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news you can trust I ** wednesDAY 18 march 2020 I vol. 19, no 522

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il demand is contracting and projected to fall below $20 a barrel, a situation that could wipe out half of Nigeria’s current

the world. Goldman Sachs slashed its oil forecast on Tuesday as the COVID-19 outbreak continues to pressure demand. Analysts at the Wall Street investment bank say oil demand is contracting by an unprecedented 8 million

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NGUS feb 22 2023 375.00

As PEAC raises concern, urges revision of 2020 budget revenue, and possibly trip the country into another recession. The international benchmark Brent crude fell below $30 a barrel Monday for the first time since 2016. This is a shocking 54 percent drop year-to-date sending risk assets reeling around

3M 0.00 2.87

NGUS feb 24 2021 367.00

Goldman Sachs warns $20 oil price coming soon ISAAC ANYAOGU & Tony Ailemen, Abuja

fgn bonds

Treasury bills

barrels a day on the back of the coronavirus and the botched response by OPEC members and their allies setting off a price war. “Demand losses across the complex are now unprecedentContinues on page 38

NGUS feb 26 2025 380*

Nigeria’s third coronavirus case questions FG’s reluctance to impose travel restrictions ... Lagos begins aggressive contact tracing ... as index case still contagious Joshua Bassey, Anthonia Obokoh, Isaac Anyaogu, Ifeoma Okeke, & Olufikayo Owoeye

igeria has so far recorded three cases of coronavirus, which is relatively fewer compared with some Africa countries and to the rest of the world. But this has gain questioned the decision of the Nigerian government to allow people from high-risk nations into the country. Thirty African countries have recorded 418 coronavirus cases, according to the World Health Organisation (WHO) on Tuesday. Six countries - Egypt, Algeria, South Africa, Morocco, Senegal and Tunisia account for more than half of the cases in Africa. Other African countries are taking no chances as they race to Continues on page 46

Inside

Lafarge rises by most in 9 months on bargain hunting P. 2 Ahmed Lawan Kuru (l), managing director/chief executive officer, Asset Management Corporation of Nigeria (AMCON), and M.B. Dogban-Mensem, acting president of the Court of Appeal, when the AMCON CEO paid her a courtesy visit at Appeal Court, Abuja.

Lagos Explosion: 60-year-old woman in desperate search of son amid rubble P. 39

Wednesday 18 March 2020

BUSINESS DAY

news Inflation rises by 12.2% in February, highest in 22 months BUNMI BAILEY

or February 2020, inflation rate rose by 0.07 percentage points to 12.20 percent from 12.13 percent recorded in January 2020, according to data released Tuesday by the National Bureau of Statistics (NBS). The current inflation rate is the highest in 22 months. Ibrahim Tajudeem, head of research, Chapel Hill Denham, said, “I expect inflation to increase further because of the Value added Tax (VAT), possible impact of wage increase, and depreciation of the naira. Right now, we are beginning to see the depreciation of the naira in the parallel market.” Nigeria increased its VAT rate to 7.5 percent from 5.0 percent, which was implemented last month. Basic

food items were part of the items excluded from VAT. Core inflation, which excludes the prices of volatile agricultural produce, stood at 9.43 percent in February 2020, up by 0.08 percent when compared with 9.35 percent recorded in January 2020. Analysts expect core inflation to increase further due to countries closing their borders to combat the coronavirus and probable pressure on foreign exchange from the collapse in oil prices. “The border closure remains a major driver of the continuous uptick in food inflation, but the magnitude of impact is fizzling out,” said Damilola Adewale, a Lagosbased economic researcher. “The non-food items that we import will begin to become scarce, thus increasing the core inflation further.” Exchange rate stability is a

major driver of core inflation because most of the items in non-food category are largely imported. And foreign exchange has been under pressure due to weak global oil prices, which led to a fall in the naira to a record low of N374 per dollar last week on the Investor & Exporter window. Food inflation, popularly known as food prices, rose at a slower pace on monthly basis in February 2020, an indication that the impact of border closure on food prices is gradually fading, analysts say. According to the NBS, food prices accelerated to almost a two-year high of 14.90 percent in February as against 14.85 percent in the preceding month, while monthly readings show a moderation of 0.87 percent in the reference month compared with 0.99 percent in

January. The closure of the border in August last year by the government to stop Nigeria from being a dumping ground for imported products and boost patronage of locally made products, hiked food prices. From the NBS data, the percentage difference of 0.87 is the lowest since February 2019. “The market is gradually adjusting itself. When the borders were shut, it made local producers to focus on increasing production and capacity so that they could increase supply,” Ayorinde Akinloye, a consumer analyst at CSL Stockbrokers, said. Food inflation contributes more than 50 percent to CPI Index. The rise in food index was caused by increases in prices of Bread and Cereals, Fish, Meat, Vegetables, and Oils and fats.

L-R: Mary Uduk, acting directorgeneral, Securities and Exchange Commission (SEC); Mohammed Babangida, chairman, House of Representatives committee on capital markets and other institution, and Zainab Ahmed, minister of finance, budget and national planning, during the international conference on Nigerian Commodities Market, theme “Commodities Traing Ecosystem: Key to Diversifying Nigeria Economy” held in Abuja. Pic by Tunde Adeniyi

Coronavirus: FG postpones National Sports Festival Tony Ailemen , Abuja

inister of sports, Sunday Dare, on Tuesday announced that the Federal Government had postponed indefinitely the National Sports Festival, tagged Edo 2020. The Federal Government is taking the necessary precautions following the nonarrival of the basic screening facilities for the tournament, according to Dare. Dare disclosed that they were yet to arrive for the festival for the screening of the over 11,000 athletes billed to participate at the event, few days to the commencement of the festival. The minister stated this while briefing State House correspondents after a meeting with President Muhammadu Buhari at the Presidential Villa, Abuja. The development has the backing of President Buhari andtheEdoStategovernment, the host of the event, he said. Dare, who was joined by the minister of state for health, Olorunnimbe Mamora said the postponement was a precautionary measure to curtail coronavirus, as the world grapples with the effects of the disease. While lamenting the huge resources invested by the participating states and other stakeholders for the event, he noted however that the health of the Nigerian sportsmen and women was upper most in the mind of

government and therefore took the decision to postpone the event. Speaking on the postponement Mamora said, “We felt that in the overall interests of Nigeria that the festival be postponed.” He added that the fear in the health circle was the spread of the disease even with persons without clear symptoms, stressing that social distance was desirable at the moment. Meanwhile, the Edo State government has also announced the postponement. In a statement, Philip Shaibu, deputy governor/ chairman, Local Organising Committee (LOC), said, “The postponement has become necessary as a result of the shutdown of socio-economic activities in various countries across the world due to the outbreak of the coronavirus (COVID-19). “Although there is no pandemic of the disease in Nigeria and the Edo State Government is fully prepared to host the games and handle eventualities that may arise as a result of the outbreak of the coronavirus and any other disease, we have decided to err on the side of caution and also show sensitivity to the plight of other countries dealing with the challenge.” He said, “Details on the new date for the National Sports Festival will be communicated after due consultation with the relevant government agencies.”

MARKETS

Lafarge rises by most in 9 How Abule-Ado explosion victims may get compensation from NNPC months on bargain hunting … amid announcement of closed period

… as experts point to third party liability Modestus Anaesoronye

ictims of the AbuleAdo Lagos pipeline explosion that occurred Sunday, killing about 20 people and injuring many with loss of properties, may be able to get compensation in the form of third party damage from the Nigerian National Petroleum Corporation (NNPC). The state-owned oil company should ordinarily have taken insurance for its facilities as well as for third party damage, in the case of an accident like what happened on Sunday. Third-party insurance is essentially a form of liability insurance purchased by an insured (first-party) from an insurer (second party) for protection against the claims of

Analysis another (third party). The first party is responsible for their damages or losses, regardless of the cause of those damages. The victims of the incident can therefore through their lawyers approach the NNPC for compensation on damages, including life and properties lost in the incident. But how much the NNPC will get from insurance industry support or claims to indemnify the victims are dependent on the level of coverage it took for the facilities. SundayThomas,actingcommissioner for Insurance/CEO of theNationalInsuranceCommission (NAICOM), told BusinessDay, Tuesday that “ordinarily the effect of the explosion is a liability to the owners of the pipeline.” www.businessday.ng

The extent to which insurance companies will be responsible for payment of claims is determined by the nature and extent of the cover, Thomas however noted. Daniel Braie, managing director/CEO, Linkage Assurance plc, said the incident was thirdparty liability damage, and so victimswouldhavetofallbackon owners of the facility for claims. The primary cause of the accident was said to be from a granite carrying truck that broke down on the pipeline area of the NNPC facility in Abule-Ado area of Lagos. Since it is established as an accident and not a kind of explosion that resulted from human intentional actions, like pipeline vandalism or oil scooping activities, war or protest, insurance will have a role to play if it has been contracted

for third-party protection. Fatai Adegbenro, executive secretary, Nigerian Council of Registered Insurance Brokers (NCRIB), said there could be claims depending on the perceptive you were looking at it. Adegbenro said, “If the victimsthemselveshaveinsurance, they will be indemnified by their insurance companies, and this affects both life and properties.” But again, the insurers also have the opportunity to pursue subrogation right from owners of the pipeline, the NNPC, he said. Subrogation right in insurance is a term describing as a legal right held by most insurance carriers to legally pursue a third party that caused an insurance loss to the insured. This is done inordertorecovertheamountof the claim paid by the insurance carrier to the insured for the loss.

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OLUFIKAYO OWOEYE

arely 24 hours after announcing its closed period in preparation for the consideration of its 2019 audited financial result, shares of cement-maker, Lafarge, surged 10 percent, the highest allowed in a day trading on Tuesday, as bargain hunters and renewed appetite for Lafarge shares drove the price to N11. The last time Lafarge shares gained 10 percent was in June 21, 2019. In a release to the Exchange dated March 16, the management announced the closed period for trading of the Company’s shares to start March 16, 2020, until the 2019 Audited Financial @Businessdayng

Statement was released on the floor of the Nigerian Stock Exchange (NSE). According to NSE rule book 17:18, the period of closure shall be effective from 15 days prior to the date of any meeting of the Board of Directors proposed to be held to consider any of the matters referred to above or the date of circulation of agenda papers pertaining to declaration of financial results, up to 24 hours after the price sensitive information is submitted to The Exchange. During this period, no director, person discharging managerial responsibility and adviser of the Issuer and their connected persons shall deal in the securities of the Issuer when the trading window is closed.

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A large informal sector is nothing to celebrate Small Business handbook

Emeka Osuji

he SME sector has been celebrated, probably a bit too much, as the hope of development in many economies, especially the less developed ones. Nigeria is one of those countries with a burgeoning informal sect. This is understandable. With a stagnant economy and a population growing much faster than the economy, unemployment is a natural signpost while the informal sector is the soothing balm. The sector has been credited with unmatched capacity to create jobs and reduce poverty. This way, the informal sector is made to appear like the missing link in the development chain of these countries. Yours sincerely has been a strong advocate of the sector, having studies, researched it, and published a lot of materials on it. I still believe the MSME sector holds great promise, for as long as we remain on this static development journey in our country. The reality is that a large informal sector is not a thing of which to be proud. It is a mark of underdevelopment. It is not something you go about saying how great it is to have in one’s country. While the MSMEs will help you bridge the employment gap, it is not good news to be bragging of their being the group that will create the most jobs in a country in the 2020s. They may do so and it becomes a thing to celebrate, if you live in sub-Saharan Africa, but certainly not in the developed world. The smaller the

size of the informal sector the richer the economy. However, it does appear that the SME sector in Nigeria has not come into that glorious position where we can say, unequivocally, that it has become the engine of growth of our economy. This has led me thinking that there must be something or some challenge in need of resolution. And I think there is a problem with our SME strategy. The truth is that SMEs are nothing without big companies patronising them. They will not do much until we forge an enduring linkage between them and the big corporations, I have said this over and over again: that there needs to be a tight link between them and the big companies that should provide them with markets. The SME sector in Nigeria has been operating like an orphan without that support. So it has been overrated and under provisioned. While we must acknowledge the extensive sums of money made available in the system for on-lending to the sector, we seem to have abandoned the task of job creation and economic growth to the MSME sector, on the wrong notion that finance is their biggest problem. From the reports available regarding the extent of utilisation of available on-lending facilities, there are more serious problems in the sector than finance. There is the problem of low technical capacity and lack of organisation in terms of proper registration and packaging of companies in the sector. These are some of the reasons why the MSME sector in our part of the world is different from those in Europe and America. Besides the fact that what they call an SME over there may be our own large corporation, making them more amenable to policy support and capable of benefiting from such, our SME sector is full of briefcase companies and orphan entities that hustle their way to daily bread. We need a deliberate policy to expand the formal sector by letting the

big companies know the duty of care they owe small entities. Promotion of the SME sector has no doubt gained global support, especially in the developed world, from which much financial and technical support flows to the developing countries. In other words, policy action targeting to advance the cause of SMEs is no longer limited to developing countries. Even the more advanced countries have continually taken steps in this direction, probably doing more than the developing ones. The advanced countries have long since recognised that for a large informal economy, premium should be put on the dominant informal sector. However, the job creation capacity being ascribed to the sector is probably exaggerated for so long as these entities live under uncertain conditions with regard to patronage. During the past three or four decades, developed countries have made significant efforts to implement programmes and policies to assist operators in the SME sectors of their countries. This is evidenced by the findings of several research works in that area. This effort has also been justified by the increasing contribution of the sector to the growth in output and employment in those countries. In the OECD countries where SMEs account for about 99 percent of all firms, for instance, research shows that they are the leading source of employment, and account for much of the job placements in diverse economic fields. About 60 percent of all the jobs in the manufacturing sector come from the SMEs. They also provide about 75 percent of the employment in the services sector. In terms of value addition, the SMEs are generating, on the average, between 50 percent and 60 percent of value added. In Europe, specifically, small and medium enterprises have continued to demonstrate dynamism and innovativeness, creating new technologies and products. They are responsible for about 20 percent

‘

The SME sector in Nigeria has been operating like an orphan without that support. So it has been overrated and under provisioned

Dr Osuji is head of the department of Economics at Pan Atlantic University Lagos. eosuji@ pau.edu.ng @Emekaosujii

Finnish but certainly not finished

ichel de Montaigne once remarked, “It should be noted that children at play are not playing about ; their games should be seen as their most serious-minded activity.” I believe now more than ever that our educational system needs a complete overhaul if we desire to create a better and more functional society. The school curriculum is completely outdated, ineffective and altogether moribund, if I may use that term. If we leave it as it is, it will continue to lead us nowhere. It’s difficult to decipher the purpose it’s supposed to serve. What evidence do we have that it’s working? Is our society the better for it or the Nigerian child better equipped by it? The World Happiness Report of 2019 ranked 156 countries and that tiny Scandinavian nation, Finland, took the top spot for the second consecutive year. Several factors were used, including generosity, life expectancy and freedom. The Legatum Institute’s Prosperity Index has also, for many years, ranked Finland amongst the most peaceful countries on earth, in addition to it having the highest quality of life. Lucky, aren’t they? Well, if you agreed with that, you would be wrong. Luck has absolutely nothing to do with it. They’re simply enjoying the fruits of very intentional, well thought out policies, implemented with scientific precision. It may interest you to know that they achieved all this, even without having to first establish a Ministry of Happiness or by spending scarce resources to erect statues of foreign leaders, unlike what transpired in one of our states, where civil servants were being owed months of unpaid salaries. A hundred Ministries of Happiness can never in a million years

succeed in bringing even the faintest of smiles to the face of a hungry man. All we ask is for our leaders to demonstrate good leadership by doing the right thing. That’s all. And you know what? This is often far easier than the curious, grand projects they embark on which never take us anywhere. Living in a society like ours, at least for the last twenty five years now, where parents proudly boast to friends and foe alike, that their child has begun school at the age of two, it fascinates me to learn of a society where children don’t enrol at school till the age of seven; where senseless cramming is totally discouraged and the pupils are not subjected to any standardized test until they reach the age of sixteen. Despite this, the heavens haven’t fallen and in fact the society is more prosperous now than most of us can possibly imagine. For the last two decades, Finland has generally been regarded as the country with the best education system in the world. And lest I forget, schooling there is essentially free; meaning, such an accolade has not been earned because they have the most expensive private schools. Anything but. Furthermore, various studies discovered that the gap between its strongest and weakest students is the narrowest in any country’s educational system and quite instructively, this has been achieved in a system where collaboration has been adopted to displace competition amongst pupils. One reason given for its success is that all students of the same age group, study in the same class. So no, you’re not likely to find nine-year olds grouped in the same class as eleven-year olds, just so some parents can brag about how clever their child is. Coming from a British

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system myself, where schools are strict about age parity in the classroom, I’ve never quite understood why so many Nigerian parents are in such a hurry to rush their children through school. Some jump two classes! I honestly believe it’s a disservice to the child. Let sixteenyear olds discuss what sixteen-year olds will naturally discuss when they are together, but why should I put my fourteen-year-old in a situation where she is exposed to that? She has plenty of time for that and by that time, she will hopefully be mature enough to stand her own in the conversation, without being unduly influenced. That has always been my view, but Hey! What do I know? While conducting research for my Masters in Professional Ethics final project, which I titled The Moral Foundation of Education, I discovered several more interesting facts about the Finnish education which has caused it to stand out. First, I read that the “stated aim of Finnish primary education is to promote ethical responsibility and equality whilst promoting the basis of skills and knowledge required for development in later life.” So why would the people and the leaders they produce, not be fairer and less self-centred? Two, “healthcare, a daily meal, textbooks and other materials are all provided free, as is travel to and from school if the journey exceeds 5 km each way.” Again, I ask you, why will the people not jealously protect a system and diligently serve a nation that does so much for them? Finland’s top position in some of the global indexes mentioned earlier is not a mere coincidence, but is a direct result of the ethos which guides their educational system and their life in general. Speaking directly to the quote by Montaigne

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of all patents in biotechnology-related fields. In fact, over two thirds of the National Productivity Champions in Europe ─ defined as the most productive firms in their various European countries and industries - are SMEs. In the knowledgeintensive services, this contribution is in excess of 80 per cent. The contribution of SMEs to the output and growth of economies of the emerging markets is equally impressive. Here, they contribute as much as 45 percent of all employment and about 35 percent of GDP. According to the National Bureau of Statistics (NBS) in Nigeria, during the past five years, SMEs have contributed 48 per cent of the nation’s GDP, which has helped to establish the country as the biggest economy in Africa. They also constitute 96 per cent of all business entities in the country while providing 84 percent of all employment. These are by no means small issues but evidence of the need to take more pointed steps to improve the operating environment for small business in Nigeria. Much is actually being done in that regard, especially by entities like the development banks, but there is a need for coordinated and synchronised efforts, and the measurement of results. Compared to Nigeria, SMEs in South Africa make up 91 percent of all business entities; they contribute 60 per cent of employment and 52 percent of that country’s GDP. There is indeed no more doubt that these small firms are usually dynamic and innovative. It is therefore a wise policy action to do things that make them improve their operations. They are also a critical element in any effort to achieve inclusive growth. A large informal sector is not a good thing but while it is there, we must connect them with the big companies for patronage.

Character Matters with Daps

Dapo Akande with which I opened up today’s discussion, another thing which the Fins do differently in schools which they ascribe much of their success as a society to, is that they incorporate ‘play’ into learning. It’s an integral part of the school day because it is well understood that while playing, children learn without even being conscious of the fact that they’re learning. The lessons they learn from this form of learning, which is experiential, is also far more likely to endure and guide their reasoning. Like the Director of a Finnish public Kindergarten once said in an interview, “It’s not a natural way for a child to learn when the teacher says, ‘Take this pencil and sit still.’ “ Going by this, playing, which some of us think is an utter waste of time, isn’t, after all. Perhaps to ensure he drills his point home, he concluded the interview by quoting an old Finnish saying which goes like this, “those things you learn without joy, you will forget easily”. Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng Akande is a graduate of the University of Surrey, UK, author of the acclaimed book: The Last Flight: A personal journey to discovering values. Contact: dapsakande25@ gmail.com

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Ounce of prevention is worth a pound of cure Nneka Eze

he global covid-19 pandemic and the resultant reduction in global demand for oil and falling oil prices are precisely why we need to diversify and transform Nigeria’s economy. We are especially at risk in Nigeria given our already depressed, low-growth economy – GDP growth was projected at 2.5 percent for 2020 – and the wider socioeconomic conditions – the high levels of inequality, widespread poverty, limited social safety nets, and high and rising unemployment rates. These long-term stresses weaken our ability to respond to and recover from the shocks of pandemics, fires, explosions, or global economic shifts. Over the past few days, the global situation has arrived more visibly in Africa. The case counts and deaths are rising drastically – Africa’s covid-19 confirmed cases rose from 83 on 8 March to 313 by 15 March, and people are wondering how this happened. When Gabon originally introduced its strict travel limitations on travel from countries that had any covid-19 cases, I wondered why they were being so harsh. Countries such as Ghana, Kenya, Rwanda, and South Africa, have now followed in their footsteps, although for the latter, it is likely too late for a containment strategy. In Nigeria, in-person meetings, religious events, sports activities, social events and school continue amid a global pandemic. We feel justified that our case numbers are so low, so we are free to socialize. However, a few million people could die in Nigeria if we are not able to put in place rigorous containment measures. The most extreme models project

the potential to have 50-80 percent of people will be infected, globally, and suggest up to 5 percent mortality rates from coronavirus. The NCDC and the state and Federal Ministries of Health are doing laudable work to contain the cases that are known. The Emergency Operations Centres set up to manage exactly this type of pandemic, are working – and the staff are working hard to trace contacts and to locate people potentially exposed to the virus. The abundance of hand sanitizer and temperature checks at businesses are a step in the right direction. However, the risk of the unknown cases remains – and we do not have enough testing kits. We need to take bold steps in Nigeria to address coronavirus before the unsettling projections manifest. First, the Government of Nigeria should take the step to close our borders to non-Nigerians arriving from countries with any covid-19 cases. All people arriving from countries with

cases need to stay under strict self-quarantine for 14 days – with continued follow up from the state and federal health teams working together with NCDC. This must be a strict requirement, and all arrivals, including VIP arrivals and those arriving by land need to be screened and documented. Second, we should promote social distancing, preemptively cancelling non-essential in-person meetings, close universities and schools, cancel religious and social events, including weddings and funerals, and stop shaking hands for at least 30 days. This may seem extreme. However, we have had extreme measures in the past – schools and universities have closed for longer time periods due to student or teach strikes, and we restricted movements over the course of two weekends last year for the rescheduled elections. Further, we have not yet closed our borders, and social distancing can help to protect the most vulnerable in the society. While we do not yet

Eze is Partner and Nigeria Director at Dalberg Advisors, a global group working to build a more inclusive and sustainable world.

How to retain your job in these times

hese are not normal times. Because of the Coronavirus, the global economy is expected to contract, caused by reduction in consumption and spending. This will affect many industries and businesses. Mostly hit are the tourism, travel, conference and exhibition industries. Energy stocks globally have witnessed a major hit and crude oil prices dropped to levels never seen since the gulf war, caused majorly by the oil price war between Saudi and Russia – second and third producers respectively globally. In Nigeria, GDP estimated for 2020 will be revised drastically further down wards as the effects of Coronavirus and its implication on crude oil consumption becomes more apparent. Already the Federal Ministry of Finance has intimated on the need to review the benchmark price of crude used in the 2020 budget estimate, because revenue targets may not be realised. This will certainly affect spending and businesses will be adversely affected. When business is down, most companies generate coping and survival strategies. Amongst them is to reduce cost and expenses to manageable levels, while seeking for new market opportunities to keep the business going. There is so much apprehension right now in many organisations and with many staffs because layoffs are inevitable. We run a recruitment and HR support organisation and daily we see the concerns of job seekers including those holding positions that are becoming shaky due to the prevailing circumstances. How do you retain your job? One cardinal advice: Do not be an Expense. Do not be found in the expense address. Because expenses are the first casualty in times

have evidence of community transmission, experience globally suggests that this will happen soon. If the government will not order this level of social distancing, business leaders should take heed – we can make a difference if we take bold actions before it’s the trend, before we look more like South Africa or the UK than our present case load suggests. Third, we need to deploy the best of artificial intelligence that already exists to help detect potential high impact locations, predict where the coronavirus may spread next, inform decisions by state and local executives, and contact individuals. Finally, we need to make urgent investments in increasing our capacity to respond to the most extreme cases – we need more ventilators on standby and medical supplies, particularly protective wear for our medical professionals. The argument is that we will not see many cases in Nigeria. With a global pandemic, the aim is to be proactive, rather than reactive – one day of delay in strict measures, whether border closures or social distancing measures can have a significant impact on the outcomes. We need a clear plan in place to deal with the worst-case scenario, with continued hopes and prayers that it does not come into existence. I think the “ounce of prevention is worth a pound of cure” motto attributed to Benjamin Franklin is still valid today. We need to continue work to transform the economy and to address preemptively the shock coronavirus could have directly and immediately on our people.

like this. Who is an expense? What do I mean? Simply put, when your contribution is far less than what you are earning. Or the business is subsidising your income. In other words, what you are getting from the business is far more than what you are putting or giving at the end of each work month. Is it possible for one to put less and get more? Yes. So how does one leave this “expense address” assuming one is there now? Here are some suggestions. Firstly, understand your job description. If you don’t have one, please demand for a clear, well written and approved job or position description for whatever position you have been given. This is very important. This is your contract of engagement with the organisation. Once you have this, then spend time to understand it but also regularly visit your position description to refresh yourself with it. Secondly, give more than what you earn. This may sound foolish, but this is wisdom talking. Make it deliberate professional habit to give more than what you are getting from your organisation. This is your greatest security against tough times and in times like these. When you give more than what you get in qualitative terms, you automatically cross from an expense to a value creator. Now, in times like these, value creators remain and in fact are given more responsibilities, indeed they are in high demand. This will require personal adjustments and sometimes sacrifices that may not be convenient. But I tell you it will pay off. Thirdly, don’t be lazy. Part of the sacrifice to give more than what you earn is that you may find yourself taking job home, spending up to 2-3 hours some days, finding solutions to critical tasks. Sacrifice always pay off! Fourthly, put your mind on your job. I cannot emphasise this enough. Especially young

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people, they are so distracted that they spend less time on their jobs and tasks, thinking through the tasks, and so their contributions are neither here nor there. The greatest gift God has given to man is the mind. Many of us do not use our minds enough. No matter the challenge and task before you, man has the ability to resolve it and find solutions. Your mind is your greatest asset. In fact, your organisation employs you because of your mind. Your looks and how you appear is good and very valuable in many positions, but the greatest asset an employee has is his or her mind. At the end of each work day, do a quick self-assessment of your accomplishments for the day and make plans for the next day. Free your mind from things that can shut out inspiration. Like unforgiveness, malice and generally try to be happy and keep a good and friendly relationship with colleagues and people close by. Fifthly, always self-evaluate your work against your PD. As you perform your daily tasks, take note of your accomplishments and periodically do a self-assessment and report on your accomplishments against your position description. Some organisations require self-evaluation as part of the annual or biannual evaluation process and will require you to present your self-evaluation report to your supervisor. Engage your supervisor and get his or her feedback on your self-evaluation and take whatever inputs he or she provides to improve and move on. It is possible for one to be in the “expense address” and not even know it. How is this possible? The following conditions can lead to that state of mind: Firstly, when you have an entitlement mentality. You feel that it is your right or the organisation owes you an employment. So,

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Roland Oroh

you become unmindful of your contributions, not interested in making sacrifices but rather you focus more on the rewards you expect to get each month. This may continue for a while, but it is not sustainable. When hard times comes, even the big and mighty and the well-connected may not be spared. So, let go this entitlement mentality, it is not sustainable and it reduces your ability to move to other more rewarding organisations when the opportunity comes. You are being subsidised here because the MD knows your father. That may not be the case in other more rewarding organisations within the industry. Secondly, you are so self-centred, you see only your goodness, your needs, you become so lenient and generous with your-self to the point that water has cross under the bridge and the company tolerates your weaknesses and limited contributions that you did know this for many years running. Until the axe fell! Don’t allow this to happen. Constantly be hard on yourself, checking your performance against your PD, keeping abreast of developments in your industry and seek new ways to do your job more efficiently. In conclusion, your work is your life. God made man to work. And through our work, we shall provide for our needs and be happy and prosperous (Psalm 128:2, GNB). This piece was written by Roland Oroh, founder of RosslandJobs, a CV Bank and Job Portal; and Rossland Screening Solutions, a recruitment agency and HR solutions provider with a focus on creating development impacts. Email: Roroh@rosslandgroup.com

Wednesday 18 March 2020

BUSINESS DAY

Editorial Publisher/Editor-in-chief

Frank Aigbogun editor Patrick Atuanya

Why the FGs $22.7b loan request cannot fly Fails to meet conditions for loans in the Fiscal Responsibility Act, Debt Management guidelines and more

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

Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

he House of Representatives has deferred debate on the Federal Government’s request for approval of a $22.7 billion loan that it would source from at least four lenders. The action of the HOR came after the Senate had approved the loan despite trenchant criticisms and objections. It has now emerged that the Senate was wilfully negligent in giving its approval. The loan request does not satisfy several constitutional and legal requirements and conditions precedent. It is deficient on several grounds and calls for a second and third look. First, it does not meet the requirements of the Fiscal Responsibility Act (2007) which under Section 44 (1) provides that “Any government in the Federation or its agencies and corporations desirous of borrowing shall specify the purpose for which the borrowing is intended and present a cost-benefit analysis, detailing the economic and social benefits of the purpose to

which the intended borrowing is to be applied.” Subsection 2 further stipulates that each borrowing must comply with these conditions. They are a) the existence of prior authorisation in the Appropriation or other Act or Law for the purpose for which the borrowing is to be utilised; b) The proceeds of such borrowing shall solely be applied towards longterm capital expenditures.” There are 35 items listed as purposes and projects that the government would execute with the $22.7 billion loan. A briefing by Logosphere Advisory Services led by former NERC Chairman Sam Amadi shows that only two of the items feature in the Appropriation Act. Those that pass muster are the Mambila Hydro Electric Power Project Mentioned under Code: ERG10109723; Amount 2,000,000,000; on Page 941, Volume 2, Appropriation Act 2020. The other is Lake Chad Basin Commission. It is listed under code 0252039001 as Lake Chad RBDA; Amount 3, 928,824, 204; page. 1258, Vol-

ume 2, Appropriation Act 2020. Other considerations for such foreign loans include compliance with the prescriptions of the Debt Management Office Establishment Act 2003 and the Investment and Securities Tribunal 2007. Under the DMO Act, the FG should provide to the National Assembly Foreign policy objectives underlining the request or proposal; Terms and conditions of the grant or loan; Benefits which Nigeria stands to derive from the grant or loan; and State of the relations existing between the foreign state or international body and Nigeria at the time of the request or proposal. The Investments and Securities Act demands that the FG in requesting the loan should show evidence and be approved only if “the total amount of loans outstanding at any particular time, including the proposed loan, does not exceed 50 percent of the actual revenue of the sub-national concerned for the preceding year.” Part XV of the Investment and Securities Act so stipulates. Finally, the loan does not co-

here with the Economic Recovery and Growth Plan of the FG nor with its medium-term expenditure framework. There are also issues with the exclusion of the SouthEast geopolitical zone in projects identified for the loan. We are glad that the House of Representatives has acted more maturely than the Senate is stepping down discussions on the loan request. It is embarrassing that the FG in making the request failed to do due diligence on the statutory requirements for such a procedure. How could this happen with the huge bureaucracy that services the Presidency and the FG? The dynamics of the oil market in the wake of coronavirus and ego games by the two leading producers of Russia and Saudi Arabia has further destroyed the basis for any such adventurous foreign loan. Nigeria cannot afford such risks now given the instability in earnings and repayment of such loans in foreign currency. We urge both the National Assembly and the Presidency to rest the matter of this quest for an unsustainable loan that Nigeria cannot repay.

