BusinessDay 19 Dec 2019 by BusinessDay

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news you can trust I ** thursDAY 19 DECEMBER 2019 I vol. 19, no 460

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FG to suspend absconding N-Power volunteers after BusinessDay investigative report FRANK ELEANYA

he Federal Government, through the National Social Investment Office (NSIO), has said it would suspend volunteers found to have absconded from their duty post in the states where they were posted. The development is coming after a BusinessDay investigative report uncovered the rot in the N-Power programme, a social investment programme pioneered by the President Muhammadu Buhari administration to tackle poverty and improve the health and education of children and other vulnerable groups. In an undercover report which investigated schools in seven local government areas in Sokoto State, BusinessDay found that volunteers the N-Power Teach, arguably the most popular of the four categories of the National Social Investment Programme (NSIP) initiative, were colluding with the heads of the various schools where they were assigned to cheat the system. Some of the school heads were found to collect money from the volunteers to allow them to skip classes, thereby leaving the Continues on page 42

Inside

SAA: Senate absolves OMSL of fraud, irregularities P. 2

L-R: Ahmed Ibrahim Yakasai, former president, Pharmaceutical Society of Nigeria; Bukky George, founder & CEO, HealthPlus Limited; Julius Adelusi-Adeluyi, founder & chairman, JULI Pharmacy plc, and Jimi Agbaje, founder, JAYKAY Pharmaceutical and Chemical Company Limited, at the 20th anniversary ceremony of HealthPlus Limited.

PFAs miss offshore gains over presidential assent, forex restriction As pension contributors face low retirement benefits

Modestus Anaesoronye

ension Fund Administrators (PFAs) in Nigeria are missing out on the opportunity to earn stronger returns on investment in permissible foreign assets as a result of two government policies that are

hampering investment. The policy requiring PFAs to get presidential assent before they can invest a certain percentage of pension fund assets offshore as well as the Central Bank of Nigeria’s restriction of access to foreign exchange for PFAs who need it to enable investment offshore, experts say, are having

negative impact on long-term growth of pension fund assets. The implication is that employees and retirees under the Contributory Pension Scheme (CPS) are not able to earn impressive returns on investment (ROI) on their pensions funds, whereas opportunities for higher ROI abound in the permissible

offshore assets. A further implication is that the employees retire with very little funds in their Retirement Savings Account (RSA), which also has adverse impact on their welfare at old age. The objective of the ContribuContinues on page 42

Thursday 19 December 2019

BUSINESS DAY

news SAA: Senate absolves OMSL of fraud, irregularities ... says activities legal and patriotic

he Senate yesterday absolved Ocean Marine Solutions Limited, a foremost maritime logistics and security company, of any infractions, fraud or criminal activities whatosever in its operations in the nation’s maritime security and handling of the Secure Anchorage Area (SAA). This followed deliberations and adoption of the report of the Senate Joint Committees on Maritime, Navy and Finance, chaired by George Thompson Sekibo (Rivers East), who laid the report before the Senate. The Senate said rather than being vilified, “Ocean Marine Solutions Limited should be commended for its genuine national interests in investing over four hundred million dollars ($400,000,000) into the security at the Secure Anchorage Area (SAA) in particular and the Nigerian waterways in general by providing the needed platforms and logistics to the Nigerian Navy to effectively perform

24/7/365 patrol operations as well as to provide the required protection for vessels waiting to berth at the Lagos ports”. It said “since no fraud is found in the operations of OMSL and is operating at no cost to government, OMSL should be allowed to continue its operation at SAA”. Other recommendations include proper funding of the Nigerian Navy to enable it carry out its constitutional responsibilities without over depending on Private Maritime Logistics Support Companies (PMLSC). It also commended the Nigerian Navy, the Nigerian Ports Authority and NIMASA for initiating and implementing a process that led to the provision of enhanced and advanced maritime security in the Secure Anchorage Area (SAA) in the Lagos waters in 2013 that has led in checkmating the high rate of attacks on vessels waiting to berth at the Lagos ports. The joint committee was

gainst the backdrop of federal lawmakers’ move to approve a $29.96bn concessionary loan request for which President Muhammadu Buhari had failed to secure the approval of the 8th National Assembly three years ago, the country’s economy managers have been cautioned against excessive borrowing. Senate President Ahmad Lawan had announced at a news conference on Monday that the Senate would approve the loan request. ButAtikuAbubakar,aformer vicepresident,criticisedNigeria’s risingexternaldebtprofileunder President Buhari and warned such borrowings could cost the future of the country. Nigeria recently became both the global capital for extreme poverty and out-ofschool children. Atiku said rather than continued borrowing, the Federal Government should unbundle loss-making Nigerian National Petroleum Corporation (NNPC) and improve the country’s chances of attracting Foreign Direct Investment by respecting the rule of law and institutional independence. This, he said, was a better option to trading the future of the country through costly and poorly managed debts. Atiku, in a piece entitled ‘Endless Borrowing Will Lead to Endless Sorrowing’, argued that “rather than turn in regular losses (which it has consistently been doing), the best

Yuletide rush squeezed as persistent Apapa gridlock drives up container haulage cost

Continues on page 42 AMAKA ANAGOR-EWUZIE

As Buhari’s $29.96bn loan request progresses, here’s a word of caution SEGUN ADAMS

L-R: Fortune Idu, managing director/chairman, Nigeria Aviation (NIGAV) Awards; Sylvester O. Egogo, business head, West and Central Africa, Arik Air; Chris Najomo, pilot, Arik Air, and Clifford Omozeghian, secretary/legal adviser, Federal Airport Authority of Nigeria (FAAN), presenting the award for the Airline of the Year 2019 to Arik Air at the 10th NIGAV Award in Lagos.

thing to do with the Nigerian National Petroleum Corporation is to reform it”. “Saudi Arabia’s ARAMCO, the most profitable company in the world, took that route and almost broke the global stock market with the most successful initial IPO in world history, bar none. Ironically, Saudi Aramco raised $29.4 billion via this IPO. Just the amount this administration wants to borrow,” he said. Atiku said Nigeria could fund its infrastructure and growth without borrowing but is missing out on that opportunity. He pointed to the success of the Nigeria Liquefied Natural Gas company (NLNG) model as the joint venture between the Nigerian government and the private sector churns in billions of profit in dollars annually. Some economists, including Ayo Teriba, the CEO of Economic Associates, have said that a country like Nigeria in the post-commodity-boom era must utilise its national assets to attract global capital, which is more available than it ever was, instead of going into more debt. “If we had taken that route, not only would we have attracted Foreign Direct Investment into Nigeria, but even better than investment, we would have attracted confidence in our economy, because it would have shown that we have a thinking leadership,” Atiku said.

•Continues online at www.businessday.ng www.businessday.ng

mporters’ efforts to take delivery of their consignments from Nigeria’s two major seaports, Apapa and Tin-Can Island, before the Christmas holiday are yielding little fruit following the return of gridlock in and out of the IjoraApapa/Wharf Road, the only access into the ports. As a result, the cost of moving cleared containerised goods from the ports has also hit the roofs. Truck owners recently doubled the transportation fare in order to mitigate effect of the man-hour lost in accessing Apapa and also departing either of the ports with laden cargo. “The port system is drifting to a halt such that not much will be achieved this festive period as a result of the unsolved traffic gridlock in and outward the ports including Tin-Can Port. Port operation is failing

daily. So, the Christmas rush is nipped in the bud due to the traffic,” Jonathan Nicol, president, Shippers Association of Lagos State, told BusinessDay in a telephone interview. This is happening four months after importers heaved a sigh of relief following the slight improvement in traffic situation around the Apapa port city, a situation that reduced the cost of moving laden containers out of seaports to importers’ warehouses both within and outside Lagos. When BusinessDay visited the port, it was discovered that there was a long queue of trucks and trailers on the port roads, thus impeding movement of vehicles in and out of Apapa. Due to the traffic situation, trucks hardly move 250 containers daily from the Apapa main port. It was also estimated that only about 200 containers exit terminals in Tin-Can Port while 150 containers exit

from Port and Terminal Multiservices Ltd (PTML). Nicol said the cost of transportation from Apapa to warehouses in places like International Trade Fair now stands at N750,000, Ikeja N850,000, and Victoria Island N650,000. Beforenow,thecostoftransporting one by 40-foot container within Lagos reduced to N300,000- N400,000, while one by 20-foot container dropped to N250,000-N230,000. He stated that containers are trapped in the port due to inaccessibility of trucks, adding that the situation makes it difficult for laden containers with Christmas goods to be cleared to meet high demand that comes with Christmas and New Year celebrations. According to him, importers arelosinganaverageof“N80billion a day” to high cost of doing business associated with payment of demurrage and storage charges to shipping companies and terminal operators.

“It has not been good for the maritime industry in recent times. The environment is not conducive for normal business. Operators are working under very stressful and abnormal conditions.Cargoismuchinthe ports today but importers cannotaccesstheircargoes,”hesaid. Nicol said the situation with evacuation of cargo from the port has deteriorated so badly that it now calls for total restructuring of the administration of government agencies responsible for building infrastructure. In addition to the persistent gridlock and high demand that comes with yuletide rush, the truckers also blamed the palliative works on the Tin-Can, Coconut and Mile 2 stretch of the Apapa-Oshodi Expressway as another reason truckers had to increase cost.

•Continues online at www.businessday.ng

Soku oil wells: Rivers eyes N50bn refund, says proceeds to boost 2020 budget …as Wike, Amaechi camps claim credit for victory IGNATIUS CHUKWU, Port Harcourt

he Rivers State government may be expecting as much as N50 billion as windfall from the Soku oil field which it has just won back from Bayelsa State. The government hopes that the proceeds from the field, including the accrued refunds over the years, would bolster its revenue projections for 2020. Justice Inyang Ekwo of the Federal High Court in Abuja on Monday ruled that the disputed Soku Oil Wells/Fields

located in Akuku-Toru Local Government Area belong to Rivers rather than Bayelsa State. The judge said the court reached this conclusion after examining all the documents from relevant government agencies and facts before the court. “Yesterday, we won back the Soku field, which was illegally ceded to Bayelsa State by the Federal Government and the proceeds from this field, including the accrued refunds over the years, will additionally bolster our revenue projections for 2020,” Wike said while presenting

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the state’s 2020 budget on Tuesday. The state government projected an income of N530bn in the 2020 budget, an increase of N50bn from N480bn in 2019. Sources said Rivers State may be expecting a refund of N50bn given that the amount in the escrow account from 1999 to 2004 was N7bn and from 2005 to 2014 was N17bn, totalling N24bn. They now expect it to have yielded another N26bn, making a total of about N50bn. “From July 2004, the Revenue Commission officially @Businessdayng

attributed the Oluasiri (Soku) Oil well to Bayelsa State and the amount of N7,292,218,892 was subsequently released from the ESCROW account to Bayelsa State on 19th March 2007 during the administration of President Olusegun Obasanjo,” according to a 2014 statement from Bayelsa State. In the meantime, camps of the two bitterest rivals in the state, Wike and Chibuike Rotimi Amaechi, have continued to claim credit for each leader for the victory over Soku oil wells.

•Continues online at www.businessday.ng

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Thursday 19 December 2019

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2019 budget: We’ve released N1.2trn for capital expenditure - finance minister ... rehabilitation of Port Harcourt Refinery begins Jan. 2020 - Sylva Tony Ailemhen inister of Finance, Budget and National Planning, Zainab Ahmed, Wednesday said N1.2 trillion had been released so far for capital expenditure out of the N2 trillion budget for the 2019 fiscal year. This, the minister said, represents a 50 percent performance of the capital budget. Zainab said this while speaking with State House correspondent alongside the ministers of state petroleum, Timipre Sylva; transportation, Rotimi Ameachi, and information and culture, Lai Mohammed, after the weekly Federal Executive Council (FEC)

meeting presided by President Muhammadu Buhari at the Presidential Villa, Abuja. She also disclosed that the revenue performance in the third quarter 2019 was N4.25 trillion, adding that it represented a performance of 81 percent. According to Zainab, the GDP growth that we planned for 2019 was 3.5 percent and the third quarter GDP performance was reported as 2.28 percent. ”So far, as at last week, we have released up to N1.2 trillion in capital expenditure and that is a 50 percent performance of the capital for the whole year 2019. ”Now that Mr. President has assented to the 2020 budget

which is a major achievement for this government, it is clear that the 2019 budget is also a six month budget. ”So, we have achieved a 50 percent performance of the 2019 budget,” the minister said. The minister said, “We have also been able to pass through the National Assembly and the National Assembly has passed the Finance Bill of 2019.” She said the bill would be conveyed to Mr President for his assent today (Thursday). On expenditure, she said the ministry had been able to release all that was required for personnel, saying, “Personnel expenditure is on course, debt service is also on course.”

Anambra to commission Awka Millennium City IFEOMA OKEKE overnorofAnambraState, Willie Obiano, will commissioned Awka Millennium City, tagged as one of the huge investment opportunities for South Easterner, today. This is contained in a press release made available by Clem Nwogbo, the group chairman of M-P Infrastructure Limited. According to Nwogbo, investing in Anambra, South East part of the country, is well-thought of,

giving to the economic potential of the region dated back to the era of late Michael Okpara, former Premier of Eastern Region of Nigeria, and then the Jim Nwobodo era and up to the current administration under the leadership of Governor Obiano. The Awka Millennium City is a master-planned gated community of Public Private Partnership (PPP) project, which will be largescale residential neighbourhood that serves residential, commercial and recreational uses

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and amenities, such as schools, leisure and entertainment centres, parks and playgrounds. “We are not building a billionaire city as some have alleged. This is why in the Memorandum of Understanding (MoU), we are committed to dedicating 25 percent of the 100 hectares to building a 5-bedroom, 4 bedroom, terrace and detached homes and housing stock for anyone interested to subscribe as well as offer it for sale to other subscribers and Ndi Anambra people.

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Thursday 19 December 2019

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Thursday 19 December 2019

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Edo spends N4.7bn on health sector reforms in 2019 Concerns in Lagos over infection of patients CHURCHILL OKORO, Benin

do State government says it has so far expended over N4.7 billion in revamping healthcare services across the state in the 2019 fiscal year. The state government’s expenditure in the health sector in the fiscal year was contained in the 2020 budget estimates presented to the Edo State House of Assembly for consideration and passage by the state governor, Godwin Obaseki, on November 13. The budget estimates, exclusively obtained by BusinessDay in Benin City, show that a greater proportion of the money is allocated to the Edo Healthcare Improvement Programme (Edo-HIP). While presenting the budget, Obaseki said EDO-HIP was a comprehensive plan to make health accessible and afford-

able to Edo people. He also disclosed that the state government had completed a Lassa fever isolation centre at the Stella Obasanjo Hospital and another currently under construction at Central Hospital, Benin City, in a bid to reduce the spread of the disease. According to Obaseki, we have spent N4.7 billion in the health sector, with much of it deployed for the implementation of the Edo-HIP, which is a holistic plan to rejuvenate the healthcare to be more responsive, affordable and accessible to the people. “The Edo-HIP, which is made up of the Edo State Health Insurance Scheme and the Basic Healthcare Provision Fund, have so far reconstructed 20 Primary Health Care centres across the 18 Local Government Areas of the state. “We have also trained over

500 midwives, nurses and community health extension on best practice for care delivery, and a public health emergency operations centre,” he said. He explained that the sum of N1 billion had been allocated to primary health care reform in the 2020 fiscal year, noting that the primary health care reform, one of the priority areas in 2020 year, was to ensure residents had access to quality healthcare. He further added that N1 billion would be committed to the Edo State Health Insurance Scheme, which will fully commence in January 2020. “With the launch of the Edo State Health Insurance Scheme, the government is committing N1 billion as its contribution to the scheme, while we expect workers across all sectors to sign up to the laudable initiative, which enhances their access to quality healthcare services.

with diseases during blood transfusion

JOSHUA BASSEY

agos State government is taking steps to guarantee quality assurance in blood donation and transfusion, saying it is unacceptable that patients are infected with deadly diseases in the process of blood transfusion in health institutions in the state. Akin Abayomi, the commissioner for health, raised the concerns at the 2019 annual stakeholders’ summit of the Lagos State Blood Transfusion Service (LSBTS), Wednesday, where he reiterated the resolve of the government to ensure access to screened, certified, clean and quality blood for citizens, especially pregnant women, whenever it was required. “I have seen a few patients that have been infected with

hepatitis through blood transfusion or contaminated needles. Only a few months ago a friend of mine with sickle cell went for injection and she was unfortunately infected with hepatitis B, this kind of trend has to be eliminated,” Abayomi said. According to Abayomi, the provision of clean, safe and fast availability of blood for transfusion in all health facilities as a measure against haemorrhage, which is the leading cause of maternal and child mortality, has become imperative, as preventable deaths in women and children resulting from normal life procreation process caused by haemorrhage are unacceptable. “In a place like Lagos where we have two teaching hospitals, 27 general hospitals and

over 300 primary healthcare centres, we should not accept these preventable deaths. Lagos State shouldn’t be a place where we should be talking about maternal and child mortality rates and this is why we have declared zero tolerance for preventable deaths in mothers and babies,” he said. The commissioner stated that blood should be viewed as an organ and not necessarily as a liquid, adding that whenever blood was being transfused, what it signified was an organ transplant to save precious lives. While noting that the war being waged on HIV through the Lagos State AIDS Control Agency is yielding the desired results, Abayomi stated that the state government would be declaring war on hepatitis in 2020.

Stakeholders charge Fintechs to drive borderless trade in Africa Modestus Anaesoronye

he business community in Nigeria and players in the Fintechs sector have been charged to take advantage of the opportunities that abound in the African Continental Free Trade Agreement (AfCFTA) by developing intra-African payment solutions to ease trade settlements. This recommendation, among others, was discussed at the 7th Edition of PoS Innovation Summit organised by Global Accelerex with the theme ‘African Continental Free Trade Agreement: Driving Borderless Trade Through Fintech.’ Gathered at the Grand Ballroom of Eko Hotel and Suites last week was a sea of curious heads: from financial regulators to senior bankers, from top management staff of Fintech companies to major players in the import and export space; the summit had delegates from all walks of life who came to get critical insight on how Fintech can drive AfCFTA, one of the hottest topical issues in continental discourse today.

Tunde Ogungbade, managing director of Global Accelerex, set the tone for the event with thought-provoking questions in his welcome remark, which centred around how Fintechs can facilitate easy and seamless payment across Africa in this new era of borderless trade and how the former bottlenecks and barriers can translate to breakthroughs and possibilities for continental commerce. Speaking also at the event, Niyi Adebayo, minister of Industry, Trade and Investment, who was represented by the director-general, Nigerian Office for Trade Negotiations, Liman V. Liman, explained the intricacies of the treaty, pointing out that African countries stood to gain a whole lot by doing business with each another. He opined that the pact, which has a goal to create a single market that allows free ﬂow of goods and services across the continent, would expand intra-African trade through harmonisation, liberalisation and facilitation of trade instruments across Africa.

P&ID: Court orders arrest of British citizen, Adam Quinn Innocent Odoh Abuja

ustice Okon Abang of the Federal High Court, Abuja on Wednesday, granted the prayer of the Economic and Financial Crimes Commission (EFCC) for a warrant of arrest against Adam Quinn, a British citizen. According to a statement issued on Wednesday by the head of media and publicity of the Commission, Wilson Uwujaren, Quinn, a director at Goidel Resources Limited, who is presently at large is wanted by the EFCC to face multiple charges of money laundering in the country. His name has featured in counts one, two, four, 14, 15, 16, 17, 18 to 31 in an amended charge, filed against James Richard Nolan, another British na-

tional on November 20, 2019. Nolan and Quinn, who both are directors in Goidel Resources Limited, a designated Non-Financial Institution (DNFI) and ICIL Limited, are facing a 16-count money laundering charge in a matter that is related to the Process and Industrial Development, P&ID gas processing and utilisation contract scam, in which the EFCC has already secured the liquidation of the company and conviction of some of its management staff. At the resumed trial of Nolan, today, prosecuting counsel, E.E. Iheanacho, informed the court that the prosecution’s first witness was in court, and that the prosecution was prepared “subject to the convenience of the court”, to present the witness. www.businessday.ng

L-R: Yemi Gbenro, managing director/chief executive officer, SFS Financial Services Limited; Bola Onadele Koko, managing director/chief executive officer, FMDQ Securities Exchange, and Patrick Ilodianya, managing director/chief executive officer, SFS Capital Nigeria Limited, at Exchange Place during the signing of the Funds Listing Register for the SFS Fixed Income Fund listed on FMDQ Exchange in Lagos, yesterday.

International Breweries appoints Lagos projects N43bn investment in agriculture new managing director Daniel Obi

nternational Breweries plc (IB plc), a part of the ABInBev Group, has officially announced Hugo Dias Rocha as new managing director to replace Annabelle Degroot, who leaves Nigeria at the end of this month. The company confirmed BusinessDay report that Annabelle is leaving Nigeria to take up new responsibilities in Europe within the ABInBev Group, having successfully driven the company’s transformational agenda, which has seen IB become the second largest brewer in Nigeria in the last two years. The incoming managing director, Rocha, is expected to consolidate on Annabelle’s legacies and achievements by leading the company to the next phase in its growth trajectory. A statement by IB’s company secretary/general counsel, Muyiwa Ayojimi, notes that Hugo Dias Rocha comes with a lot of valuable experience, having worked with the ABInBev Group for over 24 years in different leadership roles within the sales, process integration and human resources functions in various countries like Brazil, Dominican Republic, China, Colombia, Argentina, and South Africa.

He holds a Master’s degree in Business Administration (MBA) from the Sao Paulo Business School, Brazil, and a degree in Mechanical Engineering from the Federal University, Paraiso, Brazil. Director, legal and corporate affairs, Michael Daramola, says the outgoing MD’s tenure is marked with remarkable achievements, among which is the successful merger of three hitherto independent breweries; rapid growth in the brewery’s product portfolio and the inauguration of a solar powered, ultra-modern gateway plant in Sagamu, Ogun State. Also, a new finance director, Bruno Zambrano Arana, takes over from Zuber Momoniat, who had served in that capacity in the last five years. Zambrano comes with tremendous experience having worked extensively in virtually all aspects of financial management across ABInBev’s businesses in Latin America, East Africa and South Africa. He holds a Masters in Business Administration (MBA) from Mccombs School of Business – Austin, Texas. He holds a Bachelor of Science in Economics from University of Texas at Arlington – Arlington, Texas.

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Joshua Bassey

agos State government is projecting an investment of N43 billion in the agricultural value chain over the next five years - 2020 to 2025. The investment projections aim at improved food production for a state whose population is estimated at 22 million people, with an annual growth rate of 3.2 percent. Currently, less than 30 percent of food consumed in Lagos is produced within the state, meaning it relies heavily on imports from other states and outside Nigeria. The five-year investment projection in the sector is, therefore, to also bridge the huge import gaps, Gbolahan Lawal, the commissioner for agriculture, told BusinessDay on Wednesday. Of the N43 billion, the state government will be targeting to invest N13 billion via annual budgetary allocation, while N22 billion will hopefully come as private capital, and N8 billion from donor agencies. A document sighted by BusinessDay, which is being deliberated on by stakeholders in public and private sectors, including banks and experts from the academia, shows the breakdown of the projected investment in key @Businessdayng

agricultural production. According to the document prepared by the state ministry of agriculture, rice production is projected to take 38 percent of the investment, empowerment and capacity building 18 percent, red meat production 15 percent, coconut production 7 percent, vegetable production 7 percent, piggery 3 percent, among others. The agriculture commissioner further informed BusinessDay that rice production was being given priority in the five-year agricultural roadmap because, apart from being an international commodity, it was being consumed in every home across Nigeria. According to Lawal, the policy document the ministry was able to put together in less than 200 days in office of the Babajide Sanwo-Olu’s administration, once approved by the State Executive Council, would guide investment decisions by the government and private investors in the state’s agro sector over the next five years. Ruth Olusanya, special adviser to the state government on agriculture, said partnership with the private sector was key in the quest for Lagos to achieve food security for its rising population.

Thursday 19 December 2019

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ICAN to begin three professional examination diets from 2020

Eastern ports get boost as largest container ship berths in Onne Port

AMAKA ANAGOR-EWUZIE

etermined to service the growing number of candidates aspiring to become chartered accountants in Nigeria, the Chartered Institute of Accountants in Nigeria (ICAN), has announced plans to begin the conduct of three professional examination diets from March 2020. Speaking in Lagos on Wednesday at the AATWA 51th Induction Ceremony, Nnamdi Okwuadigbo, 55th president of ICAN, said the Institute’s professional examinations would now hold in March, July and November every year, as against the present two times in a year. According to Okwuadigbo, the development was against the backdrop that the Institute has progressed from manual marking of examination to on-screen marking, which has reduced the time of processing the examination scripts from about seven-eight weeks to only four weeks. Okwuadigbo, who pointed out that the development would help to address the human capital gap in both the public and private sectors of the economy, said the rapid changes in the fundamentals of businesses require graduates to regularly update their skills and competencies as accounting technicians. “The Governing Council of the Institute has constituted the AATWA Investigating Committee and its Disciplinary Tribunal to respectively investigate allegations against AATWA members and to consider the reports of the investigation in order to recommend appropriate sanctions to discipline any erring member,” he said further. Stating ICAN’s resolve to provide the necessary technical support to would-be accounting entrepreneurs, he said the Institute has also established an Entrepreneurship Committee with the mandate to continually develop strategies for ensuring that chartered accountants in the Small and Medium Practices (SMPs) category are not just gainfully employed but that such businesses continue to thrive to provide employment opportunities. The ICAN president said the standards of the ICAN’s examinations comply with that of the International Federation of Accountants (IFAC), the body that regulates the accounting profession globally, comprising of 175 accounting bodies and over 3 million Chartered Accountants across the world. Earlier, Onome Joy Adewuyi, vice-president of ICAN, said a total of 734 candidates of Accountant Technicians were inducted, which brings the total number of AATWA members in ICAN to 34,616, inducted in 30 years of the certification.

fforts to increase cargo traffic at the ports located in the Eastern part of Nigeria have received a boost with the successful handling of the largest containership measuring 265 metres in length by the West Africa Container Terminal (WACT) at the Onne Port Complex, Rivers State. The ship, named JPO Volans, is the first gearless vessel and the largest containership ever to visit a seaport outside

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the Lagos area. Aamir Mirza, managing director of WACT, said the German vessel brought containers to the Onne Port from the Far East Asia, saying it took only 2.75 days to turnaround the vessel at the terminal. “This was another major achievement for Onne Port and another testament to our commitment to set new standards and serve our customers better,” Mirza said. He said WACT was able to handle this gearless vessel

by deploying its newly commissioned Mobile Harbour Cranes. “The key achievement here was our ability to handle larger, gearless, mainline vessels that were considered only suitable for terminals in Lagos. By handling these vessels, we have not only proven to the world that East Nigerian ports are equally capable of handling large ships but have also improved the profile of Onne port globally,” he said. Mirza said, “With our ma-

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jor investment plans in the pipeline, this will go a long way in improving our capabilities and highlighting same to all our shipping line and landside customers.” Recall that in September, WACT acquired two Mobile Harbour Cranes worth $10 million (N3.6bn) to boost operations at the terminal. It also acquired 10 specialised terminal trucks and two new reach stackers to complement existing cargo handling equipment, and increase turnaround time of vessels

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at the port. With the new cranes and other investments, experts believed that WACT is presently at par with its peers in Lagos ports in terms of equipment availability and operational efficiency. “Our vision is to make WACT the best performing container terminal in West Africa. We believe we are on course to realising this vision in record time with the support of relevant authorities and stakeholders,” Aamir said.

Thursday 19 December 2019

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Obaseki, Dare advocate accountability, transparency to develop nation’s sports

do State governor, Godwin Obaseki,and the minister of Youth and Sports Development, Sunday Dare, have urged the Nigeria Football Federation (NFF) to shun corruption and adopt transparency in their conduct so as to attract investors and reposition the sector for growth and development. Obaseki and the minister made the call to stakeholders from the 36 states of the Federation including the Federal Capital Territory (FCT) at the 75th Annual General Assembly (AGM) of the NFF, held in Benin City, the Edo State capital. Obaseki, who reiterated his administration’s commitment to sports development, said the sector will be able to attract sponsorshipandinvestorsifcorruption is reduced. The governor also commended the sports minister for the bold

steps taken to tackle the rots in the country’s physical infrastructures for sports, stressing that his administration is following the foot step in rebuilding the Samuel Ogbemudia Stadium. “We have rebuilt the Samuel Ogbemudia Stadium with stateof-the-art facilities as it has the requisite technology. We also installed Video Assistant Referee (VAR) in the stadium. We have invested in sporting infrastructure across the state, building mini stadia in all 18 Local Government Areas to develop sports in the state. “In Edo, we have taken sports seriously as we have created a commission with its own executive chairman. Sports start and end with good governance, as there is need for accountability and transparency.” The minister who was represented by Permanent Secretary,

Federal Ministry of Youths and Sports,OlusadeAdesola,frowned at the perception of football development in Nigeria, describing it as polluted on account of the negativeperceptionofcorruption. “The stigma of corruption in NFF predates this board, hence theneedforproperaccountability and transparency going forward because we must move quickly to changethistoxicperception.With the bad image at all levels of our football, including the organisers, our domestic leagues cannot attract sponsorship, which is the biggest hub of business.” He continued, “The first step towards reducing corruption is for all transactions in football to be transparent and it starts now. Transparency should be the new watchword if the NFF and its affiliates want to do the business of soccer to rake in millions as is the case in other climes.”

AfDB, AU to develop Africa’s electricity master plan MIKE OCHONMA

frican Development Bank (AfDB) and the African Union’s Development Agency (AUDA-NEPAD) are planning to develop a blueprint for a pan-continental electricity network and market, the organisations say. This is as the development of a unified electricity transmission network and market for electricity trading are viewed as a critical priority to improve the lives of people across the continent. “The Continental Power System Master Plan will ensure that competitive electricity markets are developed at regional and continental levels, creating unique opportunities to optimally utilise Africa’s vast

energy resources for the benefit of Africa,” senior energy adviser to AUDA-NEPAD’s CEO, Mosad Elmissiry, a professor said in a statement. The development finance institution, Angela Nalikka, AfDB national and regional power systems manager in explaining the impetus for the partnership, said most stateowned electric utilities in Africa today were unable to secure the financial resources needed to implement required segments of regional interconnectors and associated national feeder lines. “The bank plans to encourage private sector participation in transmission projects in the continent,” Nalikka said. The master plan will also inform the energy component of the Programme for Infrastruc-

ture Development (PIDA) Action Plan, which focuses on key regional integration projects. The agreement to set up a Continental Power System Master Plan between the bank and AUDA-NEPAD was unveiled on November 29, 2019 during a three-day workshop on the side-lines of PIDA Week held in Cairo, the capital of Egypt. The workshop which was aimed at advancing the launch of an Integrated Continental Transmission Network (ICTN) to link national power utilities into regional power pools and, ultimately, into a continent-wide transmission network also produced the master plan’s terms of reference. The plans also include setting up a market for electricity trading, the organisations said.

BEDC to partner Gencos to boost power supply IDRIS UMAR MOMOH, Benin

s part of efforts to boost power supply, the management of Benin Electricity Distribution (BEDC) has disclosed plan to engage the services of power generating companies (Gencos) to build, operate and evaluate powerlines. A statement signed by Adekunle Tayo, head, corporate affairs of the company and made available to newsmen in Benin City, said the plan was part of the company’s bid to improve the quantum and quality of power being supplied to customers. According to Tayo, the power company will partner any power generating company within and outside its franchise that specialises in embedded generation to build, operate and evacuate powerlines (11KV or 33KV) from their facilities to BEDC’s designated take-off points. He explained that the objective was aimed at solving the problem of power supply in

some of its franchise states, noting that with the partnership the power generation companies were expected to produce power through embedded generation/ off national grid to augment shortfall from the Transmission Company of Nigeria (TCN). He opined that the initiative would permanently improve power supply in such locations within the shortest possible time. “We implore our customers to note that the power sector improvement process is a journey and not a race and that with your collective support by prompt payment of bills and honouring of your obligations, we will all get to our desired destination faster while all participants shall benefit from better power supply,” he said. The partnership is open to existing generation companies within BEDC’s franchise areas and those operators with genuine intention to site their generating facilities within its franchise area that covers Delta, Edo, Ekiti and Ondo states, he said.

