BusinessDay 19 Dec 2018 by BusinessDay

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N2.4trn equity wipeout means bleak Christmas awaits stock investors IHEANYI NWACHUKWU

N L-R: Asuquo Ekpenyong, commissioner for finance, Cross River State; Biodun Shobanjo, chairman, Troyka Holdings; Adebola Williams, co-founder of The Future Project; Rotimi Amaechi, minister of transportation, and Okechukwu Enelamah, minister of industry, trade and investment, at the 13th edition of The Future Awards Africa in Lagos.

Falling oil prices opens exit window for costly N1.6trn fuel subsidy A ISAAC ANYAOGU

n agreement to cut 1.2 million barrels per day (bpd) from global oil production by the Organization of Petroleum Exporting Countries (OPEC) and non-members including Russia has not lifted prices providing Nigeria an op-

portunity to exit a costly fuel subsidy that could gulp N1.6trillion by year end. Brent crude, the global oil benchmark, fell 3 percent to $57.80 a barrel on London’s Intercontinental Exchange. West Texas Intermediate futures, the U.S. standard, was down 3.3 percent at $48.24 a barrel on the New York Mercantile Exchange.

Analyses of oil prices show that both benchmarks have almost fallen 35 percent from fouryear highs reached in October and are at their lowest levels in more than a year. “If oil prices keep going down, it affects our revenue and infrastructural development because there would not be much money for investments, so this is the

time to get out,” Ayodele Oni, energy analyst and partner at Bloomfield law firm said. Many economists now tell BusinessDay that as much as N1.6 trillion will be spent on petrol subsidy this year (2018). While the government maintains it is the right thing to do at this Continues on page 38

igerian stock investors who took positions in the market hoping to reap capital gains that earlier looked possible from traditional ‘Santa Claus’ rally are currently licking their wounds. The stock market has lost approximately N2.4trillion this year, meaning that investors who chose to hold their stocks till date are in for desolate Christmas spend because of the market meltdown. “While investor interest on select stocks remains evident, broad market sentiment has shown little sign of improving. Thus, we expect another mixed trading session, with a negative tilt”, Lagos-based Vetiva research analysts said in their Tuesday December 18 note. At this time of the year profesContinues on page 38

Inside Access to raise $200m, write off all Diamond P. 2 bad loans FMDQ integrates money, capital markets P. 39

2 BUSINESS DAY NEWS

FG goes hard on MDAs, says 36 federal agencies yet to remit over N2.7trn

The new face of Nigeria’s banking landscape where the combined Access/Diamond now stands taller as the number one bank.

... announces stricter conditions to ensure compliance ONYINYE NWACHUKWU, Abuja

hirty six federal agencies, including the Petroleum Pricing Regulatory Agency, Central Bank of Nigeria, Nigeria Ports Authority, among others, owed government a whopping N2.671 trillion operating surpluses as at end August, 2018, Ben Akabueze, Director General, Budget Office said on Tuesday, as he announced a new framework that would ensure tighter compliance in remitting monies generated by the Government Owned Enterprises (GOEs) going forward. Figures reeled out by Akabueze indicted 50 agencies, with the Petroleum Pricing Regulatory Agency yet to remit up to N1.34 trillion; Central Bank of Nigeria, N801.18 billion; Nigeria Ports Authority, N192.102 billion as well as the Nigerian Maritime Administration and Safety Agency (NIMASA), N66.08 billion, among others. The Performance Management Framework which he announced in Abuja would institute Corporate Governance enhancement practices, including performance contracts for Chief Executive Officers (CEOs) and other key Management Staff; Set financial indicators and targets for each GOE; ensure a Monthly publication of revenue and expenditure performance for all GOEs; as well as quarterly publication of GOE’s Budget Performance. At a town hall meeting with Chief Executive Officers of Government agencies, Akabueze regretted that despite huge sums – put at approximately N40 trillion -which the Federal Government has invested in these agencies, what they usually remitted

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to the Treasury in terms of dividend or surplus at the end of each operating year is mostly insignificant. Historical independent revenue inflows into the federation account shows that in 2015, actual revenue collection was N354.03 billion, 27.6 percent lower than the N489.29 billion budgeted; in 2016, N398.19bn was collected as against N1.505trillion budgeted; in 2017, N216.66 billion was collected as against N807.57 billion budgeted; and in 2018, N302.66billion was collected as against N847.95 billion budgeted. He told Chief Executive Officers (CEOs) and other key Management Staff of government agencies that the continuous underperformance of their offices has made it difficult to achieve enhanced domestic revenue mobilization from operating surpluses of the enterprises. He admitted that Nigeria faces significant medium-term fiscal challenges, especially with respect to revenue generation as indicated by the FY2017 and Jan - Sept 2018 budget performance, adding that achieving fiscal sustainability and macro-fiscal objectives of government would require bold, decisive and urgent action. “The record shows that few of the GOEs declare surpluses. In effect, the Nigerian tax payers/general public have not benefited much from these investments agencies,” Akabueze said. Out of the total projected sum of N807.57bn independent revenues in 2017, only N216.66 billion, representing 26.8 percent performance, was remitted by GOEs and revenue generating MDAs, he re-empha-

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HEALTH

Ranking by loan size

Ranking by share of deposits 20.0

18.0 16.0

16.0

14.3

14.0

18.3

18.0

13.4

14.5 14.3

14.0

12.0

12.8

12.0

9.9

10.0

9.8

8.0

9.2

10.0

8.8

8.5

8.0

6.1

6.0 4.0

6.0

3.9

2.0

5.5

4.0

2.7

2.0 Access+ Zenith Diamond

FBNH

Access

UBA

GTB

Diamond Bank

Stanbic IBTC

Access+ FBNH Diamond

Zenith

Access

GTB

UBA

Diamond Bank

Stanbic IBTC

Access to raise $200m, write off all Diamond bad loans

... May close 100 branches, lay off 1,000 staff ... Diamond Eurobond rallies 2nd straight day IHEANYI NWACHUKWU & LOLADE AKINMURELE

ccess Bank which announced the acquisition of Diamond bank to create Nigeria’s largest banking institution will embark on a fund raising exercise of about $200m to keep its capital well above regulatory requirements, bankers working on the deal told the Financial Times. Access Bank reached an agreement in principle on Sunday to buy Diamond Bank in a deal that values

Diamond at just over $200m (N72.33 billion), creating Nigeria’s biggest bank by both deposits and assets. “They have their own legacy issues and a loan book that was not properly managed,” said Herbert Wigwe, chief executive of Access Bank, who will head the merged entity. Wigwe said Diamond would write off all its bad loans before the merger goes through. “We won’t have new bad loans coming to the enlarged entity,” he said. The new bank would have a customer base of 27m, including 12m with mobile accounts, making it Africa’s biggest

bank by customers, he added. People close to the transaction said there would be substantial synergies. As many as 100 of the banks’ combined 650 branches could be shut with more than 1,000 of the merged entities’ 6,800 staff expected to lose their jobs, they said. However, it is extremely difficult to close bank branches in Nigeria, and it is subject to central bank approval. Access offered N3.13 a share for Diamond, against a recent price of just N0.87. It will pay N1 a share in

Lagos to enrol 2.5m in 2019 as health insurance scheme takes off Brazil low sugar output may cause price hike in Nigeria ... sets aside 1% consolidated revenue ANTHONIA OBOKOH

he Lagos State government says it is targeting to enrol at least 2.5 million in 2019 as it flags off Nigeria’s largest health insurance scheme aimed at expanding access to healthcare delivery system in the state in line with the global drive for Universal Health Coverage. The state projects that with the health insurance scheme, health related issues in Lagos will reduce by 10 percent, as it commits to set aside one percent of its consolidated revenue in the 2018 budget to drive the health scheme. The Lagos State Health Scheme was established by Law No.4 of May, 2015 and was inspired by government’s desire to provide access to affordable and quality healthcare services to all residents of Lagos. The scheme has a designated enrolment points and a licensed health insurance agent- Lagos State Health Management Agency (LASHMA). Payment for each enrolment is broken down into family and individual premium which can be spread out yearly, quarterly and monthly. For civil servants of the state, the government will pay 75 per cent of their contributions while they are expected to pay 25 per cent from

their own salaries. Family premiums, at N40, 000 per annum, is defined as father, mother and maximum of four children, individual premium yearly, will cost N8, 500 and an additional family member below 18 years enrolment will attract an additional premium of N6, 000. “I am delighted that we have fulfilled that promise and are gathered at this historic and momentous occasion today for the formal launch of the Lagos State Insurance Health Scheme. It is historic because it marks a distinct milestone in the state government’s effort to ensure the sustained provision of a critical social service to our teeming Lagos population,” said Governor Akinwunmi Ambode at the launch of the scheme in Lagos on Tuesday. According to the governor, it is a known fact that out of pocket payment for healthcare deters access to health services especially for indigents and other vulnerable persons in our society. “The overall goal of this scheme is to ensure that all residents of the State have unhindered access to sustainable, quality and affordable healthcare services with financial risk protection including subsidy from government subsidy,” said Ambode. Babajide Idris, the commissioner

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... El Nino reduces output in world’s biggest producer BUNMI BAILEY

drop in the output of sugar in Brazil, the world’s biggest producer, could lead to price increases in the commodity in Nigeria, a BusinessDay investigation shows. Already, the price has risen by 25 percent, some consumers say. Data from Rome, Italy-based Food and Agriculture Organisation (FAO) shows that its Sugar Price Index averaged 183.1 points in November, an increase of 7.7 points or 4.4 percent from October. That marked the third consecutive monthly gain by the index, it said. The FAO attributed the threemonth consecutive price increase to the low production output from Brazil, the world’s largest producer and supplier of the sweetener. “The increase in sugar price quotations mostly reflects production developments in Brazil, where according to the latest estimates, sugar output in the Center-South region is heading to a 27 percent decrease from last year,” FAO explained. It added that the share of sugarcane used to produce sugar has fallen to 35.8 percent from 47.4 percent in 2017, with the bulk of the cane harvest directed to ethanol production. “However, the cut in Brazilian

gasoline prices last month prevented sugar prices from rising even further, by diverting some sugarcane away from ethanol production.” The Central Bank of Nigeria (CBN) said in May last year the country imports $100m worth of sugar yearly. Nigeria imported N45.7billion worth of cane sugar, meant for its sugar refineries from Brazil in the third quarter of 2018, the National Bureau of Statistics said in its foreign trade report for the period. A 2017 United States Department of Agriculture Foreign Agricultural Service report said Nigeria’s sugar requirements are mostly met through imported raw sugar refined locally. Brazil is the largest supplier (over 80 percent share) with an estimated value at $500 million. Nigeria has made efforts to raise local production of sugar, but these are yet to make impact on the level of imports of the sweetener. “Even though there have been a lot of efforts from major sugar companies like Flour Mills of Nigeria, BUA Group, and Dangote Group trying to cultivate huge expanse of land for sugar production, they are yet to fully produce the sugar that we need, so they import,” Ayo Akinwunmi, Head of Research, FSDH Merchant Bank, said in a telephone interview

with BusinessDay. Emmanuel Ijewere, vice president of the Nigerian AgriBusiness Group (NABG) said that the low production volumes in Brazil are already having an impact on sugar prices in Nigeria. “Brazil is having El Nino weather situation at the moment. As at today, the price of sugar is going up because of the reduction in the production capacity of Brazil.” El Nino is a weather condition that alters the level of precipitation and temperature thereby disrupting output of agricultural commodities. Consumers of sugar are feeling the impact on local prices. Adenike Olaniyi, a Lagos-based businesswoman, confirmed that the price of sugar has risen in recent times. According to her a 250g of Dangote sugar which she used to buy for N200 now sells for N250. Africanfarmer Mogaji, CEO of X-Ray Farms Consulting, said the price at which the country purchases sugar will be higher. “Indirectly, companies will not import like they used to before because they want to maintain profitability and the bulk of sugar is not consumed by people but by confectionaries, they are the ones that use it the most not the day to day consumers.”

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NPA raises demurrage, rent-free days to cut financial suffering of importers AMAKA ANAGOR-EWUZIE

etermined to reduce the financial burden the congestion at the Apapa and Tin-Can Island ports has brought on importers, the Nigerian Ports Authority (NPA) has announced increase in the number of demurrage and rent free days at ports. A statement sent to BusinessDay and signed by the management of the NPA on Tuesday noted that with effect from Tuesday,

December 18, 2018, there will be an increase in rentfree period for cargoes housed in the terminals from the current period of three free days before commencement of rent charges to 21 free days before commencement of rent charges for a period of four months. Also, with effect from Tuesday, there will be an increase in the demurrage free period on return of empty containers from the current five days period to 15 days for a period of four months. “Shipping companies should immediately deploy

sweeper vessels to evacuate empty containers from the port to clear the backlog of empty containers littering the country within four months. The Authority encourages the use of Onne Ports for such sweeper vessels,” NPA directed in the statement. According to the authority, the Nigeria Customs Service (NCS) is urged to immediately commence the process of auctioning of overtime cargoes. “This is imperative as the ports are meant to be transit and not storage facilities. These auctions should

be carried out on the spot at port locations and every buyer would be given a stipulated short period to evacuate the cargoes out of the ports after which they will be re-auctioned. “Terminal operators are however encouraged to negotiate and grant waivers to consignees to facilitate the evacuation of these cargoes to mitigate against the auctioning which will result in a total loss of revenue by the terminal operator and the loss of cargo by the consignee. The statement further said: “These measures are

emergency steps taken to immediately reduce the financial burden of congestion on citizens as the Federal Government proceeds to permanently resolve the congestion through the following: reconstruction of the port access road, the provision of trailer park and holding bays with e-call up system, the enhancement of cargo evacuation using rail transportation and inland waterways with barges among others. The NPA however said the Authority recognised the financial implications of

these policies on the terminal operators and shipping companies and would consider a shift in our operational charges to ameliorate the situation of stakeholders. Reacting to this, Vicky Haastrup, chairman, Seaport Terminal Operators Association of Nigeria (STOAN) told newsmen in Lagos that terminal operators were still deliberating on the issue and would soon take decision on the directive. She said most of the managing directors of the terminals had travelled for Christmas, but efforts were in place to reach out to them.

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comment Small Business handbook

Emeka Osuji Dr Emeka Osuji School of Management and Social Sciences Pan Atlantic University Lagos. eosuji@pau.edu.ng @Emyosuji

here are over one thousand microfinance banks (MFBs), currently operating in Nigeria. There are also three categories of operators in that segment of the finance industry – the Unit MFBs have authority to run only one branch in the state where they are located, while the State operators are allowed to open as many branches as the CBN may allow in the state in which they are licensed to operate. The third category is the National MFBs, which are the big ones allowed to operate in every state and may locate in any state of their choice in the country. These institutions had carried on business with authorized capital funds of N20million, N100million and N1billion, respectively for unit, state and national microfinance banks. However, that era came to an end on October 22, 2018, when a new regulation on capitalization was released. Going forward, anyone wishing to operate in the subsector would have to provide a capital fund of N200million, N1billion and N5billion respectively for unit, state and national MFBs. This is a clear call for consolidation, which was however, not unexpected, given recent developments in the subsector. The industry has grown very rapidly but the things that go with maturity have begun to rare their heads, both ugly and pretty. There have been rising concerns over the health of many operators in recent times. Only last September, the industry witnesses a lot of fatalities as the CBN revoked the licenses of 154 microfi-

Wednesday 19 December 2018

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De-risking MFB lending: A superior option to a national MFB nance banks across the country on grounds of sundry infractions and distress. According to the CBN, 62 of the failed operators had already closed shop while 74 of them had become insolvent. It added that 12 were terminally distressed; while six had been voluntarily liquidated. Over the years, the Nigerian Deposit Insurance Corporation has had to part with substantial parts of its deposit insurance fund in order to meet liabilities arising from failure of some operators. Evidently, the time has come for sweeping changes, if the industry is to meet the objectives of its designers. With the new capital requirement, the changes have begun to come, with a sign that more are in the offing. That brings us to the issue of a national microfinance bank said to be planned by the CBN in collaboration with some stakeholders. According to reports, the CBN will, as early as January 2019, float a nationwide microfinance banking programme that will cover the 774 local governments of the country. The new institution, according to the reports will make use of existing facilities of the Nigerian Postal Service (NIPOST) in all the local government areas for its offices. This initiative is said to be part of efforts to facilitate the speedy disbursement of the many intervention funds provided by government, and in particular, the Agribusiness/Small and Medium Enterprises Investment Scheme (AGSMEIS). The CBN Governor was quoted as saying that “in order to collectively address the challenges militating against the achievements of the objective of the AGSMEIS initiative, the CBN is considering the proposal for the establishment of the national microfinance bank, which would leverage on the Nigerian Postal Service presence in 774 local government areas across the country”. The Governor was further reported to have said that the bank

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Undoubtedly, the idea of a strong microfinance industry is unassailable. We cannot continue to promote very weak institutions that increase the already high systemic risk in the subsector

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would enable the CBN to create jobs and enhance skill acquisition in the rural communities. The partners of the CBN in this proposed bank would be the Bankers’ Committee and the Nigerian Postal Service (NIPOST). Undoubtedly, the idea of a strong microfinance industry is unassailable. We cannot continue to promote very weak institutions that increase the already high systemic risk in the subsector. In particular, the poor capital base of the existing operators, especially the unit banks makes them unviable. However, I think that completing the consolidation process already underway, before proceeding to launch a new government MFB, is a better option. The new publicly-owned MFB will surely divide the market into two - a political and a commercial microfinance market. This will undoubtedly impact the enthusiasm with which investors embrace the recapitalization plan. Besides, a national microfinance bank sounds like another Peoples Bank of Nigeria – a good idea that was crucified on the altar of public ownership. I was privileged to be a special adviser to the Minister of Finance at the time the Peoples Bank was created.

It was part of government’s plan to canalize financial resources to the informal sector, in an organized and responsible manner as opposed to haphazardly dispensed hand-outs that existed. The bank came out of the many financial sector reforms of the 1990s, aimed to create new institutions and instruments to enhance the robustness of the financial system. It came with the formal licensing of finance companies and primary mortgage institutions, which would combine with new financial instruments also introduced at the time, to canalize financial resources to the “dry grounds”. The concept of the Peoples Bank under Mrs Sokenu and her team was good but it had problems. Largely because of its ownership fundamentals, it became politicised, disoriented and had to go. I have no doubt those problems are natural to public-owned enterprises. We therefore need to assure ourselves that we understand what happened at the Peoples Bank, and that we have learned the necessary lessons, which every business failure offers, as to benefit from that experience, before trading a path that looks similar to the one that ended in failure. More important, I think that some of the recent policies implemented are yielding good fruits, and need to be given a chance to nurture. The Secured Transactions in Movable Assets Act, which my readers know am a leading promoter, is a case in point. In my trips around the country interpreting the Act to operators in seminars and lectures, I found that, as expected, that Act is beginning to positively impact both microfinance banks and their clients. Reports have it that by April 2018, total credit to that sector was about N400billion but by November, it had jumped to about N1.1 trillion. As at October 8, 2018, 560 financial institutions had responded to our campaign, registered and are now leveraging the infrastruc-

ture of the National Collateral Registry to advance credits to clients. Over 35,000 Financing Statements have been registered worth several billions of Naira. Surely, there is virtue in derisking lending to risker borrowers. Among the 560 institutions registered to use the Collateral Registry, MFBs are 483. It means that an increasing component of the loans booked by the participating microfinance banks will be secured with movable assets. That tells us something about the future on non-performing loans and the operators in the industry. The former is dim while the latter is bright. It is not too late for CBN to review its plans and invite the industry champions to help tweak the N5billion utilization. The industry champions are MFBs that have distinguished themselves and can be trusted with government funds. Some of them are already accessing huge funds from even more discerning investors from abroad. We could use them to disburse the AGSMEIS funds more productively, rather than the Deposit Money Banks, that are content with oil and gas revenues and who failed to disburse the funds. CBN can introduce new monitoring indices as they did in Kenya, where economic and social indicators have been introduced, including employment generated and contribution to literacy, in evaluating MFB performance. There is a business case for using the big MFBs rather than forming a new institution that has failure in its DNA and potential to expand the frontiers of toxic assets. India’s growth was reviewed down from 7 per cent to 6.7 per cent, over which its Central Bank Governor resigned. That will impact oil sales to India and impact our economy negatively. Government should get smaller instead.

social media to have a sense of how the company is perceived is a tool in managing stakeholders. The primary step in stakeholder management is identification. Stakeholders do not have the same influence and are not affected in the same manner and thus should be identified and managed according to the impact, opportunity and threat they pose to corporate returns, reputation and sustainability. It is useful to identify those directly impacted and those indirectly affected to enable the Board of Directors define strategies to deal with each group. However, whilst not directly (or indeed indirectly impacted some would argue) the social stakeholders can cause significant damage to the company’s reputation and so should not be ignored. Effective stakeholder management entails categorization of stakeholders based on their ability to impact positively or negatively on the operations of the company, their power, influence and level of interest and their motives. Communication is key in dealing effectively with stakeholders as they require access to regular, reliable

and comparable information in sufficient detail. Insufficient or unclear information will affect investor confidence and impact negatively on share price or access to equity capital. Effective communication and disclosure will improve public perception of the company. To be effective, communication must be treated as an on-going pro-active process and should not be reactive. The goal of stakeholder communications and engagement is to manage expectations and minimize surprises. Red flags to be mindful of in stakeholder management include missed deadlines (regulator), strikes (employees), legal actions (customers, suppliers), bad press etc. Managing a company efficiently to maximize returns for its shareholders is important and is at the heart of enterprise. However, it is just as important to ensure that the company is appropriately directed such that the divergent interests of other indispensable stakeholders are balanced by the Board and Management.

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Managing stakeholders – A paradigm shift

Bisi Adeyemi Bisi Adeyemi is the Managing Director of DCSL Corporate Services Limited. For comments and reactions, kindly contact badeyemi@dcsl.com.ng.

ound corporate governance practices are essential for efficient, viable and sustainable growth of companies and institutions, including governments. An interesting definition of corporate governance is that which defines it as “a system of law and sound approaches by which corporations are directed and controlled, focusing on the internal and external corporate structures with the intention of monitoring the actions of management and directors and thereby mitigating agency risks which may stem from the misdeeds of these corporate officers”. (Sifuna, Anazett (2012). The contemporary view of business

which is fast catching on is that the Board of Directors and Management are responsible to not only shareholders, but to stakeholders. There are generally two main stakeholders to be considered: external and internal stakeholders. While external stakeholders comprise of shareholders, debtholders, regulators, trade creditors, suppliers, customers and communities affected by the corporation’s activities; internal stakeholders comprise Board of Directors, Executive Management and other employees. Each group has different interests and objectives which may result in conflicts of interests, a typical one stemming from the agency theory. The essence of corporate governance is the ability of the Directors to manage the diverse expectations and interests of the various stakeholders and particularly to ensure that managers as agents act in the best interest of the owners. There are three stakeholder theories of Corporate Governance namely - the strong form theory, the minimalist model, and the pragmatic view. The strong form theory canvasses

that management is answerable to all stakeholders and should try to satisfy them. The minimalist model postulates that management is legally answerable only to the shareholders as owners and may consider other stakeholders. The pragmatic view holds that Management is not answerable to all stakeholder groups but should take account of them in the interest of commercial practicality. There has been a shift from the traditional shareholder value-centered view of corporate governance in favour of a structure that seeks to protect the interest of a wider circle of stakeholders i.e. the strong form theory. Successful companies consider all stakeholder interests relative to the type of influence and threat they possess. Social media has created another group of stakeholders – the social stakeholders. These are stakeholders who are not suppliers, consumers, investors or otherwise directly impacted by how an enterprise conducts its business. They could however from an altruistic perspective take umbrage, for instance, with non-diversity on the Board and launch a social media campaign – indeed war - against the company. Thus occasionally scanning

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comment Character Matters with Daps

Dapo Akande Graduate of the University of Surrey, UK, author of the acclaimed book: “The last fight: A personal journey to discovering values.” Contact: dapsakande25@gmail.com

hile driving on a narrow street the other day, made even narrower by thoughtless double parking, my wife patiently waited for four cars coming in the opposite direction to pass. As she wanted to take her turn to go, another vehicle, still coming from the opposite direction sped up so she could pass as well. Big mistake! My wife was having none of it so she blocked this vehicle. In typical “ogboju” fashion, the other motorist, who also happened to be a woman, refused to back up and

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We first (1) subsequently switched off her car engine in protest. My wife too put her vehicle in park mode. When passers-by noticed the other motorist ranting and raving in her vehicle like a maniac even when she was so obviously in the wrong, they decided to approach the person whose attitude appeared to be more reasonable. However, despite all their entreaties, my wife refused to shift ground, not this time. It wasn’t a case of just being pig headed but there was a principle at stake. But why, may I ask, do we Nigerians always expect the person who rightfully feels aggrieved and has done nothing other than to stand on his or her principle to back down for “the sake of peace?” What about the obvious scoundrel? For how long shall we continue to let evil doers get away with it? For as long as we continue to accommodate this sort of behaviour, things won’t change. When people become fully aware that their compatriots will no longer tolerate such crudely selfish behaviour, they will have no choice but to change their ways. In order to move in the right direction as a people, I feel it’s critical we ask ourselves these ques-

BUSINESS DAY

‘ For how long shall

we continue to let evil doers get away with it? For as long as we continue to accommodate this sort of behaviour, things won’t change

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tions: What standard of behaviour should we entrench as our values? Do we not need to agree on what our defining characteristics should be? Values are the core beliefs that both guide and motivate our attitude and actions; and there’s no better place to inculcate these than at the family level and at schools. Tracing my steps back a little from what I said in my book, The Last Flight, and as odd as it may sound, self-centeredness is not always a bad thing. The greatest motivation for man’s actions is personal

interest – fact. I asked my children the other day what appeared to be a simple question and this was it: a naija man who decides to beat traffic by driving in the lane of oncoming traffic and the oyibo man who decides to stay in his lane, as they generally do abroad, which one of them would you say is driven by self? Of course the answer must be the Nigerian who selfishly decides to break traffic law. Or should it? In my humble opinion, they both are and this is why. I’m convinced that the oyibo man, a product of nature just like we are, is filled with the same self-centered tendencies as we are. He’s just smart enough to realise that mutual cooperation is the surest way of having his interest served but his eye is still very much on his interest. This cooperative selfishness can be better known as enlightened self interest. This is a philosophy in ethics which “states that persons who act to further the interest of others (or the interests of the group or groups to which they belong) ultimately serve their own interest too.” Here lies the common good concept. Crude selfishness on the other hand, as displayed by the motorist who decides to take one way and subsequently gets his pas-

sage blocked up front by a fellow motorist, who insists he does the right thing, is just stupid, overt selfishness which ultimately benefits no-one. He’s so self absorbed that his selfishness knows no restraint. In the end he stays in the same spot for 30 minutes arguing due to some foolish pride when he could have passed in 5 minutes if only he had done the right thing like everyone else. A smart chap would take the right way because he knows that’s what will ultimately pay him. After all, in anyone’s book, 5 minutes is a far more economical use of time than 30 minutes. So oyibo doesn’t obey rules necessarily because he loves the next person so much but because he loves himself. This informs, at least in part, why the Bible so aptly said in Psalms 18:1 that, “unfriendly people care only about themselves; they lash out at common sense.” Tell me, is there anything quite as nonsensical as being so blinded by self-centredness that you cannot see how it works against your overall interest? Changing the nation...one mind at a time! Send reactions to: comment@businessdayonline.com

Your procurement and supply chain team is not a ‘support’ department HAROLD NWARIAKU Nwariaku is Principal Consultant at Harold & Co Procurement/Supply Chain Consulting, Email:harold@haroldandco. com

‘‘

t really does not matter how much water you try to put into a container; if there is a leakage, you are merely wasting your time’ In my experience, most organisations rank their departments in the order of how much revenue they are able to rake in; from marketing, to the operations unit, down to sales, finance, human resources et cetera. This also reflects in how these department heads are recruited, and the amount of face time they have with the chief executive officer (CEO) and shareholders. If you study the value chain of these companies, you will typically find that they make a clear distinction between “core” departments and “support” departments. Is it any wonder then why these support units become the source of the deepest frustrations these organisations have? In the last few years, we have had procurement/supply chain associations and institutes call for and demand a ‘seat at the table’. I have worked for multination-

als that reluctantly heeded this call and chose to invite procurement/supply chain heads to their leadership teams. Whether this decision impacted in their bottom line is left for the annual reports to show; it is however becoming increasingly clear to top corporate organisations around the world that you really cannot deliver on your shareholders objectives without having procurement/ supply chain on your leadership team. Take the analogy of a car for example: the interior comfort, body lines, colour, and luxury is marketing; its fuel economy is finance; the technical specifications could represent operations; the technology it runs on is IT, and the tires which make contact with the road and also indicate how fast it goes is sales. Now, will you call the engine a support component? Will you treat the car engine as an accessory? The procurement and supply chain of an organisation is the engine, without which, the vehicle is merely an empty shell. There is the question however of a bad or knocked engine – this is the situation where the procurement/supply chain unit is underperforming, or not capable of moving at the speed of the rest of the company. The debates in this case is not about whether one

should throw it away, or change it; it is more about how much time the CEO has put into looking after it. The fact that you only open your bonnet to look at the engine when something goes wrong is a sign that something is wrong. All the complaints and frustrations about procurement can be easily resolved if more attention is paid to this critical part of the organisation. Unfortunately, some CEOs and chief finance officers (CFOs) never make the time to do this, and they therefore end up blaming the very team they ignored. I recognise that I am putting procurement and supply chain in the same basket here, and while I appreciate that procurement is an integral part of the supply chain, there are schools of thought who insist on keeping them as separate entities, so as to avoid the conflicts of interest that may occur when procurement reports into the same organisation they are meant to control costs for. Many organisations are yet to see this, and manage them as one. According to the Korn Ferry Institute, ‘across industries—including technology, manufacturing, health care, and retail—the supply chain is much more than just the purchase and movement of materials and components. There are distinct competitive advantages offered by the supply chain, includ-

ing cost-effectiveness and the social responsibility and environmental impact of material sourcing (sustainability). With greater strategic importance placed on the supply chain, the CPO—the Chief Purchasing Officer or Chief Procurement Officer— is moving from a behind-the-scenes role into the spotlight. Although not a universally adopted role, CPOs are becoming more common in organisations—and they are increasingly near the top of the leadership pyramid. The CAPS Research 2014 Chief Purchasing Officers’ Mobility and Compensation Study, a survey of more than 100 Fortune 500 CPOs, reported that 82% have direct access to the CEO, an increase from 60% in 1999.’ When big companies fail to meet their targets, a huge part of the problem is traced to a failure in the supply chain, or a failure in integrating the supply chain into the mainstream. From General Motors investing in robots that mostly didn’t work in the 1980’s to CISCO’s poor demand inventory visibility leading to a $2.2bn inventory write-down in 2001; Adidas’ Distribution Center (Warehouse) automation failures in 1986, and Nike’s 20% stock drop over a failed planning system; when Supply Chains fail, they fail BIG time. As it has become customary for CEO’s to carry their CFO’s like

handbags into every important meeting and event, it is my suggestion that they include their CPO’s or Supply Chain Heads in that handbag. The early involvement of these critical team members will help foresee and manage risks. In fact, are risk management and stakeholder management not core skill requirements of a supply chain expert? Tim Cook (Apple), and A.G. Lafley (Procter & Gamble), are but two examples of supply chain people who grew through the ranks to become excellent, world changing CEOs. How many such rare talents do we have waiting in the wings, which are forced to remain under the radar because of the outdated perception of supply chain people remaining as members of support teams? I suggest that CEOs and Boards of Directors engage more often with their supply chain people, and see what they are missing. Procurement and other relevant teams should no longer be classified as ‘support’, but core to the success of any company. Everything that goes into an organisation and is churned out from raw materials to finished products is looked after as part of the supply chain process; ignore them at your peril. Send reactions to: comment@businessdayonline.com

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Wednesday 19 December 2018

Amnesty International and Nigerian army

or the umpteenth time, the Nigerian army is publicly protesting the activities of Amnesty International in Nigeria and is calling for the closure of its Nigerian office. The army spokesman, Sani Usman, said in a statement on Monday that Amnesty International wanted to distabilise the nation through the fabrication of ‘fictitious’ allegations of human rights abuses against the Nigerian security forces. “They have tried over the years using Boko Haram terrorists’ conflicts, Islamic Movement in Nigeria, some activists and now herders-farmers conflicts...[It] is at the verge of releasing yet another concocted report against the military, ostensibly against the Nigerian Army. Consequently, Nigerians should be wary of Amnesty International (Nigeria) because its goals are to destabilise Nigeria and to dismember it. The Nigerian Army has no option than to call for the closure of Amnesty International offices in Nigeria, if such recklessness continues,” Usman said in his press release. The army is again reacting to the release of AI’s latest report on Nigeria titled: “Harvest of Death: Three Years of Bloody Clashes Between Farmers and Herders.” The global watchdog said in the report that the Nigerian government’s failure to investigate communal clashes and bring perpetrators to

justice has fuelled a bloody escalation in the conflict between farmers and herders across the country. The conflict has resulted in at least 3,641 deaths in the past three years and the displacement of thousands more, the report stated. It said 57 percent of the 3, 641 recorded deaths occurred in 2018. This is coming three days after the army accused UNICEF of aiding terrorism in the NorthEast and ordering the closure of its Nigerian office. The army alleged that UNICEF had shifted from “its duty of catering to the wellbeing of children and the vulnerable through humanitarian activities and now engages in training selected persons for clandestine activities.” This is not the first time the Nigerian army and Amnesty International have been engaged in a tussle over human rights abuses. Early last year, the global human rights watchdog, released its report on Nigeria in which it accused the Nigerian Army of being directly responsible for the death of 240 people, including infants, in a dreaded military detention centre in Borno in 2016 and the extra-judicial killing of 177 pro-Biafran agitators and protestors same year. The watch-dog also partly blamed the army for holding hostage most IDPs in camps under inhuman conditions, which led to over 1200 deaths just in one camp alone. AI, writing on the condition of the detention facility said: “At the military detention facility at Giwa barracks, Maiduguri, cells were overcrowded.

Diseases, dehydration and starvation was rife. At least, 240 detainees died during the year. Bodies were secretly buried in Maiduguri’s cemetery by the Borno State Environmental Protection Agency staff. Among the dead were, at least, 29 children and babies, aged between newborn and five years.” After the report was published, the Nigerian army came out to strongly deny the report describing it as “rather contrived lies orchestrated to blackmail and ridicule the Nigerian Armed Forces which they have successfully tried to do in the past”. As it has done with local journalists and human rights activities who criticise it for human rights violation, the army, through its spokesman, accused AI of encouraging “activities of non-state actors who take up arms against the state, killing, maiming and destroying public property.” But history is not on the side of the Nigerian Army. Countless bodies, international and local NGOs, journalists, and even the Panel of Inquiry instituted by the Kaduna state government to investigate the Army –Shiite clash in Zaria in December 2015 have all indicted the Nigerian Army for extrajudicial killings. It is also a fact that the people in the IDP camps are dying of starvation and want and are being detained there against their will by the Nigerian Army probably on the orders of the government. The allegations of soldiers killing pro-Biafran protesters were also backed by countless eye-

witnesses, documentary and video evidences. The balance of evidence weighs heavily against the Nigerian Army. True, Amnesty International has been relentless in its exposure of human rights abuses allegedly perpetrated by Nigerian soldiers in the country’s war against Boko Haram and the military’s ruthlessness in quelling protests in other parts of Nigeria. This is because of the Watchdog’s commitment to defending human rights and not because of any supposed bias or collaboration with violent non-state actors. While many Nigerians are willing to excuse extrajudicial killings and gross violations of human rights on the excuse that the army is defending the country, AI doesn’t buy that argument. It is its firm belief that human rights should be respected at all times regardless of situations and no life should be taken or if it should, not without the benefit of open and fair trial. The Nigerian Army will do well to shed its famed notoriety of treating citizens as enemies or a conquered people. It must learn to operate on the basis of respect for the full rights of all individuals in the country. More importantly, we believe ultimately that the government directly sanctions or at worse condone these killings and abuse of human rights. We operate a democracy in Nigeria and the government must ensure that all security agencies treat citizens with the utmost respect and safeguard their rights at all times.

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Agric investment dips by 45% despite diversification rhetoric Josephine Okojie

apital importation into Nigeria’s agricultural sector has declined in the third quarter of 2018 as investment into the sector dropped by 45 percent to $23 million, data from the National Bureau of Statistics (NBS) shows. The capital importation report states that investments into the agricultural sector declined year on year from $42 million in the third quarter in 2017 to $23 million over the same period in 2018. On a quarter on quarter basis, it declined from $104 million in second quarter 2018 to $23 million in third quarter. This is happening at a time the government claimed it has made process in reviving the sector. Stakeholders in the industry attributed the decline in investments to the poor state of infrastructures in the country and the issue of flooding recorded across the country. “The potentials in our agric sector are huge but the infrastructure to drive the growth

Ani Charles Bassey-Eyo, CEO, LANI Group & co-founder, SEHAI Foods moderating a panel with Malawi’s youth Agripreneurs during the Agricultural Transformation Summit organised by Foundation for a Smoke Free World in Lilongwe, Malawi.

are lacking. How can the sector attract investments when the vital infrastructures are not there?” AfricanFarmer Mogaji, CEO, X-Ray Consulting asked. “The roads to the farms are very bad and there are no adequate storage facilities for farmers. “The flooding we experienced is another issue that affected investments into the sector,”Mogaji

said. Poor transport infrastructures has remained one of greatest problems confronting Nigeria’s agricultural sector. Nigeria lacks rail infrastructure to move agricultural commodities from farms to ports and markets. Also, road connections that are crucial to trade are in deplorable condition, experts say.

As a result, farmers continue to suffer low levels of agricultural productivity which has reduces their profit and impact on their capacity to increase productivity. The provision of critical infrastructure is a pre-requisite for enabling Nigeria stimulate economic growth and to reach the targets for economic diversification and food security,

experts say. Obiora Madu, former chairman, export group, Lagos Chamber of Commerce and Industry (LCCI) said that Nigeria do not have an effective agricultural infrastructures, stating that the country’s export drive can only be successful with adequate infrastructural facilities such as storage, good road networks amongst others, stressing that the lack of it has made cost of food production higher. Furthermore, the farmlands in major agricultural producing states were submerged in floods and has impacted negatively on farmers output. On a sectoral share of total investments that came into the countr y for the period, agric contributed 1.9 percent. A total of $2.9 billion investments came into the country for the third quarter with Abuja, Lagos and Abia as the leading destinations. United States led the list of countries with the highest capital imported into the country for the period with $911 million follow by the United Kingdom with $871 million and South Africa with $153 million.

OCP Africa drives Nigeria’s agric with school lab, agro booster initiatives

Expert calls for increase in ethanol production from cassava tubers

…to invest $2.5m in 2019

Victoria Nnakiaike, Lokoja

Josephine Okojie

n a bid to ensure that agriculture plays a key role in Nigeria’s quest for revenue diversification, OCP Africa Fertilisers Nigeria Limited through its school lab and agro booster initiatives is driving growth in the country’s agricultural sector. The main objective of the school lab and agro booster initiatives is to ensure that farmers rightly use fertilisers on their farmlands to boost their productivity and increase their income. “Most farmers do not even know the right fertilisers to use on their farmlands so we decided to introduce the agro booster and the school lab initiative to address this,” said Muhamed Hettiti, managing director, OCP Africa Fertilisers Nigeria Limited in a chat with the Food and Agricultural Writers (FAWON ) members in Lagos recently. “The school lab initiative is a mobile laboratory to carry out soil test for farmers to know the right fertilisers for the right crop

and right quantity to be applied as well as the right land. while agro booster is to increase farmers yield per hectare. “We have gathered all the stakeholders around the farmers. We have the seed suppliers, the financial banks, fertilisers’ suppliers and off takers for the farmers under the agro booster initiative,” Hettiti said. OCP Africa plans to invest a sum of $2.5 million for both initiatives in 2019 and expand to other regions in the country as the scheme is currently functional in the northern

and central parts of the country. A total of 150,000 farmers are currently benefitting from both initiative with the number expected to reach over 200,000 farmers in 2019. “We started with 10,000 in 2017 and in 2018 our target was 70,000 farmers and now we have reached 67,600 farmers in Kaduna, Bauchi and Kano states. In 2019, we intend to reach 100,000 farmers and extend the initiative to the South West region” Oluwatoba Asana, production and technical manager, OCP Africa said. “We currently have four school labs and would introduce one more in January next year, making it five.” Als o, speaking to FAWON members during the briefing, Kazeem Ajape, marketing analyst and CRM officer, OCP Africa said that with the agro booster scheme the organisation has been able to provide a complete value for farmers. “We are providing with key farming inputs and training them on best practices and also we provide off-takers that off-take from the farmers,”Ajape said.

aruna Madisca president of Geron Oil and Gas has called for the increase in ethanol production from cassava tubers to assist smallholder famers of the crop and protect the environment. Madisca made this known at the just concluded Cassava City Day held in Lokoja, Kogi state. He stated that many nations of the world are now producing ethanol from cassava tuber used as renewable fuel which is friendly to the environment. “Ethanol is the best fuel for the climate that is why the whole world is diversifying to agricultural products such as cassava to produce more ethanol,” he said. He equally stated that his organisation will soon commence the production of ethanol from cassava and when the project kickstarted it will be having a pure ethanol refinery. Highlighting the advantages in cassava production, he disclosed that the waste of cassava that would be generated from the factory will serve as animal feed as nothing about the crop is wasted.