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Wednesday 18 March 2020

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COVID 19: The need for business continuity plan Franklin Ngwu

ith the global crisis caused by Coronavirus (COVID 19), many fir ms are c o n c e r n e d t hat their 2019 strategy targets will not be achieved. ‘’We are in a serious trouble! With the way things are going, we have gone beyond hoping to meet our 2019 growth targets. We are now wondering if the business will survive till end of the year! We cannot bring in some of our key raw materials, demand is rapidly reducing, loans must be repaid with new credit lines almost non-existent and both fixed and some variable costs need to be met, a CEO lamented! You are not alone, it is the situation of many firms both in Nigeria and other countries. It is a global challenge and encouragingly, it is receiving a concerted global effort

to tackle the plague, I tried to console my friend, the CEO. We pray that they succeed but whether they succeed or not, I need a solution to my business problems, he further grieved! Do you have a Business Continuity Plan (BCP) and if you don’t, don’t you think that you need to carry out a Business Continuity Exercise (BCE), I asked? His reply was not reassuring as to whether he understood either the meaning or the importance”. According to ISO22301 (2012:2), ‘’Business Continuity Exercise is a holistic management process that identifies potential impacts that threaten an organisation and provides a framework for building resilience with the capability for an effective response that safeguards the interests of its key stakeholders, reputation, brand and value creating activities’’. The focus is on having a management system in place that creates, executes, monitors, reviews, maintains and improves the capability of the business to continue its growth and performance even when faced with many challenges. In a layman understanding, Business Continuity Exercise is like carrying out a Business Impact Analysis of the challenges facing the business with an aim to develop ameliorative strategies for the continued growth and performance of the business. With regards to the COVID 19, a business continuity exercise needs to be carried out by firms to critically evaluate the impact of COVID 19 on their businesses and then innovate strategies for their continued superior performance. In a global survey by Mercer covering over 300 firms in 37 countries, about 51 percent of the firms lack a developed BCP to combat the COVID 19 challenges. Though COVID 19 is a sudden occurrence,

‘

With a focus on COVID 19, what is required in the first instance is for CEOs to understand and appreciate that while it is primarily a health challenge, the socio-economic implications of COVID 19 are wide and complex

the absence of a BCP across many firms is a management failure that further demonstrates the reactive approach to management of firms. With the recent experience with Ebola, it can be argued that CEOs of Nigerian firms without a detailed Business Continuity Plan have a question to answer as to their vision and leadership capabilities. Moreover, as COVID 19 is just one of such challenges requiring a BCP to tackle, the importance of a detailed plan in the face of other challenges such as cyber-attack, major foreign exchange risk, earthquake and loss of significant input supplier or market share cannot be over emphasised. A random interview of CEOs revealed that the absence of a BCP can be attributed to lack of knowledge and understanding, lack of commitment, lack of budget provision, absence of corporate buy-in and complacency. As a well-developed Business Continuity Plan helps to reduce uncertainty, instils confidence and enables competence for sustainable and superior performance of a firm, it is important that it is embedded as part of the culture of a firm. Interestingly, this can be achieved through a four-stage process that includes: First, detailed understanding of the firm. Second, careful determination of the appropriate business continuity management strategies. Third, effective development and implementation of a business continuity management response and fourth, regular exercising, maintenance and review of the plan. While some CEOs complain that carrying out a BCP is expensive and complex, the interesting aspect of the exercise is that the benefits always outweigh the costs. Moreover, it can be done in phases and with

minimal costs. Irrespective of the method used, what is of central importance in the development of a BCP is the actual testing of the plan to ensure effectiveness and robustness. This too can be done in a progressive way that is cost effective starting from component and module tests and then increasing to linked tests and disaster drills. With a focus on COVID 19, what is required in the first instance is for CEOs to understand and appreciate that while it is primarily a health challenge, the socio-economic implications of COVID 19 are wide and complex. Having such a mindset is necessary for the development of an effective BCP. It will help in having a holistic assessment of the impacts of COVID 19 not only on the firm but also on all the stakeholders of the firm. These include but not limited to employees, input suppliers, buyers, communities, government, competitors. With such detailed appreciation and understanding of the complex consequences of COVID 19, a firm will be better informed of the challenges it faces and the short, medium- and long-term strategies required to ameliorate and solve the challenges. As earlier pointed out, while a detailed BCP plan can be expensive to develop and test, it can also be done in a most costeffective way and tested using the talk-through method. What is important is to ensure that whatever testing method is used passes the criteria of being stringent, realistic and minimal exposure of the firm bearing in mind the wide benefits of a well formulated Business Continuity Plan. Dr. Ngwu is a Senior Lecturer in Strategy, Finance and Risk Management, Lagos Business School and a Member, Expert Network, World Economic Forum. E-mail- fngwu@lbs.edu.ng

Aesthetics driving traffic to restaurants

imes have changed and not just in terms of technology but also in the demand for restaurant spaces. A few years ago, consumers used to “sneak” into restaurants to host business meetings and order a meagre N200 bottle of water. Today, consumers are trooping to restaurants to take Instagram worthy pictures while barely ordering any item on the menu. Millennials are changing the game for restaurant marketing through their increased demand for pleasurable experiences in addition to products. Creating an experience-based atmosphere is crucial as millennials tend to be brand loyal and do not mind spending a significant portion of their income on good food and a great ambiance. Restaurants must be willing to fit their lifestyle into the aesthetics, customer service and product offerings. The term aesthetics means different things to different people thereby making it is impossible to proffer a specific formula on how to achieve the appropriate look and feel that will be attractive to customers. It could be in terms of the design and layout of the restaurant, the signage, lighting or even food design. Whilst the key product i.e. good food

remains relevant, the success of restaurants and brunch spots in Lagos is often determined by the aesthetic appeal as well as the number of picturesque spots. Economics of aesthetics Meeting the aesthetic demand is often expensive and time consuming but in the end the revenue prospects could be well worth it. It also offers effective and far reaching advertisement benefits. In today’s social media age, restaurant marketing is not as popular on radio and television as it is on Instagram and Snapchat. Restaurants are relying more on User Generated Content (UGC) to promote their brand. This involves customers using photos, testimonials and videos to promote a brand. Curating user generated content can be done using short and engaging content on social media platforms, blogs or sites such as TripAdvisor. Effective images are often used as a tool for creating said content. In other words, letting the picture do the talking. Besides the revenue generation and marketing advantage, the aesthetic mandate provides other economic benefits including: Branding: A beautifully designed restaurant is great but having a unique aesthetic feature as

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a crowd puller is better for branding purposes. In modern lingo, each restaurant must have its selling point. A few examples of how restaurants have branded themselves include the popular restaurant with the pink car filled with flowers at the entrance, the lounge whose slogan is “Visa Free Greece”, the restaurant with a swing in their backyard or the restaurant with the inscription “You are exactly where you need to be”. In a highly competitive market, a unique feature does wonders for distinguishing a restaurant from the crowd. Customer service: Before customers walk in, they probably already know the picturesque spots at a restaurant. However, they are more likely to post the picture on their social media platforms provided they receive satisfactory service. This means that look and feel must be complemented by excellent customer service rather than override it. Picture this, two social media influencers walk into a restaurant for a working lunch and are less than impressed with the look and feel as well as the customer service. Can you imagine the reputational damage this will have on said restaurant? Remember, they are not called “influencers” for nothing!

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TEMITOPE OLUGBILE Healthy competition: The race is on for which restaurant can pull the largest crowd using a combination of aesthetics, customer service and a great ambiance. There is now increased competition amongst restaurants and cafes to gain traction online with the intention of luring customers into their premises. Economists teach us that competition can yield improved efficiency and productivity, better quality as well as more choices and variety. Opportunity for the value chain: The process of putting together a pleasurable experience for customers involves employing the services of experts. From the real estate developers, interior designers, artisans and others all play a vital role in the project. The gig economy including influencers, graphic and web designers, social media managers amongst others are also benefitting from the increased need for restaurants to showcase their products on social media.

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Nigeria’s agric investment hits 6-year high …annual average growth rate of 82% Josephine Okojie

i g e r i a ’s a g r i c u l t u ra l sector has attracted its highest level of investments since 2014 on continued government support to the industry. Data from the National Bureau of Statistics (NBS) capital importation report show that foreign direct investment (FDI) in the agric sector hits $490million (N176.4bn) in 2019, up 69percent from $290million in 2018. Investments into the sector have grow n consistently at an annual average of 82percent within the last six years, BusinessDay’s analysis shows. “The agric sector has become attractive to investors since the renewed government focus on the s e ctor,” Afr icanFar mer Mogaji, head-agribusiness, Lagos Chamber of Commerce and Industry (LCCI) said. “Also, the potentials and opportunities in agribusiness

have brought lots of investors into the sector both domestically and foreign,” Mogaji said. Agriculture which was once neglected had since 2016 became an option for diversification owing to its vast potentials to drive a

more sustainable economic growth in Africa’s most populous nation in terms of job creation and revenue diversification. Owing to this potentials, the government devoted lots of energy to deepening agriculture through the

enactment of various policies. Some of the policies include; the introduction of the Anchor Borrowers Programme (ABP), placing a ban on the importation of some agro commodities and the recent shutting down of its land borders.

Olakunle Dabiri, general manager, Origin Automobile Works (OAW) presenting an official souvenir to Aminu Suleiman, Commissioner for Agriculture, Zamfara State while Kunle Ball, vice chairman of OAW looks on during a courtesy visit by members of the Zamfara State delegation to Origin’s Automobile office in Lagos recently.

How ABP, FX restriction support Nigeria’s economic growth Josephine Okojie

ince the fall in global crude oil price of 2016, Nig e r ia has attempted to diversify its economy away from oil. Agriculture became an option for diversification owing to its vast potentials to drive more sustainable economic growth in Africa’s most populous nation in terms of job creation and revenue diversification. To accelerate this growth, the government devoted lots of energy to deepening agriculture through the enactment of various policies. One of such policies is the Anchor Borrowers Programme (ABP) and the restriction of foreign exchange to some importers of agricultural products that can be grown locally in the country. The ABP initiative which started since 2016 to provide single-digit credits to farmers has impacted the country’s agricultural sector tremendously. The government has since

been lauded for the initiative as it has increased food production and impacted farmers’ livelihood positively. About 902, 518 farmers have benefitted from the scheme as it has created over two million direct jobs and eight million indirect jobs, data from the Central Bank of Nigeria (CBN) economic report shows. A total of N174.5 billion has been spent to finance farmers since the inception of the scheme. Nigeria’s rice production has seen increased since the ABP initiative. “The Anchor Borrowers P ro g ra m m e h a s re a l l y impacted the agric sector positive and rice production i n t h e c o u n t r y ,” s a i d AfricanFarmer Mogaji, headagribusiness, Lagos Chamber of Commerce and Industry (LCCI). “Finance and access to the market which has been some of the major challenge limiting productivity, are issues the ABP initiative addresses,” Mogaji said. The ABP initiative has led to an increase in the country’s paddy production www.businessday.ng

from about four million to seven million metric tons annually, according to data obtained from the National Bureau of Statistics (NBS). Numbers of rice mills both integrated and cottage mills have also increased by more than 50 percent as the government and private sector continues to make more investments in processing. The average crop yield per hectare of the crop has risen from 2.5 metric tonnes per hectare to an average of 4 and 5 metric tonnes of the same acreage, owing to renewed government commitment. Currently, the United States Department of Agriculture (USDA) puts Nigeria’s milled rice 2018/2019 production at 4.78 MMT, up over 2.5 percent from 2017/18 figure of 4.66 MMT. Rice import has reduced by 99 percent from about 1.2 million MT to about 784MT. This significant reduction in rice imports has saved the country $600million, thereby reducing pressure on the country’s foreign exchange reserves. Similarly, the restriction of

FX to some importers of food items has helped in boosting local production of some agro commodities. The policy has led to an increase in the production of some crops in which the country has a comparative advantage in its production. Data from NBS shows that investment into the sector has been growing at an annual average of 82 percent since the government renewed support to agriculture. As a result of increase in food production, request for FX for food production has also reduced and this has contributed to the growth of the economy. Agriculture was one of the major sectors that contributed to bringing the country out of recession in the second quarter of 2017. The Nigerian agricultural sector grew by 2.36 percent in 2019 and contributed 23pecent to Nigeria’s Gross Domestic Product for the period. The country just regained its position as the largest economy in Africa $425billion after losing the position in 2016.

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“The recent policies of the government have made agriculture attractive to investors. We now have new entrants of farmers as a result of these policies,” Abiodun Olorundenro, manager, AquaShoots said. Despite these policies, fundamental issues in the sector have continued to deter accelerated growth and development. Experts attributed the slower growth and trade deficit in the sector to the inability of the government to address fundamental issues in agric. They noted that the countr y can only drive growth in the sector when agricultural products become highly competitive. The experts noted that the country must increase its mechanisation scale to meet the ever-increasing demand for food before the country can talk about earning foreign exchange through the sector. Also, they added that the government must provide the needed infrastructures such as power and motorable

roads to drive down production cost, effective and efficient rail transportation linking where the food is produced in the north and markets in the south as well as irrigation facilities to aid all-year farming. With all this in place, they stated that the country’s agricultural products will be competitive as a result, importation will be discouraged. “ We have i n c re a s e d our crop production of various commodities but the government has still not done anything in addressing fundamental issues. We still do not have sufficient seeds and seedlings, nothing in place to increase mechanisation,” said Abiodun Oyelekan, chief executive officer, Farm Fresh Agric Ventures. “ The only thing the government has done is shifting attention to the agricultural sector. People now want to invest in the sector than before and this is why there is an increase in production,” Oyelekan added.

AFAN calls for reversal of sworn-in caretaker nominees Josephine Okojie

he South-West zone of the All Farmers Association of Nigeria (AFAN) has called for the reversal of the sworn-in caretaker nominees by Murtala Nyako- chairman of the Board of Trustees (BOT). The South-West arm of the association who made the call at a press briefing in Lagos recently, say other members of the BOT were not carried along in forming a caretaker committee for the farmers’ group. Fe m i O k e, s o u t hw e s t chairman, AFAN and Lagos chapter said that the swornin ceremony for the caretaker committee was conducted only by the chairman of the BOT, saying it violates the constitution of the group. He added that the chairman does not have any constitutional right to singlehandedly dissolve elected members. “It is the National Electoral Committee (NEC) and the general assembly that can confirm a caretaker committee,” Oke said. He added that none of the stakeholders were carried along except members that were already expelled and none performing in their various @Businessdayng

states. “We, therefore, seized this opportunity to appeal to our BOT chairman to reverse his decision and embrace other BOT members including the stakeholders in AFAN as this will allow us to enjoy the agricultural agenda in this administration,” the southwest chairman said. He stated that elections for the state levels have been conducted but that of the zonal and national which was supposed to be conducted last year July was shifted owing to the death of a top official of the association. Also speaking, Tunde Adeyemi, public relations officer -southwest, AFAN said that members of NEC had agreed to conduct the elections for new executives at both the zonal and national levels early in 2020, saying that preparations are already ongoing. “Among the 36 states, it is only five states that are yet to conduct their state elections and this is where members of the caretaker committees were drawn from,” Adeyemi said. Abimbola Fatoyinbo Francis, secretary, southwest zone, AFAN said “we oppose the inauguration of the caretaker committee. We were duly elected and we should allow the constitution to guide us in electing new members.”

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Dangote Fertilizer seen unlocking food production potentials Olusola BELLO

h e i mp o r t a n c e of agriculture i n N i g e r i a’s economy cannot be overstated. Fa r m i n g a n d l i v e s t o c k rearing is the main livelihood for over 70 percent of households in a country, which has again emerged as Africa’s largest economy. Agriculture contributed 23.38 percent to nominal Gross Domestic Product in the fourth quarter of 2019, according to the National Bureau of Statistics (NBS). This is significantly higher than the 7.32 percent derived from the oil sector within the same period. However, the country’s promising agricultural potential has not been fully realised. In all likelihood, low fertiliser use is still a major factor in explaining the low agricultural productivity in Nigeria. Nigerian farmers need fertilisers to redeem the c ou nt r y ’s i mp ove r i s h e d farmlands and forestall a looming food crisis in the country. The coming on stream of Dangote Granulated Urea Fertilizer plant has been regarded as a timely measure that would boost farm yield and alleviate poverty not only in Nigeria, but also for the whole of sub-Saharan Africa, and by extension Africa. The Dangote Fertilizer plant, with a capacity of three million tons per annum, has been classified as the biggest project in the entire fertiliser industry history in the world. Phase 1 of the project, which is estimated to cost $2.5 billion, is to manufacture 3mmtpa of urea per annum. The capacity will

later be expanded to produce multi-grades of fertilisers to meet soil, crop and climatespecific requirements for the African continent. The Dangote Fertilizer complex consists of Ammonia and Urea plants with associated facilities and infrastructure, to produce 3 MMTPA Urea. The complex comprises: 2 x 2,200 M T P D A m m o n i a P l a nt s based on Halder Topsoe technology, 2 x 4,000 MTPD Melt Urea Plants based on Snamprogetti technology, and 2 x 4,000 MTPD Urea Granulation Plants based on Uhde Technology. Already, in preparation f o r c o m m i s s i o n i ng, t h e company announced recently that several critical sections of the plant are going through various stages of pre-commissioning and test-run. “Virtually all the sections of the plant such as Central

Control Room, Ammonia and Urea Bulk Storage, Cooling Tower, Power Generator Plant, Granulation Plant, have all been completed and are going through pretesting”, the company was quoted in a statement. Speaking during his recent tour Dangote Fertiliser Plant, Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, said the plant became imperative to enhance the country’s quest for economic diversification. According to him, “this t i m e t h a t t h e e c o n o my is going through its own challenges, there is a need for us to diversify the Nigerian economy from oil to other areas where we have abundant resources.” Emefiele said the fertiliser plant would stop the importation of fertilisers, as about 25 percent of its products would be used

for domestic consumption to boost agriculture in the country. According to him, the plant will also generate a minimum of $750 million through export annually. Aliko Dangote, president of Dangote Group, said the fertiliser plant would make Nigeria the only u re a e x p o r t i n g c o u nt r y in sub-Saharan Afr ica and the biggest producer of polypropylene and polyethylene, which is capable of generating $2.5 billion annually. “Nigeria will soon become the biggest and only urea exporter in subSaharan Africa, for the first time. And we are not only exporting, but we would also be exporting big time,” Dangote said. “We are also going to have polypropylene and polyethylene which is about 1.3 million tonnes annually.

These two products would bring in about $2.5 billion annually in terms of foreign exchange. A lot of forex would now come in and that $2.5 billion is only about 10 percent of remittances.” “It is a huge project. That is why we have built a jetty and the pipeline through which we are bringing in the crude. One of the reasons the CBN is supporting us is that by the time we become operational, we will not only be creating jobs but we will reduce the outflow of foreign exchange not only in petroleum products but in petrochemicals and fertilisers. “We will be one of the highest foreign exchange generating companies, going forward. I must really confess that without the government’s support, there is no way we could have done what we have done so far,” Dangote said. Devakumar Edwin, group executive director-strategy, portfolio development &capital projects, Dangote Industries Ltd, said Nigeria will be able to save $0.5 billion from import substitution and provide $0.4 billion from exports of products from the fertiliser plant. “ Thu s, t h e s u p p l y o f fertiliser from the plant will be enough for the Nigerian market and neighbouring countries,” he said. Estimates indicate that around 5 million tons by year (tpy) of fertilisers are required in Nigeria in the next five to seven years. “ I a m h a p py t h a t by the time our plant is fully commissioned, the country will become self-sufficient in fertiliser production and even have the capacity to export the products to other African countries,” Edwin said.

“Right now, farmers are forced to utilise whatever fertiliser that is available as they have no choice, but we need to know that the fertiliser that will work in one State may not be suitable in another State, as they may not have the same soil type and composition. The same fertiliser you use for sorghum may not be the fertiliser you will use for sugar cane.” He pointed out that the fertilizer complex, which is sited on 500 hectares of land, has the capacity to expand as it is only occupying a small fraction of the allotted portion. “ The manag ement of the complex is confident that the fertiliser business w i l l d e l i v e r re a s o n a b l e profit to the company and its shareholders as it is projected that population growth and the need for food production will jack up the consumption of urea fertiliser beginning from 2020, when production of the production would have commenced in earnest,” he added. “ T h e c u r r e n t consumption of urea estimated at a dismal 700 000 tpy by Nigerian farmers is said to be due to very poor usage and is believed to be the cause of poor product yield, which threatens food security in the country. “By 2020, the Nigerian population is projected to increase to about 207 million, which would lead to increased food production. Estimates point out that around 5 million tons of fertilisers are required per year in Nigeria in the next five to seven years bifurcated into 3.5 million tons of urea and 1.5 million tons of NPK while current production levels in Nigeria are at 1.6 million tons by 2019.”

the government and people of Japan in partnership with LAPO to end poverty and hunger in Edo State and ensure that the people live healthy lives. Ehigiamusoe represented by Obadiora Ayobami, the acting executive director of L APO- NGO, said the three tons mill will ensure accessibility of rural dwellers t o i mp rove q u a l i t y r i c e output. “It will bring succour to the community members who hitherto travel long distances to mill and market their produce in neighbouring towns with all the attendant inconveniences, improve

the household income and livelihood of target beneficiaries as well as create job opportunities for the teeming youths,” he added. In his goodwill message, Richard Edebiri, the Edo State Commissioner for Agriculture, commended the Japanese government and LAPO for the enablement in making the rice mill project a success. Edebiri said the state government gave a projection of producing 17,000 tonnes of rice annually which when actualized will make the state the highest producer of rice in the South-South geopoliticall zone of the country.

Japan partners LAPO to commission N28m rice mill in Edo IDRIS UMAR MOMOH, Benin

s part of deliberate policies to address food insecurity in Nigeria, the government of Japan and Lift Above Poverty Organization (LAPO) has commissioned N28million ultra-modern rice mill in Edo State. The rice mill located at Ugbekpe-Ekperi community i n Et s a ko C e nt ra l l o ca l government area of the state has the capacity to mill three tons of paddy rice per day. The mill will be producing ‘Royal Rice’ as its brand. Speaking at the

commissioning at UgbekpeEkperi community, Yutaka Kikuta, the Ambassador of Japan to Nigeria said the investment was among the Japanese Embassy’s grassroots grant assistance to increase the quality of rice production in Edo State. Kikuta noted that the Japanese Government has also signed an exchange of notes for the project to i n c rea s e t h e d iag n o st i c capacity of the Nigeria Centre for Disease Control (NCDC) to fight against infectious diseases. He said the fund was used for the construction of a rice parboiling building, rice www.businessday.ng

milling equipment, office equipment, r ice hauler, d e hu s k e r r i c e d e s t o n e r machine, soaking tanks, steaming tanks, a generator, and bagging machine, among others. He explained that the government of Japan, under the Grant Assistance for Grassroots Human Security (GGP) scheme, has over two decades engaged numerous l o ca l a n d i nt e r nat i o na l governmental organisations in funding over 170 projects in different parts of Nigeria worth over $12million. “These projects are basically designed at uplifting, improving the

lives and livelihoods of the rural communities while at the same time building the capacities of the NGOs involved,” he said. He opined that rice farmers and local rice millers spent a long time milling their rice as well as incurring additional costs covering of manual labour and losing up to 20 percent of harvested rice due to damage in the process. E a r l i e r, G o d w i n Ehigiamusoe, founder of Lift Above Poverty Organization (LAPO) and managing director, LAPO Microfinance Bank Limited, said the project was a commitment by

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Wednesday 18 March 2020

BUSINESS DAY

COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

OIL& GAS

Saudi Aramco’s 2019 profit slumped 21% on low oil price, cuts spending amid price war OLUFIKAYO OWOEYE

n response to the double-whammy impact of oil crash and spread of coronavirus, the world’s most profitable company, Aramco, has announced plans to cut spending by 24percent to between $25billion and $30billion in 2020. In its full-year result for the period ended December 31, profit tanked almost 21percent on the back of lower crude oil prices and a drop in production volumes. Although the financial period closed before the full effects of the coronavirus and the end of the OPEC+ oil output agreement. Drone and missile attacks on two of its biggest facilities in September temporarily slashed production by more than half, but didn’t cause a big surge in price. During the year under review, Aramco’s posted

net profit of 330.69 billion Saudi riyal ($88.11 billion) after zakat and tax, down from 416.52 billion riyals in 2018. However, the oilgiant still remains the most profitable company in the

world, ahead tech-giants such as Apple, Alphabet (owner of Google) and big Asian banks. President and CEO Amin Nasser said “2019 was an exceptional year for Saudi

Aramco “Our unique scale, low costs, and resilience came together to deliver both growth and worldleading returns, while also maintaining our position as one of the world’s most

reliable energy companies,” he said. Khalid al-Dabbagh, Chief Financial Officer said the company can sustain a low break-even oil price and has “massive capac-

ity” to borrow, but does not need additional debt. Aramco, the world’s top oilproducing company raised $29.4 billion in a record initial public offering in December last year. In recent weeks, Saudi Arabia has announced plans to ramp up production in an oil price war with Russia that has sent the global prices plunging, tumbling below $30 on Monday. The oil-giant has been told to increase its maximum production capacity to 13million barrels a day, up from 12mbpd. Aramco shares fell as much as 1percent on Sunday, extending the decline this year to about 19perc e nt. A ra m c o’s ma rke t value has slumped from a peak of over $2 trillion in December to about $1.5 trillion. The company reiterated its desire to pay a dividend of $75bn in 2020 as it had pledged ahead its market listing.

BANKING

Zenith Bank pegs international withdrawal on naira cards amid dollar crunch OLUFIKAYO OWOEYE

s the race to buy foreign currency heats up, tier-1 lender, Zenith Bank has reviewed the international spending limit on the bank’s naira card to $1,000 per month. In a notice to customers seen by BusinessDay, the bank said daily limits for withdrawals outside Nigeria have been set at $300, a move reminiscence of the strategy adopted by several banks in 2015 in the wake crude oil crash leading to an economic recession. It is expected that other banks might follow Zenith’s as the effect of plunging oil prices bite harder across global markets. The recent crash in the oil price which hit below $30 on Monday has continued to raise fears of a possible drop in dollar revenue which might lead to a halt in the support the Naira currency receives from the

Central Bank of Nigeria. The CBN fought off a naira devaluation for 15 long months before suc-

cumbing in 2016 after a foreign exchange demand backlog of $7 billion left the apex bank with no options.

There are fears the CBN could again resort to capital controls to resist devaluation before finally biting the

bullet. Backed by high oil prices, the CBN has managed to keep the exchange rate stable for more than

L-R: Dele Ikotun, church growth officer, Redeemed Christian Church of God, LP 21, Victory Chapel, Magodo; Bayo Olugbemi, pastor-in-charge of Province, LP 21; Babatunde Irukera, guest speaker/CEO, Federal Competition and Consumer Protection Commission; Daniel Adebola, president, Redeemers Men Fellowship (Wisemen), LP 21, and Joseph Adetayo, at the Special Breakfast Meeting themed: My Roles as a Christian in Capital & Capacity Development, at RCCG LP 21, Victory Chapel, Magodo, Lagos. www.businessday.ng

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three years. In a release, Godwin Emefiele, governor of the Central Bank of Nigeria (CBN) had assured that the size of the country’s foreign exchange reserves remains robust and comfortable noting that the apex bank remains able and willing to meet all genuine demand for foreign exchange for legitimate transactions. As part of efforts to cushion the impact of plunging oil price and coronavirus on businesses, the Central Bank governor on Monday, announced six new policy measures which include; the extension of moratorium to one year on all principal repayments between March 1; reduction in interest rate on all CBN intervention facilities from 9 to 5 percent; creation of N50billion targeted credit facility for SMEs hard-hit by the impact of coronavirus; credit support for healthcare industry; regulatory forbearance; and strengthening of the loanto-deposit ratio policy.

Wednesday 18 March 2020

BUSINESS DAY

COMPANIES&MARKETS

Business Event

COMMODITIES

Gold offers no haven for investors with Monday’s slide after worst week in 40yrs SEGUN ADAMS

o l d’s ro l e a s a haven or a hedge amid uncertainties was further tested Monday as the price of the bullion continued its descent after its worst week in four decades. On the spot market gold fell by 2.02 percent to $1,499 as at 6:22 pm GMT+1 paring year’s gain to 1.13 percent. Investors are selling down gold to generate liquidity and to offset losses in other markets, an analyst at Germany-based Heraeus told Bloomberg. “In some cases, investors also sell their gold holdings in order to keep the value of the precious metal constant in their overall portfolio. Due to the lower value of the equity share, gold would otherwise take up a larger share in terms of value,” the analyst said. The bullion has fallen

from as high as $1680 per ounce since Monday, when the oil price crashed by the most since 1991, to as low as $1453 in intra-day trade Monday. Gold is usually seen as a safe store of value during periods of uncertainty. The precious metal gained 18.9 percent in 2019, which was characterized by geopolitical uncertainties and the US-China trade war, to record its performance in nine years. At the start of 2020, the crisis in the Middle East stoked price of gold near a sevenyear high as news of escalating conflict between the United States and Iran fuelled investors demand for havens. The spot price of bullion surged 2.3 percent on January 6, the most in more than four months, to $1,588.13 per ounce, the highest level since April 2013. But the outbreak of the Coronavirus has proven to defy market rules sending gold to a loss of 8.6 percent last week, the biggest since

1983. The Coronavirus blues also hit the cryptocurrency market last week, cutting the price of bellwether Bitcoin by at least $2,000. Bitcoin, once-suggested a haven now trades at its weakest levels since the start of 2019 even though halving of the crypto is only a few weeks away. Again defiant, US Stocks on Monday failed to rally after US Federal Reserve announced a rate cut to almost zero and a stimulus package of $700bn. The Dow Jones industrial average touched 8.9 percent, its lowest in more than two years, while the Nasdaq Composite (COMP) fell 8.4 percent Monday. If there is any support coming into the [stock] market, there might be a bid [in gold]. But right now, people are running scared, so they’re afraid to step in,” Phil Flynn, a senior market analyst with at Price Futures Group, told Kitco News on Monday.

L-R: Veronica Onoja, director, customer experience, Airtel Nigeria; Daniel Oladipupo, 5million naira winner of Airtelthanks Cash token Rewards; Taiwo Olashore, chairman, CeLD Innovations, and Onuzulu Pricilla, state coordinator, National Lottery Regulatory Commission (NLRC), during the Airtelthanks Cash Token Rewards Presentation held at Airtel Headquarters in Lagos. Pic by Olawale Amoo

L-R: Abdullah Al Mandoos, consul general, United Arab Emirates to Nigeria, and Sijibomi Ogundele, managing director, Sujimoto Construction, during business and tourism meeting on sujimoto group in Lagos.

Femi Gbajabiamila (2nd r), speaker of the House of representatives, receiving greetings from some senior military officers at the opening of a two-day capacity building workshop/retreat of the House Committee on Defence in collaboration with Centre for Strategic Research and Studies of the National Defence College and Policy and Legal Advocacy Center (PLAC) held at NDC Abuja

Timini Egbuson, win’s big at the 7th Africa Magic Viewer Choice Award in Lagos Pic by Pius Okeosisi.

Air Peace launches mobile app to boost customer experience IFEOMA OKEKE

igeria’s leading airline, Air Peace, has launched a new Mobile App to ease flight bookings and other transactions. With this new app, customers can easily book, pay and check-in for their flights from the convenience of their phone, while having quick access to all necessary information. Stanley Olisa, the airline’s Senior Communications Ex-

ecutive, announced this in a statement released on Thursday. He stated that the new app is a convenient and userfriendly platform and every customer will love it. According to Olisa, “The launch of this app is a demonstration of our commitment to boosting our customers’ experience with us. The app is so easy to use and navigate through, giving our customers all the details they need and when they need it.” The app, which can be downloaded on App Store www.businessday.ng

and Google Play Store, allows customers manage their bookings, check-in, check their flight status, amongst other features. Olisa stressed that the app launch is another indication of Air Peace’s innovativeness and customer-friendly stance. The airline’s spokesperson reiterated Air Peace’s commitment to providing safe and affordable flights locally and beyond. He urged the public to continue flying Air Peace to experience the ‘Flygerian’ comfort and style.

L-R: Uche Mukolo , Network Director ,Women Who Code; Chinelo Madueke, Head, Innovation Lab, thehatch; Damilola Olukoju, Front end Programmer, Inlaks; Maria Simeon, Senior Software Developer, Inlaks ;Anu Onifade, Senior Software Engineer, Andela and Omolabake Lemboye - Software Engineer, Andela at the Code Jam workshop by Women Who code, hosted at thehatch Innovation Lab on Saturday in Lagos.