FRC seeks FG’s intervention on property recovery Hope Moses-Ashike

inancial Report Council of Nigeria (FRC) has called on the Federal Government to as a matter of urgency intervene, fast track and possibly recover its landedpropertylocatedatGuzape of the Federal Capital Territory. A statement made available to BusinessDay revealed that the executive secretary, FRC, Daniel Asapokhai, said this during the Council’s visit to the minister. He stated that the body had not been able to carry out any meaningful development on the disputed landed property due to the activities of squatters. He said unlike many of the Federal Government agencies, the Council operated primarily from Lagos, saying, “So, I am sure lot of you that have been in Abuja for a while will be familiar with the corporate affairs commission, the investment promotion council, and a number of other agencies within our ministry. “But when you mentioned

L-R: Isa Pantami, minister of communications and digital economy, and Biodun Omoniyi, group MD/CEO, VDT Communications Limited, during a special reception organised for the minister in Abuja.

Edo, NIRSAL expand investment World Bank donates $90m to Nigeria for in agripreneur programme 5-year disease surveillance project ... target 17,000 jobs, N2bn in returns

financial reporting council perhaps no one has heard about the press reports. Because, you can’t pinpoint where it operates from and that is because we have no office or headquarters in Abuja.” According to Asapokhai, “There is a matter we have been pursuing for a long time and then, we have been following our petition with the federal government that in 2015, there was an approval for us to get a landed property in Abuja to able to build our headquarters and also at that time, government has approved for Nigeria to adopt international financial reporting standard, IFRS and also for the public sector to use what is called the IPSAS, international Public sector accounting standard, So we also did a launching of a fund that was meant to establish an IFRS academy meant for the training of people in the public and private on financial standard.

do State governor, Godwin Obaseki, has sealed a deal with the Nigerian Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) for the expansion of the Edo Agripreneur Programme to cover other crops aside grains. The programme is currently operating under the Central Bank of Nigeria (CBN) Anchor-Borrower programme and covers only the cultivation of grains such as maize and rice. The Edo State Agripreneur Programme is running across different locations in the state, including Sobe, in Owan West Local Government Area of the state. Obaseki, speaking during his visit to a farm in Sobe, said the signing of the amended deal with NIRSAL became imperative following the success of the 2019 Agripreneur Programme, noting that the programme would now accommodate poultry, piggery as well as the cultivation of

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root and tuber crops. The governor added that farming had become profitable under the programme, urging more residents especially youths to embrace the scheme. He said the agripreneur programme was implemented to deal with challenges confronting farmers in the state as it relates to access to land, market and other farm inputs, adding that the assistance from NIRSAL to de-risk the investment ensured the success of the agripreneur programme, “We are encouraging large commercial farms. We want more local government councils to give us more land to extend our agripreneur programme,” he said. The governor commended President Muhammadu Buhari for directing the CBN to provide support to smallholder farmers in the country, noting that Nigeria’s problems could only be solved by good leadership.

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Godsgift Onyedinefu, Abuja

orld Bank on Wednesday announced the donation of $90 million to Nigeria in form of a grant to finance a five-year Regional Disease Surveillance Enhancement (REDISSE) to address gaps in disease prevention and outbreak response. The procurement specialist, World Bank, Daniel Kajang, disclosed this in Abuja, during the formal handover of vehicles to states’ REDISSE Project, a project initiated by the World Bank to cover all countries in the ECOWAS subregion as a consequence of the 2014-2015 Ebola crisis. Kajang said the Ebola outbreak reinforced the importance of surveillance in the face of “very weak health system”. He expressed concern that diseases sometimes go undetected for months, but said the programme would strengthen disease prevention, detection and address systematic weakness within the animal and human health @Businessdayng

systems. According to him, a successful implementation would minimise health and economic consequences of major disease outbreak and enable Nigeria prepare for any eventuality. “If we are not prepared, even a little disease like diarrhoea can derail the health sector. It’s also a shame that a disease can occur for six months without anybody knowing what it is. “There was a year in this country, there was cholera in one of the northern states for six months without anybody detecting it, but with this project, epidemics will not overpower the country,” he said. He fur ther infor me d that the project which was launched on the 27th April, 2018 and under the supervision of the Nigeria Centre for Disease Control (NCDC) would end in 2023, but explained it could be extended with more financing if Nigeria performs well.

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The weird ways of university supervisors… & calling EFCC attention to manufacturers frauds

ik MUO

he road to a successful completion of a doctoral degree programme is lined with thorns, intrigues, intimidation, harassment, and sometimes open threats. It is a tough terrain to navigate. Some supervisors have the bizarre understanding that their skills are measured by their capacity to fail students, including the ability to be callous, mean-spirited, and malicious. They believe their competence is defined by how much they frustrate their PhD candidates or how difficult and insurmountable they present the programme to their students. The archetypal unsophisticated supervisor cuts the image of an arrogant, snobbish, dictatorial, and conceited academic staff who enjoys undeserved adoration and respect by students. But this misleading veneer of toughness operates only at the surface level. When you probe deeper, you will find that those character traits are used by the vacuous and old-fashioned supervisors to mask their academic and personal inadequacies’ this is a n excerpt from Levi Obijiofors letter bomb to supervisors in (and) public university in Nigeria (The weird ways of university supervisors, The Sun, 19/11/19). I have “known” Levi Obijiofor for a long while, even though I have not met him in the flesh. He might also have known me in a similar manner. Our people say that a person who dances in the public square cannot remain anonymous. The only new thing I did after reading his recent outburst against weird university supervisors, has been to find out what he does for a living. And behold, he is a lecturer of the professo-

rial cadre in a foreign university. And I thought: but snakes do not swallow snakes and witches do not bewitch their fellow witches! How can one of us look all of us in the face and publicly write us off and in such harsh and uncharitable phrases and sentences? However, on a second thought, I believe that it is a sign of maturity and integrity for somebody to publicly condemn his colleagues and ask them, in harsh tones to “repent” of their “evil” ways. In July 2018, I had commented on a wave of “examination of conscience” in the academia. That was when Ikenna Onyido, publicly blamed the drastic drop in quality in Nigerian universities, on internet or China Professors, who plagiarised their way up the promotion ladder in an absurd situation in which traditional rulers and men of influence lead delegations to Vice-Chancellors, in order to plead for their son or daughter to be made a professor. He also bemoaned the increasing churning out of “counterfeit PhDs,” which he believed posed a greater threat to the country than Boko Haram and herdsmen, in the long run. Strong words indeed! It was also around that time that Lagos State University did a sting operation and caught one of their own pants-down in a sexual harassment case while Obafemi Awolowo University acted with enviable dispatch in the case of sexual harassment involving one of their professors. (The academia: a season of examination of conscience; Ik Muo, 27/7/18 https://www.thenigerianvoice. com/news/268737/the-academia-a-season-for-the-examination-of-conscience. html) So, Obijiofor should be commended for calling attention to the failure and failings of the PhD process, especially as it relates to supervisors and supervision. However, I note that he excluded himself and his ilk from this call for repentance because he directed it at Nigerian Public Universities. Because he teaches in a foreign private university, he was in effect, “giving it to them”, excluding himself and others like him. But he is one of us. However, while Obijiofor attempted to discuss a handshake, he picturesquely

concentrated on only one of the hands. And we all know that a hand cannot shake itself; handshake is not possible without two hands. How can he write on the sorry-state of our PhD programmes, especially as it affects supervision, without making any reference to the students? Obijiofor had his PhD at the University of Queensland. So, he was not writing about his own experiences. He must have enumerated what he heard from people, what he observed or the outcome of a research. So, in all fairness, I also expect him to write on the contribution of the doctoral students to this messy situation. When he has done so, the equation will become a little bit balanced and one can then make a balanced comment on the mater. Between 1980 and 2014, I wrote 4.5 projects (the half refers to one I wrote but not for a degree). I have been supervising PG projects in the past 25 years and presently, I am a PG coordinator in a PUBLIC University. So, I am experienced in these matters and as soon as he completes his thesis, I will SURELY, make my own inputs. But any day we meet at the online staff-club, I will ask him why he gave us such an uppercut! As for the totality of what he wrote, my mouth is too holy to repeat them here. Just go and read them yourself! Other matters: Manufacturers fraud; for the attention of EFCC Our people say that when you commend somebody for his heroic works, he is encouraged to do even more while it is generally said that the chief reward for hard work is more work. EFCC has been working really HARD, notwithstanding that its chairman is the longest acting appointee in our 70-year history! The track record of EFCC in recent times has been awesome. Last week they arrested Issa Abdulrahman, the Vice Principal of Government Day Secondary School, Ote in Eiye-Nkorin Area of Kwara State, and two other teachers for collecting money from students to aid and abet cheating in the NECO examination. They have declared an all-out war against all yahooyahoo boys, which is one of the reasons why any young person with a phone or

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Some supervisors have the bizarre understanding that their skills are measured by their capacity to fail students, including the ability to be callous, meanspirited, and malicious

laptop is now an endangered species on our roads. They have succeeded in proving that the gap between chief and thief is not always wide by throwing one of our chiefs into prison, and confiscated the properties of the other. They have also notified the Sun Newspapers of impending “akshon”. I am therefore commending them, and as a patriotic Nigerian, I wish to draw their attention to the packaging fraud being perpetrated by some of our manufacturers. Sometimes ago, I bought a tin of powdered milk, opened it and found out that it was half-empty! I cried foul but one of my “pikins” assured me that they were not selling the tin but the content. And when I asked, why they did not make the size of tin to be equal to its content, he had no answer. Not long after that, I bought a bucket of 2kg S.O.J Custard and discovered to my chagrin, that the content was just 33 percent of the container. I have kept the bucket, as an evidence because I have the intention of measuring the content to ensure that it is up to 2kg! On Sunday, 15/12/19, I bought two sachets of FanIce vanilla ice-cream. I used to enjoy its sweet taste when I was in the world but now that I am in the spirit, I have to give it up. My beloved raised alarm that she put the thing into her mouth, and as she was preparing to savour the creamy taste, it had “vanished”. We then inspected the second one and the content was about 25 percent of the sachet. The content may or may not be up to the advertised 150 ml but I believe that it is deceptive to pack a small content in a large container and I believe that these manufacturers do so because the containers are opaque. Who will buy a bottle of soft drink, beer or water if it were 70 percent empty? I know that this may fall within the domain of Standards Organisation of Nigeria but I am calling the attention of the ever active EFCC to this new type of fraud. I have done my own, as a patriotic citizen! Dr Muo is of the Department of Business Administration, OOU, Ago-Iwoye

Forget the social media bill, what Nigeria needs is an online surveillance capitalism bill

any Nigerians oppose the Protection from Internet Falsehood and Manipulation Bill 2019. They fear the bill is in effect a form of censorship, designed to paralyse dissent and discourage criticism of government. But Nigeria actually needs an internet bill or something like that. Citizens need protection from the practices of powerful internet/digital/online/ social media companies who rule cyberspace. Last week, a friend said her thoughts were translated into an online advert. I was confused. Asked to explain further, she said she was thinking of buying something specific, and a day or so later she saw photos of that item every time she went online, adverts of it everywhere. I did not believe her. She explained that she never searched for that item with a search engine. Then she thought deeply about it. She later recalled speaking on the phone, using a free phone call app, she mentioned the item during a phone conversation. That was the only time she articulated her desire to purchase that item. Now she sees it advertised almost every page she opens online. This is “surveillance capitalism”, the latest version of capitalism described by Shoshana Zuboff, Professor of Business Administration (Emerita) at Harvard University. She articulated her concerns about surveillance capitalism in an award-winning paper 2015 paper titled “Big Other: Surveillance Capitalism and the Prospects of an Information Civilisation.” On-

line commerce really began in the 1990s, new business models that looked at the internet as the future of business flourished. Companies sought online presence and added “dot.com” to their business names online. But, the “dot. com” bubble didn’t last, it burst. Fast forward to the 2010s, giant internetbased companies are now not only profitable but are among the wealthiest in the world: in the top 10 most capitalised. These companies attract the best graduates from all over the world and have futuristic offices that set the standard of how the work place should look like. All this would be fine, if not for the surveillance business model of some of these giant internet companies. In summary, surveillance capitalism is commerce that uses human life as raw material for profit. Scary. Everyday experience: shopping habits, travel, emails, phone calls, online chats and comments are surveyed and harvested as data, used as input for commerce. Defence of this business model may argue that the user whose data is harvest also gets to use the apps and sites for free (social media sites, search engines etc.) But the problem is that this giveand-take is done without the user’s consent. It is all about “big data”, advances in computer power allows the extraction and processing of very large amounts of data, that can produce insights, used for presentation, prediction or prescription of information. Big data is good, it is the rock of the fourth

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industrial revolution. But the danger is in the clandestine nature of surveillance capitalism. Zuboff explores the proposition that “big data is above all the foundational component in a deeply intentional and highly consequential new logic of accumulation that I call surveillance capitalism. This new form of information capitalism aims to predict and modify human behaviour as a means to produce revenue and market control.” In her paper, Zuboff states that nearly half of the world’s seven billion people have a wide range of their daily activities “computer-mediated”. She states that “As a result of pervasive computer mediation, nearly every aspect of the world is rendered in a new symbolic dimension as events, objects, processes, and people become visible, knowable, and shareable in a new way. The world is reborn as data and the electronic text is universal in scale and scope.” The inspiration for Zuboff’s work appears to be two “extraordinary documents” written by the Chief Economist of a major internet firm. In these documents, two articles written in prestigious economics and business journals, the Chief Economist’s theme is the universality of computer-mediated transactions: “The computer creates a record of the transaction… [and] these computer-mediated transactions have enabled significant improvements in the way transactions are carried out and will continue to impact the economy for the foreseeable future.” According to him, four new “uses” from computer-mediated transaction include “data

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Uyiosa Omoregie extraction and analysis” “new contractual forms due to better monitoring” “personalisation and customisation” and “continuous experiments”. For Zuboff, the implication of all this is that these internet-controlling companies’ new revenues depend on data assets extracted through automated online operations, found at every click of the user’s mouse. In the world implied by the Chief Economist’s assumptions, Zuboff believes that “habitats inside and outside the human body are saturated with data and produce radically distributed opportunities for observation, interpretation, communication, influence, prediction, and ultimately modification of the totality of action. Unlike centralised power of mass society, there is no escape from Big Other.” Uyiosa Omoregie is fellow of the Institute of Management Consultants uyiosaomoregie@yahoo.co.uk, @UyiosaOM (Twitter)

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How Nigeria’s judiciary was emasculated CHRISTOPHER AKOR

ne feature of an underdeveloped country, or to be politically correct, a developing country, is the personalisation of power by the leader. As a rule, state institutions are deliberately destroyed or weakened so that the entire machinery of government depends on the whims and caprices of the leader. As Senegal’s Leopard Senghor once said, sharing power in un-African and therefore not feasible regardless of the attempts to model our political systems after those of the West where separation of powers is seen as the greatest bulwark against abuse of power. We also know historically that corruption is most rife in a polity with weak or absent state institutions. Leaders in such states have also realised the political value of launching wars against corruption. However, instead of fighting just corruption, they use the anticorruption war as a blunt instrument to also whip political opponents and most importantly, blackmail other arms of government to submission.

Buhari, as a true African leader, abhors any checks on his powers and has not hidden his desires to control the other arms of government since coming to power in 2015. Luckily, he won election on a strong anti-corruption ticket and, as expected, began to use the anti-corruption war to illegally expand his powers to the detriment of the other arms of government. When Bukola Saraki defied him to emerge as Senate President, a case of false declaration of assets was instantly filed against him at the Code of Conduct Tribunal, hoping that will force him to resign or force Senators to impeach him as Senate President. It took Saraki real political sagacity to survive as Senate President and all of three years to clear his name at the CCT. The indication that the judiciary was next was when he addressed Nigerians in a town hall meeting in Addis Ababa, Ethiopia, in February 2016 and basically chided the judiciary for being his main obstacle to his fight against corruption. Hear him: “On the fight against corruption vis-à-vis the judiciary, Nigerians will be right to say that is my main headache for now. If you reflect on what I went through for 12 years when I wanted to be the President...In my first attempt in 2003, I ended up at the Supreme Court and for 13 months I was in court. The second attempt in 2007, I was in court close to 20 months and in 2011, my third attempt, I was also in court for nine months...All these cases went up to the Supreme Court until the fourth time in 2015, when God agreed that I will be President of Nigeria.” It did not take long before he came for them. On October 8, 2016, the Department of State Security, in total

disregard of all extant rules and procedures for the disciplining of erring judges, invaded the houses of three justices of the Supreme Court – Walter Onnoghen, Sylvester Ngwuta and John Okoro – as well as two judges of the federal High Court – Adeniyi Ademola and Nnamdi Dimgba – in the dead of the night, ostensibly based on tip offs for judicial misconduct. But while the real reasons for the invasion of the houses of the Supreme Court justices was not immediately clear, it was later discovered that Justice Ademola and Dimgba drew the ire of the DSS for ordering the release of suspects in the custody of the outfit, an order that they failed to comply with anyway. Many lawyers and analysts foolishly supported the action of the DSS as a necessary step to fight corruption even when high-ranking members of the All Progressives Congress (APC) were granting interviews and singing a different tone. Shortly, after the arrest of the judges, the national chairman of the APC openly criticised the arrested judges for not granting judgments in favour of the party on the election case in Rivers state. “I still find the judgement on the Rivers state governorship election totally astonishing. There is something fundamentally wrong in the judiciary,” Oyegun was quoted as saying. However, Oyegun later revealed his real intentions and desire further when he openly confessed that: “We have lost very important resourcerich states to the PDP. No matter how crude oil prices have fallen, it is still the most important revenue earner for the country.” Similarly, many of his party members – prominent among which is the Lagos publicity secretary, Joe Igbokwe, have been openly abusing

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Many lawyers and analysts foolishly supported the action of the DSS as a necessary step to fight corruption even when high-ranking members of the All Progressives Congress (APC) were granting interviews and singing a different tone

The off-grid sector, opportunities and challenges for investors

or a population of about 200 million, Nigeria needs 180,000MW of power, but generates 4,500MW. The transmission company (TCN), which evacuates generated power to distribution companies, has transmission capacity of 8,100MW, but can evacuate only about half of the current installed capacity. The TCN is the weakest link in the electricity network. As a result, Nigeria’s urban electricity penetration is 55 percent, while rural penetration is 36 percent. The lack of adequate electricity access and ageing TCN infrastructure necessitated the push for investments in the off-grid (off TCN) sector. According to the Rural Electrification Strategy and Implementation Plan (RESIP) 2015 and the World Bank; for remote settlements, mini-grid solutions are more cost effective than expanding the grid. Flowing from that, the Nigerian Electricity Regulatory Commission (NERC) rolled out Regulations to guide investment in the off-grid sector. NERC Captive Power Generation Regulation 2012 – This regulates generation of electricity exceeding 1MW, consumed by the generator entity, and not for sale to third parties. This may be used by industries with heavy power usage. NERC Regulation for Mini-Grids 2016 – This regulates construction of standalone power systems with installed capacity less than 1MW, to supply electricity to unserved and underserved settlements. A mini-grid may be isolated with no link to the national grid; or interconnected, with link to the national grid through connection to a distribution network. Independent Electricity Distribution Networks (IEDN) Regulations 2012 – This regulates

off-grid distribution networks constructed in settlements not served or underserved by an existing distribution company. There are Isolated Off-grid Rural IEDNs, Isolated Urban Offgrid IEDNs (both, unconnected to an existing distribution network), and embedded IEDNs (connected to an existing distribution network). The Rural Electrification Agency (REA) also introduced initiatives aimed at providing electricity to rural areas using off-grid power solutions. Energising Economies Initiative (EEI) – This is aimed at supporting the provision of off-grid solutions to small businesses in the private sector, particularly in markets and shopping complexes, with pilot projects in Sura Complex (Lagos state), Sabon Gari Market (Kano state) and Ariaria Market (Abia state). The Project at Ariaria Market – is a 5MW gasfired power plant. The Developer of the project is Ariaria Market Energy Solutions Limited (AMESL), an SPV consisting of three companies, providing power generation, distribution and metering services. The market has about 37,000 shops, with less than 5 percent unoccupied or under construction. Sabon Gari Market – involves stand-alone solar systems for each shop between 1-2KW capacity, providing stable power to the market. This project is developed by Sabon Gari Energy Solutions Limited (SGESL). The market has about 1,198 shops, with plans to expand to over 13,598 shops. Sura Shopping Complex – involves a connection to power supply from Independent Power Producers (IPPs) located within Lagos Island. The electricity solution is taking surplus power from the IPPs to power the shopping

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TEMPLE EZEBUIKE

complex through a distribution network, with an alternative power system as backup. The developer for Sura Shopping complex is Sura Independent Power Limited (SIPL). The project will power 1,047 shops. CHALLENGES FOR INVESTORS Gas Supply- The majority of generating companies (including off-grid independent power plants) are gas-fired. 82 percent of total generation of 4,500MW is from natural gas. A big challenge to electricity generation is unavailability of gas. Only 1.4 Billion Standard Cubic Feet (bscfd) is required for generating companies to function at their maximum capacity, but only 0.9 bscfd is supplied to the power plants, the remaining rationed to other sectors within Nigeria. Lack of access to gas alone, reduces the utilization of the installed capacity of gas-fired off-grid power plants, which depletes investors projected cash flow. Variation in gas price is also a pang of worry for investors in off-grid IPPs. Gas suppliers rarely agree to a fixed-price Gas Sales and Purchase Agreement. To buffer against variation in gas price and underutilization of installed capacity, a Pass-Through clause may have to be inserted in the PPAs between off-grid IPPs and off takers. By this instance, the loss as a result of underutilization of capacity and variation in gas price is monetized and billed into the eventual tariff that will be paid by the off takers. Lack of Federal Support- Large off-grid projects require huge capital outlays for effective execution. The absence of consistent financing options for such investments constitutes a barrier to the development of such off-grid projects. Investors without government support back-off from such projects. After the Azura-Edo IIP,

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the Supreme Court and labelling its justices as ‘corrupt’ and ‘fraudulent’ with some calling on the President to probe the Supreme Court for daring to deliver judgements against the party’s candidates. While Onnoghen was never charged and later emerged Chief Justice of the federation to the consternation of the president, Justice Ngwuta was charged to the Code of Conduct Tribunal for false declaration of assets. Of course, the trumped-up charges were dismissed in 2018. And for Justice Okoro who was never charged, it took a whole of three years after the invasion of his house – a period during which he was besmirched and he suffered media lynching – for the DSS to clear him of any wrongdoing or misconduct and return to him the $38,000 taken away from his residence, among other items. Of course, we know how Justice Onnoghen ended: He was illegally removed from office on the eve of the 2019 elections and a pliant judge appointed in his place. We could all see how the judges disposed of the electoral cases against the election of the president. Both the judges at the court of appeal and the Supreme Court were not just content to dismiss the cases for lack of proof, but they actively turned defendants of the president in the case on perjury. The government taught it had completed the takeover of the judiciary until a stubborn judge insisted it releases Omoyele Sowore. Her court was not only invaded when she was sitting, she was chased away and Sowore was manhandled right inside her court. This was an obvious reminder to the intransigent judge that the DSS will not tolerate a stubborn and independent judge.

the federal government has been unwilling to guarantee investments in power projects. This is reflected in the drag in financial close of the Solar IPPs. Such unwillingness disincentivises investors whose only push may have been a sovereign guarantee to mitigate offtake risk. Purchasing Power of Consumers- Financial viability of off-grid investments is tied to the ability of consumers to pay tariffs. Before 2018, solar panels were exempted from import duty. However, with the reclassification of solar panels, imported solar panels are now faced with import up to 10 percent in duties and Value Added Taxes (VAT). Moreover, with the VAT increase from 5 percent to 7.2 percent, the import charges have moved upward to 12.2 percent. The other components that accompany a complete solar-PV system– batteries, inverters and charge controllers– already attract individual import charges. Nigerians spend about 60 percent of income on food and estimated 30 percent of income on housing. Given static salaries and delay in implementing the new minimum wage, the border closure, which has driven up inflation in food prices, may see percentage spend on food move upward to 65 percent. With 95 percent already off from income, the remainder 5 percent will be frugally spent. It would mean that the investors in the off-grid sector, for profitability, are competing with food and rent. Note: The rest of this article continues in the online edition of BusinessDay @https://businessday.ng Temple Ezebuike is a Lagos-based lawyer, with focus on Energy, Finance and Real Estate. You can reach him at templeezebuike@gmail.com

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BUSINESS DAY

Thursday 19 December 2019

Editorial Publisher/CEO

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

Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

Nigerian bourse needs more than low prices and promising fundamentals

t has become crystal clear that the failure of the federal g ov ernm ent to c on c eptual is e and implement plans to stimulate the economy is affecting various areas. Add to this its unbending position not to reverse policies that dampen the economy and what you have is a damaging effect on the general welfare of economic agents. The Nigerian bourse is a prime example. Current economic policies have had mostly deleterious effects as various economic indicators show. For instance, the Nigerian economy expanded at a sluggish rate of 2.28 percent in the third quarter of 2019, according to the National Bureau of Statistics (NBS). However, the seeming growth in headline figures is unlikely to resonate with many Nigerians. Despite seeming growth in GDP figures, it is shrinking in per capita terms. Moreover, inflation is tending towards 12 per

cent by year-end after rising for the third successive month to 11.85 percent year on year by November 2019. Of course, higher inflation means a further reduction in the purchasing power of citizens amid shrinking wallets. Actions have cons equences and for the Nigerian economy, a crucial outcome is a negative perception of the economy by investors. It shows in their investment decision. Their decisions thus far have not favoured the 30 most capitalised firms on the Nigerian Stock Exchange (NSE). The market is heading towards its worst performance in a decade at -22 percent. The market value of about 80 per cent of quoted companies has halved in 2019. The grim outlo ok for these companies shows a continued pessimism in the market since a record 42.3 percent rally two years ago. Although most stocks are currently at their lowest valuations, investors have shown little or no interest in taking a position on them.

The economy does not motivate such desires. Investors are unsure about what policies the government would announce and how it would affect their investments ; they are wary about how unpredictable the government and regulators can be. Companies in the economy have been struggling. According to BusinessDay analysis, about 56 percent of NSE 30 companies reported a decline in profit by halfyear. Further, earnings were weak across the board in the third quarter. The results speak to the general tendency and state of the nation’s economy yet to improve to pre-recession levels. We c o m m e n d t h e e fforts of the Nigerian Stock Exchange. The authorities moved to improve market performance or reduce the effect of selloffs by increasing the minimum trade quantity required to change stock prices. The Central Bank of Nigeria also implemented its OMO access restriction policy aimed at navigating domestic stocks back to the stock market and

treasury bills. These policies have proven to be short-lived as the previous week recorded the longest streak of losses in the market since October. So, what’s next when low stock prices and promising fundamentals have failed to strengthen investors’ (domestic and foreign) sentiment towards the stock market? Investors have proven not to be enthused by the current low prices nor about the wellbeing of companies listed on the exchange. Events in the macroeconomy have an overwhelming effect on the market. Time is running out for the current administration as the best time to be intentional with its policies to drive investments and boost confidence in investors is yesterday. Now is another “best time” to reconsider bold market-driven policies. The calming effect of picking a stellar cast for the Presidential Economic Advisory Council is wearing off. Time for real action is now. Policies, programmes and implementation, please.

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BUSINESS DAY

Thursday 19 December 2019

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The swagger of failure The Public Sphere

CHIDO NWAKANMA

hen an institution such as the World Bank warns about the trajectory of an economy, all stakeholders must show interest and critical attention. According to that important bastion of global economics, Nigeria risks becoming the home of not just the majority of poor people but 25 percent of the global poor. In other words, where we worried about 98 million poor, we should be thinking of about 200 million persons struggling to live. Their prognosis came with a caveat. Nigeria must find a way to

boost employment and economic growth to prevent this sad scenario from playing out. Precisely, Nigeria must remove the many restrictions on the free operations of market forces in the economy and stop the rush to an economy controlled and run by the state. The World Bank wants Nigeria to remove trade restrictions, stabilise economic policies and increase domestic revenue. They also advise as they always do, the removal of fuel subsidies and lending by the Central Bank to specific areas. Ni g e r i a’s c u r re n t s i t u a t i o n would help to understand the gravity of the prognosis of the World Bank. Projections are that the economy would expand by 2.1 percent in 2020 and 2021. It seems weak but manageable until you place it against the population growth figure of 2.6 percent for the same period. In other words, the economy will be growing behind the numbers we need to feed our growing population. The other challenge is the enormous debt the federal government has accumulated in the last four years. It is the highest rate of debt growth in the history of not only Nigeria but other countries not at war. We are so much in debt it is now worse than the massive debt overhangs the 15 years of military rule post-Shagari left us. The real threat though is the fact of a government revelling in the swagger of failure. There is an arrogance to the pursuit of wrong policies and programmes by the

federal government. They despise counsel and contrary opinion to the paths they choose even as the results show those paths to be incorrect. As the indices point south, the government walks with a swagger claiming fantastic results that do not reflect in the lives of citizens. They quarrel with the figures. Or generate their own statistics as manifested in two successive ministers of agriculture. While Audu Ogbeh claimed our alleged rice, revolution had shut mills in Thailand, his successor believes there is no poverty in the land that has now become the poverty capital of the world. At inception, the federal government by acts of omission and commission quickly led the economy into a recession that the countr y had not seen in three decades. The federal government t h e n st a r t e d a ga m e w i t h t h e economy: multiple exchange rates that allowed significant arbitrage and freeloading; selective bans on items or denial of access to official foreign exchange and more. What followed was the blame game. Rather than tackle the challenges of governing, it spent three years blaming the past g overnment while doing worse things. Take the matter of fuel subsidy. A government that swore it would not tolerate it, quickly embraced subsidy more than ever before. The figures for fuel subsidy are the worst we have ever had. And it is continuing in that direction.

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The real threat though is the fact of a government revelling in the swagger of failure. There is an arrogance to the pursuit of wrong policies and programmes by the federal government

Going back to the 1984 playbooks, the government recently then shut the western border. The goal of the protectionist move is to enable the protection of local production of rice while curbing criminality. Note, however, the selective application of the border closure. A significant challenge for the Nigerian economy is the confusion and mixed signals of running command-economy style policies against a market economy in practice. There is a critical mismatch between policy and practice in the Nigerian economy. An excellent example of that confusion is the increasing incursion into the field of play by the Central Bank of Nigeria. It is now going beyond development financing and regulation to regulating itself as an enterprise player in agriculture. Will Nigeria listen to the World Bank? If the history of our relationship with such bodies is any guide, the bet is that the federal government will ignore the bank and respond with a salvo of accusations instead. How do they dare to call out the Government on its direction? The FG knows what is best for Nigeria; we do not even believe the figures that they share about our economy! Pride goeth before a fall, the aphorism of old holds. Nwakanma is a Visiting Member of the BusinessDay Editorial Board and serves on the Adjunct Faculty at the School of Media and Communication, Pan Atlantic University, Lagos. Email chidonwakanma@ gmail.com.