He noted that the factory will recycle water from the project adding that the organisational goal is to ensure the protection of the ecosystem. Madisca also hinted that his mission is to fight poverty from the street, adding that he grew up in the street and knows what poverty means. “I appreciate Governor Yahaya Bello for giving the people of Kogi this enabling environment. It is about what we can do for our people. I have travelled to many countries to understudy how they run power fuel refinery and we are working in synergy with NNPC. We are ready to see what we can do in Kogi State that will create jobs and improve livelihood in the state. If all hand should be on deck, I believe we will go far with this project. We have for long ignored the opportunities in Kogi and now we are going to explore it “. He equally commended Oyisi Okatahi the managing director of ADP, for leaving his comfort zone in Canada to come to the state to work. Madisca equally emphasised that the organisation is ready to for collaborations in helping the state realise its objectives.

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How farmers, traders endanger Nigerians’ health with chemicals Josephine Okojie

ainab Sadiq, a trader in fruits and vegetable at Ketu Market needed to supply 20 bunches of ripe plantains and bananas daily to customers. But she only got five bunches of ripe plantain and bananas from her suppliers. To meet up with the demand from customers, she resorted to applying calcium carbide to force the fruits to ripe. Apart from selling it to customers, Sadiq also consumes the plantain and bananas with her family. She is unaware of the health dangers in the consumption of such fruits and vegetables. “My family also consume some of the plantain and bananas,” the trader said, when BusinessDay interacted with her. Sadiq’s case gives an insight of the high usage of harmful chemicals by Nigerian traders in the storage, colouring, ripening, processing, and preservation of food products in the country. Also, farmers are using some dangerous chemicals on farm produce to protect against pests and insects

Otunba Oluwatoyin Akomolafe, national president, Nigerian-American Chamber of Commerce (2nd l); Oba Otudeko, chairman, Honeywell Group (r); W. Stuart Symington, U.S. ambassador to Nigeria (l); Olusegun Osunkeye, former chairman, Nestle Nigeria Plc at NACC 2018 annual dinner & presidential inauguration held recently in Lagos

invasion as well as their investments. Apart from calcium carbide, farmers also use other chemicals which include artificial sweeteners such as aspartame and acesulfame, s n i p e r, m o n o s o d i u m glutamate, common dyes, sodium sulphite and sulphur additives. Others are sodium ascorbate, aitric acid, sodium

critrate, artificial favourings and lactic acid among others. Health experts say such practices are dangerous to human health as they expose Nigerians to terminal diseases and death and called for the out-rightly banned of such practices. “The chemicals being applied by farmers and traders to preserve and force ripening of fruits and vegetables have

JOSAN rehabilitates Omor Rice Mill GODFREY OFURUM, Awka

OSAN Agro-Allied Limited, a public Pr ivate Par tnership (PPP) initiative between Joseph Agro-Allied Limited and Anambra State Government has successfully re su s c i t ate d O m o r R i c e Mill, in Anyamelum Local Government Area, one of the biggest rice milling plants in the country. The resuscitated mill, which is currently in production, has brought relief to about 20,000 rice farmers in Omor that were in need of automated dries to dry their produce, especially during raining season, says Oliver Okeke, chair man, JO SAN AgroAllied Limited. O ke ke, w h o s p o ke t o BusinessDay exclusively in Omor, at the 1st Ofala Festival of Igwe Chris Oranu Chidume, Eze AnaUkwu, Eze Igulube of Omor, explained that JOSAN intends to expand the mill,

as the State Government has also handed over the Omor Rice farm, to the firm. “Omor has over 20,000 rice farmers and many of them are small holder farmers and unfortunately most of them did not have off-takers for their produce, especially during raining season. “And because there is lot of moisture during the raining s eas on, most of their produce goes bad, so they were posting 50 p ercent loss dur ing the raining season. “So what they have been waiting for is a big off-taker that has an automated drier that can take all their rice produce during the raining season and that is what we offered to do. “ We e s t a b l i s h e d o u r mill here, early this year (2018) and we were able to resuscitate an existing mill in the community, which expatriates couldn’t, but we did. And as we speak, we are milling in Omor,” he said.

The Omor Rice Farm is a million dollar investment that was established in the early 80’s, but currently lying fallow. It has a water pump station and 333 kilometer canal and if revamped, will become the most irrigated farm in the whole of Africa. “There is perennial lack of water, including drinking water in this area. People have not had good water for many years now and during the dry season, you would weep here,” he added. “If the irrigation works, it now means that water could be pumped to the farms and farmers can now cultivate rice all year round. “What it will also do for the farmers, is that it will increase their income by 200-300 percent, so, it will be amazing, if we can push water out from Ezu River. “A n d a l o n g t h e r i g h t of the way, we will build a water treatment plant, so that people can have portable water”, he stated.

serious health implications when consumed for a long period of time,” says Doyin Odubanjo, chair man, Association of Public Health Physicians, Lagos chapter. “ The side effects are responsible for the rising cases of cancer, skin disorders, kidney diseases we have now in the country because Nigerians consume these food products daily,” Odubanjo said.

To identify food products that have these harmful chemicals, the nutritionist advised that Nigerians should immediately discard fruits or vegetable with an odd taste. Farmers also use sniper, an agro chemical that contains d i c h l o rov i n y l d i m e t h y l phosphate (DDVP) in the preservation of beans. Experts warn that consumption of pesticides made from DDVP can lead to death. These practices have led to the massive importation of various kind of pesticides and agro chemicals into the country, even those that are already banned in some countries. “The government is lacking in the area of food safety in the country and the situation is getting worse daily. There are no regulations on the use of agro chemicals and pesticides on the farms; even products banned in other countries are found in the hands of farmers in Nigeria,” says James Marsh, managing director, James Marsh and Associate. The situation is a major threat to the export drive initiative of the Nigerian government. The European Union (EU) rejected 24 food products

from Nigeria in 2016. Nigerian beans has since 2015 been banned by the EU Food Safety Authority because it contained between 0.03mg per kg and 4.6mg per kg of dichlorvos pesticide. The ban has been extended to 2019, which shows that Nigerian farmers and traders are yet to change from such practice. Marsh who is a food safety expert blamed regulators such as the National Agency for Food and Drug Administration and Control (NAFDAC), Nigerian Agricultural Quarantine Service (NAQS) and the Federal Ministry of Agriculture (FMARD) for failing in regulating the use of these harmful chemicals. “The regulators are not regulating the use of these chemicals effectively and ensure the consumption of safe and nutritious food. The regulation stars from the farms,” he says. He also calls for framers and traders education and sensitisation on the effect of these harmful chemicals. “Farmers and traders need to be educated and sensitised on the use and dangers of these harmful chemicals and food toxins.”

Kwara allocates N500m to agriculture in 2019 SIKIRAT SHEHU, Ilorin

s part of measures to consolidate economic recovery and foster growth in Kwara, the state government says it will commit N500 million to agriculture in 2019. T h e s t a t e g o v e r n o r, Abdulfatah Ahmed disclosed this recently, while presenting the 2019 budget proposal before the Kwara State House of Assembly. According to him, his administration will continue to support the agricultural sector to boost farmers’ productivity and increase their income Highlighting the programmes and policies of the proposed budget Ahmed said “this administration will continue to lay the desired emphasis on this economic sub sector in order to increase productivity and income of our farmers.” “The state government shall further boost agriculture in the 2019 fiscal year with credit support to register

farmers in the state with the total sum of N500 million for crops farmers through the Central Bank anchor borrowers’ programme.” Th e o b j e c t i v e o f t h e allocation to the sector according to the governor is to increase the state Internally Generated Revenue (IGR) and create an enabling environment through the provision of key infrastructures. Also, to create jobs through promotion of the agricultural value chain and wealth creation for sustenance of human capital development in areas of vocational and technical education as well as enhancing prudent management of all human and rural resources in the state. Governor Ahmed, presented the total sum of N157.5 billion as the budget estimate for the service of the state government in 2019 fiscal year He noted that the budget proposed is hinged on zero -based budgeting, to ensure prudent utilization of revenue.

Ahmed said the estimate shows a marginal increase of N1.4bn which represents a percentage increase when compared to the 2018 revised budget. “Out of the total budget size, the sum of N77.7billion which account for 46 percent of total budget is for recurrent expenditure while the sum of N79 billion which represents N51 percent, is for capital expenditure.” “On the sectoral allocation of the budget, the economy has the highest of N54.5billion which represents 34.6percent of the total budget, followed by the General Public Service Sector with N35.6billion which represents 22percent while Education has 18percent and Health sector got 17.5percent,” he explained A h m e d , h o w e v e r, maintained that the overall objective of the budget is to consolidate on the gains of the past years and to ensure completion of all on-going projects across the state in order to ensure good welfare of the citizenry.

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

PRIVATE EQUITY

Carlyle stung by $133.5m loss after Diamond Bank sale LOLADE AKINMURELE

arlyle’s bitter experience with Diamond bank threatens to keep private equity funds away from Nigeria. The US-based private equity firm’s 18 percent stake in Diamond bank which was worth $147 million in 2014 may have cost the retail lender’s new owner- Access bank- as little as $13.5 million going by the N27 billion ($75 million) paid to snap up Diamond. That means Carlyle may have lost roughly $133.5 million on the deal, a loss that could prove enough to keep the world’s third largest buyout fund away from Nigeria forever. What’s more is that the Carlyle experience could scupper further deals by private equity firms looking to invest in Nigeria. The fact that the naira value is down more than 100 percent against the US dollar in the last five years is neither a strong selling point for Nigeria, a country that could do with some foreign investment to help trigger inclusive economic growth. The deals worthy of attracting large buyout firms are also few and far between. “In the last five years, hardly has there been a single big ticket deal done by a private equity firm in Nigeria that has made any dollar returns,” a source familiar with the matter said. “Not only has it become increasingly difficult to find a deal of the right size, it is now extremely risky to commit funds in Nigeria going by Carlyle’s experience,” the source added. Carlyle made its first in-

vestment in Africa’s main oil producer in August 2014, buying shares in Lagos-based Diamond Bank Plc at a time, it said the lender was wellpositioned to benefit from Nigeria’s status as one of the fastest-growing economies on the continent and enthused how it could become one of the largest financial institutions in West Africa. Since then, the bank’s shares have lost 90 percent of their value in dollars after the 2014 oil-price crash hammered Nigeria’s economy and caused non-performing loans to soar. Diamond bank is heavily exposed to the struggling oil and power sectors leading to its eventual acquisition by Access Bank. Access Bank confirmed news of a merger with Diamond bank Monday after saying it signed a Memorandum of Agreement with Diamond Bank. Access said in a statement that it emerged the preferred bidder after a competitive process undertaken by the Board of Diamond Bank. The proposed merger involves Access Bank acquiring the entire issued share capital of Diamond Bank in exchange for a combination of cash and shares in Access Bank via a Scheme of Merger. Based on the agreement reached by both parties, Diamond Bank shareholders will receive N3.13 per share, comprising a cash consideration of N1.00 (one Naira) per Diamond Bank Share representing a total cash amount of N23.16 billion (US$ 75.58 million). They will also be allotted roughly 6.6 billion new Access Bank ordinary shares, representing 2 new Access Bank ordinary shares for every 7

Diamond Bank shares. The offer represents a premium of 260 percent to the closing market price of N0.87 per share of Diamond Bank on the Nigerian Stock Exchange as of December 13, 2018, the date of the final binding offer. The completion of a transaction would be subject to formal regulatory and shareholder approvals. Nigeria’s entire banking sector has been hit by lower oil prices, with non-performing loans across the sector averaging nearly 15 per cent. In September, local lender Skye Bank collapsed.

Toyin Badeji, business development manager, Visa West Africa; Kemi Okusanya, vice president, Visa West Africa; Ebehijie Momoh, head of retail banking, Standard Chartered Bank Nigeria Ltd (SCBN); Arinola Adeleye, product manager - lending products, SCBN, and Yetunde Obrimah, head, client experience, process and governance, SCBN, at the recent Visa 360° Rewards launch event last week in Lagos.

PUBLIC INSITUTIONS

NEXIM boosts export activities in South West with N15bn HOPE MOSES-ASHIKE

s part of efforts to grow the non-oil sector of the economy, the Nigerian Export Impor t Bank (NE X IM) has extended support to the tune of over N15 billion disbursement to exporters in the South West region, to boost export activities. Stella Okotete, executive director, business development, NEXIM, made this known during a facility tour of some of the recipients of the funds in Lagos. Okotete said the disbursements is to let every-

one see that non oil export is growing and NEXIM is meeting its mandate of increasing the contributions of non oil to the Gross Domestic Product of Nigeria. Nigeria was said to lag behind a number of countries in non-oil export earnings as Africa’s biggest economy faces poor infrastructure slump that c o nt i nu e s t o hu r t l o ca l manufacturers. She was concerned about the state of the Apapa road, saying that “the Apapa road is imitating Continues on page 18

Edited by LOLADE AKINMURELE (loladeakinmurele@gmail.com) Graphics: CHINEDUM ONYEMA

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Wednesday 19 December 2018

COMPANIES & MARKETS TECHNOLOGY

Smile offers free YouTube access, voice calls to customers in Christmas season campaign JUMOKE AKIYODE-LAWANSON

mile 4G LTE telecommunications network has introduced a brand campaign, in the spirit of the holiday season to keep families and friends connected, entertained w i t h mu s i c a n d v i d e o s and updated with what’s happening on social media. The campaign tagged ‘Get into the groove this season’ is aimed at empowering individuals and families to purchase and u s e S m i l e’s a f f o rd a b l e 4GLTE broadband internet to enjoy their smart T Vs, portable tablets as well as voice and video calls. Stay connected to the people and activities they love doing online, watch videos, play games and more. With the campaign, potential customers will enjoy the offer by purchasing a SMiFi device for only N12, 000. The SMiFi de-

vice comes bundled with 1 0 G B d at a i n a d d i t i o n to FREE 1 hour YouTube access daily for 1month, 10 minutes calls all local networks,100% data bonus for first 3 months and unlimited on-net calls. The FREE 1 hour YouTube access is available for use between 9am – 3pm daily within the 30days period. Existing customers on the network will also enjoy t h e F R E E 1 h o u r Yo u Tubeoffer for 30days period by purchasing any 30 days AnyTime data plan with a minimum of 5GB. C o m m e nt i n g o n t h e lau n c h o f t h e s ea s o n ’s campaign in Lagos, Lotanna Anajemba, Smile’s h e a d , b ra n d a n d c o m munications, emphasized the need for every Niger ian to stay conne cte d to families and friends through voice and video c a l l s by s i m p l y d o w n loading and using the SmileApp, streaming andwatching movies as well a s s h a r i n g m e m o ra b l e moments. He explained

L-R: Tayo Fakorede; Stephen Odili, ERS Operations Lead; Etop Ikpe, CEO, Cars45; Aare Bashir Fakorede, CEO, Bash Oil; Milin Shah, MD, Smartflow Technologies; Abayomi Awobokun, CEO, ERS, at the official station launch of ENYO Retail and Supply’s Owode Onirin Service Station, Ikorodu road, Lagos State.

further, that Smile will continue to innovate and provide offers that provide s value to fulfil the telecommunications needs of the customers. The company says the o f f e r w i l l b e av a i l a b l e

COMPANY RELEASE

PAC Capital talks Green Finance in Partnership with the NESG

t a two-day workshop on Green Finance organized by the Nigerian Economic Summit Group, The Heinrich Boll Foundation, Office of the Nigerian Vice President National LPG Expansion Program, Natural Eco Capital, CERASE and PAC Capital Limited, discussions centered on the challenges impeding proliferation of green investments from the private sector, the design, implementation and supervision of green bond issuance; relationship between green growth and green finance as well as green investment opportunities for both the private and public sectors. Participants, drawn from finance, oil and gas, energy and Non-Government Organisations (NGOs) segments, were treated to in-depth presentations by industry experts and government representatives; Obi Ugochukwu – Adviser Federal Government of Nigeria on Green Bond Program, delivered a presentation on ‘Federal Government of Nigeria: Green Bond Ex-

perience’, Fatimah Denton, Director, United Nations University – Institute for Natural Resources in Africa (UNU – INRA), provided insights on ‘Emerging Opportunities for Green Growth’; citing that the transition from “brown” industries into green and the deployment of renewable energy is one way to position the numerous opportunities present in Nigeria; whilst Jubril Adeojo, a certified climate expert, and Korede Ologun, an Investment Banker from PAC Capital Limited identified what and where the green investment opportunities exist for the private and public sectors. Limited expertise around green finance especially in the Banking sector, unavailability of innovative finance/ funding solutions to support the renewable energy, and lack of continuity of infrastructure projects by succeeding government were some of the challenges identified by the Experts. Others are unproductive/ non-commercially viable off-grid communities for energy supply and high cost

of renewable energy assets/ technology for the end-users when compared with fossil fuel powered generator set consumed by households, SMEs, and industries at large. There is no doubt that there is a much needed call for continued robust conversations around Green Finance and Climate Sustainability Developments within the Nigerian context. Hence, PAC Capital Limited aims to support platforms to engage global and local experts.

through all Smile distribution channels including retail shops, kiosks, field sales representatives (FSRs), independent dealer outlets and online. Smile communication was the first to launch

VoLTE on its network and has continued with its innovation, having introduced SmileVoice, which is a free mobile app that enables customers with any Android or ios handsets (including those which

are not VoLTE-enabled) to make clear voice and video calls over Smile’s 4G LTE networks. Smile was also the first to introduce an unlimited offering, which enables fast data and clear voice, all from one data plan.

PUBLIC INSITUTIONS

NEXIM boosts export activities in ... Continues on page 18

against the progress in the non-oil export. The number of truck on the road is increasing the turnaround time from 90 days to 180 days, thereby reducing revenue contribution from that sector. “We have an office in Calabar and we expect that we should reduce the traffic of everything coming to Lagos port, Okotete said.” On the need to increase t h e b a n k ’s i n t e r v e n t i o n from the average of N1.5 billion disbursed, she said, “Because they are new on our books, we wanted to see

capacity and coming here today, we have seen that they have the capacity and they will get more. “One of them told us that he has done $38 million transactions in 2018 and that is enough reason Tom increase what he gets by reducing his interest burden and increase his export.” Madhukar Khetan, Chief Operating Officer of Dufil Premier foods, who spoke at the presentation of N1.5 b i l l i o n t o t h e c o mp a ny , said: “the fund will help to stimulate our production and export performance. “We are currently doing N900 million worth of ex-

port monthly and N10 billion annually, with 20,000 direct and indirect employment, Khetan, said.” Adeyemi Adeniji, Chief Executive Officer of Starlink, who’s company got N10 billion said he lost 505 tonnes of cocoa produce on transit from his warehouse to the Apapa port barely 10 kilometre away. “The nightmare in Apapa is shrinking our business. In 2016, we did 65,000 tonnes of cocoa export. In 2017, 53,000 tonnes and in 2018, 11 months down the line, we have only managed 30, 000 tonnes,” he added.

MARKETS

IAA to bridge skills gap in Nigeria marketing communication industry

he International Advertising Association (IAA) Nigeria, the umbrella body that champions the interests of the marketing communication spectrum in Nigeria has resolved to bridge the knowledge and skills gap in the industry. The IAA Nigeria is a platform for industry issues that is dedicated to protecting and advancing freedom of commercial speech, responsible advertising, consumer choice, and the education of marketing professionals in Nigeria.

Tunji Olugbodi, the president of IAA Nigeria while speaking at the stakeholders’ cocktail dinner held in Lagos on Thursday said, there is a knowledge/skills gap in the industry. “There are specific areas in our industry that we are not growing as many people to quickly take up those responsibilities as possible,” said Olugbodi. According to him, there is a dearth of concept and copy writing; same with strategic planning, hence there is a need for industry expert to collaborate in bridging the gap and ensure the

vocation (adverting) does not go into extinct. “These are areas we need to make sure it is not a dying vocation. So, we have identified some and will continue to identify more, which is the basis we will continue to engage different stakeholders in different areas to grow the industry. “What is clear is that there is a need for a central coordination to identify what the challenges are, in terms of skills and knowledge gap, to understand what need to be done and to harness that not

just from the local point of view but from a global point of view,” Olugbodi stated. Speaking on the roles advertisers can play in a political atmosphere, Olugbodi opined that members of the association will be professionals in their conduct to ensure messages are both truthful and factual. According to him, elections do not hold in a vacuum as it does raise the interest and concern of the society; hence advertisers must consider first, the end users of the advertising messages.

Wednesday 19 December 2018

BUSINESS

COMPANIES & MARKETS

Business Event

DAY

POWER

Siemens tasks Edo youths on power innovation with N3.5m cash prize

o less than 60 youths have reached the finals of the Hack Edo Series organised by the Edo State Government in partnership with Siemens’ Impact Hub to improve power supply in communities across the state. The finalists will gather in Benin City, the state capital, on Monday, December 17, for the final phase of a grueling competition that will provide workable and innovative technologies to identify and solve the challenge of power in the state. Senior Special Assistant (SSA) to the Governor on Skills Development and Job Creation, Mrs. Ukinebo Dare, said, “The Hack Edo Series is a multi-dimensional initiative focused on leveraging technology to identify and solve the most pressing problems faced by individuals, businesses and the ecosystem

as a whole. Through a series of practical Hackathons, the Hack Edo series will equip young Nigerian innovators with the skills necessary to make impact in their various communities. She said that 60 finalists have been shortlisted out of over 100 applications received, noting, “The Power for Edo Hackathon was open to innovators, entrepreneurs, and knowledge seekers, including developers, business managers, students, analysts among others withinnovativetechnologytobuild a solution.” Dare added that three winners with the best innovative solutions topower supply challenges will emerge at the event, as the winner of the first prize will go home with N2,000,000.00; 2nd place, N1,000,000 and 3rd place N500,000.00,makingatotalofN3.5 million. She said other 90 participants are expected to attend the event,

whichwillalsohostChiefExecutive Officers of Siemens and Impact Hub. According to her, “the event is intended to achieve the following objectives; increase the number of individuals taking action; build a collaborativecommunitythattackles issues as a whole, and identify thebestideasthatwillbesupported through the incubation phase.” Dare noted that the event will catalyse growth of startups within Edo State, support development of ventures from ideation to commercialisation, promote job creation and economic development, drive and ensure the increased adoption of local technology by government, corporate and development agencies across Edo state and Nigeria, strengthen and raise the standard of startups in the region, and deliver positive social impact returns to communities and people across the region.

L-R , Segun Ajayi-Kadir, director general, Manufacturers Association of Nigeria with Diekola Onaolapo, CEO Eczellon Capital, during the latter’s courtesy visit to the MAN office in Lagos .

GLOBAL WITNESS

Senior execs of top world oil traders implicated in bribery scanda

enior executives in two of the world’s largest companies stand accused of involvementinamulti-milliondollar bribery scandal to secure lucrative oil deals in Brazil, Global Witness can reveal. Trafigura and Vitol, the commodity trading giants, have found themselves embroiled in Brazil’s Car Wash scandal, one of the biggest corruption cases of all time. Earlier this month, Brazilian authorities accused both companies, and major trader Glencore, of paying over $15 million in bribes to officials at state oil company Petrobras. Our new revelations show just how high the corruption allegedly went. Freshly released court documents examined by Global Witness revealtheallegedcomplicityofsome of Vitol and Trafigura’s leading lights in the bribery schemes. A former Trafigura board director was deeply involved in the criminality, and the late founder and former chairman of the company was in the know,

Brazilian authorities say. Meanwhile, Trafigura’s current Chief Operating Officer signed off payments to a middleman that ended up being used for bribes, emails in the court material show. There is no evidence the COO knew ofanybribery,andTrafigurastrongly denies any such suggestion. TheheadofVitol’sUSoperations was knowingly involved in the corruption too, according to Car Wash investigators. The disclosures come less than a month after an investigation by Global Witness and Swiss campaign group Public Eye first exposed how the three multinationals used shady middlemen in their Brazilian oil deals “Accusations that senior execs wereinonthesecorruptdealsshould force Vitol and Trafigura to take a long, hard look at themselves,” said Ed Davey, at Global Witness. “This isn’t the first time we’ve discovered commoditiestradersusingquestionable middlemen to broker shady

deals, and unless they start changing theirapproachtocorruption,itwon’t be the last.” The UK, U.S, and Switzerland provide key operational bases for the companies, and host the bank accounts of middlemen who were pivotal to the alleged schemes. Global Witness is calling on law enforcement in each of these countries to launch immediate investigations. Glencore says it “takes ethics and compliance seriously” and will cooperate with Brazilian authorities. Trafigura said it is “taking these allegationsseriouslyandarecarefully reviewinganyinformationavailable”. Vitol said it would be inappropriate to comment on the allegations, but it had a zero tolerance policy over bribery and cooperates fully with the authorities wherever it operates. The Brazilian authorities made eight arrests in December 2018 in connection with the investigation but are yet to bring any charges in the case.

AWARDS

L-R: Timothy Olawale, director-deneral designate, Nigeria Employers Consultative Association (NECA); Mohammed Yinusa, president, and Taiwo Adeniyi, first vice president, during the NECA’s press briefing in Lagos

L-R: Lanre Onasanya, CEO, H.C. Bonum Limited and Member, Board of Directors, Digital Jewels Limited, Mrs Adedoyin Odunfa, Managing Director, Digital Jewels Limited and Mrs Ibukun Awosika, Chairman, Board of Directors, First Bank of Nigeria Limited at the Digital Jewels Limited 10 Anniversary Celebration/ Awards Dinner event held in Lagos.

Ademosu, Babatope, Okwuosa, others bag HBSAN awards NOMSO ONUOHA

a r v a rd B u s i n e s s School Association of Nigeria (HBSAN) held its Annual Gala and Leadership Awards Night on Saturday, December 8, 2018, at the Eko Hotels and Suites, Lagos. Akinwande Ademosu, CEO, Credit Direct Limited, was presented with the HBSAN Leadership Award for General Management, while Moses Babatope, and Kene Okwuosa, Co-Founders of Filmhouse, jointly received the HBSAN Leadership Award for Entrepreneurship. Joshua Ihejiamaizu, Software Engineering Lead, Generation Enterprise and Temi Marcella Awogboro received the HBSAN Leadership Award

for Social Impact on behalf of Clara Chow, Founder and Chair of Board Chair, Generation Enterprise. The gala was a glamorous evening of food, drinks, electrifying performances, networking and reconnecting with old friends, which commenced at about 6:00pm with an Oscar Trivia Game Show and lasted well into the night. The Chief Host of the event, His Excellency Akinwunmi Ambode, Executive Governor of Lagos State, delivered a welcome address that was well received by the guests. In his address, the Governor mentioned that he had attended a program at the Harvard Kennedy School which helped in preparing him for his current role as the Executive Governor of Lagos State.

The Oscars glam themed event fostered interactions among the guests who were alumni of HBS, Chief Executives of large private sector organizations and alumni members of Ivy League business schools. It provided a medium for the formation of new friendships and business relationships. HBSAN is the HBS alumni group of Nigerians and resident non-Nigerians driven by a primary objective to provide members with resources, relationships and opportunities to enable them build and lead organizations that will create transformational impact in Nigeria and beyond. The association is currently being presided by Fola Ogunsiakan, Managing Director, Cedar Capital.

L-R: Mafe Oluwayemisi, head brand communications department, SUNU Assurances Nigeria Plc; Tony Agenmonmen, president, National Institute of Marketing of Nigeria (NIMN), and Tunji Oyebanji, chairman of the body of fellows NIMN, during the National institute of Marketing of Nigeria fellow’s dinner and awards night in Lagos.

BUSINESS DAY

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Wednesday 19 December 2018

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BUSINESS DAY

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Tax Issues

FIRS generates N5trn, targets N5.3trn by year-end IHEANYI NWACHUKWU

CITN update:

Suit between Afolabi Igbaroola & other versus FIRS & other

s at the second week of December 2018, Federal Inland Revenue Service (FIRS) has generated N5trillion and is at the verge of making N5.3trillion at the end of the year, according to its Executive Chairman, Tunde Fowler. Speaking at the induction of new membersoftheJointTaxBoard(JTB)lastWednesday in Abuja, Fowler said FIRS has been able torecordsignificantachievementsfollowing maximum support from the Presidency, Ministry of Finance, the JTB and other taxation stakeholders. If the FIRS pools N5.3trillion revenue, that will be the highest revenue ever generated by FIRS in history. The highest in FIRS history is N5.07 trillion generated in 2012. Fowler’s generation of N5 trillion is significant as it was at a period when oil prices oscillated between $50 and $70 per barrel. Oil price was at an average of $100 to $120 per barrel between 2010 and 2013. “This year, the FIRS, with the support of the Presidency, Ministry of Finance, the JTB and other stakeholders, has been able to generate up to N5 trillion. We believe that we should be able to close at least at N5.3 trillion which should be the highest in the history of FIRS. And we believe that with that additional revenue, the state and federal governments would be able to provide more services and more development to the people of Nigeria”, he said. Fowler urged the new inductees to JTB to equip themselves with new ideas and embrace the Information and Communication Technology (ICT) to be able

Babatunde-Fowler, FIRS boss

to face the reality of revenue collection in the ever-changing society. “I see it as a privilege to be addressing this class of inductees today as history has chosen you at this critical point in time in our nation’s development to steer the ship of sustainable revenue generation. “While preparing for this occasion, I came across an observation by the American inventor and author Ray Kurzweil where he noted that the rate of scientific and technological change is exponential rather than linear. This observation presupposes that the better part of applied wisdom requires that in our journey of life we are capable of identifying the most apt moment to know at what point to adapt to the ever-tumultuous sea that modern existence represents. “It also indicates that we should be

able to develop the ability to accept and embrace positive change, maybe due to the fact that change is inevitable, but more significantly that oftentimes, change presents us with the rare breaks that we can exploit to advance individual and collective goals and objectives”, he said. The FIRS boss also stated that as global society continues to transform in structure and process, especially with new technologies and ways of doing things, the role that has been presented before tax administrators in an emerging economy such as Nigeria are quite enormous. He said rather than being overwhelmed by the rapid changes of the 21st century, taxmen should remain undaunted and see the opportunities that are possible to us as a people in general and as tax administrators in particular.

Wednesday 19 December 2018

he aforementioned suit came up for hearing on Monday December 10, 2018 at the Federal High Court in Suit No. FHC/L/ CS/1480/18. Counsel were present while the learned Judge considered the case as time bound and therefore wanted to take totality of the prayers i.e. all pending interlocutory applications, including a motion on notice for an interlocutory order of the court to restrain the Federal Inland Revenue Service and the Chartered Institute of Taxation of Nigeria from implementing any and all matters pertaining to the use of the Institute’s stamp and seal by January, 2019. Due to the need to adequately accommodate issues and events that had occurred between the last hearing and yesterday as well as the need to allow for proper exchange of briefs, Counsel on both sides agreed to defer argument on the interlocutory applications as well as the sub-

stantive suit until Wednesday; January 16; 2019. On its part, the Institute declined to give any undertaking concerning the implementation of the policy under consideration, until the adjourned date in January; 2019, when requested to do so. For the records, the court did not hear any of the arguments, either interlocutory or substantive, before it but adjourned hearing till January 16, 2019. Please be rest assured that the Institute would do everything within its power to defend and promote the legal mandate handed it by the unambiguous provisions of the law. This will be done regardless of sentimental or emotional attachments. Members are urged to be at the Federal High Court sitting on Wednesday, January 16, 2019 for the hearing on the interlocutory and substantive suit. Once again, we urge members to remain calm and not discuss this matter as we await the court’s verdict.

Ease of Doing Business: Impact of multiplicity of tax audits ADEDOLAPO ADEBAYO; senior tax adviser in KPMG Nigeria

udits of company have always been a way by which tax authorities ensure that Companies and individuals pay the appropriate taxes due from them. Audits typically require that tax authorities cross check the records of a Company vis a vis the returns filed with the authority and evaluate the existence or lack of a tax liability. In the Nigerian tax system, there are usually three ways by which the records of tax payers are verified. These three methods are desk query (which is usually done via mail correspondence), a field audit at the office of the tax payer and Investigations, where there is a probability of fraud or willful neglect. While all three methods are aimed at ensuring that the tax payer is appropriately taxed, the difference is in the complexity of information required. The key drivers for carrying out tax audits are to: • ensure that a business maintain proper books of accounts and other similar records; •get a proper understanding of the income and expense of the taxpayers as well as their tax deductions; •ensure the accurate application of tax laws; •ensure that the tax credit refund being applied for is valid. The major reasons for auditing the records remain the same irrespective of the number of times a particular period is audited, investigated or queried. This brings to mind the question of how often does the government have to

check the records of a Company for a particular period, for the Company to be issued a clean bill of health for that period? In the recent past, Companies expected to be audited by the States Board of Internal Revenue (SBIR) on issues relating to tax on employees, and transaction taxes with respect to partnerships and unincorporated businesses. On the other hand, for taxes on transactions and income of incorporated entities and value added tax, Companies expected to be audited by the Federal Inland Revenue Service. As a result, Companies had a level of certainty as to the frequency of audits to be expected during each period. In addition, the Companies could plan adequately for such audits and structure the activities of the appropriate unit to make adequate arrangements for such audits. However, this is no longer the case. Current happenings in the tax space have made it impossible for businesses to plan for tax audits as they did in the past. Rather, Companies continually receive letters and notifications for audits. This development has further saddled the Nigerian tax system with additional ineffectiveness. This fact is also acknowledged by the Government of the day and thus in the first quarter of 2017, the Federal Executive Council of Nigeria approved a new National Tax Policy, which (among other things) was aimed at addressing multiplicity of taxes and revenue agencies and also recommending the existence of one revenue agency per level of government. However, despite all the efforts being invested in improving the tax administration and processes, stakeholders are yet to feel

the difference. Of course, the state of the tax administration in Nigeria can be attributed to different reasons like the mythical multi-headed serpent of old. However, this article will focus on one of the heads of this serpent: the multiplicity of tax audits on the records of a business. Multiplicity of tax audits is a very common occurrence in most sectors of the Nigerian economy. However, one industry in the Nigerian space where multiple audits are very common is financial services. This industry renders immense support to the Nigerian economy as financial transactions/ monies have to go through one sector of the financial industry or the other. As a result of this, there is the general belief that the financial services industry earns a lot of money and may not be paying or remitting its fair share of taxes. This perception has led to back-to-back, non-ending audits of the records of the businesses in the financial sector by various arms of government. For example, Banks, are subjected to series of audits by the Federal Inland Revenue Service, ranging from full scale field audits to routine compliance and monitoring checks at their offices. As if this is not enough, the revenue-allocating arm of the Federal Government recently started carrying out a “verification” audit of the Banks as a taxpayer. In addition, various committees of the National Assembly and even the Economic and Financial Crimes Commission (EFCC) have recently shown interest in auditing or verifying the tax records of these businesses. This begs the following questions: “Are multiple audits really necessary for the government to establish a true and accurate picture of

the tax position of a business?” “Should the Government’s only concern be collection of tax without a thought to the health of the businesses in the country and sustaining them?” To answer these questions, we will first consider how a typical audit affects a business. To understand this, we would have to evaluate factors such as time and efforts expended by the business in the course of the audits. Of course, there is also the issue of the fees payable to tax consultants. Typically, an FIRS audit will require some sorting of records and documents and that information and records are compiled prior to the FIRS’ arrival. This would also require that the officials saddled with these responsibilities abandon their usual job descriptions and focus their time, efforts and attention on collation of documents for the audits. In a case where the audits cover a number of years, the efforts and time required for the collation of documents would be even significant. What is more, when the audit covers a period which ended years ago for which the documents might have been archived, it may take even more efforts and time. Typically, this could stretch for weeks and even then some documents may still not be obtained. This is probably what the tax law drafters had in mind in putting a cap on the number of years which the regulator can go back to audit, except in cases of fraud. Considering the time, man power and resources required for an audit, it then becomes more cumbersome when more than one authority is auditing a business at the same time. How are the personnel of the business supposed to attend to multiple audits at

the same time? At the point where the both authorities arrive at undisputed liability for the business, to whom does the business pay the outstanding liability? One would think that when both authorities are federal agencies, they should jointly advise that the business pay the liability into a dedicated joint federal government account for taxes collected; however, this is hardly the case. The reason is that most of the revenue agencies seem to have a target they are working towards, whether or not the target is publicly acknowledged. Therefore, each agency has an account in its name for collecting revenue. In such a case, our hypothetical business is at a cross roads as to whom they should pay to. Since the business also doesn’t want to pay the liability twice, it is wary and would rather pay the liability to the more-threatening authority. This means that it will most likely pay to the authority/agency which is more forceful or who may pose a reputation risk by denoting the business or owners as tax evaders in public space. This is also one of the issues that result from multiple audits on a business. So what can be changed? Is there anything that can be done to improve corporate tax compliance in Nigeria while also ensuring that businesses are able to thrive and government get its fair revenue from these businesses? To answer this, a review of the tax practice of the United Kingdom would be relevant. In the United Kingdom, the revenue authority: Her Majesty’s Revenue and Customs (HMRC) is the UK’s tax and customs authority. The department is responsible for the administration and collection of taxes, duties and levies. Continues nexy week

Wednesday 19 December 2018

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BUSINESS DAY

E-mail: insurancetoday@businessdayonline.com

Allianz 2018 safety & shipping review unveils fresh challenges for global insurers • 94 large ships lost worldwide in 2017, down by more than a third over 10 years. Bad weather involved in 1 in 4 losses. Losses up in accident hotspot - South China and South East Asian waters (30 ships). Typhoons, traffic and safety on domestic routes major factors. Shipping incidents in Arctic waters increase. • Human error still a major driver of incidents. Big data analysis of crew behavior and near-misses could help prevent disasters. • “Mega ship” fires, emissions rules, climate change and autonomous shipping pose new risk challenges. Insurers expect to see more losses from cyber incidents and technological defects.

here were 94 total losses reported around the shipping world in 2017, down 4% year-on-year (98) – the second lowest in 10 years after 2014. Bad weather, such as typhoons in Asia and hurricanes in the US, contributed to the loss of more than 20 vessels, according to the annual review, which analyzes reported shipping losses over 100 gross tons (GT). “The decline in frequency and severity of total losses over the past year continues the positive trend of the past decade. Insurance claims have been relatively benign, reflecting improved ship design and the positive effects of risk management policy and safety regulation over time,” says Baptiste Ossena, global product leader Hull & Marine Liabilities, AGCS. “However, as the use of new technologies on board vessels grows, we expect to see changes in the maritime loss environment in future. The number of more technical claims will grow – such as cyber incidents or technological defects – in addition to traditional losses, such as collisions or groundings”, he concludes Analysis shows Friday is the most dangerous day at sea – 175 losses of 1,129 total losses reported have occurred on this day over the past decade. Friday 13th really can

be unlucky – three ships were lost on this day in 2012 including Costa Concordia, the largest-ever marine insurance loss. The unluckiest ship of the past year is a passenger ferry operating in the East Mediterranean and Black Sea region – it was involved in seven accidents in 12 months. “Human error continues to be a major driver of incidents,” says Rahul Khanna, global head of Marine Risk Consulting, Allianz Global Corporate & Specialty (AGCS). “Inadequate shore-side support and commercial pressures have an important role to play in maritime safety and risk exposure. Tight schedules can have a detrimental impact on safety culture and decision-making.” It is estimated that 75 percent to 96 percent of shipping accidents involve human error. It is also behind 75 percent of 15,000 marine liability insurance industry claims analyzed by AGCS – costing $1.6bn The Allianz Group -headquartered in Munich, Germany - is one of the world’s leading insurers and asset managers with more than 88 million retail and corporate customers. Allianz customers benefit from a broad range of personal and corporate insurance services, ranging from Property, Life and Health insurance to Assistance services

to Credit insurance and Global business insurance. The Allianz Group manages over 650 billion euros on behalf of its insurance customers and an additional 1.4 trillion euros of third-party assets.

Allianz holds the leading position for insurers in the Dow Jones Sustainability Index and in 2017, over 140,000 employees in more than 70 countries achieved total revenue of 126 billion euros and an operating

profit of 11 billion euros for the Allianz Group. In July 2018, Nigerian insurer, Ensure Insurance, was acquired by the Allianz Group and rebranded to Allianz Nigeria in December 2018

L-R: Rotimi Edu, vice president, Nigerian Council of Registered Insurance Brokers; Taiwo-Tella Ndukwe, divisional head, Corporate Clients & Intermediaries, Ensure Insurance Plc; Sunkanmi Adekeye, managing director, Ensure Insurance; Shola Tinubu, president, NCRIB; Bola Onigbogi, deputy president at the December Edition of NCRIB Members Evening sponsored by Ensure Insurance Plc held in Lagos recently.