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Wednesday 18 March 2020

BUSINESS DAY

cityfile NAPTIP seeks Lagos’ support to combat human trafficking

Patrick Ukpan (r), Commandant, Nigeria Security and Civil Defence Corp, FCT Command, and others, inspecting a seized tanker allegedly used by pipeline vandals at Jahi District of FCT, in Abuja. NAN

Ondo murder: CDHR petitions AIG over alleged shielding of ‘killers’ … CP dismisses allegation KORETIMI AKINTUNDE, Akure

he Committee for the Defence of Human Right (CDHR) has petitioned the Assistant Inspector General of Police (AIG) in charge of Zone 11, Bashir Makama, seeking his intervention in an alleged suppression of justice by the Ondo State Police Command over a murder case against a police officer serving with the command. A copy of the petition, which was made available to journalists in Akure on Monday and signed by chairman of Ondo State chapter of the human rights group, Alfred Olorunwo, accused Undie Adie, the Commissioner of Police (CP) in Ondo, of using

his position to suppress the murder case. The petition dated March 6, 2020 and received at the AIG’s office, Osogbo on March 9, 2020 reads, “On December 5, 2019, one Akinrodolu Ebenezer went to Ubine Eugene (CSP); the Divisional Police Officer (DPO) at Olofin police division, Idanre, Ondo State and lodged complaint which ordinarily is never part of the scope and duty of Nigeria Police to meddle into which is enforcing collection of money or due for Idanre day celebration 2019. “Thereafter, Ubine Eugene ordered Akorede Samuel (Constable) to follow Akinrodolu Ebenezer to camp in Idanre towards enforcing payment of Idanre day celebration 2019. At the commander’s camp,

Idanre, Akinrodolu Ebenezer collected money from one John Adie and when he demanded for receipts, the former was giving excuses. In the long run, Akorede Samuel struck one Godwin Odey with a heavy stick on the chest; the said Godwin Odey started vomiting blood. Akorede Samuel and his boss detained Godwin Odey and some of his townsmen at Olofin police division, few days later Godwin Odey died at a hospital”. In the petition, the chairman of the human rights group said the CDHR on being informed of the incident sent a petition to CP Undie Adie. The copy of the petition written to Adie which was dated on December 16, 2019 and received on the same date at his office reads, “Petition

against grand criminal conspiracy, assault occasioning harm, grievous bodily harm, to members of Ogoja community and murder of one Godwin Odey”. The petition also made available to journalists reads further, “It is to our report that one Akorede Samuel, a police constable, Bode (Superintendent of Police) and three other policemen attached to Olofin police division Idanre brutally murdered one Godwin Odey and assaulted some others with grievous bodily harm. “These police officers acted upon the instructions of the duo of Oliver and Adanigbo who wanted to enforce the payment of Idanre Day celebration due. Kindly act in earnest and bring to book the nefarious acts of these police officers and their sponsors”.

Gridlocks: Enugu residents demand flyover bridges AMAUCHECHUKWU ANUKWUOJI, Enugu

esidents of Enugu have called on the state government to construct flyover bridges at some strategic locations to reduce the heavy traffic jams being experienced within the state capital. Some residents who spoke with Cityfile, however, commended the state government for the ongoing construction of pedestrian bridges, but pointed out that such measures would not solve the traffic challenge. The state government is erecting a pedestrian bridge at the Holy Ghost Bus Stop,

but some residents said it would have been better the Governor Ifeanyi Ugwuanyi’s administration built a flyover at that point. Uchenna Ibeh, an interstate commercial driver who spoke with Cityfile, maintained that traffic congestions within Enugu were majorly caused by increasing vehicles on the roads and not passersby. He argued that the pedestrian crossing has little to contribute to traffic decongestion at the Holy Ghost area. Ibeh also complained about the activities of traffic control officers, the police and ministry of transport. www.businessday.ng

Some of the areas pointed out by the commercial drivers for flyovers include Holy Ghost, Mayor, Abakpa ,Garriki and Four Corner junction along Enugu-Port Harcourt Express way. Another driver, Uche Oji who operates from Garriki to Holy Ghost described the pedestrian bridges as a misplaced priority because the challenges in those places were not caused by human traffic but vehicles. He also called on the government to look into the deplorable state of inner roads in the state. “Let me also tell you that constructing flyovers in these places particularly Holy Ghost

will bring the name of the governor out forever,” he said. Members of the National Union of Road Transport Workers (NURTW) also said that a flyover would have been a better option, saying that a lot of people would still not use the pedestrian bridges when completed. They also appealed to the state ministry of transport to compel commercial drivers in Garriki area of the state to make use of the parks instead of loading along the road which is the major cause of traffic jams in the area thereby encourage criminals to dispossess passengers of their wares.

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he National Agency for the Prohibition of Trafficking in Persons (NAPTIP), Lagos command, on has sought synergy with the Lagos State government to combat human trafficking within the state. State commander of NAPTIP, Daniel Atokolo, said this when the agency hosted the commissioner for special duties and inter-governmental relations, Paul BamgboseMartins and his team in Lagos. According to him, there is a high rate of human trafficking going on within Lagos. The commander said that the situation was evidenced by the number of victims rescued and brought to the command intermittently. “The number of rescued victims in the facility is overwhelming. Lagos state command receives and provides necessary services to survivors of trafficking in persons and returnees every week. He said the returnees were mostly from countries such as the United Arab Emirates (UAE), Benin Republic, Lebanon, Libya and Mali among others. Atokolo added that

now was the right time for the state government and NAPTIP to join forces against traffickers. He said that the risks associated with human trafficking was more than what could be seen physically, adding that loss freedom, loss of self-esteem, forced abortion, rape and rituals among others were few known risks. Atokolo said that some of them were already pregnant before they came to the command and there was the need to establish the anti-human trafficking taskforce in Lagos State. He appealed to the government to facilitate the establishment of the taskforce to enhance NAPTIP’s services in the state. Atokolo also stressed the need to enroll NAPTIP in the Lagos State’s security committee. According to him, it is not only police or paramilitaries that should be on Lagos security committee, NAPTIP should also be on board. Bamgbose-Martins, represented by Bankole Adetola, a director in the ministry of special duties, assured the agency of state government’s support. He also commended NAPTIP for not relenting in its fight against human trafficking in Lagos.

Edo to support victims of fire, windstorm in Igueben, Ubiaja

o mitigate the effect of the recent windstorm and fire disaster in Igueben local government and Ubiaja, in Esan South East local government areas of Edo, the state government is working to provide relief to the victims. A delegation from the government visited the affected communities on Monday to ascertain the degree of damage caused by the disasters. The team was led by the special adviser to the state governor on special duties, Yakubu Gowon, heads of state emergency management agencies, and other top government functionaries. The team visited the Igueben main market, where roofs were blown off by the wind; St. Joseph Catholic Church, Eguare in Igueben, where perimeter fence was destroyed, as well as private homes and business premises gutted by fire. Gowon, who thanked

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God that lives were not lost, said persons who sustained injuries were receiving treatment in the hospital. “We have come on behalf of the state government after we got a call from the local government chairman, Josie Ogedegbe that fire had gutted buildings and windstorm has blown off some parts of the main market. Governor Godwin Obaseki asked us to immediately come see what happened, take inventory and report back to him because he does not want his people to suffer.” Gowon assured that the state government would continue to support the community. The parish priest, St. Joseph Catholic Church, Igueben, Charles Omoakue, thanked God for using Obaseki to respond to them. Chairman of Igueben local government area, Josie Ogedegbe thanked the state government.

Wednesday 18 March 2020

BUSINESS DAY

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Wednesday 18 March 2020

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Wednesday 18 March 2020

BUSINESS DAY

MARITIMEBUSINESS Shipping

Logistics

Maritime e-Commerce

NIWA seeks free funds to complete abandoned Oguta, Jamata River Ports …Says Onitsha River Port’s concession still on course amaka Anagor-Ewuzie

etermined to open up several river ports for the business of decongesting the seaports and bringing port business closure to the people, the National Inland Waterways Authority (NIWA) said it’s presently seeking free funds to complete the abandoned Oguta and Jamata River Ports. Oguta River Port, which is in Imo State is about 61 percent completed but abandoned as the port had not been in the budget for the past 10 years, said George Moghalu, managing director of NIWA. On the amount of fund required to complete the two ports, NIWA boss stated that the authority needs to carry out fresh assessment in order to ascertain the amount required to complete both ports. Moghalu, who spoke to newsmen at the weekend

in Lagos on the sideline of Stakeholders’ Meeting for Key Operators in Maritime Industry Dredging/Inland Waterways Transportation, said the authority is presently engaging the Imo State Government and some other critical stakeholders to see how to raise money for the completion of the port projects. “We are looking at how to

get free money to complete the port project because if Federal Government had invested 60 percent which runs into billions of naira on the project, leaving it uncompleted becomes a disaster. This means that the money already invested is a waste because the structures would dilapidate. So, completing it for me is also priority,” he said.

He stated that same fate applies to Jamata Port in Lokoja, which is about 57 percent completed despite the fact that the project has been in the budget. On river ports, he said that the concessioning process for Onitsha River Port has started such that his first outing to the National Assembly was to go and defend a petition against the

process of privatisation and commercialisation. “We would have travelled to Belgium last Sunday for due diligence at the Port of Antwerp, who also visited Nigeria vis-à-vis Onitsha River Port recently. It was consequent upon their early visit that invitation was extended to us but we were forced to put a hold on that visit due to Coronavirus,” he stated. While stating that Onitsha River Port is completed, Moghalu noted that concession involves alloy of process, which differs from the process of selling ones personal house. “If there is anything that I hope to achieve before leaving office is to see that Onitsha River Port and Baro River Port are completed and fully operational that was why my first official visit after my appointment by water was going to Baro from Lokoja. Baro is also a completed port,” he said. For Baro, he said, nothing has started in line of conces-

sioning but we identified a challenge including lack of access road to the port. “For instance, the big question is if we bring cargo to Baro, through which road would the owner take it out? We are going to Minna to open a discussion with the Niger State Government to find solution to that challenge.” According to him, NIWA would also engage the Federal Ministry of Works, adding that the issue of Baro Port road is in the budget. “Once we are able to resolve that, interested investors would come. Though, the port is world-class and properly completed but private sector investors would not be able to invest due to the road situation. We are determined to doing it and we have the buy-in of our management,” he said. He however noted that NIWA under his leadership needs to get these two ports functioning while every efforts is being made to get money to complete Oguta and Jamata Ports.

altogether. We now have a service that comes all the way from the Far East to Onne without calling Lagos.” According to her, “So, for Onne based customers, I think that’s something to be really attractive as it adds value to your business. You can get your cargo on time directly from Far East without adding 30 days of Lagos waiting time. You can turn around your money, your products and that’s why we are here just to recognise this unique offering to our customers.” Ismaila Al-Hassan, Port Manager, Onne Port, who was represented at a brief reception for the gearless vessel by Prince Zhattau, port’s Traffic Manager, described Maersk’s direct service to the port as a welcome development as it will help in decongesting Lagos ports. WACT, which has become the most preferred container terminal outside the Lagos area, is fast gaining a reputation as the gateway to

Eastern Nigeria and as the alternative to the ports in Lagos. The terminal has also been handling gearless vessels, which previously could only be handled at the ports in Lagos. Since 2019, WACT after spending USD14 million in its Phase 1 upgrade to acquire modern cargo equipment including two Mobile Harbour Cranes, 14 specialised terminal trucks and two reach stackers has gained capacity to handle gearless vessels. The investment brought high operational efficiency and set WACT apart from other ports in Nigeria. However, the terminal operator said recently that it is set to deploy new cranes consisting of three additional Mobile Harbour Cranes (MHCs) to bring the number of MHCs at the terminal to five; acquire 20 Rubber Tyre Gantry Cranes (RTGs) and three Reach Stackers in its Phase 2 upgrade within the next 18 months.

Maersk Line begins direct service to Onne

…As WACT receives first direct service ship from Far East amaka Anagor-Ewuzie

he West Africa Container Terminal (WACT), has said at the weekend that it received Maersk’s first direct service containership from Far East to the Onne Port in Rivers State. The gearless ship named KYPARISSIA with a capacity of 4,800 Twenty-foot Equivalent Unit (TEUs), was brought to Onne Port by Maersk under its FEW3 service, and is the first Maersk vessel to visit Onne Port without first calling at any port in Lagos. Noah Sheriff, commercial manager of WACT, said, the long awaited FEW3 service, which is a direct service from Far East into Eastern Nigeria has started, and ‘we are here to witness the first call’. “With our Mobile Harbour Cranes operations, we are positioned to handle

such gearless vessels calling our facility. The Nigerian Ports Authority (NPA) initiative to bring larger vessels into other ports is aligned with our Phase 2 terminal upgrade project, which will see our number of Mobile Harbour Cranes and other container handling equipment increased by third quarter of this year,” he said. According to him, this new service will not only call WACT Onne weekly, but would also bring the benefit of a short transit time for cargo coming from Far East to the Eastern Nigeria. He described the new service as a product many customers have been asking, which WACT would ensure that the vessels are turnaround quickly. Chibuzor Ejiofor, East Nigeria Manager of Maersk Nigeria Limited, said the ship call is historic and will benefit the businesses in eastern Nigeria. “ We n e e d t o c re a t e www.businessday.ng

awareness to the coming of KYPARISSIA not because she’s one of the largest vessels that ever called Onne, but she is the first Far East vessel that will be calling Onne without calling Lagos ports first,” she stated.

She said that Maersk decided to put Onne on a direct service from Far East, and that doesn’t mean that Maersk doesn’t call Lagos because, “We are still calling Tin-Can and Apapa but that is on another service

L-R: Mohammed Rekz, head of operations, West Africa Container Terminal (WACT); Marvin Omovbude, assistant harbour master, Onne Port; Noah Sheriff, commercial manager of WACT, and Prince Zhattau, traffic manager, Onne Port, at a reception for KYPARISSIA, the first ship deployed by Maersk directly to Onne Port, Rivers State from Far East, recently. https://www.facebook.com/businessdayng

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Wednesday 18 March 2020

BUSINESS DAY

BANKING

CBN’s aligns with IMF policy steps to addressing impact of Covid-19 …Creates N50bn credit facility for households, SMEs Stories by HOPE MOSES-ASHIKE

s the coronavirus spreads across the globe, decisive and coordinated action is key to providing stability to the global economy and financial markets, boosting confidence, and preventing deep and prolonged economic effects, according to the International Monetary Fund (IMF). Central banks, the Washington based Fund said should support demand and confidence by easing financial conditions, ensuring the flow of credit to the real economy, and fostering liquidity in domestic and international financial markets. Consequently, the Central Bank of Nigeria (CBN) on Monday established a N50 billion credit facility through NIRSAL Microfinance Bank

Godwin Emefiele, CBN governor

Limited, for households and Small and Medium Enterprises (SMEs) that have been

particularly hard hit by coronavirus. The beneficiary sectors

Access Bank to give N1bn to customers in DiamondXtra season 12

ccess Bank Plc will in the season 12 of its DiamondXtra saving scheme be given out N1 billion to its numerous loyal customers who would participate and emerge winners in the monthly draws. Since inception of the scheme in 2008, the bank has given out a total of N5.7 billion to 22,000 customers across the country. Season 12 is a wonderful season. In this season, we are going to be introducing several good stuff over what we did last season,” Victor Etuokwu, executive director, retail banking, said at the official unveiling of the season 12 on Friday in Lagos. The season 12 will feature 63 winners for ‘Rent For a Year’, which is 200 percent compared to 21 winners recorded in the last season. Also, there is going to be three winners for ‘Salary4life’ in the new season. The bank has in this season introduced a free health insurance scheme that would cover the customer, his

spouse and three children. “We are going to have the normal N1 million winners category like we had today. We have a lot of loyalty schemes like those that won N20,000 and N50,000,” Etuokwu said. Another new development in this season is the introduction of women category where nine women will be wining N300,000 each. One of them will be wining a shopping allowance of N100,000 and will shop at any of the markets approved by the bank. “This year we are also introducing senior citizens where nine customers will be winning N500,000 each and one customer will get N100,000 a month,” he said. To participate in the promotional draws, an existing or new customer is required to save N5,000 to qualify. “The more you fund your account, the more you increase your chances of winning”. Adaeze Ume, head, consumer banking, said DiamondXtra season 12 has www.businessday.ng

been unveiled and will last till one year. She explained that the insurance coverage is N1.6 million and it is for the family. “We are having as many as 21 winners. Every month we will be having draws. We will also have the quarterly draws and the special draws like the women draws, senior citizen draws and others,” Ume said. The bank at the event presented N1 million cheque each to the eight winners in the last draw. One of the winners, Folashade testified that she was excited when the bank contacted and informed her about her win. Speaking at the event, Onuzuru Priscilla from the National Lottery Regulatory Commission (NLRC), said the promo keeps getting better and re-loaded, promising that the commission will also cover the season 12, being present in all the states. “Access Bank so far has kept faith and we believe that it is going to keep better faith so that the standard will not be compromised”, she said.

include but not limited to airline service providers, hoteliers, and healthcare merchants. Akintunde Olusegun, financial market analyst at Polaris Bank Limited, said the policy measures rolled out by CBN is a welcome development if well executed by all affected stakeholders, most especially, the policy around the regulatory forbearance, reduction of rates and credit support. “Energy, Aviation and hospitality businesses are the most hit globally by the effect of the virus. A move that cushion the impact on the affected sectors will save jobs and also forestall their inability to meet their obligations to banks. However, more stimuli like this policy is required as the virus continues to ravage global economy,” he said. Beyond bank loans, Olusegun said the CBN should also look at any corporate bond, commercial paper

or any other debt instruments that might have been issued by any of the businesses most affected by the outbreak and extend policy measures that will ensure that there is no default on such instruments interest or principal repayments. Other policy measures announced by the CBN include interest rate reduction on all intervention funds from 9 percent to 5 percent per annum for one year, effective March 1, 2020, regulatory forbearance for deposit money banks, strengthening of Loan to Deposit Ratio (LDR) policy, credit support for healthcare industry and one year extension of moratorium for all CBN’s intervention facilities. Governor Godwin Emefiele said the ravaging coronavirus scourge had presented impetus for the CBN to provide support for affected households, businesses, regulated financial institutions, and other stakeholders in

order to cushion the adverse economic impacts of the coved-19 pandemic. The CBN said in a circular signed by Kevin Amugo, director, financial policy and regulation that it stands ready to provide liquidity backstops as and when required. IMF said monetary easing will support demand and confidence while reducing borrowing costs for households and firms. In addition to rate cuts (where there is policy space), stimulus can be provided through forward guidance about the expected path of monetary policy, and expansion of asset purchases (including risky assets). “Temporary targeted measures will support sectors that have been hit hardest. To complement generalized policy measures, more targeted support for certain asset classes should be considered,” the Fund said on Monday.

Fidelity Bank to support traders affected in Lagos explosion

idelity Bank Plc, on Monday commiserated with traders and others victims of Sunday’s tragic explosion in Abule Ado, Amuwo Odofin Local Government Area (LGA) of Lagos State. Accompanied by other executive management staff, Nnamdi Okonkwo, managing director/CEO, who visited the affected market areas was received by the leaders of the Balogun Business Association (BBA), Auto Spare Parts and Machinery Dealers Association (ASPAMDA) and Association of Progressive Traders (APT). He prayed

for the repose of the souls of those who died in the explosion and disclosed the bank’s readiness to make some token contributions to members of the traders’ associations whose shops and properties were destroyed. “We thought to come this morning to commiserate with you and see first-hand the damages caused by effects of the explosions” said Okonkwo. Responding, the market leaders thanked the bank for the gesture, noting that Fidelity Bank has been a true supporter and remains the most responsive of all financial institutions in the market. “Fidelity is not the only bank in this market.

L-R: Ezenwa Oguadinma, Treasurer, Balogun Business Association (BBA); Nnamdi Okonkwo, managing director/chief executive officer, Fidelity Bank Plc; Tony Obih, president, BBA; Emeka Igbosupolu, vice president, BBA during the visit to the markets at BBA, ASPAMDA and APT to commiserate with the victims of the Lagos explosion.

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Coming here barely 24 hours after this incidence and offering financial support in addition, is quite commendable. We are still evaluating the extent of damages and the number of our members affected” said President BBA, Chief Anthony Obih. The presidents of ASPAMDA and APT also expressed gratitude to Fidelity Bank. “You have indeed demonstrated to us that we are indeed partners. We will reciprocate this kindness and will continue to do everything within our powers to support the bank” stated President ASPAMDA, Chief Daniel Oforkansi. On his part the APT market association president Chief Eric Ilechukwu called on other corporate entities to emulate Fidelity Bank saying “it is people and organizations like you that we want. If others are like you, things will be better for it”. Several residential and commercial buildings as well as cars were destroyed in the explosion that rocked Abule Ado to its core. The resulting fire, from the explosion, later spread to the Nigerian National Petroleum Corporation (NNPC) oil pipeline passing through the area, although the pipeline was shut down as a precautionary measure.

Wednesday 18 March 2020

BUSINESS DAY

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Wednesday 18 March 2020

Harvard Business Review

BUSINESS DAY

ManagementDigest

What the US needs to do right now to fight coronavirus Ranu S. Dhillon and Devabhaktuni Srikrishna

he coronavirus epidemic is rapidly escalating in the United States. In addition to social distancing measures, such as canceling public events and working from home, we need a health-system strategy premised on testing, telehealth and treatment that achieves the twin objectives of curbing transmission and optimizing care for the influx of patients expected in the coming weeks. With the epidemic doubling in size every week, we need to act urgently. Within the next 30 days, we must establish a systematic approach to find and isolate infected people as quickly as possible before they infect others; monitor COVID-19 patients with mild illness at home; and preserve limited hospital capacity for those who really need it. TESTING Because COVID-19 causes symptoms similar to the flu and other viruses, it’s impossible to know who is infected without testing. Anyone with concerning symptoms needs to be tested. To give some idea of how many people this may include, the flu infected about 10% of the U.S. population last year — more than 30 million people. Testing large numbers of people in hospitals and doctors’ offices, where infection could inadvertently spread, is not a good idea. Sites capable of tests that use the polymerase chain reaction, or PCR, technique should be established in every town, suburb and borough, with sample collection points set up in neighborhoods and smaller communities so people can get testing without delay or an appointment. These sites can be set up as drop-in, walk-through or — as is being done in South Korea, the United Kingdom and now Seattle and Nevada — drivethrough centers where trained personnel with protective gear can, in about 10 minutes, assess patients and obtain nasal swabs from those with concerning symptoms. These swabs can be sent to PCR testing labs, and patients can then be notified of the results by phone. While awaiting results, patients with mild symptoms can be advised to quarantine themselves at home. Others already with signs of serious illness should be sent immediately to a hospital.

For people unable to seek testing on their own, such as the homebound elderly, trained staff from local health departments should be dispatched to their homes to collect samples. People should also be given the option of receiving home testing kits that allow them to swab themselves and mail in samples for testing. Ultimately, the challenge of mass testing can be streamlined with a rapid diagnostic test that, akin to over-the-counter urine pregnancy tests, can even be self-administered and can provide results within minutes. Though several rapid tests are being developed, it’s unclear when any will be ready for use. However, the need to scale up and speed up detection can’t wait for a rapid test and need not — China was able to turn around PCR results within the same day, compared with the 48 hours or more it has been taking in the United States. TELEHEALTH Telehealth response centers with 24/7 call-in lines staffed by nurses should be established within each local public health department. People with concerning symptoms can call in to be assessed and, if deemed necessary, referred for testing. These nurses should follow up with all patients with positive test results. Patients who appear to be developing serious illness — about 20% of all cases — should be transported by ambulance for higher-level assessment and www.businessday.ng

care at a local hospital. The roughly 80% with only mild symptoms can remain in home isolation and counseled on caring for themselves and preventing the spread of the virus to others, including ways to disinfect shared spaces in the home. Similar to the way poison control centers that already exist in each state remotely monitor people who have ingested a toxic substance, telehealth centers should periodically check on these patients and refer any patients who evolve more concerning signs to the hospital. This monitoring can be enhanced with FaceTime or Skype and devices that allow remote tracking of vital signs, such as Fitbit or Apple Watch. TREATMENT About 20% of patients will require care in hospitals; 5% will need care in intensive care units, or ICUs, for intubation and placement on ventilators. Even with steps to admit only those patients who truly need hospital care, capacity for isolation and ICU care may quickly become overwhelmed. Reports from Italy describe hospitals overrun with critically ill patients. The same health-system failure can easily happen here. For example, California has about 80,000 hospital beds. If even 1.5% of the state’s 31 million adults were infected — a plausible scenario that is far less than the adult infection rate of 20% or more that one leading epidemiologist is predicting — CO-

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VID-19 patients would take up every hospital bed in the state. Immediate contingency planning and federal funding is needed to quickly provide hospitals with surge capacity for space, staffing and key equipment. Hospitals should have turnkey plans for converting existing nonclinical spaces, such as conference rooms, into isolation wards. They should also identify other buildings, such as public offices and empty warehouses, that can be used if needed. State and local health departments should review staffing plans with local hospitals and begin allocating funds to hire additional staff as well as provide bonuses for those willing to take on more shifts. Family doctors and internists — the two most common specialties in the U.S. — typically spend substantial time in ICUs while in training and should be provided with refresher training on managing ventilators to boost the ranks of those ready to care for sick COVID-19 patients. The federal government should immediately incentivize companies involved in producing specialized equipment such as ventilators to accelerate manufacturing. State and local health departments should coordinate the purchase and allocation of equipment depending on where needs are. LEADERSHIP AND COORDINATION This systematic chain of test@Businessdayng

ing, telehealth and treatment should be directed by state health departments, with local health departments managing ground-level implementation. State departments should quarterback the allocation of resources across counties as the epidemic evolves. With a national emergency declared on March 13, the Federal Emergency Management Agency is now coordinating the disaster response. The Centers for Disease Control and Prevention should deploy expertise where needed, provide state and local teams with technical guidance and disseminate best practices from around the country and globe. The National Institutes of Health and the Biomedical Advanced Research and Development Authority should lead the research and development of new knowledge and tools needed to better respond. The COVID-19 epidemic poses a once-in-lifetime challenge that is already causing widespread panic and economic paralysis. While the epidemic appears to be spiraling out of control now, if we take these steps in the next 30 days, we can meet the challenge it poses.

Ranu S. Dhillon is an instructor at Harvard Medical School and a physician at Brigham and Women’s Hospital in Boston. David Beier is a managing director of Bay City Capital. Devabhaktuni Srikrishna is the founder of Patient Knowhow.

Wednesday 18 March 2020

BUSINESS DAY

insurance today

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AIICO, IFC, Africa Re bolster FG’s efforts on food security … engages farmers, agric business players in Ogun Modestus Anaesoronye

IICO Insurance Plc with the support of development partners, International Finance Corporation (IFC) and reinsurance giant, Africa Reinsurance Corporation (Africa Re) has added impetus to the Federal Governments quest for food security through development and empowerment of farmers and players in the agricultural value chain. The underwriter, through partnership with Business Support Academy weekend provided a platform for over 3000 members of Ogun State Corporative Federation (OSCOFED) on how to take advantage of the current agricultural transformation trajectory to harness enormous benefits such as accessing affordable financing, good agronomy practice, training and leveraging AIICO’s range of agriculture insurance offerings that provide financial protection to the various risks that confront Nigerian farmers and agribusiness investors alike. Babatunde Fajemirokun, group managing director/CEO, AIICO Insurance Plc speaking at the event held at Gree Resort Abeokuta said “we recognizes the potential in the extensive agricultural value chain, and the role of proactive and researchbased agricultural endeavours which eventually distill into job creation, poverty eradication, increased exports (and income levels), improved growth rates, and food security for the nation’s teeming population.” Fejemirokun stated that AIICO is convinced that insurance, being an indispensable component of the value chain and a vital tool of financial protection, plays a pivotal role in the above regard. “In pursuance of our mandate to develop and implement a technical system and operational process required for the efficient and sustainable management, underwriting, and distribution of an Index-Based Agriculture Insurance portfolio for smallholder farmers in Nigeria, as supported by the GIIF, the event will provide platforms

R-L: Adewale Kadri, executive director (Technical); Babatunde Fajemirokun, GMD/CEO; and Joseph Oduniyi, head, Corporate Business at the Enlightenment Campaign for Ogun State Coperative Federation Limited (OGSCOFED) promoted by AIICO Insurance plc under the Global Index Insurance Fund (GIIF) grant held in Abeokuta, Ogun State

for empowerment of smallholder farmers, youths, and other stakeholders in the host community to improve their farming skills as well as embrace the necessary awareness on Index-based Agriculture Insurance deployed for the protection of their investments.” He therefore thanked funding partners, IFC for their active role in facilitating the development of Index Insurance in Nigeria; Africa Re, for providing needed support; BSA, for providing the platform for successful execution of the event. Akinowa Temitope, assistant director, Underwriting & Marketing, Lagos Regional office of Africa Re said since the signing of the agreement with IFC/ Global Index Insurance Facility (GIIF) in March of 2019

to help insurance companies in Nigeria develop innovative agricultural insurance products for small holder farmers, African Re in collaboration with its partners has initiated and continued to support various activities in the market to achieve the key objectives under the agreement. To adequately address the challenges faced by our stakeholders in the Nigerian agriculture space, we reached out to them individually to collate their needs, one of them turned out to be this one day enlightenment campaign for small holder farmers, she said Temitope also stated that “today we are happy to report that the IFC/GIIF fund which Africa Re manages on behalf of the Nigerian agriculture industry stakehold-

ers aligns with our founding mission in addressing the agriculture industry challenges.” She said Africa Re supported by its partners will continue to work with IFC/GIIF to provide solutions to the Nigerian agriculture industry by assisting in provision of adequate reinsurance capacity, stakeholder trainings, awareness campaigns, digital solutions and affordable products for farmers. She also thanked IFC/GIIF for their continuous support to the Nigerian insurance industry as well as AIICO Insurance Company for their proactive initiatives on growth of agriculture business in Nigeria, that within the next two years, the challenges facing the Nigerian agriculture industry will be a thing of the past.

Reinsurers may dump some markets over rates, as COVID 19 threaten business Modestus Anaesoronye

s the global economy suffers economic decline over Coronavirus COVID 19 spread, some reinsurers may quit some markets due to poor rates. Insurers being aware of this are also being careful of what kind of business they take from their broker partners, as claims may be higher than expected in the next few months, experts warn. There is a chance some carriers choose to exit certain parts of the reinsurance market if rates do not materially improve at the next sets of renewals in 2020, with some Lloyd’s players in particular finding property catastrophe underwriting uneconomical currently, according to reinsurancenews.

Rates did not improve as much as some had been hoping at the January 2020 reinsurance renewals and with retrocession generally costing more this year some insurance carrier business models have become less tenable. It’s not just the cost of retrocession but also its availability and the types of coverage on offer that is pressuring some underwriters in the Lloyd’s market, we understand. The disappearance of abundant pillared retrocessional reinsurance products from the market with the demise of Markel CATCo has hurt some Lloyd’s syndicates that were underwriting property catastrophe risks. Certain retro products had been looked on particularly favourably by the powersthat-be in the Lloyd’s market, helping syndicates with their capital adequacy and business models. www.businessday.ng

Now these products are no longer available at all, or as readily as before, or are now considerably more expensive, it is leading some underwriters to ponder exiting the underwriting of certain areas of reinsurance risk, we’re told. This is something we first wrote about last July and discussed with some Lloyd’s players around conference season last year. At the time, most were sceptical that state of the market would result in significant challenges to their business models, but it soon became apparent that those with a catastrophe underwriting focus were going to feel pressure in time. Neon’s pull-back from property treaty reinsurance, which it said was due to a mismatch in pricing between retrocession and its inwards business, gave a perfect example of how market forces were pressuring participants.

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There was also Hamilton shuttering its Acapella syndicate business citing a lack of return, and Pioneer who exited Lloyd’s saying the syndicate structure was no longer economically efficient, which also provided signals of how the way the market had moved was making conditions less tenable for some. Then Neon’s total shuttering and placement into run-off, as parent AFG said the business wasn’t generating a sufficient return on its investment through its participation at Lloyd’s, that showed how serious issues had become for some. Not all of this was related to retrocession pricing and the mismatch with reinsurance, but the ramping up of pressures from this hasn’t helped, in particular for those writing catastrophe exposed business.