Lessons from the U.K. Brexit election

he U.K. has announced the result of the “Brexit Election”, and Boris Johnson’s Conservative Party won a landslide victory, mostly at the expense of Jeremy Corbyn’s opposition Labour Party. Listen to their statements after the results; “I will work night and day to repay voters’ trust” … Boris Johnson. “I will not lead the party in any future general election campaign” … Jeremy Corbyn. Despite the very high stakes in this election, there was no acrimonious stirring of tribal sentiments, nor calls on supporters to protest or reject the results. Rather, leaders on all sides called on their supporters to accept the line in the sand and move forward together. The central message of the winner was – let the healing begin. Here are the key facts: The decision to go for elections in the U.K. was taken in late Oct 2019, but officially kicked off on Nov 6th; Voting started at 7am on Dec 12th, and stopped by 10pm the same day; The polls all come in by 8am next day, Dec 13th, except for St. Ives, an island caught in a storm; The fastest returning record was 45 mins after voting closed; There was 67 percent voters’ attendance; There were no incidents of ballot snatching, violence or deaths as a result of the election.

They did not have four years to plan; in fact, they barely had two months, and they had to deal with the exigencies of the attendant “holiday mindset” of the Christmas season; and yet there was no thought of postponement. What can we learn from the UK elections? Can we replicate this in Nigeria? What do we need to do to make this happen? I asked these questions on my social media handles and got a myriad of responses ranging from genuine self-introspection to excuses, and even outright justification of the status quo. It is an unfair comparison of apples and oranges. Comparing a country created in 1536 with a country that was colonised and whose independence was given in 1960 is not a fair comparison; Nigeria needs time! One of them declared. Some others postulated that until we pass into law the electoral reform bill, there will not be elections in 2023. I don’t think the comparison is unfair; technology evens things out. We have to start aspiring towards superior systems instead of wallowing in our status quo, another countered. If the U.K. is too far from Nigeria in development for a fair comparison, then maybe we should measure our electoral process against our neighbours here

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in Ghana and assess how we stack up. It cannot be gainsaid that the deliberate policy of free quality education in Ghana is at the root of sustained electoral maturity. The elections are more about developmental manifestos of the candidates than about parochial tribal and religious sentiments. Even if we compare “apples with apples” with respect to the period since independence, how do you explain that countries like Botswana (1966), Mauritius (1968) and Singapore (1965) who were also colonized and gained independence after Nigeria are doing much better in their political process. Perhaps the most telling comment was that elections in the U.K. are not do-or-die affairs because there’s a limit to what a party can spend, coupled with the fact that the rewards and perks of political office are not way out of proportion to other careers. Nigeria’s political process seems to be riddled with rigging, violence and deaths. We seem to take one step forward in electoral reforms, followed by two giant leaps backwards. Success at organising elections will certainly boost our standing among nations, and indeed our self-esteem as a people. While it is pertinent to do an introspection about how we got here, it is

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AUSTIN OKERE

more important to focus on how to dig ourselves out of this predicament and our respective parts in the plan; what I call healing “the man in the mirror” to heal society. Credible elections will instil good governance, assure shared prosperity and stem the massive brain drain plaguing our nation. This is certainly not rocket science, or is it? It will be interesting to hear your views. Austin Okere is the Founder of CWG Plc, the largest ICT Company on the Nigerian Stock Exchange & Entrepreneur in Residence at CBS, New York. Austin also serves on the Advisory Board of the Global Business School Network, and on the World Economic Forum Global Agenda Council on Innovation and Intrapreneurship. Austin now runs the Ausso Leadership Academy focused on Business and Entrepreneurial Mentorship

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Thursday 19 December 2019

BUSINESS DAY

cityfile

Oyo trains 1000 locals to sustain community project REMI FEYISIPO, Ibadan

bout 1000 stakeholders have been trained on how to monitor and maintain projects embarked upon by the Oyo State Community and Social Development Agency (CSDA), for sustainability of such projects. The stakeholders were charged to intensify efforts towards maintaining functionality and sustainability of micro projects in their communities. The ongoing CSDA projects cover 2009 to 2020 and those that have impacted on community health, rural electrification, accessible water and others have been executed. Speaking at a one-day refresher training organised by CSDA for Community Project Management Committee (CPMC) members, the general manager of CSDA, Babatunde Christopher, said that grassroots development anchored on the needs of the people was the major area of interest to the present administration. Babatunde disclosed during the training for Ibadan/Ibarapa, Oyo/Ogbomosho and Oke-Ogun zones, that 691 projects had been completed in 146 communities in the areas of health, water provision, education, rural electrification, construction of bridges, socio economic empowerment while 35 ongoing projects would be concluded before the year 2020. He stated that as the community and social development project was preparing to round up by the year 2020, the success of the micro project implementation in the communities depended largely on the CPMC, as they must acquire effective supervision and sustainability of projects. “It is pertinent that the people directly affected by these projects are made to monitor and maintain them, this is the only way to keep the projects alive for the benefit of the rural dwellers.

NDLEA arrest 4 drug merchants, burns 14.3 tonnes of cannabis

he National Drug Law Enforcement Agency (NDLEA) says it has seized and burnt over 14.3 tonnes of illicit drugs and crops in six different camps raided by its operatives in Ondo and Edo states. Haruna Gagara, NDLEA Commandant in Ondo State, told newsmen in Akure that his team also apprehended a notorious cannabis merchant, Ohimai Ayodele, 51, in Uzebba, suspected to be the mastermind of the killing of NDLEA personnel earlier this year. “Ayodele’s men opened fire in an attempt to resist his arrest. Seven of our personnel got injured in the course of the incident and they are currently receiving treatment in a hospital,” said the narcotic chief. Gagara further disclosed that the operatives also arrested a 66-year-old cannabis farmer in a deserted locality along Edo/ Ondo border. He said that several cannabis nursery and transplant farms were discovered and destroyed immediately while weapons were seized. The state commandant said the patrol also invaded Ajobieye forest in Ute, Ose local government area of Ondo State in an operation that lasted about eight hours. “This operation led to burning of 1,225 bags of cannabis sativa,while 174.5 kilograms and sample of fresh plants were brought for prosecution purposes.

L-R: Femi Osilajo, regional operatives director, West Region, Airtel Nigeria; Adetokunbo Alegbejo, regional marketing manager, West Region, Airtel Nigeria, serving beneficiaries, during Day 2 of Airtel’s ‘Five Days of Love’ annual feeding programme at Lafenwa Market, Abeokuta, Ogun State

A’ Ibom to deny GBV offenders bail

… Rights groups kick ANIEFIOK UDONQUAK, Uyo

n a move aimed at reducing high incidence of Gender-Based Violence (GBV), including rape and defilement in Akwa Ibom, the government says it will, going forward, deny perpetrators bail by courts in the state. But the position of the state does not sit well with rights groups, who believe it will amount to the violation of the rights of the perpetrators to bail. This is coming after more than 452 cases of GBV have been reported by the state ministry of agriculture and women affairs with 18 offenders successfully prosecuted and 16 convicted. Police sources say cases of rape and defilement in the state not reported are more than those made public due to the fear of stigmatisa-

tion and the unwillingness of victims to press charges against the offenders. According to the United Nations, over 35 percent of women worldwide have experienced physical or sexual in their life time. Gloria Edet, commissioner for agriculture and women affairs who stated the state government’s position during a one-day workshop on GBV said: “Anybody that rapes a child there is nothing like bail for that person and there is no sentiment about it, no matter who is involved, be it a father raping his own child and so on, we must work together to prosecute that person.” Last month, the police in the state paraded some offenders, including fathers who raped and defiled their daughters, including a man who impregnated his daughter thrice and forced her to abort the pregnancies.

A pregnant lady whose husband was paraded by the police for raping his step-daughter was reported to have pleaded that her husband be left off the hook by the police, saying there would be nobody to look after her if the husband was prosecuted and jailed. A pastor of a new generation church who was paraded by the police for raping his daughter in the church, and who confessed to the crime, told reporters that he did not know what pushed him into the act in the church. “As I sit here, I don’t know what came over me. If I am done here, I will ask for deliverance,’’ he was quoted as saying. But rights groups in the state have picked holes with the position of the state government, saying no matter the crime committed, the offender is still innocent until proved guilty by a court of law.

FCTA receives 7, 826 land applications in 2019 …as Bello signs 785 C of O James Kwen, Abuja he Federal Capital Territory Administration (FCTA) has received a total of 7,826 applications for various plots of land in the Federal Capital Territory (FCT), Abuja in the year 2019. Director, Abuja Geographic Information Systems (AGIS), Isa Jalo who disclosed this in Abuja while briefing journalists, said private residential applications were 4,901, commercial, 2,120; resettlement, 431; area councils, 373; and diplomatic,1. Jalo noted that the production and conveyance processes of the Certificates of Occupancy (C of O) have been reorganised to fast-track its deliverance with the intention of reducing wastage of man-hour of the customers. He stated that AGIS has contributed

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to the success Nigeria recorded in its upward movement on the ease of doing business on the 2019 World Bank index as the agency has repositioned its customer service to make it more responsive and people result oriented. “In consonance with this narrative, AGIS has re-modernised its website by making it interactive with the deployment of online customer complaint and feedback mechanism. This innovation allows the general public to lodge complaints, which can be promptly responded to. “AGIS reactivated its Electronic Queue Management System which has led to the improvement of crowd management and sustained orderliness especially during peak hours of its operations. “AGIS has worked fervently to quicken the process of payments for services like legal search, deed of assignment, power of attorney, legal mortgage and opening

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of new application files among others; thereby making legal search to be conducted within 24 hours including its report to customers”, Jalo added On his part, FCT director of land administration, Adamu Hussaini disclosed that the FCT minister, Muhammad Bello signed and conveyed 785 certificates of occupancy in 2019. Hussaini said efforts were being made to fast-track the process of timely issuance of C of O in line with the SERVICOM charter of the Federal Government and the executive order on the ease of doing business. He stated that the department embarked on an in-house cleaning and sorted out 11,263 uncollected certificates of occupancy stored and called on the owners of the uncollected certificates to claim them. The director also disclosed that the department has 6,402 Rights of Occupancy in its vaults uncollected and advised such allottees to take possession of these title documents.

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Thursday 19 December 2019

BUSINESS DAY

Investor

In association with

Helping you to build wealth & make wise decisions Market capitalisation

NSE All Share Index

NSE Premium Index

N11.721 trillion

Week open (06 – 12–19)

31,924.51 26,855.52

N12.962 trillion

2,169.31

Week close (13 – 12–19)

26,536.21

N12.808 trillion

2,137.83

Year Open

Percentage change (WoW) Percentage change (YTD)

-1.19 -15.57

2,241.37

-1.45 -2.61

The NSE-Main Board

NSE ASeM Index

NSE 30 Index

NSE Banking Index

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

130.95

723.46

NSE Lotus II

NSE Ind. Goods Index

NSE Pension Index

291.84

2,272.45

1,254.54

1,212.79

801.09

1,438.19

426.64

1,123.02

757.63

119.16

551.01

233.97

1,776.52

1,069.12

1,012.93

734.99

1,134.61 1,124.63

356.93

1,112.88

352.66

119.20

548.50

234.05

1,762.70

1,056.79

1,013.14

-1.20

0.03

-0.46

1,456.29

-0.90 -22.71

-2.99 -7.41

-0.88 -20.64

-11.60

-5.76

-26.75

0.03

-0.78

-1.15

0.02

-22.56

-21.09

-14.63

-16.09

L - R: Toke Alex Ibru, director, Capital Hotel Plc; Oscar N. Onyema, chief executive officer, The Nigerian Stock Exchange (NSE); Anthony Idigbe, chairman, Capital Hotel Plc; Chuma Anosike, director, Capital Hotel Plc; Fadeke Odugbemi, director, Capital Hotel Plc; Alexander Thomopulos, director, Capital Hotel Plc and Olumide Bolumole, Head, Listing Business Division, NSE during the Capital Hotel Plc Facts Behind the Figures presentation for capital market stakeholders at the Exchange

Capital Hotels mulls public offering to remedy free float deficiency Iheanyi Nwachukwu

apital Hotels Plc is considering public offering in the near term, which is in line with the Board of Directors plans to remedy record deficiency in the company’s shares’ free float. Free float is to the number of a company’s outstanding shares owned by public investors, excluding locked-in shares held by controlling-interest investors. The X-Compliance Report of the Nigerian Stock Exchange

shows that Capital Hotels Plc which has just 2.99percent free float was given to August 16, 2021 to comply with the listing requirement on free float. The plan for public offering was disclosed when Anthony Idigbeled Board of Directors presented Capital Hotels Plc Facts Behind the Figures to capital market stakeholders at the Nigerian Stock Exchange (NSE). “The Board of Directors is appreciative of the approval of extension of time to remedy the free float deficiency of Capital Hotels Plc and has taken concrete steps to cure same.

“The actions taken include: that a public offer be made specifically to remedy the shortfall; engaging with existing major shareholders to reach an understanding to cure the deficiency; and regular quarterly communication will be sent to the NSE to indicate concrete milestones attained”, the company told capital market stockbrokers, analysts and investors present. The free float requirement for companies on the Alternative Securities Market (ASEM) Board is a minimum of 15percent of issued and fully paid up shares while that of the Main Board is a minimum of 20percent of the issued and fully

paid up shares. Companies listed on the Premium Board are also required to have a free float of a minimum of 20percent of issued and fully paid up shares or the value of its free float is equal to or above N40 billion on the date The Exchange receives the Issuer’s application to list. Listed on the Main Board of the NSE, Capital Hotels Plc’s 1,548,780,000 shares outstanding are valued at N4.259billion at N2.75 per share. The company’s shareholding structure shows shareholders with 5percent equity and above. They are: Hans-Gremlin Nigeria

Limited (51percent), Continental E n e r g y R e s o u rc e s L i m i t e d (14.76percent), Oma Investment Limited (14.76percent), Abuja Investment Company Limited (6.50percent), and other investors (12.97percent). “Ca p i t a l Ho t e l s P l c w a s incorporated on January 16, 1981 as a private limited liability company. It became a public liability company on May 31, 1986. Its hotel, Sheraton Abuja Hotel commenced business in January 1990. “Sheraton Abuja Hotel has 575 Guests Rooms of which 266 are under renovation. 97 of the 266 guests rooms shall be released into the market newly renovated stateof-the-art Club Rooms and suites in early 2020. “Once completed, the ongoing renovation will yield a top notch product to delight our numerous guests. Our service delivery will, over the long term, cause us to surpass the needs of our guests, and thereby create more value for our shareholders in a sustainable manner,” the management told the audience at during the Facts Behind the Figures presentation. Highlight of the company’s income statement shows that its revenue grew by 6.3percent to N5.977billion in 2018 from N5.622billion in 2017. Its profit after tax (PAT) printed lower by 59.4 percent to N379.94million in 2018 from a high of N935.90million PAT recorded in 2017. Room revenue accounts for over 50percent of the hotel’s income and Food & Beverage rakes in just less than 40percent while other services account for the balance. 57percent of the food and beverages revenue comes from banqueting and conferencing. About 48 percent of the hotel’s earnings come from corporate entities.

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Thursday 19 December 2019

BUSINESS DAY

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Investor’s Square

United Capital Investment Views

Equities market: Santa claus yet to visit the Exchange

n the prior week, the local equity market sustained its recent bearish trend, down 1.2percent week-onweek (w/w) as the NSE-ASI closed at 26,536.2points. This was as the market closed in the red territory on three out of the five trading days of the week. Accordingly, YTD return weakened to -15.6percent while market capitalisation fell by N151.4billion to close the week at N12.8trillion. Activity level was mixed as average volume traded fell 10.1percent w/w to 155.3million units while average value traded inched higher by 14.5percent to N1.4billion Three out of the five sectors under our coverage closed in the negative region. The Banking index (-1.2percent) dipped the most as we saw losses in Guaranty (-2.3percent), FBNH (-2.3percent) and STANBIC (-1.9percent). The Industrial Goods (-1.2percent) and Consumer Goods (-0.5percent) indices joined the week’s laggards, owing to price declines in DANGCEM (-1.9percent),

However, we do not rule out a quick visit by Santa Claus during the week. Money Market : Rates continue to crash at the NTB auction During the previous week, naira inflows into the system exceeded corresponding outflows, as overall system liquidity remained buoyant and interbank funding rates remained in the single-digit region. In terms of liquidity flows, the DMO successfully rolled over N45billion worth of NTB that matured on Wednesday. Also, the CBN partially mopped up N289.1billion of the N650.2billion OMO that matured on Thursday. Overall, the average interbank funding rate Open Buy Back (OBB) and Over Night (O/N) closed lower by 25basis points (bps) w/w to settle at 2.5percent. In terms of primary market activities, local investors continued to aggressively bid for NTBs, as total subscription was N292.6billion versus N45billion that was offered. Across the maturities offered, the 91-day bill received the

BERGER (-10percent), CCNN (-2.08percent) and NESTLE (-3.7percent). On the flip side, the Insurance as well as Oil & Gas indices rose by 3bps respectively. This was on the back of price appreciation in MANSARD (+9.1percent), ETERNA (+7.1percent) and OANDO (+0.3percent). Investors sentiment remained underwhelming as market breadth declined to 0.6x (previously 0.7x). Specifically, 29 stocks declined and 16 stocks advanced w/w. This week, we expect interest to remain tepid as investors continue to opt for safety amid uncertainties in the macroeconomic environment.

most interest (bid to cover: 10.8x), with the 182-day (4.6x) and the 364-day (6.4x) also receiving significant interests. Similar to the previous auctions, the DMO was able to crash rates significantly across all bills offered by an average of 1.3percent (91-day: 5percent, 182-day: 6.2percent and 364-day: 6.9percent). For the OMO auction, no demand was recorded on the 89-day and 180-day. However, the 362 day was heavily subscribed (bid to cover: 1.4x), with the CBN able to tweak rates lower by 2bps to 13.28percent. Following the oversubscription at the NTB

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auction, demand filtered into the secondary market, as average NTB yield dropped by 98bps w/w to 6.3percent. A similar performance in the secondary OMO market was observed, as average OMO yield dropped by 180bps w/w to 13.1percent. This week, we expect rates at the 19th Dec auction (N7billion) to dip further, amid heightened liquidity and the continued search for investment outlets by local investors. Also, with N395.9bn OMO set to hit the system, we expect the CBN to continue its liquidity mopping strategy. Bond Market: Average real yield slid into negative region Sentiments in the secondary bond market stayed upbeat during the previous week, buoyed by the elevated level of liquidity in the system. Activity level weakened as total trading volumes declined by 14.1percent w/w to N521.0bn. Bulk of the activities were concentrated at the long end of the yield curve, with notable demand for the high yielding 30-year notes. Accordingly, average yields declined by 79bps w/w, to settle at 10.8percent - 77bps below October 2019 Inflation rate. Sentiment at the secondary Eurobond market turned bullish during the week. The performance was buoyed by key positive developments in the global space. First, the U.S. Federal Reserves and the European Central Bank (ECB) maintained status quo at their last meeting in 2019. Also, trade truce between US and China calmed investors apathy for Emerging Market assets. Lastly, crude oil prices remained on the ascendency during the week, as Brent traded above $64 per barrel for the major part of the week. In all, buying interests in FGN dollar notes outpaced selling interests, average yield fell by 32bps, to 6.3percent. Meanwhile, yields on Corporate Eurobonds declined slightly by 2bps to 5.3percent. Elsewhere, IMF reached a staff-level agreement on a $2.9billion financing package with Ethiopia, to provide balance of payments support for the cash-strapped economy as well as technical assistance for the government’s liberalisation agenda.

•Have you been shabbily treated by your registrar, stockbroke r or other capital market operators? Let us know and investor will help you investigate and report back. E-mail: iheanyi.nwachukwu@businessdayonline.com

Vetiva Research

Equity market: A stuttering year draws to a close (Part 1) … We expect 2020 to provide more attractive market for investors

oming off a sustained d ow nt re n d ( t h e market has lost more than 14percent since December, 2018), expectations of a post-election rally proved unfounded, as the All Share Index (ASI) floundered for most of 2019. Pre-election activity was tepid, with average daily turnover of N3.6 billion and periods of investor apathy. The postponement of the presidential polls further provoked doubt among i nv e s t o r s, l e a d i ng t o a delayed reaction following the conclusion of voting and the announcement of results. Despite the straightforward process, investors failed to return to the equities market with any enthusiasm. Other drivers (the merger between ACCESS and Diamond Bank, the listing of MTNN and AIRTELAFRI) did provide investors with some reason to return to the equities market, but these were opportunistic forays rather than a concerted change in sentiment. L ooking for ward, we expect 2020 to provide a more attractive market for investors, amid a more stable political backdrop, increased capital expenditure, currency stability and slightly stronger economic growth (2020E GDP Growth: 2.4, IMF: 2.6percent). Risk-off internationals eye investment options International investors

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traded cautiously in Nigerian equities throughout 2019, as the uncertainty of the ongoing trade war, weaker oil prices, domestic economic weakness and political uncertainty dampened sentiment. As of October 2019, total foreign investment activity had declined 26.2percent year-on-year (y/y) to N1.628 billion, while total foreign inflows into the market was 29.8percent lower y/y at N363.85 billion. This reflects the weak perception of international investors towards the Nigerian market, while the OMO and T-bills markets remained more attractive through most of the year. In the final quarter, the CBN’s OMO policy, which was intended to boost real-sector lending has pushed some investors into the equities space; however, this activity was led by local investors (according to NSE data, foreign inflows declined by 20.7percent month-on-month (m/m) in the period of the new policy, while outflows jumped 41.01percent m/m. Further interventionist policies in the capital market are only likely to dampen foreign investor confidence, especially amid a less than bullish economic growth outlook and mounting pressure on reserves. Emerging, Frontier markets provide near-term @Businessdayng

opportunities N i g e r i a’s m a r k e t performance compared to other Frontier Market names was poor; Egypt, Turkey and Kenya’s markets have all returned in the double digits so far in 2019. The general sentiment towards Emerging and Frontier Names has been positive, with investors taking advantage of the stronger yield environment of some of these markets. Also, the reversal of Monetary Policies in Developed markets proved a boon for Emerging Market borrowing. However, Frontier equity markets have generally lagged developed markets, with the MSCI EM index returning 6.4percent yearto-date (ytd) and the MSCI FM index gaining 9.5percent, while the MSCI World Index for Developed Economies advanced 21.3percent. Looking forward, foreign investor participation in Emerging and Frontier markets is likely to increase (e v e n a c ro s s e q u i t i e s ) , although the bulk of inflows will generally be to the Fixed Income space, amid dovish policy stances from developed economies and weaker global prospects. However, Nigeria is unlikely to be the main destination for investors, as comparable frontier markets cur rently pres ent more attractive prospects.

Thursday 19 December 2019

BUSINESS DAY

Investor Helping you to build wealth & make wise decisions

‘Electronic offering will address e-dividend issues’ Mary Uduk, acting director general of the Securities and Exchange Commission (SEC) responded to questions at the Capital Market Committee (CMC) briefing held recently in Lagos. Iheanyi Nwachukwu brings you the excerpts. What are some of the activities the SEC has participated in to attract more investors and deepen the market? etween the 2nd CMC held in August and now, the Commission has organised and participated in a number of events of which we informed the market at the meeting. Such events include our collaboration with the University of Lagos in organising a two-day conference on “Leveraging the capital market for economic growth and development”, on September 11 and 12, 2019. The event served as a convergence for industry experts, the SEC and the academia to forge a partnership that would aid the conduct of relevant research towards innovative solutions in our market. This was followed by the Commodities Round-Table held in October, 2019, with over 170 key stakeholders in attendance. This roundtable served as a platform to secure the buy-in of these stakeholders, as well as the perspective of policy makers towards improving the commodities ecosystem. As you are aware, Nigeria has a lot of potentials in the commodity space and the capital market can be used as a platform to achieve these. Another key highlight of our activities within the period was the convening of the Inaugural West African Capital Market Conference with the theme “Positioning West Africa capital market to achieve sustainable and real economic growth through integration and sound regulation. The event which held from October 27-29, 2019 in Abidjan, Ivory Coast, featured resource persons on infrastructure and sustainable financing, Capital Market Integration, FinTech, Investor Protection, amongst others. In addition, we launched the FinTech Roadmap for the Nigerian Capital Market during the Nigeria FinTech Week in October 2019. The event buttressed the Commission’s resilience to adopt and guide the industry towards innovation. Following an amendment to Rule 61 (2) of the SEC Rules, the Commission has issued directives to facilitate effective compliance with the amendments on operations of nominee accounts by capital market operators. We enjoin all CMOs to familiarize themselves and comply with this new rule. To improve capital formation and investment from savings, we also informed the market that the Honorable Minister of Finance, Budget and National Planning has approved the composition of a National working group on Saving Scheme. The Inauguration of the group will be undertaken by the Honorable Minister in the near future. In terms of our Investor Education efforts, you are aware of the initiative towards including Capital Market Studies in the curricula of Basic and Senior Secondary Schools. Having infused the capital market content into this curriculum, the next phase of our work is to develop the Teachers’ Guides. We have equally constituted a steering committee for the Universities’ curriculum. The CMC just held its last meeting for the year 2019. What are some of the highlights of the meeting? At the meeting, the various Technical Committees provided updates on their activities and I would like to provide you with some of the highlights. In the presentation made by the Commodities Trading Ecosystem Committee, we were informed about the ongoing collaboration with the Standards Organisation of Nigeria to review applicable standards as well as the schedule of a capacity building session for personnel of the

Mary Uduk

Federal Ministries of Finance, Budget & Planning, Trade & Investment and Agriculture. The Committee is also having engagements with relevant corporates and state governments to secure their buy-in on current initiatives in the ecosystem. Going forward, the Committee is proposing to meet with the Nigeria Sovereign Investment Authority (NSIA) on the status of the Nigerian Commodities Exchange (NCX) and work with the Nigerian Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) to develop some agricultural-based financial instruments. The Multiple Subscription Committee presented the status of its ongoing engagement with the Central Bank of Nigeria (CBN) and Committee of Heads of Banking Operation to display multiple accounts regularization banners in the banking halls all over the country. The Committee also reported that CMOs have commenced the filing of report on regularized accounts with the Commission, on a quarterly basis. Given the relevance of this exercise and the need to create more awareness, the Committee requested for an extension of the deadline of multiple accounts regularization. Also, the presentation by the e-Dividend Committee showed that the number of shareholders enrolled on the e-Dividend Mandate Management System (e-DMMS) platform has increased to 2,820,065 at the end of the 3rd Quarter of 2019. Further updates were given concerning the ongoing efforts at integrating the Direct Cash Settlement (DCS) and the e-DMMS mandate forms, as well as the engagement with the CBN on the inclusion of e-DMMS charges among allowable bank charges. Also, the Non-interest Finance Committee presented the importance of granting the PFAs the permission to invest a given percentage of a willing contributor’s Retirement Savings Accounts in Non-Interest capital market products. Updates were equally given on the progress made in the collaboration with the Debt Management Office (DMO) to develop a short term

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non-interest instrument. The meeting received further updates from the presentation of the report of the Market Liquidity Technical Committee, as well as the final report of the Block Chain and Virtual Assets Committee. We had extensive discussions on these Technical Committees’ presentations and comments were also received on the presentations of Self-Regulatory Organizations (SROs) and the Observer Groups. What were some of the resolutions reached? Registrars are to discontinue the practice of requesting for confirmation of bank signature during the e-DMMS process. CMOs are to display awareness campaign banners of e-DMMS at their offices and Venue of Annual General Meetings (AGM). Capital market operators should also work with the Commission to share awareness information on their social media platforms. SEC is to review the request from the Association of Stockbroking Houses of Nigeria (ASHON) for extension of time for compliance on the transfer of complete investor data among operators such as Brokers, Registrars and CSCS. Upon completion, the position of the Commission will be communicated to the relevant parties. The Commission is to engage the National Pension Commission (PENCOM) on modalities which would permit Pension Fund Administrators (PFAs) to participate in Securities Lending. The Commission to develop rules and regulations on warehouse receipts within the current legal framework. What new strategies is the Commission looking to tackle unclaimed dividends? The issues of unclaimed dividends are legacy issues. They happened way back in the past. Right now you will not get unclaimed dividends from new issues. Part of the problem of unclaimed dividend has to do with identity management. We are doing all we can to educate the public on and

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engaging the various stakeholders to be able to get a lot of the information that we require. Since then, items like BVN have been added to help in identity management. The capital market is also taking advantage of it. The CSCS and the registrars are working together to ensure that more information from the legacy shareholders are being collected to be able to update their information and get them to be able to claim their dividends. Recently, there have been lots of engagements with shareholders on this issue. The registrars don’t have direct interface with shareholders, they deal directly with stockbrokers. But there is a committee comprising of SEC, the registrars, the stockbrokers, the issuing houses, the CSCS and NSE working on that in addition to the e-dividend management. The committee has come up with a resolution which was adopted at the last CMC meeting. Part of the resolutions is that stock brokers will update information in respect of their client. They are legacy issues, remember that before 2008, we had a lot of Nigerians who bought shares in the capital market and at that time we did not have BVN numbers. Even some of them did not provide their account numbers. What was agreed was that we would update information of such shareholders. That information will be transmitted to the CSCS who will update their own information and send them to the registrars, which means we will not address the legacy issues by the time stockbrokers update that information. What was also agreed was that there will be no transaction in respect of any account that information is not updated. We also talked on the issue of compliance and enforcement which has to do with conduct of capital market operators. It was agreed that there will be zero tolerance and the brokers will be given a time frame. We hope that by the time that information is updated, the issue of unclaimed dividends will be resolved. Also going forward, the Commission has approved the rule in respect of electronic offering and we believe that by the time we commence that, it will address that. Before you can complete the application, the system will validate your account number, the system will not accept incomplete application. We believe that in addition to the e-dividend mandate, these other initiatives that the Commission is doing with other stakeholders will address the issue of unclaimed dividends. What is the SEC doing to attract retail investors? We have various initiatives in place all geared towards attracting retail investors to the market. We are interacting with them in a lot of ways like the social media, educational materials, excursions to the Commission, enlightenment campaigns among others. We are also interacting with them through the new curriculum that we are coming up with for Capital Market Studies in secondary schools. Of recent, we interacted with the army, even for us it was an eye opener. They came out in their numbers and we intend to do more. We have a department in the Commission where students from all over the country come to the Commission for interactions. We try to engage all sectors of the country; we believe that we need to develop this market. That is why we have both short term and long term plans. What we are doing with the universities are research based conferences, issues that will be very key to the market are brought to the fore. We just completed one with the University of Lagos and other universities have indicated their interest in such programmes too.

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Thursday 19 December 2019

BUSINESS DAY

COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

C&I leasing eyes more investments in marine business to boost revenue ...forecast average growth of 18.48% through 2023 MICHAEL ANI

&I leasing, Nigeria’s only publicly listed leasing firm, is eyeing to pump in more investments into its marine business as the company seeks to boost revenue and reward its shareholders. By increasing its investments in the marine sector, the firm anticipates to grow revenue at an average of 18.48 per cent within the next five years, Andrew Otike-Odibi, Chief Executive Officer, for the leasing firm said. “We see the marine sector as a promising one, and we intend to put more money behind that sector which will impact positively on the overall performance of the business,” Odibi said last week, in the firm’s headquarters in Lagos. N3.2 billion Right Issues C & I Leasing Plc has commenced the process to raise N3.2 billion equity capitals through Rights Issuance to fund the acquisition of offshore vessels for marine

and oil business expansion. The firm is issuing 539,003,333 ordinary shares of 50 kobo at N6 per share. The capital raise will enable the company, strengthen its financial position in order to enhance its capital structure for optimum performance; provide working capital support in a timely manner; and capture potential attractive growth opportunities. The right issuance was open for subscription to both existing and on the 18th of November is expected to close on the 27th of December 2019. According to Odibi, most of the proceeds from the N3.2 billion will be going into business expansion particularly the marine sector, which will, in turn, reflect on the overall performance of the business. The firm’s boss noted that the right issues have so far gotten maximum subscription form both shareholders and non-shareholders of the business. “Most of our existing shareholders have been very positive which has been very encouraging for

us. We have also gotten some non-shareholders who have indicated interest which is also a sign of positive developments,” he said. Last year, the company’s board approved a N20 billion debt issuance programme, the first leg of which (a N7 billion issuance) was oversubscribed by 33 per cent. The latest

N3.2 billion rights issue is a part of that 5-year fixed-rate senior secured bond. Odibi said the company has succeeded in making three payments to the trustees without defaults on the dates. “That speaks volumes about the business and the cash flow we generate,” he said Growth Forecast

The company forecast its revenue to hit N33.67 billion in full-year 2019. With this, the firm said its revenue would continue at 18.46 per cent to N66.34 billion by 2023, supported by increased volumes in its Nigeria, Ghana and the United Arab Emirates divisions. In its 9month audited

L-R: Chukwu Okoronkwo, director and head advocacy, communication and social mobilization, National Malaria Elimination Programme, Federal Ministry Of Health; Ochuko Keyamo-Onyige, country manager, Nigeria Gbchealth; Omobolanle Victor-Laniyan, head sustainability, corporate communications, Access Bank/co-chair, Corporate Alliance on Malaria in Africa (CAMA), and Okuns Ohiosimuan, corporate medical service manager, Nigeria LNG Limited, at the 2019 Corporate Alliance on Malaria in Africa (CAMA) End Of The Year Members/ Partners Meeting, at Access Bank Headquters, Lagos.

financial statement, C&I reported a slight drop in Profit before Tax (PBT) by 6.7 per cent to N1.20 billion, from N1.288 billion reported the same period in the year before. This was despite reporting a surge of 33.7 per cent in gross earnings from N19.86 billion to N26.55 billion. Odibi said the slight decline in PBT, was as a result of two of its vessels which were out for maintenance. He noted that these vessels were back in business, and would impact positively when its full-year 2019 scorecards eventually drop. The firm also anticipates a simultaneous rise in shareholders’ funds from N13.68 billion in 2019 to N34.57 billion in 2023, which will be substantiated by a 466 per cent growth in retained earnings. According to Odibi, the future growth forecast was not based on how the company has operated in the last three years, but it’s based on the investment (financial and non-financial transaction) that has been within the past periods.