Insurance gives boost to financial inclusion with tips on how to save for rainy day …as experts at Cornerstone offers guidance Modestus Anaesoronye

nderwriting firm, Cornerstone Insurance Plc as part of its contribution to Federal Government’s efforts on financial inclusion has engaged the public through its education awareness campaign on how to save, even in difficult times. The insurer said, ideally, you should be saving at least 10 percent of your monthly income every month. “If no one has ever told you, the purpose of money,is firstly to be a safety net that you can fall back on when the unexpected happens. Unexpected things like a medical emergency or loss or damage to an asset. The money you save to buy a new iPhone X or to travel on holiday is another savings account entirely; separate from your 10 percent.” The second purpose of saving money, the Company said is to build a springboard for your long term financial freedom. When the money you have saved up has accumulated to an appreciable level, you can convert it to investments. These investments (maybe in property or a business) over time will generate passive income that you can live on comfortably even after you retire. The unfortunate reality for most of us however, is that we are broke

two or three weeks after pay day and just manage to survive till the next credit alert the next month. How is it possible for me to save if what I have is not even enough to get by, here experts at Cornerstone identify five tips that can help you save monthly even when your monthly pay is just the minimum wage. Pay yourself first You need to change your mindset. What you need to realize is that every time you spend money, you are contributing to the dreams of the person you are paying. Whether you’re paying for food, transport, a new pair of shoes or that new iPhone you’ve been dreaming about, whenever you part with your money, you are fuelling someone else’s goals. Who is fuelling your goal? Apart from your salary, who else is paying you regularly? If no one is paying you, at least pay yourself. Contribute towards your own dreams by paying yourself before you fuel anyone else’s dreams. Every time you have been broke, somehow you survived till the next pay day so you can survive on 10 percent less and still make it. Avoid bad debt One of the reasons you are struggling financially might be because you are in a cycle of debt. When you get your salary, the first thing you do is go round paying all your creditors,

leaving you with less than you can survive on. Before the next pay day, you go around borrowing again against the salary you haven’t even collected. You need to break this cycle of debt. Not all debt is bad and I realize that sometimes, you have no option but to borrow but you have to evaluate your life carefully. Make a commitment to reduce the amount you borrow until you have no more debt. It will be tough and you will have to make sacrifices. You are enduring the pain now, so that you can enjoy later. Save your change daily Something I’ve been doing since my school days is, I empty all my loose change into a jar every night when I get home. I’ve been doing this for so long, that even now that I don’t need to do it anymore, I feel uncomfortable if I don’t do it. More so, most of my purchases now are electronic, so I don’t carry as much change as I used to. If you find it hard to save 10% upfront, then do this. Every night when you get home, take out all the notes less than N100 from your wallet (or whichever denomination you feel comfortable with) and put them in a safe jar. At the end of the month or whatever frequency you choose, take all the money you have saved and put in a separate account from your regular one. My prefer-

ence is an account that you can’t access easily with a debit card. Insurance savings accounts work well for this. This is the absolute least you can do and there is no excuse you can give not to do at least this one thing to save monthly. An example is the iSave Plan, which is an enhanced savings plan that assists in building a lump sum amount over 24 months while paying a competitive interest rate which is 4 percent higher than the minimum savings deposit rate paid by the banks. Some of the benefits include: Creating capital for future needs (i.e. school fees, home ownership, start own business etc.). In the event of death, the account balance and sum assured are paid to the named beneficiary. Prepare a monthly budget Before you collect your next salary, list out all the things you spend money on and put a spending limit next to each one. Pay yourself 10 percent first. The addition of all your expenses should be less than your income. It’s time to start cutting. There are things that you might think you can’t do without but these can either be eliminated or at least slashed. Do you really need that cable TV subscription? You are hardly at home anyway. If you have kids who watch the TV while you are at

work, then get a cheaper bouquet. Pack meals to work rather than buying from eateries. You have to do all that it takes to cut and slash all these expense lines until you have a balanced budget. There are times when it’s the big expenses like rent or your children’s school fees that are the source of your financial issues. These can be a bit tough to handle, moving further out of town so you can get a cheaper accommodation means higher transport costs to and from work (not to mention the mental and physical toll on your body). You may be paying high school fees for your children’s education because you value the quality of education they are getting. In that case, it’s a sacrifice you have chosen to make for a specific timeframe. The next section therefore may apply. Start a side hustle Sometimes, there just isn’t any more fat you can trim off your monthly budget, you just need to increase your income. You can get a higher paying job or you can start a side hustle. If you think long and hard enough, you will come up with something you can do to earn extra money. You have a circle of friends, colleagues, fellow worshipers and so on. All these people have needs. What can you sell to them to address their needs?

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Wednesday 19 December 2018

In association with E-mail: insurancetoday@businessdayonline.com

FG employees denied compensation for death benefits over nonpayment of premiums

Insurance industry gross premium up 22% in Q3 …market sees significant growth at year end Stories by Modestus Anaesoronye

he nation’s insurance industry as at end of third quarter 2018 has grown its gross premium income by 22 percent, moving from N258 billion during the same period in 2017 to N315 billion. The industry is expected to close the year with a significant leap in premium, Mohammed Kari, commissioner for Insurance/CEO National Insurance Commission (NAICOM) said. Kari made the disclosure during the End of the Year review workshop for insurance journalist held in Lagos. Represented by Sunday Thomas, deputy commissioner for Insurance, Technical at NAICOM said the gross claims figure for the third quarter 2018 was N143 billion, a 30 percent increase over the N110 billion reported for the same period in 2017. Going into 2019, he said the outlook may not be as rosy as we all would have liked but NAICOM sees the silver lining and is fully committed to making the most of it. Kari said “We have set for ourselves a clear, unambiguous task: to improve the aggregate number of insurance consumer by enabling

individual operators to optimally serve a much larger customer pool with a more varied basket of products. T he end game for us is to increase the insurance uptake ratio among the Nigerian populace and we have a number of initiatives in place towards achieving this.” According to the commissioner, financial inclusion is one of the tools the Commission envisage to help improve market penetration. The initiative is premised on the fact that getting the mass of the financially excluded to embrace insurance in one form or another will have a positive impact. Kari therefore charged the insurance companies to have a buy into the industry’s microinsurance initiatives for the Nigerian market. “The Takaful market is still grossly under accessed by the public, there is therefore the need for aggressive promotion in aid of financial inclusion.” “In addition, efforts are being made to expand the distribution channels for insurance products because the traditional channels are becoming too restrictive and suboptimal. Whereas Bancassurance has received the most attention, there are other initiatives to reach out to the public.” He said the Commission has

developed a guideline for the creation of State Insurance Producers (SIP) which, is expected that State Governments participation in enforcement of compulsory classes of insurance will enhance compliance and deepening of the market. “States will in the process create employment and enhance their internally generated revenue.” Tope Smart, chairman, Nigerian Insurers Association (NIA) said the operators were putting initiatives in place to reach the unreached population of Nigerians. He said with a 2.5 percent economic growth projection for 2019, and anticipated investment in infrastructure by government; insurers are hopeful to benefit from the insurance element. Eddie Efekoha, president Chartered Insurance Institute of Nigeria (CIIN) stated that among the issues that occupied public discourse in 2018 was the Tier Based Minimum Capital policy, stating “While I thank the Commission for deeming its fit to withdraw and cancel the policy the time they did”, the fall out was huge. It reawakened some of us who were sleeping; it has also wet the appetite of consumers who now have become more selective, and most importantly we have built greater capacity for our business, Efekoha.

According to them, death claims are now in billions, but they cannot pay because premium was not paid by government during period. “However, the implication is that the dependants of workers who died when premium had not been paid will not have anything to claim from the insurance companies, except the Federal Government decides to make a separate package for them,” an operator said. They said this in compliance with the ‘no premium, no cover’ regulation of the National Insurance Commission stipulating that insurance cover could only commence when the premium had been paid. The Pension Reform Act stipulates that every employer, to which the Act applies, must maintain Life Insurance Policy in favour of the employee for a minimum of three times the annual total emolument of the employee. Under the policy, total annual emolument is defined as the basic salary, transport and housing allowances and shall not include bonuses, overtime, directors’ fees or other fluctuating emoluments.

Two specialised microinsurance firms to commence operation new year

wo specilised microinsurance companies will commence operation in the New Year, as they were on the verge of securing regulatory approval to do so, the National Insurance Commission said. This is in line with the effort to insure about 80 million uninsured low income earners across the country. The two microinsurers, when they start operation would become the pioneer microinsurance outfits in the insurance sector of the economy. While it is yet unknown which of the Unit, State and National License the two firms will operate with according to specification of the guildelines, insider source revealed that one of the firm is expected to target Lagos and SouthWest market in a bid to increase insurance penetration and

acceptance in the country. Confirming the development Sunday Thomas, deputy commission for Insurance, Technical, NAICOM said the Commission had applications from five companies of which two of them are at the verge of being given license. These duo, he said, will be the first two set of companies that meet the microinsurance license requirements. According to him, “We had applications from like five companies and two of them are at the verge of being given license. Those will be the first two set of companies that meet the requirements.” He stated that some years back, when micro insurance started, it went through a lot of discussion in the market, but insurance operators were not taking advantage of it as only few companies’ have shown interest.

2015

L-R: Eddie Efekoha, president, Chartered Insurance Institute of Nigeria (CIIN),; Tope Smart, chairman, Nigerian Insurers Association(NIA); Sunday Thomas, deputy commissioner for Insurance, Technical, NAICOM;Leonard Akah, head corporate governance, Enforcement, Comliance, NAICOM ; Ebelechukwu Nwachukwu, managing director/CEO, NSIA Insurance; and Richard Borokini, director general, CIIN during the NAIPCO End of Year Review Workshop held in Lagos

he inability of the Federal Government to pay premium for the insurance of its employees has denied dependants and relatives of deceased workers appropriate compensations. Federal Government paid last in April, meaning that for this period compensation were not coming from insurance companies, as the underwriters did not collect premiums on the workers. The implication is that government would have to pay from its coffers, putting pressure on government budget, and this is falling back on dependants of deceased employees who are now queuing in their numbers. Some of the labour unions who commented on the matter said some of their deceased colleges relatives have had to wait for so long to be compensated, stating that FG should fall back to insurance companies by paying their premiums as and when due. When some of the insurance companies were contacted, the blame the development on the delays and inconsistencies in the payment of the annual premium by the government..

Wednesday 19 December 2018

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Pension Today

BUSINESS DAY

In Association with

Before and after retirement, what is there for you as an RSA contributor?

he Pension Reform Act 2014 has been structured to ensure that pension contributors have smooth process in accessing their benefits, either before retirement or upon retirement. Howeversome people have difficulty in accessing their benefits because they failed to follow the rules or fail to show up for documentations early enough, ahead of their retirement time. To make the process simpler for contributors, the Pension Fund Operators have continued to explain critical issues bothering on payment of retirement benefits, who qualifies for benefits, and what can be done to make the process easy and stress free. Under the PRA 2014, A Retiree is described as a person who is 50 years or older and is retired/disengaged from active employment. It could as well be a person who is below 50 years old but retired based on the terms and conditions of his or her employment. So, these two set of retirees are qualified to access retirement benefits. Other categories of Retirement Savings Account holders that are eligible to make withdrawals from their retirement savings account are:Persons below 50 years who exit voluntarily or are disengaged from employment and are unable to secure another employment within 4months. In this case, the person can access 25 percent of his RSA balance. Others are persons certified by a qualified physician to be mentally or physically incapable of carrying out the functions of his office. In this case, the person is Withdrawing on health grounds and so can access lump sum and Programmed

L-R: Gbenga Dada, South-West regional head, ARM Pensions; Olademeji Suleiman, manager Operations, PenCom; Omoshola Faustina, deputy manager operations, PenCom; Bisola Onigbogi, head, Business Development - ARM Pensions and Martins Benjamin, legal Officer, PencCom at ARM Pensions Client Forum held in Lagos Recently

Withdrawal or Annuity and or enblocpayment based on the total balance in his RSA account. The Next of Kin or Administrator of a deceased personcan apply for deceased benefits. Getting ready for retirement, the RSA holder has an important role to play, which is to update his or her information withhis chosen PFA; obtain relevant information from his employer; commence gathering of required documents; attend the Verification Exercise of the National Pension Commission the year before retirement if you are a public sector employee. Some of the critical documents required for processing of benefits applications are highlighted: Pay slip: For any month within the last three months to the

retirement date Retirement letter: The retirement letter should state the effective date of retirement and should be on the employer’s letter head. Evidence of death of birth: A sworn affidavit for age declaration or Birth Certificate supporting the age of the RSA holder as provided during registration. There are common complaints while trying to access the RSA, here Jumoke Bakare of Stanbic IBTC Pension Managers provide answers to some of the questions bothering retirees and would be retirees: Question: I retired since 2003 but I am yet to receive my Pension from my PFA? Answer: Persons that retired prior to July 2004 do not fall under the Contributory Pension Scheme (CPS)

RC634453

Diamond Pension Fund Custodian Limited

1A, Tiamiyu Savage Street, Victoria Island, Lagos State. Tel: 01-4613753, 2713680, 2713954 Fax: 01-2713955 Email: info@diamondpfc.com Website: www.diamondpfc.com

hence their retirement benefits should be received from the old schemes that they were part of. Also note that employees that had 3years or less to retire from the date of commencement of the Act (30 June 2004) are exempted from the contributory scheme. Question: I need my money but my PFA is trying to frustrate me by requesting for several documents? Answer: These documents are required to confirm the RSA holder’s eligibility, and extract information required to compute the retirement benefits accurately. There is a checklist of documents required for each application type. Question: I need my money but my PFA is refusing to pay my benefits? Answer:This may be as a result of ineligibility of

the client. For public sector clients – the accrued rights needs to be remitted before the client can access the benefit. The retiree is expected to attend the annual verification exercise a year before retirement Question: My monthly payment after the lumpsum is too small? Answer: The Benefits Calculator template is used to determine the benefits due to an RSA holder. The four variables are inputted into the template to determine the lump sum and monthly drawdown. These variables are the Gender, Age at Retirement, RSA balance and Final Salary of the retiree. The commission is working on the guidelines for implementation of the Minimum Pension Guarantee which is an arrangement to establish a Guaranteed Minimum Pension to eligi-

ble retirees. Question:Delays in processing of Pension Payment, why? Answer:This may be as a result of disparity in personal details provided at registration and retirement, incomplete or invalid documentation, delay in obtaining confirmation from employer. Question:The PFA is delaying the process of accessing the benefits of a deceased relative, why? Answer: To access the benefits of a deceased RSA holder, the beneficiaries are required to present a valid will admitted to probate or a letter of administration confirming the beneficiaries under the estate of the deceased RSA holder. Upon receipt of such documents, the PFA is expected to carry out due diligence by verifying the Letters of Administration and Will at the probate successfully before the benefits can be processed. This is subject to the court / judicial processes. For Public sector RSA holders that died in service, the beneficiaries are expected to submit Death Notification Documents. These are the documents that enable the commission to compute and remit the total benefits due to the deceased RSA holder before the beneficiaries can access the benefits. The KEY to easy and prompt access to the benefits in the Retirement Savings Account is Regular Data Update and Documentation. The client Familiarity Index is a PenCom initiative to get all RSA holders to update their information with their PFA every three years. Make sure there is timely processing of retirement benefits, and you will not have any difficulty accessing your benefits. Happy retirement!

This section is created to increase awarness and deepen knowledge about the contributory pension scheme. If you have enquiries or contributions, send to this e-mail: diamondpfcbusday@yahoo.com

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Leadership

Wednesday 19 December 2018

Shaping people into a team

What will it take to make finance more gender - Balanced? Mary King, Malin Ortenblad and Jamie J. Ladge

e had come to fear that our gender would keep us from achieving the same level of success as our male peers in finance. Because one of us (Malin) grew up in Sweden, considered to be one of the more genderneutral countries, with its familyfriendly policies that emphasize both parents’ responsibility in raising a family, we wondered whether gender equality in the finance industry in Sweden had progressed further than it had in the United States, and if there were any lessons to be learned there. Going into our study, we expected to see women and men equally represented in senior leadership positions in Sweden, and higher self-efficacy among professionals. We doubted, for example, that we would come across Swedish investment banking teams that were less than 40% female. We found that our initial perceptions were incorrect in the more competitive fields of finance, such as venture capital, investment banking, and securities. Consider investment banking. The Swedish investment bankers we interviewed told us their teams were on average only comprised of 5% to 20% women. Those who responded to our survey also had less confidence than American investment bankers in their own ability to impact gender equality in their firms. And although there were family friendly policies in place in Swedish firms, team members said that full use of them was not culturally encouraged. This made us think that the field in which one works can matter as much as or more than the country you work in. The more male-dominated fields in finance are also those with the longest working hours (over 60 hours per week), and according to estimates among the employees we interviewed, these fields seem to be comparably unequal (with women making up less than 20% of the workforce) in both the United States and Sweden. Fami-

ly-friendly policies alone may not be enough to drive changes to gender equality in finance. But in fields such as retail banking and corporate finance, where female representation is higher, our survey respondents and interviewees did in fact suggest that gender equality is greater in Swedish. Many of the managers in retail and commercial banking we interviewed in Sweden said their teams were made up of well over 50% women. Many also had women in senior leadership positions, including on boards. The U.S. finance professionals we studied reported lower numbers. When we asked interviewees why there was a lack of women in their firms, the most common response in both countries was that they believed women are not interested in finance. When pressed further, they identified two reasons: a masculine culture and long working hours. The second explanation makes sense when it is seen as an obstacle to raising a family. The responsibility of raising a family has, in both countries, traditionally fallen more often on women , and prior research has shown that employees who work long hours tend to have a partner that takes on disproportionate responsibility in the home. This was brought up by

many of our senior interviewees. Several referred to a discrepancy in “what [men and women] are willing to compromise and give up along the way [for their career],” as a senior American male trader put it, suggesting that some senior men still believe a woman is more likely to forego a career in order to raise a family. But data shows that, at least in the United States, only 2% of both men and women say they plan to leave the workforce to focus on their families; Sweden’s parental leave policies seem to allude to similar societal views. Although long working hours might have a more negative impact on women than men due to the unequal division of housework and child care, none of our women interviewees commented that long working hours effected them more negatively than their male colleagues. More survey respondents and interviewees pointed to an unwelcoming masculine culture as the reason there weren’t more women in certain fields. Many of the women we interviewed were among the only women at their firms, and they often attributed part of their success to their comfort in a masculine environment. Several described themselves this way or were described this way by their colleagues. “I grew

up with two brothers, and most of my closest friends are guys … to be honest, it would be more uncomfortable for me to work with a lot of women,” one Swedish female investment banker told us. It’s not hard to see how this thinking can put pressure on women to assimilate to the masculine culture in order to advance, and how this might create a barrier for women like ourselves, who don’t want to mask our femininity in order to succeed. We did learn about a few unlikely allies. To our surprise, respondents told us that their clients were one of the primary reasons teams kept gender representation at the forefront. Client-sided work is known for its harsh hours and lack of flexibility stemming from unpredictable demands. But, for better or for worse, many of our female interviewees mentioned being invited to meetings because they were women, seeing questions about the firm’s gender representation in RFPs or hearing clients explicitly comment on the lack of women during calls. One woman said, “[I am] expected to show up to a lot more meetings, because we are often criticized for not bringing along women.” Although this can encourage representation of women,

c 2017 Harvard Business School Publishing Corp. Distributed by The New York Times Syndicate

some interviewees noted that it has increased the perceived competition between women in their workplace. If management has been incentivized to have a woman in each meeting, women are incentivized to maintain their status as a token as a tool for career progression. Another group of allies? In both countries young people, especially young men, with less than four years of work experience after college were most vocally concerned about the lack of equal gender representation at their firms. This is consistent with other research on male allies in the United States, which has found young men to be the best positioned to advocate for gender equality. The solution to the lack of female representation in masculine fields of finance may not lie in Sweden, as we had hoped, but by the end of our study we were somewhat reassured. We learned of grassroots movements at finance firms in both countries to promote gender equality. We hope senior level professionals at finance firms will realize that graduating women like ourselves are aware of these issues and are actively choosing careers at firms that are making concerted efforts to improve. Clients also need to use their position of power to effect positive change in the financial firms that they do business, making crucial but simple demands for equal representation and inclusion. Future students should not have to worry about gender being a barrier to success. Mary King is a senior at Northeastern University studying Finance, Accounting, and Management Information Systems. Malin Ortenblad grew up in Gothenburg, Sweden and moved to the U.S. to attend Northeastern University, graduating in August 2018 with a Bachelors degree in International Business and Accounting. Jamie J. Ladge is an associate professor of management and organizational development at Northeastern University.

Wednesday 19 December 2018

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Wednesday 19 December 2018

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BUSINESS DAY

30 BUSINESS DAY

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Wednesday 19 December 2018

Hyundai Creta wins Nigeria’s 2018 COTY Award …As S-Class, RR Autobiography, Camry, Yutong make list MIKE OCHONMA mikeochonma@gmail.com

t was a harvest of awards by leading auto brands, tyre, lubricants brands in the country as the Nigeria Auto Journalists Association (NAJA) recently presented different categories of awards to deserving winners at the Eko Hotels, Victoria Island, Lagos. The award night which had the director general of the National Automotive Design and Development Council (NADDC), Aliyu Jelani and the representative of the Corp Marshal of the Federal Roads Safety Corps (FRSC) as special guests was well attended by many chief executives and other stakeholders in the nation’s automotive sector. In the award categories for 2018, Hyundai Creta compact SUV under the franchise-ship of Stallion Motors Nigeria Limited won the Car of The Year (COTY) Award beating Toyota Corolla and GAC GA3 by the whiskers. In the Luxury Car of The Year segment, the Mercedes Benz S-class emerged winner ahead of BMW 7-series while the Luxury SUV of the Year award was grabbed by the Range Rover Autobiography.

Toyota dominated the commercial segment category with the Hilux utility vehicle and Toyota Hiace clinched the Pick-up of the Year award and Mini Bus of the Year awards respectively. Indigenous Lubricant of the year went to Lubcon, just as Ceat smiled home with the Tyre brand of the year, with the Micking being presented with the Best New Entrant Lubricant. Also Massilia was named as the Most Innovative Auto Company (Mitsubishi) while Mitsubishi Fuso Canter grabbed the Light Duty Truck of the year award and JAC T6 won Auto Value for money. AIICO won the Auto Insurance Company of the year, among others. While the Yutong bus won the High Capacity Commercial Passenger Bus of the year, the JAC truck won the Heavy Duty Truck of the year. Both are assembled in Nigeria by Kojo Motors and Lanre Shittu Motors respectively. Other winners are -Workshop of The Year, Mandilas; Auto Assembly Plant of the Year, PAN; Road Transport Operator of The Year, Primero Transport Services; and Outstanding Lubricant of The Year, Castrol (Eterna Oil Plc). Also, Outstanding Design

of the Year (Small Sedan) went to GAC GA3; Outstanding Design of the Year (Big Sedan) was won by Toyota Camry; and Outstanding Design of the Year (SUV) went to Mitsubishi Eclipse. In his welcome speech, Mike Ochonma, the newly elected Chairman of NAJA, said that NAJA award is the most prestigious and only recognised auto award in the country. Stating that awards is the only recognised award nation-

ally and internationally, and that the winners were arrived at after an exhaustive, but objective evaluation of competitors in each of the categories He said that, the award winners which were arrived at through members’ votes will among other things, provide consumers with sound, comparative information on vehicles that are new to the market. On his part, Moses Ebosele, Chairman of the Award Committee, said the annual

event always provides an opportunity for all stakeholders in the sector to come together to celebrate and exchange ideas especially in the areas of manufacturing, efficiency, innovation and corporate social responsibility. In his response, Parvir Singh, managing director of Stallion Motors Nigeria Limited (HMNL), thanked the Nigeria Auto Journalists Association for organising the award and for finding the Hyundai Creta worthy for the COTY award.

He promised that the company will continue to uphold the integrity which the company has been known for, while contributing positively for the Nigeria Auto industry. Also responding after the awards night, Bukola Ogunnusi, public relations manager of Toyota Nigeria Limited (TNL) expressed appreciation for the many awards presented to the company 2018. She said, it is a testimony of the leadership position of the brand over the year in in the country.

DataDot Technology, Stallion Motors moves to halt vehicle theft

ataDot Technology South Africa (Pty) Limited through its authorized distributor Stallion Motors Nigeria has introduced a hi-tech digital security system uniquely designed to bring vehicle theft to an end, while also reducing the trade of stolen vehicles and parts in the country. The digital security system known as DataDots uses the microdot DNA system that dates back to the 1800s, when they were first used during the FrancoPrussian War as a message system transported by carrier pigeons. Also used in World War I and II as a means of passing messages through insecure postal channels, Microdot has undergone tremendous modification and is applied in multiple discreet locations on a vehicle to deter vehicle theft, while also making it difficult to trade parts in the car to unsuspicious buyers. Already installed on all vehicles assembled and marketed by Stallion Mo-

Santhosh Kumar, manager, logistics & product planning, Sonu Singh, head, media & marketing, Parvir Singh, managing director Stallion Motors, Pankaj Bohra, national aftersales service manager, Devashish Jaiswar, head of after sales , all of Stallion Motors Limited at the launch of DataDot Microdot Technology anti-theft digital security system in Lagos recently

tors, DataDot Technology ensures that micro-dotted vehicles including their parts are distinctively assigned with an identity that can be linked only to the rightful owner. This coded identity could forestall theft, intruders and serve as deterrent to thieves while also making recovery of a stolen vehicle an easy task. Parvir Singh, Stallion

Motors Nigeria managing director who gave this hint at the launch of the device in Lagos said: “DataDot has pioneered microdot technology in South Africa since 2001 and today, they are being used extensively to protect vehicles and assets. “We are excited to introduce this new offering across Nigeria to enhance the positive experience of

owning Stallion Motors’ marketed brands of automobiles just as we hope to extend the offer to all other brands sold and marketed by other dealerships.” He said: “Microdot is marked, secured and ensures that your entire assets are uniquely marked with polymer particles of 1mm or 0.5mm in diameter called microdots, which are liter-

ally the size of a pin head that can only be viewed by a magnifier and traceable to the rightful owner.” Also adding that the company is in talk with the National Automotive Industry Development Council as well as Insurance Companies and the Police, Singh said: “DataDot is the number one option for your theft prevention needs and it is virtually impossible to locate let alone removing the microdots, which makes it extremely difficult for thieves to sell micro-dotted assets without the fear of being apprehended.” Stallion Motors who are vehicle assemblers and brand custodians of Nissan, Hyundai, Volkswagen, Honda and Changan brand of vehicles said: “We are proud to be part of a program which supports the automotive industry with the DataDot security product that gives customers peace-of-mind and enables us to increase trust in our brands.” He urged motorists, fleet owners including truck and

equipment managers to register their assets with DataDot to get the authorized representative DataDot App, which allows users to (i) link the DataDot PIN to the asset owner, (ii) allows users to share information, (iii) flag stolen vehicles and (IV) keep records of vehicle services. DataDot Pepper spray according to Singh is a selfdefensive tool against intruders and threats to the person as well as occupiers of the vehicle and above all, it represents a significant commitment to the very latest in anti-theft technology yet demonstrates the best ways of deterring thieves and making recovery of stolen vehicles and parts very easy. The introduction of DataDot to the Nigerian automotive market marks a significant contribution of the Stallion Group to the growth of the automotive digital security system, using microdots. This unique competitive advantage should help bolster the sales of Stallion auto brands, said Parvir Singh.

Wednesday 19 December 2018

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BUSINESS DAY

Toyota remains highest brand despite challenges - CEO Over the past few years, the auto industry has been rocked by economic challenges, which has impacted auto stakeholders negatively. But despite all these challenges confroting many stakeholders like a hurricane, Kunle Ade-Ojo, managing director of Toyota Nigeria Limited in this interview with some motoring journalists including BusinessDay’s motoring Editor Mike Ochonma still insists that, even though, the brand may not have done well in some segments, it is no doubt the highest selling brand in Nigeria. Excerpts

or the first time in Nigeria Toyota is losing top position to Hyundai. What is responsible for that and how do you intend to reverse the trend Toyota is still in top position in Nigeria. We had issues with stocks some time ago and it affected us but that has been resolved. We’re still top and we’re going to remain top at the end of the year. When you say lack of stock, what caused it Since we work with manufacturers, there is what we call cycle lead time and cycle of ordering, production and arrival. In 2017, we had challenges with finance. Our business partners, the manufacturers were also very risk averse, so there was limitation on what we could order. By the end of 2017, we had ordered vehicles that were going to be arriving by April/May this year. So these affected our stocks because lead time for ordering was stretched last year. Normally it used to be between five and seven months from order to arrival. Now last year, even till date, it is between six to eight months. So I am ordering now and vehicles are going to be arriving in eight months I have a short time to react if the market suddenly changes. So that was one of the things that impacted us and we could only recover in the second half of the year. In 2019, based on the challenges in the sector, are you thinking about doing other things to make up for the downside apart from selling vehicles One of the things that we are going to embark upon is to further strengthen and energise our existing “after sales service” offering. We’re going to be doing not just normal service but adding other things that we are not doing currently and most of our competitors are not doing. For instance, in terms of in-

Ade-Ojo ternal refurbishment of vehicles, none of us is doing that right now. We’re going to get involved in doing that for people who still want to use their vehicles because if you use your vehicle for five to six years, there is the tendency that the leather may wear out from the sun and fabric. So we’re getting ourselves involved in those little value-added products. We’re also going to improve on training with the dealers that we work with. There are certain body and paint after sales services we are going to get involved in. How has the brand survived in the face of a dwindling auto market Any company that is constantly planning and doing a survey of its market will understand how events happening in the market are going to affect its business. The same company planning against what will affect it negatively will also be planning for what will affect it positively to ensure that they maximize whatever positivity that is coming out of the market. Out of this, they maximize the

return for their company and if anything is coming up against the company, they can plan against such, which again comes to the risk management aspect. We’re already forecasting that next year, it is going to be a tough year. The price of oil is dwindling, debt is rising, and the naira has depreciated a bit. With all these things in place, reports have it that government is not even able to fund the 2018 budget. Naturally you know who your customers are, you know what kind of challenges they are facing, so we put things in place against such. And you ask, with this kind of situation which model will be the best one that we can maximize our profit on. So you need to bring in just the right amount to ensure that you are not tying down money. Then at the end of the day you say what about my fixed cost. At any given point in time there is an amount that whether you sell or you don’t sell people’s salary has to be paid, there is an amount that must be set aside for electricity, even for electricity for instance right now there are

certain things to cut that down. We shut down about four hours every day to minimize the diesel. This year alone we have consumed about 600,000 liters of diesel. You do the calculation compared to where we’re coming from last year it would have been more if not for the fact that we shut down at least four hours a day to conserve and save energy. That adds little to the bottom line of the company. Then also we negotiate good rates with our bankers. We ensure that at any given time our dues are paid so by virtue of that we’re able to get preferential interest rates from the bank and if we have any free cash they are not lying idle. We have different levels of investment for any of our free cash. So outside of selling those monies generate us something so we are making every little count to ensure that we survive in this very tough market. And very importantly it’s not just about selling because a company that does not have a good balance sheet, that is not growing its shareholders’ funds to ensure that the balance sheet strong. You minimize your liabilities and exposure to the banks and ensure that your assets are continuously growing that’s what shows the value of every organization. These are the things that we’re doing and putting in place to ensure that we get through this very harsh and difficult period. One other that we are also doing is going digital. Internally we are also pursuing that because we cannot be left alone and we are trying o systemize our processes to make it seamless. You know we have dealers around that we work with. So when they want to place their order, they don’t need to call us. Most of them are online to improve the efficiency of our operations using technology. As we start implementing them going into the future it’s going to change some of the ways we do things. It is going to go beyond our dealers but also impact our

customers but of course through our dealers. Assess performance this year compared to 2017 If you look at sales, we are down this year compared to last year, even though there is an increase in the market, we are forecasting that the market will end this year at about between 11,200 and 11,500 by the end of the year from a position of about 9,000 last year. Last year we did about 2,300 and we are going to be ending the year at between 1,500 and 1,700, which is a drop from where we were last year. In 2017, we came into the year with a not healthy stock. It made us to face challenge with stocks in the first half of the year, which impacted our performance and allowed some of our competitors to get very close to us but as of the third quarter of the year we have managed to pull ourselves from them gradually and we are gradually regaining the lead. But compared with last year, we’re still going to end lower and next year we’ve been working to also sort of build up our stocks gradually to prepare ourselves for 2019 so that we don’t get into the same situation that we got into in the first half of this year. So there is some erosion but we’re working to recover that as far as sales is concerned. If you’re talking about how that relates financially, I think we’re still very healthy, even though if you look at our turnover there is a drop because we’re selling lesser than we did last year. However, you will recall that we at Toyota Nigeria have made risk management part of our culture and we observe the market situation to determine how we react and what are the things we need to put in place so we had to cut cost on certain things we used to do in the past and we’re also trying to make sure that we maximize where we can get some additional returns such that we’re still going to end up this year in a good state, not as good as last year but relative to the performance of the economy we’re doing okay.

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Nigeria braces up for 4th Industrial Revolution in auto sector MIKE OCHONMA, mikeochonma@gmail.com

he director general of the National Automotive Design and Development Council, (NADDC), Jelani Aliyu has assured that, even though the country, for the most part had missed out on the first three industrial revolutions; that the council is dedicated to developing the Nigerian automotive sector. Aliyu therefore, informed that NADDC is committed to providing the best for Nigerians as the federal government and the Council are committed to engaging and supporting some of the world’s best car manufacturers to set up operations in Nigeria. The brain behind the captivating design of the Chevrolet Volt while working with the American headquartered General Motors before returing home the be at the helm of affairs of the NADDC gave the insight in his keynote address at the 2018 Nigerian Auto Journalist Association (NAJA) Awards ceremony held at Eko Hotels and Suites in Lagos. According to Aliyu, the first industrial revolution saw the emergence of steam engines and mechanization; the second brought about electric-

ity and mass production, while the third industrial revolution brought about electronics and abundant power sources. Describing the present era as the fourth industrial revolution, Aliyu said the first, second and third industrial revolutions are being brought about by exponential advances in the sciences, art and technology. He said “We are now in the fourth industrial revolution, characterized by digitization, virtual realities and an enhanced human consciousness dedicated to the sustainability of the world’s natural ecosystems”. The NADDC boss observed that recent innovations at the global auto industry are good news for Nigeria, since fossil fuel engines are being replaced by engines powered by electricity, batteries and hydrogen fuel cells. “For example, an electric vehicle has far fewer moving parts than an internal combustion engine, and hence less things go wrong; the electric motor is virtually good for a million miles. This is good for Nigeria”, he said. To tap from the trend, Aliyu said it was for these reasons that the Council is already in discussion with international stakeholders in the field of vehicle electrification, in order to get started with an electric vehicle pilot program so as to better understand the viability, challenges and opportunities.

“We have met and discussed with both electric vehicle and charging station manufacturers and stakeholders in China and Germany towards the pilot program”, Aliyu informed. “The electric vehicles program will have three components. Vehicles, charging stations and training/maintenance”, he added. He pointed out that NADDC has also signed an MOU with Volkswagen to produce vehicles in Nigeria,

noting Volkswagen is Europe’s largest auto manufacturer and it is very serious about electric vehicles and other new mobility solutions”. “As we position ourselves to provide the best for Nigerians that’s the type of partnership we need for our nation. Volkswagen has just started producing cars in Rwanda, and our intention is for them to do it on an even larger scale here in Nigeria”. The director general said

as of today in Nigeria, that a number of automotive producers are producing thousands of vehicles, employing thousands more, and adding value to the Nigerian automotive ecosystem. “The commitment and dedication of these local producers is immeasurable, the NADDC is committed to work, even closer with them to ensure a strong win-win for them and the Nigerian people”, Aliyu said.

Belarus set to invest in NIgeria’s auto sector

he European Nation of Belarus said it is highly encouraged by the developments in the nation’s economy, and is willing and ready to invest in it, particularly in the automotive industry in Nigeria This development is coming, following the success of the recently signed Memorandum of Understanding between the Federal Government of Nigeria and Volkswagen Group for the production of various brands of Volkswagen vehicles in Nigeria. Speaking on Friday in Abuja when he paid a working visit to the National Automotive Design and Development Council (NADDC), the Ambassador of Belarus

R-L: Sani Mohammed, Director, NADDC,Belarus Ambassador to Nigeria, Vyacheslav Brill, DG, NADDC, Jelani Aliyu (MFR) Charles Adzo, Aleksandr Lukashevich and Jekadi.

to Nigeria, His Excellency, Mr. Vyacheslav Brill, said his country

was eager to come in and invest in the country’s economy.

The ambassador said his country has global expertise in agricultural mechanization and machineries like tractors, harvesters amongst others, adding they were also willing to invest in the production of trucks and other heavy duty vehicles in Nigeria. According to him, his country has already made significant contributions for Africa’s development through the Africa Export Import Bank, adding Belarus was ready to increase its presence and economic significance in Nigeria. Receiving the delegation while assuring them that the government will continue to create and maintain the enabling environment for development, the Direc-

tor General of NADDC, Mr. Jelani Aliyu (MFR), said the council was ready to work with them in areas of automotive development, particularly in the production of agricultural equipment and urban transit solutions. The director general said NADDC has already built test centers in various parts of the country in readiness for the productions of vehicles in Nigeria, adding these centers will be commissioned early next year. He said agriculture remains a main economic activity in Nigeria, pointing out the Council was willing to support Belarus in the production of tractors and other agricultural mechanization equipments in Nigeria.

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CITYFile

Yuletide: NEMA opens emergency response centre in Imo

he National Emergency Management Agency (NEMA) has set up an Emergency Response Centre (ERC) in Imo to take care of cases during the Yuletide. Evans Ugoh, Head of Imo and Abia operations office of NEMA, said this would enable the agency and other disaster stakeholders respond quickly to any emergency situation during the festive season. At an emergency stakeholders meeting in Owerri, Ugoh called for continued collaboration among emergency stakeholders in the state. He said that the center would be a rallying point for all disaster stakeholders in the state to serve as take-off point for them. According to him, every disaster agency will donate both manpower and equipment to the center for efficient operations. “We are here today to deliberate on the way forward especially this period of yuletide. “It became obvious that we must set up the center because we needed a rallying point where all stakeholders can take-off when called on during emergency,” he said. Ugoh urged the disaster stakeholders to wake up to the challenges ahead to ensure quick response to any emergency in Imo. Joseph Aremu, sector commander, Federal Road Safety Corps (FRSC) in Imo, said the commission has deployed its field marshals to strategic places to ensure free flow of traffic. He said the ERC would facilitate their job toward ensuring that any emergency would be properly handled.

Police arrest 13 suspected kidnappers in Sokoto

he police in Sokoto say they have arrested 13 suspected kidnappers and recovered 4, 000 live ammunition from them. They also said that two people, identified as Aliyu Abdullahi and Alhaji Adduwa, suspected to be arms suppliers were shot dead by police operatives. The command’s public relations officer, Cordelia Nwawe, told newsmen in Sokoto that Abdullahi was killed in gun battle at Gawon Fulani village, Rabah local government, while attempting to evade arrest. She added that Adduwa, the ward head of Gidan Bunu in Raba LGA also engaged the police in a shootout at his house before he was gunned down. Nwawe alleged that Adduwa was the gang’s armourer before his death. The command spokesperson, also said among those arrested was one Lawalli Aliyu, a resident of More village, Kware local government, Sokoto State, whom she described as a gunrunner, cattle rustler and kidnapper. She added that Aliyu had confessed to have smuggled weapons for bandits operating in Zamfara, Kebbi and Sokoto States. The suspect who confessed to participating in several kidnapping cases, admitted being in the business for long while. He also mentioned some of his accomplices in Niger Republic, including one Danrani, who is still at large. Others arrested included an old woman, Ramatu Muhammad, who distributed guns to members of the gang on the instruction of late Adduwa, and the gang’s transporter, Madugu Haruna. Nwawe said all the 13 suspects, mostly arrested in Raba and Ilela local government areas of the state, would soon be prosecuted. She said apart from the guns and ammunition, the police also recovered 251 sheep, 69 cows, blankets and other valuables from the suspects.

L-R: Funmilayo Balogun, permanent secretary, Ministry of Finance; Adesina Odeyemi, permanent secretary, Cabinet Office; Helen Morenike Deile, Auditor General, Lagos State; Waliu Onibon, chairman, Audit Service Commission, and Adesunbo Abolarin, Auditor General for Local Government, during 9th annual auditors’ retreat, in Lagos on Monday.

