear losing to influence the outcome.

Surely, it’s not mere coincidence that five of the six states where elections were declared inconclusive are those in which PDP candidates are the frontrunner and where there is a heavy military presence. Few can deny that abuse of incumbency, abuse of state power, is involved. It’s difficult to accept that the APC-led federal government is not using its federal might to give unfair advantage to its party and candidates in those states.

President Buhari says he wants to leave a legacy of free, fair and credible elections. But that legacy is already tainted by the blatant abuse of state power, of incumbency, in this year’s elections. And it will be destroyed completely if his government handles the re-run elections in the six states and the situation in Rivers State badly!

Dr. Fasan, a London-based lawyer and political economist, is a Visiting Fellow at the London School of Economics. e-mail: o.fasan@lse.ac.uk, twitter account: @olu_fasan

Who protects you if the government tries to steal your assets?

ECONOMIST

NONSO OBIKILI

T

he protection of property rights is one of those things economists and other social scientists have discovered is fundamental for economic development. Property here meaning anything of value. The thinking is very simple. If a society is to progress, then people must be productive. If people are to be productive then the incentives that shape how hard they work or how much effort they put in are fundamental.

One of these incentives is to keep the fruits of their labour. If you spend time and effort trying to produce something, then getting and keeping the rewards of that thing, and knowing in advance that you will keep the rewards of that effort is one of the main reasons you put in effort in the first place.On the flip side, if you know that you will not keep the rewards of your effort then why put in effort in the first place? To use our Nigerian lingo, no one wants to be the monkey in a “monkey dey work baboon dey chop” scenario.

There are many examples of what econ-

omists mean when we say protection of property rights is important. The most commonly discussed is in relation to foreign investment. If investors put their money in your country, either through stocks or bonds or direct investments, a big factor to their decision to invest is the knowledge that they will be able to get their money back at the end. If they know that their profits will be expropriated by someone before they are able to take the rewards, then they will not make those investments in the first place.

Same applies to domestic investors as well. If a farmer knew that a random local chief would come and seize her crops the day before she is able to harvest them then she is unlikely to bother farming in the first place. Why put in the effort and investment when someone else will just seize the crops? If the spare parts dealer knew that thieves would come and steal all his spare parts before he can sell them then he probably would not bother investing in buying spare parts in the first place.

This kind of dynamic applies to basically all types of economic activity.

Societies in general depend on government to deliver this key public service of protecting their property. Protecting crops from thieves, or cattle from rustlers, or pipelines from “bunkerers”, or investor funds from unscrupulous bankers, and so on. But what if the thief is the government? What if the party expropriating your assets is the government itself who is in theory supposed to protect your assets?

It’s a complicated social topic. On the

‘

Over the last few years we have seen cases of FIRS unilaterally freezing bank accounts and other regulators imposing fines that look more like theft than enforcement

one hand the government can claim it is not theft but taxation, and they would technically be right. Governments frequently have to force citizens to pay taxes and assuming those taxes are not in themselves stolen, deliver public goods in return. There is a thin line between government theft and government taxes but who decides where that line is? Is it the people? Their representatives? A president? In the event that the government crosses that line, what tools do people have to defend themselves and their assets from government?

These are fundamental questions that when left unanswered have led to serious social unrest in many countries.

The American revolution with the “no taxation without representation” slogan is the most popular example. The French revolution had similar undertones with a monarchy trying to get out of debt through unpopular taxation schemes.

And even here in Nigeria where the Niger Delta has been in and out of crisis over the question of who keeps crude oil revenues.

As the Nigerian government tries to transition from an oil dependent state to a tax dependent state we are bound to come across the question of where the line is. Who really decides what to tax? Where is the line? What protects the people if the government crosses that line? Over the last few years we have seen cases of FIRS unilaterally freezing bank accounts and other regulators imposing fines that look more like theft

than enforcement. More recently there are rumours of a housing bill snuck through the national assembly that seeks to confiscate ten percent of all pre-tax profits from basically every business in the formal financial sector, and about 2.5 percent of every income earned by individuals.They will claim its for housing, but it sounds like theft to me.

Unfortunately, our judicial system doesn’t really seem equipped to enable individuals or businesses sue the government and protect their property. For example, you will rarely find cases where a business opts to take a government regulator to court. Even if they manage to get through the court processes, the business becomes prone to abuse of power by the regulator making the whole exercise not worthwhile.

It’s an important challenge for the government to migrate to a tax dependent state but it must remember that people actually have to be productive for there to be any taxes to collect. If the tax drive incentivizes people to work less or scale down their operations then that only results in less taxes actually collected from a smaller economy, and probably poorer people. If justice and fairness are not part of the tax drive, then we will all end up as losers. If there is nothing to protect people from theft by their government then they are likely to start to think about other undesirable methods of protection.

Dr. Nonso Obikili is Chief Economist at Business Day.

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