ENTERTAINMENT

Unity Bank partners Veritas Kapital for new insurance product ENDURANCE OKAFOR

nity Bank in partnership with Veritas Kapital Assurance Plc has launched Bancassurance, a robust financial solution that provides customers access to insurance services while carrying out their banking transactions. With the partnership, Veritas Kapital will leverage on the customer base of the Bank and its distribution channels to sell its products. In order to make it easy for end users to access the new product, Veritas Kapital representatives will be present in designated flagship branches under the initiative to rollout Bancassurance prod-

ucts which offer financial protection covering wide ranging policy and risks in areas such as Motor,

House Owner, Personal Accident and House Holder insurance. Commenting on the

partnership, the Managing Director/CEO, Unity Bank Plc, Tomi Somefun believes that the Bank’s

L-R: Beatrice Olowu, wife of Uche Olowo, president/chairman of council, Chartered Institute of Bankers of Nigeria (CIBN); Debola Osigbogun ,former president, CIBN; Micheal Akinwale, a reverend, and Jaiyeola Laoye, past president, CIBN, at the CIBN’s evening of songs to mark 2019 Christmas carol in Lagos Pic by Pius Okeosisi

longstanding relationship with Veritas Kapital Assurance Plc makes the implementation of the agreement work best for all parties, particularly, the Bank’s customers; adding that, “the new synergy will bolster the bank’s agribusiness and its value chain as customers in livestock and crop production can be effectively offered an insurance cover”. Veritas Kapital Managing Director/CEO, Kenneth Edore Egbaran is confident that this partnership will open new vistas of opportunities to offer even more innovative financial solutions to customers to enable them access numerous benefits that are available through insurance products. Since 1984, Veritas Kapital Assurance Plc has

been offering non-life Insurance products and services to individuals and institutions across Nigeria. This expertise, combined with Unity Bank’s strength in agribusiness and the offering of Veritas Kapital in agricultural products such as Area Yield Index-Based Insurance, Livestock Insurance, Property and Produce Insurance will provide a unique solution to enhance the customer’s experience, the commercial lender have said. In 2018, The Central Bank of Nigeria and the National Insurance Commission issued guidelines for Banks and Insurance companies wishing to go into collaboration based on referral model for Bancassurance product.

Thursday 19 December 2019

COMPANIES&MARKETS

BUSINESS DAY

Business Event

Nigerian firm COC Beauty School explores Dubai market for technical capabilities MODESTUS ANAESORONYE

rom February 1st to 11th 2020, ten passionate women will become scientifically sound formulators. These lucky women will tour the cosmetic industry of Dubai, a city where the art of perfumery is widely appreciated and greatly packaged. A Nigerian based institute where the best of cosmetics production is tutored, COC Beauty School is overseen by the CEO, Ayo Bassey - a 10-year certified expert in herbology and cosmetic formulation. Ayo and her team at COC Beauty School have raised over 100 beauty entrepreneurs in 10 countries and counting. Students are taught cosmetics formulation skills and exposed to practical business tips on how to launch beauty businesses, selling the products they learn to make. The prod-

ucts created include skincare, haircare, makeup & perfumery. The Dubai tour will be guided by selected U.A.E experts in three very profitable fields; MihaelaPaunescu (Skincare), TalmiraYermolova (Perfumery) and Julia Violet (Scented Candles). They will teach the participants advanced ways of creating products that sell, reveal to them the best markets for acquiring quality ingredients and tools that are inaccessible in West Africa thereby building a reliable supply relationship. Participants will acquire knowledge on how to create exquisite rich perfumes of Arabian descent, go on a yacht cruise, visit the perfume museum, archives & souk, Miracle Garden etc. Most importantly, participants will be exposed to the international side of the beauty business and prepped towards breaking the international market, having their products being sold globally. Accord-

ing to Ayo, the intention is for participants of the beauty tour to become potential millionaires from making and selling beauty products. In her words, “our dream is to get African made products on the world’s map and this is one step to lift the vision of our African beauty formulators” At the end of tour, these women will join over 100 COC Beauty School alumni, some of whom have raked in 7 figures from their first launch. “Upon gaining in-depth knowledge of each ingredient used, they will be well aware of what proportions to use based on skin, hair type, race and climate. Students will also understand the importance of every step taken in production, enabling them provide ideal solutions that are healthy by making the safest and most effective cosmetic products. Each participant will be awarded a certificate of completion” Ayo further added.

L-R: Jummai Idonije, special assistance technical to minister; Olukayode Pitan, MD/CEO,Bank of Industry; Pauline Tallen, minister of woman affair and social development; Adebisi Ajayi, group head gender business of Bank of Industry, and Simon Aranonu, executive director large enterprise of Bank of Industry, at the courtesy visit of minister to the BoI head office in Lagos

Grape Tree Int’l rewards marketers for hard work IFEOMA OKEKE

nternational Ltd, producers of Diplomat toothbrush; who are also marketers for Grape Tree International ltd, Ifeanyi Joseph and Taofeek Yahaya have been rewarded with a Lexus 330 Sport Utility Vehicles (SUV), and a Toyota Corolla for their hard work in 2019. Speaking at the event, which was held at Sanditex hotel, Lekki recently, Cyril Okoye, the chairman of Grape Tree International Ltd, while presenting the keys to Joseph and Yahaya, said the two young men proved worthy when the company closed windows on credit buy-

ing and resorted to deal on cash business alone. The two men lived up to expectations and became the highest cash buyers. Meanwhile, the company has made it a policy, process and procedure to reward the highest cash buyer during the year’s prize giving ceremony at the end of the year. “The two men lived up to expectations because the company made it a policy, procedure and process to reward the highest cash buyer during the year’s prize giving ceremony at the end of the year.” Okoye added that “In a bid to preserve the company policy, live its expectations and keep

the fire burning in the minds of marketers, agents and business associates; Grape Tree International Ltd also rewarded other marketers with various consolation gifts items to encourage them put more effort in the coming year. “We are here today to promote our great company Grape Tree International Ltd, and our products especially Diplomat toothbrush to the general public. It has become the company’s strategy to appreciate our clients, markets, agents and business associates. We value them with worthy gifts for their efforts and to thereby encourage them to work harder in the coming year,” he said.

L-R: Fred Martins, head teacher, Besona International School; Foluso Oladejo, territory sales manager, Pz Wilmar; Meshach Darefaka, head Boy, Besona International School, and Njoku Chinesom, principal, Besona International School, at the Mamador Breakfast School Activation at Besona International School in Port Harcourt.

COMPANY RELEASE

St Kizito Clinic applauds Chevron’s support in fight against Tuberculosis

L-R: Funke Opeke, CEO, Mainone/keynote speaker; Fola Adeola, founder, Fate Foundation, and Adenike Adeyemi, executive director, Fate Foundation, at Fate Foundation’s 2019 annual celebration and awards ceremony In Lagos.

t. Kizito clinic, Lekki Lagos has commended Chevron Nigeria Limited (CNL) for upgrading the analogue x-ray machine it donated to the clinic in the past, to a digital x-ray machine. This is part of CNL’s support for the fight against tuberculosis (TB) in Nigeria. Explaining the value of the digital x-ray machine, the management of the clinic says the digital imaging bypasses the films chemical processing, provides immediate image preview and availability, it enhances the images’ quality and allows us to digitally transfer the results for consultation in real-time. More than 20,000 patients will benefit from this upgrade. “This great stride will greatly increase effective TB screening towards identifying TB sufferers: TB remains the world’s deadliest infectious disease

L-R: Seyi Olanrewaju, chairman, Chartered Institute Of Management Accountants (CIMA) Nigeria Branch; Florence Lawal and Her Husband Razak Lawal, Fellow Of CIMA; Ijeoma Anadozie, associate director, CIMA Nigeria; Dan Akujobi (ACMA CGMA), and Femi Adebayo, vice chairman, CIMA Nigeria, at the centenary dinner Of CIMA, in Lagos

and require acceleration of efforts to end its epidemic,” a statement by the clinic said. “Chevron Nigeria Limited’s (CNL) support to St Kizito Clinic started in 2005 and has continued till date - a recognition of the professional daily work of the centre, which remains the only comprehensive diagnostic and treatment TB- DOTS unit with experienced and trained health personnel and laboratory operating in Eti-Osa LGA,” the statement added. Nig e r ia i s a m o ng t h e countries with the highest burden of TB in the world, a disease with fatal consequences if not diagnosed and treated adequately. “In our country, less than 25 percent of all TB cases are diagnosed, increasing the fatalities from an otherwise curable disease. Over 10 percent of the national

burden of Tuberculosis is reported by Lagos State making it the state with the highestburden of TB in Nigeria. In the last 30 years, St Kizito Clinic has treated more than 2,000 TB cases. As a recognized TB and HIV Centre, working in close collaboration with the Lagos Ministry of Health, St Kizito Clinic in Jakande Housing Estate is one of the comprehensive diagnostics and treatment TB DOTS centre with experienced and trained health personnel and standard laboratory operating in Eti-Osa, and Lagos Island LGA. Alda Gemmani, St Kizito Clinic Medical Director said: “We are grateful to CNL for the consistent support provided to Loving Gaze through the years. Previously, CNL donated a mobile X-ray machine and film processor which allowed us to commence Radiology service at St Kizito Clinic in 2014.

Thursday 19 December 2019

BUSINESS DAY

RESEARCH&INSIGHT

In association with briu@businessday.ng

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

08098710024

Nigeria Economic outlook 2020 Global economy

lobal growth impetus in the year 2019 was bedevilled by a number of headwinds: the US-China trade tension, Brexit uncertainty, and tight monetary policy environment. In 2019, the Federal Reserve cut the funds rate three times (against the increasing trend seen in 2018 and expectation for 2019). This year, there are signs of easing on these winds. For example, the U.S and Chinese governments have decided to work the resolution in phases instead of taking on the entire process. The “Phase 1” deal would have the U.S reduce by half the tariff on $120 billion Chinese imports; suspend the imposition of 15 per cent new tariff on $150 Chinese good set to take effect on 15 December 2019. The U.S would, however, retain the 25 per cent on $250 billion Chinese imports to the U.S. On the other hand, while China has equally suspended a planned retaliatory move on the U.S., they pledged to buy $32 billion ($16/year) worth of U.S agricultural produce over the next two years. This is on top of a baseline of $24 billion in Chinese purchases in 2017 before the trade dispute. The intention is to go immediately into other serious phases of the resolution before the November 2020 U.S elections. A Goldman Sachs report shows that the trade dispute subtracts about 0.4pp from quarterly annualized growth in the US and 0.6pp in China. Therefore, an ease in the tension due to progressive agreements would imply a “subtraction of negatives”. In addition, the perceived consensus in the Brexit debate deducible from the election of a new Prime minister, Boris Johnson in the UK, encourages expectation of some degree of recovery and growth of 1.4 per cent in the coming year. In all, forecasts estimate a growth of about 3.2 per cent in 2020 from 3.0 per cent in 2019 on the grounds of lesser uncertainty in the UK (and the EU by extension) in the

-3.5 to -12.1 per cent in the second and third quarter of the year. • Minimum wage legislation was passed increasing the minimum wage from N18,000 to N30,000. • Nigerian signed and ratified the optimistic African Continental free Trade Agreement (AfCFTA), after months of national deliberation. • Two months after signing the AfCFTA, Nigeria shutdown it land borders to neighbouring countries. The trade sector experienced a contraction of -1.45 per cent since while the agricultural sector expanded.

Table 1 Global growth outlook for 2020

Source: Bloomberg

event of a successful withdrawal from the EU, improvement in the US-China trade negotiations, and the improvements in other emerging market economies such as Brazil, India, and Russia. However, based on established recession models, there are arguments of 20-30 per cent chance of the global economy slipping into a recession in 2020. The elections in US and Israel in 2020 are countries to sway the political arena. Nigerian economy: 2019 in review For Nigeria as with some other countries including South Africa, it was an election year which made things kick off rather slowly. The capital market was hard hit as the NSE ASI fell 14.1 per cent to 27,002.15. The sentiments

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stemmed mainly from the uncertainties around the election and the also the shocking realities of the outcome of the election. Albeit GDP growth increased by 2.01. 2.12 and 2.28 per cent in Q1, Q3 and Q4 2019 respectively. The inflation rate also declined to 11. 37 and 11.31 per cent in January and February respectively from the December 2018 peak of 11.44 per cent. Other highlights in the year 2019 include: • MPC cut interest rate by 50 basis points to 13.5% per annum first time since July 2016 while holding other measures the same. This was in line with a pro-growth strategy in the real sector as the target for 2019 was 2.3 per cent • The CBN increased the Loan to Deposit ratio (LDR) from 60 per cent to 65 per cent. This move was to encourage lending to SMEs, retail and mortgage sectors so as to spur growth in the real sector. • CBN restricts purchases of OMO bills to foreign and institutional investors. • Two major telecoms listing in the local bourse: MTN Nigeria and Airtel Nigeria. Yet, year-to-date returns continued to decline:

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Outlook for 2020 The AfCFTA as it goes into effect in the coming year would mean the dawn of new reality for the countries in the sub-region. The fundamental weaknesses in intra-African trade as well as existing regional treaties and arrangement would challenge the success of the AfCFTA. Like Nigeria, more countries might become protectionist in reaction to the outcome of the regional integration. As of Q3 2018, the unemployment rate was about 23.1 per cent (last available statistics). There was less than the usual liquidity flush in the last election compared to the previous ones. The CBN has also been on the watch on monetary policy tools. The annual inflation rate in 2019 is about 11.3 per cent compared to 12.7 in 2018. Growth rate in GDP has been upward trending in the year with the yearly average expected to be 2.15 per cent based on a Q4 growth of 2.2 per cent. (Economic realities would interplay with seasonal effect to determine the GDP growth in Q4). This

might mean in all, a small moderation in unemployment rate. The outlook on growth in 2020 expected to be above 2 per cent (though below 3 per cent ERGP target); inflation would trend higher in the first months of the year and decline as the year progresses. The market may rebound eventually. The US-China trade tension as well as the Brexit and the AfCFTA would be the major wind to watch in terms of external shocks.

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Thursday 19 December 2019

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LegalBusiness BD Business Law Industry Report Practice Intelligence Partnerships

Plea bargain has reduced amount of taxpayers’ money spent on prosecution of cases in court – AG, Lagos

The Lagos State Ministry of Justice is on a mission to drive and implement policies and programmes that would give residents of Lagos state greater access to justice through what it describes as its dynamic law reform programmes. In this interview with BusinessDay Law Editor, THEODORA KIO-LAWSON, the Lagos State Attorney General and Commissioner for Justice, MOYOSORE ONIGBANJO, SAN speaks about administering justice in one of Nigeria’s most populous states, legislative reforms, and protecting the rights of citizens. EXCERPTS…

lease tell us about the agenda of this administration. Our focus is on maintaining the tradition of keeping our dear state at the vanguard of Good Governance, Rule of Law and Constitutionalism, not just for now but also for the future. Under my watch as Attorney General, justice sector in Lagos State will also continue to experience the implementation of programmes aimed at giving the good people of Lagos State greater access to justice through dynamic law reforms and adherence to the Rule of Law.

sions in the Nigerian Correction Service Act. What is the state doing about the fight against Domestic and sexual violence? The fight against Domestic and Sexual violence has been on for sometime through our Domestic and Sexual Violence Response Team, which is dedicated to pursuing justice for survivors and deterring perpetrators. Recently, on the 26th November, 2019 there was a Walk to commit and act against domestic and sexual violence. The Walk represents a clear message that the Lagos State Government under this present Administration will not tolerate any form of domestic or sexual violence and that is why the symbolic walk was led by Mr Governor. We are looking at propagating a dedicated Sex Offenders Register with data extracted from the Lagos Criminal Information System and the DSVRT. The major aim of the monitoring programme and the mandated reporting policy is to reduce repeat cases by providing names and personal details of convicted sex offenders in a central database.

Lagos State comes with the full demonstration and challenges of an urban city. What is the goal of your administration, towards ensuring law and order in Lagos State? We recognise the need to ensure that Law and Orderliness is kept. It is this administration’s agenda to clamp down on criminals, land grabbers and other troublemakers to reduce crime and all forms of security threat to the barest minimum. This administration has zero tolerance for criminals, and we would also ensure that the poor and downtrodden in the society have access to justice through our agencies.

Has the focus shifted now to more critical justice issues? In the last months, the focus has basically been to foster speedy and time effective justice delivery equally amongst all persons in the state. We recognised that this can only be achieved mostly through institutional and policy strategies. Please clarify. We are all witnesses to how the activities of Land Grabbers were almost completely stifling commercial activities in the State. The Lagos State Special Taskforce on Land Grabbers popularly known as ‘Omo Onile Taskforce’ with a mandate to rid the State of land grabbers, continued to receive petitions and several criminal prosecution cases against suspected land grabbers currently on-going in different Courts. The operation of the Taskforce recently received a boost when 19 alleged land grabbers were arrested on the 13th November 2019, in Kosofe Local Government and trial is still on going at the Magistrate Court. We presently have 35 Land Grabbing cases in Court, wherein land grabbers are being prosecuted and we are hopeful that justice would be served without hindrance to serve as a deterrent to other land grabbers.

How have some of these policies and procedures impacted the confidence of the people in the ability of the state to administer of justice? Recent Statistics shows that there is an appreciable increase in the number of citizens who patronize the Taskforce for resolution of land grabbing cases. We owe this in part to the intensity of publicity and awareness campaign as well as testimonies of people who have had their cases resolved through the Taskforce. As cheering as this is, the Taskforce is confronted with myriads of challenges in carrying out its legal responsibilities, which are presently being addressed for optimal performance.

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We seek the cooperation and support of State House of Assembly, the Judiciary, the Police, the Prison Services and other security operatives, in order to collectively ensure that our dear State is a safe and secure environment for all regardless of our different tribes, religious and political affiliations.

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How has the journey been and how have you tackled obligations, tasks and projects since you assumed office? Upon assumption of office as Attorney General, my first major assignment was to chair an EXCO Sub- Committee on Road Traffic and Law and Order. That Committee looked into the expansion and functionality of the Mobile Courts in order to seek ways of reducing street trading, traffic congestion and unethical/anti-social conducts on the roads, as well as environmental nuisances; thereby improving the socio-economic well-being of the residents of Lagos State. To show the seriousness and commitment of this Administration towards Law and Order, I personally prosecuted traffic offenders at the mobile court in October, this year.

As it concerns Administration of Justice, in the last months, the Directorate of Public Prosecution received 212 duplicate files for Legal Advice and 164 have been issued and despatched. The remaining 48 could not be treated because of request for further investigation by the Police. In the last two weeks, 94 Plea Bargain applications have been treated. The introduction and utilization of the Plea Bargain has reduced the time spent on criminal cases towards achieving Prison and Court decongestion, as well as saved, in no small measure, the amount of tax payers money expended in the prosecution of matters in court. The Office of the Public Defender (OPD) handled 1,636 cases, 600 petitions out of which 245 have been concluded. 141 judgements have been obtained, over 30 children rescued and total compensation of N8,103,567.09 was received on behalf of clients by the OPD. Similarly, the Public Advisory Centre, received monetary claims of N3,684.666 on behalf of claimants, whilst the Directorate of Citizen’s Rights instituted cases in the National Industrial Court where 7 Claimants were awarded N21, 352,319 as terminal benefits from their various organizations. These are basically highlights of this office’s efforts regarding Access to Justice. The Lagos State Ministry of Justice recently intervened in respect of an encroachment on land of an elderly couple at Ejigbo, whose video went viral on social media, what is the update on this matter? The couple were invited to our office and the police have also been invited to investigate the alleged criminal activities of the individuals named. How has your office progressed with the issue of non-custodial sentences On our part, there has been a renewed effort through the Community Service Unit of the Ministry of Justice of the State Government to work with the Nigerian Correctional Service to implement the non-custodial sentence provi-

Human rights violations are the core and foundation of a state of unrest and conflict in any given society, how would the state through your ministry ensure that the rights of citizens and duly protected? The Lagos State Government under the leadership of Mr. Babajide Sanwoolu is firmly committed to the promotion, protection and fulfilment of human rights, welfare and wellbeing of the citizens. It is in recognition of this fact that the Ministry of Justice annually joins the rest of the world to commemorate the Worlds Human Rights Day on every 10th of December. We seek the cooperation and support of State House of Assembly, the Judiciary, the Police, the Prison Services and other security operatives, in order to collectively ensure that our dear State is a safe and secure environment for all regardless of our different tribes, religious and political affiliations. What is the Agenda for 2020? In the coming years, particular attention will be drawn on law, order and legislative reforms. We have a whole lot of Laws in the pipeline. The importance of Laws in a Society cannot be overemphasised. It keeps the society running. Laws are made to provide for proper guidelines and order upon the behaviour for all citizens and sustain the equity on the three branches of the government. We believe that laws are important in a society and so, we will further create awareness of the Laws that are being passed by the Lagos State House of Assembly. We hope to continue to receive the cooperation and support of the State House of Assembly, the Judiciary, the Police, the Prison Services, other security operatives, and of course the media with their first hand and prompt information, in order to collectively ensure that our dear State is a safe and secure environment for all regardless of our different tribes, religious and political affiliations. How does it all come together for you? None of this Agenda would be possible without the effort and support of the Solicitor General and Permanent Secretary, and the leadership of directorates, agencies, centres and various units in the ministry of justice.

Thursday 19 December 2019

BUSINESS DAY

GREYMATTER

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Validity of Consumption Taxes imposed by State Governments in Nigeria: …Has the Federal High Court decision in Hotel Owners Case settled the controversy?

he Federal High Court, Lagos Division (“FHC” or the “Court”), recently decided in The Registered Trustees of Hotel Owners and Managers Association of Lagos (suing for itself and on behalf of all its members) v Attorney-General of Lagos State & Federal Inland Revenue Service (“Hotel Owners”) that (i) the consumption tax (by whatever name called) imposed and chargeable by the Lagos State Government on goods and services supplied in hotels, restaurants, and event centers in the State, is valid and enforceable under Nigerian law, and (ii) the provision of the Value Added Tax (“VAT”) Act (the “VAT Act”), which imposes VAT on the supply of all non-exempt goods and services in Nigeria, is inapplicable to goods and services supplied by and in hotels, restaurants and event centers in Lagos State. The FHC further handed down an order of perpetual injunction restraining the Federal Inland Revenue Service (“FIRS”) from implementing the provisions of the VAT Act in relation to the supply of goods and services consumed in hotels, restaurants and event centers in Lagos State. Synopsis of the Hotel Owners Case The Plaintiffs in the suit contended in the main that having paid VAT to the Federal Government of Nigeria (“FGN”) in respect of goods and services supplied in hotels, restaurants and event centers in Lagos State, they are not liable to pay any further consumption tax imposed by the Lagos State Government (“LASG”), and sought from the FHC the declaratory reliefs set out below, to wit; (i) That the VAT Act has covered the field in respect of consumption tax on all goods and services supplied in Nigeria; (ii) That the Hotel Occupancy and Restaurant Consumption (Fiscalization) Regulations 2017, made pursuant to the Hotel Occupancy and Restaurant Consumption Law of Lagos State (the “Lagos Consumption Law”) is inapplicable to the Plaintiffs; (iIi) That the FIRS is the only lawful and competent agency vested with constitutional powers to assess and collect consumption tax in respect of goods and services supplied in Nigeria. Lagos State Government, acting through its Attorney General, joined issues with the Plaintiffs

and sought an order of the Court invalidating the applicability of sections 1, 2, 4, 5 and 12 of the VAT Act (which impose tax on the supply of all taxable goods and services in Nigeria) to hotels, restaurants and event centers,

supplied by the affected businesses.

which are domiciled and/or operate within the State. Lagos State Government further argued that the aforementioned sections of the VAT Act are inconsistent and irreconcilable with the legislative powers conferred on the different tiers of Government reserved in sections 4(2), (4) and (7) of the Constitution of the Federal Republic of Nigeria 1999 (as amended) (the “Constitution”), and as such, are invalid, unconstitutional and unenforceable. After hearing arguments, the FHC upheld and sustained, the contention of Lagos State Government, and consequently declared that the power to impose, charge and collect tax pertaining to the supply of goods and services consumed in hotels, restaurants and event centers is on the residual list in the Schedule to the Constitution, and as such, is within the legislative competence of the Lagos State House of Assembly. Further, the Court pronounced that Lagos State Government is the only lawful and competent authority empowered to impose, charge and collect any tax pertaining to the supply of goods and services consumed in hotels, restaurants and event centers in the State; by virtue of the provisions of section 4(7) of the Constitution, the Taxes and Levies (Approved List for Collection) Act (“Approved Taxes Act”), the Taxes and Levies (Approved List for Collection) Act (Amendment) Order 2015 (“Approved Taxes Order”), and the Lagos Consumption Law. Consequent upon the foregoing, the Court made an order of perpetual injunction, restraining FIRS, its agents and privies from further assessing and collecting VAT in relation to goods and services

ers among the three tiers of Government in Nigeria (Federal, State and Local Governments), and seeks to abolish the burden of double taxation borne by taxpayers in relation to the supply of goods and services consumed in hotels, restaurants and event centers in Lagos State (Prior to the FHC decision in the Hotel Owners’ case, Lagos State consumption tax was charged in addition to VAT). The decision, however, does not appear to have conclusively settled the controversy around the competence of State Houses of Assembly to legislate on issues and laws pertaining to imposition and collection of consumption taxes. In our view, the decision in the Hotel Owners Case is restrictive in scope and may not qualify as a sweeping authority on the point, as it does not seem to cover consumption tax imposed on goods and services supplied outside hotels, restaurants and event centers. There is also the well-founded contention that Hotel Owners Case appears to have been decided in sharp contrast to the Supreme Court’s pronouncements in Attorney-General of Lagos State v Eko Hotels Ltd. & anor (“Eko Hotels”). In Eko Hotels, the Supreme Court reasoned and held that the VAT Act covers the field in relation to imposition and collection of consumption tax in Nigeria, and that the imposition of VAT and consumption tax on a taxpayer in relation to the supply of the same set of goods and services would constitute double taxation. The Supreme Court further held that since the rates of VAT and consumption tax are similar, the co-existence of the same creates an unhealthy competition be-

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Commentary The decision in Hotel Owners reinforces the constitutional delineation of legislative pow-

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tween the federal and state tax laws to the detriment of taxpayers. Thus, the Supreme Court concluded that consumption laws passed by State Houses of Assembly would remain inoperable until such a time that

the VAT Act is either repealed or invalidated by an order of a court of competent jurisdiction. By contrast, the FHC decision in Hotel Owners suggests that the VAT Act does not cover the field in respect of consumption tax in Nigeria. Further, we hold the view that reference to, and reliance upon the Approved Taxes Act and the Approved Taxes Order as constituting in part, the basis for the decision in Hotel Owners appears misconceived, unfounded and unjustifiable; as the substance of both legislation does not expressly empower State Governments to impose consumption tax. The Approved Taxes Act does not impose taxes but only prescribes taxies and levies approved as being chargeable and collectible by the three tiers of government. The listed taxes and levies become collectible after specific laws, which empower their imposition, chargeability and collection have been properly enacted into law by the competent authority so authorized to give effect to them. Thus, in determining the applicability of the Approved Taxes Act in respect of any of the taxes and levies listed thereunder, regard would be had to the character or treatment of the particular tax or levy under the Constitution. From the provisions of section 4 of the Constitution, it is clear that taxation of goods and services supplied and consumed in hotels, restaurants and event centers neither reside on the Exclusive Legislative List nor the Concurrent Legislative List, and as such; cannot be validly legislated on by the National Assembly. This presupposes that only a State (or Local Government deriving @Businessdayng

power under a State) can validly legislate on such, being a matter on the residual list. Based on the foregoing, we are of the considered opinion that the FHC ought to have restricted itself,

and anchored its reasoning in Hotel Owners on the provisions of the Constitution, without more, and to the exclusion of any other authority including the Approved Taxes Act and Approved Taxes Order. We are aware that the FIRS has approached the Court of Appeal to challenge the FHC decision. Whilst an appeal will not necessarily operate to stay the effect of the judgement until it is effectively entered, and or an order is handed down in relation thereto, we believe that the FIRS may take steps incidental to truncating the efficacy of the judgement until the final determination of its appeal. It is also not inconceivable that the FIRS may continue to act in furtherance of imposing tax and collecting same in relation to the supply of goods and services, as it pertains to the Plaintiffs in Hotel Owners, in exercise of its powers under the VAT Act. Pertinent to state, that the FHC decision is a good judgement and shall apply as the authority on the subject until set aside by an appellate court.

The Grey Matter Concept is an initiative of the law firm, Banwo & Ighodalo DISCLAIMER: This article is only intended to provide general information on the subject matter and does not by itself create a client/attorney relationship between readers and our Law Firm or serve as legal advice. Specialist legal advice should be sought about the readers’ specific circumstances when they arise.