Gridlock: Ambode urged to complete Orile tanker terminal JOSHUA BASSEY

overnor Akinwunmi Ambode of Lagos State has been urged to complete and hand over the Orile tanker terminal project started by his administration a few months

ago. The tanker terminal became necessary as part of measures to address the perennial gridlock being currently experienced around the Iganmu axis and the Lagos-Badagry expressway, where petroleum tankers and containerladen trailers have converted to a parking lot. Ambode flagged off construction work at the site on August 5. Checks around the project site on Monday showed that the work is at near abandonment. Observers say this became noticeable since Ambode lost his second term bid in October 2 All progressives Congress’ (APC) party primaries, to Babajide Sanwo-Olu. The state of the project is raising concerns among some stakeholders in the downstream petroleum sector, who say the tanker terminal must not be abandoned. The Orile branch of the National Union of Petroleum and Natural Gas Workers (NUPENG), Petroleum Tanker Drivers (PTD) said

they appealing to Ambode to complete the project. Speaking to journalists on Monday, Kehinde Ishola, secretary, NUPENG, Orile PTD branch, said the governor should complete the project before leaving office on May 29, 2019 in order to check the gridlock around Iganmu. Ishola said: “Recently, we discovered the work at the site suddenly stopped after the governorship primaries. “We are begging the governor because the Apapa gridlock is affecting many businesses in the state,’’ According to him, the union has removed all tankers that could disturb construction works on site. Ishola said that the union has also complied with the directive given by the state government to ensure prompt completion of the project. “It is unfortunate that the work is now turning to an abandoned project. Even at the stage it is now, we cannot park inside the place,’’ he said. Ishola said that tanker drivers were forced to park indiscriminately on the road due to inadequate space at the Orile terminal, saying that the completion of the terminal would stop the menace of trucks parking on the highways. “The state government should come to our aid by completing the project for orderly park-

ing of our trucks. “The space here can accommodate more than 5,000 tankers if properly arranged. It is very dangerous and at the same time not proper as a city or country for our highways to be filled with trucks and tankers, It is not ideal,’’ he said. Ladipupo Dada, a tanker driver, also appealed for speedy completion of the construction works. “It was a surprise to us here because the pace of work was fast before now but we discovered that after the primary election the work stopped. “We appeal to the state government to continue the work here to allow us have enough parking space so as to curb the gridlock on highways leading to Apapa port,“ Dada said. Recall that the Lagos State government on July 1, 2018, directed tanker drivers to ply designated trailer routes – Apapa-Oworonshoki Expressway via Ogudu to Lagos-Ibadan Expressway. The directive followed an ultimatum given on road worthiness certificate as a result of a tanker explosion on Otedola Bridge inward Ojodu Berger on Lagos-Ibadan Expressway in June 2018.

Lagos auditors tasked on service delivery JOSHUA BASSEY & JOHN SALAU

ecretary to the Lagos State Government, Tunji Bello has stressed the need for auditors in the public service to up their game and stay professional in view of the growing demand for accountability and improved service delivery to the public. Bello stated this at the opening of the 9th annual auditors’ retreat, organised by the Office of the Lagos State Auditor-General with the theme, “effective public sector auditing: a catalyst for good governance and economic development,” which began Monday in Lagos. According to him, public sector auditing is an essential aspect of governance for encour-

aging agencies to improve their effectiveness and efficiency in public administration. He noted that “efficiency in auditing public funds and resources reduces the resources needed to provide public goods and services.” According to Bello, the essence of the threeday retreat is to fashion out better working relationship, strengthen policies, monitor and evaluate strategies that needed to address areas of conflicts so as to forge a better public sector in Lagos State. Helen Morenike Deile, the Auditor-General of the state, remarked that any society lacking proper audit risks slipping into a situation where people do whatever they like. “Ours is to ensure compliance with set rules with appropriation law from time to time”. According to her, the retreat this year is

also aimed at equipping auditors in the state public service towards the challenges in the coming year. “In the last auditing year we are able to cover about 156 agencies both on normal audit and periodic check on the parastetals. With this retreat we believe we will be able to do more for the new audit year, which usually starts on November 15,” said Deile. Waliu Onibon, chairman, Lagos State Audit Service Commission, said training and retraining the auditors was necessary, as it exposes them new developments in the audit circles. According to Onibon, public sector auditing is a key instrument within the financial arm of the government to improve accountability and transparency of transactions.

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CEO INTERVIEW

Wednesday 19 December 2018

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BUSINESS DAY

Chukwueloka

Managing director of Centaury Power Generation Ltd

Interview with Private Sector Leaders

Century Power is trying to boost power supply, grow economy Chukwueloka Umeh, is the managing director of Centaury Power Generation Limited which is building a 495megawatts plant at Okija. The plant, when completed, he said would boost power generations and also will help to energise the nation’s economic growth. In an interview with Olusola Bello, the Centaury boss gave insights into what propelled the promoters to embark on this highly capital intensive project. Excerpts:

Tell us about Century Power entury Power is a private company, started by the main sponsor, Nestoil Limited. The idea behind Century Power is to develop, build, operate and maintain an Independent Power Plant, (IPP). Now the whole idea was to provide electricity to Nigerians for the purpose of national growth. You know we have 180 million people. According to statistics we are still generating less than 4000 megawatts of electricity per day. Meanwhile, Nigeria has the world 9th largest gas reserve so there is no excuse. We have the gas, we have the fuel, we have rivers, so we can do hydro power plant, we have a lot of sunlight in the North, we can also do solar power; we have coal as well, so we can generate power through coal. So Century Power is simply trying to help the Nigerian people by trying to make available power that is affordable and steady. Phase one of the plant which is ongoing involves the construction of a 495 MW (ISO) Open Cycle Power Plant (OCPP) consisting of multiple E-class gas turbines, with provisions to add Heat Recovery Steam Generators (HRSGs) and steam turbines in a later phase. You mentioned various

sources of power, but why is it that we are not using coal in the country to generate power? What is happening in Nigeria is that, the power sector has been ignored for many years. Remembered back in the 70s we had power plant that used coal, we were also using it for mining coals in Enugu and it was also supplying electricity to the public. But today, that power plant has been neglected. If you drive down to plant site, you will just see bushes and scraps of equipment lying around, the mines are no longer working. Nobody is producing Coal and we are not selling Coal. So if you are not producing Coal, you cannot run Coal power plant. The power sector has been neglected; no new investments were made over the years. But now we are trying to restart the power sector. In my opinion, we’re doing it in the inappropriate way. The government is trying to put a lot of regulations in place, hopefully, have the regulations start the industry rather letting the industry start and then let the regulations catch-up and direct how things are done. Government main worries are that it does not want power companies, the producers and the

distributors to sell power at a price that would be unfair to the people, but they are forgetting something, you cannot expect someone to build a power plant, you cannot expect someone to invest in distributions or transmission, you can’t expect someone to produce gas without them knowing how to make their money back and that is the main problem. The Government has now said that if you’re a power producer, they can only pay you 7.5 cents per kilowatt hour. But the person that is going to produce that power needs to be able to raise money to build that power plant in the first place. So in Century Power, for example, we’re working to build a 495megawatts plant which is going to cost us about $700 million. We are going to borrow a large percentage of that money, the people, the banks and investors that we are going to borrow this money from want to know how much you are making and the percentage return and what is the guarantee that when we produce power and sell it, you would get paid for it. This is a big problem, is a big lacuna. This question is not being answered but when we talk to Nigerian Bulk Electricity Trader ( NBET), you discover that NBET has real concern too. We produce power and sell to NBET and they buy it and sell to the Discos. The Discos are not able to collect the money for the power they sell to people. Number one, the Tariff is too low. Number two, the ATC&T losses are way too high, so they are collecting about 35percent of the money for the power that they distribute. That’s never going to work and that is part of the real problem. Since your company is aware of this problems why putting this project. Yes, we are aware of the problem, if we don’t do it that who will? So we go back to square zero! Somebody has to do it. You know in 2011, when this power sector reform started, the government went into privatization. She privatised the assets, the power plants and the Discos. The regulations created then were very sound and people jumped into the sector and we also got into the sector. However, with time the regulations started to change, and they were flip-flopping. Today, they tell us this is the regulation, and tomorrow they give you something different. So confusion started and with the confusion everything started breaking-down, those of us hanging in the sector,

the power producer is allowed to sell his power at a viable price that allows him have a reasonably return to be able to build his power plant, and the distribution companies are allowed to charge the end users the reasonable tariff in order for them to make a required investment in the distribution networks, then we’ll have a sector that can work. Where do you think the power industry would be in the next 3-4 years? I will tell you that it will really depend on what the government decides to do with the industry and how much importance it puts on it. If she feels the industry is so important and is willing to remove all the impediments that the private companies faced now and is serious about it, things can change quickly within two years. You will start to see the difference and you will start to see investments coming in. But it will take much longer to actually see the change in the power available in the country. The reason is this, it takes about a minimum of 24 months to build a sizeable power plant and I’m not talking about the fifty megawatt or twenty megawatt. Where is the gas going to come from? Private Company will supply gas to us Why are you using your money to construct gas pipelines to the plant? We are using our money and we are also going to borrow some money. we have invested a lot of money to develop our own project to where they are. Not just us, there are other people who invested a lot of money too, these are millions we are talking about, the designs, legal and the commission part of the plant, we also invested in doing environmental and social assessment studies, the money has already been spent but the regulations keep changing. We don’t really have a clear path on how we will get our money back. But as patriotic Nigerians we know that we have to make things work because whether we like it or not, Nigeria’s economy is in trouble and the only way for any economy to grow is, you must become a producing economy. Not producing oil, but producing goods that you can sell and you can export, the only thing we export meaningfully in Nigeria today is oil: crude oil and natural gas. That is our main source of income in this country.

Do you have PPA, GSA and others in place now? As far back as three years ago, we had the Power Purchase Agreement (PPA) that we negotiated with the government and other agencies and we initialed that agreement. Over a year ago that agreement that we initialed we were told was longer valid and that we need to do a new one. Now think about this, we spent several millions dollar paying advisers to do this work for us, to come up with a bankable PPA and all of a sudden that document means nothing and we have to start all over again, paying the same lawyers to do the same work that we had done before. How can you have meaningful investment in that kind of environment? The gas supply agreement we have one, we negotiated several times over as a company, we had to go into developing not just the power project but also the gas supply to power plant, we have invested in gas assets, we also started investing on pipe-line to bring gas to our plant. The government is supposed

to build the pipeline. Right? But we are now doing it as a private company. So those documents are all there. What is missing is that the government has not been able to allow private companies to do what they know how to do with the support of the government to attract investment. Foreign investors are nervous about the instability in the regulatory environment in the country, that they are not really willing to invest. Where are we going to raise $700million from? Nigerian banks cannot provide such money. Nigerians investors cannot raise the money because a lot of investors would rather invest their money in overseas. So we have to go overseas and they need to see all these documents: PPA, the gas transport agreement, the gas supply agreement and so on and so forth. But the government doesn’t see it. If the power producers are allowed to negotiate directly with the gas suppliers and gas transporters and pay them what they need to be paid to have them have a viable business, and then

What is the timeline for delivery of the plant Assuming that everything that we need, the regulating support from the government is given and we are able to raise the money that we need to build the plant, by the end of 2022 we should see this plant running. What are the other regulatory requirements that you need now? PPA Are you going to do another PPA ? We have already done that and initialed it after another round of negotiation and money spent but it has not been sent because we need to see a signed PPA by the government. We need to see some kinds of guarantees from the government that support PPA, we need to see the transmission company

support, and so on and so forth. But the main thing is the payment guarantee and the Power Purchase Agreement from the government and then if the government doesn’t want to go into power purchase agreement anymore, then they should let private companies deal directly with one another and set the tariff that they need to be able to make their investment. You cannot force power producers to accept 7.5 cents per kilowatt hour and then force the distribution companies to sell at a certain tariff, but then, you still not giving us kind of guarantee. What informed the power plant being cited in Okija? Let me ask this question. Where are most of the power plants today located. They are scattered across the country? Most of them are in the southsouth part of the country and we have a couple in the deep north like Geregun, and one in Sokoto, there is a small plant the government built in Sokoto. Now think about it, where are the main economic zones in this country? Where do we manufacture things in the East? Where is the largest open air market in West Africa? Onitsha! Okija is 20 kilometer to Onitsha, Okija is about 16 kilometers to Nnewi. So if I put my plant close to these people and give them power, is it not helping the rest of the country? The way Okija is, we will transmit power to Onitsha Sub-station, then from Onitsha Sub-station the power can then go on to the Beninline.. The power can go from Okija to Onitsha, to Benin, to Lagos and Kano, it can go any anywhere. This is strictly business decision. Who are your partners? We have a company called GLOBELAQ. GLOBELAQ owns about 2000 megawatts of power in other parts of Africa, they are just into developing and running power plant. GLOBELAQ is co-owned by United Kingdom and Norway, so they are my partners. At what level do you want government to be involved in the power sector? Government has no business in business, and you know that everything government gets involved in, doesn’t work. Government’s job is to make regulations, to regulate the business for the benefit of Nigerians. How can the issue of non reflective tariff be resolved? I can tell you that the price that

we pay for our phone services is more expensive than what you get in other countries but we still buy it. Your vulcanizer probably has two phones, the average guy on the street that can’t even eat has a phone, but a phone is not considered as a necessity. When MTN came to Nigeria, they did not believe they could get up to 5000 phone subscribers, some companies refused to invest in Nigeria because they thought it’s not a viable industry. But today, MTN has several millions of subscribers and they are always struggling to meet up with demands, but phones are not necessities. Electricity is a necessity, companies should build power plants at whatever price and sell their power whatever price they need to sell to make a reasonable return, to justify their investment and let the competition drive the price down. By the time power plant ‘A’ is supplying to Lagos Eko Disco and power plant ‘B’ is also trying to supply Eko Disco, they will be fighting among themselves for price and price will come down and then the price to the end-users will come down that is basic business. Do you see the transmission network to be better in the next three years? It won’t take more than three years. This is simple economics of demand and supply. If the Discos are demanding power then the transmission companies would be forced to build transmission lines to get the power to them. Today

the Discos reject power, sometime they send power to them and they reject the power, because they are not able to collect the money for the power that they already sold and the people are feeling they don’t have power. But the Discos are rejecting power. If the transmission company has the incentives to build more lines, generating companies will have more incentives to build more plants. The gas producers will have more incentives to produce gas, and there will be more incentives to build more pipelines for the gas to get the producers. Simple economics! What is your view about Embedded Power, Eligible Customers and other policies that have come to being? These are steps in getting to the free market that we keep on asking for, the free market should simply be meeting the Gencos. Let me sell my power to whoever is willing to buy. My plant may be located in the Enugu Disco zone, but I want to be able to sell power to Benin Disco, Kaduna Disco or Abuja Disco through the transmission line. Let me deal directly with those Discos. If I sell to Benin and it doesn’t meet up with its financial obligations, next time I will move to another Disco. Somebody will buy because people are demanding. It should be open market, the same way with cell phones. I can choose to buy my service from MTN, if MTN doesn’t meet my standard, I will port with the same number to Airtel, it an open market.

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& INNOVATION

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Wednesday 19 December 2018

Supported by:

Inclusion in 2018: marginal growth driven by non-regulated financial providers Usoro Usoro

nhancing Financial Innovation & Access (EFInA), a financial sector development organization that promotes financial inclusion in Nigeria, recently published results from their country wide biennial survey. Following a period of decline from 39.5 percent exclusion rate in 2014 to 41.6 percent in 2016, the results show that Nigeria has returned to a modest positive trajectory. The rate of financial exclusion has dropped by 4.8 percent (from 40.1 million individuals in 2016 to 36.6 million in 2018); this is predominantly driven by an increase in the informally served (those using nonregulated financial products or services such as savings clubs/pools, esusu, ajo, and moneylenders). The number of banked Nigerians rose marginally from 38.3 percent in 2016 to 39.8 percent in 2018, and of this group, the increase in those who actively use their bank accounts has increased from 31 perecnt in 2016 to 68.7 percent in 2018. Rural interventions – such as the Conditional Cash Transfer Initiative which reached up to 1.8 million people across 20 states from 2016 to 2018 – have had a significant impact on reducing the rates of exclusion by 6.6 percent in rural areas, and have potentially played a role in improving account usage. Microfinance banks usage and pension contributions have grown, with savings accounts as the most accessible financial services product. The quantity of

people borrowing in the formal non-banking sector (i.e. microfinance and mobile money services) and from informal institutions (nonregulated financial services) has risen by 1.2 percent and 3.9 perecnt respectively. Specifically, between 2016 and 2018, credit sourcing from banks increased by only 0.3 perecnt; this figure, once adjusted for FX and inflation movements, actually represents a decline. On the other hand, credit sourcing from microfinance banks rose by 13perecnt – this clearly showcases the manner in which people turn to less formal systems when the formal ones fail to meet their needs. This evident preference for nonbank services reiterates the necessity for credit services to be made a core component of all financial inclusion initiatives and efforts. There are however, still significant strides to be made. Despite the rise in

banked Nigerians, the quantity of individuals saving has reduced by 6.7 percent, and the number of individuals seeking loans has reduced by 1.4 perecnt. Only 8 perecent of the adult population in Nigeria currently work in the formal sector – this is a 1 percent reduction from the quantity of formal professionals in 2016, indicating that the number of people starting businesses is on the rise. This is also as a result of rising unemployment in the formal sector, which has forced more people to take up entrepreneurship as a means to earn income. Ideally, this would be a positive outlook for the economy, however of the 44.3 million business owners in operation (up by 2.4 million since 2016), the vast majority of these businesses are not formalised – as 80percent are individual entrepreneurs without employees. This is reflected in

the rising unemployment rates, and it has had an impact on the need and usage of financial services, such as savings accounts. In the informal economy particularly, certain sectors have barely made progress despite interventions from several stakeholders. In the agricultural sector for example, over 97 percent of both subsistence farmers and business owners (farming, non-farming, and services) receive their incomes in cash. Overall, only 10 percent of Nigerian adults who receive income, receive their main income into their bank or mobile money account. The economic implications for bridging this gap for the financial and other services sector are immense and presents a massive untapped opportunity. Mobile money usage has increased by 2.2perecnt, but currently serves only the banked – in 2018, 3.3perecnt

of adults made of use mobile money and 1.1perecnt used mobile money agents. Usage drivers include speed and influence from family and friends, however, there is evidently still a high absence of awareness, as only 0.3 perecnt (313,000 adults) of the banked adult population in Nigeria has a mobile money account. This illustrates the current obstacles to mobile money’s ability to move the dial on inclusion, without significant efforts to build awareness and literacy in this regard. Based on a state-by-state comparison, the South-West has improved to the degree that it has now attained the 20 perecnt exclusion target for 2020, as set by the CBN in the NFIS. However, considering that the South-West region of Nigeria makes up only about 17 perecnt of the entire nation, the majority still remain underserved. States such as Gombe, Bauchi, Bayelsa and Ebonyi have the highest exclusion rates, ranging between 40 perecnt and 70 perecnt. Evidently, some regions have benefitted from financial inclusion initiatives more than others, and this disparity is likely to have a continued impact on the overall state of exclusion; thus, there is a clear need for an improved geographical focus with existing and impending initiatives. Furthermore, 36.8perecnt of the adult population still lack any access to financial services. The barriers to this access include factors such as affordability, due to irregular income (35%); institutional exclusion (i.e. distance from bank branches) (23%); and not having a job (20%).

For others, illiteracy (10%) and the amount of required documentation (10%) required still present obstacles to financial inclusion. While other factors are due to social circumstances (such as area of residence, educational levels, access to job opportunities) the latter in particular (i.e. required documentation) is indicative of a potentially faulty design model, and thus, highlights the need for a closer look at the existing KYC policies, to ensure that they are not playing a role in driving and enhancing exclusion. Financial products and services enable citizens to meet their needs as it facilitates day- to-day living and helps families and businesses plan for everything – from long-term goals to unexpected emergencies. Their absence affects the welfare of individuals, companies, communities, and thus the whole country. On a fiscal level, financial exclusion impacts socioeconomic indicators such as job creation and other macro-economic indicators like economic growth and income, liquidity, fiscal policy and cost of funds. The end of the year allows most people to ponder on their finances and make monetary goals for the upcoming year. For most people, these goals are unachievable in part due to their inability to access financial services. With a current financial inclusion rate of 48.7 percent after eight years, the country still has a steep journey to attaining the goal of 80 percent inclusion by 2020. Usoro Usoro is the General Manager of Mobile Financial Services at MTN Nigeria

Promoting use of disruptive technology to enhance financial inclusion in Africa HOPE MOSES-ASHIKE

he United Nations Economic Commission for Africa (ECA) is collaborating with the International Financial Corporation (IFC) and Ant Financial (Ant) to promote digital financial inclusion in Africa, through investment and technical capacity building. Recently, Vera Songwe, ECA executive secretary, led Ant Financial’s CEO, Eric Jing, and IFC’s VP and

Treasurer, Jingdong Hua, to a meeting with President Mulatu Teshome of Ethiopia. Addressing a group of journalists right after the meeting, Songwe said “Essentially, we were talking (with the president) about IT and the power of IT for financial, social and political inclusion.” The Executive Secretary noted, “Agenda 2030 and Agenda 2063 say we should leave no one behind, and many people have been asking what happens to SMEs

with the AfCFTA. So we are thinking about what platforms we can put together to ensure that not only big companies take advantage of the AFCTA but also small companies.” Songwe underscored that “We have an opportunity to leapfrog technology for social, financial and political inclusion,” adding “today, we are bringing Ant Financial, which has the largest platform for financial inclusion and assists people with very small financial capacity to be in-

volved in the society.” Ant Financial - an affiliate of the Alibaba Group – runs one of the world’s largest online payment platforms, valued at $150 billion. Ant CEO, Eric Jing, said the company serves over 650 million people on a daily basis. He stated that “we have expanded well beyond China and are recording tremendous success in our effort to bridge the gap between the reach and the poor in many other countries such as India, the Philippines and more.”

Jing said he would like to replicate his company’s success in Africa so that financial inclusion can be enhanced. Hua stated that IFC is supportive of Ethiopia’s laudable poverty reduction initiatives. The delegations from IFC and Ant Financial also met with some senior staff of the ECA on Friday and expressed their willingness to collaborate with the Commission to foster inclusive growth on the continent. They were also briefed on

what ECA does in line with IT and digital inclusion. Songwe highlighted the importance of digital IDs, noting that “we have many displaced people and refugees on the continent without proper official identity. We know that without an identity you are not a complete citizen and life can be challenging.” “So we are trying to see how we can go from getting identities to getting financial and social inclusion particularly for youth and women,” she said.

Wednesday 19 December 2018

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Financial Inclusion

BUSINESS DAY

& INNOVATION GSMA explores regulatory challenges in mobile money industry Supported by:

Stories by Endurance Okafor

obile money services are regarded as powerful tool for deepening financial access in developing markets, as it expand financial inclusion through lower transaction costs, improved rural access and greater customer convenience, Groupe Spécial Mobile Association (GSMA) has therefore recommended regulatory guide for the industry. The global System for mobile communications said in its 2018 mobile money policy and regulatory hand book that as governments and regulators take a broader approach to digital financial services, “providers and national authorities must continue to work in concert to strike a balance that ensures sustainable and responsible market growth.” The Handbook assembles a range of key considerations for regulators and other stakeholders in the mobile money industry, providing a practical guide to regulatory best practices and industry perspectives. It said it explored regulatory challenges that have faced industry since its inception, and recommend approaches key stakeholders can take towards creating an enabling environment. The Handbook also accounts for recent regulatory considerations surrounding mobile money taxation and

data privacy. The content is based on up-to date statistics and new resources, and will continue to be refined as the industry evolves. “As mobile money continues to bridge the gap in financial inclusion around the world, the need for a sound understanding of policy and regulatory issues and opportunities has never been greater,” it revealed in the handbook seen by BusinessDay. The London-based organisation said that mobile money services has a strong impact on whether a provider can enter the market and sustainably provide the services, determine the best solution to become interoperable and provide a broad range of services that create value around wallets. It therefore recommends from a regulatory perspective that the basic proposition for mobile money to succeed

is to create an open and level playing field that allows non-bank mobile money providers, including mobile money operators to enter the market and issue e-money (or equivalent). The central Bank of Nigeria (CBN) has proposed Payment Service Banks (PSB), aimed at deepening financial inclusion in a country where only about half its total adult population is included into the financial cycle. With PSB initiative Banking agents, Mobile Money Operators (MMOs), Retail chains (Supermarkets), Telecommunications companies (Telcos) who are able to present an initial capital of N5 billion will be given license to operate under the structures and guideline specified by the apex bank, with the motive but not limited to ensuring access

to financial services for the unbanked rural segments of the society. “Mobile money is helping to make the financial services industry more efficient and inclusive. This has opened access to a broad range of essential financial services for millions of unserved and underserved people, GSMA said. According to data compiled from the GSMA, financial inclusion industry is now processing a billion dollars a day and generating direct revenues of over $2.4 billion. “With 690 million registered accounts worldwide, mobile money has evolved into the leading payment platform for the digital economy in many emerging markets,” it said. Another regulatory initiative it cited was effectively mitigating the risk of mobile money customers losing the money they have stored in

the system. “These are the basic elements of an enabling regulatory approach and are consistent with the recommendations of global standard setters, such as the Bank for International Settlements (BIS) and the Financial Action Task Force (FATF), which have recommended that the regulator take a functional and proportional regulatory approach. The policy context also plays a critical role,” GSMA explained in its handbook. It mentioned also that the challenges of Anti-Money Laundering and Countering Financing (AML/CFT) compliance can be addressed by promoting risk-based Know Your Customer (KYC) procedures. It said there are also costeffective regulatory solutions in place to develop and set up distribution networks and accelerate customer adoption. “Therefore, MNOs should be; directly licensed as emoney issuers; or licensed through a subsidiary set up for this business.” It said. The establishment of bold financial inclusion policy objectives can help to mobilise political will and coordination of government agencies/ regulators to enable market reforms that promote the growth of mobile money and the development of a larger ecosystem, the hand book read. According to Enhancing Financial Innovation and Access (EFInA), a financial sector development organization Nigeria currently

has 63.6 per cent of its adult population with access to financial services, while 36.8 per cent, equalling 36.6 million of the adult population are financially excluded. As at the time Nigeria was considering the optimal approach needed to leverage new, innovative technology to deliver financial services to its people, the Central Bank analysed in some detail how to structure the guidelines and the regulatory environment to deliver the benefits on offer, without compromising the integrity of the financial system. Africa’s largest economy needed to see how the regulation of mobile money could evolve owning to significant volumes of currency that could be circulating in mobile wallets, and may not be visible to the regulatory authorities. As such it was clear that a better balance between the market and the regulatory structures was required. Meanwhile since then there has been an explosion in mobile money wallet usage in Kenya and other Africa peers, the Nigeria’s CBN was rather focused on an independent bank led model that would supplement and support the existing banking system. “Together, reforms that enable multiple use cases are necessary to build a successful, sustainable mobile money business and for the digital financial ecosystem to flourish. Ultimately, this will create greater financial inclusion and economic growth,” GSMA explained.

FNB partners FinTech distribution platform to solve financial inclusion

irst National Bank (FNB), a division of FirstRand Bank Limited, recently announced its partnership with Selpal, a South African FinTech company that operates specifically in the township and informal economy, or the “Unseen Economy”. Michael Vacy-Lyle, CEO of FNB Business explains that “with 50 perecnt of South Africa’s urban population living in townships, the ecosystem supporting these communities warrants significantly greater focus from the banking sector. They refer to this opportunity as the “Unseen

Economy” – the opportunity space that most call the informal sector or the township economy. These businesses range from survivalist businesses to often highly organised and sizeable SME operations. “At FNB Business we are of the view that this business segment of the South African economy has been ignored for far too long,” FNB said in a statement. Statistics show that there are around 30-40 businesses per 1,000 people in townships. FNB estimates that this translates into around 800,000 to 1million businesses. The majority of

these are survivalist businesses, with around 300,000 representing entities employing three or more people, as compiled from the document seen by BusinessDay. FNB believes that these businesses are under serviced from a banking perspective mainly due to cash being the predominate form of payment for them. “Access to financial services is critical for the growth of any economy and these businesses should be included into the financial system. Transactional banking, investing, lending and insurance opportunities exist in this unseen

space” Vacy-Lyle said. Selpal is a unique technology start-up company that has developed an integrated system that connects informal retailers such as spaza shops (community grocery stores) with FMCG (fast moving consumer goods) suppliers, wholesalers and brands. The user-centric platform was designed and built using direct observations, engagements and understanding of the pain-points that various users experience along the entire FMCG value chain in the informal sector, from manufacturer to consumer. Stephen Goldberg, the

CEO and co-founder of Selpal explains “Selpal is an agnostic virtual distribution platform which electronically enables the way in which products are ordered, paid for and sold in the unseen economy.” Using proprietary hardware and software that the company developed, he said they are creating a network of partner store traders which will be equip with a Selpal POS (point-of-sale) device that allow them view, order, pay for and sell stock and value added services without the storeowners ever needing to leave their shop, and unlocks extra revenue for them.

This, an industry expert said will be a welcome development in Nigeria where there are a lot of businesses that not financially served. “Nigeria needs to have initiatives of this kind,” the industry expert said on the condition of anonymity. “Every Selpal store will provide a potential service point for financial access and inclusion. The FNB partnership brings both credibility and access to FNB’s significant expertise around financial regulation and payments infrastructure, which will bring value to all participants in our ecosystem,” Vacy-Lyle added.

38 BUSINESS DAY NEWS Falling oil prices opens exit window for... Continued from page 1

time, analysts say the truth is

Nigeria’s economy cannot afford it and the result is out there for all to see now. Lower oil prices often forces the Nigerian government to undertake painful for necessary reforms. This scenario played out in 2016 when oil prices fell below $40 per barrel in the first three months of that year. Low oil prices cut revenue in half. The situation was further worsened by destruction of oil and gas infrastructure by Niger Delta militants whose campaign shut in a quarter of Nigeria’s oil production. In May, the government was forced to review the pump price of petrol from N86 per litre to N145 but higher oil prices soon saw the gains eroded. The Federal Government which had hitherto sworn off subsidy resumed payment. Marketers say they are now being owed over N800billion; this is over seven times the capital budget for education in the 2018 budget. Adeola Adenikinju, director, Center for Petroleum Energy Economics

and member of the Central Bank of Nigeria monetary policy committee, believes Nigeria should get out of subsidy as fast as possible. “Nigeria has to decide what it must do with fuel subsidy, because we can’t go on like this,” said Adenikinju. Oil subsidy or under recovery as the Nigerian National Petroleum Corporation (NNPC) prefers to call it, has been rising astronomically within the last 24 months. A recent BusinessDay investigation found that between 2006 - 2015, the NNPC claimed N170.6billion as under recoveries while it claimed N632.2billion in two years alone (2017 and 2018), a 217 percent percentage jump. This is not only a drain on the economy but creates room for corruption, experts say. “I find no justification whatsoever for the increase in NNPC’S PMS claims,” said Jean Balouga, economics professor at the University of Lagos, commenting on the analysis of NNPC under recovery data in comparison with rise in oil prices. Balouga said the claims have been

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‘grossly exaggerated.’ In March this year, the NNPC said it was incurring N774million daily to subsidise about 55million litres of petrol it claims Nigeria is consuming. Analysts say Nigeria could spend over N1.6trillion on subsidy for petrol this year, resources that could have been better utilised to fix broken infrastructure including roads, rail lines and bridges and fund education and healthcare. The rise of shale oil, growing adoption of electric cars and renewable technologies mean that crude oil prices may not recover to $100 per barrel in the medium to long-term so depending on higher oil prices to fund fuel subsidies is not a winning strategy. In the past, OPEC cuts were effective to rein in excess production and shore up oil prices. But the influence of OPEC as a cartel is waning and now needs non-members buy-in to exert influence. Even then, the threat of US production could derail any cuts meant to raise oil prices. “Nigeria should get serious about diversifying, the government should look into tech and payment spaces and reduce dependence on oil and wasteful fuel subsidy,” said Oni.

Wednesday 19 December 2018

Access to raise $200m, write off all Diamond... Continued from page 2

cash and swap two new Access shares for every seven Diamond shares. The bank will soon be seeking the approval of market regulators – the Securities and Exchange Commission (SEC) and Nigerian Stock Exchange (NSE) for the Rights Issue which is expected to take place next year. “The most important thing is that it is coming before the merger takes effect. It is meant to shore up the capital base of Access Bank. It means that existing shareholders in Access Bank will be better positioned to reap from the bigger entity,” an informed source close to the planned Rights Issue told BusinessDay. The yields on Diamond Bank Plc’s $200 million Eurobond closed lower for the second straight day at 25.40 percent Tuesday, according to FMDQ data, as investors continued to react positively to the retail lender’s merger with Access Bank Plc. The bond price also sustained a steady march upwards, rising to 93.59 Tuesday from 93.33 Monday and a record-low of 90 in November. The bond presents an opportunity for investors to make profit as the price nears its par value of 100. “Investors were heaving a sigh of relief upon the Access and Diamond bank deal and that has paved way for the Eurobond rally we are seeing,” a South-African based fund manager told Business Day. The inverse relationship between bond prices and yields means that when yields decline, prices rally in a show of high investor demand. Dur-

ing a bond sell-off however, yields rise and prices fall in reflection of negative investor sentiment. Diamond bank’s Eurobond had endured a thick-sell off that was sparked by credit downgrades from the three largest global ratings agencies, Standard & Poor’s, Moody’s and Fitch. All three downgrades came in a scorching month of November that also saw the tier-two bank announce it was revising revenue forecasts lower. Investors panicked, sparking a sell-off that has just only been cut short by the merger deal. Some investors will be beating themselves for not betting on the Eurobond at a time the sell-offs intensified and yields climbed as high as 31 percent late November, which was three times higher than the 10.9 percent average yield on the outstanding Eurobonds of other local banks. Investors who could stomach the risk associated with the Eurobond have made a killing. Business Day had reported last week that the struggling bank’s Eurobond presented a bargain opportunity for investors, seeing the price had slumped to 90 as against a par value of 100, less than six months to maturity. S&P, Moody’s and Fitch all warned of a risk of default, saying they had little optimism that the bank would be able to sell its UK unit in time to repay its dollar obligations. The Bank’s merger with Access bank means the latter will now be the one to pay international creditors for the loan taken in 2014 which falls due next May, squashing initial concerns over a possible default.

Lagos to enrol 2.5m in 2019 as health... Continued from page 2

L-R: Lai Mohammed, minister of information; Chief Diana Chen, chairman of CIG Motors, the sole distributor of GAC Motors in Nigeria, and Vice President Yemi Osinbajo, at the launch of Edo State Security Trust Fund in Benin City, the Edo State capital.

N2.4trn equity wipe-out means bleak... Continued from page 1

sional/retail stockbrokers and

shareholders traditionally spice up their homes, buy cars or upgrade an old one, pay school fees and also show kindness to family members by taking some profit on capital gains. It is less than four (4) trading days to Christmas. The stock market’s negative performance has persisted lately amidst growing political concerns ahead of the 2019 elections, and absence of a positive market trigger. Despite some analysts’ positive outlook for stocks in December, the market rather got off to a quiet start in the first week of the month. The All Share Index (ASI) has declined to a low of 30,728.32 points as at close of trading on Tuesday December 18, 2018, representing year-to-date (ytd) return of negative 19.4 percent. “We think the market loves December because it is a month where players begin to trade their optimism about the New Year. It is also a month

where portfolio managers - looking to re-balance their portfolios – take position ahead of year-end reporting,” said Lagos-based research analysts at United Capital Plc in their November 28 commentary. The value of listed Nigerian equities which had opened the year 2018 at N13.609trillion, increased to N15.896 trillion as at end of January; and rallied further to a record high of N16.019trillion as at end of June, but touched a new low of N11.221trillion as at Tuesday December 18. The continuing bearish reign at the Nigerian Bourse comes on the heels investors expecting to take position in fundamentally sound stocks for short term gains. Despite FSDH Research analysts reiterating that the stock market has strong growth potential for investors with a medium-to-long-term view, investors still chose to tread carefully in the equity market, particularly because of election considerations. “We note that most share prices

are in oversold positions and these stocks may attract the interest of domestic investors. The Fund Managers’ strategies to position in the market towards year-end may also drive the market up in December”, FSDH Research noted in their most recent equities outlook. History shows us that the All Share Index (ASI) has averaged a return of 2.8percent in the final month of the year since 1998 second only to May which has averaged 5.3percent. In the past 21 years, the market has only seen four negative monthly returns in December (specifically in 2001, 2005, 2008, 2009) - the lowest of any other month. Thus, the probability that there would be a December rally is a whopping 81percent”, United Capital research analysts said earlier in the month. The forecasts have failed to materialise with bearish sentiment remaining strong as oil prices slide and election uncertainty escalates, leaving stock investors with a miserable Christmas.

for health, Lagos State said the initiative was put on hold until an enabling environment to implement the Scheme was in place. “The journey to this historic moment in the history of the State health sector has been a long but purposeful one. A huge chunk of the scheme is directed at the poor to assure affordability and sustainability, ensuring that the basic health needs of the population would be addressed,” he said. According to Idris, the scheme is a mandatory health insurance programme for all residents of the state. In the design of the benefits package, reviews of the common healthcare challenges and poor health indices especially those centred on both maternal and child morbidity

and mortality were carried out to understand the needs of the state’s population and informed the development of the benefits package, according to Idris. “Quality care is one of the major features of the scheme and the State has designed a quality Improvement Programme (QIP) for the health care providers participating in the scheme to meet international best practices,” he said Obinnia Abajue CEO of Hygeia HMO Limited, one of the selected Health Maintenance Organisation (HMO) described the scheme as a milestone. He said the health of the citizens is a fundamental issue and critical to the out plan of Lagos economy, and so the scheme is very important.

FG goes hard on MDAs, says 36 federal... Continued from page 2

sised, noting that remittances and collections by Government agencies should contribute more significantly to FGN’s revenue. Recall that concerns about financial performance of GOEs gave rise to Executive Order 2 of 2017 and the circular ref SGF.50/S.3/C.9/24 recently issued by the Secretary to the Government of the Federation (SGF). With the Executive Order 2, President Buhari had directed that, “All agencies whether or not listed on the Fiscal Responsibility Act, shall, on or before the May of every year, cause to be prepared and submitted to Minister of Finance and Minister of Budget and national Planning, their schedule of Revenue and expenditure estimates for the next three years’. Akabueze noted that the situation warranted additional compliance measures and that with the Performance Management Framework, government expects a significant improvement in remittances by revenue-generating and collecting

agencies in order to strengthen the Federal Government’s finances. Another key imperative of the new framework is to bring the activities of these agencies into the budgetary framework and process and establish revenue Department in GOEs to be manned by Professional Treasury Officers from the Office of the Accountant General of the Federation (OAGF). The framework would also ensure institutionalizing appropriate sanctions for utilizing IGR without approval or waiver from the Budget office. It would also be deployed to consolidate at least the major agencies in the fiscal forecasting, budgeting and financial reporting of the FGN in order to make the process more transparent and inclusive. Akabueze said the new framework would also institute expenditure controls, including issuance of Finance Circulars to limit allowable expenses, frequency of board meeting, and other wasteful practices.

•Continues online at www.businessdayonline.com

Wednesday 19 December 2018

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Explainer How mobile phone app is addressing herder-farmer conflicts in Africa JONATHAN ADEROJU

he farmer-herder conflicts across Africa and especially in Nigeria have brought untold pain to various families, and leading to many deaths. The latest Amnesty International report says 3,600 people have been killed in Nigeria on account of farmer-herder clashes since 2016. According to the rights organisation, violence between the two groups is often caused by struggle over access to fertile land and water, which drought and rapid population growth have worsened. The impact of these clashes has been destructive, bringing about deaths, hunger and forceful displacement of people from their homes. In Nigeria many people have been displaced in the middle belt part of the country. Several solutions have been proposed to tackle the problem but in some African countries including Botswanna, Ethiopia, and Kenya a cell phone app is playing a significant role in addressing the fundamental issues at the heart of the farmer-herder conflicts. The AfriScout mobile app, developed by Project Concern International (PCI), a global development organisation provides current water and vegetation conditions on localised grazing maps, enabling pastoralists make more accurate and cost-effective migration decisions, improve pasture management and collaboration, reduce the risk of herd loss, and ultimately transform their lives. How it works The AfriScout app provides pastoralists with updat-

ed information on forage and water availability specific to their community grazing areas enabling them to make more accurate and cost-effective migration decisions. While masking conditions on areas outside accepted traditional grazing lands, it significantly expands the user’s field of vision within their grazing areas. This app helps users to monitor past forage conditions so that they can analyse climatic changes in their local areas over time. The app is compatible with all Android operating systems, is fully functional offline, and available in five regional dialects. Since the 2017 beta release, PCI has made several user-driven improvements. The latest release displays vegetation and surface water resolution down to 10 square meters and simultaneously reduces the data burden to only 20kb per map update (from 600kb), allowing cheaper and faster downloads on unstable 2G networks. Significant impact AfriScout app has helped pastoralists, aiding the timing and destination of migration, improving pasture conservation and management, improving collective and informed decision-making regarding migration. The mobile app has eliminated the need for ‘trial and error’ searching or settling on substandard locations due to limited knowledge. In addition to using the app to help determine where and when to migrate, pastoralists also use the information to delay or hasten migration, conserve grasses for when conditions worsen, or forgo migrating altogether to preserve the caloric expenditure of their animals.