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Wednesday 18 March 2020

BUSINESS DAY

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Abule-Ado pipeline explosion victims to get compensation from insurance Modestus Anaesoronye

he victims of the Abule-Ado Lagos pipe line explosion which occured weekend killing about 20 people and injuring many with loss of properties will get claims compensation, if there was insurance coverage. They assurance is coming on the heels of established cause of the accident, which was said to have resulted from a granite carrying truck that broke down on the pipeline area of the Nigerian National Petroleum Cooperation (NNPC) facilities in that Lagos area. In other words, it could have been an accident and not a kind of explosion that has resulted from human intentional actions, like pipeline vandalisation or oil scooping activities, war or protest. If the affected lives are insured, they will get compensation from affected insurance companies; if the affected buildings and vehicles were insured they will get compensation from insurers; and if the NNPC facilities are insured they will get insurance compensation from insurers, and there is also a third-party

liability side, say’s insurance practitioners who gave their perspective on the incident. Fatai Adegbenro, executive secretary, Nigerian Council of Registered Insurance Brokers (NCRIB) said there could be claims depending on the perceptive you are looking at it. Adegbnero said, if the victims themselves have

insurance, they will be indemnified by their insurance companies both for life and properties, and the insurers also have the right to pursue subrogation right from owners of the pipeline, According to him, they owner of the pipeline can also get compensation if he insured the facility, and at the same time could claim for third-party damage

from owner of the truck that caused the accident. He also noted that insurance will have a big role to play if there was insurance taken for fire on the buildings, taken for life by those who lost their lives. Mayowa Adeduro, managing director/ CEO, Law Union & Rock Insurance Plc who expressed sadness over the incident consoled with

families of the deceased and prayed God to grant the dead internal rest. Speaking on the insurance implication said, “If those lives were insured they will get full compensation from insurance companies involved. Also if those houses were insured they will get indemnity from the insurance companies” According to him, the

NNPC pipeline may also be paid if there was insurance, and what the corporation suffered is above the deductible in the policy. “The remote cause of the explosion was said to be from a granite carrying truck, and so the owner is variously liable to all parties that has suffered financial loss from the incident, Adeduro said.

Sell insurance as a solution, need agents advised Modestus Anaesoronye

embers of Association of Registered Insurance Agents of Nigeria (ARIAN) have been urged to know their customers, their needs and desist from just sell insurance, but as a solution to clients. Rantimi Ogunleye, managing director, Mutual Benefits Life Assurance Limited, said this at the ARIAN 2020 Annual National Conference, AGM and Election in Lagos, adding that disasters abound, lives lost, and properties damaged without adequate insurance, therefore, agents should be evangelists to provide solu-

tions and fill the gap. “It is estimated that about 3 million Nigerians have one form of insurance; this provides ample opportunity within the informal sector (representing about 60 per cent of the economy) which can be harnessed through personal-line insurance solutions,” he said. According to him, in the last decade, the growth of the Nigerian Insurance sector has been driven largely by reforms, stressing that although there has been appreciable increase in premiums, especially in the post consolidation era, the sector remains primarily in a state of infancy particularly when compared to the Banking industry. He posited that from a largely fragmented operatwww.businessday.ng

ing environment characterized by a weak regulatory framework, the industry has seen some changes that

have shaped concentration levels and raised the sector capital cushion, thereby unlocking investment op-

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portunities and enhancing the underwriting strength of players. “From the perspective

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of the capital market, the insurance sector has underperformed the Nigeria All Share Index since 2009. It remains one of the least capitalized on the NSE, with less than 2 per cent of aggregate market capitalization. “Inadequate capital base, poor investment strategy, dearth of human capital, weak performance, couple with poor public perception of insurance in Nigeria have adversely rubbed-off on the market pricing and valuation of insurance stocks,” he added. He maintained that in the opinion of analysts, the management of most insurance companies has failed in their primary responsibilities of maximizing the wealth of shareholders.

Wednesday 18 March 2020

BUSINESS DAY

feature

Paul Orajiaka: The toymaker with a political dream A self-made billionaire earned the admiration of many as a toymaker who built a business empire from almost nothing. Now, he plans on winning the heart of both young and old with his vision for Anambra State, come 2021 with grim determination, raw courage and daring doggedness as well as zeal to uplift the living standards of his people. writes SEGUN ADAMS.

n an interview around the middle of last year, the owner of one of Africa’s biggest toy companies who is always loyal to his cause was asked what he would do differently if he were in government. His reply was straightforward: to focus on improving the plight of SMEs as a way of solving the numerous socioeconomic problems facing Nigeria. “This keen interest on SMEs is why my focus in my doctorate studies at Henley Business School UK is geared towards providing theoretical and practical solutions to their plight and with a position in government, we can push the right policies through,” Orajiaka told the Vanguard. Thus, the unassuming entrepreneur, Paul Orajiaka, avoided the common pitfalls of politicians who promise to deliver on one thousand things (and have often delivered on nothing). Still, Orajiaka’s goal to support micro, small and medium enterprise, as a way to change the country’s poverty narrative, is not to the exclusion of other ends (like healthcare, security and education) rather a means to them. Orajiaka, who has declared his intention to run for state governor in his state of origin Anambra, would be up against several candidates from different walks of life. To win the gubernatorial elections in 2021, he would rely on parallels between him and his state to show how Anambra can dream big and recreate opportunities that exist even outside Nigeria to solve many of its socio-economic problems. The philosophy of Orajiaka, who has identified Singapore’s Lee Kuan Yew as his role model, is informed by his story as a young boy who had sought greener pastures abroad but ended up building a globally recognized business in Nigeria.

The little boy with big dreams About two decades ago, Orajiaka founded Auldon Limited, a multi-million dollar toy company, with less than $100. Born to a carver, Orajiaka spent his early childhood in Warri, South-South Nigeria, working with his dad and as a result, he had an entrepreneurship mindset instilled in him from a very early age. When he was 12-year old, his dad opened an account for him and his siblings to deposit their share of proceeds for the crafts they produced. Upon his graduation from Igbinedion Secondary School in Benin City around the age of 18, Orajiaka relocated to Lagos from where he planned to travel to the United States for his first degree. After three unsuccessful attempts, Orajiaka decided to remain in Lagos to ‘hustle’ in the busy Idumota market, www.businessday.ng

alongside his in-law who was into importation business. “It was at that point that I saw how Nigerians were very entrepreneurial, making a lot of money from very rowdy areas. I got inspired seeing young boys making money and I thought: What am I going to the U.S. to do? If I stay here long enough, work long enough, I will be able to make a success out of this place,” Orajiaka said in an interview. During a routine supply of different products to supermarkets in Victoria Island, Orajiaka noticed that Park ‘n’ Shop supermarkets, now SPAR, had run low on its supply of toys. Orajiaka approached the Indian store manager to supply him toys not even knowing where they sold toys in Idumota, he said. The teenager got in touch with his Brother-in-Law to connect him with a toy supplier so

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he could in turn supply Park n shop. This opportunity with a capital of $30 in 1997, was the start of the Auldon empire. Determined to be a millionaire before the age of 21, Orajiaka continued in diligence, drawing from the lessons from his time at his father’s workshop to scale up his new toy supply business. Soon, the shrewd teenager who had taken it upon himself to make the trip to Dubai so he could get the latest and soughtafter toys opened his first shop in Idumota, Lagos, where only the fit survives. According to Orajiaka, the move was to manage the crunch in cash flow due to debtors, whose actions had threatened to stifle the young business. Not to be one to scorn the importance of an education having forged a path that promised a bright future, Orajiaka returned to school to further his education. In 2001, Orajiaka started his ungraduated program in Accounting at the University of Lagos and followed it up immediately with a Masters in the same institution. In 2011, he earned an Executive Masters in Business Administration (MBA) from the Lagos Business School, Pan Atlantic University (PAN). Not resting on his oars, Orajiaka pursued a doctorate in Business Administration in Henley Business School, University of Reading in the UK and then a Masters in Public Administration at Harvard Kennedy School of Government in the US. One of the highpoints of Orajiaka’s craftsmanship and business acumen was in the launch of the Unity Dolls, a collection of 14-inch child developmental dolls that represent Nigeria’s three major tribes - Hausa, Ibo and Yoruba. The social entrepreneur said it was a move aimed at delivering a social message to infants across the country and by extension the world at large, enlightening them about the Ni@Businessdayng

gerian culture, allowing them to have a sense of ownership early in life which puts them in good stead to make a positive impact when they are grown. The product was a hit! Parents scrambled to get the dolls for their children and stores had a difficult time keeping up with demand. But for Orajiaka, empowering the girl child was the main goal. “Importantly, we have created a product, not just for girls to have dolls that look like them, but they also have a positive message,” he said. “We have portrayed the Unity Girl, as far more than a doll, with a brand identity, which represents the social concern around the challenges of the girl-child, particularly her education and welfare in Nigeria and the world at large. Currently, it has become a household name among Nigerian parents and now, we are selling Unity dolls across the entire African continent and around the globe .” His business Auldon which has continent-wide market has brought him much fame with international media including Forbes interviewing the young entrepreneur a few years ago and a recent feature in BBC World News In Business Africa program. Orajiaka has won several awards including the Global Titan CEO Award in the SME sector, in West Africa. Now, Orajiaka sets his eyes on politics – public sector leadership as he would like to call it. The tycoon with big dreams “Africa is a mess and the right people are not in power,” said Orajiaka to The African Exponent when asked why he held a Masters in Public Administration. Orajiaka says he wants to lift the face of Anambra, a state rich in natural gas, bauxite and ceramic and human resources needed to improve the livelihood of near 5 million inhabitants.

Wednesday 18 March 2020

BUSINESS DAY

FEATURE

Designed to fail: Monopoly capitalism and the oil and gas industry Adesina Agboluaje

ver the years, the Onne/Ikpokiri, Oil and Gas Export Free Zone Authority, OOGEFZA, seem to be obsessed with acquiring powers and jurisdiction not given to her to control and monopolise operations in the Oil and Gas industry. The Authority has consistently attempted to alter her enabling Act and deliberately avoided the legislative process to give herself powers and responsibility not given to her by law. Each alteration has been designed to achieve an intended objective to further entrench her monopoly of the Oil and Gas sector and mislead the public to the extent of reprinting and editing the decree that established, now wrongly referred to under a nomenclature different from what was initially enacted. The true title and the name of the authority is Onne/Ikpokiri, Oil and Gas Export Free Zone Authority Act. There is now a need for the Federal Ministry of Justice to amend the title correctly for citation. Onne/Ikpokiri, Oil and Gas Export Free Zone Authority Act was enacted on 29th March 1996 and created the Onne/Ikpokiri Oil and Gas Export Free Zone Authority. Without legislative amendment she has changed the name to Oil and Gas Free Zones Authority (OGFZA). Section (1) of the 1996 Act provides that “The President designates the Onne/Ikpokiri Area in Rivers State as an “export free zone”. This section expressly designates Onne/Ikpokiri area of Rivers State as OOGEFZA’s area of operation; they are now illegally claiming to be in Warri, Calabar and Apapa Ports Terminals as Oil and Gas Free Zones without legal or constitutional authority. It is unfortunate that when lies and fraud is continuously perpetuated and aided, it tends to sound as if it is the truth. However, no matter how long the truth shall overcome. UBI JUS, IBI REMEDIUM, a Latin maxim that states that you cannot put something on nothing and expect it to stay there, it will not stand. Interest as a stakeholder The oil and gas sector is of interest to many Nigerians and it is easy to understand why. For someone like me, it is quite imperative. Let me introduce myself from the point of view of my professional background. I was appointed as the Nigerian Trade Commissioner to Asia based in Shanghai overseeing

about 11 countries in the period of 2012-2016. Prior to that, I was the Managing Director/Chief Executive of Nigeria Export Processing Zones Authority (NEPZA) from 20042012. Subsequently before then, I was the pioneer General Manager of the Calabar Export Processing Zone, later changed to Calabar Free Trade Zone. I had a unique opportunity in participating in drafting and publishing most of the regulations and guidelines, some of which are still in operation today. I had a unique opportunity also, of assisting in the take-off of the Onne Oil and Gas take off management operation at Onne working with consultants as at that time INTELS Nigeria Limited while I was the General Manager in Calabar. There are issues currently before the Senate Committee on Trade and Investment considering bills on NEPZA and Onne Oil and Gas Amendment. In attempts to implement the self-amended laws of Onne Oil and Gas Authority, earlier than 2016 and in particular in 2016, Onne Oil and Gas Free Zone Authority, OOGFZA, approached several zones licensed by NEPZA with the intention of regulating and taking over their operation based on their interpretation of their self-created Act, the offers were rejected by the Zones and that remains the status quo up till today because notwithstanding their self-amendment of their law, the provisions are not enough to take over operations that NEPZA has been overseeing and this was brought to the knowledge of the supervising ministry www.businessday.ng

NEPZA. The matter went through different levels of government interventions, particularly between 1999 and 2004, and NEPZA advised the zones to ignore their overtures. In resolving the issues, there is a Federal Executive Council resolution on the matter by way of a directive from the Secretary to the Government of the Federation to the Minister of Trade and Investment for NEPZA to take over all activities of Onne Oil and Gas and we should operate a single authority. For reasons best known to the ministry, this directive was not implemented, I guess this emboldened the Onne Oil and Gas authority to continue seeking for self-help, legal opinions, procuring opinion from Minister of Justice and NEPZA response to the opinion, all ignoring the fact that there is a standing Federal Executive order on the matter which has not been reversed and still stand up till today and several other comments here and there, none of them has helped them in this situation. National Assembly current issues The Senate Committee on Trade and Investment invited the public for Senate Hearings on the proposed NEPZA Amendment Bill on Monday, 20th December, 2016. At the Public Hearing in the Senate Building, participants called for the repeal of both NEPZA and OOGEFZA Acts to make way for a single Free Zones Authority to sanitize the free zones environment as was done with the Nigeria Communication Commission where the various wireless communication service providers were

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brought under one single regulatory Communication Commission. On Thursday, 26th January, 2017, there was also another Senate Public Hearing on OOGEFZA proposed amendments Bill. At the hearing, participants especially NEPZA licensed zones who are tailored as targets of take-over by OOGEFZA, in December, 2016 were specifically mentioned in the draft proposed Bill as free zones under OOGEFZA regulation which was fraudulently inserted. Illegal designation of NPA ports as oil and gas free zones ports The other issue on the Bill is the designation of certain ports as dedicated oil and gas ports in Nigeria to the disadvantage of stakeholders within and outside the free zones scheme. There are Port Terminal Operators and Port Concession schemes both under the NPA statutory responsibility. However, the claimed of dedicated oil and gas ports in the proposed Bill are all in the Eastern District leaving the Western District without such dedicated ports. The representative of the NPA at the Hearing revealed, first that there was no such designation done on ports on the basis of commodities, goods and/or articles in the concession of ports and secondly there was no designation of any port as dedicated for oil and gas cargoes. This pattern of illegality and recklessness continue unabated. Been left unchecked, the Oil and Gas Free Zone Authority continue to be more emboldened, believing they can do anything from one generation of management to the other. This must stop @Businessdayng

and continuous embarrassment of the Federal Government and the Federal Ministry of Trade and Investment. The above NPA position is consistent with the Federal Government position and policy since 2006 where Mr. President declared that “importers of oil and gas related cargoes should be free to choose port of preference”, appendix 4. In 2008, late President YarAdua restated the Policy through the Minister of State for Transportation Public Notice Ref. No. T. 4316/ ST3/24 of 7th August, 2008, appendix 5 re-confirming Presidential directive on choice of preferred port by importers of oil and gas related cargoes subsists. The current proposed fraudulent OOGEFZA amendment Bill being peddled in the National Assembly and now part of it brought here also for us to discuss cannot stand because the basis of the amendment is false, the contentious issues raised are not acceptable, is in conflict with other existing laws of NEPZA, if such is allowed to pass, it will go against the FEC resolutions, President policy directive and natural justice in a competitive market place. At the last Senate Public hearing on this matter, the stakeholder present made relevant submissions that OOGEFZA exceeded her mandate and authority as conceived in her enabling Act in operations. The proposed amendments are a self-help attempt to usurp the authority of NEPZA and NPA and make nonsense of the investments in the Free zones by both government and individuals into an unending litigation by both local and foreign investors and make ridicule of the federal government and laws of Nigeria. Conclusion In line with the stakeholder recommendation at the last senate committee hearing on trade and investment that harmonization of the following bills which at one time or the other were before the National Assembly over the past years resulting into one single regulating agency in Nigeria will be in the best interest of Nigeria and Nigeria Free Zone development to have a single regulatory agency like we have with the Nigeria Communications Commission. No matter how much how much they try, they will never be able to take over operations of ventures, licensed by NEPZA. Adesina Agboluaje is a Principal Partner at Sinolat Company Lagos.

Wednesday 18 March 2020

BUSINESS DAY

TRANSPORTation Motoring

RailBusiness

ModernTravel

Roads

GIGM signs N36bn off-taker deal with JetMover … Designed for African roads, mulls EVs

MIKE OCHONMA

MIKE OCHONMA Transport Editor

flour ishing transport company; God Is Good Motors (GIGM) has signed an agreement for the delivery of 2,000 units of the new range of Jet Mover commercial mini-buses with Jet Systems Limited to replace their ageing fleet over the next three years whenever an order is placed with Nigerian automaker, Jet Motor Company. The Jet Systems is also introducing the Jet EV, Africa’s first all-electric vehicle, and the Jet Mover, a luxury, durable, yet affordable minibus built specifically for African roads. The auto manufacturer is said to have figured out the optimum specifications for the ultimate vehicle within the local and African environment which is an all-terrain van built out of Africa for the world. Rupani Sanjay, Jet Motor Company director of sales and marketing noted that, the vehicle is a combination of the best design and technology practices from Europe and Asia, tropicalised for Africa. The shock absorbers are stronger than average, ground clearance is higher, tyre sizes are bigger. Generally, our testing has led us to see what is best for the Nigerian and African market and that is what we have built with minibus,”. After over three years of thorough automobile research, testing and iterative development, the Jet Mover was produced and recently launched into the market. In Sanjay’s submission,”We wanted to create a global product that is built to last. We were obsessed with getting it right because, if our vehicles can work well on Nigerian and African roads, they can succeed anywhere in the world’’. Following a successful pro-

PAN reshuffles team for better performance

totype, Jet Motor Company was able to engage leading inter-state transporter, GIGM as an early adopter, making it one of the first to live-test the vehicle. Impressed, the company has since signed an agreement for delivery of 2,000 units of the Jet Mover to replace their fleet over the next three years. The first set of delivered vehicles is currently in use along its major routes in Nigeria and Ghana. Beyond durability, the Jet Mover is also built for luxury and versatility. The premium passenger version of the Jet Mover is a 13-seater with leather seats and personalised entertainment system for each passenger. The Jet Mover can also be customised for various other uses like cargo, medical emergencies, as a school bus or for military use. In a telephone chat with BusinessDay on Monday, Sanjay Rupani disclosed that the Jet Mover is already in use by the Edo, Delta and Lagos state governments with a long line of other government bodies, major road transport companies and NGOs waiting in line for delivery of their pre-orders. “There is such a long waiting list that we can barely keep up

with the current demand,” Sanjay said. He attributes the overflow of demand to the focus on versatility, durability and adaptability, all of which have propelled the Jet brand and its flagship vehicle ahead of long-standing rivals with global names behind them. Having obtained the relevant licenses, Jet is already expanding into an over 2-acre assembly plant in Lagos, Nigeria to meet demand. By the second quarter of 2020, the assembly plant is expected to attain a capacity of 5,000 vehicles annually. In all these, the company has been able to maintain a competitive price point. Commenting on this, Oluwemimo Joseph, strategy and projects head and chief financial officer of Jet Motor Company said: “For now, we are not as focused on profitability as we are matching towards becoming the first truly Nigerian brand delivering on quality and affordability. The Jet Mover currently offers more value for money than the closest competition”. Recently, Jet closed a private round of financing from the Canadian-based Africa Development Capital, Greatmand Legend, and a number of Asian investors. The

cash injection, which is solely for research and development, will enable the company to introduce other lines of vehicles including, pickups, SUVs sedans and, most importantly, its ambitious Jet EV project. Jet EV is Jet’s electricity-powered bus project. Already well into the research and development phase, current Jet EV prototypes can be driven for over 300 kilometres on a single charge. The plan is to begin testing them in real-life situations as soon as possible. “We have already signed a contract with industry leader, GIG Logistics (GIGL) to supply over 50 electric Jet EV buses over the next 2 years and to commence testing in Q3 2020, utilising GIGL pickupcentres between Lagos and Benin as charging points,” Sanjay said. Sanjay emphasized that; the company will require a review of Nigeria’s automotive policy to be able to carry on smooth testing operations in 2020. “JET Motor Company is positioned to lead Africa into a new era of mobility, by producing world class vehicles designed in Lagos, assembled in Nigeria, and built for the globe,” he said.

n its bid to reposition PAN Nigeria Limited for better performance, the management of the company has announced a reshuffling of its management team. Ibrahim Tanko Mohammed, the managing director made this announcement at the company’s executive management meeting/retreat held in Kaduna last weekend. In taking this measure, the PAN boss explained that, “We have taken a long and careful look at the experiences and competencies of key officials who hold strategic positions in the company, and we have embarked on this reshuffling which is aimed at delivering a better overall performance of our company in 2020 and beyond. This management redeployment exercise is part of our transformation strategies at PAN Nigeria.” Among the six management staff redeployed are Salaudeen Abdulhafiz who moves from

Ibrahim Tanko Mohammed

head of after-sales Department to head of spare parts while Pakshar Yakubu, head of commercial, PAN Leaning Centre, replaces Abdulhafiz as the new head of after-sales. In a press statement signed and made available to BusinessDay by Oladeji Victor Bamidele, the new head, corporate communications, PAN Nigeria Limited said that Ojo Oladapo, former head of production is now the head of quality department while Continues on page 31

Shacman trucks boost ABC Cargo Express long haul operations

BC Cargo Express, a division of ABC Transport Plc has just added 10 new units of Shacman heavy duty trucks to its fleet to boost the existing cargo operations in Nigeria. This is coming on the heels of the injection of the 10th unit of her new premium coach to boost her passenger operations. The 10 new cargo trucks, delivered to ABC Transport head office in Owerri, over the weekend, are specially featured with low fuel consumption, white clearance lamps on the sun canopy, to mention but a few; and are fully adapted for Nigeria condition with popular and tested power train

made with Weichai engine (styre), fast gear box and hande axles. The Shacman trucks are aswww.businessday.ng

sembled in Enugu, Nigeria by Transit Support Services Limited (a subsidiary of ABC Transport Plc). Built with the best designs and craftsmanship, equipped with the standard loading logistics transporters’ demand and active and passive safety features to ensure safety on the highway and relaxed journey for crew; Shacman heavy duty trucks are truly recommended for total logistic solutions. Shacman cargo truck is highly reliable and trusted to offer most cost effective opera-

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tions, delivering high returns on investment. The fleet injection will surely ensure delivery times are prompt and customers satisfied. With this latest truck acquisition, ABC has once again demonstrated her trailblazer position in the transportation, haulage and Logistics businesses in Nigeria. Andrew Anuforo, head of the Cargo Express division of ABC Transport stated: “At ABC Transport we understand the importance of haulage and logistics to the Nigerian economy, and the important roles the industry, commerce and transportation play in the production, marketing and distribution of raw and finished @Businessdayng

products to its destination. We are determined to maintain the lead in the logistic and haulage industry by providing excellent logistic services unrivalled through our Cargo Express division”. The start of the year hasn’t been a slow one for ABC Transport as it has trained over 100 cargo heads, key supervisors and staff. The training is a conscious effort by the transport and logistics company to develop adequate capacity of her staff for value creation. ABC Cargo Express is a subsidiary of ABC Transport plc providing cargo, parcel and customized logistic services to individuals and organizations across West Africa.

Wednesday 18 March 2020

BUSINESS DAY

TRANSPORTation Motoring

RailBusiness

ModernTravel

Roads

FG laments N2.9tr wasted on vehicles importation NRC makes N200m monthly ….PAN, Innoson, Stallion receives commendation over N360bn investment in local auto Industry

on Abuja-Kaduna route

MIKE OCHONMA

…Spends N100m on recurrent expenses …Begins improved hourly train services April

liyu Jelani, director-general and chief executive of the National Automotive Design and Development Council (NADDC), has on behalf of the federal government commended Peugeot Automobile Nigeria (PAN), Innoson Vehicle Manufacturer (IVM), Stallion automotive group and other local automobile manufacturers for investing over N360billion ($1billion) annually into Nigeria’s Auto industry. Jelani however, frowned at the over N2.9 trillion ($8 billion) that leaves the country annually for importation of over 300,000 to 400,000 used and old cars. The NADDC DG made the disclosure at Nigeria’s first parade of indigenous auto manufacturers and assemblers of different brands of vehicles. Also speaking at the event, PAN’s executive director on charge of sales and marketing, Shehu Sani Dauda, said the company was excited to be at the event, expressing optimism

MIKE OCHONMA

for the brand leading others at the just concluded event. On the multi-brand variant being launched by PAN, he said: “We are now multi-brand; we brought in one of our latest buses which are overdue to come on board into our brand. It is a rugged and affordable bus. “It is built with several options like TV, USB points for every customer, creatively made to carry

luggage with maximum comfort for users and customers.” Daudu said the Peugeot brand was exceptionally prepared for the Argungu rally which kicked off noted that PAN 508 was built for ruggedness and reliability. He expressed hope that, with the ongoing innovation and effort of the NADDC, PAN will return to higher production with patronage to take the country back to glory when it

was producing 90,000 cars with 4,000 employees on its payroll. Flagging off the event, the Minister of Industry and Investment, Adeniyi Adebayo, commended the NADDC and manufacturers on their innovations at showcasing Nigerian cars. He said that the President Muhammadu Buhari administration will explore every avenue to use the auto industry for job creation.

Coscharis group’s President/CEO bags multiple Awards MIKE OCHONMA

redible recognitions came the way of the founder of the respected wholly owned Nigerian conglomerate, Coscharis Group, Cosmas Maduka recently when he was awarded on three different platforms in his capacity as an entrepreneur per excellence. First award came from the globally respected consulting firm, Ernst & Young where Maduka was adjudged the EY Entrepreneur of the year in the Master Class category for West Africa. This category of award which was the ultimate award for the night was keenly contested with other tested personalities that are entrepreneurs in their own rights that had impacted in the economy but Cosmas Maduka stood out tops according to the panel of judges made up of professionals of high integrity after strong consideration of his past contributions, present positive impact and futuristic approach to creating value for mankind in all ramifications. Olufemi Hamzat, the deputy governor of Lagos State applauded the choice of Maduka as the Entrepreneur of the Year going by his pedigree as an established entrepreneur that has con-

R-L: Obafemi Hamzat, deputy governor of Lagos state handing over Ernst & Young’s Entrepreneur-Of-The-Year-Award to Cosmas Maduka, President/CEO of Coscharis group in Lagos recently.

tributed immensely to the growth and development of Lagos State in particular and Nigeria as a nation. Second award came from the Enugu Chamber of Commerce, Industry, Mines & Agriculture with the prestigious Keyman Award as an Outstanding Distinguished Entrepreneur in the growth and development of automobile/agro-allied industry. The Chamber recognized his contributions overtime in the economic sector of the country especially within the auto industry where his entrepreneurship skills has made him to build an home grown leading auto dealership in Coscharis Motors that exclusively represents some of the best globally respected iconic auto brands like the Rolls-Royce, Jaguar Lan-

dRover, BMW, Ford, Renault amongst others. Third award was from the Independent Newspapers Limited awarded him as the Real Sector Investor of the Year for Maduka’s dynamic nature of creating value beyond the auto industry he’s known for with inroad into the agricultural sector where he had equally invested heavily in the rice production. Coscharis Farms remains one of the biggest farms in the whole of West Africa with an ultra-modern rice mill. The Farms is one of the vibrant member companies that make up the group as an entity with others like the Coscharis Technologies, Coscharis Mobility, Coscharis Beverages, Coscharis Medicals, and Coscharis Ghana amongst others.

In his response, Cosmas Maduka who will be representing West Africa in the world category for the Ernst & Young awards at Monte Carlo in France later in the year dedicated the awards to his late mother who believed in him as a child and thought him his early days skills as an entrepreneur which has helped him to grow his businesses till date. He equally dedicated the awards to the organization’s ever loyal customers for their consistence patronage and acceptance of the brands over the years with a promise to continually create more values in all the business sectors Coscharis brand operates in Nigeria. In his words, ‘’there can’t be another best way to start a very challenging but promising business year in 2020 than with these set of prestigious awards as recognition to some hard work made possible by our hard working team members across board who despite all odds has consciously strive to deliver value for money at all times for the benefit of our numerous stakeholders. I do cherish all these awards that came my way especially coming from respected bodies that has been part of the success story of the Coscharis brand from the beginning in Nigeria and beyond’’.

he Nigeria Railway Corporation (NRC) generates about N200 million every month out of which almost N100 is spent on operational cost such as routine maintenance, cleaning and recalibration of equipment that are in use and fueling. Fidet Okhiria, managing director and chief executive of NRC, made this known on the sidelines last weekend in Ogwashi-Ukwu, Delta state, during the interment of Tony Iwelu, the late chief security officer to the Rotimi Amaechi, Nigeria’s minister of transportation. Meanwhile, the recurring shortage of coaches for passenger services on the

Abuja-Kaduna train services will gradually be a thing of the past as the Nigerian Railway Corporation (NRC) is planning to commence train service on an hourly schedule on the Abuja-Kaduna standard gauge route in April this year Currently, the train service operates on three hours intervals or more to the frustration of travelers, but authorities at NRC has assured of improved service delivery beginning from next month. This means that passengers that miss a particular train departure schedule would no longer wil for nearly three hours for another service like before, but would rather depart on the soon-to-

be introduced hourly service. Okhiria also said the recently procured two locomotives and eight coaches are expected to arrive Kaduna by first week of April and will be commissioned immediately and put to use, he said. With the new capacity, more express services will be introduced for all categories of individuals that would want to travel fast without the disruptions of stopping at every station, however, with a price. “Two locomotives have arrived. You know it’s not easy to move them by road. We hope that in the next three weeks, the two locomotives and eight coaches would have arrived Kaduna. “Immediately, we will com-

mission them and start operations with them. With that, we can have the hourly train, Okhiria said. When fully deployed, there will be non-stop return trip train services from Abuja to Kaduna. At the same time, the price will not be the same again because of the seats there. In terms categories, there are coaches for 24 passengers and another two coaches that can accommodate 56 people and the normal one depending on the class of ticket purchased by the passenger. ‘’So, we don’t expect people who will relax their chair to also pay the same price,” he explained.

PAN reshuffles team for better performance Continued from page 30

Christopher Osifeko who formerly headed the quality department is now the head of production even as Dorothy Abdul, former head of administration takes over as the head of procurement. O n t h e o t h e r ha n d , Maria Maikasa was redeployed from her position as head of procurement to head of methods and study. Addressing the management executives, Mohammed noted that the shake up will deepen and

expand the knowledge base of the staff, hereby improving their efficiency. He charged them to proactively take strategic steps that will improve customer satisfaction and delivery at the auto company. In May 2019, Ibrahim Tanko Mohammed, a successful banker of over three decades, took over from Ibrahim Boyi as the managing director and chief executive of PAN, with the mandate to reposition the company and revive its fortunes as the leading automobile assembly company in the country.