Thursday 19 December 2019

BUSINESS DAY

PERSPECTIVE

LegalBusiness

Legal and institutional restructuring for the next Nigeria Continued from last Week

he recent arbitration award secured by a company, Process and Industrial Developments Limited (P&IDL) has raised the question of how fair it is for Nigeria to have arbitration clause with a foreign seat. We understand that an Executive Order is currently under contemplation to make Nigeria the seat of arbitration and require parties to choose an arbitration institution in Nigeria. While the proposed Executive Order is laudable, it is our opinion that the Order might be confronted by challenges that might defeat the essence of enacting it. It will be recalled that Arbitration Agreements are embedded in Bilateral Investment Treaties (BITs) that Nigeria has signed and ratified with many countries. An Executive Order may conflict with the BITs. This is so because BIT’s provide that disputes arising between Nigeria and foreign investors will be determined in foreign institutions of arbitration and seeking to alter this position simply by an Executive Order might generate significant opposition by concerned interests. Furthermore, the Executive Order might conflict with the underpinning principles of arbitration that are premised on the notion that parties to an arbitration have a right to determine the arbitration institution and arbitrators that will undertake the arbitration proceedings. Given the above, we would rather suggest that an Executive Order should create a National Work Group that will be authorized to review the scheme of the arbitration provisions currently incorporated in the BITs, and the task of proposing how Arbitration connected to Nigeria will have Nigeria as seat of Arbitration. MARITIME MATTERS This is potentially the largest economic sector outside of hydrocarbons. Nigeria’s maritime sector is estimated to be capable of GENERATING 7 TRILLION NAIRA ANNUALLY AND 4 MILLION JOBS OVER 5 YEARS. However, to tap revenue from this sector there needs to be an overhaul of policy, institutional, regulatory and legal framework. For instance, the Government needs to immediately implement the policy for Inland Container Depots (ICDS). We have 6 (Six) ICDS spread across the geopolitical zones that can generate at least 15,000 jobs for different levels of manpower. Due to the lack of infrastructure to support business and

operations by concessionaires, these depots have not been optimally utilized. 80 per cent of Nigerian trade is diverted to ports in Cotonou and other West African ports. Further to this is the need to review our cabotage regime to stem capital flight and boost capacity for Nigeria’s Shipowners. Despite the enactment of the Coastal and Inland Shipping Act 2003 Nigeria loses an estimated 7 Trillion Naira in the shipping sector. Foreign vessels trade in violation of the Cabotage regime. This is responsible for capital flight. There is a need for immediate enactment of several critical bills pending before the National Assembly. This would facilitate the legal framework to move the maritime sector to the next level. Such bills as the Petroleum Industry Bill (PIB), the Ports and Harbour Bill, Maritime Zones Bill, Ocean Bill etc. are yet to be passed into law. There is also an urgent need to review the Nigerian Shipping Policy of 1987. AVIATION/SPACE The Aviation Sector requires major reform. Nigeria has no presence in the Aviation business. Nigeria Airways has been long comatose. Foreign aircraft dominate the Nigerian airspace and earn well over a trillion Naira to our exclusion. A trillion Naira is about a quarter of our entire national budget. A Fly Nigeria Bill will ensure that every government Naira used to purchase a ticket must originate and terminate on a Nigerian carrier. This Fly Nigeria Bill will create an instant market for our national carrier. On Space, it has been said that that the future of mankind is in Space. Space has many major applications for developing our economy. We will mention at least three examples. First, space can be applied to the energy sector as remote sensing can tell us the quantum of our hydrocarbons. Second, it is the value of space applications

to the Maritime sector. Third, it is the link between space and national security. Satellite technology intelligence gives us vital footprints in the national security infrastructure. The growing threat of terrorism and the adverse impact on economic stability can only be checked by intelligence provided by space satellites. We must upgrade our space legislation. LEGAL/JUSTICE SECTOR ISSUES The legal and judicial system has experienced legal failure. The judicial system has never really been reformed. The Nigerian judicature is based on the 1875 Judicature Act. The consequence is that cases take too long to resolve. It takes between 5 to 20 years to resolve simple contractual disputes. Investors, whether local and international will not invest in a country where there is no sanctity of contract and simple contractual disputes take between 5 to 20 years to resolve. We must give urgency to this sector and reverse legal failure. A speed of justice policy will reduce delays. In this regard, the National Assembly can consider introducing the Administration of Civil Justice Bill to ensure efficient administration of civil disputes. Also, new methods of dispute resolution should be considered such as Alternative Dispute Resolutions, small claims courts, traditional and customary arbitration. Finally, quasi-judicial administrative tribunals can be established by sector, following the UK example. In England there exist many administrative courts to cover Telecommunications, taxation, transportation, Insurance, Education, Financial Services, Trade, Investments, etc. LAND ADMINISTRATION The Land Use Act created a framework for ascertaining title and therefore it became easy to determine title. It also meant that landholding was major

collateral for investment and financing. In doing this the state governors play an administrative role, issuing consents, licenses, permits etc. which has become overwhelming. The process has become clogged and as a result of this clog, the impact of land collateralization on lending and borrowing is affected. A recent study shows that the housing asset inventory of Nigerian property exceeds six trillion dollars. Most of this is dead capital and is not fungible. There is a need to wake up this six trillion dollars’ worth of dead capital. A Land Use Administration Commission Bill will make the Land Use Act and consent rules more efficient and instill confidence in financial institutions. This will impact positively, collateralization, lending and borrowing within the financial system. ANTI-CORRUPTION The war against corruption requires an effective strategy. In addition to the strategy of prosecution, it is suggested to consider a 2-year moratorium from criminal prosecution. So legislation may be considered on immunity from criminal prosecution (Moratorium) Act. The Abacha case is now going 20 years with little result. This may be controversial but it is worth considering. SOCIAL SECURITY ADMINISTRATION The Federal Government has committed trillions of naira to administer social security to the elderly and vulnerable like the school feeding programme and Trader Moni but there is no legal framework. The standard operating model around the world is the creation of a benefits agency as it is called in England, and a social security agency as it is known in the US, to cater for those who are unable to look after themselves. The government will gain more by giving a legal framework for these benefits. Enacting a Social Security Administration Bill pursuant to Chapter 2 of the Constitution will see to the progressive realization of rights contained in Chapter 2 of the Constitution. 4TH BRANCH OF GOVERNMENT This was developed by FDR in the 1930s and is why the US came out of the recession rapidly. The 4th branches are regulators who implement decisions of the Executive branch, which is the first branch. They are called the 4th branch because they exercise executive, legislative and quasi-judicial powers. In Nigeria, regulators like NAFDAC,

SON, NERC etc. are part of the 4th Branch of government. They can make regulations, enforce them and impose penalties. Unfortunately, there is no standard operating model for these regulators. Most of them lack a basic understanding of their role as the 4th branch of government. It may be worth doing a high-level training workshop on the role of the 4th branch of government. A strong 4th branch of government will improve the efficiency of government. CONCLUSION Development law policy has succeeded wherever it has been applied. It has not been applied in Nigeria. If applied it will result in double-digit growth, more revenue and will pull millions of Nigerians out of poverty. It is strongly recommended that the government should adopt a development law policy as one of its economic policy tools.

ABOUT OLISA AGBAKOBA Dr Olisa Agbakoba is a Senior Advocate of Nigeria (equivalent of Queen’s Counsel) and a life bencher of the Body of Benchers. He is one of Nigeria’s leading experts in Maritime Law and has litigated several complex maritime cases. He has championed legal reforms in maritime law including the Cabotage Act, the National Oceanic Policy and other strategic legislations. He played a major role in the reform of both State and Federal High Court Rules for speedy dispensation of justice. He is the founding President of the Nigerian Chamber of Shipping, a member of the National Assembly Business Environment Roundtable (NASSBER) and Vice Chairman Presidential Committee on the review of the maritime sector. Dr. Agbakoba is also a leading arbitrator, an initiator and pioneer of Law Firm Annexed Arbitration/ Mediation Centre in Lagos (Nigeria), the Olisa Agbakoba Legal (OAL) Arbitration & Mediation Centre. He designed the ADR mechanism and rules for Asset Management and Recovery of Nigeria (AMCON). He has been involved as counsel and arbitrator in various national and cross border multi-million dollars disputes. He is a Development law expert and has advocated the application of Law in development planning and economic growth. He has consulted and provided advisory services to the federal and state governments, as well as government ministries, departments and multilateral agencies on legal reforms and legislative advocacy. He has served in various appointive governmental positions and a member of the Nigerian Economic Summit. Dr. Agbakoba is a leading Human Rights activist, a democracy and Rule of Law scholar. He became the President of the Nigerian Bar Association (20062008) and in 1987; founded the Civil Liberties Organization (CLO) of which he was the president from 1987 to 1995. He has authored numerous books such as the National Oceanic Policy, Development Law Policy, Federal High Court Practice Manual, Maritime Newsletter Volume I & II among many others.

Thursday 19 December 2019

BUSINESS DAY

INDUSTRYFILE

LegalBusiness

Humans Rights Day at US Consulate: Akpata, others call on govt to safeguard citizens’ rights

o mark this year’s International Human Rights Day on Tuesday December 10th, 2019, the United States Consulate-General, in collaboration with the Constitutional Rights Awareness and Liberty Initiative (CRALI), last week hosted a panel discussion, on the theme, “Respect for Human Rights: A Panacea for National Peace and Development and the roles of State Government in Nigeria”. Speaking about this year’s event, the convener, Adeola Oyinlade stated that there was need to engage state governments and to see how they can best promote and support human rights causes. Welcoming guests during her opening remarks, US Consul General, Claire Pierangelo reflected on the annual Human Rights Report, which is published every year by the US State Department to document human rights violationrelated issues in Nigeria. She emphasised the importance of civil liberties and the need for the government, as the custodian of power, to put in place strong institutions that would guarantee the rights of the ordinary citizen always. She said, “Human rights starts with us in our small communities before it becomes a national issue and we all have a duty to promote the rights of citizens across the world. We need to stand up together, to speak up for democracy

Adeola Oyinlade, convener.

Claire Pierangelo, United State Consul General, Lagos.

Claire Pierangelo, United State Consul Gener- Olumide Akpata al and Darius Ishaku, governor, Taraba State.

Panel of discussants. L-R, Dr. Babatunde Ajibade, SAN, managing partner, SPA Ajibade and Co.; Attorney General of Ekiti State Olawale Fapohunda; Apwenyang Yamusa Shitta, solicitor general, Taraba State, sand Olumide Akpata, senior partner, Tempars.

and against actions that set us back, so that bad precedents will not be set.” Claire added, that the United States government will continue to champion human rights causes because of its experiences in this regards. “We believe when we do this, countries are stronger and more prosperous.

Arch. Darius Ishaku, governor, Taraba State.

Olumide Ayeni, SAN, former attorney general/ commissioner for justice, Ogun State, representing the Chief Justice of Nigeria.

L-R: Olumide Akpata, senior partner, Templars; Dr. Babatunde Ajibade, SAN, managing partner, SPA Ajibade and Co.; Russell Brooks, public affairs officer, United State Consulate, Lagos; Claire Pierangelo, United State Consul General, Lagos, and Arch. Darius Ishaku, governor, Taraba State, Adeola Oyinlade and the Attorney General of Ekiti State Olawale Fapohunda at a conference organised by US Embassy to mark 2019 International Human Right day in Lagos, yesterday.

We have a strong bilateral relationship with Nigeria and we will continue to strengthen this relationship”, she said. Olumide Akpata, a Senior Partner at Templars and the immediate past Chairman of the NBA Section on

Business Law, who spoke during the panel discussion, called on the Nigerian government to safeguard the rights of its citizens. In his words ‘there is only so much that civil liberty organizations can do; the government must play a

critical role in guaranteeing the rights of its citizens’. He also noted that the rights to freedom of expression and assembly are necessary for peace and development in any society. In his remarks, the governor of Taraba State, Darius Ishaku noted that, “There were critical indices that must come to play in the protection of human rights. The state government should do more than the federal government at ensuring human rights protection by safeguarding the people and the process.” Olumide Ayeni, former attorney general/commissioner for justice, Ogun State, who made the keynote presentation, stated that human rights laws have continued to be expand beyond its original scope. “To this end, we must not relent in doing this because the development of human rights is a panacea and economic development in any society”, It is imperative that attorneys general of states in Nigeria ought to ride where opportunities present themselves to continue to expand the scope of human rights as a panacea for national development. Where human rights are eroded, there cannot be development”, he said. In his remarks, Olawale Fapohunda, Attorney General of Ekiti State called for a national conversation. “There has to be a national conversation about what type of judiciary we truly want. Is it one that is dependent on political forces or a truly independent one?

He continued, “There are two protagonists who should be championing the struggle for an independent judiciary – the first should be the judiciary itself and the second, the legal profession (i.e. the local and national bar associations), and I must say that I do not think the bar is doing enough to address these issues.” Another member of the panel, Dr. Babatunde, Ajibade, SAN, Managing Partner, SPA Ajibade & Co., disclosed that part of the challenges faced in the justice sector was due to the division in the legal profession. “The profession is divided into so many parts and what we must do now is retrace our steps towards developing the sector. “The Political actors are work hard to ensure that we do not have an independent judiciary and they have succeeded thus far, while the legal profession sits and watch. Sadly, it may come to a point where the judiciary is so suppressed that it may no longer be able to grant court orders; and this is so, because we have sacrificed everything on the alter of self-interest. In closing, Olumide Akpata stated firmly, that, until we all come together to make the judiciary impregnable, and free from personal and political interest, our democracy would not develop; we would continue to have human rights violations and issues; and we may not even have a place to go to determine our rights.

Appointment

TNP Partner, Baba Alokolaro appointed to Lagos Law Reform Commission

he Managing Partner of The New Practice (TNP), Baba Alokolaro was on Tuesday appointed to the Lagos State Law reform Commission. Baba, who leads the Corporate Finance and Business Advisory Group of his law firm, is regarded as a solution-oriented business lawyer and has been responsible for the firm’s reputation in the capital markets, e-Commerce and tech space in a series of deals across several industries. He lends his expertise across areas of Project Finance, Corporate Finance, M & A,

Baba Alokolaro

New Members of Lagos State Law Reform Commission

Infrastructure and Power. He was General Counsel to the Governor of Lagos State between 2007 and 2011 and currently the chairman of the Merg-

ers, Acquisitions & Corporate Reorganisations Committee of the Section on Business Law, as well as a Council member of

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the Section on Business Law (NBA-SBL); a member of the Chartered Institute of Arbitrators and a member of Capital Market

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Solicitors Association. The Law Reform Commission was established by statute of 18th May 2007 by the Lagos State @Businessdayng

Law Reform Commission Law as amended on 30th January 2012. Its first Commission was constituted on March 12, 2012.

Thursday 19 December 2019

BUSINESS DAY

INDUSTRYFILE

LegalBusiness

Nigeria’s economy in 2020 is dependent on a combination of smart decisions - Bismarck Rewane to capital market lawyers

L-R: Chief Olurotimi Williams, Member, Board of Trustees, CMSA, Oladepo Odujinrin, chairman board of Trustees, Bismarck Rewane, Benjamin Obidegwu, chairman, CMSA, Anthony Idigbe, member Borad of Trustees and Chike Obianwu, vice chair, CMSA, during the CMSA end of year event in Lagos.

anaging D i re c t o r and Chief Executive Officer of Financial Derivatives Company Limited, Bismarck Rewane has said that a key factor for the revival of Nigeria’s economy in 2020 is dependent on a combination of smart decisions by the Government and the cooperation of lawyers in the capital market. Bismarck Rewane, who is a member of the Economic Advisory Council, made this disclosure at the Capital Market Solicitors Association (“CMSA”) End of Year Event (EoYE), which held in Lagos recently. According to Bismarck, the outlook for the year 2020 would include some challenges for the con-

L-R, Vincent Iweze, CMSA, Secretary, Guest, Ayo Owoigbe (Immediate Past Chairman, CMSA Executive Committee), Benjamin Obidegwu, CMSA, Chairman, Executive Committee

L-R, Semilore Atewologun, Chioma Olibie, Bukki Olabiyi, CMSA Publicity Secretary and Damilola Ogedengbe.

L-R, Efeomo Olotu, CMSA, ExCo member with Guests and Ikechukwu Uwanna (2nd from right).

One of the winners of the Raffle Draw with Fubara Anga, Former Chairman, CMSA Executive Committee and Otome Okolo, CMSA, Social Secretary

sumer such as tax increases by the government, higher inflation rate due to the border closure as well as challenges for the government in terms of a high possibility of more FOREX restrictions and increased borrowing to meet the revenue shortage. “To make a headway despite these challenges, there must be an intervention outside market forces and the government must

provided an update on upcoming CMSA events in the year 2020. He assured guests, that the CMSA would make efforts to get more sponsorships for future events in order to relieve the pressure on the member firms. Some lucky winners were treated to exquisite prizes during the raffle draw which was actioned by the CMSA Trustees present at the event; prizes

play an active role in ensuring a better economy and this would only be possible with support from the legal sector,” he said. The chairman of the CMSA, Benjamin Obidegwu during his welcome address expressed his gratitude to all the guests in attendance, assuring them of a memorable event, while the vice chairman of the CMSA and Templars partner, Chike Obianwu,

included a spa treatment, a dinner of two at an exclusive restaurant and much more. The event was well attended with lawyers from member firms, members of the board of trustees, and former members of the CMSA executive committee. Vincent Iweze, the Secretary of the CMSA, thanked the invited guests and members for making time out to be at the

event and urged everyone to look out for emails on upcoming CMSA events. It was an evening of music, dance, entertainment, networking and knowledge sharing; one that attendees are unlikely to forget anytime soon. The current members of the Executive Committee of the CMSA were introduced to members; Benjamin Obidegwu (Chairman), Chike Obianwu (Vice Chairman), Vincent Iweze (Secretary), Simisola Eyisanmi (Assistant Secretary), Blessing Choko (Financial Secretary), Joseph Eimunjeze (Treasurer), Otome Okolo (Social/Welfare Secretary), Olubukola Olabiyi (Publicity Secretary), Jennifer Martins – Okundia (Ex Officio), Efeomo Olotu (Ex Officio), Folasade Ajibola (Ex Officio).

FCCPC applauds suspension of Turkish Airlines operations

he Chief Executive Officer of the Federal Competition and Consumer Protection Commission (FCCPC), Babatunde Irukera has applauded the action taken by NCAA against Turkish Airlines for its unacceptable treatment of passengers. Describing the move as “strong and decisive”, the FCCPC boss in a statement to the media, recalled the incessant and unabating complaints about the airline’s treatment of passengers, which preceded the NCAA’s action and the regrettable lack of sufficient attention by the airline to mitigate these mistreatments and reverse the trend.

Babatunde Irukera

The statement read in part, “A fundamental plank and mutual commitment under Bilateral www.businessday.ng

Air Service Agreements (BASA) is respect for local laws and maintaining appropriate standards,

not just as a matter of aircraft airworthiness and safe operations, but also how passengers are treated. Sadly, Turkish Airlines has remained insensitive and unyielding to repeated regulatory intervention and oversight to modify its behavior.” The CEO stated that the vexatious multiple issues of delays, cancellations and baggage handling continued to be the highlights of passenger complaints, whether international or domestic travel. These according to him, undermine confidence and the full potential of the aviation sector. “ T h e re s p o n s e by NC AA will no doubt address the airline’s

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conduct, and more importantly, send a clear message to other airlines, including domestic, that regulators are not unwilling to utilise the regulatory tools at their disposal to promote and ensure fair treatment of consumers”, Irukera said. Pledging support for the regulatory body he further said, “The FCCPC will continue our record of strong collaboration with the NCAA, and continue to provide useful feedback to support an enduring approach to regulatory action, where necessary, to improve passenger experience. “FCCPC looks forward the improved services promised by Turkish Airlines, including chang@Businessdayng

ing the current equipment from a B737-800 to an A330 and alternately, a B737-900. We expect that, in addition to more appropriate and befitting equipment, Turkish Airlines will implement a more sensitive and responsive approach to passengers,” the chief executive said. It would be recalled the Nigerian Civil Aviation Authority (NCAA) on December 13th 2019, suspended the operations of Turkish Airlines in Nigerian airports on account of poor treatment of passengers and a very inefficient approach to timely delivery of baggage to travelers. The Airline is currently in talks with the NCAA.

Thursday 19 December 2019

BUSINESS DAY

TECHTALK Innovation

Apps

Fin-Tech

Start-up

Gadgets

Ecommerce

IOTs

Broadband Infrastructure

Bank IT Security

Tech tools can solve Nigeria’s 80 million human capital challenge - Shagaya From founding one of Nigeria’s biggest e-commerce companies, Konga, Sim Shagaya, now the founder and CEO of uLesson, certainly knows first-hand the promise of leveraging technology to address Nigerian’s many developmental problems. In this interview with BusinessDay’s Frank Eleanya, He explains how using digital tools can help the country resolve the problems in human capital development. What was it like for you moving from e-commerce to education? Was it like moving from a bad relationship to a new environment? wouldn’t say it was a bad relationship. It was an incredible experience. We built an incredible brand that continues to function till today. I took a lot from that experience that - along with many things - have prepared me for what we are looking to do now. I think that there are some foundational problems that we face on the continent, some of them are infrastructural, but I think the most pressing ones are human capital related. The ones that are human capital related are around healthcare, financial inclusion, and education. We have seen a lot of progress in addressing the financial inclusion part. There is a lot of people doing incredible work in financial inclusion. Healthcare is a special beast. But I think there is no other sector at this point that is more ready, where you can apply these powerful tools that digital has brought to us, than education. There are so many tools that are available to us now that were not available when I started Konga. Even though the telco networks still leaves a lot to be desired, but they are doing a lot to try to improve that. I think that one thing they have done is that they have left in their wake, over the past decade, this massive install base of cell phones. These are

incredibly powerful tools that come with all kinds of things; front camera, back camera, microphone, screens where you can do high resolution videos, and storage has gotten so much cheaper. Today, there are SD cards you can find for 64GB and 128GB. These were tools that were not available before. When you take all of these in totality, they are going to allow us at uLesson to start out with a product that I think is revolutionary, and to build on top of that going into the future to create really quality education that is affordable for Africa. I think education is the foundational issue that we face right now on the continent. Everything stems from that.

Sim Shagaya

You have always found yourself in sectors that have a long way to go in terms of maturity. What is your drive? Education is something that I care deeply about. My happiest moments have been in front of a blackboard. Whether that was teaching as a graduate student or as a graduate teaching assistant when I was doing my Masters. When I was with Konga, I took a year off to a university in Cape Town. Teaching and that whole universe that surrounds it is what I am passionate about. I tried to actually do this before Konga. In 2008 and 2009, I had two choices; either to pursue e-commerce or to do something that uses technology to address the

educational problem. But the tools were not ready. These tools that we have built up are very powerful. The West and the rest of the world are starting to realise some of the moral and social negatives that come with some of these tools with respect to privacy and the ability to interfere with politics. Like every technological tool on the other side, there is an opportunity to do good. Education in the context of Africa is bad. In the United States, teacher to student ratio is about 1-10 and they are even complaining. In India, teacher-to-student ratio is 1-19. That is a really bad situation and any Indian will tell you. In parts of Nigeria, teacher-to-student ratio is

1-70 and even the one has not really received the training that they have to reach the students. I am part Plateau and Delta, and in those two states as in much of Nigeria you see teacher absenteeism is a huge problem. When you dive into it you find that the problems are as little as the teacher has nowhere to stay in a village. In some parts of this country, 90 percent of the housing are mud houses. So you want to take somebody that have been trained in engineering, in Physics, Chemistry or Microbiology and you want them to stay in a mud home. Some of these factors drive teacher-absenteeism. The net-effect of all of these is that young people are not getting

what they need. The students are not getting what they need and this is against the backdrop of a population that is exploding. We are adding more babies today in Nigeria in terms of nominal count than all of Western Europe. If you look at the government’s budget for education; whether at LGA, state or federal, they all have various responsibilities, the fiscal allocation to education, recurring or capital expenditure assuming that all of the spends is efficient, there is no way for us to get the 80 million people that we need to get into classrooms over the next ten years. It is simply not possible. The only way to do it is to use digital tools. That makes for a profound opportunity. A big facet of that opportunity is that it is a commercial opportunity. I think that it is not just about doing good, it is also an opportunity to do well. There is no other way to address the problem. For me and my colleagues this makes it worthwhile to put in a large part of our lives and capital and effort and energy to fix this problem. What we are building in uLesson is that we have found the very best teachers - many of them young people that aced WAEC, JAMB, these are geniuses that we found. They are able to explain complex concepts like Newton’s Law of Motion, the Citric Acid Cycle in biology, concepts that are foundations for all kinds of professions. They take these concepts and break them

down in fun and entertaining ways using animation built on digital. This allows young people to learn and remember things in a way that even folks in the West couldn’t with textbooks. We then take this content and apply it to digital to make it infinitely available and affordable. What are the criteria you have to recruiting the teachers? There are three legs to what we are doing. The three are technology, media and academics. We are combining all of these quite delicately but boldly to create this product. The technology bit is what my experience at Konga has always been. For media, we all know that Nigeria is the continental centre for media. On the academic side, we have found talents or geniuses who were once languishing in different corners of this country. We took some of these people and gave them income levels that they could never have dreamed of and said “Here is our challenge; can we digitise and create a library here that is unlike anything that has been built on this continent before?” we started this a year ago, so it has taken us a year to build out this library. So it is not just the ability to pass exams which all these people have, but the ability to break down incredible concepts. Note: The rest of this article continues in the online edition of Business Day @https:// businessday.ng

Pantami drafts MainOne CEO, others into National Broadband committee FRANK ELEANYA

he Minister of Communication and Digital Economy, Isa Ali Pantami has unveiled the Nigerian National Broadband Plan Committee for the Development of the 2020-2025 National Broadband Plan. The 28 member team which is being chaired by Funke Opeke, CEO of MainOne were selected, according to a statement from the ministry, based on competence, integrity, and professionalism. The minister of communication and the digital economy had on November 30, signed a letter of intent with

the UK government through the Prosperity Fund’s Digital Access Programme, as part of efforts to draft the new National Broadband Plan. The minister had also promised to engage industry stakeholders through the process of the draft which is expected to conclude 31 March 2020. The new broadband plan has taken almost one year to commence after the previous plan ended with an abysmal result. The previous plan’s headline target was to achieve 80 percent penetration of 3G mobile wireless broadband by 2018 and the five-fold increase of broadband penetration, from the 2013 penetration of

6 penetration to 30 percent, by the end of 2018. While the 30 percent target was achieved the five-fold increase was not. By prioritizing mobile wireless broadband, little was done about fixed broadband penetration which remains at 0.06 percent in 2019 according to data from Nigerian Communications Commission (NCC). This is after billions of dollars in investment have been made by the government and private operators in the telecommunications sector. For instance, Nigeria has about five fibre optic cables lying on its shores with terabytes of capacity. The Nigerian Telecommunications Limited (now nTel),

South Atlantic 3(SAT3) Fibre optic cable is an investment of over $600 million; MTN’s West African Cable System’s is worth $650 million, ACE Cable by Dolphin Telecoms is worth $700 million, MainOne is worth $300m and Globacom’s Glo cable is worth $800 million. Presenting the new committee on Monday, Pantami acknowledged the importance of increasing investment in fixed broadband penetration. According to the World Development Report 2016, a 10 percent increase in fixed broadband penetration leads to an average increase of 3.19 percent in per capita GDP of a country. The new National Broad-

band Plan when concluded is expected to set a target of 65 to 66 percent penetration from 2020 to 2025. But experts have said Nigeria needs more than. Gbenga Adebayo, chairman of the Association of Licensed Telecoms Operators of Nigeria (ALTON) had said in January 2019 that for Nigeria to be fully digitised in 2019, government must raise broadband penetration level to 50 percent at the end of 2019 and further raise it to 80 percent by 2020, when the country will be expecting 5G rollout. One of the biggest problems hindering fixed broadband rollout which was also highlighted prominently in the previous

Team: Frank Eleanya, frank.eleanya@businessdayonline.com; Caleb Ojewale, caleb.ojewale@businessdayonline.com www.businessday.ng

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broadband was the disparities in Right of Way (RoW). Right of Way charges constitutes a major hindrance to fixed fibre deployment, sometimes constituting 50 to 70 percent of the cost of fibre deployment in some states in Nigeria. Pantami in his speech to the committee said resolving RoW is being prioritised. “The Federal Ministry of Communications and Digital Economy under my watch is working hard to address the challenges of the telecommunications sector such as Right of Way (RoW), consideration of Telecom Infrastructures as Critical National Infrastructures among others,” he said.

Thursday 19 December 2019

BUSINESS DAY

ENERGYREPORT Oil & Gas

Power

Renewables

Environment

Implications of Oando’s involvement in NLNG gas supply agreement Olusola Bello

he recent signing of gas supp l y a g re e m e n t between Oando plc, Nigerian National Petroleum Corporation NNPC and the Nigeria Liquefied Natural Gas limited is a testament that indigenous oil companies have come of age, and that, there is confidence that some of them are reliable enough to meet international standards expected of them when given jobs to do by international oil companies. It also serves a booster to the local content development policy of the government. The successful execution of the agreement by Oando would further embolden other international companies to give more jobs. This is also an indication that foreign investors that want to come to the country but yet undecided can be rest assured that there are some local companies to partners with. More jobs would be created through this just as further investments could be made to reduce capital flight. Among the consortium that signed the agreement, Oando and Nigerian Petroleum Development company

L-R: Adewale Tinubu, group chief executive, Oando PLC; Tony Attah, managing director, NLNG; Massimiliano Bertona, general manager Commercial & Negotiations NAOC, representing the managing director, NAOC and Mansur Sambo, managing director, NPDC, during the signing of the NLNG Gas Supply Agreements for Trains 1-3 and 7 in Abuja, chaired by the Mallam Mele Kolo Kyari, Group Managing Director, NNPC.

(NPDC) are the only indigenous companies involved. Oando Energy Resources, signed two Gas Supply Agreements (GSA) with the Nigeria Liquefied Natural Gas Ltd (NLNG), for the renewal of gas supply for the existing Trains 1-3 for a term of 10 years and for gas supply for the impending Train 7 for a term of 20 years. Under the terms of the current agreement the NAOC Joint Venture (JV) made up of NNPC/NAOC/Oando has a total supply obligation of 850MMScf for Trains 1–6.

The JV is specifically responsible for supplying a Daily Contract Quantity (DCQ) of 344.6MMscf/d for Trains 1-3 and The first GSA is a renewal of the gas supply terms for Trains 1-3. In addition to the JVs current supply to trains 1-6 and under the terms of the second agreement the JV will be responsible for supplying a DCQ of 294.7MMScf/d for Train 7. Train 7 is expected to come on stream in 2024, and will bring the JV’s total supply obligation to 1.1Bcf. The execution of these agreements

How Dangote Refinery will boost implementation of Nigerian Content Policy Olusola Bello

he Nigerian Content Development Monitoring Board, NCDMB, said that the 650,000 barrels per day Dangote Petroleum Refinery project under construction, would assist in the implementation of local content policy in Nigeria. The company recently announced the award of $368 million contract to 120 local contractors at its site, as part of its contribution to Nigeria content development initiative. It revealed that there were several Nigerian content opportunities in the company’s refinery and petrochemical project. The private refinery owned by the Dangote Group is under construction in Lekki Free Trade Zone, Nigeria. When completed, it will have a capacity to process about 650,000 barrels per day of crude oil. Simbi Wabote, executive secretary, NCDMB, said he believes the project is already Olusola Bello, Team lead,

helping through the award of contracts to Nigerian contractors, thereby building local capacity. Speaking on the sideline of the recently held 9th Practical Nigerian Content, Wabote, said: “First of all, to be able to drive local content you need projects. For the fact that Dangote has been able to site it project incountry is the first step to the actualization of Local content. “Dangote might as well had taken the refinery elsewhere, but he decided to execute the project in Nigeria, so that is a plus to the Nigeria investment sector. Secondly, at the peak of the construction of the refinery, about 65, 000 workers are on site, and the majority of those workers in terms of ratio that are providing various services, are Nigerians. He said there is a lot of subcontract that have been awarded within the projects site, the majority of those contracts are executed by Nigerian companies. To a very large extent, that is an example of believing in your country and trying to do things to enhance the develop-

Graphics: Joel Samson.

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to take its Final Investment Decision (FID) on Train 7 and also guarantees continuous gas supply for its existing trains after the expiration of the current agreements. Trains 1 – 3 are a brain child of the Nigeria LNG, established to tap into Nigeria’s abundant gas resource and monetize it through LNG exports. Final Investment Decision (FID) for the first 2 trains was received in November 1995. Production commenced in September 1999 for Train 2, while Train 1 started in February 2000. Train 3 commenced production in November 2002 respectively. The next phase of development called the NLNGPlus project, comprising Trains 4 and 5, commenced in March 2002. Train 4 came on stream in November 2005 and Train 5 was started up in February 2006. The NLNG Six project, consisting of Train 6 and additional condensate processing and LPG storage facilities commenced in 2004. Train 6 became operational in December 2007. With six trains currently operational, the entire NLNG plant is capable of producing 22 Million Tonnes Per Annum (MTPA) of LNG, and 5 MTPA of NGLs (LPG and Condensate) from 3.5 Billion (standard) cubic feet per day (Bcf/d) of natural gas intake.