Samson Itodo emerges The Future Awards Africa 2018 Young Person of the Year

amson Itodo, sponsor of the ‘Not-Too-YoungTo-Run bill, emerged The Young Person of the Year at the 13th edition of The Future Awards Africa held yesterday, 16 December, 2018 at the Balmoral Convention Centre, Federal Palace Hotel, Lagos. The ground-breaking bill, which was finally signed in 2018, sought to advance youth participation in Nigerian politics, challenging post-Independence laws that preclude citizens under the age of 30 from participating in Federal, State and Local Government election. Samson Itodo took the top prize in a category made up of several inspiring Nigerians including author, Tomi Adeyemi; artiste, David ‘Davido’ Adeleke;

academic, Nemitari Ajienka, and scientist, Dr. Mahmoud Maina. Receiving his award, Itodo emphasized the importance of active youth participation in the electoral process especially the upcoming elections in 2019. He advised young Nigerians to leverage on the opportunities provided by the NotToo-Young-To-Run bill to get involved and create real impact in their communities. “The 2019 elections are very important, because we cannot create true change in Nigeria without electing leaders who intend to develop the country. So when we go out next year, I beg you to look around you and search for true leadership – those who actually have the integrity and intention to lead.

39 NEWS

BUSINESS DAY

FMDQ integrates money, capital markets ... Chapel Hill, Afrinvest, DLM, Cordros Securitas, PSL Capital blaze trail

MDQ OTC Securities Exchange has once again lived up to its reputation as the foremost market development-focused securities exchange in Nigeria. Following its long-time agenda to foster market integration, improve network effects and promote liquidity in the Nigerian financial markets, the OTC Exchange has announced the launch of its Dealing Member (Specialists) (DMS) Market, which goes live today, December 19, 2018. This unprecedented market development initiative is coming on the back of the fragmentation identified in the fixed income market and will provide seamless integration of the fixed income interbank market - FMDQ Dealing Member (Banks) [DMBs] and the securities dealers, who

are Members of the newlycreated membership category - FMDQ Dealing Member (Specialists) [DMSs]. The DMS category is a subset of the FMDQ Dealing Member category, which also warehouses the DMBs, and is made up of securities dealers, including investment banking firms, securities trading/ stockbroking firms and OTC fixed income dealers licensed to make market in all fixed income products admitted for trading on the FMDQ platform. FMDQ, in the last three years, has worked with the Securities and Exchange Commission (SEC) and market participants to create the DMS market, and this new market affords both the SEC-registered Nigerian Stock Exchange (NSE) as well as FMDQ Dealers the opportunity to trade to-

gether in a liquid fixed income market operated by banks, who are the foundation Members of FMDQ. The participation of DMSs in the Nigerian fixed income market will not only enhance liquidity, but also serve as an efficient channel for FMDQ to integrate retail participants into the Nigerian fixed income market. Furthermore, in a first-time move, the banks have committed to support the DMS market with trading liquidity by accepting to provide two-way quotes to the DMSs, whereas FMDQ Clear Limited, will act as the clearing house for the market and Stanbic IBTC Bank, as the settlement bank. This innovative opportunity, which provides for a more structured participation of the securities dealers and stockbrokers in the fixed

NASS set to receive 2019 budget proposal despite crisis KEHINDE AKINTOLA, Abuja

arring last minute changes, President Muhammadu Buhari is expected to lay the 2019 budget proposal before the joint session of the National Assembly on Wednesday. Femi Gbajabiamila, majority leader, House of Representatives, who spoke on behalf of the Principal Officers of the House, explained that all issues relating to the workers’ protest had been taken care of. “This is an APC government, yes, the President will present it tomorrow (Wednesday),” Gbajabiamila said. While giving update on the intervention of the House towards resolving the crisis, the Lagos lawmaker who spoke with Legislative Correspondents

argued, “It is not possible to shut down the legislature as the entire country would be shut down as there will be nobody to make the laws. “Last night, both legislative chambers’ leadership met on the issue of unpaid salaries, though we operate separate accounts and we are on top of it. Our intervention is already yielding results and we hope to get results soon,” he said. Also at plenary, the House after the adoption of a motion sponsored by Gbajabiamila, resolved to suspend all legislative activities for Wednesday, with the view to welcome President Buhari and his cabinet members into the chamber. With less than 50 lawmakers on the floor, the House-in-session observed that the budget proposal presentation was critical

to the nation and industrial action by the workers should not be allowed to truncate it.

CHANGE OF NAME

I, formerly known and addressed as Azubuike Ngozi Peace now wish to be known and addressed as Amadi Ngozi Peace. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Ajibade Taiwo Oluwafemi now wish to be known and addressed as Adebisi Taye Oluwafemi. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Williams Chinyere Gift now wish to be known and addressed as Oloku Chinyere Gift. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Ariyibi, Ifeoluwa Korede now wish to be known and addressed as Mobolaji, Ifeoluwa Korede. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Ariyibi, Kolawole Oluwaseun now wish to be known and addressed as Mobolaji, Kolawole Oluwaseun. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Livinus Ik Onyeji now wish to be known and addressed as Livinus Boniface Onyeji. All former documents remain valid. General Public please take note.

income market, avails the Members of the DMS market, a regulated and efficient platform to trade fixed income securities in the FMDQ market, and will allow the FMDQ Dealing Members (Banks & Specialists), combined, make market in the fixed income products starting with Treasury bills traded on the OTC Exchange, under the efficient governance of FMDQ, dealing among themselves as FMDQ DMSs - indicating the start of a brand new market, and with FMDQ DMBs – indicating the long-awaited integration of the money and capital markets. The market also signifies the readiness of the Nigerian capital market to invent the future for the emergence of nonbanking trading houses in Nigeria akin to global securities dealers, such as Goldman Sachs and JP Morgan.

CHANGE OF NAME

I, formerly known and addressed as Ike Sunday John now wish to be known and addressed as Sunday Uzoma Ike. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Augustine Idogun Erabor now wish to be known and addressed as Augustine Itoya Erabor. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Miss Okonkwo Chioma Eucharia Miracle now wish to be known and addressed as Mrs Ozorokolie Chioma Eucharia Miracle. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Odoh Ifeoma Bella Wilfred now wish to be known and addressed as Odoh Ifeoma Bella. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Ariyibi, Anuoluwa Oluwafemi now wish to be known and addressed as Mobolaji, Anuoluwa Oluwafemi. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Ariyibi, Adeseun Olufunmilayo now wish to be known and addressed as Mobolaji Adeseun Olufunmilayo. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Aniagwu Chigozie James now wish to be known and addressed as Daniels Chigozie James. All former documents remain valid. General Public please take note.

BUSINESS DAY

C002D5556

Wednesday 19 December 2018

C002D5556

BUSINESS DAY

LegalPerspectives

C002D5556Wednesday 19 December 2018

With

Odunayo Oyasiji

Why Africa is not reaping the fruit of investment agreements signed with developed countries (2)

his is a continuation of the topic that started yesterday. The focus is on why countries in Africa do not attract FDI after signing trade agreements with developed countries. The A-D part was discussed yesterday. The other reasons that have been identified aree. Lack of transparent and predictable government agencies- Multinational corporations investing in a country usually deal with many government agencies. The problem they face at times in developing economies is that the agencies are often not predictable as corruption has eaten deep into the agencies. Integrity in a system is a key factor that encourages investors to invest in any country. The foregoing entails curbing corruption, quality services from government agencies and a regulatory environment that supports investment. Absence of integrity is a major impediment to the inflow of FDI. Before the reforms in Egypt, there was a major problem in obtaining the licence to start business by investors- there is often deliberate delay on the side of public officials expecting to be paid before working on the application of investors. Sometimes an entire file/application is lost. Companies are left with no choice but to offer bribe to obtain license. In Malawi, there was an attempt to change the face of public agencies based on the advice of international institutions thinking it will bring about a more transparent and accountable public agency. Rather, it led to a more corrupt setting. f. Lack of good tax policy – The issue of tax policy influences the decisions of investors. One of the major reasons why investors are particular about the tax policy of a country is because it has effect on the overall interest or profitability of their investment. Another evidence of the importance of taxation and that it influences the decision of investors is in the aspect of countries entering into agreements so that there will not be double taxation on investors i.e. tax by the investor’s home country and the one taken by the host country. Furthermore, it has also been noted that countries with high tax rates can harm FDI while those with more rational tax rate can have a level of influence on attracting FDI. Some African countries can be pointed to e.g. Namibia- unpredictable tax environment exists in Namibia and as such investors are avoiding the country. In Mauritus, low tax rates in the country is one of the reasons why the investment

environment of the country is attractive to investors, Angola- the country reduced its mine tax to 25% in 2013 and this made it more appealing to investors. g. High level of political instability in Africa- This determines the level of political risk to be taken by an investor. The political risk/instability in Africa makes the country risk to be higher than the economic opportunities in the countries. Stable political environment encourages investment. Political risk can be in different forms e.g. political violence or high profile terrorist attacks, sudden change in the laws regulating investment and overnight adoption of hostile Government policies like resource nationalism. Furthermore, investors are discouraged from investing in a country with high political risk because investment in such places are usually not as profitable as expected. The main reason why Hyundai took the decision to start a car assembly plant in Botswana to cater for South African market was that it was seen as a stable country with higher level of certainties than other considered locations. Another example of political instability can be found in constant terrorist attack in the northern region of Nigeria i.e. the terrorist sect popularly known as Boko Haram. Like many other African countries, Nigeria witnessed multiple military coups that affected its progress as policies are often changed. This uncertainty makes investors to lose confidence in the business environment of a country. h. Policies relating to how the market functions e.g. competition policy- lack of policies having to do with healthy competition can create a barrier to the entry of investors into a country and as such breed monopoly or cabals as one person or few people

control different aspect of the economy. Both manufacturers and consumers have a lot to gain under a proper business environment with policies encouraging healthy competition. The consumer benefits from lower prices, the manufacturer is not at risk of being frustrated out of the market and the market itself functions with efficiency. Issues relating to policies on how market functions can be identified in-Nigeria- MTN was the first mobile service provider in Nigeria and there have been allegations by other telecom providers that MTN wants to monopolize the industry. MTN started with per minute billing and they made Nigerians to believe that for them to switch into per second billing it will take years (you pay for a minute if your call lasts for even one second). However, when GLO (another mobile network provider) came into the market they started with per second billing and as a result MTN was forced to switch to per second billing. In Ethiopia, a set of politicians formed a cartel in the fertilizer section and they jointly fixed high prices for fertilizers. In Malawi, few big transport companies dominated the transportation sector of the country and they set high prices for transportation. i. Lack of good and sufficient physical and technological infrastructure- Lack of good infrastructure is a major problem in sub-Sahara Africa. The presence of infrastructural facilities plays a major role in attracting FDI into a nation. Facilities like good roads, telecommunication system, port and electricity are highly essential to FDI. It has been said that the condition of Africa’s infrastructure is worse than that of other developing countries. Infrastructural problems can be identified in countries like Nigeria- public funds meant to provide infrastructural facilities

are usually embezzled by politician and public office holders. Public officers like Tafa Balogun (former Inspector General of Police in Nigeria) and Dimeji Bankole (Former Speaker of the House of Representatives in Nigeria) were all accused of stealing public funds. However, the attempt to prosecute them by the Economic and Financial Crimes Commission in Nigeria didn’t yield any fruit. Access to electricity has been recognized as the greatest infrastructural problem in Africa as over 30 countries in the continent do not have stable power supply. In Mozambique, people raised the issue of poor roads as a barrier to smooth running of business and accessing other facilities like schools. In Liberia, access to health care facilities have been identified as a major problem. In Nigeria, South Africa and Cameroon, the problem in these countries has to do with electricity, roads, health care and education. j. Lack of good policies to attract investors in the host country – The general rule is that countries or economies that can offer investors what they need and also back it up with good and friendly FDI policies have a higher chance of attracting FDI. Lessons and examples as to what constitutes good policies and areas to focus on can be found in OECD countries and the policy framework developed by UNCTAD. It is worth pointing out that most of the factors considered for rating 189 countries under World Bank’s ease of doing business report falls within the areas focused on by OECD and UNCTAD for the purpose of proper policy framework. OECD countries have a programme to develop good policies in order to attract investment. The areas they concentrate on are“trade policy, investment policy, investment promotion, competi-

tion policy, corporate governance, human resource development policy, policies on infrastructure, policy on promoting responsible business conduct, policy on financial sector development and on public governance”. UNCTAD has an Investment Policy Review aimed at developing good policies for developing countries. These policies are a reflection of what investors look out for. The policy usually includes- “Corporate governance and accounting standards, protection of intellectual property, rule of law, respect for property rights, competition policy, land issues, employment-including employment on non-citizens, foreign exchange regulation, taxation, licensing and administration of regulations and investment promotion including incentives”. k. Market size- This area is important because FDI that targets market happens to be the main type of FDI. The size of the domestic market and average income per capita are very essential. The average income per capita is essential because an investor who is seeking market needs to access whether the people will be able to afford it. It is essential to note that FDI in the manufacturing sector is mainly market focused. Therefore, the size of a country’s market is a fundamental factor when it comes to attracting FDI into that country. At least 31 countries in Africa has a population that is less that is not more than 10 million. In fact, most of these countries have less than 5 million people. Therefore, these has a kind of negative effect when it comes to attracting FDI. Around 60 percent of the population in Africa live on less than 2 United States dollars in a day while around 40 percent of the population live on less than 1.25 United States dollars in a day. This shows the prospect making reasonable or significant sales of luxury products. l. Non-availability of skilled and educated workers- when the workforce in a place is full of uneducated/unskilled people then FDI inflow into such a place will be lower compared to places with skilled worker. Human capital development has to do with the level of illiteracy in a country which in turn determines the availability of skilled workers. The absence of educated populace discourages an investor and makes the country unattractive. Therefore, human capital development is an aspect that any country that seeks to attract FDI must pay attention to. There is high level of illiteracy in Africa as sub-Sahara Africa is home to 25 percent of the world’s adult illiterates.

Wednesday 19 December 2018

LegalPerspectives

C002D5556

With

BUSINESS DAY

Odunayo Oyasiji

Writing a will is not a death sentence- It aids continuity in business

his is an aspect of law that people don’t like to talk about. Writing of a Will is often considered in our society as a death sentence. That is, it is meant for people who are about to die. That is the more reason why a lot of people will rather wait till they are old (Septuagenarians and Octogenarians) before writing a Will. Unfortunately, life expectancy in Nigeria is under fifty years. Therefore, many people end up not writing a Will. It is more regrettable in a situation where notable business people die without leaving a Will (die intestate). In most cases, the businesses die due to disputes over who should be at the helms of affairs. Examples of such abound in our society. What is a Will? A Will is simply a document that speaks after the death of its maker (it is a testamentary disposition of the assets of a person- liabilities also sometimes included). It is a document that a person writes while he is alive stating how is estate/ properties are to be distributed after his death. It is essential that Wills are written in a way that the courts will

easily give effect to them after the demise of the maker. This is one of the reasons why most people approach a lawyer to guide and prepare their Will. An important legal requirement for the validity of a Will is that it must be signed by the testator in the presence of two witnesses who must be there at the

same time. If previously signed by the testator, the testator’s signature must be acknowledged by both witnesses in the presence of each other. Where the witnesses were not present at the same time, the Will may be invalid. Every person with a sound mind can make a Will. Section 3 of the

Wills Act of 1837 provides that ““It shall be lawful for every person to devise, bequeath, all properties or dispose of, by his Will executed in manner hereinafter required, all real estate and all personal estate which he shall be entitled to, either at law or in equity, at the time of his death, and which, if not so devised, bequeathed or disposed of, would devolve upon the heir at law...”. Therefore, regardless of tribe and religion a person that has attained the required statutory age and who is of a sound mind can make a Will. With regards to the right of a muslim to make a Will, it depends on the state where the person is domiciled (his residential home). If the person is domiciled in a state that applies the Wills Act, then the person has unrestrained right to make a Will –an example is Lagos State. The Supreme Court of Nigeria confirmed the foregoing in the case of Adesubokan & Ors. v. Yunusa (1971) All NLR 227. However, if the person lives in states where they have their own Wills Law and places restriction of muslim testators then such a person can only make Wills in line with

LOCUS CLASSICUS Addis v Gramophone [1909] AC 488 House of Lords

he defendant employed the plaintiff as a manager. However, the defendant terminated his employment contract and recruited another person to take over his position. This was done in a way that breached the contract between the defendant and the plaintiff. The plaintiff then instituted this action claiming for breach of contract and that the damages to be awarded should reflect the way he was dismissed as it has affected his prospect of getting other jobs. The court held that the aim of contract law is to put parties in the position they would have been in if the contract had been performed as agreed between the parties. Therefore, the claim of the plaintiff can only be limited to his wages and loss of commission. Contract claims does not give room for exemplary damages or damage to reputation. This can only be claimed under law of tort.

Payment Mechanisms in E-commerce Adetola Adeleke,

Lead Partner Crown Court Attorneys

lthough e-commerce is considerably different from e-banking, ecommerce rides on the back of e-banking, since the aim of ecommerce is to transcend geographic barriers and exchange goods/services and payment on the internet. Now, the origin of e-banking in Nigeria may be traced to 1996 when the Central Bank of Nigeria approved the introduction of ‘a closed system electronic purse called Electronic Smart Card Account (ESCA)’ by the defunct Allstates Trust Bank PLC. This was followed by ‘Paycard’ in 1997 by Diamond Bank PLC and then Valucard in 1997 by a ‘consortium of leading Nigerian banks’ as an ‘e-payment service provider.’ Nigerians have since been

enabled to make payments via e-channels including mobile

banking. Like in every other jurisdiction, continued growth in technology has since set new trends in the Nigerian banking sector. Presently, all Nigerian banks operate at least one form of e-payment or the other. Goods and services bought or supplied through the internet can be paid for through the internet in the same way that the internet can be used to make and accept offers. Popular methods of effecting payments for goods bought through the internet include

the use of credit cards, smart cards, digital or electronic cheques or cash, and debit cards. The use of credit cards is still not very popular in Nigeria. The practice is therefore for the sellers to obtain bank guarantees or often insist on receiving and validating payments before providing services or releasing goods to customers. If the goods are supplied and payment is not forthcoming through the bank guarantee, the seller has a right of action against the issuing bank that

has guaranteed payments. There are many problems associated with obtaining bank guarantees in Nigeria for payments in respect of goods bought internationally or through the internet. This has greatly hampered the development of e-commerce. However, with the increasing level of sophistication in information technology and the development of the telecommunication sector, the use of credit card and other payment facilities in e-commerce is becoming increasingly popular, and in the process, some of the problems associated with payment for goods and services in e-commerce will be reduced. The various e-payment methods have been both a blessing and a curse, with some of the e-payment methods failing to stand the test of the mildest security challenges and/or network glitches. Cyber-attacks, e.g cyber-squatting, hacking, data diddling, copyright infringement, web jacking, salami attack, worm, trojan horse, cyber warfare and virus manufacturing, remain on the rise in spite of the Cybercrimes Act, 2015. ATM frauds, PIN/ Password hacking, spoofing also pose a significant threat e-payments. It is desirable for the Government to do more to make e-banking safe.

BUSINESS DAY

Shipping

C002D5556

Logistics

Wednesday 19 December 2018

Maritime e-Commerce

Local Content Board lists top vessels to be in demand from 2019 to 2023 …As NIMASA moves to address policy inconsistency hindering shipping devt Stories by Uzoamaka Anagor-Ewuzie

etermined to encourage more Nigerian owned vessels to participate in the nation’s shipping business, the Nigerian Content Development and Monitoring Board (NCDMB) has listed vessels expected to be in demand from 2019 to 2023. According to recent data from the Nigerian National Petroleum Corporation (NNPC) and the National Petroleum Investment Management Services (NPIMS), the vessels include tugboats, security patrol vessels, jargon barges, anchor handling truck vessel and crew boats. Simbi Wabote, executive secretary of NCDMB, who disclosed this in Lagos last week during the annual ship owners workshop, said that purchasing the above listed vessels, could guarantee good shipping business and returns on investments in the next five years. “These ships account for 66 percent of marine vessel

requirements while crew boats, security vessels and guiding support vessels account for 49 percent of vessels that will be in demand within the same period. Accommodation vessels, supply vessels, anchor handling truck vessels, tug boats, and barges will account for 23 percent of the demand in the oil and gas industry. Wabote said that in the next five years, oil and gas industry’s spend on tugboats and other vessels is estimated at $1.6 billion or 51 percent of total spend, and the annual spend was put at $641 million over 519 marine contracts expected to take place in Nigeria between 2019 and 2023. Wabote advised that the listed vessels should occupy the focus of Nigerians who aspired to own vessels in the coming years. He further disclosed that the board has in partnership with the Bank of Industry, launched $200 million Maritime Intervention Fund aimed at providing single-digit interest loan to Nigerian oil and gas service providers. “We recently secured approval to increase the limit

Hadiza Bala Usman (m), managing director, Nigerian Ports Authority (NPA); Sokonte H. Davies (l), executive director, Marine and Operations, NPA, and Vicky Haastrup, president, Seaport Terminal Operators Association of Nigeria (STOAN), during an interactive session between the NPA management and the association at NPA’s corporate headquarters in Lagos recently..

of loans to $10 million from the initial $2 million. As at the end of October 2018, $21 million had been given out as loans to beneficiaries, but there is still significant head room for disbursement to interested applicants,” he assured. He stated that a committee had also been set up between

NCDMB and the Nigerian Maritime Administration and Safety Agency (NIMASA) to harmonise standards for categorisation of marine vessels. Meanwhile, Dakuku Peterside, director general of NIMASA said that the agency is now poised to redress lingering policy inconsistency that has hindered shipping

Group faults EFCC on N13.7bn Warri channel dredging contract

he Cadrell Advocacy Center, a nongovernmental advocacy group, has disagreed with the Economic and Financial Crimes Commission (EFCC) over the controversial N13.7 billion Warri channel dredging contract awarded by the Nigerian Ports Authority (NPA) to Dredging International Services Nigeria Limited. A statement signed by Evans Ufeli, executive director of the group, said that they petitioned the EFCC to probe the bidding process for the Warri channel dredging contract, which resulted in investigations by the House of Representatives and Bureau of Public Procurement (BPP). Ufeli alleged that contrary to the EFCC’s report that Dredging International Services Limited (DISL) is not a convicted company; a study of the incorporation documents of DISL obtained from the Corporate Affairs Commission in Abuja revealed that Dredging and Environmental Services Ni-

geria Limited partly owns 49,500,000 shares of the company and another 500,000 shareholding in Dredging International NV. Ufeli further alleged that the EFCC concluded the investigation without resolving the issues that came up in the cause of investigation. The conclusion reached by EFCC, he said, has raised more questions for the Federal Government and DISL rather than provide answers. He said that the EFCC report states that the companies indicted were Dredging International Services Cyprus (DISC) and Dredging International NV. Recall that the Federal Government in 2007 awarded to Dredging International Cyprus in a Joint Venture Agreement, the contract for the dredging and maintenance of the Bonny Channel River in Bonny, Rivers State. This led to the establishment of Bonny Channel Company Limited, owned 60 percent by the NPA and 40 percent by DISC. It was also reported that

Dredging International Services, Cyprus, and its official were alleged to have been convicted by a Swiss Court in 2012 for involving in bribery scandal with some Nigerian officials. “ The Bonny Channel Dredging contract referred to above is still on-going despite the company’s conviction by a court in Switzerland for bribing Nigerian officials over the award of the contract,” the group stated. “Dredging International Services Cyprus was convicted on the 2nd of May, 2012, and fined one million Swiss Francs. At that time, Bart Vandemeulebroucke and Steven Poppe were both directors in Dredging International Services, Cyprus and also directors of Dredging International Services Nigeria. And till date, their positions remained same in both companies,” the group added. Ufeli said that the exclusion of other 14 bidders on the basis of none availability of tax documents, deposed affidavit, ITF, PENCOM &

TCC (as contained in the letter to the Ministerial Tender Board, which was also sent to the Permanent Secretary, Ministry of Transport’s, the BPP dated 6th February, 2018) was wrong. Questioning why the Federal Government disqualified 14 companies from the bidding process, the group advised the EFCC to apply the above rule across board and not hold on legal technicalities to award contracts of such nature to companies alleged to have been partly owned by convicted company. “As a result of the Joint Venture, the Federal Government awarded dredging contracts worth (US$ 70 million) to companies under the DEME Group, Dredging International Services, Cyprus and Dredging International Services, Nigeria, without competitive bidding,” Ufeli alleged in the statement. The group claimed that Dredging International Cyprus, which the EFCC admitted is a convicted company that contributes to the financial figures of DISNL.

development in Nigeria. According to him, lack of supportive institutional frameworks, neglected infrastructure and inadequate financing are the major reasons Nigeria’s shipping potentials have not been fully maximised for the good of the economy. Delivering a paper titled

‘Effective Policy Implementation: A Panacea for Sustainable Participation and Growth of Nigerian Shipowners in the Maritime Sector,’ Peterside pointed at poor policy implementation, limited stakeholder involvement at the point of formulation, lack of the willingness to enforce the policies coupled with the absence of the needed competence and capacity on the part of implementers as the problem. Peterside said that there has been collaborative partnership with industry stakeholders as exemplified in the current engagement with the Central Bank of Nigeria (CBN) to secure special single digit interest loans for ship owners because shipping has the capacity to engage about 10 million Nigerians. “NIMASA is also pushing for a special forex window for ship owners to procure vessels of modern specifications in order to compete with their foreign counterparts. The agency is also engaging with the Nigeria Customs Service to create special tariff regime for those brining in ships and spare parts.

Peterside identifies maritime, logistics as heartbeat of globalisation …Bags CILT fellowship award

akuku Peterside, director-general of the Nigerian Maritime Administration and Safety Agency (NIMASA), has described the maritime and logistics sectors as the driving force behind globalisation. Speaking at the inauguration of council members of the Chattered Institute of Logistics and Transport (CILT) and investiture of fellowship awards in Lagos recently, Peterside said that NIMASA was working hard to ensure that Nigeria continued to position itself to benefit optimally from international transport and logistics. “The maritime sector is all about movement of goods from one point to another and this cannot be done without the logistics sector. This is a confirmation of the fact that everything about trade and development depend solely on logistics,” he said. Peterside, who spoke after the investiture of the fellowship awards, assured that the

inducted fellows will work together to ensure quick passage of the Act establishing the CILT. Earlier, Jibril Ibrahim, national president of CILT, called for the passage of the institute’s bill, which he says is needed to propel the institute into organising the logistics sector and to ensure adequate training of practitioners. Ibrahim, who doubles as director, Maritime Labour Services of NIMASA, called for more inter-agency collaboration to solve the problem of traffic congestion at the port area. Obiora Madu, directorgeneral of the African Centre for Supply Chains, who was the chairman of the occasion, called for a stronger partnership with the various agencies in the area of capacity building. The highpoint of the event was the award of fellowship to deserving industry stakeholders, who have contributed to the growth of the maritime sector.

Wednesday 19 December 2018

C002D5556

BUSINESS DAY

Shipping

Stakeholders decry poor contribution of maritime sector to GDP Stories by Uzoamaka Anagor-Ewuzie

rank Ojadi, a university don, has bemoaned the non-capturing of the maritime sector in the nation’s Gross Domestic Product (GDP) describing it as a worrisome and disturbing development. Ojadi disclosed this at the dinner/ annual Nigerian Maritime Award (ANMA) organised by the Shipping Correspondents Association of Nigeria (SCAN) held in Lagos recently. Ojadi, a lecturer at the Lagos Business School (LBS), said the Nigerian maritime sector is weak and may not be able to compete favourably with its contemporaries around the world. “You cannot pin down what the Nigerian Maritime industry contributes to the Nigerian Gross Domestic Product (GDP) and this is because 80 to 90 percent of vessels that come into the country are foreign vessels,” Ojadi said. Continuing, he said: “The foreign vessels owners’ repatriate the profit accrued from the shipping business in Nigeria to their various countries thereby making it difficult for Nigeria to retain the money in the economy. He however urged the

Ibrahim Jibril, national president, Chartered Institute of Logistics and Transport (CILT) presenting a plaque to Dakuku Peterside, director general, Nigerian Maritime Administration and Safety Agency (NIMASA) and an inductee, during the CILT Leadership Impact Programme (CLIP) and the induction of new fellows held in Lagos recently.

Federal Government to urgently disburse the Cabotage Vessel Finance Fund (CVFF) for the development of the maritime sector. “For the country to harness his huge maritime potential, there is need for the government to administer the ship acquisition funds also known as the Cabotage Vessels Finance Fund (CVFF) and focus on the infrastructure deficit at the seaports. He stated further that the Maritime University Okerenkoko should be pursued

and actualised for training of capacity in the maritime industry. “Training vessels should be provided for the training of seafarers. However, declaring the award session open, Uju Tony Nwabunike, chairman of the event called for quick completion of the port access roads. Nwabunike, president, Association of Nigerian Licensed Customs Agents (ANLCA) who was represented by the vice president of the association, Kayode Farinto also rues lack of

Concern as NPA raises alarm over threatening congestion at ports

orried by the negative impact of congestion currently building up at the nation’s, Hadiza Bala Usman, managing director of the Nigerian Ports Authority (NPA), has called on terminal operators, shipping companies, port managers and allied stakeholders to put in efforts towards eradicating or mitigating the cause of congestion at ports. Usman, who said that issue of port congestion should be of concern to all, encouraged stakeholders to look into the issues around evacuation of empty containers, increase in free days of storage, wavering of demurrage for a definite period of time, creating a window of some period to accommodate the concerns of importers, and among other issues.

Addressing stakeholders at a meeting held in the authority’s headquarters at the weekend, convened in compliance with a directive from Yemi Osinbajo, vice president/chairman, Ease of Doing Business Council, on the need to find lasting solution to the issue of ports congestion, Usman said that government is desirous of getting things done more smoothly in the ports. “NPA will do everything possible to facilitate trade in the maritime sector, and we would encourage shipping companies to patronise other ports outside Lagos, particularly Onne Port, she said. Hadiza further informed terminal operators that NPA has made effort to use barges to move cargoes from Ikorodu; collaborate with other stakeholders to construct access roads in Apapa; en-

courage Dangote Private Jetty Project, and promote intermodal transportation system. Responding to the concerns raised by some terminal operators that the Nigerian Customs Service (NCS) has not auctioned any cargo at the port in recent times, Usman appealed to Customs to auction over time cargo on time in order to discourage importers from turning the port into storage facility. Vicky Haastrup, chairman of Seaport Terminal Operators Association of Nigeria (STOAN), who doubles as vice chairman of ENL Consortium, said that the measures being taken by the Federal Government will affect their revenue negatively. Reacting to this, Usman assured that the situation, which she described as an emergency, will be dealt with.

consistent policies in the maritime industry. “No consistent policy to drive the maritime industry, no port development plans like other developed countries. According to Nwabunike, Nigeria generated over N10 billion in the maritime industry daily but government still neglects the sector. “Nigeria generated over N10 billion daily in the maritime industry from customs duties, NIMASA, NPA, SON, and NAFDAC among other charges but it has been neglected.

Logistics

Maritime e-Commerce

Usman tasks fire service on professionalism

adiza Bala Usman, managing director of the Nigerian Ports Authority (NPA) has urged the officers of the Fire Service Department of the NPA to rededicate them to promoting the vision, mission and core values of the authority through display of professional and responsibility in the discharge of their duties. According to a statement signed by Adams Jatto, general manager, Corporate and Strategic Communication of the NPA, Usman made this call while addressing graduands of Squad 50 of the Fire Service Cadets during their passing out parade held at NPA Fire Service Central Training School,

Apapa last week. “NPA’s Fire Service Department has a culture and tradition that is built on excellence which makes it one of the best in the country. You must key in and imbibe this culture while discharging your duties,” Usman advised. She further said that the Authority will continue to give maximum support and cooperation to the Fire Service Department. Represented by Sekonte Davies, executive director, Marine and Operations, Usman added that going by the skills demonstrated while performing their drills, that her management is convinced that the officers have been adequately trained to impact positively on the society.

Hadiza Bala Usman

SIFAX Group rewards 60 staff at Long Service Award

IFAX Group has honoured 60 staff at its 2018 Long Service Award, an annual event for rewarding staff with cash and gifts for meritorious, consistent and outstanding service after a minimum of ten years in service. Out of the 60 staff honoured and rewarded, 57 of them celebrated their ten years with the company, two celebrated 15 years while one staff celebrated 25 years’ service to the company.

Taiwo Afolabi, Group executive vice chairman, who was represented by Henry Ajetunmobi, executive director, SIFAX Off Dock Limited, lauded the staff for their passion, dedication and hard work in lifting the company to its current heights. “I must salute your courage and dedication. You have all contributed to the growth of the company in your different subsidiaries. I am touched because these gestures have shown to me an

R-L: Henry Ajetunmobi, executive director, SIFAX Off Dock, Okota presenting award plaque and prizes to Shofu Adedotun Taiwo who has spent 25 years in service at the SIFAX Group 2018 Long Service Award held in Lagos recently.

unrivalled level of loyalty to both the company and your jobs. Thank you for believing in the SIFAX Group dreams and contributing your quota to see it come to fulfilment.” Fola Rogers-Saliu, executive director, Human Resources and Administration, said that SIFAX Group’s policy of treating its staff in a deserving manner has yielded great result. “We have staff here today, who have spent 25 years in the service of the company. This goes to show that the company is really doing something right with its staff for them to pursue a longterm career path with us. Staff motivation and reward is dear to the heart of Taiwo Afolabi, and he leaves no stone unturned to make sure staff members are happily rewarded,” she said. Responding on behalf of the awardees, Shofu Adedotun Taiwo, who was rewarded for 25 years in service, thanked SIFAX Group and its management team for the opportunity given to the staff.

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ENERGY intelligence oil

gas

power

Wednesday 19 December 2018

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BUSINESS DAY

Debrief

OIL

Angola: Independent oil companies turn attention to Angola as 2019 licensing round, marginal fields drive interest Page 48 OPEC daily basket price DAY

PRICE

14/12/18

59.07

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58.67

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59.2

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58.57

10/12/18

59.72 Source: OPEC

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Nigeria’s upcoming election pushes up petroleum products’ flow to West Africa FRANK UZUEGBUNAM

gainst the backdrop of Nigeria’s 2019 election, refined petroleum products arrivals into West Africa in December so far are 1.19 million metric tonnes compared with 1.21 million mt in the whole of November, S&P Global Platts trade flow software showed. Of these arrivals, 1.02 million mt were thought to be gasoline, 60,000 mt jet fuel, and 67,000 mt gasoil, and 37,000 mt of ultra-low sulfur diesel. Gasoline buying interest has

sustained from West Africa, particularly from Nigeria, as the country’s February general election approaches. Most of the 1.02 million mt of gasoline is expected to arrive in Lagos, Nigeria. The West African country is looking to keep offshore gasoline supply topped up to forestall any shortage going into the general election in February. According to the Nigerian National Petroleum Corporation (NNPC), Nigeria currently has around 2.6 billion liters of gasoline in stock, enough to cover at least 52 days of consumption. The state-oil compa-

Ghana: Ghana on course to having nuclear power Page 50

INTERVIEW

ny has been supplying the local market with gasoil cargoes to keep retail prices low, sources said. In addition to the existing demand from NNPC, demand from private importers also increased following the drop in ICE low sulfur gasoil flat prices over November. This, in turn, supported 0.3 percent gasoil price differentials in the region. However, market participants said the West African gasoil market came under pressure from local financing problems. Traders said lower crude oil prices meant Nigeria witnessed smaller inflows of

foreign income, in turn limiting the amount of dollars available for the letters of credit. Letters of credit are issued by banks as a form of guaranteeing payment of imported products, requiring sufficient amounts of dollars to assure payments for oil products. “There is no availability of dollars to confirm and execute trades. So there is a lot of demand but there aren’t the tools to service it,” a trader active in the region said. Demand from private companies was also said to be diminishing as margins were shrinking due to ample supply.

‘Cleaner, greener, and leaner strategies drive energy M&A activity’ Page 51

48 BUSINESS DAY WEST AFRICA Outlook

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oil

Angola: Independent oil companies turn attention to Angola as 2019 licensing round, marginal fields drive interest

he Angola Oil & Gas conference will be 2019’s main p ro m o t i o n a l event for the licensing round and marginal fields. Angola’s licensing round will include a new focus on the development of marginal fields.

The licensing round and marginal field legislation indicate new strategic direction and opening of Angola’s oil and gas business. Angola has developed a strategic plan to attract new players to its established oil and gas sector, promoting a licensing

Wednesday 19 December 2018

round at Angola Oil & Gas in June 2019 and opening up marginal fields based on new 2018 legislation. The measures will encourage new participation and investment from Angolan, African and international independents in the country’s oil and gas sector. Diamantino Azevedo, Minister of Mineral Resources and Petroleum, is keen to bring new life to Angola’s oil sector, which has seen a decline in discovered oil reserves and the maturing of producing fields. The 2019 licensing round, which will include onshore and offshore blocks in the Congo, Namibe and Cunene basins, will boost exploration potential with the ultimate aim to increase production from the country’s current levels of 1.49 million barrels of oil per day. “If we do not conduct the exploration works and finds new reserves, we will not be able to maintain the current levels of production,” said Azevedo. “We have to work on the perspective of finding new oilfields to sustain the desired production,

based on the goals set by the government.” In line with Angola’s decision to promote access to marginal fields, the government has established guidelines for marginal operators by presidential decree. According to the law, marginal fields are characterized by at least one of many factors. These include: recoverable resources of less than 300 million barrels; water depth exceeding 800 meters; and/or income to the state less than $10.5 per barrel. The law also provides different tax structures for marginal fields. “There is an antiquated perception that Angola as an oil and gas market is only for the big boys,” said Guillaume Doane, CEO of Africa Oil & Power, organizer of Angola Oil & Gas 2019. “Through marginal fields, Angola is attracting a greater diversity of exploration and production players that can operate smaller onshore and shallow water resource plays. In the next decade Angola can achieve historic developments through marginal fields similar to what Nigeria accomplished in recent years.”

Brief West Africa: UK Continent-West African long range freight rates 3-year high amid strong demand

reight rates to carry a 60,000 mt clean petroleum product cargo from the UK Continent to West Africa on a Long Range clean tanker strengthened to a three-year high of $22.88/ mt, a level not reached since August 18, 2015, S&P Global Platts data shows. WAF has been the main headline of this month’s activity in the LR clean tanker markets. The Medium Range clean tanker markets saw similar price rises, having been assessed at $30.50/mt, the highest since November 17, 2015, when it was last assessed at $30.95/mt. “Delays in the US Gulf are keeping a lot of MR tankers there, hence LR tankers are filling the gap,” a London-based shipbroker said. Strong gasoline and gasoil demand over recent weeks contributed to the increased demand for tankers going to the West African region. Nigeria is likely looking to keep offshore gasoline supply topped up as the country approaches a general election in February. Nigeria currently has around 2.6 billion liters of gasoline in stock, enough to cover at least 52 days of consumption, the Nigerian

National Petroleum Corporation said. Similarly, ahead of the presidential election, the NNPC has been supplying the local market with gasoil cargoes to keep retail prices low, sources said. In addition to the existing demand from NNPC, demand from private importers also increased following the drop in ICE low sulfur gasoil flat prices over November. This, in turn, supported 0.3 percent gasoil price differentials in the region and ultimately the freight rates for clean tankers from the UKC to WAF. However, market participants said the West African gasoil market came under pressure from local financing problems. Traders said lower crude oil prices meant Nigeria witnessed smaller inflows of foreign income, in turn limiting the amount of dollars available for the letters of credit.

Mauritania: Total enters two more deepwater blocks offshore Mauritania

otal has signed an agreement for two new offshore exploration and production contracts with Mauritania’s Ministry of Petroleum, Energy and Mines as interest among oil companies to discover the lucrative West African Atlantic Margin basin grows. The deal covers offshore blocks C-15 and C-31 and Total will operate these with a 90 percent stake while the state-owned Societe Mauritanienne des Hydrocarbures et de Patrimoine Minier will hold the remaining 10 percent. Blocks C15 and C31 are both in deepwater and span an area of 14,175 sq

km. “This agreement contributes to the implementation of Total’s strategy that aims to explore basins in proven yet under-explored petroleum systems,” said Arnaud Breuillac, president Exploration & Production. The oil major already has operatorship in blocks C-7,C9 and C-18 and this deal will help it expand its footprint in the emerging hydrocarbons basin offshore Mauritania. Plans to drill a well on Block C-9 next year are still on track, it said. In May 2017, Total was awarded operatorship of block C7 and a 45 percent interest in block C18, and

the company also operates the deep offshore block C9, where it plans to drill a well in 2019. The company’s blocks from Mauritania down to Senegal, Ivory Coast, and Nigeria now comprise half its acreage in Africa. Exploration and drilling activity among oil majors and explorers in Mauritania has been growing steadily in the past few years. Shell signed two production-sharing contracts with Mauritania in midJuly for blocks C-10 and C-19. Late last year, ExxonMobil also picked up three deepwater offshore blocks after signing production sharing contracts with the government.