Wednesday 18 March 2020

BUSINESS DAY

Corporate governance

Inclusion of women in the boardroom Olayimika Phillips

very 8th of March, the world celebrates International Women’s Day. Just a few days ago, the day was joyfully celebrated all over world. It was a day that saw supranational organizations, sovereigns, multinationals, and individuals take to different platforms to underscore and appreciate the priceless role women play in society, and emphasize the need for a complete women inclusion in all walks of life. From the standpoint of corporate governance, however, the last celebration of International Women’s Day has reignited long-standing concerns over gender diversity and the inadequate inclusion and representation of women in the boardroom. It appears, evident from available statistical data, that despite their qualifications and the essential roles they play, women are not accorded the requisite representation and inclusion in the boardroom. According to Deloitte’s Global Center for Corporate Governance sixth edition report of “Women in the Boardroom: A Global Perspective”, only 16.9% of board seats are held by women globally. In Africa, only 24.3% of board seats are held by women, whilst in Nigeria only 20% of board seats are held by women. These statistics give credence to the concerns of many on the inadequate inclusion of women in the boardroom. There are myriad of benefits a company stands to gain if it adequately includes women on its board. Indeed, a board with an adequate representation of women demonstrates diversity. Studies have shown overtime that the diversity of a board impacts its effectiveness and positively influences the performance of the company. An adequate representation of women on the board has been shown to encourage crosspollination of ideas amongst directors, improve decision making and ensures that the best solutions are proffered to challenges facing a company. Indeed, with adequate representation of women,

varying approaches are presented against traditional ones and the company is better equipped to hear from people with different experience, skills, industry focus, and values. There have been suggestions that the low representation of women in the boardroom is a result of a lack of requisite qualification, skills, and experience among women. However, findings suggest otherwise. For every qualified man, there is another qualified woman. Recent findings show that women earn more college degrees than men. Another argument for the inclusion of women in the boardroom is the reputational benefits a company stands to earn. A company with a gender diverse board gains a positive reputation, which in turn impacts its performance. The inclusion of women in the boardroom has become a critical aspect of corporate governance all over the world. Indeed, recent trends and developments in corporate governance now require relevant companies to reserve a minimum number or percentage of board seats for women. Countries such as Austria, Belgium, France, Germany, Italy and some states in the United States now have a stipulated minimum percentage of seats that must be ocwww.businessday.ng

cupied by both genders on the boards of relevant companies. In Nigeria however, there is no requirement for companies to reserve a specific number or percentage of seats for either women or men. What is required, according to the Financial Reporting Council of Nigeria’s Codes of Corporate Governance 2018, is for relevant boards to promote diversity in its membership across a variety of attributes such as knowledge, skills and experience, age, culture, and gender. Notwithstanding the ab-

‘

Indeed, recent trends and developments in corporate governance now require relevant companies to reserve a minimum number or percentage of board seats for women

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sence of any legal requirements to reserve a specific number of seats for women in Nigeria, an ideal board should endeavour that its composition reflects true gender diversity and promotes the inclusion of women. Boards should put in place policies designed to eradicate all forms of biases that impede the growth of women in their organisations, or impede women’s access to corporate leadership. Crucially, women and men should be given equal opportunities for the same appointment. In the appointment of members into non-executive or independent seats of the board, the nominating committee in charge of nominating people for board appointment should be composed of people that understand and appreciate the importance of gender diversity and the inclusion of women in corporate leadership. Furthermore, enhancing the inclusion of women in the boardroom requires the support of the government and of market regulators. The Codes of Corporate Governance should be amended to provide a minimum quota for both genders in the boardroom. Board gender diversity should also be made a requirement for obtaining licences and listing on exchanges. Whilst Nigeria’s 20% rate @Businessdayng

of women board membership seems to be higher than the global average of 16.9%, there is still more that can be done in terms of increasing the representation of women in the boardroom. In the end, the role of the board is to increase shareholder value and further the success of a company. What better way to achieve this than by guaranteeing access of women to corporate leadership where they are able to influence corporate success?

Olayimika is a Partner in the law firm of Olaniwun Ajayi LP and has over 34 years of professional experience. She specializes in corporate governance, providing pragmatic solutions to the diverse challenges which confront corporates at different growth stages and serves on the board of several companies (listed and privately held).”

Wednesday 18 March 2020

BUSINESS DAY

tax issues Stamp duty on electronic fund transfer and deposit: A choice between tax revenue gains and inclusive economic development Oluwatoyin Bello & Adeniyi Adeyemi

Introduction tamp duty is a levy imposed on applicable documents in Nigeria known as dutiable instruments. These instruments are listed in the Schedule to the Stamp Duties Act(“SDA or the Act”) with the applicable rates, which could either be ad-valorem or a fixed rate.While the requirement for stamping documents has always been in the law, its potential for revenue generation only became prominent from January 2016 as the government looked for ways to boost its non-oil revenue as oil revenue was threatened due to significant fall in oil prices. The applicability of stamp duties to bank electronic fund transfers and payments, introduced in January 2016, remains a topical issue in the Nigerian tax environment. On 17 September 2019, the Central Bank of Nigeria (CBN), through its Circular, mandated banks to charge N50 stamp duty on Point of Sale (POS) individual transactions from N1000 and above .This is an update to the CBN’s Circular of 2016 introducing stamp duty charges on banking transactions above N1,000 for current account holders . This requirement has generated reactions from stakeholders and taxpayers at large. Nonetheless, the Finance Act, 2019 (“Finance Act” or “the Act”), has introduced a specific provision to impose a stamp duty of N50 on every digital payment from N10,000 and above. In this article, we examine the legality of stamp duties on electronic fund transfer prior to the passage of the Finance Act, the current provisions of the Stamp Duties Act and related judicial pronouncements. We also evaluate the impact of the recent CBN Circular on stamp duty charge and the provision of the Finance Act, 2019 on critical government policies, such as financial inclusion, cashless policy and the digital economy. Pre-Finance Act: Legality of stamp duty on electronic fund transfers and deposits There are questions about the legality of imposing stamp duty of N50 on electronic fund transfers and lodgments of N1000 and above as there are no specific provision in the Stamp Duties Act, Cap S8, Laws of the Federation of Nigeria, 2004 (as amended) to this effect. Sections 36 and 89 of the SDA are the typical bases for charges with respect to levy on bills of exchange and receipts, respectively. The Schedule to SDA lists bills of exchange as a dutiable instrument and the provisions of Section 36 of the Act defines a bill of exchange to include ‘’draft order, cheque, letter of credit, and any document or writing (except a bank note) entitling or purporting to entitle any person whether named therein or not, to payment by any other person”. This implies that stamp duties are applicable to cheques and other bills of exchange that may be presented to a bank with an order to or from one person to another. However, it is uncertain

how this can be extended to digital payments. Assuming, without conceding, that all payments by bank transfer or through POS terminals can be construed as digital cheques and assessed to stamp duties, the applicable rate would be 2kobo per transaction, and this will be limited to current accounts only. Although the CBN referenced the Federal Government Financial Regulation 2009 (the Regulation) as the legal basis for imposing this charge, it is our view that the Regulation appears inconsistent with the SDA. Besides, a regulation cannot be used to extend the list of dutiable instruments and introduce a levy to the Act as the power to vary the Schedule to the SDA is by Section 116 vested in the National Assembly. The foregoing position is consistent with the existing judicial pronouncements on the legality of stamp duty of N50 on electronic receipts or teller deposits. In the case between Retail Supermarkets Nigeria vs Citibank Nigeria Limited & CBN , the Federal High Court (FHC) held that the CBN lacked the power to impose N50 Stamp Duty via its Circular No. CBN/GEN/DMB/02/006 directing Deposit Money Banks (DMBs) to charge the duty on receipts issued for services rendered in respect of electronic fund transfers and teller deposits. The FHC in its judgement relied on the legal precedent set by the Court of Appeal (COA) in a similar case involving Standard Chartered Bank Nigeria Limited vs Kasmal International Services & 22 Others. In the COA’s judgement, the judge asserted that although the Act imposes duty on receipts, “receipts given for money deposited in any bank or with any banker” are specifically exempted by the Schedule to the Act. Given the above discussions, the expectation was that stamp duties should not apply to electronic fund transfers and teller deposits. However, banks and merchants have continued to charge stamp duty of N50 on all electronic fund transfers and teller deposits, including payments made www.businessday.ng

via POS terminals in compliance with the CBN Circular. According to Nigeria Inter-Bank Settlement Scheme (NIBSS), an estimated sum of N30 billion was collected from this charge from January 2017to May 2019 .Given the controversy around the legality of stamp duty as it applies to electronic payments and deposits, the pertinent question is whether the amount already collected will be returned to merchants and consumers, and what is the larger impact of imposing stamp duties on digital payments? While the answer to the former question may be a subject for future litigation, the rest of this article will focus on examining how imposition of stamp duty on electronic payments will impact government policies on financial inclusion, cashless economy and digital economy Impact assessment of stamp duty imposition on electronic fund transfers and receipts The implication of stamp duty on money transfers between bank accounts is expected to be far reaching. It is easy to wish away the impact and assert that stamp duty is only a fixed and meagre charge of N50 regardless of the transferred sum. However, beyond the quantum of the amount is the principle whether stamp duty should be imposed on digital payments in an economy at the early stages of digital financial services. Taxes and levies are instruments for revenue generation, but they are equally tools in the hand of government for meeting certain social and economic objectives. As a matter of fact, tax policies are viewed as a reflection of government’s commitment to its planned social or economic goals. Hence, imposing stamp duty on electronic fund transfers and receipts can be counterproductive to the cashless economy and financial inclusion policies of the government. Against this background, we have analyzed, below, the impact of stamp duty on government policies on financial inclusion, cashless economy and the digital economy at large: a. Impact on pace of financial

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inclusion The continued imposition of stamp duty on money transfers may further hurt the usage of formal financial services in the country. Based on a 2018 survey on access to financial services in Nigeria, it was revealed that the country’s banked population stood at 36.5million and about 26.8percent are inactive or used their accounts occasionally. This is against an unbanked population of 60.1 million adults with about 64.9percent mentioning affordability as their major reason for exclusion . Hence, legitimizing the imposition of stamp duty on money transfer and extending same to savings accounts may discourage more people from active operation of their bank accounts. This is regardless of the increase in the threshold of applicable transactions from N1,000 to N10,000 as the cumulative cost of running an account with a bank or other formal service providers may motivate more people to resort to cash transactions. b. Impact on cashless policy Another impact area is the attainment of government’s objective of a cashless economy. Based on the CBN’s directive, supermarkets, filling stations and other merchants have been charging their customers a sum of N50 on every payment made through their point of sale terminals. The immediate result of this requirement is the preference of consumers to withdraw cash from the ATM rather than making payments via POS machines. According to statistics from NIBSS, the number of inactive POS terminals in the country tripled to reach 131,201 in October 2019. This implies that besides undermining the cashless policy of the government, the requirement also puts merchants in a tight place as they prepare for full implementation of CBN’s Circular of 17 September 2019 on cashless policy that is scheduled to commence on 31 March 2020. Based on the Circular, individuals and organizations will be charged a penalty for lodgments and withdrawal above N500,000 and N3,000,000, @Businessdayng

respectively. The Circular stipulates a penalty of 2percent for individuals and 3% for companies on any cash lodgment above the specified threshold. Therefore, starting from 31 March 2020, the dilemma for most merchants in Nigeria is how to avoid this penal charge with the increased cash collections expected to accompany the imposition of stamp duty on alternative cash payment channels. Furthermore, the negative impact of stamp duty on payments will extend to money mobile operators and bank agents. Patronage of these operators is expected to reduce as more people return to use of cash for payment in order to manage transaction costs. Thus, increasing tax costs on mobile and electronic payments will curtail the role that mobile money plays in deepening financial inclusion. Based on the 2018 state of the industry report on Mobile Money, the GSM Association asserted that the mobile industry is already one of the highest taxed in Sub-Saharan Africa and its analysis shows that taxing mobile money does little to support public finances . We also align with this view as the revenue gains from stamp duty on mobile money will be counteracted by the loss of tax revenue resulting from reduction in the volume of mobile money transactions and profit of operators. Besides the impact on merchants and mobile money operators is the cost of printing bank notes and other adverse impact of increased stock of currency in circulation. According to CBN’s 2018 Currency Operation Department report, the country expended about N64billion on printing bank notes in 2018 alone . Thus, a need to reduce this cost further presents a valid case to avoid any tax or charge that could undermine the efforts of the CBN towards cashless economy. c. Overall impact on access to digital financial services Given the above, the ultimate impact of taxing electronic payments is limited access to digital financial services as the pace of financial inclusion slows down. This may also impact the country’s strides in strengthening its digital space with a view to competing favourably in the global digital economy. According to the World Bank, access to digital financial services is one of the core pillars of the digital economy. Hence, government must provide the necessary support to improve adoption of alternatives to cash payments and remittances and promote digital financial services as part of its digital economy strategy and policy. Concluding thoughts Whilst it is tempting to look strictly at the immediate revenue gains of collecting stamp duty on money transfer transactions, a deeper look should convince us otherwise. Oluwatoyin Bello is a Manager, Adeniyi Adeyemi and Mayowa Falohun are Senior Tax Advisers in KPMG, Nigeria. The authors can be contacted at: Oluwatoyin.Bello@ng.kpmg.com; Adeniyi.Adeyemi@ng.kpmg.com; Mayowa.Falohun@ng.kpmg.com.

Wednesday 18 March 2020

BUSINESS DAY

FINANCIAL INCLUSION

& INNOVATION

There is no timeline to roll out PSB - CBN Endurance Okafor

hile the Central Bank of Nigeria (CBN) has confirmed that the registration of Payment Service Bank (PSBs) is currently ongoing, the regulator also revealed that it has no timeline to roll out the Telcoled financial inclusion model. According to the apex bank, PSB licence like any other involves a lot of processes. “You can’t really put a timeline to it. You can’t really put a time to anything especially when it comes to things like PSB,” Aishah Ahmad, Deputy Governor of the Central Bank of Nigeria told BusinessDay recently in Lagos. A PSB license will allow companies operating outside Nigeria’s financial services industry to among other things; maintain savings accounts and accept deposits from individuals and small businesses, which is covered by the deposit insurance scheme; carry out payments and remittance (including cross-border personal remittance) services through various channels within Nigeria; issue debit and prepaid cards, and operate an electronic purse or wallet. Telecommunication operators’ push to offer mobile money service, a financial inclusion model that has cat-

alyzed higher inclusion rates in other African countries was recently given an official nod by the regulator, the Central Bank with the issuance of guidelines for players to apply for the licence to operate as payment service bank. “The roll-out of Payment Service Banks guidelines that allows licensing of telco subsidiaries is welcome and should be implemented,” International Monetary Fund (IMF) said in April 2019. But about a year and six months after the Central Bank loosened its policy to accommodate new players in Nigeria’s financial services industry; the direction of the mobile money initiative remains unclear. Since October 2018 when

the apex bank requested that industry players should apply for the licence to operate as a Payment Service Bank, only three firms; Hope PSB a subsidiary of Unified Payment, Globacom’s Money Master and 9Mobile’s 9PSB have been issued Approvalin-Principle (AIP). “We are on it. We have given out some approval in process, licensing is a process,” Ahmad said adding that “there is a role the regulator, the licenser has to play and there is also the part the people that are seeking license will have deliver.” In the last decades, Nigeria only allowed banks and licensed financial institutions to provide financial services in the country which has one

of the highest exclusion rates in Africa. Although telecom operators and other Fintech companies indicated interests to operate in the market, the CBN policy would not allow them. The regulator eventually shifted because of the increasing rate of financially excluded people in Nigeria and the lack of progress in getting banks to provide financial services to people living in areas that lack access. According to London based Group Special Mobile Association (GSMA), “from a regulatory perspective, one basic requirement for mobile money to succeed is to create an open and level playing field that includes non-bank

Lagos Fintech week to focus on bridging industry talent gap

hile Nigeria’s Fintech ecosystem has grown to become a leading network in Africa’s financial service industry through innovative solutions in Lendtech, Insurtech, and Wealthtech the industry is regarded by industry players as one that is short of talent. To bridge this gap, the organiser of 2020 Lagos Fintech Week has incorporated Fintech Talents Summit (FTS) into the annual week-long event to build a high capacity talent-based for the Fintech ecosystem. According to the chairman of the organising committee, Yele Okeremi, the Fintech Talents Summit (FTS) is the premier space for multi-disciplinary stakeholders from the private sector, policy, academia/ education, and innovation to come together “to discuss the trends and solutions for the future of work and education in financial technology space”. The FTS is expected to at-

tract strategists, key opinion leaders and relevant stakeholders to shape the future of talents in Fintech through education, innovation, and recruitment. Topics such as Community-as-a-Service which will centre on connecting the right talent for current and future opportunities, Fintech Talents Acquisition Strategy among others will be the areas the summit will be focusing its attention. According to Okeremi, the summit will attract top Fintech leaders in the ecosystem such as Programme Manager, Google Developer Ecosystem, Aniedi UdoObong, and Chief Information Officer at Interswitch, Femi Ogungbamila, CEO, Innovectives and Emmanuel Agha among others. According to organizing committee Fintech across the globe has shaped banking operations with seamless and simple innovative solutions and the disruption has helped to deepen the global financial inclusion and boost

economic output but the Fintech industry is still short of talents to grow the market for sustainability. A 2017 report by PwC revealed that about 77 perecnt of the CEOs surveyed from different parts of the world viewed skills shortages as a business threat given that there is an essential role of human capital in the coming decades. “The global war for talent is beginning and will intensify,” it said. In part, the Fintech talents gap is justified and even self-explanatory: the industry is relatively new and has to nurture new talents to meet its challenges,” industry experts said. According to them, the number of people that are proficient in finance and technologies is still dramatically low; needless to say, they are in high demand and command a high salary. Skills such as blockchain, programming languages - Python, C++, C#, GoLang, SQL, JavaScript and Java ML, AI,

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and Deep Learning, cybersecurity including soft skills such as communication, creativity and high EQ are at short-fall in the industry. Research has shown that the local educational systems are not providing the necessary skills to train students in today’s AI-driven industries, as companies and countries are being confronted with significant talent shortages, as compiled from industry sources. “As Fintech evolves in Nigeria, Africa and globally, and sets more sophisticated requirements for technology skills, many businesses lag behind due to the lack of talents and resources to bring their innovative ideas to life,” Okeremi said. According to him, FTS is co-located within Lagos Fintech Week. Lagos Fintech Week is organized by Fintech 1000+, the largest Fintech group in Africa comprising regulators, Bank CEOs, government, investors, insurers, Fintech firms and the media.

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mobile money providers such as Mobile Network Operators (MNOs). Telco-led financial inclusion model in African countries has led to tremendous progress in the number of people that have been given access to financial services. The Telecommunication companies leverage on their already existing large customer base to make it seamless to give access. While Nigeria with a lot more population numbers has mobile money service penetration at 1 percent owing to its bank-led financial inclusion model Kenya has about 60 percent, and Ghana has about 40 percent. Ghana’s decision to have a Telco-led model resulted in a 73 percent increase in registered mobile money customers in just one year, according to World Bank data, and has helped lift financial inclusion rates in the country to 58 percent in 2017 from 41 percent in 2014. This was not different for Ivory Coast who has experienced a mobile money revolution. As a result, there are now more adults with mobile money accounts of 24.3 percent than with bank accounts of 15 percent. Ivory Coast has the fifthhighest rate of mobile money accounts in the world behind Kenya (58 percent), Somalia (37 percent), Uganda (35 percent), and Tanzania (32 percent), according to Brook-

ings Institute, a Washingtonbased nonprofit public policy organization. Kenya also improved to 81.6 percent financial inclusion rate in 2017 from 74.7 percent in 2014, Ivory Coast improved to 41.3 percent from 34.3 percent. The 2018 data by EFInA put Nigeria’s financial inclusion rate at 63.2percent, meaning that as much 36.8 percent or about 40 million adults still lack access. The central bank, however, has a target to ensure it gives access to 80 percent of Nigerian adult population by the end of 2020. If the apex bank is to achieve its objective through the strategy launched seven years ago, it would have to bridge the 16.8 percent inclusion gap before year-end. The CBN had in a circular on July 2018, lamented that Nigeria was not meeting any of the financial inclusion targets agreed and contained in the 2012 Financial Inclusion Strategy. “To achieve financial inclusion target that the CBN’s inclusion strategy has set up at 80 percent rate by 2020, technology has to play a significant role. What I see technology doing in terms of Nigeria’s financial inclusion is actually to democratize access, that is the first thing it does,” Wole Adeniyi, executive director at personal & business banking, Stanbic IBTC Bank said.

Lidya co-founder Kehinde joins WEF Young Global Leaders 2020

idya, a credit financing company has announced that its cofounder, Tunde Kehinde will be joining the World Economic Forum’s (WEF) Young Global Leaders 2020. According to Lydia, Kehinde is the only finance or Fintech entrepreneur from Africa and one of only two Nigerians invited to join WEF’s 2020 Young Global Leaders. Kehinde will join this year’s class of 115 young leaders from around the world who have been chosen based on their potential to change the future. “By championing these promising and accomplished leaders we hope to create positive ripple effects that benefit entire communities. In response to a startling decline in trust in leadership over the past decade, these Young Global Leaders inspire the world through their dynamism, passion and integrity,” Mariah Levin, Head of the Forum of Young Global Leaders at the World Economic Forum, said. The Forum of YGLs uses @Businessdayng

members’ insights and capacities to realise sustainable economies and societies, with the aim of showcasing what leadership should look like across the world. The independent, nonprofit foundation with over 1,300 members and alumni represents over 100 nationalities. New members of the Forum are publicly nominated and individually evaluated by a selection committee who choose 100-150 new members each year. Kehinde founded the Fintech SME lender Lidya in Nigeria in 2016 to help bridge the global SME credit gap which is estimated by the International Finance Corporation (IFC) to be a staggering $5.2 trillion every year. As at today, Lidya is lending to SMEs in Nigeria, Poland and the Czech Republic and has ambitious expansion plans. The business is on a mission to create 100 million jobs worldwide and plans to disburse $1 billion to SMEs by 2025, the digital SME lending company said.

Wednesday 18 March 2020

BUSINESS DAY

PrivateEquity &fundraising

African capital market activity falls to 10-year low in 2019 MICHAEL ANI

frican equity capital market (ECM) activity in 2019 declined sharply both in volume and value from 2018, posting the lowest proceeds raised in ten years. The general slowdown in equity markets was largely driven by a series of macroeconomic factors including an ECM deceleration in global markets, caution in the period leading up to key local elections, which took place in both Nigeria and South Africa in 2019, and more specifically in South Africa, growing political gridlock and economic stagnation, global consulting firm Pricewaterhousecoopers said in a report. “A state of uncertainty seems to have become the ‘new normal’, and we expect some degree of volatility and caution to continue to affect Africa’s capital markets activity in 2020,” said Andrew Del Boccio, PwC Africa Capital Markets leader. “This sentiment is also reflected in PwC’s annual 2019 Global CEO Survey, in which African CEOs noted their expectations for a slowdown in economic growth as well as their top concerns, which included political risk, overregulation, and worries about finding top talent to fill the skills-gap,” Del Boccio said. African equity markets In 2019, the value of ECM was the lowest ever seen over the past decade, while the volume of deals was only lower in 2012. Overall ECM activity in 2019 declined in value and volume by 44 percent and 29 percent respectively, compared to 2018. The decline was mainly related to activity in South Africa, where ECM activity dropped by 69 percent in terms of value and 46 percent in terms of volume compared to 2018, and where Africa’s largest bourse saw no capital raised through Initial Public Offerings in 2019. Between 2010 and 2019, there were 927 African ECM transactions, raising a total of $88bn. The highest volume of transactions was recorded in 2015 and 2017, with 125 deals each, while 2012 recorded the lowest volume of transactions with 65 deals.

SOURCE: PWC

African IPO market Over the past ten years, there have been 215 IPOs by African companies on both African and international exchanges, raising $16.9bn. The year 2019 saw the lowest volume in IPO activity over the past ten years, recording a decline of 47 percent compared to 2018 activity. No capital was raised via IPOs on the JSE in 2019. However, South Africa still dominated during the decade under review, with seven of the top ten IPOs between 2010-2019, and accounted for the two largest IPOs by value - the $1.2bn Steinhoff Africa IPO in 2017 and the $819m Vivo Energy dual listing on the Johannesburg Stock Exchange (JSE) and London Stock Exchange (LSE) in 2018. Aside from the decreased levels of activity in 2019, there were some other notable events in specific markets. IPO activity resumed in Nigeria after four years, with Airtel Africa Plc’s dual listing on the Nigerian Stock Exchange (NSE) and the LSE, raising $687m. Mozambique also recorded its first IPO in six years with the listing of Hidroeléctrica de Cahora Bassa on the Bolsa de Valores de Moçambique. Between 2010 and 2019, total IPO proceeds of $15.9bn were raised on exchanges in Africa in 202 IPOs. Sub-Saharan African exchanges accounted for 133 IPOs (or 66 percent) and $12.3bn (or 77 percent) of the value raised. The remainder was raised on the

North African exchanges. Of the amount raised on the sub-Saharan African exchanges, the JSE accounted for 71 percent or $8.7bn, while the NSE accounted for 13 percent or $1.5bn. In terms of IPO volume, the JSE and the Botswana Stock Exchange recorded 64 IPOs and 10 IPOs, respectively, while the Ghana Stock Exchange, Bourse Régionale des Valeures Mobilières (BRVM) and the Dar es Salaam Stock Exchange each had 9 IPOs. The Egyptian Exchange accounted for the largest proportion of the IPO proceeds raised on North African exchanges, at 60 percent or $2.2bn raised from 23 IPOs. African FO market In 2019, FO activity declined significantly in terms of transaction volume and value, by 25 percent and 44 percent, respectively, over the prior year. Low levels of activity in South Africa fueled the decline, with the volume of FOs on the JSE decreasing by 42 percent from 38 deals recorded in 2018 to 22 deals in 2019, and the value decreasing by 58 percent from $3.8bn in 2018 to $1.6bn in 2019. Over the past ten years, a total of 712 FO deals were recorded on African exchanges and by African companies on international exchanges with a total of $71.1bn raised. 2019 saw the lowest FO proceeds raised on African exchanges in the past ten years with $3.5bn from 59 FOs. Over the past decade, a significant proportion of FO activity took

place in South Africa, with the JSE accounting for 58 percent and 79 percent of total FO volume and value, respectively. Egypt accounted for the nextlargest amount of FO volume and value at 10 percent and 6 percent, respectively, followed by Nigeria with 4 percent of both FO volume and value. African inbound, outbound, domestic and crossborder activity, 2010-2019 African ECM activity in 2019, similar to prior years, was led by domestic deals, comprising 71 percent of both ECM volume and value. Outbound ECM saw a marginal increase in the value of transactions between 2018 and 2019, with 11 transactions raising $225.4m in 2018 versus 11 transactions valued at $244.9m in 2019. The JSE led inbound activity in 2019, with ECM funding raised largely by global companies with primary South African operations or historical market ties. African debt markets Egypt was the largest sovereign issuer of non-local currency debt in 2019, raising a total of $8.2bn. South Africa was the secondlargest sovereign issuer, raising $5.0bn in September in its largest ever Eurobond issuance, as the country seeks liquidity to address budget deficits and broader systemic issues stifling economic growth. African issuers have raised $245.9bn of non-local currency debt from 759 issues over the past ten years, with almost 50 percent of that value raised in the

past three years. South African corporate issuers accounted for 52 percent of non-local currency corporate debt issued between 2010 and 2019, including energy utility, Eskom, which accounted for the largest cumulative nonlocal currency debt value raised by a single issuer over the past decade at $5.5bn, largely intended to fund the company’s capital expansion programmes, such as the construction of its coal-powered Medupi and Kusile power stations. On the outlook of the economy, PwC expects governments across the African continent to continue to implement strategies towards building robust capital markets. Some recent examples include Ethiopia’s plan to launch a local stock market during this year, and Angola’s roadmap to privatise its state-owned companies by 2022. In addition, it can be expected to see other announced privatisations in Nigeria, Malawi and Ghana. Alice Tomdio, PwC Africa Capital Markets Director, says “despite the lacklustre activity in 2019, we saw significant progress in various capital markets initiatives during the year, including the drive for sustainable finance through the issuance of social, green and infrastructure bonds in South Africa, Kenya, and Nigeria.” “Together with a move towards more local currency and blended financing, we expect this trend to continue, and to unlock new sources of capital for African issuers,” she says.

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

Email the PE & F team loladeakinmurele@gmail.com

Continues on page 34

Thursday 18 March 2020

BUSINESS DAY

news

Naira settles at N378 to dollar as CBN rolls over N47.6bn NTB Wednesday HOPE MOSES-ASHIKE

he Nigerian currency on Tuesday strengthened slightly against the US dollar across foreign exchange markets. At the Bureau De Change (BDC) segment and the black market, the naira settled at N378 per dollar at the end of the trading, while at the Investors and Exporters (I&E) forex window, it was quoted at N367.57kobo to the dollar. Earlier in the day, dollar traded at between N378 and N380 in Lagos black markets. At Broad Street and Festac area of Lagos, the dollar traded at N380 while in Apapa it sold at N378 per dollar. “Dollar will not go down again”, one of the black market operators at Broad Street told BusinessDay on Tuesday. The local currency weakened by 0.02 percent to close at N307.00kobo per dollar from N306.95kobo/$ quoted at the official window. The foreign exchange daily turnover decreased by 51.51 percent to close at $143.33 million compared with $295.58 million recorded the previous day, according to the data obtained from FMDQ. At the Primary Market Auction (PMA), the Central Bank of Nigeria (CBN) is expected to roll over Treasury Bills worth N47.6 billion today (Wednesday).

The system liquidity is expected to be boosted by inflows from Open Market Operation (OMO) maturities worth N304.8 billion. “We expect the CBN to conduct an auction to mop up excess liquidity,” analysts at Afrinvest Securities Limited said. The analysts anticipate improved demand given the level of system liquidity at about N692.0 billion as at Friday, as well as limited alternative options. “We advise investors to trade cautiously while taking advantage of attractive opportunities along the yield curve, as well as expected Commercial Paper offers,” the analysts said. However, NT-bills market ended the trading session on a flat note on Tuesday, with average yields remaining unchanged at 3.82 percent, while the average OMO yields increased by 4bps to 16.99 percent according to a report by FSDH research. The overnight rate declined by 5.46 percent to close at 12.64 percent as against 18.10 percent. Also the Open Buy Back (OBB) rate declined by 5.69 percent to close at 11.71 percent from 17.40 percent on the previous day. “We expect the money market rates to remain under pressure, as the system liquidity remains tight due to NT-bills auction scheduled tomorrow,” analysts at FSDH research said.

Ekiti SUBEB bank account flagged on suspected contract scams Mark Mayah

... as governor threatens chairman with sack

that the SUBEB chairman had discovered when she assumed office that contracts worth close to N1 billion were hurriedly awarded, with one single company getting more than 30. The contracts were allegedly sold to third parties at exorbitant rate of 35 percent, making execution of the jobs difficult. “Those who bought the contracts paid 35 percent of the contracts sum to the account of a single company (name withheld), which was used as front for two top officials of the state government,” the source said. Aladejana had petitioned the UBEC in Abuja and also copied the Economic and Financial Crimes Commission (EFCC), with the mindset that

ll is not well in the Ekiti State Universal Basic Education Board (SUBEB) as an attempt by the chairman, Francisca Aladejana, a professor, to expose what she thought was contract scam perpetrated by the immediate past administration of Ayodele Fayose, has boomeranged, leading to invitation of top officials of the agency to Abuja. Also, the bank account of Ekiti SUBEB is also said to have been flagged while some of its top officials have been invited to the Universal Basic Education Commission (UBEC) in Abuja for questioning. Sources in the know confided in our correspondent

those in the civil service awarded the contracts. “The chairman had petitioned UBEC in Abuja before she realised that the contracts may have been awarded by appointees of the current state governor, Kayode Fayemi. “When Fayemi got to know about the steps taken by Aladejana, the governor was so livid that he threatened to sack the chairman if not for prompt intervention of his wife, Erelu Bisi Fayemi,” a source said. Another source said the SUBEB permanent secretary, Olusesan Fabamise was summoned to Abuja two weeks ago to explain how the contracts were awarded. It should be recalled that the SUBEB in Ekiti State ran into

troubled waters during the first tenure of Governor Fayemi. Then, Fayemi’s administration had got the Federal Government to pay its own matching grant by obtaining N852, 936,783.12 loan from Access Bank on November 25, 2013 without perfecting documentation in respect of the loan, thereby flouting the provisions of Section 11(2) of the UBEC Act, 2004. UBEC, in a letter dated April 16, 2015, with Reference Number; UBEC/FA/SUBEB/ EK/183/Vol.II/162 described the withdrawal as a criminal act that violated Section 11(2) of UBE Act 2004 and conveyed its suspension of Ekiti State from accessing any further FGN-UBE Intervention Fund.