LPG helps curb indoor air pollution in Nigeria Olusola Bello

ment of your country. “Although they are sited in the free trade zone, which has its own advantages, and off course he is entitled to enjoy those free trade advantages as enshrined in the law, but in terms of local content, it is a typical example of someone who believes in his country, someone who is patriotic to establish such a monumental projects within the shores of our land.” He commended the company for training young Nigerians who will eventually take up the management of the refinery. “We will all eventually retire one day, and young people will take over from us. Those of us at the industry, at 60 we will all retire and then these engineers will take over from us. He stated that the state of the current four refineries in the country cannot be liken to Dangote Refinery, stating that, Dangote’s refinery is a private investment which he believes that the company will do everything possible to run and maintain the refinery effectively.

also effectively monetizes ca. 3.3Tcf of gas for the NAOC JV of which 666Bcf will be net to Oando. Wale Tinubu, group chief executive, Oando PLC said: “We are particularly pleased to be the only indigenous company party to the NLNG supply agreement, testament to the potential of local players. The NLNG vehicle will support the Federal Government’s efforts to grow reserves, boost the country’s gas footprint and market share in the global LNG market and in-turn positively develop the

Nigerian economy – a goal that indigenous players are aligned with and have always wholly endorsed. “The signing of these two agreements confirms and consolidates our long-term partnership with NLNG; furthermore it is a validation of NLNG’s confidence in our operational track record. The execution of the GSA is another positive stride in the journey of the company to becoming the leading independent exploration and production company. Being a 20 year guaranteed income stream, it will strengthen the company’s financial position as well as demonstrate to its key stakeholders the company’s growth potential. By way of this agreement and in line with its increased focus on sustainability and social impact the JV is closer to its objective of achieving zero gas flare in the immediate future. We will continue to collaborate with our partners and other stakeholders in finding creative solutions to move both the industry and economy forward,” Wale Tinubu said. The execution of the two GSAs is a significant milestone for the Company, its JV partners, and NLNG. It satisfies a condition precedent for NLNG

round the world, more than three billion people, nearly half the w orld’s population, cook their food using solid fuels like firewood and charcoal on open fires or traditional stoves. This produces a lot of smoke, creating indoor air pollution, which, according to the World Health Organization (WHO), kills millions of people annually. This type of pollution is of particular concern in developing nations like Nigeria, where women and their young children, who typically stay close to their mothers while they are cooking, bear the brunt of the health problems caused by indoor pollution. Though, air pollution occurs both indoors and outdoors, Nigerians often pay attention only to outdoor air pollution, underestimating the severity of the impact of indoor air pollution. Due to this, these sources of energy (firewood and charcoal) have therefore been highlighted as a barrier to economic progress and a

major source of illness. It is in recognition of the dangers of indoor air pollution, that leading downstream Company, Enyo Retail and Supply have prompted a revolution in energy use that is already underway. Part of this involves a massive shift from cooking with wood and other forms of biomass to cooking with liquefied petroleum gas (LPG). Liquefied Petroleum Gas (LPG) is a cleaner source of cooking energy. It has the potential to change the landscape of household energy utilization in developing countries. It has substantial potential benefit for health, and even in climate protection. It also plays an important role in reducing household air pollution. According to Sales and Marketing Lead, Enyo Retail and Supply, Habiba Abubakar, as players in the LPG space, they are proud to be leading the charge as the leading suppliers of gas in Nigeria. “The question is how can cooking gas or LPG change our way of living? Simple! Cooking has been

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around forever and will always be part of everyone’s everyday life. This is not a speculative market and because it is a part of everyone’s life, it is a very large target market. LPG will take this routine task and revolutionize the way in which we all do it,” says Habiba. Also commenting, Abayomi Awobokun , chief executive officer, Enyo Retail and Supply, stated that although clean cooking energy transitions are extremely challenging to achieve, they offer enormous potential health, environmental, and societal benefits; hence all Nigerians need to key into it. “LPG was first introduced in Nigeria in the 1990s. For many years, it was considered to be the rich man’s fuel, due to its limited availability and lack of distribution facilities. However, Enyo’s SL-Gas has emerged as a reliable kitchen fuel in the country as its availability has increased significantly and we have built up distribution channels that make it accessable to a much wider population and at an affordable cost,” explains Awobokun.

Thursday 19 December 2019

BUSINESS DAY

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Thursday 19 December 2019

BUSINESS DAY

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Thursday 12 December 2019

BUSINESS DAY

Corporate Social Impact

Skills rule the day at iCreate skills fest grand finale Stories By ONUWA LUCKY

he Landmark Centre, Victoria Island, Lagos, was the magnetic hub (4th & 5th December, 2019) as young men and women, not to forget mentors and supporters, from different parts of Nigeria came for the grand finale of the 2nd iCreate Skills Festival. On hand to witness the impressive spectacle were more than 2,500 people who knew that this was something cast in a different mould from the norm. Gathered to compete were not aspiring musicians, actors, dancers and the usual motley crew of entertainers. Rather, we had carpenters, tilers, mechanics, tailors, make up people, robotics and website designers, cobblers, electricians, visual artists, barbers; in short, a wide gamut of creative artisans whose skills are critical to nation building. These had all qualified from from the South West, the North and South East regions to showcase their skills on the big stage that Landmark presented. At the end of the day, following the keenest of contests, the following were declared winners in their various categories: Ibraheem Ridwan (Carpentry), Christopher Olaniyi (Tiling), Miracle Olasoyin (robotics), Mojisola AkinAdemola (Fashion), Ifedayo Emmanuel Bello (cooking), Emmanuel Abanobi (makeup), Kelvin Hassan (Barbing), Oluwaseun Akanbi (Electrical installations), Chima Solomon (plumbing), Leonard Manzo (automobile technology), Toheeb Ogunbiyi (Website development), Precious Audu (graphic design), Lot Madaki (leatherworks), and Oluwaseun Akinlo (Art).

CEO iCreate Africa, Bright Jaja aims to recraft the general perception of skilled work and place more importance on technical and vocational skills through the skills fest. As such, winners of the iCreate Skills Fest 2019 are billed to receive technical training from various partners such as Bosch, The Fashion Academy Abuja, House of Tara, o2 Academy Lagos, SB Exclusive Shoes, while the winner in Art will have the opportunity to exhibit at Omenka Gallery. And even more important, entrepreneurship development training will be provided by the Small and Medium Enterprises Development Agency (SMEDAN) to ensure that the skills deliver on the founder’s dream of empowering one million people who by employing at least five people in their well-managed businesses can help create five million jobs in five years.

An additional development, following the first two years of iCreate Skills Fest is the planned introduction of the ‘iCreate Skills League’ which will go right down to the grassroots to, as it were, reel in the skilled young men and women who are at the moment unheralded wherever they currently live. Bright Jaja describes it as the ‘sports league of skills’ where young skilled persons will compete in teams based on their region, as such from the 6 regions and 36 skilled leagues representing the 36 states of Nigeria and the FCT. It is from the new Skill League that winners would emerge to compete at the 2020 national grand finale. Bright Jaja, at the vent, also unveiled an architect’s rendition of the ambitious iCreate Skills Park; a hub cum incubation centre for young skilled persons where they can express themselves creatively with all the tools

and infrastructure required to do so as well as the allimportant mentoring that enables them stand strong as businesses. Speaking at the T VET Conference, which ran concurrently with the skills fest, the Minister of State for Education, Hon. Chukwuemeka Nwajiuba, highlighted the importance of having technical and vocational education as a mainstream staple, agreeing with those from the private sector present that the challenge of youth unemployment could be better addressed through the kind of quality education that guarantees self-reliance. Two states prominently represented were Lagos and Kaduna. And it’s an indication of where those states place vocational and technical education in the bid to solve their state’s unemployment challenges. Hopefully, a lot more states will get on board in the next edition.

Speaking to the organisers though one was acutely aware of the thinness of support from governments at the state level especially. Now that TVET is becoming a relatable catchphrase, state governments need to do more. This, quite frankly, is a low hanging fruit that can be taken advantage of to solve a myriad of issues ranging from unemployment to insecurity. Also to be noted was the significant German contingent coming from Bosch, GIZ SKYE, Siemens and others. Germany, as everyone knows, is one place where technical and vocational skills are taken seriously resulting in an awe inspiring export driven economy based largely on manufactured goods of the highest quality. It’s the way to go for Nigeria especially as we talk up a storm about a diversified economy. TVET can be that missing link.

Big ups to the many sponsors and supporters including Sterling Bank Plc, GIZ SKYE, Robert Bosch Nigeria Limited, AGR Ltd, Siemens Nigeria Ltd., The Fashion Academy Abuja, Trace, House of Tara, Industrial Training Fund (ITF), Society of Nigerian Artists, Soundcity, ULDA, Pedini, amongst many others. Notable personalities present at the TVET conference and event were; Senior technical advisor GIZ SKYE Mr. Stephen Agwu, Mr. Abubakar Suleiman, MD Sterling Bank Plc., Mr Boris Dolkhani Vice President Brand Management and Marketing Communication, Robert Bosch Ltd, Mrs. Alero Ayida-Otobo, founder Incubation Africa, Mr. Andy Nweke, MD, AGR Limited; Mrs. Abisola Longe, Mr Ulf Brackmann, MD Ueberfrei, and Mr. Sam Onyemelukwe MD TRACE Anglophone West Africa.

The season’s charity champions need you to pitch in

emitayo Ade-Peters and her WeForGood organisation were in Makoko on the 18th of December to set the tone for the holiday season. Hers is one of many organisations helping to make sure the good cheer goes round this season, from the high roads to the backwaters of the nation. In Temitayo’s case, her WeForGood conducted a medical drive in that now popular slum of Makoko, giving a general health talk, doing basic checkup and oral health screening, helping the residents with deworming and vitamin supplements, and handing out gifts to children.

“WeForGood”, according to Temitayo, “is excited to hold this Christmas Medical Drive. For us, not only is it an opportunity to give back to the community, it also aligns with www.businessday.ng

our drive to promote the achievement of the SDGs in Africa. As an organisation that brings people together to act on causes they c a re a b o u t. This is a way we engage our passionate volunteers”. In the same vein, Excesses Foundation is also urging Nigerians to rifle through their wardrobes for the clothes they no longer use or need either “because they are too short, too

small, too long, too tight, out of fashion, worn out or just very annoying’. They ask that we all put those clothes to better use by distributing them to the poor who by that not so grand gesture of ours are guaranteed to wear brighter smiles this season, not to talk of better clothes, better shoes, etc. The public is enjoined to dial 08021611552 to have the organisers come pick up the materials they are graciously donating to the needy. The promise is that Excesses Foundation will pick up from wherever in Nigeria to a central depot from where distribution will be made.

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This is that season when the supposed innate goodness in the heart of men, women and children tends to well up. At end of year, blessings are counted as well as misses. Most of us feel we come up short against the lofty goals we set at the beginning of the year. For some, the failure to hit set targets has become ‘habitual’ and so, depressing. While others are enjoying the holidays such people might be ruing their failure and wondering if they’ll ever be good enough like the friends they have or people they know who seem to be getting it all right. Hold it there! Alive is @Businessdayng

better than dead any day. The unvarnished truth, that. And if we but take the time to properly take stock, there are way too many things to be grateful for, some of which didn’t even figure in our goals for the year but ended up being achievements we chalked up nonetheless. And as been said by psychologists and other social scientists, the more you give out of your little, the more you spread happiness, beginning with yourself. The world, nay, Nigeria, needs you to up your giving game. Go out and do some good this season. Alone or in a group, it all counts for the greater good of all.

Thursday 12 December 2019

BUSINESS DAY

Corporate Social Impact

Onuwa Lucky Joseph (08023314782) Editor.

Ronald Lauder gives $25m for anti- Kenneth and Elizabeth Whitney gift $10m semitism accountability project

enneth and Elizabeth Whitney pledged $10 million to the School of Theater, Film and Television to renovate its historic Ralph Freud Playhouse. Elizabeth Whitney is a theater producer and a former TV and stage actress. She earned a bachelor’s degree from the School of Theater, Film and Television in 1980. Kenneth Whitney manages the family’s investment office, which is focused on startup businesses and entertainment projects. He is also a Broadway producer. He was previously a senior managing director and head of Blackstone’s investor relations and business development group.

ormer U.S. ambassador and cosmetics heir R onald Lauder gave $25 million to launch the Anti-Semitism Accountability Project, which plans to run ads and organize efforts to oppose politicians, celebrities, and institutions that appear to normalize anti-Semitism. Lauder is the son of the late Estée Lauder and Joseph Lauder who founded Estée Lauder Companies. He served as deputy assistant secretary of defense for European and NATO policy at the Department of Defense in 1984 and was appointed ambassador to Austria in 1986 by President Reagan. A b i l l i o n a i re w h o s e wealth Forbes has been pegged at $4.3 billion, he founded WRL Water, a watertreatment company, and merged it with Emefcy, an Israeli sewage-treatment firm in a $100 million deal in 2017.

Jon and Mindy Gray donate $10m to aid needy students

Do they know it’s Christmas?

hristmas is that season that everyone looks forward to. It’s end of year, so it’s special. All the work’s been done. It’s time to rest. It’s time for travel. It’s time for some play. Lots of things are scheduled with Christmas in mind. It’s the get-together season when folks everywhere meet up again and share some cheer. But it’s not that way for everyone. The cheer all around and the lack of reason to celebrate is the reason for an onset of depression for lots of people. And not only that, hunger is pervasive in the land. True, you will always have the poor, like Jesus said, but it’s a more acute problem at Christmas 2019. Thankfully, some corporate organisations and individuals are doing their bit to bring on the smile even in the darkest of personal places. Food goes a long way, clothes go a long way. Companionship goes a long, long way. Happy that this is not 1984 when Band Aid recorded this song which lyrics I have reproduced hereunder. That was a bad time. Ethiopia was

Africa and there was famine in Ethiopia. And people were dying. And Africa couldn’t help. So Bob Geldof and Midge Ure came up with Do they Know it’s Christmas? It’s a haunting song, some of it ‘grating’ when seen from today’s point of view and consciousness. But it was a different time. ‘We are the World’ happened same time. Michael Jackson, Lionel Richie, Stevie Wonder, etc., all teamed up to record that monwww.businessday.ng

ster hit and the proceeds came to the starving in Ethiopia. Africa needs stand up. Corporates need to work with NGOs to organize massive benefit concerts for the hungry and the homeless. We are the world and we got to let our not so privileged brothers and sisters know it is Christmas season. Let the bells ring!!!! (First printed at Christmas 2018. Edited for 2019)

on and Mindy Gray gave $10 million for financial aid for undergraduate students from New York City and to support the Penn First Plus program which provides scholarships for students from lowincome families or who are

the first in their families to attend college. Jon Gray is president and chief operating officer of the Blackstone Group, an investment firm in New York, and chairman of the hotel corporation, Hilton Worldwide.

Mindy Gray helped start New York City Kids RISE, a nonprofit that provides scholarships and other aid to families and schools. The couple graduated from the university in 1992. (Culled from Chronicles of Philanthropy)

Do they know it’s Christmas? - Band Aid

t ’s Chr istmas time, there’s no need to be afraid At Christmas time, we let in light and we banish shade And in our world of peace, we can spread a smile of joy! Throw your arms around the world at Christmas time But say a prayer – pray for the other ones at Christmas time It’s hard, but when you’re having fun There’s a world outside your

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window And it’s a world of dreaded fear Where the only water flowing is a bitter sting of tears And the Christmas bells that ring there And the clanging chimes of doom Well tonight, thank God it’s them instead of you And there won’t be snow in Africa this Christmas time The greatest gift they’ll get this year is life @Businessdayng

Where nothing ever grows, no rain or river flows Do they know it’s Christmas time at all? Here’s to you, raise your glass for everyone Here’s to them underneath that burning sun Do they know it’s Christmas time at all? Feed the world, feed the world, Feed the world Let them know it’s Christmas time

Thursday 19 December 2019

BUSINESS DAY

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Thursday 19 December 2019

BUSINESS DAY

MADE in aba Why BoI must increase lending to Aba artisans GODFREY OFURUM, Aba

he Bank of Industry (BoI) has so far disbursed N6.4 million to members of the Leather Products Manufacturers Association of Abia State (LEPMAAS) under its loan disbarment scheme to the Aba finished leather cluster, comprising shoe, belt, bag and trunk box makers. So far, only about 21 artisans have benefited from the loan scheme, which started about 15 months ago, with thousands of applicants still unable to access the loan. A source, who refused to be mentioned on print, told BusinessDay that the rigid requirements put in place by BoI make it difficult for interested artisans to access the loan. According to the source, BoI insists that each batch must completely pay back their loans before others can access theirs. “BoI has, for the time being, suspended loan disbarment to artisans in Aba, because five persons in batch 1 and two defaulted in completely defraying their loans. “There are lots of applications; but BOI is insisting in getting 100 percent recovery before they can continue with disbursement. “It is like BoI wants to systematically boycott the programme because the payment default is less than five percent, from my calculations. And it is not that the people are not paying at all and their indebtedness to BoI is less than N500, 000.

…only 21 applicants access loan in 15 months

“Some people who are qualified to access the loan about three months ago are still waiting. One of them even died recently, due to hardship,” the source said. Stakeholders say the BOI, being a development finance institution, can boost the growth of the Aba leather industry by increasing lending to the players. Experts say it takes $250,000 to $750,000 to set up a fullfledged The BoI signed a memorandum of understanding with LEPMAAS in 2016, with a view to providing funding for shoe, belt, bag and trunk box makers in

Aba to enable them produce seamlessly, as well as increase the volume of their production. The agreement was facilitated by the defunct Market Development in the Niger Delta (MADE), a DFID sponsored project, About 5,000 artisans are expected to benefit from the first roll-out of the scheme, which started about 15 months ago. Betsy Obaseki, managing director, BOI Investment and Trust Company Limited, described Aba as a potential hub for finished leather goods with good prospects to put Nigeria on a global shoe manufacturing map.

She expressed joy over the collaboration, which, according to her, would give the cluster financial advisory and funding support with the intention to grow the sector, improve quality and quantity of their products. “Already, they are doing so well, they are producing over 20,000 pairs of shoes per day and so you can imagine the potential. And so when we support them more, we expect that they will produce a lot more. “And already they are exporting to West African Countries and we expect them to be able to do better so that they can produce high quality products that they can even

export to Europe and the rest of the World. “Nigerians are going to start sourcing their shoes and other finished leather products from within, which will help us to save scarce foreign exchange. “We believe in this cluster as a potential sector for growth and development of Nigeria. Nigeria has a huge population so rather than go abroad to buy those expensive shoes, we support our own, build capacity, enable them to do these things for us locally, by so doing we will keep our money within the country, rather than using it to help others to develop their economy.” Tunde Oderinde, team leader of MADE at the signing ceremony, observed that the partnership between BoI and LEPMAAS, would boost local shoe industry and appealed to the beneficiaries of the first batch to be prompt with their repayment to create opportunities for others. According to Oderinde, “This is the beginning of good things to come. I know that if we can start this well, irrespective of what we are able to get as funding tranche now and we can repay, I know that BOI will be interested in increasing and also increasing the number of beneficiaries of the subsequent batches. “So, we are going to be our brothers’ keepers here, we are going to be guaranteeing ourselves as well as ensuring

that what is given out is paid back at the right time,” he said. For Okechukwu Williams, president, LEPMAAS, the partnership with BoI was a milestone development that would impact positively on the product quality of the finished leather cluster in Abia State. He applauded MADE’s contribution towards the growth of the FNS, saying, “In all our relationships, they have always been the initiators and facilitators and today is another milestone in our relationship and we are very much grateful to them. And for BoI accepting to partner with us in the development of the cluster is a positive action.” Market Development for the Niger Delta Programme (MADE) was a DFID supported project aimed at promoting livelihoods in Nigeria, through value chain (cassava, oil palm, poultry, aquaculture, recycling and agro inputs) promotion to increase economic growth, employment and incomes. The programme targeted nine states in the Niger Delta region, namely Abia, Akwa Ibom, Bayela, Cross River, Delta, Edo, Imo, Ondo and Rivers states. It utilised the Making Markets Work for the Poor (M4P) approach to ensure that interventions are pro-poor and inclusive of vulnerable groups, working in close collaboration with the extractive industries to support community engagement.

Aba manufacturers need better infrastructure to succeed Gbemi Faminu

espite being one of the most active industrial hubs in the country, Aba is hard hit by the infrastructure gap which makes it difficult to exert as much influence as it should in the market and the economy. Experts say poor infrastructure in Aba lowers the le vel of innovation and output and hampers capacity to meet the demand. One of the results of this is the domination of foreign products in the country. Infrastructure is ver y important for any business to thrive. Making footwear can be easy with the use of sophisticated machines and production tools. Absence of infrastructure, however, makes production difficult and hurts capacity to create jobs and boost the gross domestic product (GDP). The Manufacturers Association of Nigeria (MAN) believes that infrastructure is the biggest fillip to boosting

factories, as absence of it frustrates production and hampers employment creation. Babatunde Fashola, former minister for power works and housing, said at a conference that there is a need to build infrastructure in the country in order to foster prosperity and development in the country. Shoe makers in Aba say lack of electricity hampers t h e i r p ro d u c t i v i t y . Th e manufacturers use power generating sets to power their factories. This is expensive and has a negative impact on production costs. According to Muda Yusuf, director-general of the Lagos Chamb er of Commerce and Industry (LCCI), manufacturers and other business operators need cheap energy to operate in the economy. He said energy costs put more pressure on businesses, calling for a new energy policy for the country. The players also need to have access to state-ofthe-art machines that will aid production, raise output while cutting production www.businessday.ng

costs. “For instance, we have no money to procure hi-tech machines. The banks are not interested in the industry,” Ken Anyanwu, secretary of the Association of Leather and Allied Industrialists of Nigeria (AL AN), told BusinessDay in Aba. Th e re a re p o o r ro a d networks and no railway line from Aba to the other parts of Nigeria where shoes, bags and trunk boxes are needed. Also, the raw materials needed for production are not always readily available, leading to importation with an attendant implication on production costs. The transp or t s e ctor remains a major determinant for a country’s economic development, as a good transport system helps to move goods and services and enable a wider market reach. Unfortunately, despite having the largest road network in West Africa, Nigeria’s road transport system are in terrible condition as the roads are dilapidated and also expose citizens to security

risks. Mansur Ahmed, president of MAN, said at a forum that in the manufacturing value chain, transport is very important. He further said that if the transport deficit is eliminated, it will reduce the total cost of delivery of products by 30- 40 percent. Analysts say the poor condition of the road transport system poses a challenge to manufacturers as it increases their logistics costs, raises cost of

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production and causes losses, especially in common cases of accidents and thefts. “Roads in Aba are becoming better, but they need to improve,” Adiele Adigwe, a shoe-maker in the industrial city, said. Francis Meshioye, executive director, JMG Limited, said recently that the deficit in the transport sector partly accounts for the snail-paced growth of the manufacturing sector as the movement of goods @Businessdayng

from the manufacturers to the consumers is slow and unreliable. He said, “Government should make huge investments in the transport sector. This will reflect on the other parts of the country’s economy because adequate transport infrastructure will result in high employment rate, faster and competitive market reach, high income l e v e l , w i d e r re a c h a n d connectivity for transaction purposes.”

Thursday 19 December 2019

BUSINESS DAY

FEATURE

How Air Peace’s operations spur growth in Nigeria’s aviation industry port our carriers. Aviation is a very tough business. I plead with Nigerians and the government to support Air Peace. We promise to give Nigerians modern equipment and unparalleled services,” he said. Onyema said without government’s support local airlines would lose out on aeropolitics. He said this was why many Nigerian carriers have been unable to sustain their operations on the route.

IFEOMA OKEKE

n recent years, it has become difficult to discuss achievements in Nigeria’s aviation sector without making reference to Air Peace, the largest carrier that has been changing the narrative of air travel in the country. As passenger traffic continues to increase as a result of insecurity on the roads and the need to get to destinations within the country in time, Air Peace has helped bridge the gap in providing the much-needed aircraft for movement of people from one destination to another. In the first quarter of 2019, the Federal Airports Authority of Nigeria (FAAN) recorded a total of 3.5 million passengers who passed through Nigerian airports. The agency also recorded 54,000 aircraft landings. The number of passengers is almost 100,000 more than the figure recorded same period last year. For 2018 first quarter, traffic was 2.6 million – an indication that Nigeria’s traffic figure had seen an upsurge over the last year and is projected to continue growing as more people increasingly prefer air travel. Even though passenger traffic is increasing, the aviation industry is faced with depletion in fleets. Perhaps coming to the rescue, Air Peace has continued to seal deals with major aircraft manufacturers in providing aircraft that will match the increasing air traffic demand in Nigeria. Industr y stakeholders, though, marvelled at the unparalleled investment in capacity, they are optimistic that the 14 million passenger record may as well double in a year when at least half of Air Peace’s new orders join the current operating fleet. Indeed, the airline led the way with an unprecedented investment in aircraft in its bid to make a strong case for Nigerian flag carriers on regional and international skies, even as no city is left behind on the home front. Air Peace’s huge investments in aircraft Air Peace recently signed a contract for three additional Embraer E195-E2s, confirming purchase rights from the original contract signed in April this year. With the new signing at the Dubai Airshow, Air Peace has made total firm order of 13 E195E2s with 17 purchase rights for the same model, which delivery

would begin in May next year. These new E195-E2s will be included in Embraer’s 2019 fourth-quarter backlog and have a value of $212.6 million, based on Embraer’s current list prices. The April signing made Air Peace the first launch customer of the new brand of E-jets in Africa and launch customer of the brand of business class configuration for its ordered airplanes worldwide. The E195-E2s ordered by Air Peace will have dual configurations with 12-seater business class and 102-seater in the economy class. The aircraft also comes in single configuration of all economy class of 144 seats. This development was sequel to the airline placing a firm order for 10 brand new Embraer 195E2 aircraft. The order comprises purchase rights for another 20 E195-E2 jets, as well as 124-seater jet in dual class and 146-seater jet in single class configurations, respectively. With all purchase rights exercised, the contract is valued at N640.5 billion ($2.12 billion) based on current list prices. The carrier also set a regional record in September 2018 when it ordered 10 brand new aircraft from Boeing, increasing its fleet size then to about 37 aircraft. With the new order, Air Peace’s fleet size has increased to 67 aircraft. Air Peace had earlier set a domestic record as the first Nigerian airline to acquire and register the Boeing 777 aircraft in the country. Three of the four wide-body aircraft it acquired for its long-haul operations to Dubai, Sharjah, Johannesburg, London, Houston, Guangzhou and Mumbai have so far been delivered.

Employment opportunities Air Peace has remained the highest employer of labour in Nigeria’s aviation sector. BusinessDay’s findings show that Air Peace alone employs over 3,000 direct workers and provides over 9,000 ancillary jobs, a feat several foreign airlines operating in the country have been unable to achieve. Air Peace is energising the economy of the country and acting as a catalyst with its operations of about 110 flights daily, moving Nigerians around in the economy, no doubt, the airline should be supported. The airline has continued to create at least 500 direct and indirect jobs for each aircraft it purchases. The gradual expansion of its fleet with the arrival of new aircraft will also expand the workforce to about 10,000 direct staffers and more than 50,000 in the auxiliary category. Allen Onyema, chairman of Air Peace, had made it clear from inception that the reason he started Air Peace was to create employment opportunities for Nigerians and help in national development. “I know that all the violence and security challenges we are facing will reduce if our youths are positively engaged. I enjoin all Nigerians with means to invest in the country and help to create jobs to complement the efforts of the government,” Onyema said. Ease in air travel Air Peace which plies more destinations within Nigeria than any other airline in Nigeria, no doubt, is making travel experience seamless for travellers. Air Peace recently promised

to commence flights into Ibadan from Kano, Owerri and Abuja. This is part of the airline’s nocity-left-behind initiative and its plan to interconnect various cities of Nigeria, giving its esteemed customers more seamless connections. It will be recalled that just last month, the airline announced the commencement of Kano-Owerri-Kano flights. The airline has continued to receive honour for its historic evacuation of 503 Nigerians from South Africa during the xenophobic onslaught. In the face of all these achievements and strides the airline has recorded in the aviation sector in just five years of its operations, it is only desirable that the Federal Government support the airline and other domestic carriers with policies that will help sustain them. Beefing up on aeropolitics Onyema had urged the government to get more involved in playing aeropolitics to sustain indigenous carriers on designated international routes. When the airline started flying the Dubai route, Onyema said it needed the government’s support to succeed. “We cannot do it alone. We can only do our best but the rest lies with the government. The government must stop unfair competition in this sector. The United States government did it when the Gulf carriers swooped on them, so the policy of multiple designations and frequencies for foreign carriers is detrimental to our economy. Our airlines will not grow under this policy,” he said. “The government must help us grow the sector and not stifle it, but I know the president is a nationalist who is ready to sup-

Experts’ opinions on FG’s support for local airlines Nogie Meggison, chairman, Airline Operators of Nigeria (AON), said some of the major issues that need to be addressed to grow the industry include removal of Value Added Tax as domestic airlines were the only mode of transport still paying it. Also, review of the 5 percent Ticket Sales Charge to a flat rate in line with the global best practices as well as harmonisation of over 35 multiple charges which add huge burdens on airlines, among others. “A clear economic policy for the survival of domestic airlines is very critical at this time which has resulted over the years in the death of over 25 airlines in 30 years. Investors are in the business of aviation for the profit and can’t make a profit without safety or have a safe airline without profit,” Meggison said. “These are some of the main reasons for the short lifespan of Nigerian airlines averaging about eight years. With the growth in demand for domestic air travel, Nigeria can become the hub for Africa and easily make aviation the fourth contributor to the economy and a major contributor to the Gross Domestic Product as well as create 200,000 new jobs for our ailing youths through its direct and indirect link,” he said. John Ojikutu, aviation security consultant and secretarygeneral, Aviation Safety Round Table Initiative (ASRTI), told BusinessDay that foreign airlines should not be given multiple destinations and landings. “Ethiopian airline’s multiple landing should be reduced to only two, Lagos or Abuja and any other. British Airways and Virgin Atlantic should decide which out of Abuja or Lagos to fly into but none of the two should fly to Lagos and Abuja as British Airways is presently doing. The idea is to create markets for domestic airline,” he said.