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ENERGY intelligence

Ukraine: Naftogaz takes $2.6bn legal dispute with Gazprom to US

It is the latest twist in the long-running dispute between the two companies over their 10year gas supply and transit agreement that began in 2014, one which again could see tensions raised between the two sides, both crucial for the supply of Russian gas to Europe. Naftogaz is looking to seize Gazprom assets around the world in order to force the Russian company to pay up. “Gazprom continues defiantly not to implement the ruling of the international arbitration,” Yuriy Vitrenko, the commercial director of Naftogaz, said in a Facebook post. “There are no legal grounds for Gazprom

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Brief

kraine’s stateowned Naftogaz Ukrayiny has taken to its legal battle with Gazprom to the US in a bid to force the Russian gas giant to pay a net $2.6 billion awarded earlier this year by a European arbitration court. Gazprom has refused to pay the award, which came following rulings on Russian natural gas supply and transit by an arbitration court in Stockholm in February, as it has filed appeals against both decisions.

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not to pay,” Vitrenko said. Naftogaz has filed lawsuits against Gazprom in two US courts, one in New York and one in Texas, Vitrenko said. “The court in New York has agreed with our demands against Gazprom,” Vitrenko said. “We’re still waiting for the ruling by the court in Texas.” An industry source said earlier that Naftogaz was pursuing Gazprom Marketing & Trading USA, the Texas-based subsidiary of

the Russian company, at the US District Court for the Southern District of Texas. Naftogaz has also applied to courts in the Netherlands, Switzerland and the UK to enforce the arbitration award. The Stockholm arbitration court ruled at the end of February that Gazprom should pay Naftogaz $4.6 billion in damages for not transiting the agreed volumes of Russian gas to Europe under the parties’ 2009 transit accord. Taking into account Gazprom’s earlier $2 billion win in the arbitration ruling on Russian gas supply to Ukraine, Naftogaz is owed a net $2.6 billion by Gazprom.

Cote d’Ivoire: Engie to fuel first buses with compressed natural gas in Cote d’Ivoire

ote d’Ivoire has launched a ground breaking initiative as part of the country’s commitment to the Paris COP 21 agreement. Amadou Koné, Ivorian Minister of Transport, and several government Ministers gathered to unveil a fleet of buses commissioned by the Société des Transports Abidjanais (SOTRA), supplied by IVECO and fuelled by compressed natural gas (CNG). Engie and Tractebel collaborated to engineer, supply and install the first ever CNG fuelling station in Abidjan. The CNG fuelling station is located on SOTRA’s premises in Yopougon, Abidjan, and will facilitate the operation of the new range of compressed natural gas buses. When fully commissioned, the gas fuelling station will have a compression capacity of 1360 m³/h, and will be split into two units, each equipped with two hoses, enabling four buses to charge at any one time. Engie and Tractebel have a unique level of expertise and a local presence that was vital to the success of the venture.

They are specialists in delivering infrastructures which provide alternative fuels for green mobility solutions. The Abidjan station is the first stage in the Ivorian government and public transportation companies plan to increase the number of CNG buses and ensure that the region is working towards fulfilling its commitment to the COP 21 agreement. More importantly, it will lead the way for other African countries that are keen to further embrace clean technologies. Countries

including Ghana, Togo, Benin and Cameroon are monitoring the success of the initiative with the intention of replicating the project. As part of the deal between IVECO and the Société des Transports Abidjanais (SOTRA), 50 Crealis buses will run on compressed natural gas in Abidjan. The particle emission levels will be nearly zero, and their Nitrogen Oxide emissions will be reduced by 60 per cent. The buses will serve within Abidjan’s wider urban area.

For over 50 years, Engie has been active in many African countries through its energy engineering business and more recently as an independent power producer in South Africa and Morocco with a total capacity of 3,000 MW either in operation or under construction. By 2025, Engie wants to be a reference partner in ten African countries for power plants, energy services to businesses and decentralized solutions for off-grid customers – communities, companies and households.

Greece: First LNG export cargo from Texas headed to Greece

he Maria Energy LNG tanker carrying the first export cargo from Cheniere Energy’s terminal near Corpus Christi, Texas, is headed to Greece, a company spokesman said. A statement from Greece’s Ministry of Environment and Energy posted on Twitter by the US Embassy in Athens said the country was expecting its first spot LNG

cargo from the US to arrive on December 29. The Tweet from the US Embassy said the US was looking forward to working on a long-term LNG supply deal with Greece. While the Greek statement did not specify where in the US the cargo was coming from, Cheniere spokesman Eben Burnham-Snyder confirmed the cargo in question is aboard the Maria

Energy. “LNG from the US will be unloaded before the end of the year in DESFA’s new tank at Revithoussa, which was recently launched,” the ministry said in its statement. “This is the first cargo introduced by the US to Greece, stamping the mutual efforts of the two states for closer cooperation in the field of energy security in the South East Mediterranean region.” DESFA is a natural gas transmission system operator in Greece. Revithoussa is the only LNG receiving terminal in Greece. Cheniere is the only major US exporter of LNG produced from shale gas to ship a cargo from two different terminals. Its Sabine Pass export terminal in Louisiana shipped its

first cargo in 2016. The US is poised to become a much bigger player in the global supply of LNG. Cheniere and Dominion Energy are both exporting LNG produced from shale gas, and three more developers are expected to have export terminals up and running next year in Texas, Louisiana and Georgia. To date, Cheniere has shipped approximately 500 cargoes from its two export terminals, and it is bullish about its prospects for future growth, even amid ongoing trade tensions between the US and China. Wood Mackenzie said in a report that its latest research forecasts that uncontracted demand by the world’s seven largest LNG buyers could quadruple to 80 million mt/ year by 2030.

50 BUSINESS DAY WEST AFRICA ENERGY intelligence South Africa: Eskom receives extra loan to strengthen its power transmission grid

skom has signed a loan agreement with Agence Française de Développement (AFD) worth R1,5 billion (€90 million) to support the utility in extending and strengthening its power transmission grid along the west coast of South Africa. This loan constitutes the first tranche of a R6.5 billion (€400 million) multi-tranche loan facility signed between the two institutions in March 2017. This first tranche will be dedicated to financing of the Namaqualand Strengthening Phase 2: Juno Gromis Project, which aims to strengthen the power network in the Northern Cape Province, integrate renewable energy sources, and ultimately facilitate cross-border transmission. The project will include the construction of a 282km 400kV line between the Juno substation in the Western Cape Prov-

ince and Gromis substation in the Northern Cape Province, with associated feeder bays and transformer bays. The loan facility from AFD aims to support Eskom’s investment policy in strengthening its highvoltage electricity network, in order to ensure the integration of planned or under-construction renewable energy sources. This is in line with Eskom’s Transmission Development Plan 20192028 (TDP) investment of R91 billion (€5.5 billion) for the construction of 6,535km of high voltage lines, and the installation of 45,900MVA of additional transmission capacity. “This multi-tranche loan facility will contribute to Eskom’s plans to strengthen and refurbish the transmission infrastructure while diversifying our funding structures. AFD remains part of a core of longstanding partners to Eskom, and we regard the signing of this loan agreement as a formal yet symbolic gesture of a sustainable partnership in aiding Eskom to enhance the security of supply, and stabilise the power systems in South Africa. We look forward to executing future opportunities with AFD,” said Phakamani Hadebe, Eskom’s group chief executive.

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Ghana: Ghana on course to having nuclear power

he Ghana Atomic Energy Commission (GAEC) is at the point of completing the first phase of the International Energy Agency (IEA) requirements towards the establishment of a nuclear power plant to add nuclear power to the country’s energy mix. Benjamin Nyarko, Director-General of the Commission, who made this known in Accra, said documentation, legal framework and other preparatory works were in place for the country to exit phase one of the IEA milestone for the plant next year. Nyarko said this when he briefed William Owuraku Aidoo, Deputy Minister of Energy, when the latter paid a working visit to GAEC to acquaint himself with the work being done by the commission on the nuclear power plant project. Ghana’s nuclear power journey started in the 1960s when the first President, Dr Kwame Nkrumah, established the GAEC to undertake nuclear applications and

also generate electricity. Activities at the commission stalled when he was overthrown in the 1966 military coup. After decades of back and forth, actual development works on the nuclear power plant started in 2008 when a working document was approved by the Cabinet for the nuclear agenda. It was further consolidated in 2015 in line with IEA standards and requirements, necessitating the putting in place of preparatory works in

the first phase. The IEA requirements for the establishment of the plant also mandated the setting up of a nuclear regulatory authority, getting an owner operator and the eventual establishment of the plant. Nyarko said a nuclear regulatory authority had already been set up, while a body, known as Nuclear Power Ghana, made up of technocrats, had also been constituted to facilitate the initial process for owner operator for the nuclear

power plant. “The next crucial stage is having a site for the establishment of the nuclear power plant and I can say here that some people are on the field doing characterisation for us to get the site for the plant,” he said. “The actual construction of the plant takes six years but the exiting of phase one of the project, which is the longest milestone, will be a major boost to the forward march towards getting the nuclear plant,” he added.

Electricity Market: Power transmission and distribution conductors’ markets to upsurge

he global power transmission and power distribution conductors’ markets are expected to grow with a CAGR of 4.3 percent and 2.91 percent respectively, during 2018– 2022. According to GlobalData, the growth in these markets will be primarily due to increased activity within the US, China and Indian markets. The aggregate market value of the above-mentioned countries is estimated to hold 63.7 percent and 41 percent of the global power transmission and power distribution markets in 2022. The company’s latest report Power Transmission and Distribution Conductors, Update 2018 – Global Market Size,

Competitive Landscape and Key Country Analysis to 2022 reveals that the global market for transmission and distribution conductors is projected to grow due to rising electricity demand, growing deployment of generation assets, improving reliability and auxiliary support, climate change, government initiatives, and the need to replace old assets. The support for renewables such as offshore wind, distance disparity between generators and consumer loads, and utilisation of direct current (DC) mode of transmission is driving the global transmission conductors market. Countries such as South Africa and some within the EU have proposed transmission cor-

ridors to support the development of an interregional grid to enhance reliability, relieve power flow congestion, and reduce retail prices. The distribution segment is poised to face a market transformation. Distribution network segments across the

world are aging, inefficient, suffer from power thefts, and are becoming increasingly complex, integrating various smart technologies. The prevalence of distributed energy technologies has changed the mode of interaction between the consumer and

the grid. Based on market development, nations with established distribution networks are focused on transitioning their power systems to reduce environmental impacts or on gradual replacement of aging assets. Developing markets face various challenges such as evolving power generation mix, lack of distribution capacity, power curtailment, power thefts, market reformation, growing urban population, and lack of technical intervention to support grid transformation. GlobalData’s report also finds that in the forecast period, China, India and the US will be the largest markets for power transmission and power

distribution conductors. The power transmission conductors market in China is expected to grow with a CAGR of 9.79 percent to reach $1.91 billion in 2022, while the India market is expected to grow with a negative CAGR of 2.85 percent to reach $1.13 billion in 2022. Rural electrification, improving rates of access to electricity, and growing urban populations are driving the distribution markets in China and India. The power distribution conductors market in China would grow with a negative CAGR of 0.32 percent to reach $1.4 billion in 2022, while the India market is expected to grow with a CAGR of 2.69 percent to reach $2.7 billion in 2022.

Wednesday 19 December 2018

INTERVIEW

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ENERGY intelligence

‘Cleaner, greener, and leaner strategies drive energy M&A activity’ SARAH SHAW is a partner at Hogan Lovells. In an interview with Frank Uzuegbunam, Shaw talks about how shale, renewables and private equity are transforming deals in the energy landscape. Excerpts; What do you see as the main M&A drivers in the energy sector? hile fundamental factors such as expansion and consolidation continue to play a role, there are a number of more intriguing drivers emerging for M&A in the energy sector. First, big oil is moving into clean energy and new technologies including electric vehicles and battery storage. For example, last year, BP entered into a strategic partnership with Lightsource, Europe’s largest solar development company, in which it has committed to invest $200m. And in June, it announced that it was buying Chargemaster, the UK’s largest electric vehicle charging network. Another oil major, Total, has recently announced that it is planning to ramp up the amount it invests in renewables. The second key trend is the emergence of private equity (PE) and other financial buyers in the sector, both in traditional oil and gas and renewable energy. Are PE firms just dipping their toe in the water or are they really diving in? They are serious and they have made some significant investments. The North Sea has seen record levels of M&A activities in the last few years driven largely by the influx of PE money. For example, Chrysaor bought a $3.8bn North Sea portfolio from Shell following its merger with BG (and then increased its portfolio through the acquisition of Spirit earlier this year); Siccar Point, backed by Blackstone, bought $1bn North Sea assets from OMV; and Neptune, owned by the Carlyle Group and CVC Capital, has been aggressively building up its upstream portfolio including acquisitions this year in Norway and the UK. As the majors continue to pursue their divestment programs, additional mature assets are becoming available creating further M&A opportunities for this new category of oil and gas firm. PE players are also active in the power and renewable energy sectors, both in mature and, increasingly, emerging markets. Interestingly, Blackstone announced recently that it is launching a new $1bn energy fund, Zarou, with a geographi-

Sarah Shaw

With oil prices at their highest level in nearly four years, and also relatively stable, conditions in the sector are generally ripe for M&A. The challenges are less energyspecific and rather relevant to all sectors including the rise of protectionism as well as geopolitical uncertainty caused by factors such as the prospect of trade tensions between the US and China and the possibility of a hard Brexit

cal focus on Africa and the Middle East. Are we seeing a move towards more shale deals? Shale deals this quarter were dominated by one mega deal, with BP buying BHP’s US shale assets for $10.5 billion. This was a transformational deal both for the sector and for BP, being the biggest acquisition the major has made in nearly two decades. However, it remains to be seen whether this will be a catalyst for further M&A activity in the US shale sector. Total, for example, has since ruled out a move into US shale. Across the pond, the development of the UK shale industry has been plagued by political and regulatory challenges as well as fierce public opposition. The UK’s leading shale company, Cuadrilla, has recently

been given the go ahead to resume fracking for the first time since 2011, and other companies are expected to follow suit. This could spark a revival of M&A interest in the sector. However, some investors may be wary and choose to wait to see if political obstacles can be overcome and whether shale gas can be produced in commercial quantities in the UK such that it can viably compete with imports from the global market. What other interesting deals have you seen recently? In addition to those already mentioned, there is currently quite a bit of activity in the North Sea. For example, Chevron is selling a stake in the Rosebank oilfield to Norway’s Equinor and, following its acquisition of Maersk earlier this year, Total is now looking to sell a $1.5bn package of North Sea assets. It will be interesting to see which buyers emerge for Total’s assets – the PE funds are likely to be among those interested. What are the major dealmaking challenges in the sector at the moment? With oil prices at their highest level in nearly four years, and also relatively stable, conditions in the sector are generally ripe for M&A. The challenges are less energy-specific and rather relevant to all sectors including the rise of protectionism as well as geopolitical uncertainty caused by factors such as the prospect of trade tensions between the US and China and the possibility of a hard Brexit. However, the M&A market is continuing to be surprisingly robust despite these challenges. In Q3, deal value is up, volume is down in the energy sector. Is this trend likely to continue? The Q3 numbers are largely due to two mega deals – the BP shale gas acquisition already mentioned and the $13bn takeover of pipeline company APA Group by a Hong Kong consortium. The rise of the mega deal is something we have observed across all sectors this year. The current high levels of corporate cash and the low cost of financing, coupled with high and relatively stable oil prices, could continue to drive large-scale M&A, even given the on-going geopolitical uncertainty.

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marketinsight Oil prices pressured by oversupply, global economic concerns

il prices were largely steady after falling 2 percent in the previous session, but remained under pressure amid weaker growth in major economies and concerns about oversupply. Brent crude oil futures were at $60.31 per barrel, up 3 cents, or 0.05 percent, from their last close. US

West Texas Intermediate (WTI) crude futures were at $51.27 per barrel, up 7 cents, or 0.14 percent. Persistent growth in US shale output continues to weigh on oil prices, while some analysts doubted that planned supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) would be enough to rebalance markets.

“I don’t believe OPEC cuts will work this time around with Qatar going out and Iran refusing to cut, while there’s a big question mark when Russia will go to its agreed level,” said Sukrit Vijayakar, director of oil consultancy Trifecta. “Meanwhile, US production will go on increasing. So the whole load will effectively be on Saudi Arabia, who is under severe

oil demand will surge again in 2019, but this time by rising by over 400,000 bpd, according to ESAI Energy’s latest China Watch. This rebound is comprised mainly of non-marketed naphtha at two new petrochemical integrated refineries, as well as LPG demand from a wave of PDH investment. Naphtha produced and

processed at the two new paraxylene (PX) projects, Hengli Petrochem and Zhejiang Petrochem, accounts for the bulk of the 180,000-bpd growth in naphtha demand. Given that the two plants’ controlling firms are downstream polyester manufacturers that have relied on PX imports for feed-

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ENERGY intelligence

pressure from Trump anyway.” OPEC and its Russia-led allies have agreed to curb output from January, in a move to be reviewed at a meeting in April. Saudi Arabia is OPEC’s de facto leader. Meanwhile, increasing concerns about weakening growth in major markets such as China and Europe also dampened the mood in oil and other asset classes. Chinese oil refinery throughput in November fell from October, suggesting an easing in oil demand, while the country’s industrial output rose the least in nearly three years as the economy continued to lose momentum. French business activity plunged unexpectedly into contraction this month, retreating at the fastest pace in over four years, while Germany’s private sector expansion slowed to a fouryear low in December.

China’s oil demand will surge in 2019 ontrary to some observers who focus intently on trade data as a proxy for demand, China’s total oil product demand rose by only 150,000 bpd in 2018. This is part of the reason why the global oil market is so weak that as the year comes to an end. China’s

Wednesday 19 December 2018

stock, projected naphtha demand could grow even more if the two projects reach full capacity next year. Meanwhile, new PDH units will drive up LPG demand growth to over 100,000 bpd in 2019. The development of PDH projects from now to the end of next year, with a combined capacity of 2.2 MM tons, does not seem to be affected much by the trade war between US and China. Propane importers have managed to replace US propane with product from the Middle East and elsewhere. “The petrochemical sector will lift China’s oil demand growth, which should result in continued high crude and LPG imports,” comments ESAI Energy China Analyst Yao Wu. “In addition, although we see refinery-integrated PX units with a neutral impact on China’s naphtha balance, the replacement of PX imports should send ripples across Asian petrochemical sector and may affect the naphtha balances of top PX exporters, such as Japan, South Korea and Taiwan.”

OPEC Flakes US House chairman calls for antiOPEC bill to become law

he chairman of the US House Judiciary Committee has called on the Trump administration to back a bill that would allow the US Department of Justice to sue OPEC for antitrust violations. “The fact that OPEC is not being held accountable for its anti-competitive behavior makes a mockery of US antitrust law,” Representative Bob Goodlatte, the committee’s chairman and a Virginia Republican, said at a subcommittee hearing. Goodlatte said that passage of the No Oil Producing and Exporting Cartels or NOPEC Act, would be a “bipartisan victory before this term of Congress ends.” Democrats are set to take over the House when the next Congress begins on January 3. At the hearing, Makan Delrahim, an assistant attorney general in DOJ’s antitrust division, did not offer outright support for the bill, claiming that the administration was still studying it.

Delrahim, however, criticized OPEC’s impact on oil prices and said the bill would remove at least two hurdles to allow the US executive branch to bring an antitrust case against OPEC, including the actof-state doctrine and the Foreign Sovereign Immunities Act. “Whenever you have a horizontal cartel, ultimately price is not determined by the free markets and consumers are harmed,” Delrahim said. Versions of the NOPEC bill have been introduced in every Congress over the past 20 years, but several current factors, including recent OPEC-led agreement to cut production by 1.2 million b/d, have fueled speculation that the Republican-controlled House and Senate may vote on it before the holiday recess.

Qatar buys Mexico oil stakes from Italy’s Eni after leaving OPEC

atar Petroleum is buying stakes in three offshore oil blocks in Mexico from Eni SpA, as the Arab country signs another global expansion deal after leaving OPEC. Eni and the government-owned energy company in Qatar, the world’s biggest exporter of liquefied natural gas, will produce about 90,000 bopd from the Amoca, Mizton and Tecoalli fields in the Gulf of Mexico by the end of 2021, Saad Sherida Al Kaabi, Qatar’s energy minister, said in Doha. The fields hold 2 Bboe, he said at a press conference with Eni CEO Claudio Descalzi. The companies are already working together on a separate offshore block in Mexico, according to press releases from both companies. Eni gained approval for the developments earlier this year and needs the Mexican authorities to sign off the deal. Global oil majors that have for years produced in US waters are being attracted to the Mexi-

can side of the Gulf as the government opens new blocks for development. Middle Eastern producers are exploring opportunities for offshore developments in the Americas and Africa as well as looking at prospects for shale oil developments in the U.S. Growing production from outside OPEC is challenging the producers’ group. Qatar Petroleum is now operating in Mexico, Brazil, Argentina, Oman, Congo, South Africa, Cyprus and Mozambique. The Middle Eastern country, which has been facing a blockade led by OPEC members Saudi Arabia and the United Arab Emirates, said this month it was leaving the Organization of Petroleum Exporting Countries to focus on its gas business.

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BUSINESS DAY

Sokoto-Niger Border at Illela

Fact Check: Is NNPC’s claim that 25m litres of Nigerian petrol are smuggled out daily? ISAAC ANYAOGU

a i k a n t i B a r u , g ro u p managing director of the Nigerian National Petroleum Corporation (NNPC), on a visit to the Comptroller General of the Nigerian Customs Service, Col. Hameed Ali (Rtd), in March this year, revealed that a detailed study the corporation conducted showed 25million litres of petrol is being smuggled out of Nigeria daily. Based on this, the NNPC claimed N632.2billion in 2017 and 2018 as under recovery. Under recovery is difference between control price of petrol and actual cost. NNPC removes expenses before remitting proceeds of oil sales to the national treasury. According to a release dated March 4, 2018, the NNPC wrote, “the activities of the smugglers had led to recent observed abnormal surge in the evacuation of petrol from less than 35 million litres per day to more than 60 million litres per day which is in sharp contrast with established national consumption pattern.” The corporation claimed it arrived at this figure by extrapolating from storage capacity of filling stations springing up in border communities. It said that 16 states account for 2,201 registered fuel stations with 144, 998, 700 litres of petrol tank capacity. Eight states with coastal border communities spread across 24 LGAs amongst the states account for 866 registered fuel outlets with combined petrol tank capacity of 73, 443, 086 litres, according to Baru. Baru said the difference in petrol prices

between Nigeria (N145 per litre) and neighbouring countries (N350 per litre) makes it lucrative for smugglers to use frontier stations to smuggle products across the border. Huge gaps The NNPC is correct that smuggling of Nigerian petrol occurs at border communities. I visited the Sokoto-Niger border at Illela, and found an organised system of smuggling but the volumes the NNPC is ascribing to it is exaggerated. “Fuel does not come every day,” said Mohammed, a young attendant at Nura Kure, a new filling station established earlier this year, “Sometimes we don’t get

Petrol is smuggled in jerry cans across the border

supply for weeks.” The smuggling operation is largely rudimentary. Petrol is moved in carts; storage compartments built under trucks and modified fuel tanks of saloon cars. “I have been carrying petrol across the border for a long time,” a motorcycle operator who gave his name as Hassan, said. “It is not difficult,” he assured. “I bribe the Customs and I move on.” In the three days spent around illela, I estimated between 12,000 and 20,000 litres of petrol may be smuggled across the border. Two carts lugging 20 pieces of 25-litre

jerry cans move twice across the border a day could move 6,000 litres. Five trucks bearing 4 pieces of 25-litre jerry can in a built in compartment delivering supplies across the border over three days can deliver 1,500 litres. While seven saloon cars with a capacity to lift 80 litres making three rounds a day, within three days can deliver about 5,040 litres of fuel. There is no evidence of petrol trucks moving huge volumes Jerry Attah, spokesperson for the Nigerian Customs confirmed that proliferation of licensed filling stations at border communities is encouraging artisanal smuggling of petrol outside Nigeria. “We can’t check everything on people or their houses but, no truck can be allowed to move petrol across the borders with fuel,” Attah said. Indeed if that were to happen, it will question the very existence of the Nigerian Customs Service. NNPC’s own data faults this claim. According to NNPC’s August operations and financial report, local petrol distribution is undertaken by 1,017 trucks daily. The entire month sees 31,538 trucking operations. To smuggle out 25million litres of outside Nigeria daily will require a largescale operation involving over 750 trucks with 33,000 litre capacity which will create massive shortages in Nigeria. “If that much trucks were diverted from NNPC’s operations, clearly Nigeria will feel the pinch,” Olumide Adeosun, PwC Nigeria’s head of energy research said by phone. The only plausible conclusion is that the NNPC is exaggerating volumes of petrol smuggled out of Nigeria to explain away billions of naira it is claiming as under recoveries.

BUSINESS DAY

Wednesday 19 December 2018

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BUSINESS DAY

Wednesday 19 December 2018

INTERVIEW Mustafa Chike-Obi says Nigeria’s Economic performance in last 42 months should be rated an “F” GDP growth of less than 10 percent is slow death The Nigeria’s economy is under threat of another crisis according to several economists and other analysts worrying about the tottering economy. With hike in interest rate by the US Federal Reserve; declining price of crude oil, Nigeria’s main foreign exchange source; growing population rate amidst low GDP, investors are adjusting their return forecast. In this interview with Godfrey Obioma, Mustafa Chike-Obi, former Managing Director of Asset Management Corporation (AMCON) offers antidote to economic crisis. Could you take a look at the economy and assess its performance? y any standard, it is an ‘F’. In the last three (3) years, we have been growing GDP at less than population growth. Added to that, we have a very low GDP per capita. In order to catch up, we need a GDP growth of at least 10 percent for the next 20 years. And any growth less than 10 percent is tantamount to a slow death What are your prescriptions towards a double-digit GDP growth? First, we need to adopt growthoriented monetary and fiscal policies and embark on a comprehensive tax reform that will be friendly to businesses and encourage job creation. I heard somebody recently speaking for the APC who said the CBN should be independent. I am of the view that the CBN should be independent on monetary policy execution but should not set priorities. It can advise on most appropriate monetary policies. It is the President who should set the priority and the role of the CBN should be to execute those priorities. For example, if the President chooses growth and employment as his priority, the CBN should design and implement monetary policy guidelines to achieve it. It should be independent on how to get this done. I have never believed that the CBNor any national agency should set priority for national development. On the monetary side, you have to aim for growth and employment. I want to see monetary policy rate (MPR) not higher than 6 percent. Does that have consequences? Yes, it does. One of the consequences is that there may be initial inflation and some currency readjustment. I will rather have full employment with 20 percent inflation rate than have crippling unemployment with 0 percent inflation rate. Efforts should be made to manage inflation and exchange rate to minimize the impact, I think our focus on monetary policy should be growth and employment. For fiscal policy, the focus should be on tax reforms and higher revenues. In addition, we should leverage on the government’s balance sheet through guarantees to fund infrastructure projects. I have identified 30 to40 trillion Naira worth of potential funding the federal government can enable through a judicious use of guarantees. Could you elaborate on this potential use of guaranty to fund up N40trn worth of projects? The guaranty programme is a technical subject. It means the federal government should have a good guaranty programme that sets out guidelines for special projects, and give them priority. The focus areas should include housing, road

and rail. It will involve giving out guarantees to private sector organisations for funding such projects. This will result in lower interest rates for the private sector sponsors of such projects. Some will argue that if you reduce interest rate, there will be excess liquidity in the economy and more likely higher exchange rate as well as higher risk of inflation. How would you respond to this? This is not always the case. For example, if you are more productive, that helps to bring down inflation. If you have increased yield in agricultural products for example, prices of these products will come down. The point is if you can increase supply through productivity gains, prices will go down. So even if there is increased money supply, it is not all expansionary monetary policies that lead to inflation if you deploy the money into more productive sectors. Could you offer your perspectives on processing of agricultural products and how this could increase growth in the agricultural sector? I think that people that focus on farming alone in Nigeria miss the point. What has happened so far is that these agricultural products are not properly processed and preserved. If we have an aggressive campaign of processing and preserving what we grow today, we will make headway in our agricultural policy and implementation. When wastages are curtailed, more farmers will be encouraged and more Nigerians will go into farming with more jobs created. The capital market is one of the alternative sources of raising capital for long term project financing. How viable is the current Nigerian capital market as alternative source of funding? You have to understand that the money that capital market uses is from savings. The capital market is a place where people invest their income for future use or retirement. So, the bulk of money in the capital market is from savings. In Nigeria, people rarely save because their disposable income is low, hence we have little or no savings as a society. We should create more earning potentials. The best source of investing in the capital market today is pension funds. And we don’t have enough retirement money for a vibrant capital market. You are an apostle of productivity as a means of growing GDP for multiple digit growth of the economy. Could you give further insight into this? For productivity to happen you need three things. You need capital, equipment and tools. And in Nigeria today we are lacking all three. So how do we make these available? Like I said, you have to use guar-

Mustafa Chike-Obi

anty scheme to raise capital to fund equipment and tools acquisition. Also, we should have programmes where we teach people how to make things and not to focus on mostly academic subjects. Academic courses are good but government should not pay for them. So, we need the equipment and money to finance infrastructure, grow productivity and hence GDP. Job creation is one area everybody has acknowledged as key to improved national wellbeing. How do we create more jobs? I will give you an example to illustrate how to create jobs. A refinery, for example is capital intensive and this is not where government should invest money because it employs little labour. Labour intensive infrastructure includes housing, road construction and rail transportation. Housing is more labour intensive because each housing unit employs brick layers, masons, carpenters, electricians, painters etc. Road construction also employs a lot. of labour. Could you address the power challenge and how it can be tackled because many identify gas scarcity as a major problem? The problem with power is that all along it has been priced as a social good which should not be so. It should be priced as a capital good, People in highbrow-areas like Asokoro, Maitama, Ikoyi and Lekkiwill pay the high price that is necessary to provide regular power. Let those that can pay that high cost do so, because the power suppliers will make so much money that they will supply power at a commercial and profitable rate until the price comes down. That is what exactly happened with GSM.When it started, the companies were making so much money because they were charging at commercial rate, but now everybody can afford to have a phone. If we had started GSMwith

free or low-priced sim cards, most people won’t have phones today. So, the thing to do is encourage and create the supply. We should price power as a capital good. Let’s look at the issue of the ease of doing business in Nigeria and especially how can we improve our ranking in the doing business index? I think that is the area where the government tried its best. I feel the Executive is jealously guarding the powers it currently controls.I give you a good example. When I was the Managing Director of AMCON, the Auditor General sent auditors to audit AMCON. This was wrong because the law expressly states that all they can do is to ensure that all the people who were auditing AMCON were approved auditors. But they sent auditors and when we complained to them, they asked what you are trying to hide. So, there is a lot of poaching of authority by agencies of the executive. But the Vice President was able to break the bureaucratic hold. And I think on this score, he is doing a good job in the effort to shore up the ease of doing business index. We cannot separate the performance of an economy from security. What are your views on the security situation in Nigeria and what should be done? There are two security situations in the country - internal and external security. The external security includes Boko Haram. I will even group Niger Delta threat as external because of the involvement of soldiers in the Niger Delta security situation. It is clear that when the economy is doing well, there is less crime. As people have more at stake by having jobs, owning houses, getting food to eat, pay their children school fees, crime is reduced. So, we need to provide the basic necessities of life

to citizens. To ensure internal security, we need state police. I am a believer in state police. Those who are against state police fear that the governors will hijack it. This should not be a problem. There should be a provision that the federal government could take over any state police where the governor abuses the right. In the US, the Justice Department can supervise the Police from any part of the country where it finds civil right abuses. Similarly, if Governor X misuses the state police, the federal government can takeover that state police. So, state police is good but we should also have federal police. I also believe that we should allow private security guards to carry weapons. If we can do that, it will free the police from other functions- like those attached to VIPs. Let the VIPs pay for the use of private security guards. It will create a healthy competition between the private and public sector police. If this happens, some public police can migrate to private security system if they think the private police are paid better. People will say can you trust them? Of course, they can be trusted. You can ask them to come weekly for weapon and ballistic test. As for external security, if we equip and pay Nigerian soldiers properly, they will wipe out Boko Haram. In the last 2 years, the monetary policy committee of the CBN has kept rate constant at 14% in line with the current economic realities, what is your position on this? I am for a gradual and steady reduction in the MPR. My priority is to create jobs and double-digit growth. Could you comment on the belief in certain quarters that the judiciary is corrupt? Corruption is a problem but not the biggest problem. Corruption is bad but incompetence is worse. I will rather a corrupt pilot flies me to Abuja than an incompetent pilot. There is a correlation between incompetence and corruption. Competent people tend not to be corrupt because, rightly or wrongly, they believe with their competence, they can earn a living if they lose their jobs. People who are incompetent, I can guarantee you, are generally corrupt. Employ the most competent minds that you have, you will deal corruption a serious blow. As for the judiciary, I am a big fan of the judiciary. At AMCON, we had more cases in court than any other government institution. Apart from two judgments, I can’t think of any case against us that was not fair. Many of those judges, I knew them. And the judges I knew had no hesitation in ruling against AMCON. If I were to rank the three arms of government, I will rank judiciary first National Assembly second and Executive third.

Wednesday 19 December 2018

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BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

SEC chief urges action to prevent no-deal Brexit causing havoc Jay Clayton wants to see UK and EU commitments to ensure markets will not be disrupted Kadhim Shubber

ay Clayton, the head of the US Securities and Exchange Commission, has called on the UK and EU to take action to ensure a no-deal Brexit would not cause havoc to global markets. The SEC chair told the Financial Times he would like to see firm commitments to ensure that key market functions can continue without disruption even if the UK crashed out of the EU without securing a withdrawal agreement. Mr Clayton pointed to noncentrally cleared derivatives contracts and investment management broadly as areas of concern. “Some period of adjustment would be good,” he said in a phone interview. “The intricacies of our financial system are significant and it’s difficult to identify all the ways in which a decree that something is no longer valid may impact.” The comments by Mr Clayton are the latest in a series of warnings issued by US regulators as the March 29 2019 date for the UK’s exit from the EU draws closer. More than two years after the Brexit referendum, British politics remains fractured, with parliament unable to agree on the terms of an orderly withdrawal. Theresa May, UK prime minister, has been forced to delay a vote on her exit deal until January. In separate speeches ear-

lier this month, Mr Clayton and Christopher Giancarlo, the outgoing chairman of the Commodity Futures Trading Commission, which regulates derivatives contracts, issued warnings on the same day about the potential impact of Brexit. The Federal Reserve warned in November that a no-deal Brexit posed near-term risks to the US financial system. Mr Clayton said he intended to boost the number of SEC staff working solely on Brexit-related issues and said his concerns about the UK crashing out of the EU had risen since the start of the year. “If you asked me that nine months ago, I would have said, boy it would surprise me. If you’re asking me today . . . let me put it this way, I think it’s prudent for me to spend time thinking about what that means,” he said. The UK and EU, as well as businesses, have stepped up preparations for a no-deal Brexit in recent months as British politics has been torn apart by the question of whether to approve Mrs May’s exit deal. The European Commission recently committed to allowing European companies temporary access to UK clearing houses, which dominate the global derivatives market, in the event of no-deal. Brussels has also agreed a two-year access period for central securities depositories. The European Securities and Markets Authority, the Parisbased regulator, has also taken

Malaysia pursues Goldman across borders in 1MDB criminal probe Bank units in the UK, Singapore and Hong Kong are targeted, raising risk of fallout

John Reed, Emma Dunkley and Laura Noonan

alaysia is to pursue criminal charges against Goldman Sachs units based in the UK, Singapore and Hong Kong in connection with $6.5bn worth of bonds the investment bank arranged for 1Malaysia Development Berhad, the state investment fund at the centre of the biggest financial scandal in the country’s history. The move by Malaysia to target a trio of Goldman’s businesses outside its borders suggests prosecutors seeking redress for the debacle will face tortuous legal proceedings in pressing their case, as they seek to serve court orders in three foreign countries according to charge sheets published by Malaysia’s attorney-general. The charges also cast a wider net over Goldman and its global business, which market experts said could threaten the US bank’s reputation if the charges were to result in prosecution. Goldman Sachs International, based in London, Goldman Sachs

(Singapore) PTE, and Goldman Sachs (Asia) LLC, which is registered in Delaware but based in Hong Kong, were all named in the charge sheets, which were published on Tuesday. The bank said that none of the three entities had yet been served with a legal summons for the case, a court date for which has been set in March. Nizam Ismael, a Singaporebased partner at RHTLaw Taylor Wessing said: “You might hear of banks having issues with regulators in terms of not meeting regulatory requirements; that happens frequently. But for an investment bank to face charges, and criminal charges for that matter . . . to suggest that there was some collusion to perpetrate fraud, these are very serious allegations.” A corporate lawyer, who asked not to be named because of the sensitivity of the case, said: “If convicted, they would receive the penalty of a fine, but more significant is that by having a criminal Continues on page 58

Jay Clayton, right, aims to increase the number of Securities and Exchange Commission staff working solely on Brexit-related issues © AP

steps to prevent disruption to the market for non-cleared derivatives, including removing regulatory hurdles to contracts being shifted into the EU. Banks and other financial institutions have moved parts of their business from London to mainland Europe and Ireland to ensure that they retain access to the European market after the UK leaves the EU. Mr Clayton said he welcomed the efforts to address the risks around derivatives that trade through central clearing houses but was worried there was limited capacity to identify and address other potential issues. “A question I have is what’s

happening in the bilateral instruments that are not centrally cleared and how do we have those continuing relationships across borders,” he said. A key Brexit question, still unresolved, is what will happen to complex financial contracts that in some way reference or rely on the UK’s continued membership of the EU. In Brussels, officials have said there is little generalised risk due to preventive steps by private institutions. However, Mr Clayton highlighted the potential for adverse consequences as parties take steps to ensure the continuity of contracts. “You may have parties who are acting in ways

that are in their own interest but collectively turn out not to be in the interest of well-functioning markets,” he said. He did not point to any specific issue, saying: “You’re not going to see this behaviour to any great extent until the issue is in front of you”. The SEC chair also reiterated his previous calls for companies to provide more disclosure on how they are preparing for Brexit and the impact on their business. “For some companies this is obviously going to be a significant event, and I’d like to see them starting to disclose how they intend to handle it,” he said.

Xi says no one can ‘dictate to the Chinese people’ Speech marking anniversary of Deng Xiaoping’s reform strikes defiant tone Gabriel Wildau

i Jinping struck a defiant tone on Tuesday, insisting that no one could “dictate to the Chinese people” as he hailed the economic liberalisation that helped China emerge from the ruin of the cultural revolution. In a speech commemorating the 40th anniversary of Deng Xiaoping’s “reform and opening up” policy, the Chinese president did not directly mention the US or the trade conflict but also declined to propose new reforms to placate critics. “To promote reform and development in China — a large country with a more than 5,000-year history of civilisation and more than 1.3bn people — there is no textbook that can be regarded as a golden rule, and there is no great master who can dictate to the Chinese people,” Mr Xi told party leaders at the Great Hall of the People in Beijing. “What should be and can be reformed, we will resolutely reform. What should not or cannot be reformed, we will resolutely not reform,” he added. Zhang Lifan, an independent po-

litical commentator in Beijing, said the statement was a reference to the Communist party’s political authority. “That which ‘we should not reform’ refers to the ruling position of the party and the core leadership position of Xi,” he said. “We’ve seen retrogression on political reform in recent years: reinforcing the leadership of the party in every aspect, removing term limits, etc.” Mr Xi’s speech opened with a fullthroated tribute to Deng, despite what some political analysts believed was a behind-the-scenes feud between the Xi and Deng families over their respective political legacies. Mr Xi also twice referenced the cultural revolution — an extreme rarity in Chinese political speechmaking — including a description of how the event had brought “China’s economy to the brink of collapse”. But Mr Xi did not offer any new concrete policies, a disappointment to those who hoped he would use the anniversary to propose reforms in the spirit of Deng’s pro-market legacy. Instead, while praising Deng’s boldness, Mr Xi offered a grab bag of previous slogans from which all sides of the debate over Chinese economic

policy can find elements both to embrace and reject. “We will reinforce the development of the state economy while guiding the development of the nonstate economy,” he said. Ning Zhu, deputy head of Tsinghua University’s National Institute of Financial Research in Beijing, said the emphasis on strengthening stateowned enterprises represented a contentious interpretation of China’s reform history. In the late 1990s, under thenpresident Jiang Zemin and reformminded premier Zhu Rongji, the focus of shrinking the state’s role in China’s economy was arguably a crucial focus of reform efforts. “Solidifying and developing SOEs is not necessarily the trend of reform during the whole of the past four decades,” said Mr Zhu. Before Mr Xi’s speech, the commemoration ceremony began presenting a series of awards to “outstanding contributors” to Chinese reform. Among the recipients were former AIG chairman Maurice “Hank” Greenberg and Klaus Schwab, founder of the World Economic Forum.