Nigerians wait to hear from President Buhari on Coronavirus, oil price fall, Lagos explosion Daniel Obi

igerians are waiting to hear from President Muhammadu Buhari on either coronavirus disease, international oil price fall or the explosion in Abule Ado, Lagos. These are both local and global issues that have kept Nigerians on their toes, and Nigerians who spoke with BusinessDay said presidential address to the nation would clear doubts about the issues and give them confidence. Many other presidents around the world have spoken to their citizens, reassuring them on efforts to curtail the coronavirus pandemic to give them confidence on running their businesses. But Nigerians are yet to hear from their president directly on either of the coronavirus, recent oil price fall or the recent explosion in Lagos. In his reaction, John Ehiguese said it would be good to hear President Buhari join other countries’ presidents to speak to his citizens, saying, “Such communication by the president will be a reassuring statement on these issues which have put Nigerians on alert.” Dayo Elegbe, a Lagosbased digital expert, said Nigerians were a bit anxious that President Buhari had not spoken to them on either the coronavirus ravaging the world or on the effects of price oil fall at the international market, or even the recent explosion in Lagos. “We expect him to address Nigerians at this stage,”

Elegbe said. Worried that Buhari has not publicly addressed Nigerians like other presidents of the world, another analyst and public relations expert, Ken Eze said he would have been surprised if the President had reacted immediately to the troubling issues which have made Nigerians unease. According to him, Buhari has made Nigerians to believe that he is somebody who takes his time to react to issues. However, the office of the President has suspended all public visits to prisons for the next 30 days, suspended all inter-schools gathering either for sporting purposes or otherwise for the next 30 days. In a circular issued recently, the presidency directed suspension of all mass/public gathering or meetings of any nature for the next 30 days. It also suspended inter-agency, inter-institutions and inter-religious gatherings for the next 30 days. This is to curtail the possible spread of the coronavirus in Nigeria. The falling international crude oil price by over 40% to $37 dollars per barrel due to the ravaging coronavirus outbreak, exacerbated by Saudi Arabia and Russia price war is likely to hit Nigeria hard which heavily depends on oil sales to run the economy. Buhari had signed the 2020 budget of N10.6 trillion into law based on crude price projection of $57. According to analysts, if the price stays below this projection for long, it could push Nigeria into another recession. www.businessday.ng

L-R: Seyi Makinde, governor, Oyo State; Olasunkanmi Olaleye, Oyo State commissioner for education, and Akin Alamu, chairman, Oyo State Teaching Service Commission, during the inspection of St. Peter’s Schools, Ode-Aje by the governor in Ibadan, yesterday. NAN

Private sector urges FG to take prompt action to secure economy from Covid-19 Gbemi Faminu

igeria’s private sector has urged the Federal Government to come up with preventive and precautionary measures to avert the impact of the coronavirus (covid-19) on the country’s economy. Speaking at a forum organised by the Lagos Chamber of Commerce and Industry (LCCI) on the impact of coronavirus outbreak on the Nigerian economy, Toki Mabogunje, president of the LCCI, said the disease, which is spreading at a very fast rate, might hurt the global and national economy if not controlled. “The Covid-19 outbreak has dealt a severe blow to the global economy and if the spread is not curtailed at least in the near term, the global economy might slip into recession. The disease has disrupted and still disrupting businesses, economic and financial activities across the globe,” she said Mabogunje, represented by Michael Olawale-Cole, deputy president, LCCI, explained that

the global economy would have a bleak outlook as businesses continue to shut down operation, trade activities goes on hold, the price war continues between Saudi Arabia, while oil prices are being hit hard amid imposition of wide range travel restrictions. Akin Abayomi, commissioner for health, Lagos State, said the virus is in the form of three case scenarios which are the no active case, small outbreak but rapidly contained and the large extensive outbreak. He said government’s prompt response and handling of the index case averted the extensive outbreak scenario. However, there is still much more to be done, he said. Abayomi, who was represented by Soji Ologun, a health expert, said considering the swift spread of the disease there are questions around the sustainability of the government’s preventive and corrective measures owing to the country’s healthcare system as well as the capacity of the intensive care unit which is required for the treatment of the virus.

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Edo begins ‘operation show your building plan’ ...gives two-month grace period to violators

do State government has disclosed plans to commence the second phase of its ‘Operation Show Your Building Plan’, as part of efforts by the Governor Godwin Obasekiled administration to create a healthier, safer environment for residents. In a statement, Commissioner for Physical Planning and Urban Development, Erimona Oye Edorodion, said the exercise will involve all types of developments, ranging from commercial through industrial to residential projects, which are either completed, in use, or under construction. According to him, a team from the Ministry will move from house to house and from one construction site to another to authenticate developments in the various locations. The statement reads: “It is hereby announced for the information of the general public that in continuation of the ongoing effort by Edo State Government to create a healthier, safer, more aesthetically pleasing and convenient physical environment for our urban and rural settlements, the Ministry of Physical @Businessdayng

Planning and Urban Development will commence the second phase of the exercise tagged, ‘Operation Show Your Building Plan’. “This exercise shall involve all types of developments, ranging from commercial through industrial to residential development which are either completed and in use, or under construction. A team from the ministry shall move from house to house and from one construction site to another to authenticate developments in the various locations.” It continued, “There shall be a ‘two-month grace period’ from the date of this announcement for all building owners and property developers without approved building plans to ensure they secure their plans. Failure to secure your building plans after this grace period shall attract stiff violation fines. “Let this announcement serve as an advice to the general public, especially developers and owners of building developments, to seek necessary building approvals from the Ministry of Physical Planning and Urban Development.

Wednesday 18 March 2020

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news Nigeria’s third coronavirus case... Continued from page 1

Babatunde Fashola (2nd r), minister of works and housing; Abubakar Aliyu (l), minister of state in the ministry; Kunle Awobodu (m), national president, Nigerian Institute of Building (NIOB); Kabir Bala (2nd l), chairman, council of registered builders and vice-chancellor, Ahmadu Bello University, and Adebolanle Araba (r), chairman, NIOB college of fellows, during the conferment of Honorary Fellowship of the NIOB on the Minister at the Ministry of Works and Housing headquarters, Mabushi, Abuja.

Goldman Sachs warns $20 oil price... Continued from page 1

ed,” Goldman’s global head

of commodities research Jeffrey Currie wrote in a note to clients Tuesday. Goldman now sees international benchmark Brent crude at $20 per barrel with US West Texas Intermediate crude averaging $22 per barrel in the second quarter with. This is Goldman’s second cut to price forecasts in less than two weeks. WTI settled at $28.70 on Monday, so the new target implies an additional 23 percent downside ahead. This would be on top of WTI’s 53 percent drop thisyear.Goldman’sBrenttarget is33percentbelowthecontract’s Monday settle of $30.05. “The last time there was a global surplus of this magnitude was never,” Jim Burkhard, vice president and head of oil markets at IHS Markit, wrote in anoteMonday,predictinganoil demand contraction of up to 10 millionbpdforMarchandApril. “Prior to this, the largest six-month global surplus this century was 360 million barrels. What is coming will be twice that or more.” Nigeria could suffer some of the worst impacts as lower oil prices threaten allocations to federal and state governments, which will constrain their ability to service debts and pay salaries. The outsized nature of Nigeria’s government means that dwindling revenue has dire consequences for the economy as government’s inability to finance critical projects and make budgetary disbursement would shrink the economy and crimp private enterprises that rely on government contracts. This could lead to businesses struggling amid falling demand and the capital market could be hit further with the border closure compounding the woes of companies in the country. Nigeria is struggling to sell its oil cargoes in a market already dripping with oil. Chinese and European refiners currently hunkering down over the coronavirus are being courted by Saudi Arabia who is

offering its oil at bargain prices. About 70 percent of April loading cargoes from Angola and Nigeria have yet to find buyers, according to a Bloomberg report. These unsold volumes would be competing against millions of barrels that were slated for export in March and yet to be purchased. Lower oil revenue will lead to fall in Federal Allocations for the three tiers of government. In addition, Nigeria’s foreign exchange reserves could drop further, intensifying its fiscal crisis and adding pressure on the Naira, analysts say. At an average oil price of $68.26 in December 2019, the federal and state governments in Nigeria shared N647.3 billion with oil contributing to a significant chunk of the figure. Crude oil sales accounts for 75 percent of government’s earnings and 95 percent of foreign exchange. As oil prices look to fall below $20, FAAC allocations could be cut by half in April when the current OPEC+ agreement ends next month. Already global demand is declining as major international and US airlines cut their flights. 30 African countries have banned international flights along with many other American and European countries. Millions of people all over the world are entering selfisolation or full-on lockdown in an attempt to curtail the spread of COVID-19 which has since killed over 6600 people and sickened over 168,000 in more than 140 countries Analysts warn that the oil market will tumble further, after April when not only the OPEC and non-OPEC members’ alliance falters, but when big-time producers began to flood the market with vast supplies in a price war. Goldman said the sudden drop-off in demand, which began in January when the virus started hitting Chinese fuel demand, aided the price war that’s broken out between OPEC and its allies, which includes Russia. “While it is tempting to view the COVID-19 oil demand shock and the oil ‘price war’ as separate events, we like to emphasize that OPEC+ www.businessday.ng

pursuing a market share strategy is simply a second-order effect of the virus made possible by extremely weak demand, pushing the market far down the global supply curve,” Currie said. Goldman added that the virus will likely lead to far worse outcomes than previously thought — even below estimates from just a month ago — for both the commodities and equity market from just last month. But unlike equities, which the firm believes will swiftly rebound, oil will likely stay lower for longer. “While financial markets are forward-looking and are likely to rebound once the contagion stabilizes, commodity markets are spot assets and must clear the surpluses developing today from weak demand and rising supply,” Currie said. Saudi Arabia has said it would ramp production by over 12million barrels a day in April compared to the 9.7million bpd it did in February. Russia’s energy minister also said recently that it can increase production by 200,000 to 300,000bpd in the short term and 500,000bpd in the longer term. Timipre Sylva, Nigeria’s junior minister for petroleum resources also said last week that Nigeria will ramp production by over 2 million barrels a day. To be sure, throwing gasoline at a burning fire is effective when the anticipated outcome is total obliteration, however, neither OPEC members nor their former allies including Russia can survive current efforts at self-immolation. Russia claims it has buffers up to the tune of $550 billion but it cannot afford to run them aground without political consequences and Saudi Arabia with a huge subsidy system, needs oil at above $80 to keep the people from mutiny. Nigeria’s foreign reserves is a paltry $36bn and a quarter of that could be wiped off, if foreign investors pull their funds. However, some analysts are of the view that a deal will be inevitable in the long-run. “You cannot have the oil flowing if the global economy stops. It is simple. Storage will fill

very quickly, and a deal will have to be made,” said Roger Diwan, vice president at IHS Market, a global energy intelligence firm. Without a diversified economy and with little economic buffers, Nigeria’s economy needs all the hope it can get. Meanwhile as crude prices continue to fall on the global market, the Presidential Economic Advisory Council (PEAC), led by Doyin Salami, has expressed concern over possible slower growth and recommended the revision of the 2020 budget to prioritise spending on health care, infrastructure and basic needs. The PEAC stated this in a statement signed by presidential spokesman, Femi Adesina, after meeting President Muhammadu Buhari who also presided over an enlarged meeting of his Economic Advisory Council established to review the impact of Coronavirus and crash of crude oil prices. The Salami-led team had while briefing government painted sobering scenarios of what could happen to the Nigerian economy if the Covid-19 pandemic lasted for too long. The team expressed fears over possible “slower growth” occasioned by the dwindling world crude oil prices, on which Nigeria’s budget is heavily dependent They also see supply and demand sides of global economy being impacted negatively by the uncertainties, which would erode confidence, “governments acting unilaterally instead of cooperatively, further drop in oil prices, and lockdowns gaining grounds around the world.” The PEAC said there would also be oil glut, trade imbalance, drop in foreign reserves, and rise in unemployment. Noting that many countries round the world may go into economic recession, the PEAC advocated hard work for Nigeria to keep its head above the waters. They recommended among others, a possible revision of the 2020 budget, with priority spending on healthcare, reprioritisation of expenditure on infrastructure to focus on projects nearing completion with pro-poor effects.

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stop the spread of the virus on their shores. Sudan has sealed off all seaports, land crossings and airports. Egypt is suspending all flights from all its airports to contain the virus ravaging the country. Djibouti, even though has recorded just a single case, has suspended all international flights to the country. South Africa with about 62 cases has placed restrictions on foreign nationals entering into the country from high-risk countries including Italy, the UK, and the US. Across Africa, hundreds of international flights have been cancelled and even visas issued to nationals from affected countries have been revoked. But Africa’s biggest economy, Nigeria, with one of the most underdeveloped healthcare system and high rate of poverty has been unwilling to restrict foreign travels. “In today’s Nigeria, doctors who work in government-owned hospitals, both at the state and federal levels, do embark on incessant industrial action to call attention to their welfare condition,” says Chiedu Okoye, a public affairs commentator. On Monday, Olorunnimbe Mamora, the minister of state for health, told journalists that Nigeria had designated eight countries including France, Germany, Spain, China, Japan, Iran, Italy and Republic of Korea as high-risk nations and travellers from these countries would undertake secondary screening at the point of entry. They were also advised to selfisolate for 14 days on entry. But many fear that these measures are not enough, indicating that the government is not taking it as serious as it should. Many responded to the tweet from Akin Abayomi, the Lagos State commissioner for health, announcing the new case by urging the government to restrict travel into Nigeria. Third confirmed case Abayomi said the infected person in this latest case, a female, 30-year-old Nigerian who came into the country on March 13 on-board British Airways (BA) 75, from the UK. “She is in isolation and receiving care at Mainland Infectious Disease Hospital, Yaba, and contact tracing of all passengers and all those who may have come in contact with this latest case has commenced,” he said. According to Abayomi, the woman went into self@Businessdayng

isolation and was only in contact with her family. Abayomi added that the woman lived with her parents, saying that the entire family had been moved to the IDH, Yaba, for isolation to see if they would develop symptoms of the virus. He noted that while the woman had been moved to Isolation I Ward for treatment, those who boarded the plane with her would be traced, saying people in the flight with the woman should contact the government for appropriate advice on what to do. The government would be doing aggressive contact tracing, he said, but confirmed the woman was doing well and did not need serious care at the moment. Updating on the first recorded case, the commissioner said the Italian who brought coronavirus to Nigeria was still potentially contagious and would remain in isolation at the Infectious Disease Hospital, Yaba, until he no longer secrete the virus. Abayomi, at a briefing on Tuesday, said the Italian was recovering and getting better but he would continue to remain in isolation until he was no longer posing health risk to other members of the community. “The Italian has continued to remain in excellent form; our last test yesterday (Monday) shows he is till potentially contagious. We are going to do more test for him. The global practice is to conduct two negative tests 48 hours apart before releasing the coronavirus patient. “We are still going to test the secretion from his lungs and urine to make sure he does not have any virus from his secretion. As soon as he is negative, we will discharge him. The secondary case first tested positive and later tested negative, he has been discharged yesterday (Monday) morning as he has recovered from the virus,” the commissioner said. The state government will continue to strengthen its surveillance, he said, adding that the state has also introduced a toll-free line - 08000CORONA in addition to the already existing emergency lines. He enjoined residents to call the newline and other existing emergency lines 0805978886, 08035387653, 0 8 0 2 8 9 7 1 8 6 4 , 08023169485,08033565529 and 08052817243 to report suspicion and get accurate information on COVID19Lagos.

Wednesday 18 March 2020

BUSINESS DAY

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National Assembly, private sector urge travel ban from virus-endemic nations … as delay in restriction may be more fatal, warn Civil Societies James Kwen, Solomon Ayado Godsgift Onyedinefu, Abuja & Anthonia Obokoh, Lagos

s part of measures to forestall the outbreak of the dreaded coronavirus in Nigeria, the National Assembly has urged the Federal Government, the Ministry of Aviation and security agencies to immediately halt all flights from high-risk countries. BusinessDay check shows that high-risk nations such as Spain, Italy, USA, India, Iran and France that delayed in restricting social gatherings ended up recording rise in cases of Coronavirus in the last three to four weeks. For instance, the state of New York in USA recorded two confirmed cases of the virus in the first week but this number increased to 105 cases and 613 cases in the sequent week two and three respectively due to the inability of US government to restrict mass gatherings that gave room for the spread. Also, France recorded 12 confirmed cases of the virus in the first week and by the second and third week respectively; it increased to 191

cases and 653 cases; while the fourth week infected cases skyrocketed to 4499. In Iran, two cases were recorded in the first week, 43 in the second, third week grew to 245 cases but this number moved up to 4747 cases and 12729 cases respectively in the fourth and fifth week. However, Italy has seen the most cases after china, with three cases in the first week, 152 cases in second week, 1036 cases in third week, 6362 cases in the fourth week and 21157 cases in the fifth week. Nigeria in its first to fourth week has confirmed third case. So far, the high-risk nations are the UK, Spain, Italy, the USA, China and South Korea, the lawmakers noted, saying except for Nigerian citizens who will be tested on arrival and may be quarantined if necessary. However, as Nigeria confirms its third case civil society groups are deeply worried that Nigeria continues to be exposed to both visitors and returning Nigerians travelling from areas heavily exposed to the virus. This recent case calls for a more stringent measure in protecting our borders and

FG orders contractors on East West road to return to site ANIEFIOK UDONQUAK, Uyo

he Federal Government has ordered the contractors handling the construction of the East - West road sections 1 to 4 to return to site within the next one week for a speedy completion of the project. Godswill Akpabio, minister of Niger Delta Affairs, handed down the order at a tripartite meeting with officials of the Nigerian Sovereign Investment Authority (NSIA), managers of the Presidential Infrastructure Development Fund and contractors handling the construction of the roads. According to Akpabio, the Federal Government through the NSIA had concluded arrangement for the release of about N20 billion to the contractors if they mobilise to site within the next one week. In a statement signed by the minister’s press secretary, Akpabio recalled that the contract for the East - West road was first awarded in 2006, and scheduled for completion in 2010, but suffered some setbacks because of funding constraints. He stated that by the time the project was transferred to the newly created Ministry of Niger Delta Affairs in 2008, the percentage of work done was negligible. Attempts had also been made in the past to fund the road project through the African Development Bank and the Sure-P Programme but it has remained uncompleted. He said during the pres-

ent administration of President Muhammadu Buhari in 2018, the project funding was transferred to the Presidential Infrastructure Development Fund warehoused in the NSIA to ensure adequate funding. Akpabio said the tripartite meeting was because of President Buhari’s avowed determination to complete the East- West road, saying he had held several meetings with the NSIA and visited the project sites to assess the progress of work. “As at today, the Federal Government is concerned that the progress of work on the East-West road is very slow, if not totally non-existent. The people of the Niger Delta region are also very agitated. And I’m sure the contractors are also worried,” he said. According to Akpabio, “For me, a contract that was awarded in 2006 and which ought to have been completed in 2010 and 14 years later some sections have not been completed, calls for concern being a very important road not only to the people of the Niger Delta, but Nigeria as a whole, hence this meeting. “I have held several meetings with the NSIA and it looked like there were some grey areas which we have worked on so that the EastWest road can be completed, not just for the people of the Niger Delta, but also to make sure the Presidential pronouncement comes to pass because President Buhari has shown so much interest in the completion of the road.

managing movement in and out of Nigeria, they noted. The group stated, “We cannot and should not contemplate banning Nigerians from returning home in these difficult times, but it is obvious that it is time for drastic measures to protect our country and a fragile health system that has been neglected for too many years.” However, asking that the Federal Government and states must recognise like other countries that this is the most urgent of national security matters. They made a call in a joint statement signed by policy and Legislative Advocacy Centre, Centre for Liberty, Stakeholders Democracy Network (SDN), and other 18 groups for the following steps to be taken immediately. “Restriction to only essential travellers coming from any country overseas that has an on-going outbreak of Corona virus and for both Nigerians returning home and any travellers deemed essential by the Nigerian government there must be mandatory and closely monitored selfisolation or quarantine measures for at least two weeks,” the group states.

Lagos Explosion: 60-year-old woman in desperate search of son amid rubble AYETOTO TEMITAYO

60- year-old woman named Madam Ojo has been in search of her son amid the rubble from the gas explosion at Abule-Ado, Lagos, since Tuesday. By a pile of shattered pillars and slabs that had rapidly changed from wearing grey to smoky black, Ojo stood hands akimbo, desperately calling out Kolawole Ojo, her son. Whether beneath the rubble, she anxiously gazed at or from any other heap of ruins around, she wanted an answer to erupt from the familiar voice she had always known. It was 1:14pm on Tuesday and Kolawole, one of the most efficient hands that Bethlehem Girls College (BCG) had on its security team, was not reachable by phone anymore. “Please help me find him. I want to see his face. I want to know the truth about his condition,” Madam Ojo said. Her last conversation with him was about 6am on the ill-fated Sunday, three hours before the explosion attributed to a gas facility. But after the explosion, Kolawole’s phone rang endlessly without a response. By 1:14pm when three more bodies had been recovered from the evacuation carried out by the Lagos

State Emergency Management Agency (LASEMA), there was no shadow of Kolawole. But he was not the only one missing and yet to be identified among the casualties. His colleagues, Geoffrey and Alli were equally still missing and were suspected to be buried under the rubble from the collapse of the giant gate ushering into the Catholic school. The sudden explosion that ravaged Abule-Ado on Sunday not only left a quiet community with horrid sights similar to images of destruction from war-torn Syria, it was a near collapse of the community that sent shivers into people. The shocking tremor and thunderous strike from the explosion severed many buildings from their foundation with other features transported far beyond reach. There were ignitions splashed around, killing for instance, the owner of LinDaves Group of Schools, Mr and Mrs Obi-Jackson, their son who had returned to Nigeria for his wedding next month and their domestic worker, as they set for church that morning. With the severity of the devastation, the growing evidence of insecurity in the country and a fragile level of trust in government, the majority in the community kicked against the theory of a truck hitting

gas cylinders stacked in a gas processing plant as the cause of the explosion, as stated by the group general manager, public affairs division, NNPC, Kennie Obateru, on Sunday. They vehemently held on to the suspicion of bomb explosion targeted at ruining the state. Some other faction saw the explosion as an attempt to dispossess traders of the popular Trade Fair Market, which had its parts ruined by the explosion. While speculators have frowned at indiscriminate construction of buildings around pipelines, heavy criticisms have trailed the government of Lagos State for approving buildings to be cited within the perimeter of danger in the first place. As of Tuesday, three bodies were retrieved from the rubble including that of a cook to a reverend in the Catholic Church that suffered one of the major damages. Chioma, one of the security personnel who lost her colleague, Harry, tearfully said “my tight friend Harry, is dead. On Sunday morning when I closed from work, I went to meet her. Her sister is planning to wed and she asked me to come and take her cloth to my tailor. We were together until I left around 7am.”

IPPIS: Uncertainty as FG, ASUU meet again Innocent Odoh, Abuja

ncertainly appears to surround ongoing negotiations between the Federal Government and the Academic Staff Union of Universities (ASUU) over the implementation of the Integrated Personnel Payroll Information System (IPPIS), which has led to A twoweek warning strike by ASUU, it declared over a week ago. The government insists IPPIS would also cover the universities even as ASUU has resisted the attempt to foist the policy on the union. Both sides had met Thursday last week but the issues had lingered. Speaking at a reconvened meeting between the Union and government on Tuesday in Abuja, Minister of Labour and Employment, Chris Ngige, had expressed hope that both sides would try to resolve the matter, adding that there was no need to the apportioning of blames. However, ASUU president, Biodun Ogunyemi, said the union was standing on an existing Memorandum of Action (MoA) even as he blamed the Federal Government for the crisis. He noted that IPPIS was simply incapable of accommodating academic staff salary structure at the tertiary level, stressing that government should take full responsibilities for the consequences of the ongoing action. “Government actually ignited the ongoing crisis when it introduced IPPIS and instead of dialogue, it resorted to the use of force. Government

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courted the crisis by stopping the payment of salaries of our members citing president Buhari’s budget speech as a directive and they insist that the university must enrol on the IPPIS platform at a time

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we thought we are engaging ourselves. “We have responded positively, we resent and resist the logic of force. It should be recalled that during our meeting with President Buhari on

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Wednesday 18 March 2020

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Wednesday 18 March 2020

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Barge operators in tango with Customs over movement of containers from Lagos ports

igeria’s registered barge operators who move about a thousand containers away from the tow Lagos ports daily are scrambling to resume operations after a shocking disruption of their work by the Nigeria Customs Service (NCS) comptroller general. BusinessDay learns that the leadership of the barge operators held a meeting with the Comptroller General Tuesday where an understanding was reached that the barge operators should return to work today. In a March 12, 2020 letter signed by A. Chidi, a deputy comptroller general in charge of enforcement and investigation, the barge operators were told to halt movement of containers with immediate effect. The letter said the comptroller general had received “intelligence that the use of barges to evacuate contain-

ers in and out of our ports is being abused to the extent that containers are being diverted to illegal warehouses.” There are about 30 registered barge operators in Nigeria but only 10 of them are identified as major players in a business that has grown out of the traffic chaos in Apapa. There are now six operational jetties located in Ikorodu, Epe, Mile 2, Kirikiri, Abule Oshun and Agbara. In their first rear of operation, the barge operators moved above 200,000 containers from the Lagos ports. In a statement, Edeme Kelukeme, president of the Barge Operators Association, said, “While we recognise the responsibility of customs over laden containers it is also important to highlight the significant mandate that customs has towards trade facilitation. “Within just a year or operations, members of BOAN have evacuated well over

300,000 TEUs of import containers, excluding empties and export, representing about 25% of total TEU recorded in the country,” Kelukeme said. The association liken the solution they provide to taking out over 600,000 trucks moving in and out of the Lagos ports and hoped that the matter can be resolved amicably. “It is therefore imperative to call upon the leadership of the Nigerian customs service to immediately reverse this circular and engage with critical stakeholders on how to address their concerns,” the barge operators said. According to them, “The economy is currently facing multiple challenges of sudden crash in oil prices, fear of devaluation of the naira and trade disruptions occasions by the global Covid-19 outbreak and it will be inimical to add more to these challenges.”

We’ll employ more female staff, says APM Terminals’ boss, Martin Jacob AMAKA ANAGOR-EWUZIE

part of its drive to achieve greater inclusion and gender diversity, APM Terminals Apapa, has joined people around the world to celebrate the 2020 International Women’s Day (IWD) with a commitment to consciously increase the number of female employees in its payroll. Addressing female employees of the company, Martin Jacob, managing director of APM Terminals Apapa, reiterated the company’s determination to continue to engage more women based on competence in order to improve the company’s performance. He urged the female em-

ployees to continue to raise the standards at their duty posts to support the company’s drive towards gender diversity and increase opportunities for other women. As part of activities marking the event, female employees of APM Terminals also visited Immanuel Anglican School Apapa, where career talks and books were donated to the female students. Temilade Ogunniyi, commercial manager of APM Terminals Apapa, who led the female staff on the visit, said, the company needs women to not only raise the bar but to be able to meet the global expectations of diversity. “If we are not raising the bar, there is no way we would be able to compete with the

male folks. So, we want everything to be equal. We want equal number of females versus equal number of males in every way,” Ogunniyi said. Nwimo Uju, principal of Immanuel Anglican School, expressed appreciation to APM Terminals for identifying with the school to mark the International’s women’s Day. The International Women’s Day, globally recognised on March 8, is a celebration of the social, economic, cultural and political achievements of women. This year’s IWD celebrated with the theme, ‘I am Generation Equality: Realising Women’s Right,’ also recognises that gender balance is essential for economies and communities to thrive.

Lagos explosion: Uncertainty hangs over property owners as FHA, Lagos to scrutinise building plans CHUKA UROKO & JOSHAU BASSEY

eyond the large-scale destruction in human and material resources recorded from last Sunday’s explosion in Abule Ado, a Lagos suburb, an uncertain fate may be hanging over property owners in the area as BusinessDay findings show that many of them do not have building permits and plan approvals. Though Lagos State government is still in the process of unravelling the cause of the explosion, Ibrahim Farinloye, spokesman for the National Emergency Management Agency (NEMA), has said that it was triggered when a truck hit some gas bottles stacked

up in a gas processing plant near a pipeline. By the last count, the explosion had caused over 17 deaths, injury to hundreds of others, the burning of over 100 houses rendering thousands homeless and the burning of many vehicles. The explosion has raised concerns over lax regulations as several of the affected housing developments, it was learnt, had been carried out in contravention of the state government’s physical and urban planning regulations. Sources within the state government and the Federal Housing Authority (FHA) informed that after the dust raised by the explosion might have settled, many of the affected property would be www.businessday.ng

denied redevelopment approval. A source in FHA who did not want to be named told BusinessDay that many of those houses were built on gas pipeline because there were no regulations or building approvals, recalling that the housing authority had been in legal battle with those ‘land grabbers’ for some years now. “Recall that the housing authority has been in long drawn legal battle with these people who have been building and living illegally on government land. The main subject of contention is the area referred to as Festac Extension. The affected area in Abule Ado is part of this subject matter,” the source said. https://www.facebook.com/businessdayng

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Wednesday 18 March 2020

BUSINESS DAY

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Nigeria records 61% start-ups’ failure rate in 9 years … among top 10 African countries with high failure rates BUNMI BAILEY

ailure rate for start-ups in Nigeria, Africa’s biggest economy, has averaged 61 percent from 2010 – 2018, according to the latest The Better Africa report, by Weetracker, an African digital media company. The top 10 countries that experienced the highest shutdown rates among start-ups were Ethiopia (75%), Rwanda (75%), Ghana (73.91%), Zimbabwe (66.7%), The Democratic Republic of the Congo (66.7%), Tanzania (62.50%), Nigeria (61.05%), Senegal (58.3%), Somalia (60.0%), and Kenya (58.7%). The methodology was simple. GreenTec Capital Africa Foundation used a sample of 500 start-ups either headquartered or operating in Africa. The sampled start-ups founded in or after 2010 were from 32 African countries spanning across 23 industries. According to Femi Egbesola, national president, Association of Small Business Owners of Nigeria (ASBON), the inconsistency of government policies, not having the right skills, insufficient access to funding, high cost of registering business are the major reasons for the failure rate of Nigerian start-ups. “Government policies are not stable and this has been limiting the success rate of start-up businesses. The high poverty rate in Nigeria also makes many start-ups not to go for the right businesses and right skills. “Furthermore, the weak economy of Nigeria has made it difficult to access funding and the

infrastructure to help business has not been enough. Also, the government have not given soft incentives like tax holidays, reliefs and intervention loans to businesses,” Egbesola further said. Over the past few years South Africa, Kenya and Nigeria have become hubs of start-up creation. In 2019, Nigeria raked in $663.24 million worth of start-up investments, followed by Kenya and South Africa. But when it comes to the trend in shutdowns, Nigeria experienced more shutdowns at 61.05 percent as compared to the other two countries. The Nigerian economic factors can frustrate any start-up that wants to sacrifice for some years before making a profit. The recession and forex drought witnessed in 2016 cost Jumia and Konga, Africa’s top online retailers 70 percent of sales as most of their goods are imported. According to the U.S. Small Business Administration (SBA), one out of three small businesses in Nigeria went bust within 18 months of establishment. Damilola Adewale, an economic researcher said that it is not surprising as most startups are basically set up due to lack of jobs. “The high business mortality rate is due to factors such as poor marketing strategy, inability to identify the right consumers, no business plan, wrong business locations, inability to move with growing treads, managerial deficiency, poor visibility and their inability to conduct research in the market that they are operating,” Adewale further added.