Thursday 19 December 2019

BUSINESS DAY

BUSINESS TRAVEL We hope to transcend the shore of Nigeria and cover West Africa soon – CEO Finchglow Travels Bankole Bernard is the managing director of Finchglow Travels. Having operated in Nigeria in the last 13 years, Finchglow has made its relevance known within the market place and has since distinguished itself in service delivery and innovations, thereby getting accolades from high-end airlines and top organisations. In this interview with IFEOMA OKEKE, Bankole speaks on what distinguishes his travel agency from competitors. Can you tell us briefly about Finchglow and how long you have operated in Nigeria? e came into the business as a travel agency 13 years ago and in those 13 years, we have been able to make our relevance known within the market place where we found ourselves. We have grown from the staff strength of five to 165. We have multiple offices around the country. We have five offices in Lagos, two in Abuja and one in Port Harcourt. Basically, we are in the business of distribution and in the business of distribution, it means the more locations you have, the better your opportunity of reaching your clients. This has really helped our growth. You have distinguished yourself and a lot of accolades confirm your track record. Which of your awards are so endearing to you? I will say at this point that all the awards are very important to me because there is nothing like small or big award. The fact that people recognise your impact or your contributions to their business or to the economy is what brings about you getting an award. For us, practically all the airlines have given us one award or the other and this is premise on the fact that they have seen professionalism in the way we carry out our work, they have seen high spirit of dedication and commitment coming from our staff. All that put together have set us apart from our peers. So, I believe that any organisation that is willing to attain that great height must have these in focus. You recently got an award from Virgin Atlantic. Would you like to share what the award is about and why you think you were awarded? I say a very big thank

you to Virgin Atlantic for recognising the efforts and commitment that Finchglow as an organisation brings to the market. I will say that in the last three to four years, we have been their top three and last year. We had an extensive retreat session, where we promised ourselves that we want our relevance to be felt more in the market. So, we set higher goals and based on that, we knew that it was going to come with accolades like this. We pushed ourselves to become number one and we are happy that they recognise us with an award showing that we contributed more to the bottom line than any other travel agency in Nigeria, which is good for us. How do you intend to sustain the position of Finchglow in the industry? It is very easy to get to the top but it is more difficult to sustain it. Like I said, for us staying at the top means that we will continue to keep our level of relevance in terms of the quality of staff, the quality of customer service delivery and the expansion that we intend to embark on. We intend to partner more next year. These things will keep us at the top. Having operated in the market for 13 years, what will you say is Finchglow’s current market share? Our market share is about 12 percent and the closest to us have about 9 percent. I can say to you that the top 20 travel agencies are actually the ones contributing to the bottom line. We as an organisation have built partnerships with a lot of other travel agencies. They support our bottom line and we have increased our customer base business. In addition to your travel agency, you have an aviation training school. Are you able to create jobs through the aviation school? I have had the opportuwww.businessday.ng

Bankole Bernard

nity to speak with the minister of aviation on focus on the downstream sector of the aviation industry. A lot of our youths are not aware of the industry in which we play. Every time they talk about aviation, it is cabin crew and the pilots, forgetting that there are other areas youths could focus on. A youth can be a travel consultant. So, I had to set up a school to help them acquire the necessary skills for them to function. I can say that 80 percent of our workforce are youths and they are happy. They are spreading the awareness to their friends, colleagues and families, telling them that there are other professions aside having to be a doctor or engineer. Travel agency business is for professionals, not for drop out and there is a certificate that is recognised globally for the profession. They are travel consultants and you know what it means to be a consultant; he is a specialist in that field. With this, I think Finchglow as an organisation has contributed to youth empowerment and to the economy. International Air Transport Association (IATA) recently released some figures

indicating that with the growth in passenger travel, there will likely demand for human capital in future. How are you keying into this to ensure we have the supply of human capital in future? We are very much aware of the position of IATA and IATA’s data are statistics that one can rely on and work with. Based on that, we have opened a second location for our aviation school, so now we have one on the mainland and another on the Island. We realised that there are more youths in the Island that really want to partake in this opportunity. We decided to take it there to them so that they can benefit from this. The truth is that we are going to have more travels. We are going to see growth in the aviation industry and we are going to see more airlines come into Nigeria. We know that if we position ourselves well, we will be able to record higher revenue. IATA’s position is that youths will benefit more because from the demography, more youths are willing to travel, people want to discover new places. So, the industry has a lot of potentials in terms of benefits. We have seen the

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growth trend and figures of this year will be much higher than last year. What are your major challenges and how have you been able to navigate? The major challenge is the work force. People want to be rich quickly, forgetting that hard work pays. For us as an organisation, we conduct a lot of training for our workforce to ensure that we take them out of that mentality they find in their environment to a new mentality that produces better results. For instance people don’t see anything wrong coming to work late but for us, it is a problem. We must correct such anomalies. What is your vision for Finchglow in the next five to 10 years? The vision is to transcend the shore of Nigeria and cover West Africa because if you look at it, as it stands today, Nigeria has the biggest travel market in Africa now. It used to South Africa but Nigeria has taken over and Nigeria is beginning to spread into West Coast where a lot of Nigerian companies are beginning to find their way into that space. As a travel market, we make ourselves available where @Businessdayng

our customers are. If our customers are going to be in the West Coast, then we better make sure we are there. The second one is to embed professionalism into the system. If we embed professionalism into our staff and the aviation school that we have, you will find out that it will spread into the industry and the level of professionalism will be very high. What will you want Nigeria Civil Aviation Authority (NCAA) to do to ensure the downstream sector of the aviation industry gains its rightful recognition? NCAA over the years has not really engaged the downstream sector like they should but the Directorate of Air Transport Regulation, (DATR) has taken a new initiative by ensuring that the downstream sector is regulated as it should because on our own, we have pushed for sensitizing and sanitizing the industry on what we stand for. Now that NCAA is beginning to see the impact of what we are making, they are beginning to see the need to regulate it. That was why we called for a fresh registration of all travel agencies in Nigeria and they have given a deadline that everyone should conform with and our organisation has done that. We see better downstream sector in the near future. Do you think there will be a time foreigners will begin to play in the local travel agency market? We are beginning to see it and we realise that the only thing we need do in that regard is to have a strong local law that protects the industry and the citizens of the country. If we have strong local laws, then the issue of infringement or foreigners dominating the market will stop. For instance, it is difficult for me to say I want to go to Ghana and run a travel agency, I will fail. The fact that Nigeria operates an open system doesn’t mean they should come and dominate the market.

Thursday 19 December 2019

BUSINESS DAY

news PFAs miss offshore gains over presidential... Continued from page 1

tory Pension Scheme is to ensure that every person who worked in either the public service of the federation, Federal Capital Territory, states and local government or the private sector receives his retirement benefits as and when due and to assist improvident individuals by ensuring that they save in order to cater for their livelihood during old age. The growth of PFAs has been further slowed down, particularly with the recent CBN policy restricting them from participating in the apex bank’s Open Market Operations (OMO), like other individuals and corporates. OMO has been the major investment instrument for the PFAs, contributing significantly to their yields and returns on investment. Its restriction has meant significant drop in their investment returns. Mohammad Ahmad, former director general, National Pension Commission (PenCom), said the investment of a portion of pension funds in permissible foreign assets is an issue that needs to be at the front burner. In a position paper on how to move the pension industry forward presented to operators and legislators at a recent retreat in Uyo, Akwa Ibom State, Ahmad said a cursory look at the Pension Reform Act 2014, in Section 87 (1), shows that there is allowance for the investment of pension funds outside Nigeria, but this area has remained fairly non-operational with negative long-term implications for contributors. Section 87 (2) of the Act states that the commission may, subject to subsisting CBN foreign exchange rules, recommend to the president for approval portfolio limits for investment of pension funds or assets outside the Nigerian territory, he said. He said it was imperative for PenCom and the operators to engage the CBN to develop a workable framework to access foreign exchange for pension fund investment for the benefit of RSA holders in the immediate future. In order to widen the opportunity for PFAs to earn stronger returns on investment in permissible foreign assets, Ahmad advocated the removal of

presidential assent as a condition for such investment. “Going forward, however, I will strongly suggest that the need for presidential assent be removed and replaced with the power of the Board of the commission to issue investment regulation for foreign investments as is done in a number of North and South American countries,” Ahmad said. This, he said, can be achieved by collaboration between the operators, PenCom and the legislators. Members of the Pension Fund Operators Association of Nigeria (PenOp) have in the past lamented the limited investment instruments, stressing why it should be expanded to enable them create more value for contributors and retirees. Wale Odutola, head of brand committee of PenOp, said the OMO restriction was a concern to PFAs “because we get better yields from there than other instruments”. Odutola, who is also managing director/CEO of ARM Pensions Limited, said the major challenge it poses for the PFAs “is reinvestment risks, because it puts us in a position whereby we will have to look for alternative investment instruments to sustain our returns target”. Ronke Adedeji, president of PenOp, said that though OMO was not there initially, “for the time it has been in operation we have benefitted significantly as PFAs”. Adedeji expressed hope that with the closure of OMO, other instruments would open up for PFAs. Pension fund assets grew to N9.8 trillion as at the end of October 2019, adding N220 billion from the N9.58 trillion it was at the end of September this year. PenCom, in its monthly summary of pension fund assets, equally noted that pension fund operators invested N4.58 trillion amounting to 46.66 percent in FGN Bonds, N2.23 trillion in Treasury Bills (22.82 percent), N5.40 billion (0.06 percent) in Agency Bonds (NMRC & FMBN), N71.13 billion in Sukuk (0.72 percent), and N15.85 billion in Green bonds (0.16 percent). www.businessday.ng

L-R: Hussaini EL-Yakubu, MD, Gas N Power Company Ltd, a subsidiary of NNPC; Frank Nweke Jnr, board member, Brass Fertilizer and Petrochemical Co Ltd; Yusuf Usman, COO, Gas N Power Directorate, NNPC; Mele Kolo Kyari, GMD, NNPC; Ben Okoye, MD, Brass Fertilizer and Petrochemical Co Ltd; Rowland Ewubare, COO, Exploration and Production, NNPC, and Nurudeen Tambaya, board member, Brass Fertilizer and Petrochemical Co Ltd, at the inauguration of the board of Brass Fertilizer and Petrochemical Co. Ltd, a joint venture project between NNPC and DSV Group at NNPC Towers in Abuja.

FG to suspend absconding N-Power... Continued from page 1

unteers found to have absconded from their duty post in the states where they were posted. The development is coming after a BusinessDay investi-

gative report uncovered the rot in the N-Power programme, a social investment programme pioneered by the President Muhammadu Buhari administration to tackle poverty and improve the health and education of children and other vulnerable groups. In an undercover report which investigated schools in seven local government areas in Sokoto State, BusinessDay found that volunteers the N-Power Teach, arguably the most popular of the four categories of the National Social Investment Programme (NSIP) initiative, were colluding with the heads of the various schools where they were assigned to cheat the system. Some of the school heads were found to collect money from the volunteers to allow them to skip classes, thereby leaving the students without quality education.

Reacting to the BusinessDay report, the NSIO said its attention has been drawn to the investigative piece written by Ibrahim Adeyemi and published in the December 17, 2019 issue of BusinessDay Nigeria newspaper and on its online platform, businessday.ng. “The piece, titled ‘Sokoto’s Ghost Teachers, Corrupt School Principals are Stealing FG N-Power Funds’, is an illuminating read that attempts to uncover the activities of truant beneficiaries of the N-Power programme in Sokoto State, and the supervising heads that enable these duplicitous acts,” the agency said in a statement signed by Justice Tienabeso Bibiye, its communications manager. The statement said despite its several overwhelming success stories that make it “the most successful youth empowerment initiative in Nigeria’s political history”, N-Power, just like every other human endeavour, “has a few instances of challenges”. “Consequently, we have taken concrete steps to address these problems which border mainly on absenteeism and

SAA: Senate absolves OMSL of fraud... Continued from page 2

set up following a debate at the Senate sitting of Thursday, November 7, 2019. This followed complaints by the Nigerian Ports Authority (NPA) of alleged illegal security activities of OMSL at Lagos ports and alleged failure to remit funds to government coffers. The committee invited nine critical stakeholders to make presentations. Those invited were the Federal Ministry of Transportation, Nigerian Ports Authority, Nigerian Maritime Administration and Safety Agency, the Nigerian Navy, Ocean Marine Solutions Limited, Nigerian Shippers Council, National Association of Government Approved Freight Forwarders, Shipowners Association of Nigeria and the Maritime Section of the Nigeria Police

Force. At the end of its investigations, the committee in its report said it found, among others, “that the existence and operation of the SAA cannot in any way be a threat to national security as it is being operated and supervised directly by the Nigerian Navy and not by OMSL directly, and that the heightened insecurity in the Nigerian waters in 2012, particularly at the Lagos waters led to the establishment of SAA”. The committee also found that “the relevant government agencies(NPA, NIMASA, DPR and Nigerian Navy) were involved in the meetings and consultation process that led to the establishment of SAA; that the Nigerian Navy as the institution saddled with the responsibility of securing the territorial

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truancy on the part of some NTeach beneficiaries who have consistently abused the privilege of being engaged to serve their land,” Bibye said in the statement. “Not too long ago, the National Social Investment office NSIO issued a press statement that disclosed the sack of well over two thousand volunteers for either absconding or absenting themselves from their Primary Places of Assignment (PPA). We also disclosed that over eighteen thousand beneficiaries voluntarily exited the programme after securing jobs elsewhere.” The statement clarified, however, that the case as reported by BusinessDay was not ‘ghost’ syndrome as “all of the N-Power beneficiaries named actually exist, having been pre-verified through a close working relationship with the Nigerian Interbank Settlement System (NIBSS), who at inception, confirm the identities of each and every N-Power beneficiary before payment commences”. “The issue pointed out in the report is actually in relation to them absconding from work, having been deployed to their primary places of assignment by the relevant

state authorities. What we are currently facing in the field concerning a minority of NPOWER beneficiaries is the challenge of truancy and not the ghost workers syndrome,” the statement said. Bibiye also clarified that volunteers assigned to schools by the various state governments in collaboration with the Federal Government are monitored by the school heads who monthly report to the state governments’ appointed focal persons who then forward the report directly to the central N-Power office. NSIO said it has partnered with several security agencies, including EFCC, the DSS, and ICPC, to investigate, apprehend and prosecute those seen to be undermining the Social Investment Programmes of the Federal Government. “We assure Nigerians that all erring N-Power volunteers would be immediately suspended and placed on payment hold whilst we conduct investigations. This would serve as a deterrent for the future as we have always done with any reports of truancy and indiscipline as was also mentioned in the BusinessDay investigative report,” Bibiye said.

waterways operate in the SAA with platforms, logistics and technical support provided by OMSL; that the boats provided by OMSL at the SAA are painted in the Nigerian Navy colours, given Navy call signs and operated essentially as part of the naval fleet under the command and control of the Nigerian Navy”. The committee also affirmed that “there is no genuine intention in the argument being canvassed by those seeking for the dismantling of the SAA facility due to the fact that no alternative arrangement has been put in place”. “The operation of the Secure Anchorage Area (SAA) by Ocean Marine Solutions Limited (OMSL) is legal due to the fact that it was established in 2013 after an intensive stakeholders meeting led by NPA and NIMASA and the subsequent approval issue by both, through Marine No-

tice published in Vanguard of 27th November, 2013 and Guardian newspaper of 4th April, 2014. With the publication of Marine Notices, the Nigerian Navy went into an MOU with OMSL. The Notices and MOU makes the operation of OMSL legal,” the committee further noted in its report. “That Ocean Marine Solutions Limited (OMSL) is a limited liability company registered with the Corporate Affairs Commission (CAC) and pays its tax to appropriate government agencies and is having up-to -date tax clearance certificate. “That the operation of SAA by OMSL as approved by relevant government agencies (NPA, NIMASA and Nigerian Navy) it is not a Public Private Partnership (PPP) and as such OMSL does remit funds to the Federation Account,” the committee said.

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Thursday 19 December 2019

BUSINESS DAY

news

ECOWAS ministers brainstorm on counter-terrorism measures Innocent Odoh, Abuja

eaders of the Economic Community of West African States (ECOWAS) are brainstorming on measures to tackle the increasing scourge of terrorism ravaging West Africa. This is the focus of the ongoing 83rd Ordinary Session of ECOWAS Council of Ministers holding in Abuja, which commenced on Tuesday. Kalla Ankouroa, chairman of the Council and Niger Republic’s minister of Foreign Affairs, Cooperation, African Integration and Nigeriens abroad, disclosed this at the opening of the Ministerial Session. The minister noted that the Council of Ministers would be considering the financing of the action plan for counter terrorism in line with the decisions of the extra ordinary summit of Heads of States. According to Ankouroa, dealing with the new threats of insecurity due to terrorism affecting so many Member States was a matter of urgency which requires the commitments of Members States. He said that considering the importance, deliberations on the security situation of the sub-region was up for discussion during the Mediation and Security Council meeting on December 16, which adopted the Plan of Action. He said that following the consideration of various items on the agenda the reports from the Council would be submitted to the Heads of States and Governments with appropriate recommendations. He added that the Council of Ministers meetings also seeks to brainstorm on the, political, economic, humanitarian crises, climate change and social development challenges confronting the sub-

region with a bid to proffering solutions. “Today, we brainstorm of the state of our community and consider ways of advancing the regional agenda of our region and come up with appropriate responses to the various challenges facing us today. “In addition to the recurring issues of economic and social development of our people and the issues of enhancing democracy, as you know, we have to deal with new threats affecting our regions such as the issues of security due to terrorism, and the effect of climate change on our systems of production and the humanitarian crises. “That is why I welcome your effective presence of this council to put our heads together constructively and productively in furtherance to the commitments of members and the personal determination of each one of you in this lofty exercise of building regional integration. “At this 83rd ordinary session, we are going to be considering the financing of the action plan for counter terrorism in line with the decisions of the extra ordinary summit. “It is an important issue for our deliberations which was already considered yesterday in the Mediation and Security Council which adopted the Plan of Action. “Following the consideration of various items on our agenda our reports would be submitted to the Heads of States and Governments with appropriate recommendations,” Ankouroa said. Ankouroa urged Member States on committed efforts to improve the efficiency of all the institutions in order to achieve the fundamental objectives of the process of integration.

Senate confirms Nami as FIRS chair, Adamu as new AMCON boss Solomon Ayado, Abuja

enate has approved the appointment of Muhammad Nami as Chairman of the Federal Inland Revenue Service (FIRS), just as it confirmed Edward Adamu as the new Chairman of the Asset Management Corporation of Nigeria (AMCON). Buhari had in a letter dated December 9, 2019, requested the Senate to confirm the appointments with members of the boards of the agencies. The Senate on Wednesday confirmed the appointments following consideration of the report of the Senate Committee on Finance. The report was presented in plenary by the chairman of the committee, Solomon Adeola. Approved by the Senate as members of the FIRS board are: James Ayuba (North -Central); Ado Danjuma (North - West); Adam Mohammed (North - East); Ikeme Osakwe (South- East); Adewale Ogunyomade

L-R: Stella Okoli, founder/GMD, Emzor Pharmaceutical Industries Limited; Claudiana Ibijoke Sanwo-Olu, first lady, Lagos State; Bamidele Abiodun, first lady, Ogun State; Abiola Dosunmu, royal mother of the day, and Oluremi Hamzat, wife of the deputy governor of Lagos State, at the Emzor’s 15th annual thanksgiving, themed ‘thankful for Milestones and Beautiful Horizons‘ in Lagos. Pic by Pius Okeosisi

Refineries consecutive loss of N111.27bn in 9 months calls for fiscal governance in oil sector HARRISON EDEH, Abuja

igeria’s three refineries owned by the Federal Government posted a total loss of N111.27 billion from January to September 2019, resonating call for a better fiscal governance in Nigeria’s underperforming oil sector. Amid dwindling revenue resources, the Nigerian government has failed to reform the oil sector, the key revenue earner, while lacking the political will to deliver the Petroleum Industry Governance Bill, which could have unbundled the sector while creating investment opportunities in the sector. Industry analysts say the Federal Government could have sorted itself out financially rather than resort to borrowing, if it had mustered the political will to first and fore most address concerns of unbundling the Nigeria’s oil sector. “What we need is lean organisation that simply regulates the oil industry. In terms of

production and exploration, they are not cut out for it,” Austin Onuoha, a research analysts, and executive director of African Centre for Corporate Responsibility told BusinessDay. “Let me give you another instance, why is it that the NNPC is not quoted in Nigeria’s stock market, why?‎ If anybody is expecting NNPC to be profitable, that is wishful thinking. This is why you see subsidy payments growing by the year, because of inefficiency that characterised the sector,” he stated. Ademola Henry Adigun, an oil sector governance expert, told BusinessDay, “‎To address concerns of the sector, the NNPC must be made to run as a corporate entity. It must run like a corporation independent of undue interference. There must be full disclosure on the activities of the corporation in terms of crude importation, what was imported, among others, to enable Nigerians who are the rightful owners of the corporation track investments in the sector.”

Henry insisted that there must be proper legal framework for the sector, adding, “The government should write its own version of the Petroleum Industry Governance Bill, if the present one keeps getting less attention from the lawmakers.” Apart from the recorded losses in the refineries, due largely to lack to fiscal governance framework for the sector, several investments shift base to other neighbouring African countries who are mainly leapfrogging the Nigerian state with regard to oil production, but has a better fiscal governance for the sector. The refineries notably posted a loss of N96.31 billion in the same period in 2018, according to the NNPC data obtained from the corporation’s latest report. Nigeria, Africa’s top oil producer, relies largely on importation for refined petroleum products as its refineries have remained in a state of disrepair for many years despite several reported repairs. The refineries, which are lo-

(South- West); Ehile Aibangbe (South- South). Others confirmed are members of the board appointed from the ministries, agencies and departments of the Federal Government. They are Ladidi Mohammed (Attorney-General of the Federation Office ); Godwin Emefiele (Central Bank of Nigeria ); Fatima Hayatu ( Ministry of Finance ); Maagbe Adaa (Revenue Mobilisation Allocation and Fiscal Commission ); and Umar Ajiya (Nigerian National Petroleum Commission ). The rest are DCG T. M. Isah (Nigeria Customs Service) and the Registrar General of the Corporate Affairs Commission. Meanwhile, the confirmation of Adamu as AMCON chairman was followed by the consideration of the report of Senate Committee on Banking, Insurance and other financial institutions. The chairman, Uba Sani presented the report. www.businessday.ng

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cated in Port Harcourt, Kaduna and Warri, have a combined installed capacity of 445,000 barrels per day but have continued to operate far below the installed capacity. They lost N8.362bn in January; N10.26bn in February; N16.04bn in March; N11.44bn in April; N13.63bn in May, and N17.42bn in June. The plants recorded a loss of N13.84bn in July; N13.21bn in August and N7.07bn in September. Kaduna Refinery, which did not process any crude in eight months, lost N44.06 billion, according to the NNPC. Warri lost N33.88 billion as it did not process any crude oil in April, June, July, August and September. Port Harcourt Refinery posted a loss of N33.31 billion as it was idle in January, April, May and June, July, August and September. “Similar to August 2019, no white product (petrol and kerosene) was produced in September 2019. The lack of production is due to ongoing rehabilitation works at the refineries,” the corporation said.

Thursday 19 December 2019

BUSINESS DAY

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Thursday 19 December 2019

Retail &

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Spending Trends

CONSUMER SPENDING

Consumer gloom in Nigeria may dim festive cheer BALA AUGIE

n air of melancholy surrounded Robert Udo, a junior medical officer at the Lagos State University Teaching Hospital (LUTH), because he may have a very low-key Christmas celebration. Udo, who has four children, has not been paid November salary, and December pay could be delayed till January or February, further exacerbating his already aminic position. “I am confused. And thought of the Xmas sends fear through my spine. My wife complains that the price of food has skyrocketed. A speedy implementation of the new minimum wage would have assuaged my pains,” said Udo. Udo isn’t alone in this Plight, as tough and unpredictable environment has damp consumer spending in Africa’s largest economy.

The partial closure of the borders by the Federal Government has impacted negatively on the price of food as inflation continues to spike, a double whammy for country where over 50 percent of a population of 200 million live on less than $1.98 a day. Inflation for the month of November accelerated to

11.85 percent, the highest in 19 months, according to the National Bureau of Statistics (NBS). Food Inflation rose for the third month to 14.48 percent year on year, up by 39bps compared to 14.09 percent year on year in October, the statistics body added. The negative impact

of border closure trickled down to brick and mortar shops across the country. Food items, such as frozen foods, were reported to have gone up by 65 per cent. The price of foreign parboiled rice also went up by 29.4 per cent from N17, 000 to N22, 000.The demand for local rice in the absence of foreign rice drove the price

of local rice up from N15, 000 to N17, 000. Transport fares have more than doubled, thanks to bad roads as many Nigerians are on the same salary scale. Rufus Ajeigbe, an accountant in a software firm said the purchasing power of consumers is deteriorating and his salary has not been increased in the past five years. The future is bleak as the hike in Value added Tax to 7.50 percent from 5 percent and an increase in electricity tariff are expected to further undermine consumer spending, but there will be an improvement in government revenue. Nigeria’s income per capita has been dwindling since 2014 when it stood at -$3,222, a period that coincided with pre-crude oil crash that paralyzed activities and tipped the county in its recession in 25 years. Income per capita is currently at $2,336 as at 2019, but it is expected to move up to $2,451 in 2020, according

to a report by EIU. The economic metrics can be used to determine the average per-person income for an area and to evaluate the standard of living and quality of life of the population. A deteriorating figure means the living standard of people is falling. Unemployment rate stood at 23 percent as at the third quarter of 2018, one of the highest in the world. The country’s aggregate consumption is $386 million, which is 85 percent of GDP, but it is expected to increase by 12.76 percent in 2020, according a poll of economist. “We retain our view for an expanse in the pace of consumer spending owing to a confluence of factors. Firstly, although we expect a buoyant harvest this season, the adverse effect of border closure on headline inflation still stands. In addition, we expect consumer spending to be elevated in December as festivities begin,” said analysts at ARM research Limited.

COMPANY

CONSUMER SPENDING

Unilever lowers 2020 sales growth on slowdown in India, West Africa markets

Retailers woo consumers with Christmas promo

OLUFIKAYO OWOEYE

nglo-Dutch Consumer giant, Unilever the parent company of Unilever Nigeria Plc, has warned that sales gains will be slightly below guidance for 2019 and in the lower half of its expected range in 2020, due largely to a slowdown in India market, Unilever’s secondbiggest, market after the U.S, and trading conditions in West Africa market which remains difficult. Alan Jope, chief executive said due to challenges in certain markets, he expects a slight miss to the company’s fullyear underlying sales growth delivery. The company acknowledged that full recovery in North America was expected to take time despite “early signs” of improvement, while trading in developed markets generally also remained “challenging,” Unilever said. “Growth remains our top priority and we are confident

we have the right strategy and investment in place to step up our performance” added Jope, who took the helm in January. Nigeria with a potentially attractive consumer story, sadly, weak consumer disposable income and high poverty rates had made the case less compelling. The country’s tough operating environment; decrepit infrastructures, porous borders, double-digit inflation, and sluggish economic recovery, have further compounded sector players woes as they struggle to break-even. Analysts believe that the overall outlook for the consumer goods sector is not overly positive. Aside from the current challenges, the major upside potential is expected to come from the potential implementation of the new minimum wage. “However, the gains from the new minimum wage seem to be capped as the government is proposing to review upward its Value Added Tax that is expected to be passed on to consumers, in the form of price increases,” www.businessday.ng

Unilever Nigeria makers of popular brands home and personal care products, Food products. The story is not different in India with a population of 1.3 billion people as consumer spending continues to decline for the first time in four decades. According to a survey conducted by National Statistical Office, household consumer expenditure, which shows the average monthly spending by individual shows that it fell to Rs 1,446 in 2017-18 from Rs 1,501 in 2011-12, down 3.7 percent The survey found that spending in rural India went down by 8.8 percent for the period, while the corresponding fall for urban India stood

at 2 percent over a 6-year span. The survey found that rural Indians bought less of all food products barring milk and milk-related items. Worryingly, consumers from all parts of the country — including urban areas — spent drastically less on essential food items such as oil, salt, sugar and spices. Unilever owns a 67% stake in the listed subsidiary Hindustan Unilever Ltd, India’s largest consumer-products company. The unit cited the market slowdown and supply chain disruptions in an Oct. 14 earnings call, with Chief Financial Officer Srinivas Phatak telling analysts that the “near-term demand outlook continues to be challenging.

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BUNMI BAILEY

ith few days to Christmas, the atmosphere is already getting busy as retail outlets and stores are wooing consumers with promotional offers and pushing out affordable items for

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shoppers. Some of these top retail stores reviewed by BusinessDay are Spar which is tagged “25 days of Christmas savings” and Hubmart’s fourth anniversary celebration. Spar promo runs from 7th-31 December and Hubmart from 15th-25th. Below are the Christmas offers.

Thursday 19 December 2019

BUSINESS DAY

Markets + Finance

‘Providing proprietary research, commentary, analysis and financial news coverage unmatched in today’s market. Published weekly, Markets & Finance provides all the key intelligence you need.’

Only Access Bank made money for investors so far this year BALA AUGIE

ccess Bank has generated more investment profit since the beginning of the calendar than any other tier 1 lender, outperforming the broader market even amid a tight regulatory environment. That shows why it often pays for management and board of directors to formulate policies that will help take a company to the next level. Analysts and procrastinators had envisioned that Access Bank’s merger with Diamond Bank would spur investment, and it wasn’t long before their projections came to pass. Recent analysis of seven banks show that only Access Bank has a positive 1 yearto Date return (YTD) and 5 year-to date return (YTD), thanks to consistent earnings growth. What this means is that only the lender’s stock has made money as in investment so far this year. However, a negative percentage means it has lost money so far this year. Access Bank has the best bank stock yield on a YTD basis with a return of +44.12 percent, that compares with United Bank for Africa (UBA), (-9.09 percent);

Zenith Bank, (-18.66 percent); FirstBank Holdings, (-21.38 percent); Stanbic IBTC Holdings, (-24.31 percent); Guaranty trust Bank or GTBank (-14.37 percent), and Ecobank Transnational Bank, (-50.0 percent). Since the beginning of 2018, the investment returns on bank stock market prices have dropped lower than historical averages as a precipitous drop-in short-term government security deal a great blow on earnings. That’s on top of investors’ apathy towards the Nigerian stock market due to lack of policy direction on the part

of the Buhari led administration, while the economy continues to grow at a slow pace since the country existed its first recession in 25 years in 2016. The Stock E xchange Main-Board Index returned -15.17 percent to close at a level of 26,646.35 points, while it has a price to earnings ratio of 7.03 percent. As of the 13th of December 2019, the NSE Banking-10 index had returned –11.6 percent YTD. Analysts say the trajectory for growth for lenders will steepen as they delve

into traditional business as evidenced in a tight and stringent regulatory environment. The Central Bank of Nigeria (CBN) has hiked the minimum loans to deposit (LDR) to 65 percent, and the deadline to meet the target is December. Forcing banks to extend credit to a high-risk industry amid the fragile state of the economy could result in deteriorating assets quality, a double for an industry reeling from exposure to oil and gas. “Consequently, we expect the cost of risk across the industry to spike going towards 2021FY and NPL moderation to temper following an initial dip that will follow the significant loan growth,” said analysts at Cordros Capital Limited. “Notwithstanding, NPLs will spike in the event of any stress to the system, which could easily cascade into wider systemic frailty,’’ said analysts at Cordros Capital There are indications intense competition will intensify among operators in the industry as they scramble to increase their share of the market, paving a way for them to explore the retail end of the market. “With the changing dynamics both within and outside the industry, we expect the competitive landscape will become even more

intense as banks grapple with new players and more determined old foes,” said analysts at Cordros Capital Limited. “In our view, this could very well be the first flash which eventually leads to consolidation in the industry as some industry players would struggle to compete,” said analysts at Cordros Limited. Further analysis of the financial statement of the seven lenders shows Access Bank has been recording strong earnings expansion than peers since it merged with Diamond Bank to create the largest lender by total assets. Access Bank’s interest income expanded by 47.55 percent as at September 2019, that compares with a 5.05 percent reduction in Zenith Bank’s figure; GTBank’s (-0.056); Stanbic IBTC Holdings (3.58 percent); FBNH (0.029 percent); UBA (10.77

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percent), and ETI (-11.01 percent) Access Bank’s net income increased by 44.23 percent as at September 2019, that compares with Zenith Bank’s (+4.53); GTBank’s (-3.35); Stanbic IBTC Holdings (-7.03 percent); FBNH (15.32 percent); UBA (32.32 percent), and ETI (-12.35 percent). Analysts at Investment House Chapel Hill Denham Limited have maintained their BUY ratings on the stock of Access Bank with a higher 12-month TP of N17.76, implying a potential total return of 107.4 percent (capital gain of 98.5 percent and FY-19E dividend yield of 8.9 percent). “We are now more optimistic on Access achieving over 20 percent ROAE by full year, particularly given the persistently higher postmerger ROAE in the last two quarters,” said analysts at Chapel Hill Denham Limited.

A2 Thursday 19 December 2019

BUSINESS DAY

POLITICS & POLICY Sanwo-Olu’s four years guaranteed by Supreme Court Joshua Bassey and Iniobong Iwok

t is now legally certain that the Governor Babajide Sanwo-Olu will fully run his four-year tenure in Lagos, following Wednesday’s verdict of the Supreme Court. A 7-man panel of Nigeria’s highest court led by Justice Mar y Peter-Odili sealed Sanwo-Olu’s victory in the March 9, 2019 governorship election after it dismissed two separate appeals challenging the outcome of the poll. Delivering the lead judgment, Justice Paul Galinje held that the two appeals lacked merit. One of the appeals dismissed by the court was filed by Ifagbemi Awamaridi and his party, the Labour Party, while the other was filed by Owolabi Salis, of Alliance Democracy. According to Galinje, the reliefs sought by the appellant did not fall within the ambit of the schedule of the electoral act.