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NATIONAL NEWS

Malaysia pursues Goldman across borders in 1MDB criminal...

Female politicians and journalists abused every 30 seconds on Twitter

Continued from page 57

record, it would make it difficult to get a licence to operate or keep existing licences.” Malaysia’s attorney-general announced the charges on Monday, saying he would seek to impose steep fines and jail sentences of up to 10 years against the bank and two former Goldman employees, Tim Leissner, and Roger Ng Chong Hwa, alleging they conspired with two 1MDB officials to bribe public officials to secure the bond mandates. However, no indictment was published against Mr Ng as of Tuesday afternoon. Prosecutors also alleged that Goldman’s underwriting and arranging fees of about $600m were “several times higher than the prevailing market rates and industry norms”. They said they would seek the imposition of criminal fines “well in excess” of the amount they allege was stolen from 1MDB and the $600m Goldman received. Goldman hit back at the accusations, alleging that members of former Malaysian prime minister Najib Razak’s government and 1MDB lied to the bank, lawyers and others about the use of proceeds from the bonds. “1MDB, whose CEO and board reported directly to the prime minister at the time, also provided written assurances for Goldman Sachs for each transaction that no intermediaries were involved,” said a Goldman spokesman. “Under the Malaysian legal process, the firm was not afforded an opportunity to be heard prior to the filing of these charges against certain Goldman Sachs entities, which we intend to vigorously contest.” The bank said the criminal charges “do not affect our ability to conduct our current business globally”. A spate of criminal charges against international banks in recent years has reduced fears that such a step would prove highly damaging or even fatal to an institution’s ability to operate. A spokesman for the Federal Reserve, Goldman’s primary regulator, could not immediately say what local implications a foreign conviction would carry for a US company. If Goldman were convicted of a crime by US courts, it could face restrictions on working with certain institutional investors, such as pension funds, though companies have gotten around these in the past by obtaining waivers from the US Department of Labor. However, Asia-based analysts said a successful criminal prosecution could affect its business. “Goldman is trying to increase its presence in China, and as is the case for most jurisdictions when you try to apply for licences, regulators say you have to satisfy capital requirements, but also the entity applying needs to have not been sanctioned or convicted in the past five or so years,” said a consultant in the industry. “So by suing three entities, that’s a wide net, that’s really going to hurt Goldman.” Goldman earns about 14 per cent of its net revenue from Asia, according to its latest quarterly results, compared with about 60 per cent for its core US business.

Wednesday 19 December 2018

Largest study of online attacks finds women of colour far more likely targets Madhumita Murgia

The Harvard-educated woman helping lead Iran’s sanctions fight Outsider Laya Joneydi celebrates legal victory against US after rising to vice-president Najmeh Bozorgmehr

n Iran’s hierarchical political system, it is rare to see an outsider granted a senior position. That is why the Islamic republic’s newest weapon in its battle with US president Donald Trump is so unusual. Laya Joneydi, a 50-year-old academic, is a woman with no ties to conventional politicians and no personal stories from Iran’s revolutionary years. But as Iran’s vicepresident for legal affairs she has already secured a rare if symbolic victory over the US on the global stage. After the Trump administration this year withdrew from the 2015 nuclear agreement and reimposed sanctions on Iran, Ms Joneydi worked with the legal teams from other institutions to file a lawsuit against the US at the International Court of Justice (ICJ) — and Iran won. Those involved included the ministry of foreign affairs, the ministry of health, the ministry of roads and urban development, the Center for International Legal Affairs of the Presidency, and some foreign lawyers. “What the US administration has done to the Iranian people is illegitimate from a legal point of view and more illegitimate from a moral point of view,” she told the Financial Times in her first interview with a foreign

media group. Ms Joneydi’s rise is the result of mounting public pressure on Iran’s leaders to appoint women to top jobs, with people voicing discontent over a rise in the number of female university students not leading to more women in senior official roles. She is one of Iran’s 12 vicepresidents, two of whom are women. In the ICJ case, Ms Joneydi helped Iran argue that the US reimposition of sanctions violated a 1955 Treaty of Amity between the two countries that encouraged trade, investment and closer economic relations. On October 3, The Hague-based ICJ handed a victory to Tehran by ordering Washington to ensure its sanctions did not hit certain forms of trade, including humanitarian aid, food and medicine. The provisional ruling cannot be enforced and the US immediately terminated the treaty, saying aid was never a target of its sanctions. But the ICJ win was nonetheless heartening for Iran, whose economy has been hit by the sanctions. The measures began to hit oil exports last month and weakened the rial by about 50 per cent against the dollar this year. “This has been an injustice to Iranian people, who see their economy and welfare weakened while even their access to basic needs is hit,” said Ms Joneydi. “The US knows that it cannot ignore the ICJ’s rulings. It may not be

the perfect option [for Iran] but . . . it has been useful.” The ruling had helped in Iran’s efforts to capitalise on an EU decision to stick with the nuclear accord, she said. Without it, she suggested, European countries might not have been willing to set up a sanctionsbusting payments channel for trade with Iran, due to be launched in the coming weeks. In addition, Ms Joneydi said, Iran was using the ICJ verdict in its negotiations with foreign companies and banks that are reviewing their ties with the country. In a country where conservative ideologues are vying with moderates for primacy, Ms Joneydi is seen as a non-partisan pragmatist who is committed to defending Iran’s sovereignty. She was born into a middleclass family in the town of Babol on the shores of the Caspian Sea and moved to Tehran as a teenager to study law at the University of Tehran, where she was the only female student among her peers at masters and PhD levels. In 2002 she received a post-doctoral research scholarship at Harvard in the US. She still teaches at the University of Tehran and is proud that most of her students are women. “This means growth. It is the ultimate satisfaction for me to see today’s young and educated generation push for the country’s progress,” she said.

20 graduates employed through digify Africa

nother 20 graduates from different universities have been employed through digify Africa, a digital marketing skill training programme that equips the next generation of digital talent. Florence Atunwa, director programme digify , Nigeria stated that the programme is a unique one because they come unemployed but end up being employed and digifed “The unique thing about this is that they end up with a job after the training, out of this twenty only one person has ever stepped her foot in an advert agency where she did her internship, one of the requirement for this is that you must have no job, now they have all entered four agencies, they also went for a competition yesterday and they came out first position, we have been able to turn them all to marketing communication consultant” “She stated that the age limit is 30, it’s an 8weeks program we feed them, we pay for a bus to take time

out so if they are more than that we won’t catch them all properly, the program is two months and they have to do internship, since July and now we Have been able to train forty people we can show to the world, a lot of people doing digital marketing out there but they have been extra ordinary trained and prepared for this , it is totally free, am expecting them to go and represent, Facebook and their families they have not just been given fish they have been thought how to fish , they are starting work on Monday, after 3months if they perform well they will be sustained” Speaking to one of the beneficiaries Adeola precious whose story proved that all hope were lost for her but has been rebranded after being trained by digify africa, “I didn’t know digital has more to do than posting pictures on social media, I came with zeal to learn just to learn and I got more than I expected, we have to keep striving for the best, I wanted to build my-

self and get prepared for tomorrow and now I am proud of myself” Omowonuola Giwa another beneficiary and communicator stated “Being a communicator prior to this work I used to work in a radio station, I used to think there was nothing more than communication, after leaving my job earlier this year there are so many things and more to do, the key is to remain consistent expect to see contents from me” Digify Africa is a non for profit initiative two months intensive boot camp where 20 aspiring digital professionals learn what it takes to have a career in digital marketing, the programme is designed to fit the specific needs of industry, covering a range of topics including community management, content and email marketing, brand online reputation management, ux design and more as they are being mentored by industry professionals from reputable advertising agencies from around the country.

emale politicians and journalists were abused on Twitter every 30 seconds in 2017, according to the largest-ever study into how women are targeted with hate speech online. Researchers from Amnesty International and Element AI, an AI software start-up, used volunteers to read through 300,000 tweets mentioning one of 778 women on their list in 2017 and label any abuse targeted at gender, race and sexuality. The findings, when extrapolated, suggest that 1.1m abusive tweets were sent to the women on their list, which included all female members of parliament in the UK, female members of Congress in the US, and a number of journalists working at titles across the political spectrum, from Pink News and the Guardian to the Daily Mail and Breitbart. Women of colour were more likely to be mentioned in abusive tweets. Black women were almost twice as likely as their white counterparts to be targeted. Diane Abbott, the shadow home secretary and Labour politician, received the most abuse of any British woman, with estimates putting the total number of abusive tweets mentioning her at 30,000 last year. “Abuse of this kind really limits women’s freedom of expression online. It makes them withdraw, limit conversations and even remove themselves altogether,” said Milena Marin, senior adviser for Tactical Research at Amnesty International, who has been studying the issue for three years. “We’ve been in dialogue with Twitter for a long time, asking for transparency around the abuse data, but they act as gatekeepers. I don’t think that it’s Amnesty’s job to analyse abuse on Twitter, but we had no choice.” She added that the data set compiled by the researchers is now the largest of its kind in the world. “We have the data to back up what women have long been telling us — that Twitter is a place where racism, misogyny and homophobia are allowed to flourish basically unchecked,” said Ms Marin. Ms Abbott said her staff spends “a considerable amount of time” removing abusive tweets and blocking users and that the abuse she suffers is overwhelmingly racist and misogynist. “I have always felt that this type of hate speech can lead to violence, and Twitter has a responsibility to shut these accounts down a lot quicker then it currently does,” she said. “The sheer volume of abusive comments makes it difficult to block them all . . . Twitter does not do enough to identify accounts that repeatedly offend.” The researchers relied on 6,000 volunteers worldwide who were shown anonymised tweets mentioning one of the women on the list and asked to categorise whether it was abusive and how.

Wednesday 19 December 2018

C002D5556

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Oil majors stay under pressure as wider stock sell-off eases Slide for Brent crude leaves sector exposed as Wall Street and European bourses bounce Michael Hunter, Peter Wells, Nicole Bullock, Alice Woodhouse

orries about the outlook for global economic growth stalked stock and commodities markets on Tuesday, taking a sell-off on European bourses into a fourth session and taking oil prices sharply lower. Brent crude, the international benchmark, fell by as much as 3.7 per cent, before bouncing off lows to trade down 1.6 per cent on the session to $58.66 a barrel. West Texas Intermediate, its US counterpart, dropped 4 per cent to $47.95, hitting the lowest level since September 2017. That decline reverberated around the energy sector, taking the Stoxx index tracking it down 1.5 per cent. Oil majors BP and Total were down by about 1 per cent apiece, while Royal Dutch Shell lost 1.7 per cent. But after a tumble of more than 2 per cent overnight, the S&P 500 reclaimed 0.8 per cent. European bourses also found some support as the trading day developed, with financial stocks snapping a two-session losing streak, which followed the European Central Bank’s announcement that it was ending stimulus spending. The Federal Reserve was widely expected to raise rates at the end of its two-day policy meeting on Wednesday, leaving investors faced with the end of the era of cheap money coinciding with the threat to

global growth posed by the US trade dispute with China. All 111 economists polled by Reuters ahead of the meeting expected an increase of 25 basis points to the Fed funds target range. CME Group data tracking the futures market puts the chances of such action at 70 per cent. Analysts also cited concern at a lack of a sustained improvement in trade relations between the world’s two biggest economies. “It is the same thing that has been driving declines for the last few weeks,” said David Kelly, chief global strategist at JPMorgan Asset Management. “It is concern about some slowdown in the US and global economy.” The overall extent of the declines eased in Europe but the region-wide Stoxx 600 stayed lower for the fourth consecutive trading day. It was down 0.3 per cent in mid-session trade, taking its decline since the sell-off started to just over 2 per cent. Frankfurt’s Xetra Dax 30 recovered, by 0.3 per cent, helped by demand for industrial stocks and carmakers. European financial stocks also recovered, with the Stoxx index tracking the sector up 0.2 per cent. Since the ECB confirmed plans to end its stimulus spending last Thursday, the index has fallen 1.3 per cent. The retreat in Asia took Japan’s Topix to an 18-month low with a drop of 2 per cent. China’s CSI 300 fell 1 per cent, with losses deepening after a speech by Chinese president Xi Jinping that failed to hint at any major new initiatives or reform.

India’s Byju’s looks to launch its online learning app in US and UK Benjamin Parkin

ndia’s leading education technology start-up is planning to launch its online learning app in the UK and US, after raising $540m in fresh investment. Byju’s, which offers video tutorial and educational games to schoolchildren through its app, raised more than $500m this week from South African internet group Naspers and the Canada Pension Plan Investment Board. The deal values the company at $3.8bn, according to people close to the fundraising. Previous investors have included China’s Tencent, Silicon Valley venture capital firm Sequoia Capital and Facebook founder Mark Zuckerberg’s Chan Zuckerberg Initiative. The start-up has become one of the world’s largest online learning companies since launching in 2015. Some 30m Indian students between the ages of nine and 17 use Byju’s app, 2m of whom pay annual subscriptions that average over $200 each — a princely sum for most Indians. The company now wants to target even younger learners abroad, with new products aimed at three to eight-year-olds in English-speaking

countries such as the US, UK, Australia, New Zealand and Canada. Byju Raveendran, a former celebrity tutor who founded the company, said using smartphones to teach such young learners was largely new territory. “There’s opportunity that’s untapped,” he said. “There’s no playbook here in terms of what has worked before, and what can work for us.” The company has invested in adapting to different education systems and tweaking the English accents in its apps, Mr Raveendran said. It also plans to buy existing edtech companies in other countries, and is considering going public in two or three years. Byju’s has ridden the surge in education technology in India, which has the world’s largest school-age population, as parents take to smartphones to help bolster their children’s learning and performance in competitive school exams. A 2017 report by KPMG and Google estimated the country’s online education market would grow to $1.96bn of sales by 2021. “We believe the company’s success in India will translate across borders,” said Russell Dreisenstock, Naspers’ head of international investments.

Huawei says it is victim of geopolitical attacks US has lobbied several countries to ban Chinese telecoms group over security concerns Yuan Yang

uawei has attacked the US and its allies for spreading fear about its telecoms equipment because of “ideological or geopolitical concerns.” Ken Hu, the current chief executive of the Chinese telecoms group, said countries that banned Huawei from their telecoms infrastructure would put themselves at a severe disadvantage as the world moves to 5G, the next generation of mobile internet. In recent weeks, the US has lobbied several countries to ban Huawei from their 5G networks because of security concerns. On December 1, relations soured further when Meng Wanzhou, Huawei’s chief financial officer and the daughter of the company’s founder, was arrested in Canada for extradition to the US to face charges over an alleged breach in sanctions against Iran. “Despite efforts in some markets to create fear about Huawei and to use politics to interfere with industry growth, we are proud to say that our customers continue

to trust us,” said Mr Hu. While most countries’ concerns over 5G security could be resolved through technological discussions, Mr Hu added, some countries have turned these concerns “into speculation . . . out of ideological or geopolitical concerns.” Mr Hu said Huawei has won 25 commercial 5G contracts, and has shipped more than 10,000 5G base stations to different countries. He also forecast that revenues would surpass $100bn in 2018, “a big milestone in our history.” Mr Hu repeatedly emphasised that there was “no evidence of any major attacks” in recent years, and challenged the governments banning Huawei to produce such evidence. He warned that the US would suffer in building 5G coverage without the company’s participation. “This is a market that is falling short of competition in a very big way,” said Mr Hu, adding that Huawei would have cut costs for 5G network building by $20bn from 2017-2020. At the same time, Australia’s rejection of Huawei in its 5G system

will come at the cost of “several billion Australian dollars”, Mr Hu said, attributing the estimate to Frontier Economics. As the world’s biggest supplier of telecoms equipment, Huawei’s 5G homegrown technology is included in international standards. The company was praised last month by British Telecom’s chief architect Neil McRae for being “the only true 5G supplier right now”. But the company has admitted it must address security problems raised through the UK’s review of its software. More broadly, intelligence agencies are concerns that Huawei, in common with other Chinese companies, are legally obliged to comply with China’s national security goals. Mr Hu declined to comment on Ms Meng’s case, who faces US charges of misleading banks about Huawei’s business in Iran. If Huawei is found guilty of violating the US’s Iran sanctions, then it could face the same ban on component exports from the US which crippled production at its domestic competitor ZTE earlier this year.

Canada fines Glencore’s head of copper trading $1.8m Henry Sanderson and Neil Hume

ne of the top lieutenants of Glencore chief executive Ivan Glasenberg has been fined C$2.45m ($1.8m) and banned from serving as a company director for four years, after the company’s subsidiary in the Congo was found to have issued misleading financial statements. Canadian regulators said Telis Mistakidis, who is head of copper trading at Glencore, as well as several other directors, allowed Toronto-listed Katanga Mining to overstate its copper production. The investigation by the Ontario Securities Commission also found that Katanga Mining, which is majority owned by Glencore, failed to disclose its relationship with Israeli businessman Dan Gertler, who has been sanctioned by the US for his “opaque and corrupt mining and oil deals” in the DRC. Mr Gertler was a shareholder in Katanga Mining until being bought out by Glencore in February

2017. In a statement the Fleurette Group, a company controlled by Mr Gertler, said it “has at all times acted with integrity, honesty and transparency.” “Fleurette will continue to be a business that operates with transparency and integrity in the DRC despite the barrage of unsubstantiated criticism levelled at it by others,” it said. As part of a settlement Katanga Mining has agreed to pay a fine of C$2.45m to the commission and a wide-ranging review of its practices and procedures by an independent consultant. The company’s chief executive Johnny Blizzard will also step down. “This settlement enables the company to continue to move forward with improved governance, compliance and control procedures and to focus on the completion of operational enhancements to its 75 per cent owned copper and cobalt mine in the DRC with enhanced value for all our stakeholders,” Hugh Stoyell, chairman of Katanga Mining, said.

Glencore said it was “disappointed by the conduct” that led to the settlement and would take remedial action, including strengthening its day-to-day control over Katanga. “Glencore is working with Katanga to implement the various changes to improve its reporting and control functions and to address the cultural failures that led to this conduct,” it said. Mr Mistakidis did not immediately respond to a request for comment. The fine by the Canadian regulators is the latest in a string of problems to hit Glencore in the DRC, where some of its most important assets are located. It comes as the US Department of Justice is investigating the company’s activities in the country, as well as Venezuela and Nigeria, going back to 2007. Katanga Mining is the majority shareholder of the Kamoto Copper Company, which operates one of the biggest copper and cobalt mines in Africa, in the south-east of the DRC. The other shareholder is the country’s state-owned miner Gécamines.

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Wednesday 19 December 2018

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NEWS Terminal operators raise alarm as bad roads, Apapa gridlock wreck port operations AMAKA ANAGOR-EWUZIE

hairman, Seaport Terminal Operators Association of Nigeria (STOAN), Vicky Haastrup, says bad roads and menacing Apapa gridlock, which she describes as monumental national disgrace, are frustrating operations at the nation’s seaports. Haastrup, who spoke in Lagos at the weekend, said terminal operators were working under the harshest business environment, in spite of the huge investments made towards developing the ports. She wondered why government had allowed the port access roads to degenerate until they became impassable. “How can a sector that has potential to generate billions

of naira for government is left to degenerate? Government is looking for oil but we have a sector that has the capacity to give you all the revenue you need, yet the sector is suffering,” she said. The large number of tank farms located within Apapa has also compounded the chaotic gridlock, while more licences are still being issued to new tank farm owners, she disclosed. She also asked the Federal Ministry of Works, Power and Housing to urgently reopen the bridge exiting Apapa at Leventis/Area B, which had been shut down for several months without any visible sign of work being carried out on it, noting, “Without reopening that bridge, the inflow and outflow of trucks will remain a major challenge in Apapa.” Augustine Fischer, Africa Communication manager of

Maersk, said the poor condition of roads in and out of the Apapa area of Lagos State remained a major blight on port operations in Nigeria. The two seaports in Lagos handle more than 60 percent of goods imported into country, Fischer said, while the volume of cargoes imported into the country has been on the rise —increasing from about 35 million metric tons in 2006 to more than 80 million metric tons 12 years —the roads through which these goods are moved have gone from bad to worse. “The poor road condition coupled with a lack of parking lot for trucks and proliferation of tank farms in Apapa, means these trucks have to spend days – sometimes as much as 10 days – to cover a short distance of less than 5km to enter the port to drop off, or take delivery of cargo.

FG opens Lagos-Ibadan Expressway to ease traffic flow CHUKA UROKO

he Federal government, Tuesday, opened the section 1 of the Lagos-Ibadan Expressway to ease traffic flow for the North and Eastbound travellers either on business trip or on homeward journey to join their families for the Christmas celebration. The section 1 of the expressway, which seems to be perpetual construction site, stretches from the Lagos Toll Gate to Shagamu Interchange. It has garnered notoriety for the frequent accidents that occur there almost on daily basis, claiming so many lives. Figures from the Federal Road Safety Corps (FRSC), Ogun State Sector Command, show that as at the end of last

year, 210 deaths were recorded while 214 deaths have already been recorded this year. Clement Oladele, FRSC sector commander, Ogun State, explained that about 50 percent of the deaths occurred at the construction zones, but blamed that on the impatience of the motorists. Adedamola Kuti, the federal controller of works in Lagos, assured that the reconstruction work would continue after the Yuletide, saying the Federal Government had set aside a huge sum of money, about $650 million infrastructure fund to ensure that there was no slow down in construction activities. “The $650 million is meant to complete this expressway, Abuja-Kaduna-Kano Road, East-West Road, PlateauMambila Bridge and Second

Nigeria Bridge under the Federal Government’s infrastructure fund. The fund is growing and, if I have my figures right, it must have reached $1 billion by now,” he said. He disclosed that the additional work to be done on the expressway had moved its completion date to 2021 and also increased the contract sum by almost 100 percent to N134 billion, up from N70 billion. Lagos-Ibadan Expressway is one of the most important arterial roads in Nigeria being the major gateway to the Northern and Eastern parts of Nigeria. Its economic importance can hardly be overemphasised, more so as it facilitates trade and commerce between the commercial cities of Onitsha in the East and Lagos in the West.

Edo to leverage agric value chain for wealth creation SEYI JOHN SALAU

overnor Godwin Obaseki of Edo State has reiterated his administration’s resolve to leverage agriculture sector and the agribusiness value chain for wealth creation for the people. According to Governor Obaseki, it is the responsibility of government at all levels to make the people rich, “Our emphasis in Edo State is to talk less and look for honest and direct means to empower the people and make them rich.” Obaseki stated this at the ongoing maiden Edo Food and Agric Trade Fair, which started on Monday, December 10. The governor in a paper ‘Inclusive Agric Value Chain Development and Funding: Workable Models and Institutional Bottleneck,’ said, “Nige-

ria spends over N20 billion on food importation annually on products that can be grown locally. “We need to have financial inclusion so that our method of farming will change from producing small units to producing in large scale to cater for the growing population, which is a huge market for us.” On the agricultural value chain, he said local farmers should be well educated on the various stages of the value chain and the opportunities that abound to improve and grow agricultural practice in the state. “They need to understand and know how to access funds for agriculture in order to go into full scale mechanised system to increase yield of food crops,” he stated. Thomas Oloriegbe, the chief operating officer of Nosak Group, maker of Nosak Famili Vegetable Oil and No-

sak Famili Pure Palm Oil, in a statement said in reflecting the agric value chain, there should be optimum closure of the infrastructural gap such as access roads, electricity, and water supply, among others. Oloriegbe in his paper presentation, ‘Growing Edo State Economy and Agric Value Chain Using the Bottom-Up Model of Development,’ said, “Farmers should be educated on the ways they can grow their businesses by embracing the financial opportunities through the various Agric intervention funds provided by the Central Bank of Nigerian (CBN) and the Bank of Industry (BoI) as well as organised Cooperative Societies.” According to Oloriegbe, accessing these funds will further improve the value chain and encourage more participation of the local farmers into agricultural practice in large scale.

BUSINESS DAY

62 BUSINESS DAY NEWS Nigeria’s auto sector to get more foreign investment MIKE OCHONMA

elarus, a European nation, says it is encouraged by the development in Nigeria’s economy, and is willing to invest in it, particularly in the automotive industry. This development is coming following the success of the recently signed memorandum of understanding (MoU) between the Federal Government of Nigeria and Volkswagen Group for the production of various brands of Volkswagen vehicles in Nigeria. Speaking in Abuja recently at a working visit to the National Automotive Design and Development Council (NADDC), Vyacheslav Brill, ambassador of Belarus to Nigeria, said his country was eager to come in and invest in the country’s economy. The ambassador said his country had global expertise in agricultural mechanisation and machinery like tractors, harvesters, among others, adding they were also willing to invest in the production of trucks and other heavy duty vehicles in Nigeria.

According to Brill, his country has already made significant contributions for Africa’s development through the Africa Export Import Bank, adding that Belarus was ready to increase its presence and economic significance in Nigeria. Receiving the delegation while assuring them that the government will continue to create and maintain the enabling environment for development, the director-general of NADDC, Jelani Aliyu, said the council was ready to work with them in areas of automotive development, particularly in the production of agricultural equipment and urban transit solutions. The director-general said NADDC had already built test centres in various parts of the country in readiness for the productions of vehicles in Nigeria, adding these centres would be commissioned early next year. Agriculture remains a main economic activity in Nigeria, he said, pointing out the Council was willing to support Belarus in the production of tractors and other agricultural mechanisation equipment in Nigeria.

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NICArb pledges to improve domestication of arbitration, maintain high standards of training KELECHI EWUZIE

igerian Institute of Chartered Arbitrators (NICArb) has pledged to use every necessary mechanics to domesticate arbitration in Nigeria and reduce significantly the number of arbitration of home-generated disputes exported outside Nigeria. The premier arbitration institute in Nigeria also said it will continue to explore ways of maintaining the high standards of training aimed at achieving the highest standards in its membership, while trying to ensure that arbitrators are not only competent and experienced in this field, but are of the highest moral calibre and professional competence. Speaking in Lagos at the 2018 Annual Investiture/ Awards ceremony of the institute, Afe Babalola, chairman of the event, said with qualified persons in the Institute, there should be no excuse to seek expertise outside, except of course in international commercial arbitration; or where the specific circumstances of a case so demand. Babalola, who was rep-

resented by Fabian Ajogwu, vice president and member of Governing Council of the institute, said the institute was putting in place measures to reverse the trend of setting aside arbitral awards at the slightest opportunity, and to appointing qualified arbitrators in Nigeria to conduct arbitration. He observed that the 2018 Fellows, Members and Associate members that were inducted represents the needed testimony to the high premium that the institute continue to place on its objectives and activities. He further lauded the founders of the Institute and charged all inductees to go forth and practice and promote arbitration, mediation and other ADR; and serve as good ambassadors of the Institute in their different fields. Walter S.N. Onnoghen, chief justice of Nigeria and chairman, Board of Governors, National Judicial Institute in his keynote address at the event said recourse to arbitration as a method of dispute resolution has been on the increase in Nigeria, and of course the nature of the proceedings and the minimal implications were the drivers.

Wednesday 19 December 2018

‘Viable economic opportunities in developing countries will ease global migration crisis

do State governor, Godwin Obaseki, says one of the ways to ease the global migration crisis is for global actors to join forces in creating viable economic opportunities in developing countries. Governor Obaseki said such an effort would benefit from the input of multilateral organisations, corporate bodies, non-governmental organisations (NGOs) and publicspirited individuals in building capacity of youths, in developing countries for global competitiveness. The governor made the submission in commemoration of the International Migrants Day, marked by the United Nations every year, on December 18. He argued that in the long run, it was cost effective to invest in solutions that create an army of productive youths, especially in the age of digitalisation, which had opened a window of opportunities for value creation regardless of the inhibition of space and time. He said, “Our position on migration has remained that any youth who seeks opportunities overseas should do so through the regular route. We vehemently discourage people from embarking on

illegal migration, which exposes them to risks across the Mediterranean and the Sahara Desert. “As a government, we have continued to assist our youths to gain skills that will make them globally competitive and migrate, if they so wish, legally.” He added, “We have secured a number of collaborations with international partners to support in creating the right environment for our people to learn valuable skills in Edo State. These will enable us to build institutions for capacity building and equip our people to contribute productively to development. We still seek more of such partnerships.” The governor said the Managing Migration through Development Programme (MMDP) has been designed by the state government and its partners as a strategy to eradicate illegal migration and promote economic prosperity and safety of the citizens of Edo State. He urged multilateral organisations and international actors to continue to support the state in curbing illegal migration, noting that the 2018 theme for the International Migrants Day, ‘Migration with Dignity’ is in line with the state’s stance on the matter.

Wednesday 19 December 2018

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Rising un-contracted LNG demand opens market opportunity for Nigeria, others ISAAC ANYAOGU

… WoodMac reports buyers taking position for next year

he seven major buyers of the world’s Liquefied Natural Gas (LNG), CNOOC, PetroChina, Sinopec, CPC, JERA, KOGAS and Tokyo Gas, which account for half of global volume, could see their total un-contracted demand rising fourfold by 2030, providing opportunity for savvy producers, a new WoodMac research has found. The four-decade old global research and consultancy firm found that after a number of quiet years, these Northeast Asian players have become active again in global LNG contracting activity, with over 16mmtpa of contracts announced this year, pushing forecast for un-contracted demand volume to 80 million tons per annum (mmtpa) by 2030. “As China pushes on towards a lower-emission economy, its demand for gas and

LNG has grown significantly and we expect the trend to continue in the longer term,” said Nicholas Browne, research director. “Other traditional major buyers, on the other hand, are facing legacy contract expiries and will be on the hunt for a mix of contracts to lower average costs and security in supply sources,” he said. But huge demand does not immediately translate into value for Nigeria until it makes the required investments. In July, Nigeria took concrete action development of NLNG Train 7, with the signing of front-end engineering and design contracts with Saipem SpA, TechnipFMC Plc and Chiyoda Corp. A final investment decision was expected later in the year but BusinessDay checks show no announcement is in the offing. Two other LNG projects in Nigeria: Olokola LNG and

Brass LNG have been unable to reach final decision. The Olokola LNG project was stalled because all the international oil companies (BG, Shell and Chevron) withdrew from the project, with only the Nigerian National Petroleum Corporation (NNPC) left. The Brass LNG project, which was designed to produce 10 million metric tonnes per annum, was to be built by the NNPC, Total, ConocoPhillips and Eni Group. But ConocoPhillips withdrew from the project in 2013 and it has stalled since then. Of these projects the LNG Train 7 looks the most likely to reach FID and could have the most impact. On completion, it will lift total production capacity of the plant to 30 metric tonnes per annum (mtpa) from the present 22 million tonnes per annum, capacity from six NLNG trains and help Nigeria retain its spot as 4th largest LNG exporter in

the world. Last year, Nigeria supplied the world with 7 percent of the super-chilled fuel but it is struggling to retain its market share in Asia. It is also struggling to retain markets in 24 countries it supplied LNG in 2017, a prospects that increasingly looks bleak with difficulties it has had re-marketing its expiring contracts. Meanwhile, Wood Mackenzie predicts that 2019 could be a record year for LNG project sanctions with over 220mmtpa of gas targeting final investment decision (FID). Some of the less prepared or competitive projects will slip into 2020 and beyond, but nonetheless a bumper year beckons. The research firm said LNG suppliers will need to ensure they can meet the changing needs of major LNG buyers as they seek a variety of contracts to meet their different needs.

R-L: Tomi Somefun, managing director/chief executive officer, Unity Bank plc; Aminu Babangida, chairman board of directors, Unity Bank plc, and Mohammed Shehu, the company secretary, at the bank’s 12th annual general meeting in Uyo, Akwa Ibom State.

Access Bank, 27 others develop Global Banking Principles HOPE MOSES-ASHIKE

ccess Bank, in partnership with 27 leading banks across the world, has developed new Principles for Responsible Banking, an initiative launched recently at a joint event in Paris – the UN Environment Finance Initiative’s biennial Global Roundtable and the fourth Climate Finance Day – under the patronage of the French President Emmanuel Macron. The Principles have now been officially endorsed by other global banks including Caixa Bank, Corporación Financiera de Desarrollo (Ccofide), DGB Financial Group, GLS Bank, KB Financial Group, KBC Group, Keystone Bank,

Natixis, Qatar National Bank, Standard Chartered PLC, and Zenith Bank plc. Herbert Wigwe, group managing director/CEO of Access Bank, speaking after the launch, explained that as a member of the United Nations Environment Programme Finance Initiative (UNEP FI), Sustainability was an important global platform for the bank, especially in achieving sustainable growth through socially-responsible corporate practices. “At Access Bank, we have stayed committed to ensuring that we place priority on not just being a profitable venture but also one that is deeply concerned about the planet and the people. With specific guidelines that have been developed, applied, and

with rigorous monitoring, we can all ensure that we build a sustainable and prosperous future, achieve long-term business and financial benefits while driving urgent action that reduces the risk to the environment,” he said. The Principles will align the global banking industry with, and scale up its contribution to society’s goals as indicated in the Sustainable Development Goals (SDGs) and the Paris Climate Agreement. Supporting the bank’s commitment, Omobolanle VictorLaniyan, head of sustainability, Access Bank, said: “In order to continuously increase on impact through sustainability practices, we will consistently align our corporate strategies with ideas and activities that contribute to our customers’ needs.

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BUSINESS DAY

Emotan Gardens: Mixta Nigeria Edo commences overhaul hails award of Benin-Abraka of state broadcasting Road reconstruction, security outfit, redeploys EBS staff architecture he Edo State gov-

ixta Nigeria, the joint venture partner of the Edo Development and Property Agency (EDPA) on the development of Emotan Gardens, an over 70-hectare affordable housing estate in Benin City, has hailed Governor Godwin Obaseki for the award of contract for the reconstruction of Benin-Abraka Road, noting that the gesture will further boost the profile of the estate. The real estate company also saluted the state government’s investment in the ambitious security architecture/trust fund, which it said would strengthen the existing security arrangement in the state and boost investor confidence. Head, business development and sales, Mixta Nigeria, Korede Lawrence, in an interview with journalists, said the award of the contract was a promise kept, showing that the state government kept its words. According to Korede, “We at Mixta Nigeria are particularly pleased about this. It follows through on the government’s promise to the people and also to Mixta Nigeria as well as other well-meaning developers. It shows that when this government says that they will do something, they surely will.” He added: “Since we started, we have had a few people who have said that some politicians say things and don’t do what they say. This is to assure Edo people particularly those who have indicated interest in our estate, which the Obasekiled government has put its money where its mouth is. More value has been added to the estate with this new development. It is a testament to the things we have been advertising.

ernment has commenced the overhaul of the Edo Broadcasting Service (EBS), with the redeployment of some staff to the Ministry of Communication and Orientation. In a statement signed by the Secretary to the State Government, Osarodion Ogie, the state government said, “Redeployment is in line with the ongoing restructuring of stateowned media organisations.” With the redeployment, Ransley Abu Osagie has been appointed acting general manager of the station. According to Ogie, staff of EBS that have been redeployed with immediate effect include Friday Okoedion, general manager; Uche Nwoko, head, manpower/training; Oseni Salami, head, programmes, Television; Godwin Egbe, head, Presentation; Festus Obasogie Evbuomwan, head, Corporate Affairs; Osagie Asabor, head, News, Television. Others are Ndidi Ehikwe, head, News, Radio; Bode Okudishu, head, Commercial; Emmanuel Oguns, Commercial Dept; Magdalene Mudasheru, Commercial Dept, and Festus Alenkhe, News Department. Those to take over from the redeployed staff in acting capacity with immediate effect, according to the statement, are: Ransley Abu Osagie, acting general manager; Ivy Adodo, head, News, Television; Benjamin Osagie, head, News, Radio; Pat Ebueku, head, Current Affairs; Jennifer Ngozi-Lloyds, head, Corporate Affairs, and Emmanuel Omoregie, head, Commercial. Others are Comfort Alonge, head, Accounts; Amenze Osagie, head, Engineering; George Osawaru, head, Radio; Franca Olu-Oseh, head, Programmes, Television; Mercy Orukpe, head, Marketing; Charles Ogboghodo, head, Presentation.

Glo subscribers to win N4.8m in online talent contest ENDURANCE OKAFOR

he yuletide promises to be exciting as Globacom has unveiled an online talent competition in which creative subscribers stand to win a total of N4.8 million in cash prizes. “As part of our celebration of the festive season, we are offering our subscribers the chance to break the internet with excitement in 60 seconds. Just for uploading a video of themselves doing what they enjoy doing, they stand a chance of winning fantastic cash prizes in the competition,” Globacom said in a press statement. Tagged GLOIN60SECONDS, the competition, which is already garnering

rave reviews as the biggest online talent engagement, will run via social media platforms including Facebook, Instagram and Twitter. Participants are expected to upload a one-minute music, dance, comedy, poetry or any other creative ability video of themselves showcasing their talents on their social media accounts such as Facebook, Instagram or Twitter and hashtag it on #GLOIN60SECONDS. They will subsequently be expected to follow Glo on any of the company’s social media pages @Globacomlimited on Instagram, @Gloworld on Twitter and Gloworld on Facebook record and upload the video and register online for the campaign which will run for eight weeks from De-

cember 10, 2018, to February 3, 2019. Globacom said that participants could upload as many videos as possible per week, but that the videos would only be eligible for weekly prizes in the week uploaded. “To be eligible for prizes in other weeks, they could upload as many videos every week. However, these videos will be eligible for Grand Finale entry.” According to the network, seven lucky contestants with the highest video likes will win 50,000 each every week, making a total of 56 winners followed by the grand finale in which N200, 000 consolation prizes will be presented to 5 runners-up. A grand prize of 1 million naira will also be won by the overall winner.

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Wednesday 19 December 2018

National Discourse The birth of a new era in Lagos politics OBINNA EMELIKE

ince the emergence of the Fourth Republic in 1999, three political parties with the same ideology have held sway in Lagos State. From the Alliance for Democracy (AD), Action Congress of Nigeria (ACN) to the ruling All Progressives Congress (APC), there has been an unwritten understanding of an automatic second term in

office for the governors. However, the trend changed for the first time in almost 20 years on October 2, 2018 when Akinwunmi Ambode, the incumbent governor, who took office in May, 2015 lost in the gubernatorial primaries election to Babajide Sanwo-Olu, a former commissioner in the state. Of course, Ambode did not lose on the basis of poor performance, as the many completed and ongoing projects under his stewardship stand him in good stead. But the defeated governor was rather stopped by “the powers that be”, some interest groups and power brokers who insisted that he must go, for not ‘carrying them along’ or for failing to patronise them. It would be recalled that same scenario played out before the re-election of Babatunde Fashola, the immediate past governor

of the state. Then, it was said that Bola Tinubu himself was the one saying no to Governor Fashola’s reelection. As the APC national leader, Tinubu, a former governor of the state, who is better known as Asiwaju or Jagaban, listened to the pleas of the masses to let Fashola be. Then, the masses, who constituted Fashola’s strength, were ready to re-elect him under any platform even if he exited the party. In that case, Asiwaju listened to the voice of reason. But the events of October 2, 2018 have introduced another dimension in Lagos politics. The unwritten agreement of an automatic two terms for governors no longer holds, as Ambode, who many expected to put up a fight, accepted his defeat and even went ahead to campaign for the incoming governor. Epe Division, his constituency, wanted to roar in

Lagos 2019 budget caught in web of politics as governance slows JOSHUA BASSEY

or the first time in five years, the Lagos State government would be presenting its most delayed annual budget estimate for 2019 in what is believed to be a reflection of a struggling governance in the state since the middle of this year. Governance in the state has ebbed significantly, as the vibrancy associated with Lagos and which has been the attraction for other states of the federation, seem lost. It has been worsened by the recent decision of the power brokers in the state to deny Governor Akinwunmi Ambode a secondterm ticket, as well as ongoing electioneering and political intrigues, all of which have left governance in Nigeria’s economic hub largely deflated. Checks show that Ministries Departments and Agencies (MDAs) of government are heavily impacted, as tons of files are said to be awaiting approval while many others already approved have not translated to funds to enable the MDAs execute some of the programmes slated for 2018, 12 days to the end of the year. One of such programmes, BusinessDay has been told is the Lagos Corporate Assembly otherwise known as Lagos Means Business, usually organised by the Ministry of Commerce, Industry and Cooperatives, to bring the busi-

ness community, members of the Organised Private Sector (OPS) and high-flying entrepreneurs to interface with the governor and share ideas and issues of concern. Discussions and resolutions in the corporate assembly have always helped the state government to rethink and reshape its policies in a manner that reflect the views of the business community in the bid to create an atmosphere conducive for business. At the last edition of the event in March, Ambode had announced to the corporate world that the event would be held quarterly. The next edition was considered for May but subsequently postponed with a consideration for November. By yesterday, a source within the government confirmed to BusinessDay that the event would no longer hold this year. Sources said that the delay in the 2019 budget is a fallout of October 2, 2018 All Progressives Congress (APC) governorship primaries, which saw Ambode supplanted by Babajide Sanwo-olu. According to our sources, although work on the 2019 budget had begun since June with consultations with relevant stakeholders and MDAs, it ran into some hitches in the build-up to the APC primaries. The dust generated by the primaries was said to have slowed the budgeting processes owing to high level mistrust in government, as some commissioners and cabinet members played

down on their responsibilities. However, Akinyemi Ashade, the commissioner for finance, in a telephone interview with BusinessDay, said work on the 2019 budget is now being concluded and would soon be tabled for deliberations and approval by the State Executive Council. “We are working on the budget. It has gone through the various processes and procedures and assessments. It is being considered for approval by the State Executive Council. I can assure you that the governor would soon present the appropriation to the House of Assembly for their consideration,” said Ashade, a former commissioner for economic planning and budget in the state. The 2019 budget, which size, a source said may not be significantly difference from 2018, and to be presented next week, would be the most delayed in recent years. Ambode’s predecessor in office, Babatunde Fashola presented the 2015 budget of N489.69 on November 25, 2014. Ambode presented his first full circle budget of N666 billion for 2016 on December 17, 2015. The budget presentation improved significantly the following year, as the 2017 budget of N813 billion was tabled before the House of Assembly on November 29, 2016 while the 2018 budget of N1.04 trillion was presented on December 11, 2017.

opposition, but Ambode’s peace move discouraged them. Sanwo-Olu polled 970,851 votes to defeat the incumbent Ambode who had 72,901 votes in the primaries. The handwriting is however on the wall. Two terms for a governor is no longer automatic. “The powers that be” could once again bring a new messiah to deliver the state from Sanwo-Olu’s grip as he seems set to benefit from a breach of the unwritten rule. Going forward, governors in Lagos will need more than good works. They will need regular handshakes of approval with “the powers that be”. That is just the mindset of many going into political offices and that mindset will be worse when one realises that he cannot get a second term, then he uses the first and only term to take care of himself, his god-fathers,

party and friends, leaving the state worse than he met it. Now, will the incoming governor continue with the projects of the outgoing, knowing full well that he has only one term? Might he not be inclined to rather pursue his own agenda, than deliver on the continuity which he promised during the campaign? Well, they say politicians promise all manner of things during campaigns and forget them the moment they assume office. So, an incoming governor might be in a dilemma; how to continually please the godfathers and that will be at the expense of the masses. But this will not happen if there is credible opposition in the state. The ruling party seems to get away with the imposition because the opposition is sleeping.