Economy: Return Nigeria to agriculture to cope with oil price - Senate urges

Covid-19: Sanwo-Olu visits airport, insists on screening of persons arriving Nigeria

... as FG releases N340bn to critical sectors

Joshua Bassey

Solomon Ayado, Abuja

enate has stated that unless Nigeria returns fully to agriculture, the country will end up over-dependent on oil and unable to cope with the sharp drop in crude prices. Relatedly, the Senate said in a report that the capital releases for the first quarter commenced by the second week in March with the sum of N340 billion being released to critical sectors of the economy. The sectors are transport, agriculture, works and housing, health, and other social and real sectors. Also, the Senate has disclosed that the effects of the sharp drop in the crude oil price will be felt with the effect from May, June, and July. This was contained in a report of the joint Senate committee on Finance, Appropriations, National Planning and Economic affairs and petroleum resources, on the sharp drop in oil prices and other economic issues occasioned by the outbreak of coronavirus. The report was presented in plenary by the chairman of the joint committee, Adeola

Solomon Olamilekan (APC, Lagos West). Specifically, the Senate noted that the nation’s dependence on oil as its major source of income was due to the shallow policy in agriculture. Consequently, to boost the nation’s economy and enhance ease of doing business, the Senate has insisted that the government should as a matter necessity, “show more commitment in returning the country as a major leader in agricultural produce both within and outside the African Continent.” It pointed out that Nigeria was the leading producer of cocoa but due to lack of commitment has overtaken by Ivory Coast as number one producer, since the advent of crude oil. Adeola, while presenting the report, explained that the joint committee sought expert ideas on the need to prioritise both the Social and real sectors of the economy, looking at their importance to the overall benefit of Nigeria; loss of revenue as a result of Gas flaring which runs into several billions of dollars; devaluation of naira; removal of oil subsidy among others.

ollowing the confirmation of the third case of Covid-19 in Nigeria, the Lagos State governor, Babajide Sanwo-Olu, was at the Muritala Mohammed International Airport, Tuesday, where he insisted that people arriving Nigeria from other countries must be thoroughly screened. Sanwo-Olu told security officials at the airport that nobody was above the law, and that the situation did not call for any compromise. The governor, who inspected facilities at the airport, urged all stakeholders in the aviation sector to step up the preventive measures against the coronavirus pandemic. Sanwo-Olu was received by the acting director-general of Federal Airport Authority of Nigeria (FAAN), who conducted him round the premises. Sanwo-Olu said: “It’s actually a working visit, 60 percent of international travel come in through Murtala

NNPC team moves in to repair pipeline damaged by Abule Ado explosion OLUSOLA BELLO

aintenance team of the Nigerian National Petroleum Corporation (NNPC) has moved in to repair the portion of system 2B Pipeline affected by the Abule Ado explosion on Sunday. The action of the NNPC team was as a result of the fire which reignited from the pipeline at about 5.10 am on Tuesday, Mele Kyari, managing director of the corporation, said in a tweet Monday. A combined team of NNPC, Naval personnel, Lagos State officials and Federal fire service effectively controlled the fire and took steps to forestall it reignition, Kyari said. Residents of the place told BusinessDay on Tuesday that security agents have barricaded the place, barring human and vehicular traffic on the road leading to the scene of the blast. Kyari said the fire re-ignition on the pipeline started as a result of the residual fires in the neighbourhood. He sympathised with the people and government of Lagos State on the loss of lives and property and expressed deep appreciation for the timely response and interventions of the men of Fire Services, security agencies, the Red Cross, and other stakeholders. According to him, the en-

…as fire reignited from it croachment on the NNPC pipeline right of way (ROW) by gas vendors and construction of houses led to the explosion and aggravated its impact. He said the NNPC was working with the Lagos State government and security agencies to clear the ROW. The strategic products pipeline which is known as system 2B serves the entire southwest. It starts from Atlas Cove in Lagos and supplies products to Mosimi, Ejigbo, Ibadan, and Ilorin depots. The explosion at a gas processing plant on Sunday killed at least 19 people and destroyed about 50 buildings after a fire broke out in Abule Ado, a suburb of Lagos. NNPC said the explosion was triggered after a truck hit some gas cylinders stacked in a gas processing plant near the corporation’s pipeline in Abule Ado. The impact of the explosion led to the collapse of nearby houses, damaged NNPC’s pipeline and forced the corporation to halt pumping operations on the Atlas Cove-Mosimi pipeline. NNPC has assured that the temporary shutdown of the petroleum products pipeline would not affect the normal supply of products to the Lagos and surrounding towns. www.businessday.ng

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Muhammed International Airport. It is no longer news that we have the third index case, we need to heighten our preventive measures, that is why we have come to encourage our teaming staff. “We have information that other borders are doing the same thing. Everyone coming in through our boarders must be properly screened, nobody is above rules and regulations, and nobody must be spared because coronavirus knows no colour, race or tribe. We came here to commend you and assure you that we are not dropping our guards.’’ The governor said he was, however, impressed at the level of screening at the airport, and commended the health officials on ground. The general manage, Aeromedical Standard, Wilfred Haggai, while addressing Sanwo-Olu, said the public health emergency team had been set up since the time of Ebola, and they have been working together since 2014.

Wednesday 18 March 2020

BUSINESS DAY

POLITICS & POLICY How EDO APC factions react to Appeal Court’s judgment on Oshiomhole …As PFN president warns urges politicians to embrace peace IDRIS UMAR MOMOH & CHURCHILL OKORO, Benin

wo factions of the All Progressives Congress (APC) in Edo State on Tuesday differed on the Appeal judgment that ordered a stay of execution of the suspension of Adams Oshiomhole as the National Chairman of the party by a Federal Capital Territory (FCT) High Court, Abuja. The two factions are led by David Imuse and Anselm Ojezua. While David Imuse-led faction is loyal to the national chairman of the party, while those led by Anselm Ojezua are loyal to the state Governor, Godwin Obaseki. Reacting to the Court of Appeal’s judgment, loyalists of Oshiomhole at a press conference in Benin City, described it as a moment of sober reflection for the party in the state. Pius Odubu, the immediate past governor, who on behalf of other governorship aspirants and party members, however, accused the state governor, Godwin Obaseki of spearheading attempts to remove his predecessor from office.

Odubu said the Court of Appeal ruling that quashed the suspension of Oshiomhole as National Chairman of the party, would linger in their memories as a day of victory for justice, due process, for light transcending darkness, rule of law, for upholding constitutionalism and respect for party supremacy and internal mechanism of conflict resolution. “While we appreciate our party faithful for their steadfastness and resilience in the midst of these injustice, oppression and provocations, we need to assure them that the Egyptians they see today, they shall see them no more from the 12th of November, 2020,” he said. He however, commended President Muhammadu Buhari whose decision as the leader of the party helped to cancel the illegal NEC meeting, which he said would have caused implosion in the party. He also commended the National Leader of the Party, Bola Tinubu, Progressive governors of APC, National Assembly members, NWC members, among others, who stood in defence of the party supremacy and Oshiomhole in appreciation of

Adams Oshiomhole

his sacrifices for the party. However, the Anselm Ojezua-led faction of the party also commended President Muhammadu Buhari and the Progressive Governors Forum (PGF) for intervening in the political crisis rocking the party in Edo and other parts of the country. Ojezua opined that the president’s intervention to forestall zero-sum outcomes

was timely as the crisis was already approaching a dangerous climax. He however, added that there was a second chance for possible reconciliation. According to him, “President Buhari’s intervention saved the party from possible implosion. I give credit to President Muhammadu Buhari and the Progressive Governors Forum for halting

a very dangerous situation. “The party was moving towards a dangerous situation as all sides had taken very extreme positions and the fear was that the party could implode. “APC opted for a second look at the possibility of reconciliation, particularly since a reconciliation committee has been set up but yet to commence work,” he said. According to Ojezua, “These past few days, everybody has had their fair share from the tension that arose from political activities. A lot has been achieved in terms of sending clear messages to those concerned particularly the National Chairman, Comrade Adams Oshiomhole, who has learnt a lot of lessons these few days.” Ojezua however, hoped that the national chairman of the party would maintain peace in order to properly put things in focus and generate the kind of reconciliation required. Meanwhile, Felix Omobude, the national president of the Pentecostal Fellowship of Nigeria (PFN), has urged the political class in Edo State not to do anything that could set the state

on the path of retrogression. Omobude, who is also the General Superintendent of Gospel Light International Ministries (a.k.a the New Covenant Gospel Church (NCGC) with headquarters in Benin City), made the call in a statement made available to newsmen in Benin-City. He also called on members of the political class, particularly leaders of the APC in the state, to settle their differences and give peace a chance. According to him, it’s painful that the two main actors in the ongoing crisis in the APC (Comrade Adams Oshiomhole and Governor Godwin Obaseki), are illustrious sons of the state who have contributed immensely to the development of Edo State. “It’s a pity that they both know the right thing to do but unfortunately decided to do otherwise. They should learn to forgive each other and tell their followers to accommodate one another. “They should be told that Edo State belongs to all of us and that the people need peace to be able to support and vote for them during elections”, he said.

‘In defiance of Buhari’s peace efforts, Odubu attacks Obaseki’

COVID-19: Atiku calls for reduction of price of PMS, suspension of Stamp Duty

…As governor’s aide urges Oshiomhole to denounce verbal attacks

Innocent Odoh, Abuja

pecial Adviser to the Edo State Governor on Media and Communication Strategy, Crusoe Osagie, has said that a former Deputy Governor of the state, Pius Odubu was sabotaging the peace efforts by APC governors and President Muhammadu Buhari. In a statement, Osagie said less than 24 hours after the peace initiative by the President and the governors in Abuja, Odubu has launched a barrage of attacks on the person of the governor, a situation that jeopardises moves to restore peace to the All Progressives Congress (APC), a party that has become severely troubled. He challenged the party’s National Chairman, Adams Oshiomhole to publicly de-

nounce the attacks by Odubu, on Governor Godwin Obaseki in the spirit of the peace efforts by the President and the party, as Odubu has been a known frontline speaker for Oshiomhole during the crisis that preceded the current peace initiative. According to him, “It is unfortunate that less than 24 hours after a reconciliation is being forged around the consultations between President Muhammadu Buhari and all governors elected under the APC, including Governor Godwin Obaseki, Dr. Pius Odubu, a frontrunner in the factionalisation of the APC in Edo State under the supervision of the National Chairman of the party, Comrade Adams Oshiomhole, has kicked off personal attacks on Goverwww.businessday.ng

nor Obaseki. “It is clear that these characters neither mean well for the party nor do they mean well for Comrade Oshiomhole. They would rather continue to stir crisis and disrupt the peace in the state and the party. We, therefore, call on the Presidency to take note of this trend aimed at rubbishing all the efforts by President Muhammadu Buhari and the APC governors to bring peace to the party at all levels.” He added, “We challenge Comrade Oshiomhole to come out to publicly denounce the irresponsible comments if he does not subscribe to them, failure of which proves that he is actively in support of the renewed attacks on the governor.”

ormer Vice President and Presidential candidate of the People’s Democratic Party (PDP) in the last election, Atiku Abubakar has called on the federal government to reduce the pump price of Premium Motor Spirit (PMS), otherwise known as petrol as part of a decisive economic action to protect the Nigerian people from the ravaging effects of the COVID -19- the Coronavirus. Atiku made this call in a statement he personally signed on Tuesday, even as he also called for temporary suspension on Stamp Duty on all types of accounts until such a time when the nation has turned the tide in the fight against the virus. “Every action that can be taken to ease the cost of doing business in Nigeria and

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reduce the cost of living, while promoting consumer confidence must be implemented. “As such, I recommend that policies like the Stamp Duty on all types of accounts be temporarily suspended, until such a time as the nation’s economy has turned the tide in the fight against this virulent scourge. “Furthermore, as the landing cost of Premium Motor Spirit, also known as petrol, has reduced significantly, it is strongly recommended that the government should not absorb the savings, but should pass it on to the Nigerian people by way of reducing the pump price of PMS to reflect the current prevailing market costs,” Atiku noted. Apart from these measures, Atiku also urged the government to encourage large scale industrialists and employers of labour not to disengage workers because @Businessdayng

of the virus. “Definitely, this scourge will affect their production and profitability. However, if they know that the government is behind them and will do all to support them, they are less likely to disengage workers,” he said. He called for all hands to be on deck in a multi-partisan manner to ensure that Nigeria does not return to economic recession. He added that this is possible with decisive leadership and disciplined management. “These are extraordinary times, and we as a nation must take extraordinar y measures to protect the entire nation. Nigeria is our collective home, as such, we must suppress every partisan disagreement and think and work patriotically to ensure our national survival in the midst of global uncertainty,” he said.

Wednesday 18 March 2020

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

World on lockdown: West closes borders and orders isolation France and Northern California order residents to stay home as Merkel shuts retailers Guy Chazan, Victor Mallet, Hannah Murphy and Demetri Sevastopulo

overnments in all large western economies took drastic measures to limit public movement on Monday, closing borders, shutting down retailers and ordering citizens to stay in their homes in an urgent effort to arrest the spreading coronavirus pandemic. The most extreme measures were taken in France and Northern California, where authorities imposed Italian-style prohibitions on anyone leaving their homes, while Brussels proposed a 30-day ban on all “nonessential travel” into the EU. President Emmanuel Macron barred the French from anything other than essential outings for at least two weeks, although residents would be allowed to shop for food, take exercise and go to work if it was impossible for them to do their jobs remotely. “We are at war,” Mr Macron said in a nationally televised address. “Never has France had to take such decisions, albeit temporary, in time of peace.” San Francisco and much of the surrounding Bay area imposed similar measures, ordering all residents to “remain in place” with exceptions for “essential needs” only. “We know these measures will significantly disrupt people’s dayto-day lives, but they are absolutely necessary,” said London Breed, San Francisco’s mayor, who acted in concert with authorities in nearby Santa Clara, Marin, Contra Costa, San Mateo and Alameda counties. “These measures will be disruptive to everyday life but there is no need to panic.” The moves come a day after Spain

followed Italy by instituting its own national home confinements. The lockdowns were in response to the exponential growth of cases in Europe and the US, with European diagnoses growing from 2,200 at the start of March to 54,000 on Sunday. As of Sunday, the number of cases of Covid-19 outside China had surpassed the number inside China. In the US, which has more than 4,200 reported cases, President Donald Trump introduced new recommendations that included avoiding gatherings of more than 10 people, refraining from unnecessary travel, and shunning bars, restaurants and public food courts. “If everyone makes these critical changes . . . we will rally together as one nation and we will defeat the virus,” Mr Trump told a White House news conference. “We would much rather be ahead of the curve than behind it.” We are at war. Emmanuel Macron, French

president When asked if he was considering imposing a nationwide quarantine, Mr Trump replied: “At this moment, no.” Anthony Fauci, head of the US National Institute of Allergy and Infectious Diseases and member of the White House’s coronavirus task force, said the new guidelines were not an overreaction: “We hope that the people of the US will take them seriously.” Although Germany stopped short of imposing the same kinds of restrictions on internal movement as neighbouring France and Italy, Chancellor Angela Merkel announced a shut down of shops, churches, sports facilities, bars and clubs. Ms Merkel admitted the measures were “drastic” and unprecedented in Germany’s postwar history. “But we have to do this right now to reduce the number of contacts and with it the number of . . . serious illnesses,

and so prevent our health system coming under excessive strain,” she told reporters. Under the provisions agreed by Ms Merkel’s cabinet and the governments of all 16 of Germany’s states, all shops will be closed, apart from those selling food and drink. Banks, chemists, petrol stations, newsagents, as well as certain other categories of retail businesses such as laundromats, will also be exempt from the ban. Ms Merkel declined to say how long it will last. “The more people comply with these restrictions and regulations, the quicker we’ll get through this phase,” she said. The shutdown was announced hours after Germany imposed controls on its borders with France, Switzerland, Austria, Denmark and Luxembourg. Traffic jams quickly began building up on some of Germany’s key border crossings. Coronavirus business update How is coronavirus taking its

toll on markets, business, and our everyday lives and workplaces? Stay briefed with our coronavirus newsletter. Sign up here Ursula von der Leyen, president of the European Commission, attempted to check the erection of further national border controls within the EU by proposing a ban on all travel into the EU and four non-EU countries that are part of Europe’s passport-free Schengen zone. Mr Macron has been particularly outspoken in opposition to national governments reimposing border controls unilaterally, and participants in a conference call of EU leaders on Monday said the French president pushed hard for a pan-European response instead. “We must co-ordinate the measures we take to avoid a negative impact on our people, our economies and our supply chains,” said Ms von der Leyen. Canada also moved to imposed its own ban on most foreigners entering the country, though Americans are to be exempt from the restriction because of the close economic integration of the two countries. “If you are abroad at this time, it’s time to come home while it is still possible to do so,” warned Justin Trudeau, the Canadian prime minister. Mr Trudeau made the announcement from the front yard of his Ottawa home, where he is under a twoweek period of self-isolation after his wife, Sophie Gregoire Trudeau, tested positive for the virus. Russia also said it would close its borders to all foreign citizens from Wednesday for at least six weeks. Russia has already closed off its land borders with China and Belarus and banned flights to most foreign countries, with the exception of some capital cities.

New accounting rules pose threat to banks amid coronavirus crisis IFRS 9 said to make lenders more susceptible to highs and lows of economic cycles

Laura Noonan, Stephen Morris and Martin Arnold

ew accounting rules could cripple parts of the banking sector by forcing earlier recognition of loan losses, as the coronavirus pandemic threatens to push the world into recession. “There is a problem with the new accounting rules,” which would “increase provisioning in a dramatic way”, one member of the European Central Bank’s governing council told the Financial Times, referring to sweeping changes to the way loans are accounted for. The adoption of Europe-led accounting standard IFRS 9 has a “procyclical effect”, the person warned, which would make banks more susceptible to the highs and lows of economic cycles.

IFRS 9 requires banks to take earlier provisions for loans going bad, especially when they cross key thresholds such as a “material change in circumstances”. This forces banks to take provisions for the entire lifetime of a loan. Meanwhile, US banks have been operating under a new standard, dubbed “current expected credit losses”, since the start of the year. This requires them to book lifetime loan losses as soon as there is reason to believe a loan will not be repaid in full. The old method for both jurisdictions was to book provisions only when customers actually missed payments. IFRS 9, I hate it as a rule, but relaxing accounting standards in a crisis just doesn’t look right European banking executive www.businessday.ng

“If we were still under an ‘incurred loss model’ many companies could likely overlook the current economic issues as long as the creditors are currently paying on time,” said Janet Pegg, an analyst at Zion Research Group, of the situation in the US. Despite multiple pledges of capital relief for the banking system, stock markets continued to sell off on Monday as the eurozone shut its borders, airlines cancelled tens of thousands of flights and factories announced closures. An index of European and UK banks has fallen 44 per cent in the past month to a level last seen in the 1990s. The four biggest US lenders by assets plunged a fifth on Monday morning. Some bank executives said they are concerned that higher loan-loss

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provisions will absorb much of the capital relief announced by central banks, leaving little left over to be lent on to companies seeking new emergency credit lines. “We don’t have hard estimates yet for the impact [ . . .] but IFRS 9 will become a real pain for banks,” said one bank executive. UBS’s Jason Napier said the fallout from coronavirus was “the first real test” of IFRS 9 since it was introduced in 2018. Kian Abouhossein, an analyst at JPMorgan, said the change in approach meant about 50 per cent of total loan losses would come in the first year, whereas historically 60 per cent of loan losses were spread over the first two years. Signs of a backlash against the rules already exist. The Association of German Banks has started lob@Businessdayng

bying for a “more flexible handling” of risk provisions under IFRS 9, and has warned that the existing accounting rules could “massively amplify” the looming crisis. Under the current regime, German lenders would be exposed to “excessive risk provisions and capital needs”, it said. Jérôme Legras, head of research at Axiom Alternative Investments, said the ECB had done a “good job” with its relief and stimulus package last week, but “it’s only halfway there”. “They need to talk about the loans,” he said. “Someone needs to say in a very clear way ‘we are not doing IFRS 9 for the next year or so’.” However, JPMorgan’s Mr Abouhossein cautioned: “To make accounting rules suddenly flexible for certain periods [ . . .] reduces the confidence in the system.”

Wednesday 18 March 2020

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Renaissance tripped up by coronavirus-induced market turmoil Secretive quant hedge fund endures one of its worst months in more than a decade Ortenca Aliaj, Robin Wigglesworth and Miles Kruppa

enaissance Technologies, one of the world’s biggest hedge funds, has been tripped up by the market turmoil unleashed by the coronavirus outbreak, underscoring how even the industry’s brightest names are struggling to navigate the financial chaos. It has been a rocky year for the $75bn computer-powered “quantitative” hedge fund. Renaissance’s stocks-focused fund had one of its worst months in more than a decade in February after losing more than 7 per cent. It managed to pare back some of those losses in the first week of March but suffered another setback when the turmoil worsened last week. The Renaissance Institutional Equities fund is down 12 per cent year-to-date, while Renaissance’s Institutional Diversified Alpha fund has declined by 10 per cent. RIEF was down approximately 5.5 per cent this month through to the end of Friday, according to two people briefed on the numbers, after gaining close to 5 per cent in the first week of March. RIDA was down 7.4 per cent this month, erasing gains of 5 per cent through the first week of this month. Renaissance declined to comment.

Coronavirus business update How is coronavirus taking its toll on markets, business, and our everyday lives and workplaces? Stay briefed with our coronavirus newsletter. Sign up here Renaissance is secretive, even by the standards of the hedge fund industry. But it is one of the investment industry’s most fabled groups, having helped pioneer the trend of using computers and algorithms to unearth faint

but persistent signals in a sea of data. That even Renaissance has stumbled reveals the turmoil in markets. Investors belatedly started grappling with coronavirus in February, but the turbulence that started last month has paled next to the mayhem that has enveloped markets in March. Despite the Federal Reserve’s moves to support economic growth and buttress financial markets — culminating in slashing

rates to near zero and restarting its quantitative easing programme on Sunday — markets have remained exceptionally rocky. The S&P 500 tumbled 12 per cent on Monday — its biggest oneday fall since “Black Monday” in 1987 — and extending its tumble from a February peak to almost 30 per cent. The Vix index of volatility lept beyond its financial crisis-era high. “A pandemic sweeping across the globe leaving unprecedented

human turmoil in its wake while also abruptly freezing economic activities has brought the longest bull market in US history to a crashing and swift end,” said Jim Paulsen, chief investment strategist at The Leuthold Group. The ferocity of the turbulence has hammered many investment groups, including hedge funds that can seek to profit both from markets rising and falling. HFR’s global hedge fund index was down 4.5 per cent in the month through to March 13. Equity hedge funds had lost 9 per cent, and after Monday’s mayhem the losses will probably be even more severe. Renaissance Technologies was founded by the geometer and former Cold War codebreaker Jim Simons in 1982. After struggling to make headway in consistently using computers and complex models to unearth lucrative trading patterns, it eventually started racking up profits, the like of which the investment industry has rarely seen, both in terms of size and consistency. Its flagship fund Medallion was so successful it kicked out external investors in 2005, and has since only managed the wealth of Renaissance’s executives. Mr Simons said last year that it had delivered an annual average return of about 40 per cent since 1988 — even after charging employees an unusually large fee for keeping their money in the vehicle.

Wall Street opens higher a day after market rout

Investors still on edge amid fears over economic impact of widespread shutdowns Philip Georgiadis, Hudson Lockett, Daniel Shane and Leo Lewis

S stocks opened higher while European equities came under fresh bouts of pressure in another day of hectic trading across global markets. The S&P 500 opened just over 2 per cent higher on Tuesday, a day after the worst selloff to hit Wall Street since 1987. The FTSE 100 swung throughout the session, with London’s blue-chip benchmark 1 per cent lower by early afternoon, having opened up 3 per cent before selling off. The European composite Stoxx 600 was also down 1 per cent, having lost more than a third of its value in less than a month. Investors have warned that any rebound would likely be shortlived without firm indications that Europe and the US were bringing the coronavirus

outbreak under control. The health crisis has brought activity in large parts of Europe to a virtual standstill, and there are lingering questions over how effective monetary and fiscal policy can be to mitigate its effects. Jim Reid, a strategist at Deutsche Bank, said “the impact of the various western world shutdowns will mean that at its peak the Covid-19 impact on the global economy will probably be worse than the peak of the financial crisis”. The UK and US were set to outline rescue packages for businesses on Tuesday, while France promised a €45bn economic aid package as it forecast its economy would contract this year. There are “few reasonable economic comparisons” to this situation, said Paul Donovan, chief economist at UBS Global Wealth Management. “Wartime language suits politicians, but wartime maxiwww.businessday.ng

mises production. Lockdowns minimise production,” he added. Earlier, Asia-Pacific markets rose in another volatile session. Australia’s S&P/ASX 200 stock index jumped 5.8 per cent after plunging nearly 10 per cent a day earlier. Japan’s Topix was 2.6 per cent higher after earlier falling as much as 3 per cent. John Woods, Asia-Pacific chief investment officer at Credit Suisse, said despite the recent sharp losses he was still not recommending to his clients to re-enter equity markets without signs of stronger fiscal measures. “The knife is still falling,” he said. On Monday, the S&P 500 plunged 12 per cent in its biggest one-day fall since Black Monday in October 1987 as the US and other countries tightened restrictions on public movements to curb the spread of the virus. Many global stock indices have fallen into bear markets

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due to concerns the coronavirus will lead to a global recession this year. Mohammed Apabhai, head of Citi’s Asia-Pacific trading strategies group, said investors were increasingly concerned about a credit crunch in Asia’s corporate sector. “The equity sell-off is morphing into something much more serious. We now have three or four crises happening at the same time.” Moves such as the Federal Reserve’s one-percentagepoint rate cut are “welcome, but it’s not enough”, he said. On Monday the Bank of Japan said it would buy as much as ¥12tn per year of exchange traded funds to help stabilise markets. “You have got some buying in here based on the view, however unfounded, that the BoJ is going to buy big to protect the 1,200 line on the Topix [which is currently trading around 1,240]. I think the market is going to test a lot of @Businessdayng

these theories in coming days,” said one broker at a large domestic house. The Japanese yen, a haven during times of market uncertainty, weakened 1 per cent to ¥107 per US dollar. The 10-year US Treasury yield rose 0.06 percentage points to 0.81 per cent. Yields rise as bond prices fall. Sterling fell as much as 1.7 per cent to below $1.20, extending a slide that has seen it fall by more than 10 cents over the past week. Oliver Harvey, Deutsche Bank analyst, said that the currency is highly sensitive to souring mood in markets, which means that “sterling underperformance is likely to continue as long as market conditions remain stressed”. Brent crude, the international oil benchmark, was trading at about $30 a barrel having dipped below that mark overnight for the first time in four years.

Wednesday 18 March 2020

BUSINESS DAY

ANALYSIS

Europe’s café culture on front lines of coronavirus ‘catastrophe’ Small businesses like pubs and restaurants bear early brunt of continent-wide shutdown Victor Mallet and Daniel Dombey

he coronavirus pandemic is only the latest, if most severe, of the financial blows to hit the long-suffering Christophe in his two years running a corner café in the prosperous sixth arrondissement of Paris. “First, I had the gilets jaunes demonstrations, and then the strikes, and now this,” he said as his staff clear the refrigerators of food that will be given away following the French government orders to close schools, restaurants, cafés and non-essential shops. He added sardonically: “I expect the next thing will be an earthquake.” The small businesses that are the lifeblood of national economies in European countries such as Spain, France and Ireland have been stopped in their tracks by the rapid spread of the disease and the “social distancing” measures hastily adopted to control it. Economists say the direct and indirect effects of the small-business shutdown are likely to trigger a Europe-wide recession. Christophe’s woes are echoed throughout the left-bank districts of Paris whose streets are normally teeming with Chinese tourists, French flâneurs and international students. “Economically, it’s a catastrophe,” said Rémy Silva, who manages the Hotel d’Angleterre, once the haunt of Ernest Hemingway. In theory, hotels can stay open, but he is closing up because there are no takers for his 26 rooms. “We are going to completely lose two months. People are even cancelling a bit for May.” In Ireland, the government ordered the closure of 7,000 pubs on Sunday, causing deep concern in a sector whose busy season usually starts with the St Patrick’s day festivities, which fall on Tuesday.

A closed restaurant in the Champs-Elysées, Paris. France is spending billions of euros to prop up the economy © AFP via Getty Images

Willie Aherne’s family has run the Palace Bar in central Dublin since the 1940s. The business employs five full-time staff and another five part-timers. “A lot of lads are very emotional, very upset,” he said. In Spain, where the government has imposed a nationwide lockdown, small and mediumsized businesses are warning they will not be able to survive long without immediate, substantial help. “We don’t know what is going to happen from one day to another; each day is worse,” said Lucio Montero, who makes stands for exhibitions, conventions and fairs. “Thankfully, our company is economically healthy and doesn’t have any debt, but we won’t have any business until at least July.” Meanwhile, his company has €25,000 in fixed costs a month and is trying to negotiate rent reductions and more time to pay suppliers. “If I keep paying everything right now, we will have to

close next month,” he added. “The simplest thing would be to shut now and have done with it, but why would we want to do that?” We don’t know how long this is going to last, but it seems set to be a long time . . . We are very frightened Alejandro Sánchez, Spanish restaurateur Antonio Garamendi, head of the Confederation of Employers and Industries of Spain, which represents 2m companies and self-employed entrepreneurs, said companies with costs and no income would inevitably last “only a very short time”. “We have to be aware that the government’s move to impose a state of alert has practically paralysed the entire economy,” he said. “About 95-96 per cent of the companies in Spain are SMEs, so their contribution is hugely important.” Gilles Moec, Axa chief economist, said that in France output of “accommodation and food ser-

vices”, accounting for 2.8 per cent of gross domestic product, and “arts and recreational activities”, which make up 1.4 per cent, are likely to fall close to zero. A lockdown of six weeks in these two sectors alone, followed by the optimistic scenario of a return to normal, would chop 2 percentage points off French GDP in one quarter, even before the knock-on effects of lost spending power and reduced confidence. Add in declines in air travel, manufacturing and more, and the stage is set for a severe economic contraction. “It’s going to be big,” Mr Moec said. French ministers have moved quickly to reassure entrepreneurs and employees that they will spend whatever is required — “tens of billions of euros”, said finance minister Bruno Le Maire — to save jobs and prop up the economy for the duration of the coronavirus crisis. The eight laid-off employees

at Christophe’s café, for example, will be subsidised by the government for the duration of the shutdown and so will not lose their jobs, while he will be allowed to delay tax and social security payments — although entrepreneurs and staff complained on Monday that the online systems for accessing these benefits had been overwhelmed since the announcement of the shutdown. In Spain, Mr Garamendi’s confederation, the country’s leading business organisation, has joined forces with the unions in calling for immediate rule changes to make it easier for companies to suspend people temporarily, maintaining their benefits, rather than permanently laying people off. It is also calling for tax and social security payments to be deferred or annulled and for state guarantees for bank loans to help companies survive the coming weeks. “We need to prevent companies from failing because of this,” Mr Garamendi said. Alejandro Sánchez, a restaurateur in the mountain village of Robledo de Chavela, near Madrid, said: “We don’t know how long this is going to last, but it seems set to be a long time . . . We are very frightened.” When he closed his 45-seat restaurant on Friday, in line with government orders, Mr Sánchez did so in expectation that an emergency economic package would be unveiled the following day. But that has now been delayed to Tuesday. Even French entrepreneurs who will eventually benefit from the state’s largesse are worried for the future. Julien Frère-Mottant was on Monday closing the Paris florist he manages, giving away the remaining flowers in the shop to neighbours and sending the 10 staff home.

Investors clamour for ECB support in Italian bond slump Country’s bonds are sliding despite apology from European Central Bank president Christine Lagarde Tommy Stubbington and Martin Arnold

nvestors say the European Central Bank must ramp up its bond purchases if it wants to arrest one of the sharpest rises in borrowing costs for Italy and other eurozone members since the region’s debt crisis nine years ago. Italy’s 10-year bond yield surged above 2.1 per cent on Monday, up nearly 0.4 percentage points, as remarks made by ECB president Christine Lagarde last week continue to ricochet through debt markets. Italian spreads above German bonds — seen as a key measure of country risk in the eurozone — hit their highest level since last June. Spreads also widened to the most in more than a year in Spain and Portugal, as the sell-off rippled through eurozone bond markets, although borrowing costs remained well below the heights scaled during the 2011 crisis. “Italy, and other eurozone mem-

bers, needs to be able to deploy a fiscal response to the crisis at a cheap price,” said Ludovic Colin, a portfolio manager at Vontobel Asset Management. “The ECB can’t let this go further.” Ms Lagarde has come under criticism since saying at last Thursday’s ECB press conference that it is not the central bank’s job to “close the spread” in bond markets. She later tried to walk back the comment in a TV interview and apologised to her fellow governing council members on Friday, two people involved in the call told the Financial Times. Last week’s ECB decision gave it more ammunition to combat the fallout from the coronavirus, but it will not be enough Andrew Kenningham, Capital Economics But investors say the damage has been done, and only a decisive intervention in markets will demonstrate that Ms Lagarde retains the commitment of her predecessor Mario Draghi to hold down eurozone borrowing costs. www.businessday.ng

“It’s all well and good saying ‘sorry,’ but if they want to see some impact they’ll have to put their money where their mouth is,” said Mark Dowding, chief investment officer at BlueBay Asset Management. The ECB last week announced a €120bn expansion of its asset purchase programme this year, on top of the €20bn a month already committed. That still leaves the monthly pace of purchases well short of the €80bn seen at the peak of the ECB’s quantitative easing programme, and pales next to the Federal Reserve’s $700bn of purchases announced on Sunday. Some members of the ECB’s governing council indicated they would have preferred a bigger increase to the bank’s extra bond purchases at last week’s meeting. Several members of the ECB’s top decision-making group have since said publicly that it could further increase its target for bond purchases, while emphasising that it has flexibility to front-load the extra purchases and to focus on a par-

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ticular country’s bonds if necessary. The ECB’s chief economist, Philip Lane, said the central bank was “ready to do more” to contain any government debt stress. Fabio Panetta, another ECB executive board member, said: “If necessary, we can further expand the programme.” Peter Vanden Houte, an economist at ING, predicted the ECB would have to increase its bond-buying programme by an extra €100bn. “Last week’s ECB decision gave it more ammunition to combat the fallout from the coronavirus, but it will not be enough,” said Andrew Kenningham, chief Europe economist at Capital Economics. “We now think the bank will soon make an explicit commitment to keep sovereign bond yields low for all governments at least for the duration of the coronavirus crisis.” If Ms Lagarde wants to convince investors that the bank has plenty of ammunition to contain any dislocation in sovereign debt markets, one option is to relax its self-imposed rule to buy no more than a third of @Businessdayng

any government’s eligible bonds, Mr Kenningham said. However, the ECB believes it is not constrained in how many bonds it can buy, so there is no need to change those limits. Italy has announced plans for a €25bn spending package to shield workers and small businesses from the worst of the pandemic, which economists expect to plunge the country into a deep recession and to push its already-large national debt towards 140 per cent of its gross domestic product. Borrowing costs for the country, and for other former crisis hotspots, still sit far below their 2012 peaks. But if they rise much further, some investors could begin to question the sustainability of public finances, creating a self-reinforcing sell-off and over the long term, potentially reawakening questions about the make-up of the eurozone. Mr Dowding said: “If they don’t show up with the big bazooka, Lagarde could end up responsible for killing the euro.”