2019: Parties adopt another method of vote buying ... lure voters with monthly stipends, gifts OLUSOLA BELLO & INIOBONG IWOK

s political parties perfect their strategies ahead of next year’s general election, findings by BusinessDay reveal that some political parties in the country have devised another method of vote buying in a bid to lure voters ahead of the general elections. Finding by this medium, reveals that in some part of the country, voters are approached by agents of the major parties to register as members of their parties, after registering, they are directed to go and open account numbers with any commercial bank close to them and also obtain a Bank Verification Numbers (BVN). A banker in a first generation bank confirmed that the number of people that came to the bank to open accounts have increased significantly in recent time, adding that most of the customers often disclosed that their party officials directed them to open such accounts. The situation which is very prevalent in Lagos and Oyo states has led to unsolicited payment of the sum of N2,000 to N10,000 into people’s account. A member of one the major political parties in the country, who confirmed this development in Lagos, said that his party has already registered a good number of party men and women, adding it was necessary that the new members be taken care of.

“We need loyal party members and their loyalty must be sustained. To make them happy, we need to do what is right and doing right is to provide money for logistics to them from time to time.” He added that his party would do all it can not to allow the other party win the state in next year’s general election. A chieftain of an opposition political party, who did not want his name in print, said that all the political parties in Nigeria where adopting different method of luring voters ahead of the general elections, stressing that it was wrong for only one party to be fingered in the exercise. “Well I don’t know where you get your information from; there is nothing wrong if parties take care of their members, but what I can tell you is that; it is obvious everyone is desperate to win the 2019 election. “Every political party is adopting strategies to win the heart of the voters. It is wrong to name only a political party, every political party is involve in the act,” he said. Reacting to the development, the national President of Voters Awareness Initiative (VAI), Wale Ogunade, condemned the practice and urged Nigerians to report such incidences to the relevant agencies, stressing that he was confident that the Independent National Electoral Commission (INEC) will deal with the act.

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Why we opposed assent to Electoral Act Amendment Bill- APDA presidential candidate Presidential candidate of the Advanced People’s Democratic Alliance (APDA), Mohammed Shittu and his party say their opposition to assent to the Electoral Act Amendment Bill recently passed by the National Assembly, is because it could truncate Nigeria’s democracy, adding that it is ill-timed. In this interview with INNOCENT ODOH, Shittu also says that his ambition to lead Nigeria as president in 2019 is based on his ideological convictions to help the nation out of economic doldrums, insecurity and social disharmony. Excerpts: We understand that your party was among those that went to court to stop President Muhammadu Buhari from giving his assent to the Electoral Act Amendment Bill. What motivated you to do that? hat motivated us was patriotism because we don’t want this democracy to be truncated. You have to see that this bill should not be signed now. We are not saying that this bill should not be signed but at this juncture that we are already 50% to our electoral process; it will be counterproductive, especially with some provisions like 87, 84 and 52. If you look at them one is saying that we must transmit our election results by electronic means. How will you electronically transmit from rural areas at this time? Where will you get those equipment quickly now in one month? Who will manufacture the equipment for us and how do we train the INEC staff? For me I saw a foul play somewhere around it. This bill will affect our democratic process. I am a Presidential candidate and I know what electronic transmission of results will be and I know that my people are not aware of it and I am suspecting foul play. How can you amend the electoral law two months to election, do you want to put the country into chaos? It is a wrong time, it should be signed but not before 2019 election. We have two months to election and we are campaigning and you are saying that there must be a new rule. We should not be sentimental, I am not supporting anybody, but this is distraction. Some people have suggested that if the bill is not signed into law, it will give room for the President and the ruling All Progressives Congress (APC) to manipulate the process to their favour. What is your reaction to this? It is a wrong timing, two months to election, how do you get the equipment? INEC will tell you that they don’t have budget for it and it has become law. So what will you do? We are always sentimental in our judgment. If it becomes law, you must implement it and INEC will tell you that they have no budget or say they have no equipment for it. Are we going to wait for that equipment? I think we are trying to drag the country back. But INEC has said severally that they have the capacity to do electronic transmission of results… They don’t have any capacity to do that. So who gave them the money to buy the equipment, where are the equipment? Let them showcase it. Nigeria is said to be the world capital of extreme poverty with 87 million of our citizens living in

Shittu

extreme poverty. If you become president, what exactly will you do to revive the Nigerian economy? We must go back to our culture and marry our culture with our economy. What do I mean by this? We are an agrarian society and we have to elevate this agrarian society into productive and industrial society. Until we are able to integrate our agrarian society into industrial hub we cannot get it right. Therefore, as a party we will move back to rural agriculture and be able to promote our products. But we cannot go into manufacturing or processing until we have power. So we have to marry power and industrialization. Now instead of generating power and put in the national grid we must decentralize our generation and transmitting capability by allowing investors to come in. Even our people on their own can generate, transmit and then distribute power within their own factory and you can even have what is called processing centers, where you can generate power by yourself either by solar or hydro, thermal or wind. This was what the Chinese did. China took capitalism; they took socialism from Russia and married it to their own community. Then we must stop importation of whatever we have in this country. We must meet World Trade Organisation and re-negotiate whatever agreement that is inimical to our own economic development and then close our borders on some goods and also ban exportation of raw materials from Nigerian until it is processed. This is because it is when you process these materials that you create employment. You just don’t take for example soya beans from the farm

and just export it. If you do it that way there is no value chain. What we should do is to grow, process and package it. During processing you have employed many Nigerians, during packaging you have employed Nigerians, in transportation you have employed Nigerians and then you export it to get foreign currency. It is because there is no value chain in our products that is why we are having the unemployment today. Even the crude oil that we have we just export crude oil. We are supposed to refine it and even sell to our neigbouring countries. What kind of education will work for Nigeria at this critical time? We must concentrate more on vocational education, where we bring out technicians to be able to work out these processing centers. We must invest in technical education and skill up Nigerians. How much of the National budget will you commit to the education sector if you become president of the country? When you are talking of vocational education, technical colleges, the mistake we make in this country is to allocate amounts of budget into the sectors without aggregating what we want to do in that sector first. This is what I want to do because if you create value chain people would need the skilled workers. So for us you don’t just waste money because you want to build class you will have to aggregate what the sector wants. Despite the huge amount of money committed to curbing insecurity the problem persists. Recently Nigeria has been rated the third most terrorized country in the world. Apart from the terrorism of

the Boko Haram we also have growing criminal activities ravaging the country. So, what exactly will you do to secure the Nigeria? First of all, we must take the welfare of the military seriously. Their package must be well spelt out in a manner that it goes to them directly. Secondly, we must provide employment opportunity for the teaming youth in order to curb insecurity. There is no amount of money you pump into insecurity that will work if you don’t create employment opportunity for people to curb the menace. So, until you take people out of the streets, and they are engaged in factories, there will continue to be insecurity because as you are finishing one you enter another because that is the only means for them to have livelihood. But if you create these vocational centers, you create these value chains people will realize their legitimate objectives. Let’s assume that Danladi is producing tomatoes in Talata Mafara and you have a processing center where he can process his tomatoes and in one year Danladi was able to realize substantial amount of money and build his own house and marry a wife, you think that the next young man will not do the same? But in a situation that Danladi cannot even produce anything, and he has to fend for himself, the next thing he will be thinking is what to do and what an idle mind does is thinking evil. That is how insecurity occurs. But if we engage the young ones, the situation will not be as bad. The Boko Haram insurgency is not just about tackling unemployment because it is deep in ideology rooted in beliefs. So there is already an ideologically driven war against the Nigerian state. So, how are you going to tackle the issue? We have economic ideology and religious ideology. This insurgency occurs because the government has not provided the economic ideology to them and they have to develop their own ideology and whatever they call that ideology they use it to perpetrate criminality. That is why as a government, you have to impose your own economic ideology which will kill that fundamentalist ideology that they have but you have to be proactive. It is not enough for instance to give them vocational training and skill but where will they work after they have received training? Ideology is built by government and propagated by the citizens and each generation put themselves into different ideology that they encounter as they go on. Human mind is dynamic; it changes according to its own environment. We are the ones providing room for them

to build that terrorist ideology. If you go back to the root of how Boko Haram started, it did not just start as a violent organization but when that did not work for them they ran into the bush and built a new ideology for themselves that had become a menace to the Nigerian society. Therefore, it is government that drives ideology and as government they should drive the ideology that will take them away from such fundamentalist ideology. The President Buhari government says it is fighting corruption but it appears increasingly difficult to tame corruption in Nigeria. If you become President, how will you tackle corruption and how will you rate the fight against corruption of the current government? You must provide security of life for Nigerians. As a public servant when you are retiring back to your village and you have no house to stay, your pension may not even be paid for three or five years, how will that person want to leave office without getting something for himself? That is why we cannot kill corruption until we do the right thing. For instance if a police officer is injured or is killed in active service and you take token money and give to the family and forget them, how will they cope with the demand of sending their children to school? In a nutshell the government should provide incentive that will give people confidence and security so that they will feel that after retirement they can be okay, so why will they steal? Secondly we must also reorientate the mind of the Nigerians to believe in their country Nigeria, to believe that they have no other country than Nigeria and that if you stack money abroad you are only wasting your time because you may not even be able to get this money back to yourself. What is your take on restructuring? We are talking of economic restructuring which I have just laid down to you indirectly. We can say that each state should bring up a crop that they have comparative advantage in, develop it and we go into the Concurrent and Exclusive list and look at issues like the rail and allow states or individual to build rail within their economic zones. You can even do it from state to state. That is where I talk about decentralization of power generation. We should allow state to take care of some of these federal roads so that state to state will be linking their road and their rail line and link their water ways. The economy will start booming. This is the kind of restructuring that we are talking about.

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How we took control of Imo House of Assembly - AA National Chairman

head of the 2019 elections, the national chairman of the Action Alliance (AA) Kenneth Udeze, has disclosed the high wired political intrigues that enabled the party to take control of the Imo State House of Assembly following the defection of 19 members of the Assembly from the All Progressives Congress (APC) and 3 members of the People’s Democratic Party (PDP) to AA. The recent defections by the Imo lawmakers was largely seen as a protest by the members following the denial of the APC governorship ticket to Uche Nwosu, the son-in-law to Imo State Governor, Rochas Okorocha. Nwosu had also defected to AA and was given the ticket to contest the election under the party’s platform. There was confusion as to how the lawmakers, who defected, could stand for elections especially judging from the fact that the time frame for substitution of candidates set by INEC had elapsed before the defections. Reacting to this development in phone chat with BusinessDay at the weekend, Udeze said that in the game of politics there is a lot of underground activities that people don’t see but at the end of the day when the results start manifesting they will start wondering.

Udeze

The AA chair said that it took months of intensive political negotiation and permutation to make sure that the lawmakers all defect to Action Alliance considering the fact that this present APC government is doing everything possible to make sure they de-register opposition political parties after the 2019 general election particularly on the clause that the parties that cannot provide at least one member in a house assembly in any part of the country will be deregistered. “So politicians like us felt that there is the need to protect the life of the party. It took me time to move into Imo and other states to make sure that we get some state House of Assembly and National Assembly members so that we can escape from the hammer of INEC that is waiting

on some political parties. “So in Imo, what we did was to make sure that we fielded candidates who are very loyal to the party and willing to give us their letters of withdrawal when we happen to get those who have the capacity and the financial muscle and the good will of the people to win election. “And when it got to the last day for the substitution of candidates we made sure we got letters of withdrawal and substituted them with the serving members of the House of Assembly in Imo. So as I speak to you their names are already in INEC as our candidates for the elections. The only place where we did not touch was the Okigwe state constituency, where one of your colleagues, a journalist, Adaora Onyechere, is contesting.

2019: Group tasks presidential candidates on appointment of professionals, youths KEHINDE AKINTOLA, Abuja

oalition of United Movement for Better Nigeria (CUMBN) has called on Nigerians aspiring for the office of President in the forthcoming general elections, to allocate 60 percent of cabinet and other appointments for youths and professionals. The Group gave the charge during a world press conference on ‘10-point Citizen’s demand’ from Presidential candidates of leading political parties in 2019 election held in Abuja. Arome Salifu, co-convener of CUMBN explained that the coalition consists of over 2,000 groups made up of professionals, youths, women, religious, political and cultural organizations, which has over 20 million membership spread across the country. “Our objective for coming together is to organize as citizens to engage the political class in Nigeria to demand for meaningful and significant improvement in the living conditions of Nigerians in several but key sectors through purposeful and strategic po-

Don’t compromise professionalism during elections, media practitioners urged SIKIRAT SHEHU, Ilorin

Innocent Odoh, Abuja

litical leadership from our President come 2019. “After due consultation with a teeming members across the country, the following 10 point demands have been put forward as the strong conditionality upon which we shall mobilize our members and followers to support and vote for any of the presidential candidates,” he said. These include: concession of 60% of administration’s cabinet and political appointments to young people and professionals, starting from the formation of political campaign structure; establishment of ultra-modern, state of the art skill acquisition centres in the 774 local government areas across the country; 10% budgetary allocation in every fiscal year to poverty alleviation and fight unemployment and provision of stable, reliable and affordable electricity in the bid to fast-track industrial development, economic expansion and improved living conditions of Nigerians. Others include; provision of universal healthcare delivery services to all Nigerians by ensuring availability of infrastructure in all the wards in Nigeria in consistence with SDGs targets; upgrading of all educational

institutions: primary, secondary and tertiary to international standards by ensuring conducive teaching and learning environment for all students; ensuring fiscal and political restructuring in consistent with the principle of true political and fiscal federalism as well as build world class infrastructure that would make Nigeria competitive and attractive to both local and foreigners alike and helping to complement physical, economic and social development based on well-developed master-plan. The coalition also stressed the need for provision of safety and security for all Nigerians and total end to Boko Haram insurgency in the North-East and initiate and implement policy framework that will prohibit public office holders and their family members from seeking foreign medical treatment and educational services outside Nigeria. In their remarks, Iko Yabo, coconvener and his counterpart, a former Anambra State governorship aspirant who expressed displeasure over the high level of brain drain in the country, called for deliberate action towards taking over 90 percent of Nigerians who live below poverty line.

Wednesday 19 December 2018

head of 2019 general elections, media practitioners have been charged to strictly uphold professionalism in the discharge of their responsibilities. Femi Mapaderun, a veteran journalist, gave this charge at oneday seminar on “Journalists and Ethics Of Election Coverage and reportage” organised by National Orientation Agency (NOA) and Nigeria Union Of Journalists (NUJ), Kwara State chapter, held recently in Ilorin, the state capital. According to the guest speaker, who is also a retired Director at National Orientation Agency and a current station manager at Impact Business Radio FM Ibadan, “there is no doubt that information is an essential component of the development process and to that extent, Nigeria requires a massive dose of information which can only be put together and packaged by the media practitioners. The information must however derive from the people social and cultural values in order to generate perception and attitudes that are conducive to the nation’s efforts at development” “For the records, let it be made manifestly clear that the 2015 presidential election was won and lost on the social media. In the sense that so much information both truth and false were flying on the social media most especially against the sitting president to the extent that former president Goodluck Jonathan would need the grace of God to win that election. “And here we are again, facing similar challenges or even in worse dimension. The major contestants are posting so much information

and video clips on all social media platforms that one is at a loss as to what to believe. It is that bad, sad to say that our conventional media practitioners are being dragged into this puddle. “The journalist of my own era, who understudied the likes of Segun Osoba, Areoye Oyebola, Festus Adenaike, Chris Okolie, Sam Amuka did not have it easy as those of present era, but the dictum was that “if you are in doubt, leave out but today the dictum is if you are in doubt, damn all consequences and use. In those days, we also ran after scoops but they were verifiable scoops and not the one that you will prefix with “alleged or allegedly.’’ “As media practitioners in this election season you must be able to differentiate between propaganda and truth because you are endowed with a potent instrument for change. You have tremendous energy for qualitative analysis through which you shall be measured by the extent to which you enhance the integration of the society,” he added. Earlier, in his welcome address, the Kwara State Director Of National Orientation Agency, Olusegun Adeyemi, cautioned journalists and general public on the menace of fake news and hate speeches which he said is assuming dangerous dimensions adding that history has it that most of the uprisings, tribal wars, religious crises and ethnic clashes in Nigeria has experienced came about as result of hate speeches and fake news which journalists and responsible citizens must guide against at every point in time. Kwara State Chairman of NUJ, Abdulwahab, said that the seminar was timely and crucial to ensure success in 2019 elections coverage by media practitioners in Nigeria.

Okowa committed to peace building across Delta communities - Otuaro Francis Sadhere, Warri

eputy Governor of Delta State, Deacon Kingsley Burutu Otuaro on Monday said the state Governor, Senator Ifeanyi Okowa, is committed to building peace across all the communities in the state. He said the State Government was unwavering in its commitment to maintaining peace towards developing all parts of the state. Otuaro, who is also Chairman of Delta State Advocacy Committee Against Vandalism of Oil and Gas Facilities, gave the assurance in Warri while addressing newsmen shortly after a tripartite meeting of the State Government, representatives of Ogulagha/Forcados communities areas and the Shell Petroleum Development Company Ltd (SPDC). The Deputy Governor, who said

the engagement, was one of periodic meetings geared towards reviewing the security situation in the area, expressed satisfaction with the outcome of the meeting. “It is a tripartite meeting for peace building among representatives of communities in Ogulagha/Forcados area, SPDC and the Delta State Government. It is normal, natural and desirable that periodically, we come together to take an overview of the security situation in the area as development can only thrive in a conducive and peaceful atmosphere,” Otuaro said. Otuaro noted that the Senator Okowa-led administration was not leaving any stone unturned in building peace across all communities in the state, adding that the relative peace achieved so far, has enhanced the infrastructural development of the state and other giant strides of Governor Ifeanyi Okowa.

Wednesday 19 December 2018

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Why Nigeria needs land reforms JOSEPH MAURICE OGU

ig e r ia’s l a n d a d ministration needs urgent reforms. The 40-year-old Land Use Act 1978, the law that generally governs the administration of land in Nigeria, from all indications, has lost its usefulness. Whatever purpose it might have served in the past, the current realities in the country have rendered it irrelevant and inoperative. Thus, rather than being a tool for boosting economic advancement, it is now a clog in the wheel of progress. The need for a land use reform in the country has become even more urgent as the country marches towards 2019. It is a year that has been touted as one for consolidating the nation’s democracy and ushering in economic prosperity. On this basis, experts say the presidential candidates should look towards land reforms as one of the ways to ensuring that whichever plan is eventually voted in, will translate into economic revival for the populace. Arguably, one of the most contentious legislations in Nigeria remains the Land Use Act. The act, originally known as the Land Use Decree 1978, was rechristened Land Use Act 1978 when it found its way into the Nigerian Constitution. The provisions of the Act are responsible in part for many of the ills that have beset our agricultural and housing sectors. The Act also has become a drag on the industrial sector in some ways because it has made land acquisition a difficult process for potential industrialists and other investors. According to Chapter 202 of the Laws of the Federation of Nigeria 1990, the Land Use Act is “an Act to vest all land compromised in the territory of each state (except land vested in the Federal government or its agencies) solely in the governor of the state, who would hold such land in trust for the people and would henceforth be responsible for allocation of land in all urban areas to individuals resident in the state and to organisations for residential, agricultural, commercial and other purposes while similar powers will with respect to non-urban areas are conferred on Local Governments (27th March 1978) Commencement.” The military government of

General Olusegun Obasanjo enacted this Act. The law effectively transferred the ownership of land from the people to the government, specifically, the governor of a state. The implication of the act is that instead of revenues and royalties including oil incomes generated from land going to the people, the benefits are expropriated by the government, its officials and their cohorts. Analysts say the Act is responsible for the dichotomy in Niger Delta area. They argue that if the land had been in the hands of the people, the revenue accruing from oil would have been in the hands of the people. This, the analysts say, would have served their interests better than the current arrangement under which they are paid 13 percent derivation. By conceding all lands to the state governors who assume ownership of lands within their states, the Act makes housing delivery in the country cumbersome. It also places impediments to process of land titling, assignment and foreclosure. With this Act, a governor’s consent is required for the acquisition of any piece of land. Analysts advise land reforms that will return the ownership of land to the people, as people are better users of the land than government. This will take care of unutilised government lands lying fallow across the country. Peter Oluyede writing in the book, Modern Nigerian Land Law, said that “if the Land Use Decree is implemented in such a way as to serve the interest of the privileged,

then our society must be prepared, in no distant future, for increased cases of armed robbery and the possible introduction of a western type of kidnapping demand for huge ransom.” As it stands, what Oluyede foretold in 1989 is already happening. The land Use Act 1978 seems to have created different problems. Some of the problems have been identified by different writers and legal practitioners. In addition, land reform will take care of some legal tussles arising from mortgage, as seen in the case between Savannah Bank of Nigeria Ltd and Ammel O. Ajilo (S.C. 188/1987). Ajilo used his house as a collateral for the money he collected from Savannah Bank. Unfortunately, Ajilo refused to service his debt with Savannah Bank arguing that the governor, as the owner of the land on which the property was built, was unaware of their transaction and therefore his business with Savannah Bank was illegal. But the Supreme Court ruled in favour of Savannah Bank citing that Ajilo had dubious intention when he transacted with the Bank. A land reform that makes the people the ownership of lands will save people from such litigation, and other prolonged title documents from the government. It has equally been pointed out that the current land Act encourages violence. Since the lands of the country legally now belong to the government, anyone could illegally occupy any piece of land to commit evil while claiming he is occupying

government land. An example of the above is the Fulani herdsmen, who are known to have made such claims. “Whenever Fulani herdsmen take their cows to destroy people’s farms in any part of the country, one of the things they claim is that the land belongs to the government and they have rights to graze their cows in government lands”, says Nelson Oka, a Lagos-based security expert. This explains why Fulani herdsmen have not accepted in reality that they erred in occupying other people’s lands. The implication of this is that, inasmuch as the Constitution gives ownership of the land to government, and there are people who could reason like the Fulani herdsmen, the security of lives and property will continue to be compromised. The insecurity in the land caused by the herdsmen leads to food insecurity in the country. A land reform that guarantees the security of peasant farmers in any part of the country will equally guarantee security of food for Nigerians. On the issues of Certificate of Occupancy (CofO), experts say the present complex administrative charges and procedures, undue delays in the issuance of CofO should be reduced to the minimum in order to guarantee security of lands to their owners, especially to the rural dwellers and the poor. The implication of this, in simple terms, bothers majorly on ownership rights. Anyone who acquires a land without a CofO cannot claim ownership of such land, but simply holds it on a lease. Such property could be seized by the government without any form of compensation because one does not technically have a freehold of such property. The power to seize such property rests within the Land Use Act. Peter Adeniyi, a professor and chairman, Presidential Technical Committee on Land Reform (PTCLR), believes that the Systematic Land Titling and Registration (SLTR) would make land administration in Nigeria more productive. “Someone with a well-titled land can easily get a loan from the bank to develop the land or to even buy shares. Without such titling you cannot go for any mortgage,” Adeniyi said. He noted that farmers in particular are at disadvantage completely because they don’t have the resources and they can

only get the resources required by using their land. “But if they have title, that will enable them to take loan from the bank and expand their productions,’’ Adeniyi said. Investors are also caught in the web. Whether local or foreign, investors who wish to invest in the country will equally prefer to buy lands with the proper government documents. Buying lands without such documents may end up in litigation which could drag for up to 10 years, thereby frustrating investment and potential economic prosperity of the area. Adeniyi decries the process of getting CofO as not only cumbersome, but also expensive and centralised at the state capitals. This makes it too expensive and worrisome for people to acquire CofO, especially for the people who live in the countryside. Majority of land owners who desire to acquire the certificate either go through a lawyer or estate surveyor, which increases the price because of their service charges. According to Adeniyi, SLTR would take care of the shortcomings of acquiring CofO as it is being done at the moment, since SLTR is technologically based. For speedy development to take place, especially in the real estate sector, experts have suggested the Act be reviewed or thrown out of the Constitution. Efforts by Umaru Yar’Adua and Goodluck Jonathan administrations’ attempts to amend the Act were not successful, mainly because of the constitutional requirement for such amendment. Some state governors have made efforts in their domain to adjust the local administration of the lands to suit their people. These include: Akinwunmi Ambode of Lagos, Oluwarotimi Akeredolu of Ondo, Godwin Obaseki of Edo. These governors could have good intentions, but if the Land Use Act 1978 is not reviewed, their efforts will still be revolving around the Act. In its ‘Doing Business 2019’ report, World Bank ranks Nigeria 184th on the ease of registering property, out of the 190 countries it considered. This is alarming and could easily scare away potential investors from the country. To get this broken part fixed, the next administration should look into the Land Use Act 1978 and fix its broken parts to pave way for the Nigeria’s economic prosperity.

comes from. He also promised that in addition to creating an enabling environment for businesses to thrive, his administration would create jobs for the teeming unemployed youths in the zone. Other leaders on the entourage also took turns to assure the people of a brighter future in an Atiku/ Obi administration, urging them to

make a wise choice in their voting next year. The rally in Gombe was the 4th zonal rally the PDP presidential candidate has convened since the lift of the ban on presidential campaigns. He had previously launched Zonal engagements in Northwest (Sokoto), North central (Kwara) and Southwest (Ibadan).

Atiku in North East Zonal rally pledges security, job creation

n continuation of his zonal rallies ahead of the February 16 presidential election, the Presidential Candidate of the People’s Democratic Party (PDP), Atiku Abubakar, his running mate, Peter Obi, leadership of the party and members of the presidential campaign team, were yesterday in Gombe, capital of Gombe State, for

the Northeast Zonal Rally. The PDP team pledged to return the country to a working nation where citizens would no longer pine away in hunger and abject poverty. Noting that the Northeast has been a hotbed for the Islamist sect, Boko Haram insurgency, that has led thousands of people dead since 2014, the Presidential candidate

pledged to end the nightmare if voted into power next year. He promised to give priority attention to security in the zone to enable the people go back to their means of livelihood in order to fulfil their Godgiven destiny. He lamented the massive destruction suffered by the region, which happens to be the region where he

BUSINESS DAY

Opinion

FRANKLIN NNAEMEKA NGWU (PHD)

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t a recent World Economic Forum (WEF), workshop on â&#x20AC;&#x2DC;Shaping Inclusive Growth in the Fourth Industrial Revolution in Africaâ&#x20AC;&#x2122; held in Johannesburg- South Africa, Nigeria expectedly received good attention as the so called â&#x20AC;&#x2DC;giant of Africaâ&#x20AC;&#x2122; or the biggest economy in Africaâ&#x20AC;&#x2122;. As many top economies are now in the fourth industrial revolution, a critical question that left all the participants worried is what stage of industrialization is Nigeria: first, second, third or fourth industrial revolution? After a critical analysis of our industrialization state and manufacturing capacity, there was a lamentable agreement that Nigeria does not seem to have achieved the first industrial revolution before we talk of the second, third and fourth. Just to clarify, first industrial revolution is a stage of industrialization with a focus on the production of primary and agricultural products using mainly labor intensive industries. The question then is how is the gi-

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NEWS YOU CAN TRUST I WEDNESDAY 19 DECEMBER 2018

Nigeria: First or fourth industrial revolution ant of Africa planning to properly start the first industrial revolution. A further question is when will the giant of Africa move from first to second, third and fourth industrial revolution where the developed economies are. The trajectory of Nigeriaâ&#x20AC;&#x2122;s version of industrialization started with import substitution industrialization (ISI) of 1960s, 1970s and early 1980â&#x20AC;&#x2122;s. With the seeming failure of ISI and the emergence of Gen. Babangidaâ&#x20AC;&#x2122;s administration which led to the adoption of Structural Adjustment Programme (SAP) and associated market reforms, the pursuit of ISI was jettisoned. As part of the SAP package, an industrial approach generally referred to as Export Oriented Industrialization (EOI) was adopted. As SAP is generally accepted to have failed, all associated reforms of that periods can be said to have suffered similar fate. Nigeriaâ&#x20AC;&#x2122;s industrialization really never took off and oil has remained the only major export product even till today. With the manufacturing sector contributing just about 9% of the GDP in 2017, unemployment currently above 20% and over 88 million (about half of the population) classified as extremely poor, access to credit unavailable to over 80% of small and medium scale enterprises (SMEs) and interest rate above 20%, there is no better time to rethink and properly jumpstart our first industrial revolution than now. If not, our precarious and lamentable social and security challenges will aggravate; the little

agricultural output will decrease due to herdsmen/farmer crisis and oil production and export cannot be guaranteed. Given our worrisome situation, it was expected that a well detailed industrialization strategy should be contained in both PMB and Atikuâ&#x20AC;&#x2122;s 2019 campaign plans. But alas, reading through their plans, there is limited appreciation of the enormity of our problems particularly the need for urgent and effective first industrial revolution. While industrialization/ manufacturing is listed as one of the key areas in their plans, there is no clear detailed explanation on the identification, calibration, synergy of the industrialization process that will move Nigeria from the first to second, third and fourth industrialization stage. In Atikuâ&#x20AC;&#x2122;s plan, there is a promise to increase manufacturing output from 9% to 30% of the GDP by 2025, â&#x20AC;&#x2DC;local contentâ&#x20AC;&#x2122; usage with diversified production structure will be pursued and supported. In addition key professional bodies such as Manufacturers Association of Nigeria (MAN), chambers of commerce and other critical stakeholders will be consulted prior to formulation of investment policies. Through collaboration with all the relevant stakeholders, cost of borrowing might be reduced and incidences of multiple taxation tackled. Duties levied on imported raw materials available in Nigeria and machinery for local production will be reviewed and buy-made in Nigeria products

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The proposed six regional industrial parks and 109 special production and processing centers (SPPCs) raise more questions than answers. Where will they be located and what products or services will they produce and provide. Will they be owned by the federal government or in partnership with the regional state governments?

vigorously supported. The problem with Atikuâ&#x20AC;&#x2122;s industrialization plan is that it comes across as unprepared. For instance, consultations with the key stakeholders should have been done and feedbacks received used in crafting a detailed and convincing industrialization strategy. This is not the time to consult, it is the time to state the outcomes from various consultations. The plan should clearly state the sectors that will be focused on in the first, second, third and fourth year of

Atikuâ&#x20AC;&#x2122;s possible government and how the sequence will help start proper first industrial revolution of Nigeria and the possible transition to the second, third, fourth industrial revolution in 5- 15 years. It should contain a clear evidence of proper assessment of the different regions of Nigeria and their respective comparative advantages to know the sub-sector(s) that each region should focus on. In PMB Next level plan, 6 regional industrial parks and special economic zones will be built in addition to 109 special production and processing centers (SPPCs). While President Buhariâ&#x20AC;&#x2122;s government seems to appreciate the need for Nigeriaâ&#x20AC;&#x2122;s industrialization, a critical assessment of the current policies and outcomes show that neither are the policies and outcomes convincing and encouraging nor the urgency for action visible. Even though that industrialization of the country is one of the focus areas of the current Economic Recovery and Growth Plan (ERGP), I am concerned that neither will the ERPG work nor its industrialization component. A key challenge of the ERPG which is also very evident in most of the government policies is the narrowness of thinking and plans. It seems to grossly underestimate the complexity and plurality of the country and as such belittles the enormity of the problems. Reading the ERGP reminds me of reading a 5 year strategic plan of a

firm in Nigeria developed by consultants based in London or New York. Not sure if it is intentional, but ignoring or avoiding our institutional or cultural peculiarities will only help us in addressing the symptoms of our problems not the root causes. The proposed six regional industrial parks and 109 special production and processing centers (SPPCs) raise more questions than answers. Where will they be located and what products or services will they produce and provide. Will they be owned by the federal government or in partnership with the regional state governments? How do the six regional industrial parks and 109 SPPCs fit in with our urgent need to properly start our first industrial revolution? How do you create the appropriate synergy and sense of ownership in a situation where different political parties govern the concerned regional states? Is proposal for the six regional industrial parks a sudden and subtle acceptance for restructuring the country which the APC government seems to officially reject? To achieve a rapid industrialization starting with the first industrial revolution (production of basic goods and agricultural products), there is a need to first do a deep critical review and mapping of our areas of product and service comparative advantages and then what needs to be done to actualize the potentials and benefits of those areas of comparative advantages.

Bear stock market: Any breather from Santa Claus? UCHE UWALEKE Uche Â Uwaleke Â of Â Nasarawa Â State Â 8QLYHUVLW\ .HIÂż LV 1LJHULDÂśV ÂżUVW Professor Â of Â Capital Â Market Â and Â the Â President Â of Â the Â Association Â of Â Capital Â Market Â Academics Â of Â 1LJHULD

ith the stock market in the bear territory, down by over 20 per cent from its highest peak in January this year, will Santa Claus provide any breather for traders and investors this festive season? That is the question on the lips of many a trader but of course the answer will be known in a few daysâ&#x20AC;&#x2122; time. To be sure, in many parts of the world, the last month of the year has been associated with stock market upward momentum that occurs in the last week of December right through the first two trading days in January of the following year. In the United States for instance, historical data supports the likelihood of a stock-market rally in the closing days of a calendar year and the first few trading days of a new year. As evidence, a report in â&#x20AC;&#x2DC;Seeking Alphaâ&#x20AC;&#x2122; citing the â&#x20AC;&#x2DC;Stock Traders Almanacâ&#x20AC;&#x2122; had noted that since 1969, the US stock market has yielded positive returns in 34 out of 45 Christmas holiday seasons adding that the aver-

age cumulative return over the last five trading days of the year and the first two trading days after the new year was 1.4 per cent with positive returns in each of the seven days of the rally on average. A number of studies have attributed this seasonal phenomenon popularly referred to as Santa Claus rally (or Santa Claus effect first recorded by Yale Hirsch in his Stock Traders Almanac in 1972) to several factors including a general feeling of optimism during the Christmas period, employees investing their Christmas bonuses, fund managers â&#x20AC;&#x153;window dressingâ&#x20AC;? their holdings for a better appearance as well as additional trades which, for tax purposes, have to be concluded by the end of the year. Further, there is some research that point to investors taking positions in the stock market before the end of the year in anticipation of a rise in stock prices during the month of January in what is known in literature as the â&#x20AC;&#x2DC;January effectâ&#x20AC;&#x2122;. In the final analysis, stock market rallies are the products of the collective psychology of market participants. In Nigeria, the evidence of Santa Claus rally is not so strong not least because some attempts to investigate the Santa Claus effect have focused o n t h e w ro n g p rox i e s e m ploying returns for the entire month of December following the erroneous assumption that the Santa Claus effect is same as the December effect. For example, Investdata Research

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In Nigeria, the evidence of Santa Claus rally is not so strong not least because some attempts to investigate the Santa Claus effect have focused on the wrong proxies employing returns for the entire month of December following the erroneous assumption that the Santa Claus effect is same as the December effect

had observed that â&#x20AC;&#x2DC;â&#x20AC;&#x2122;over the last two decades, the month of December on the NSE has closed in green 13 years since 1998 and red for six times making the month a reasonably predictable one for traders and investors to play their cards positively while investing for short-term returns with composite NSE All-Share index averaging 2.56% within the periodâ&#x20AC;&#x2122;â&#x20AC;&#x2122;. Similarly, United Capital Research had noted that â&#x20AC;&#x2DC;â&#x20AC;&#x2122; in the past 21 years, the market has only seen four negative monthly returns in December (specifically in 2001, 2005,

2008, 2009) - the lowest of any other month. Thus, the probability that there would be a December rally is a whopping 81 percentâ&#x20AC;&#x2122;â&#x20AC;&#x2122;. On the strength of these findings, it seems safe to conclude that it is highly probable that the market will witness a rally this Christmas season. But as pointed out earlier, any outcome that is based on the use of monthly returns for detecting Santa Claus effect is bound to be spurious. To see why the evidence is weak, the pattern of market behaviour in the last couple of years provides a clue. A Santa Claus rally in the real sense is expected to linger into the first week of a new year but this has not been the case. In the last week of December 2015 for instance, while the NSE All-Share Index appreciated by 6.59 per cent to close the week on December 31 at 28,642.25, it was down by -5.63 per cent during the first trading week that ended on Friday Jan 8 2016. Similarly, according to the NSE Stock market reports for December 30 2016 and January 6 2017, the benchmark Index went up by 1.47 per cent to close the week on December 30 2016 at 26,874.62 but quickly reversed this gain in the first trading week of 2017 dropping by 2.32 per cent to close the week at 26,251.39. A different scenario played out in the last trading days in 2017. In the week ended December 29 2017, the benchmark Index was down by 0.72 per cent but appreciated by 1.78 per cent in the first week in January 2018

to close at 38,923.26. These mixed outcomes clearly point to the fact that Santa Claus rally in the Niger ian stock market is far from a sure bet. Unlike in 2017 when the Nigerian Stock market posted 42.3 per cent returns and was adjudged the third best performing stock market in the world after Argentina (73 per cent) and Turkey (43 per cent), this yearâ&#x20AC;&#x2122;s performance has been full of red ink. The haemorrhage in the stock market has continued into the month of December. According to the Nigerian Stock Exchange Stock market report for the week ended 14th December 2018, â&#x20AC;&#x2DC;â&#x20AC;&#x2122;The NSEâ&#x20AC;&#x2122;s All-Share Index depreciated by 0.63% while Market Capitalization depreciated by 0.58% to close the week at 30,672.79 and N11.204 trillion respectivelyâ&#x20AC;&#x2122;â&#x20AC;&#x2122;. Worst hit have been the NSE 30 Index which tracks the top 30 companies in terms of market capitalization and liquidity, NSE Consumer Goods Index and NSE Industrial Goods Index which have all underperformed the market with Year-to-Date returns of -20.83 per cent, -26.33 per cent and -37.81 per cent respectively. Market consensus has put the blame on political risk in Nigeria as well as interest rate normalization in the United States of America which has led to the exit of many foreign investors. These near-term risks will continue to dampen investorsâ&#x20AC;&#x2122; sentiments and depress animal spirits well into the new year. As it is, there is little upside because no spark

can be seen in the horizon for any rally this festive season. It is doubtful if the presentation of the 2019 budget proposal by the President will excite the market. Just like this year, 2014 was also a penultimate election year that was largely bearish with negative Year-to-Date return recorded at 16.14 per cent. In spite of the political risk at the time, the market rallied in the last week of December appreciating by 0.66 to close the week that ended in the green on Wednesday 31st December at 34,657.15. There is no guarantee the market will follow a similar path this time around. At best, any rally in the last week of December this year is likely to reverse in the first week of January 2019 if recent experience is anything to go by. In a market largely influenced by foreign investors, monetary policy stance in the US, oil price volatility and political uncertainty in Nigeria remain a major road block on the path of Santa Claus this year. The good news, however, is that the bear market is at variance with market fundamentals and so a correction is bound to happen as soon as the political risk peters out. While a breather may not come from Santa Claus this season, investors should find solace in the fact that many stocks across sectors are currently priced below their intrinsic values which offers a good e n t r y -p o i n t a h e a d o f n e x t yearâ&#x20AC;&#x2122;s general elections.

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