Wednesday 18 March 2020

BUSINESS DAY

NATIONAL NEWS

Anil Ambani vs Chinese banks: court case exposes stunning decline Once one of the richest people in the world, the Indian tycoon claims his net worth is now zero Benjamin Parkin

n March 2013, Bollywood was abuzz as Steven Spielberg came to town. At a glitzy gala to celebrate his visit to Mumbai, the world’s most famous film-maker mingled with a star-studded crowd and chatted on stage with legendary Indian actor Amitabh Bachchan. Seated at a table alongside the two was the party’s host, the man who made the visit possible: Mr Spielberg’s business partner and “dear friend” Anil Ambani, then one of the world’s richest men. The event cemented the reputation of Mr Ambani, the younger son of a corporate dynasty, as one of 21st-century India’s most glamorous tycoons. His foray into entertainment, including a tie-up with Mr Spielberg’s DreamWorks, added flamboyance to a business empire centred on telecommunications, power and finance. In 2008, Forbes named Mr Ambani as the world’s sixth-richest man with a fortune of more than $40bn. Yet in the intervening years, Mr Ambani has endured one of the most stunning reversals of fortune in recent corporate history. The extent of this decline has now been laid bare through a legal case in London which reaches a crucial stage this week, as a trio of Chinese banks pursue him for some $700m in unpaid loans they allege he personally guaranteed. The case prompted Mr Ambani to make the extraordinary claim last month that his net worth had plummeted to zero after many of his investments soured and his flagship telecoms business, Reliance Communications or RCom, went bankrupt. But his creditors — Industrial and Commercial Bank of China, the world’s largest bank by assets, China Development Bank and Export-Import Bank of China — allege that Mr Ambani, whose older brother Mukesh is now India’s richest person, continues to enjoy access to vast wealth. Not only does this include interests in companies around the world, they say, but an apartment building in exclusive south Mumbai, a private jet, a yacht worth tens of millions of dollars and a $3m fleet of cars. A judge has given Mr Ambani, who denies that he personally guaranteed the loans, until March 20 to pay $100m into court ahead of a trial. If a payment is not made, Mr Ambani’s defence can be struck out. “Mr Ambani has, and continues to have, a very lavish lifestyle,” Mr Justice Waksman said in a February judgment. “I just do not accept that his own available assets

are as limited or as negative as he says . . . He clearly has more assets and/or income than he is letting on.” Mr Ambani is appealing the order, saying the assets in question are not owned by him and that he has no funds at his disposal. Mr Ambani is among the most high profile of a generation of Indian tycoons who rode a wave of booming economic growth over the past decade, tapping easy credit to fuel labyrinthine, infrastructure-heavy conglomerates. But as India’s economy slowed, many of those bets soured. That has left the banks and other lenders that financed the group of industrialists, who are known locally as “promoters”, struggling to recoup billions of dollars worth of unpaid debts. The dangers of this cycle became apparent this month when private Indian lender Yes Bank, which had exposure to Mr Ambani’s companies, was taken over by the central bank amid fears that it would not survive — sending shockwaves through the financial system. Reliance Group said it is committed to repaying its debts to Yes Bank. The perceived lack of accountability for the industrialists who sit atop these crumbling groups has fuelled resentment at a time when India is suffering its most severe slowdown in years. “This is a very open secret that in India, the business goes bankrupt but the businessmen never go bankrupt. Their lifestyles never get affected,” says one former executive at an Indian financial group. “In a good year, it goes unnoticed. Because the economy is in a downturn . . . they are being pushed into a corner.” Mr Ambani spent some of his www.businessday.ng

early years in tenement housing in an unremarkable Mumbai neighbourhood, a far cry from the gilded life he would go on to enjoy. His late father Dhirubhai Ambani was one of 20th-century India’s most celebrated rags-toriches success stories, rising from petrol-pump attendant to lead a polyester-manufacturing empire. Mukesh and Anil first burst into public view in 2002 after Dhirubhai died without leaving a will, setting up a years-long dispute between the two brothers that drew comparisons with Bollywood family dramas and even the Sanskrit epic The Mahabharata, in which two branches of a family go to war with each other. The brothers divided their father’s businesses in 2005. While Mukesh took the oil products business under the Reliance Industries brand, Anil wrapped telecommunications and power into his Reliance Group. The spat continued, with Anil accusing Mukesh of reneging on a gas-supply deal and, separately in 2008, suing his brother for alleged defamation. In the same year, Mukesh used his first right of refusal under the terms of the divorce to scupper a deal that would have seen Anil’s RCom merge with South African MTN to create a transcontinental mobile phone giant. This is a very open secret that in India, the business goes bankrupt but the businessmen never go bankrupt. In a good year, it goes unnoticed. [But] Because the economy is in a downturn . . . they are being pushed into a corner Former Indian financial executive Anil told shareholders in 2009 that Reliance Industries “has tried

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every trick in the book, and apparently several outside the book, to back out of its solemn, legal and contractual obligations. It is plain and simple corporate greed.” Reliance Industries declined to comment. But their paths followed sharply different trajectories. Anil’s investments in power and infrastructure suffered, while RCom lost market share to rivals before being hammered by a newcomer into the sector: none other than his elder brother. Mukesh’s new mobile operator Reliance Jio, backed with tens of billions of dollars in investment, started a price war in 2016 that eroded revenues to a point where the number of private providers fell from around a dozen to three today. RCom quit the mobile sector in 2017, entering bankruptcy proceedings with around $7bn in debts last year after a deal to sell its assets to Jio fell through. In 2019, Forbes named Mukesh as India’s richest man with a net worth of $50bn. By contrast Anil’s lawyers told the High Court in February that Reliance Innoventures, the holding company owned by him and his family, had a net asset value of negative $412m at the end of 2019. “These stories are a combination of hubris and misfortune,” says Saurabh Mukherjea, founder of Marcellus Investment Managers in Mumbai. “India was a red-hot roaring economy, and it’s no longer a red-hot roaring economy. As the tide has receded these promoters have been left stranded.” As China Inc traversed the globe in search of returns over the past decade, India’s nascent mobile sector seemed a promising place to park. @Businessdayng

By loaning money to telecommunications tycoons, China’s state banks could help fund the purchase of equipment from the likes of Huawei and ZTE, aiding national champions while simultaneously tapping the credit market. Against this backdrop, ICBC, CDB and Exim in 2012 agreed to loan RCom almost $1bn. With foreign currency debt obligations due in March of 2012, Anil Ambani dispatched a senior RCom executive to Hong Kong in February on his behalf to sign off on the deal with the Chinese banks. The banks allege the deal included a personal guarantee making Mr Ambani responsible for the debt under English law. RCom had by 2018 defaulted on the repayments, prompting the banks to sue Mr Ambani in an English court last year. But Mr Ambani says he had no knowledge that, when he gave his lieutenant power of attorney to sign on his behalf, it would be used for anything more than a non-binding “comfort letter” assuring the banks that the debt would be repaid. Citing correspondence placed before the court detailing the negotiations, Mr Ambani’s lawyers argue there is no evidence that Mr Ambani ever authorised anyone to make a guarantee. Justice Waksman was critical in his assessment of Mr Ambani’s defence, observing that it would amount to “serious dishonesty” and deception by his executives without an obvious motive. “I consider that Mr Ambani’s evidence is inexplicably incomplete, implausible and highly unlikely,” the judge said in a December ruling. “I think it is highly probable that at trial his defence will be shown to be opportunistic and false.” The judge also said in February Mr Ambani had been “caught out on a lie” for suggesting he would not give a personal guarantee of such nature, after it was revealed in court filings that he had already done so to the State Bank of India. Reliance Group did not respond to a request for comment on the judge’s view that Mr Ambani lied. The company said in December that “Mr Ambani is confident that his position would be fully vindicated once all the facts and the entire evidence is before the court”. The Chinese banks called the case “a straightforward debt claim to recover outstanding loans made to RCom in good faith and secured by a binding personal guarantee given by Mr Ambani, which he has refused to honour. We remain very confident.”

Wednesday 18 March 2020

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Tuesday 17 March 2020

Top Gainers/Losers as at Tuesday 17 March 2020 LOSERS

GAINERS Company

ASI (Points)

Opening

Closing

Change

Company

Opening

Closing

Change

N27.95

N30

2.05

DANGCEM

N153

N137.7

-15.3

DEALS (Numbers)

MTNN

N93.1

N95

1.9

N19.95

N18

-1.95

WAPCO

N10

N11

ARDOVA

N15.3

N13.8

-1.5

VOLUME (Numbers)

STANBIC

N29.3

N30.25

0.95

NASCON

N9.5

N8.55

-0.95

ZENITHBANK

N12.8

N13.5

0.7

N5.75

N5.2

-0.55

CAP

INTBREW

VALUE (N billion) MARKET CAP (N Trn)

22,543.07 7,368.00 675,910,797.00 8.059 11.747

Global market indicators FTSE 100 Index 5,203.27GBP +52.19+1.01%

Nikkei 225 17,011.53JPY +9.49+0.06%

S&P 500 Index 2,493.01USD +106.88+4.48%

Deutsche Boerse AG German Stock Index DAX 8,838.89EUR +96.64+1.11%

Generic 1st ‘DM’ Future 20,722.00USD +461.00+2.28%

Shanghai Stock Exchange Composite Index 2,779.64CNY -9.61-0.34%

Stock investors lose N85bn as Dangote Cement spurs erosion of mid-day gains Stories by Iheanyi Nwachukwu

tock investors at the Nigerian Bourse lost about N85billion on Tuesday March 17, 2020. The market closed in the red zone, fuelled by the impact of the 10percent decline in the most capitalised stock –Dangote Cement. This negative came on the heels of record mid-day gain of about N150billion when investors were taking positions in some value counters. The ASI would have closed Tuesday session in the green, if not for Dangote Cement stock. The stock decreased from N153 to N137.7, losing N15.3 or 10percent, while Nigerian Breweries Plc advanced most from N27.95 to N30, adding N2.05 or 7.33percent. Zenith, GTBank, FBNH, Access and UBA were actively traded stocks on the NSE on Tuesday March 17. There is renewed fear of Coronavirus (COVID19) fol-

L-R: Bola Adeeko, head, Shares Services, Nigerian Stock Exchange, Mary Uduk, acting director General SEC and Isyaku Tilde, acting, executive commissioner operations, SEC during the International Conference on Nigerian Commodities Market in Abuja.

lowing its third case in Lagos, the country’s business capital. The Nigerian citizen returned into the country on March 13 from United Kingdom, one of the COVID19 high

risk countries like Italy and the United States. Besides the aviation and tourism sectors, COVID19 has also crippled international trade and rocked the capi-

Julius Berger to pay N3.63bn in proposed N2.75kobo final dividend …shareholders to get bonus of 1 new share for every 5 held

onstruction giant, Julius Berger Nigeria Plc proposes to pay its shareholders a final dividend of N2.75kobo per share. This amounts to N3.6billion considering the company’s 1.320billion shares outstanding. The proposed dividend will be paid to shareholders whose names appear in the register of members as at close of business on May 29, 2020, the company noted. This comes as the company proposes bonus in the proportion of one (1) new ordinary share for every five (5) existing ordinary shares held. At the Nigerian Stock Exchange (NSE), the shares of Julius Berger at N22.15kobo on Monday March 16 traded near its 52-week high of N27.50

against a corresponding period low of N18. With a record positive return of +11.3percent year-to-date (YtD), Julius Berger stock outperforms the NSE All Share Index (ASI) which has negative return of about -15.41percent same day. The dividend will be paid on June 19, 2020 according to the company in a note following its recently released full year audited financials for the year ended December 31, 2019.

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Julius Berger grew its group revenue by 36.9percent to N266.43billion as against N194.617billion in 2018. The group profit before taxation (PBT) increased by 36.49percent to N13.918billion from N10.197billion in 2018. The group profit for the review year stood higher at N8.75billion as against preceding year low of N6.10billion, representing 43.56percent increase.

tal market, with stock prices and bond plunging. Oil price neared $30 per barrel as recession fears, pump war weighed. The value of stocks listed on the Nigerian Stock Ex-

change (NSE) decreased to N11.747trillion as against preceding day high of N11.832trillion. The NSE All Share Index (ASI) also printed low at 22,543.07 points from a high of 22,705.19 points the preceding day. In 7,368 deals, investors exchanged 675,910,797 units valued at N8.059billion. The Nigeria stock market had since joined the global rout with year-to-date (ytd) return printing at a record negative of -16.02percent lately. It lost about N1.8trillion last week. “Given that there is no improvement in global outlook –depressed oil prices and the coronavirus pandemic –we think there is still a possibility of further declines,” said analysts at Coronation Research. All over the world, the outbreak of Coronavirus (COVID-19) has drawn the attention of monetary authorities. Notably, the US Fed tweaked its policy rate lower to zero, while launching a $700billion asset purchase

programme. Also, the Bank of England trimmed its policy rate by 50basis points (bps) – its first rate cut since July 2016. Also, the Central Bank of Nigeria (CBN) at an emergency meeting recently, joined the easing bandwagon as it released six initial policy measures, aimed at reducing the impact of the global pandemic on Nigeria’s economy. With international communities locked down, factories closed, trade slowing, and investor confidence plummeted during the prolonged fight against COVID19, there is no saving the Nigerian economy from the butterfly effect of the pandemic. “The impact of the coronavirus outbreak on Nigeria’s economy is likely to be significant, as it is poised to take a toll on critical economic sectors. “The situation is being made worse by the slide in crude oil prices as a result of a crude price war between Saudi Arabia and Russia”, said Mosope Arubayi’s team of analysts at Lagos-based Vetiva.

Govt urged to incentivise Commodities Trading

he Federal Government has been urged to incentivise the trading of commodities through the exchange as this will impact positively on the commodity ecosystem. This was part of the recommendations at the end of a 2-day International Conference on the Nigerian Commodities Market (ICNCM 2020), with the theme: Commodities Trading Ecosystem: “Key to diversifying Nigeria’s economy” organised by the Securities and Exchange Commission (SEC), in Abuja, Tuesday. Also, measures such as provision of high quality seedlings to farmers are critical to boost the quality of harvest and in the long run increase liquidity and competitiveness in the commodity market. According to the Communique issued at the conclusion of the conference, access to long-term funds through the Nigerian capital market was identified as critical towards

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the holistic development of the Agricultural sector adding that “Discourse should therefore revolve around how the capital market could create long term funding for Agriculture and Agri- businesses”. Participants agreed that Nigeria must decisively address the challenges across the entire gamut of the agriculture value chain in terms of access to finance by farmers, aggregation of smallholder farmers, storage, warehousing and transportation, establishment of efficient irrigation mechanisms to ensure year-round farming, availability of effective de-risking frameworks and the introduction of modern scientific solutions as well as cutting-edge equipment for mechanized farming. The regulator on the other hand, was urged to remain an impartial enabler and promoter, providing a framework for exchanges, institutions and participants in the commodities ecosystem to thrive. @Businessdayng

Zenith Bank says no binding offer to acquire any financial institution

enith Bank Plc has said that it has not made any binding offer to acquire any financial institution. The tier-1 lender said this in a March 17 note to investors following certain internet and social media reports (not BusinessDay) suggesting a proposed acquisition of Union Bank Plc by Zenith Bank Plc.

Wednesday 18 March 2020

BUSINESS DAY

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Wednesday 18 March 2020

BUSINESS DAY

Live @ The STOCK Exchanges Prices for Securities Traded as of Tuesday 17 March 2020 Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 215,048.62 6.05 10.00 563 92,028,374 UNITED BANK FOR AFRICA PLC 181,256.93 5.30 4.95 426 31,470,605 ZENITH BANK PLC 423,852.67 13.50 5.47 1,663 173,936,141 2,652 297,435,120 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 143,581.17 4.00 8.11 645 119,267,480 645 119,267,480 3,297 416,702,600 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 1,933,678.74 95.00 2.04 137 1,209,730 137 1,209,730 137 1,209,730 BUILDING MATERIALS DANGOTE CEMENT PLC 2,346,477.87 137.70 -10.00 131 2,814,023 LAFARGE AFRICA PLC. 177,185.75 11.00 10.00 227 6,662,157 358 9,476,180 358 9,476,180 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 320,408.06 544.50 - 7 1,542 7 1,542 7 1,542 3,799 427,390,052 REAL ESTATE INVESTMENT TRUSTS (REITS) SFS REAL ESTATE INVESTMENT TRUST 1,386.00 69.30 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 8,538.46 3.20 - 27 3,083,700 27 3,083,700 27 3,083,700 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 2 360 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 2 360 2 360 29 3,084,060 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 57,234.60 60.00 - 30 110,604 OKOMU OIL PALM PLC. 40,450.00 40.45 - 4 731 PRESCO PLC 34 111,335 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,500.00 4.25 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,650.00 0.55 - 2 104,990 2 104,990 36 216,325 DIVERSIFIED INDUSTRIES JOHN HOLT PLC. 217.92 0.56 - 1 1,125 1,903.99 2.93 - 0 0 S C O A NIG. PLC. TRANSNATIONAL CORPORATION OF NIGERIA PLC 28,047.11 0.69 9.52 95 13,256,075 U A C N PLC. 21,609.72 7.50 - 71 723,315 167 13,980,515 167 13,980,515 BUILDING CONSTRUCTION ARBICO PLC. 469.26 3.16 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 29,436.00 22.30 0.68 186 2,935,932 ROADS NIG PLC. 165.00 6.60 - 0 0 186 2,935,932 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 2,468.48 0.95 - 7 88,887 7 88,887 193 3,024,819 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 5,558.94 0.71 -8.97 7 133,805 GOLDEN GUINEA BREW. PLC. 220.45 0.81 - 0 0 GUINNESS NIG PLC 55,197.65 25.20 - 23 67,655 INTERNATIONAL BREWERIES PLC. 139,682.76 5.20 -9.57 63 3,493,349 NIGERIAN BREW. PLC. 239,907.06 30.00 7.33 117 2,634,092 210 6,328,901 FOOD PRODUCTS DANGOTE SUGAR REFINERY PLC 118,200.00 9.85 - 95 583,988 FLOUR MILLS NIG. PLC. 87,748.12 21.40 - 31 298,983 HONEYWELL FLOUR MILL PLC 6,582.06 0.83 - 9 163,229 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 0 0 NASCON ALLIED INDUSTRIES PLC 22,652.70 8.55 -10.00 34 1,116,581 2,993.06 10.95 - 0 0 UNION DICON SALT PLC. 169 2,162,781 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 10,705.75 5.70 9.62 25 433,706 NESTLE NIGERIA PLC. 725,518.27 915.30 - 148 849,603 173 1,283,309 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 5,015.88 4.01 - 12 29,660 12 29,660 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 16,080.43 4.05 - 15 74,693 UNILEVER NIGERIA PLC. 66,929.31 11.65 - 25 81,874 40 156,567 604 9,961,218 BANKING ECOBANK TRANSNATIONAL INCORPORATED 90,830.28 4.95 6.45 58 766,052 FIDELITY BANK PLC 50,995.64 1.76 5.39 86 4,938,071 GUARANTY TRUST BANK PLC. 576,851.11 19.60 3.16 1,402 131,063,876 JAIZ BANK PLC 12,374.98 0.42 7.69 20 2,151,108 STERLING BANK PLC. 31,669.46 1.10 - 31 2,508,715 UNION BANK NIG.PLC. 209,669.42 7.20 9.09 43 699,241 UNITY BANK PLC 4,909.52 0.42 - 6 53,789 18,515.74 0.48 9.09 17 906,179 WEMA BANK PLC. 1,663 143,087,031 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 9,404.07 0.83 5.06 22 727,382 AXAMANSARD INSURANCE PLC 17,850.00 1.70 3.03 4 539,161 CONSOLIDATED HALLMARK INSURANCE PLC 2,439.00 0.30 - 0 0 CORNERSTONE INSURANCE PLC 7,806.64 0.53 - 4 32,634 GOLDLINK INSURANCE PLC 909.99 0.20 - 0 0 GUINEA INSURANCE PLC. 1,228.00 0.20 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 1,464.69 0.20 -9.09 6 964,500 LAW UNION AND ROCK INS. PLC. 4,425.22 1.03 - 3 5,530 LINKAGE ASSURANCE PLC 3,200.00 0.40 - 5 140,000 MUTUAL BENEFITS ASSURANCE PLC. 2,234.55 0.20 - 4 1,342,000 NEM INSURANCE PLC 8,343.19 1.58 5.33 12 730,600 NIGER INSURANCE PLC 1,547.90 0.20 -9.09 2 943,500 PRESTIGE ASSURANCE PLC 2,960.40 0.55 -9.09 6 1,042,306 REGENCY ASSURANCE PLC 1,333.75 0.20 - 0 0 SOVEREIGN TRUST INSURANCE PLC 2,272.89 0.20 - 1 100,000 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 0 0 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 1 50,000 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 0 0 WAPIC INSURANCE PLC 5,518.09 0.23 -8.00 68 11,020,273 138 17,637,886 MICRO-FINANCE BANKS NPF MICROFINANCE BANK PLC 2,126.57 0.93 9.41 3 399,000 3 399,000

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MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 6,784.62 1.05 - 0 0 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 5,671.82 1.36 - 0 0 INFINITY TRUST MORTGAGE BANK PLC RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 6,980.00 3.49 9.06 81 2,629,836 CUSTODIAN INVESTMENT PLC 29,409.32 5.00 - 13 202,300 DEAP CAPITAL MANAGEMENT & TRUST PLC 495.00 0.33 - 8 9,200 FCMB GROUP PLC. 31,486.31 1.59 9.66 84 4,359,005 ROYAL EXCHANGE PLC. 1,131.98 0.22 - 0 0 317,775.26 30.25 3.24 42 10,478,234 STANBIC IBTC HOLDINGS PLC UNITED CAPITAL PLC 14,520.00 2.42 10.00 110 5,356,536 338 23,035,111 2,142 184,159,028 HEALTHCARE PROVIDERS EKOCORP PLC. 2,991.61 6.00 - 0 0 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 710.63 0.20 - 6 2,500,000 6 2,500,000 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 494.58 0.50 - 1 399 1 399 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 5,111.58 2.45 - 9 78,050 GLAXO SMITHKLINE CONSUMER NIG. PLC. 4,125.77 3.45 - 4 60,175 3,709.26 2.15 - 9 72,810 MAY & BAKER NIGERIA PLC. NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 759.66 0.40 - 5 30,918 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 325.23 1.50 - 0 0 PHARMA-DEKO PLC. 27 241,953 34 2,742,352 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 710.40 0.20 -9.09 6 1,107,459 6 1,107,459 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,000.21 0.34 -8.11 1 115,000 1 115,000 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 237.60 2.20 - 0 0 287.07 0.58 - 1 31 TRIPPLE GEE AND COMPANY PLC. 1 31 PROCESSING SYSTEMS CHAMS PLC 1,033.13 0.22 4.76 10 2,937,000 E-TRANZACT INTERNATIONAL PLC 10,962.00 2.61 - 0 0 10 2,937,000 TELECOMMUNICATIONS SERVICES AIRTEL AFRICA PLC 1,123,311.48 298.90 - 8 14 8 14 26 4,159,504 BUILDING MATERIALS BERGER PAINTS PLC 1,767.92 6.10 - 21 60,490 1,195,411.70 35.30 - 3 900 BUA CEMENT PLC CAP PLC 12,600.00 18.00 -9.77 29 284,705 244.37 0.46 - 0 0 MEYER PLC. PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,769.32 2.23 - 0 0 PREMIER PAINTS PLC. 1,156.20 9.40 - 0 0 53 346,095 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,192.12 2.03 - 0 0 CUTIX PLC. 2,043.13 1.16 - 3 112,900 3 112,900 PACKAGING/CONTAINERS BETA GLASS PLC. 34,998.04 70.00 - 0 0 GREIF NIGERIA PLC 388.02 9.10 - 0 0 0 0 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 2 30 2 30 58 459,025 CHEMICALS B.O.C. GASES PLC. 1,685.79 4.05 - 1 950 1 950 METALS ALUMINIUM EXTRUSION IND. PLC. 1,781.64 8.10 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 77.00 0.35 - 0 0 0 0 1 950 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 - 4 112,945 4 112,945 INTEGRATED OIL AND GAS SERVICES OANDO PLC 24,987.14 2.01 0.50 123 11,316,875 123 11,316,875 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 52,827.21 146.50 - 28 17,706 ARDOVA PLC 17,974.24 13.80 -9.80 7 288,595 CONOIL PLC 10,131.70 14.60 - 24 47,455 ETERNA PLC. 2,634.37 2.02 - 10 81,275 MRS OIL NIGERIA PLC. 4,206.05 13.80 - 2 977 TOTAL NIGERIA PLC. 36,328.84 107.00 - 8 3,194 79 439,202 206 11,869,022 ADVERTISING AFROMEDIA PLC 1,509.28 0.34 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 15,796.05 1.62 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 235.27 0.20 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,779.06 3.00 - 0 0 TRANS-NATIONWIDE EXPRESS PLC. 421.96 0.90 - 0 0 0 0 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,259.15 2.75 - 0 0 IKEJA HOTEL PLC 2,058.01 0.99 - 2 99,592 TOURIST COMPANY OF NIGERIA PLC. 7,076.28 3.15 - 0 0 TRANSCORP HOTELS PLC 30,401.62 4.00 - 0 0 2 99,592 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 3,960.00 0.33 - 10 90,000 10 90,000 PRINTING/PUBLISHING ACADEMY PRESS PLC. 223.78 0.37 - 0 0 LEARN AFRICA PLC 771.45 1.00 - 1 50,000 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 427.10 0.99 - 0 0 1 50,000 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 497.31 0.30 - 1 22,000 1 22,000 SPECIALTY INTERLINKED TECHNOLOGIES PLC 688.80 2.91 - 0 0

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Insight

BUSINESS DAY Wednesday 18 March 2020 www.businessday.ng

Saudi oil war: ‘The beauty is you can blame it on the Russians’ Battle between strongmen threatens to upend markets and damage economies Andrew England, David Sheppard and Henry Foy

rown Prince Mohammed bin Salman was at a low ebb when President Vladimir Putin of Russia swept into a room packed with world leaders. Saudi Arabia was facing its biggest diplomatic crisis in years after the murder of Jamal Khashoggi weeks earlier, and the kingdom’s heir-apparent, who many blamed for the journalist’s killing, had faced a cool reception at the G20 gathering. But Mr Putin smiled broadly as he high-fived Prince Mohammed and took a seat next to the beaming Saudi. The meeting in Buenos Aires in November 2018 epitomised the warming relationship between two authoritarian leaders whose nations spent decades on the opposing sides of global divides but had found common interest: maintaining the stability of oil prices. That compact collapsed spectacularly last week as two of the world’s top energy producers became embroiled in an oil price war that wrought chaos on global markets already reeling from the coronavirus pandemic. Caught in the maelstrom is Donald Trump, who ignored critics to stand by Prince Mohammed after the Khashoggi murder and has confounded many with his repeated praise of Mr Putin’s leadership. Just as the US president is gearing up for an election battle under the cloud of the Covid-19 outbreak, the Russian-Saudi crude war threatens America’s growing shale industry, hurts debt-burdened US oil majors and exacerbates the pressure on collapsing stock markets. “We’re in a three-way Mexican stand-off with three big players in the room all saying, ‘if you screw that guy over there, you are screwing me over, so I’m going to screw you over,’” said Michael Stephens, an associate fellow at the Royal United Services Institute. “It’s a strange triangular discussion from which no side wants to back down and all are going to feel the pain.” The price war erupted when Russia rejected a plea from Saudi Arabia to make deeper cuts to oil production to stem the slide in prices as the coronavirus pandemic spread, ending three years of co-operation between the two on crude output. Riyadh, the de facto Opec leader, responded swiftly with its most aggressive oil-related action in decades, threatening to flood the market with an additional 2.6m barrels a day at hugely discounted prices. Benchmark crude

Prince Mohammed bin Salman’s reputation as an impetuous leader is likely to be reinforced by the decision to take on Russia in an oil price war © BRENDAN SMIALOWSKI/AFP/Getty

prices plummeted by more than 30 per cent last week. Moscow’s target is the US shale industry, whose output has soared by 4.5m barrels a day since Prince Mohammed and Mr Putin agreed to co-operate on production cuts in 2016, chipping away at Russian and Saudi market share. Saudi Arabia, the world’s biggest exporter, is betting that increased volume will cushion the financial impact of tumbling prices, boost its market share and either bring Moscow back to the table or reshape the energy industry. “With all the global criticism and people jumping on the Khashoggi killing, I think the feeling is, ‘we are not getting credit for being the responsible [oil] player that we are’, and ultimately everybody is in this for themselves. Why should we sit and sacrifice for nothing?” said a Saudi close to the royal court. “The beauty of this is you can blame it on the Russians. You have a legitimate answer, ‘Go

talk to Vladimir, he’s the one who started this’.” The person added that it was in Saudi Arabia’s interests to “allow this thing to go on for a while to bring structural change to the industry”. “Get rid of weak shale players and send a message to the Tesla’s of the world and alternative energy, there’s a lot that could change the whole picture of oil,” the person said. Yet it is likely to reinforce Prince Mohammed’s image as an impetuous leader. It is also a big gamble for the oil-dependent kingdom. The move, coupled with the impact of coronavirus, risks crashing the economy for a second time in six years, while upending the crown prince’s own plans to diversify the economy. Russia will also endure some pain, but it boasts higher foreign reserves, a floating currency and is less dependent on oil sales. And the signals from Moscow are that it is in for the long haul. Mr Pu-

‘‘

It’s a strange triangular discussion from which no side wants to back down and all are going to feel the pain Michael Stephens Royal United Services Institute

‘‘

For Saudi Arabia, it believes that every country that has fought the kingdom in a serious price war has lost. But we are facing an unprecedented situation from both the rise of shale and Covid-19, tin’s spokesman said the Russian leader had “no plans” to speak either to Prince Mohammed or to his father, King Salman. “For Saudi Arabia, it believes that every country that has fought the kingdom in a serious price war has lost. But we are facing an unprecedented situation from both the rise of shale and Covid-19,” said Amy Myers Jaffe, a fellow at the Council on Foreign Relations. “Low prices won’t necessarily spur renewed demand.” The collateral damage will ripple from Baghdad to Texas.

A decade ago, US would have clearly benefited from lower oil prices, but its rapid emergence as the world’s top oil producer has altered that calculation. States that were beneficiaries of the shale boom such as Texas, North Dakota and Pennsylvania will be victims of a price war that seeks not just to lower prices but to crash them. The Kremlin has long viewed Washington’s sanctions against Russia to be partly motivated by a desire to create more space for US shale. “The increase in the share of the US oil on the global market is often achieved not so much via economic as via political methods — by ousting key players and foisting products,” said Igor Sechin, Rosneft’s chief executive, in October. While some in Saudi Arabia are emboldened by the belief that the kingdom fatally undermined the Soviet Union economy in 1986 by flooding the market, others fear the crown prince may have gone too far. “You annoy Russia and now you’re going after the only friend [Trump] you have: this is complete lunacy,” said a Gulf-based analyst. “There’s a real sense of despondency among Saudis I know. ” Oil traders are waiting to gauge if, and how, two of the world’s strongmen can step back while saving face. “Even if the price war is resolved, chances are sour feelings will linger,” said Ms Myers Jaffe. “I don’t see a quick reconciliation.”

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