He explained that the prayers sought before the court in an election matter were jurisdictional and must fall within the reliefs allowed by the law in section 138 of the electoral act. Sanwo-Olu, through Victor Opara, his lawyer, had approached the court to upturn the order of the Appeal Court to resume hearing in the governorship election petitions tribunal in Lagos State. Salis, the governorship candidate of Alliance for Democracy, and Ifagbemi Awamaridi of the Labour Party, had prayed the apex court to dismiss the appeal filed by the appellant and uphold the decision of the Appeal Court, which had ordered the election Reacting to the verdict, Sanwo-Olu, said the victory would reinforce his desire to vigorously pursue his vision of bequeathing a legacy of a Greater Lagos to the residents at the end of his tenure. In a statement signed by Gboyega Akosile, his chief press secretary, the governor

Babajide Sanwo-Olu

said he had absolute confidence in the judiciary, knowing that it would adjudicate on the side of the people of Lagos who freely gave him the mandate to administer the State on their behalf for

Securing loans for development purposes in order – Razak

stalwart of the All Progressives Congress (APC) in Lagos State, Lanre Razak has debunked the insinuation that the state would be plunged into financial crisis due to debts being incurred through loans. According to the politician and former Public Transportation commissioner, “if securing loans is for development purposes, there is nothing bad in it”, saying that delaying execution of developmental programmes by waiting for Internally-Generated Revenue (IGR) could be anti-productive. The Epe, Lagos Stateborn high chief, was reacting to critics of Lagos State Governor, Babajide Sanwo-Olu over some loans he plans to take for development purposes, describing

them as, “arm-chair critics.” “It is very easy to cross the river on the map. Those saying so do not know what the money is being used for and the exact amount the state is spending. I can tell you authoritatively that the people in government today are very prudent with public fund and are applying it to the best interest of Lagosians. “So, we don’t need to worry and there is no need for anybody to be crying more than the bereaved. We have given the mandate to Governor Babajide Sanwo-Olu and we knew him too well before we did that. He and his team are doing very serious financial re-engineering of funds and resources available to the state,” he said. On the recently approved N250 billion loan for the executive by lawmakers,

Razak said, Lagosians need to understand that those who extend credit to Lagos and the state government strongly believe in the state’s ability to repay. “Another good thing to consider is the economic benefit of the projects that would be executed with the loan. If we don’t borrow today, the cost may be twice, when the projects are to be executed in later years. So, it is logical, reasonable and economical to borrow and it is good for the state,” the concern elder statesmen submitted. Razak therefore urged for more support for SanwoOlu and his team, assuring that, any laon approved for him would be judiciously utilized by him and his prudent team of highly respected individual professionals on different fields of human endeavours.

the four year tenure. “As the last hope of the common man, I was never in doubt that the judiciary would do what is right and what is just. The people of Lagos spoke loudly through

their votes on the day of election and their action gave us victory. We remain thankful and indebted to them.’’ The governor also thanked the leadership of his political party, the All Progressives Congress (APC), supporters and well-wishers who, he said have remained steadfast from March 9, 2019, after the election up to this moment. He pledged his administration’s commitment to the T.H.E.M.E.S agenda, which he said was aimed at delivering a future forward Lagos to the citizens. The governor, however, called on his opponents to join him in his efforts to make Lagos a destination for commerce, industry, tourism, sports and entertainment as encapsulated in the T.H.E.M.E.S agenda. “Our administration is already on the path of meaningful developmental strides. With this victory, people of Lagos State are set to enjoy more of infrastructural development and people-oriented programmes which will ac-

celerate the standard of living. “I therefore, urge the opposition to join hands with me in our quest to move our dear State forward and to give abundant life to our people,” said Sanwo-Olu. In his reaction, Awamaridi expressed dismay with the manner the petition was treated in the Supreme Court, but said his party would not relent on its effort to free Lagos State from the grip of the cabal. “We are surprised with the manner the case was treated at the Supreme Court; however, it is the highest court of the land we abide by the ruling. Can you imagine that our case was heard today, while judgment was also given today, and we called about seven witnesses? “My lawyers are surprised because they have not seen this kind of thing before. But the battle and struggle to free Lagos State continues. The party would not relent on its effort to free the state from the grip of the APC and some individuals,” he said.

‘Makinde’s Supreme Court victory, a triumph of justice, people’s will’ … You earned your victory at the polls and court, group tells governor REMI FEYISIPO, Ibadan

he affirmation of the victory of Governor Seyi Makinde in the March 9, 2019 governorship election by the Supreme Court on Wednesday has been described as a triumph for justice and the power of the people to democratically determine their leaders. Special Adviser on Strategy and Political Matters, Babatunde Oduyoye, who stated this in reaction to the ruling of the apex court, said that the Supreme Court must be commended for its apparent courage and forthrightness in the face of undue pressure by certain elements to pervert the cause of justice in the election petition matter. Oduyoye, who stated this in Abuja, shortly after the Supreme Court delivered its judgment, which validated the decision of the Election Petition Tribunal to uphold the election of Governor Makinde, declared that the

ruling of the apex court further affirmed the fact that the court remained the last hope of the people. According to Oduyoye, the unanimous judgment by the Supreme Court “confirmed that technicalities cannot take the place of the people’s power and that only the ballot box can determine the fate of political office holders.” “We are happy that the Supreme Court has affirmed what we knew all along- that the people of Oyo State overwhelmingly voted for Governor Seyi Makinde in a free, fair and credible election on March 9, 2019, when they elected him with over 515,621. “Today, the shameless voyage embarked upon by peddlers of lies and desperation in Oyo State politics came to a decisive end with the unanimous judgment of the Supreme Court, which validated the election of Governor Seyi Makinde. “That judgment, in which all seven justices of the apex court agreed with the ruling of

the Governorship Election Petition Tribunal in Oyo State and the minority judgement of the Court of Appeal, that Governor Makinde had, indeed, won the election and that the All Progressives Congress (APC) failed to prove its case, is a triumph of justice and fairness. It is a vindication of the people, who voted for massively for Governor Makinde. Meanwhile, a group, called Oyo State Development Advocacy group (OSDAG) has congratulated the Makinde over his victory. Spokesman of the group, Michael Ogunsina, said that Oyo people are lucky that they voted the right man and stood by him, stressing that it was a well-deserved victory. “This mandate was freely given to him and there should not be any dispute in the first place,” he said. The group urged the opposition to accept the verdict in good faith, insisting that the wish of the people cannot be upturned.

Abiodun wins, hails Supreme Court’s judgment as Ogun workers suspend strike RAZAQ AYINLA, Abeokuta

ovenor Dapo Abiodun of Ogun State has hailed the Supreme Court verdict which upheld his election in the March 9th, 2019 gubernatorial election in the state.

In a statement released by Kunle Somorin, Governor’s Chief Press Secretary in Abeokuta on Wednesday, the governor described the verdict as not only a victory for the people, but for democracy, the judiciary and an attestation to the awesomeness of God. Abiodun congratulated the www.businessday.ng

good people of Ogun State, the All Progressives Congress and indeed all other parties that have shown support and solidarity for his administration, despite fielding candidates in the same election. Meanwhile, the Organised Labour in Ogun State has suspended its proposed two-day

warning strike earlier threatened to embark upon as a response to non-accessibility to Government on the issue bordering on new minimum wage and the consequential adjustment proposal. The strike was however suspended following a meeting with Government’s rep-

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resentatives and Organised Labour. Speaking on the suspension of warning strike, the Chairman, Trade Union Congress (TUC), Olubunmi Fajobi made the pronouncement to suspend the strike during the meeting held in Abeokuta on minimum wage @Businessdayng

between Labour side being led by Folorunsho Olanrewaju, the Chairman of Joint Public Service Negotiating Council (JPSNC), Folorunsho Olanrewaju and the Government side, led by Tokunbo Talabi, the Secretary to the State Government.

Thursday 19 December 2019

BUSINESS DAY

UNDERSTANDING NIGERIA’S

DAIRY VALUE CHAIN

Bridging the infrastructural gap in the Nigerian Dairy Sector Mohammed Rilwan

igeria dairy farmers are mostly pastoralists who are concentrated in rural regions of the country. Dairy production, however, requires the availability of water for animal consumption, milk production, and processing, as well as the irrigation of fodder land, road access and cold storage to ensure the rapid transportation of milk to off-takers and access to markets. To this effect, dairy farmers require critical infrastructure such as boreholes to improve water access, good road networks to transport milk efficiently and cold chain facilities to preserve fresh milk. Unfortunately, rural communities have limited access to key amenities. According to the National Demographic Health Survey conducted in 2018, 42% of rural households depend on unreliable and unsuitable water sources for drinking. This study also found that 61% of rural households lack access to electricity, which constrains the effective storage of fresh milk and milk products. Milk must be stored between 2ºC4ºC, otherwise it will begin to spoil, developing a sour odour, off-flavour and curdled consistency. To improve the level of dairy production, this lack of infrastructure must be addressed through the combined efforts of governments, dairy processors, and development organizations. It typically takes the average rural farmer 1-3 hours to transport milk to the nearest milk collection point. This distance makes it difficult to deliver fresh milk that meets milk processors’ quality standards. Until recently, no cold chain infrastructure existed for use by dairy farmers. This lack of milk storage facilities has led to major losses of potential income given the highly perishable and delicate nature of fresh milk. As such, addressing the infrastructure deficit would

One of the NDDP Solar Powered Boreholes in Kano

help to encourage dairy production by minimizing waste and boosting dairy farmers’ income. During the implementation of the Nigerian Dairy Development Program (NDDP), Sahel Consulting noted that most of the participating dairy communities lacked access to safe and potable water in Kano. These communities depend on wells, stagnant water bodies, and streams that generate limited water in the dry season. Only a handful of communities had hand pumps, but many had fallen into disrepair due to a lack of proper managewww.businessday.ng

‘

The lack of potable water contributed to unhygienic milk collection practices by the dairy farmers and reduces the quality of milk produced

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ment. This lack of potable water contributed to unhygienic milk collection practices by the dairy farmers and reduces the quality of milk produced. The NDDP, implemented in Kano and Oyo, collaborated with dairy processors to establish milk collection centres near dairy farmers. These milk collection points were equipped with bulk milk tanks that store milk supplied by pastoralists at temperatures low enough to preserve milk quality before it is transported to the processors. With these collection points, dairy farmers @Businessdayng

spent less time on milk delivery and the quality of milk delivered improved, leading to lower milk rejection volumes by processors. One of the key interventions under the NDDP was the construction of 51 solar-powered boreholes within integrated dairy communities to address difficulty accessing water and to improve hygiene in the dairy production activities. Similarly, the Milky Way Project a public-private partnership implemented in Kaduna State has been able to provide some dairy communities with safe and accessible water to enhance dairy production. In October, the Federal Government also supported dairy farmers by inaugurating a milk collection centre in Tassa Dawaakin Kudu LGA in Kano. These cold chain facilities go a long way in helping farmers store fresh milk for longer periods before it is processed, thereby reducing losses incurred by dairy farmers and increasing the availability of fresh milk. The much-needed growth and development in the dairy sector can be achieved if the government ensures that all basic infrastructure such as good roads, clean water, and energy is provided. The government can also support dairy farmers by building irrigation systems for pasture production. Ultimately, addressing the rural infrastructure deficits will create an enabling environment for rural dairy farmers, increase their household incomes and boost dairy production.

Mohammed Rilwan Sahel Consulting www.sahelconsult.com

Thursday 19 December 2019

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper EDWARD LUCE

t started with a bang. Democrats in the US were tripping over themselves at the start of this year to audition as their party’s chief Trump-slayer. Even the local dogcatcher could defeat Donald Trump, people joked. The field was the largest and most diverse in history — record numbers of women, non-whites, the first openly gay candidate, young aspirants and old. Among those still standing, few show signs of winning the hearts of a party that likes to fall in love, as the saying goes. It was Democrats, after all, who produced John F Kennedy and Barack Obama. Who will be their saviour in 2020? The radar is troublingly faint. None of the leading candidates shows much promise of uniting a disparate base. The Democratic party spans every minority, a key chunk of the blue-collar union classes, a majority of the wealthiest and most educated Americans and more besides. Even when Mr Trump is your opponent, it takes a sprinkling of magic to unite a coalition that diverse. Rich and poor, black and white, gay and straight may all loathe the president. What else will bind them? The challenge is accentuated by the party’s split on the meaning of Mr Trump. Some, led by Joe Biden, believe he is an aberration. Others, led by Elizabeth Warren and Bernie Sanders, see him as a symptom of a pre-existing American condition. The former treats 2020 as an emergency. Mr Trump must be removed at all costs. Other goals can wait. The latter sees next year as an opportunity. Now is the best chance to restructure America’s faltering capitalist system. It takes a rare kind of politician to blend these priorities.

The Democrats are badly in need of a messiah

Few of the candidates show signs of winning the hearts of a party that likes to fall in love

Democratic presidential hopefuls Pete Buttigieg, Elizabeth Warren, Joe Biden and Bernie Sanders all suffer from obvious deficiencies © Saul Loeb/AFP/Getty

Each of those left suffers from obvious deficiencies. In Mr Biden’s case, they are hard to redress. The biggest is his family’s history of monetising his name. Neither Mr Biden’s younger brother, James, nor his son, Hunter, are alleged to have broken any laws. But their longrunning ability to profit from Mr Biden’s well-recognised name and status at least partly neutralises his attack on Mr Trump’s corruption. Mr Biden appears blind to his family’s faults and remains tongue-tied when asked about them.

Outflows hit record despite well-performing stock market

oreigners have withdrawn from Brazilian equities at a record pace this year, amid persistent scepticism from global investors about the country’s economic recovery. In total, foreign investors have pulled a net R$15.2bn (US$3.7bn) out of the country’s stock markets this year, data from the São Paulo stock exchange show. The exchange has surged higher, with the benchmark Bovespa up more than 25 per cent this year. But the persistent withdrawals from foreign accounts show how heavily this rally depends on local investors. “Foreign investors are looking for reality rather than rhetoric,” said Greg Konstantinidis, a portfolio manager at Fidelity International. “High unemployment and low capacity utilisation are signs of a weak economic growth backdrop.” Aside from the crisis year of 2008, foreign investors have been strong net buyers of Brazilian stocks every year since figures were first collected in 2004. But net inflows drew to a halt last year and outflows accelerated throughout 2019. So far this month, foreign investors have reduced their stock holdings in Brazil by $578m. In part, that is because Brazil offers large, liquid financial markets, which are sensitive to volatility else-

where in the region, analysts said. But foreign investors have also been spooked by stalling reform momentum after the passage of a landmark pension reform this year. Despite signs of economic growth returning after a deep recession in 2015 and 2016, unemployment is stuck at about 12 per cent and household debt is rising. Column chart of Foreign investor flows, R$ (bn) showing Record foreign exodus from Brazilian equities in 2019 Some investors are also avoiding Brazil because of concerns over the country’s governance of its natural environment. Under president Jair Bolsonaro, loggers and farmers have stepped up development of the Amazon rainforest, a factor that has already led Nordea Asset Management to back away from investing in the country. Investing within environmental metrics is “a huge business”, said Wilber Colmerauer, a Brazilian financial consultant in London. “You have a president who cannot stop talking about producing as much as we can as fast as we can. It’s completely out of sync.” While locals appear to have kept faith in the new government’s liberal economic programme, foreigners are more sceptical. The São Paulo stock exchange data show that foreigners have been net sellers of Brazilian stocks since the election of the rightwing government in October 2018. www.businessday.ng

1992. What echoes on campus faculties and with metropolitan journalists is a reliable sign of limited broader appeal. As Stevenson said after being told he had the support of every thinking American: “Yes, but I need a majority.” Ms Warren has struggled to reassociate herself with the blue-collar Oklahoma of her upbringing, as opposed to Massachusetts where she became a Harvard professor. Mr Sanders shares with Ms Warren a penchant for radical promises. Each may indirectly have been

damaged by the scale of Jeremy Corbyn-led Labour party’s defeat in last week’s British election. The Democratic party’s moneyed wing now has a champion in Michael Bloomberg, who is the ninth richest person in the world, according to Forbes. But his upside is capped by a lack of charisma. Should the field still be fragmented on “super-Tuesday” in early March, when half the US states hold a primary, Mr Bloomberg’s record election spending may be enough to bring about a brokered convention — the party’s first in decades.

Fiat Chrysler and Peugeot agree to merge in giant auto deal

Foreign investors rush out of Brazilian equities ANNA GROSS

Mr Trump is also likely to raise doubts about Mr Biden’s stamina. He would be 78 on inauguration. Older voters like him. As do AfricanAmericans and some blue-collar Democrats. He has yet to make inroads with college-educated and younger Democrats. Ms Warren’s fan base is a mirror image of Mr Biden’s. Her wonkish campaign is reminiscent of many former Democratic contenders, from Adlai Stevenson in the 1950s to George McGovern in 1972, Michael Dukakis in 1988, and Paul Tsongas in

Tie-up would create the world’s fourth-biggest carmaker MICHAEL POOLER

iat Chrysler and France’s PSA, the owner of Peugeot, have struck a merger pact to create the world’s fourth-largest carmaker by output with combined revenues of €170bn. The two companies said they had signed a binding “combination agreement” that would result in an “industry leader” with greater scale and ability to invest in new technologies. Shareholders of each group would hold 50 per cent in the new entity. The deal will reshape the automotive sector as it undergoes a period of transformation, with significant expenditure required to develop electric vehicles and self-driving systems. It will form a group with recurring operating profit of more than €11bn, a 400,000-strong workforce and total vehicle sales of 8.7m, putting the manufacturer ahead of General Motors and Hyundai-Kia. In Europe, the company’s sales would even outpace Volkswagen, which has historically dominated the region’s industry. No plants will close as a result of the merger, which the companies expect to lead to annual cost savings of around €3.7bn.

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Based on their respective market capitalisations before Wednesday morning, the new entity will be valued at around €41.1bn. PSA’s Carlos Tavares will be chief executive officer with an initial mandate of five years, with John Elkann, scion of Italy’s Agnelli family that controls FCA, chairman. “Our merger is a huge opportunity to take a stronger position in the auto industry as we seek to master the transition to a world of clean, safe and sustainable mobility and to provide our customers with world-class products, technology and services,” said Mr Tavares. PSA and FCA said they expected the transaction to complete within 12 to 15 months, subject to shareholder approval and regulatory clearances. The announcement comes after the companies confirmed at the end of October that they were pursuing merger talks. Shares in PSA were up 1.5 per cent on Wednesday morning while FCA’s stock remained flat. With a portfolio of brands covering the luxury, premium and mainstream passenger car segments, its marques will include Citroën, Opel and Vauxhall from @Businessdayng

PSA, with FCA contributing Jeep, Dodge and Alfa Romeo. The biggest markets will be Europe, accounting for 46 per cent of revenues, and North America, generating 43 per cent of sales. Beefed-up purchasing power will account for some two-fifths of the cost savings, with a similar amount from improved efficiencies for investments in technology, products and platforms. The savings will result in a one-off cost of €2.8bn. The megamerger comes after merger talks between FCA and French rival Renault collapsed earlier this year. For PSA, it marks a second high-profile deal in two years. The French automaker bought OpelVauxhall from General Motors of the US in 2017 and has presided over a dramatic turnround at the carmaker. To balance the value of the two companies, FCA will pay a €5.5bn special dividend to its shareholders, while PSA will distribute the 46 per cent stake it owns in components supplier Faurecia to its investors. FCA, meanwhile, is working on a separation of its holding in robot-making unit Comau. Each company also intends to pay out a €1.1bn dividend.

Thursday 19 December 2019

BUSINESS DAY

NATIONAL NEWS

Investment banks forecast dollar to head lower next year EVA SZALAY

he rush of investment banks’ market forecasts for 2020 is almost complete, and many agree on one key point: the dollar is heading for a modest fall. Deutsche Bank, Goldman Sachs and Bank of New York Mellon all agree that after a patchy decade of gains, next year will see the dollar decline as global growth concerns ease, boosting demand for riskier bets at the same time as the US central bank is holding or even cutting rates. Asset manager BlackRock agrees, expecting mild declines in the greenback in the first half of next year. Economists at Citigroup also think that the Federal Reserve staying put on rates or even cutting them could be the catalyst for dollar weakness next year, as the rewards for holding the currency get eroded by lower US interest rates. The consensus forecast for the end of 2020 is for the euro to trade at $1.16, from the current $1.10 rate, according to Bloomberg. Yet similar forecasts in previous years have proven to be off the mark. The conviction backing analysts’ views is also too overwhelming for comfort for some. Andreas Koenig, head of global foreign exchange at asset manager Amundi, said every meeting he had with analysts about the prospects for next year came to the conclusion that the dollar would weaken against its main counterparty, the euro. The weight of expectation meant he “would be very surprised if this consensus came true”, said Mr Koenig. For him, even after three rate cuts in the US this year, the 1.75 per cent benchmark interest rate is just too compelling when

other major economies are stuck with negative rates. “I have little incentive to switch,” he added. Making forecasts for the year ahead is one of analysts’ key tasks, as clients such as investors and companies often use them as a guideline. But a year is a long time in markets, and much can go awry. A graphic with no description For 2020, the dollar’s fate hinges on global growth and developments in the US-China trade war. When investors’ sentiment is broadly positive, the US currency tends to decline as investors feel safe to pile into riskier assets such as emerging markets. On the flip side, concerns about slowing global growth and the impact of trade tension have led many to seek safety in the greenback this year: instead of slumping, as many had forecast, JPMorgan’s dollar index crept 1.25 per cent higher. Yet analysts think this time is different. Goldman Sachs expected to see some mild weakness in the greenback and forecast that the euro would trade at $1.15 by the end of next year from the current $1.10 rate. For bigger declines in the dollar, the economic recovery in the eurozone would need to pick up, the Fed would need to cut more and tariffs on China would be rolled back, the bank’s analysts added. “We think [dollar weakness] will happen in 2020,” said Vasileios Gkionakis, head of currency strategy at Swiss bank Lombard Odier. Deutsche Bank analysts agree, based on the expectation that global growth will improve modestly into next year. “While the next big move favours dollar weakness, the timing is trickier,” its analysts said in a note, forecasting the euro to trade at $1.20 by the end of 2020.

Bank of England to set up tough climate stress tests UK banks and insurers will be under scrutiny in 3 scenarios that will last decades CAROLINE BINHAM

enders and insurers in the UK will be tested against three different scenarios that stretch out decades under what the Bank of England claims will be the world’s stiffest climate stress tests. The BoE on Wednesday set out how it would test the balance sheets of the largest UK banks and insurers, pledging to scrutinise how they would cope with more frequent severe weather events such as floods and subsidence, as well as what would happen if there were a sudden fire sale of “brown” assets — those considered detrimental to the environment. In the most severe scenario, lenders and insurers would be tested against temperature rises of as much as 4C by 2080. The first results will be published in the second half of 2021 as part of the normal annual stress tests the BoE runs. The seven lenders that currently undergo those tests, which include Barclays, HSBC and Lloyds Banking Group, will take part, as well as a far higher number of insurers that are already subject to confidential climate-related tests, the inaugural results of which will be published in the first quarter of next year. But there will be no pass or fail, and the results will initially only be published in aggregate without naming individual institutions. The BoE is not ruling out naming and shaming individual companies in the future if it feels not enough

action is being taken. It emphasised that the exercise is not intended to raise capital, as the regular stress tests are, but instead as a way to spot risks on lenders’ and insurers’ balance sheets. These range from exposure to mortgages in flood-hit areas to portfolios that include large holdings of brown assets. In the UK, loan exposures to fossil fuel producers and other brown assets amount to around 70 per cent of banks’ so-called common equity tier one capital, the safest kind of capital, the BoE said. Banks and insurers have already been put on notice that they have to have a senior manager responsible for managing climate risk who is then liable for fines or a ban if they are not doing their job properly. The BoE could ultimately penalise a bank by insisting on higher capital requirements if it did not think it was adequately managing its risk. The three scenarios, which were not explained in detail on Wednesday, will rise in severity. The first assumes that early action is taken to address climate change and comply with the Paris accord to keep temperature rises below 2C. The second will assume delayed action by a decade, which could prompt more severe fire sales of assets as politicians and policymakers rush to make the 2C benchmark. The third assumes that no action is taken and so temperatures rise by as much as 4C by 2080, with chronic weather changes such as rising sea levels and more frequent flash floods. www.businessday.ng

M-Pesa, launched in Kenya a decade ago as a peer-to-peer mobile money service for people without a bank account, has grown into Africa’s largest payments service © Reuters

Vodafone targets Africa’s unbanked with ambitious plans for M-Pesa Telecoms group seeks to turn mobile payments unit into provider of wider services NIC FILDES AND TOM WILSON

odafone plans to transform its M-Pesa African mobile payments service into a financial platform spanning the continent as it seeks to unlock the value of one of the world’s largest fintech networks. M-Pesa, launched in Kenya a decade ago as a peer-to-peer mobile money service for people without a bank account, has grown into Africa’s largest payments service. A push to offer more sophisticated financial and ecommerce services could open the door to a stake sale to highlight the business’s value. Nick Read, who took over as Vodafone chief executive in 2018, has laid the ground to separate the company’s huge tower business into an independent company, a move that has lifted the company’s flagging stock price by about 10 per cent. Analysts see M-Pesa, like the towers, as an under-exploited asset on Vodafone’s balance sheet. Shareholders attribute it little value because they regard it as a small part of a mature telecoms company rather than as a pioneering fintech business. A graphic with no description While it only accounts for 3.5 per cent of revenue at Vodacom, Vodafone’s African arm, applying a valuation in line with other payment technology companies — roughly 20 times earnings — would make M-Pesa worth as much as $1.5bn, three times its current implied value. Expanding its range of products and its geographic scope could significantly boost its value. Vodafone’s strategy is to expand M-Pesa’s business rapidly in the seven African countries where it already operates as well as in new markets such as Ethiopia, where the British company has no telecoms network. “I believe we can turn it into Africa’s largest unbanked bank,” Mr Read told the Financial Times. “To achieve this, we need to explore strategic technology partnerships and work with key financial institutions. I believe there is the opportunity to roll out M-Pesa into other countries where we do not have existing mobile operations when the platform is further developed.” M-Pesa was launched in 2007 by Safaricom, the Kenyan telecoms company jointly owned by Vodafone

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and the Kenyan government. Named after the Swahili word for money, the basic transfer service quickly took off in a market with limited banking infrastructure. Kenyans could suddenly use mobile phones to send money to friends, relatives and merchants at the click of a few buttons. As basic phones were replaced by feature phones and then smartphones, M-Pesa’s functions expanded to include the ability to pay for everything from electricity and rent to air fares. A graphic with no description Now used by two-in-five Kenyans, the system provides the payments backbone to a multitude of digital services. Safaricom expects M-Pesa to account for more than half its revenue within four years, up from just over 30 per cent currently. The service has been launched in six other African markets, including Tanzania, Egypt and Ghana, and the customer base is growing across the continent. Their numbers rose 12 per cent to 37m in the year to the end of March, while revenues were up 21 per cent to €750m. More than €10bn is processed over the M-Pesa platform every month. It has not all been plain sailing. Launches in countries including India, Afghanistan, Romania, Albania and South Africa failed to work and the service was closed down. And in Kenya, Safaricom has been forced to allay concerns that MPesa could be caught up in tensions between the US and China — Safaricom and Vodafone migrated the M-Pesa customer base to Huawei’s Mobile Money Platform in 2015. A year ago US authorities issued a “denial order” that prevents international companies from working with Huawei. Vodafone had to pull phones made by the Chinese company, which use Google’s Android operating system, from its 5G launch in the UK. However, Safaricom has played down any prospect of a ripple effect on M-Pesa from Huawei’s woes. “They have been a very competent and very close partner of ours for a very many years and I hope they continue to be,” Bob Collymore, Safaricom chief executive until his death this summer, told investors in May. “Our policy as a company is not going to be driven by Donald Trump . . . We will make independent decisions, similarly I believe @Businessdayng

the government of Kenya is making decisions, which are independent of America-China geopolitics.” Collymore is to be replaced with Safaricom’s first Kenyan CEO, Peter Ndegwa, who will join from Diageo next year. Any move to disrupt M-Pesa would have a dramatic effect on the Kenyan economy. Joshua Oigara, head of the Kenyan bank KCB Group which is a partner of Safaricom for MPesa, estimates that about a quarter of Kenya’s gross domestic product is processed over the platform. M-Pesa is already used to pay salaries, book bus tickets and settle invoices in most of its markets. In Kenya it has expanded into more advanced financial services including small loans, supply chain finance, insurance and a growing number of in-store and ecommerce services. Mr Oigara said data generated by M-Pesa users would be key to introducing credit scores to African markets. The business does not have an open goal, however. Banks including Standard Chartered have identified Africa as a potential growth market while other telecoms companies, including South Africa’s MTN, France’s Orange and India’s Airtel, have launched rival payment services. There were 135 live mobile money services across sub-Saharan Africa and 122m active accounts at the end of 2017, the most recent data available, according to global mobile phone trade body the GSMA. Well-funded Silicon Valley players have also targeted the region. San Franciscan lenders Branch International, backed by Visa, and Tala, which counts PayPal as an investor, have both launched in sub-Saharan Africa. And other telecoms companies, notably Orange, have targeted banking as a new growth area both in Africa and Europe. A rapid expansion of M-Pesa over the next 12 to 18 months could become a similar growth driver for Vodafone. “The future of telecoms businesses like Safaricom is using MPesa to go into more ecosystems beyond telecoms,” said Mr Oigara, highlighting financial services, education and healthcare as industries that could be further stimulated as mobile payments grow on the back of smartphones. “You can capture the value of the transactions which is really what the business is today.”

Thursday 19 December 2019

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Volvo sells struggling Japan unit UD Trucks to Isuzu Motors Truckmakers aim for strategic alliance in latest partnership in auto industry RICHARD MILNE

olvo Group is selling its struggling Japanese business to Isuzu Motors as the two truckmakers seek to set up a strategic alliance, the latest in a series of partnerships sweeping through the automotive industry. The Swedish truckmaker said that its longtime problem child UD Trucks had an enterprise value, which includes equity, debt and cash, of Y250bn ($2.3bn) but that final terms would be agreed with its Japanese rival next year. The deal to sell its Japanese unit should boost Volvo’s operating income by SKr2bn ($210m) and its net cash position by SKr22bn. News of the sale of a unit, which contributes little to Volvo’s profitability but has annual revenues of SKr24bn, boosted shares in the world’s second-largest truckmaker behind Daimler. They rose 4 per cent to SKr156.8 on Wednesday morning. Shares in Isuzu rose 1.5 per cent to Y1,385. The non-binding agreement between the Swedish and Japanese truckmakers is set to be formally signed in mid-2020 after due diligence with closing of the deal taking place at the end of next year. The two truckmakers will also start an alliance to include a technology partnership, a focus on the heavy-duty truck business of both companies and the possibility of

further collaboration in areas such as medium and light-duty trucks. “Amid this once-in-a-century industry shift, there are many partnerships, but an alliance between commercial vehicle makers is the most efficient,” said Masanori Katayama, Isuzu’s president, according to Bloomberg. Martin Lundstedt, Volvo’s chief executive, added: “We see great potential to extend our co-operation within technology, sales and service as well as other areas going forward, for the benefit of our customers and business partners.” Mr Lundstedt, the former head of highly profitable Swedish truckmaker Scania, has reshaped Volvo, aiming to make it more resilient and with higher margins before an expected downturn. He has restructured the Gothenburg-based company, which is separate from the Chineseowned Volvo Cars, by selling off noncore businesses and cutting costs. Volvo warned in October that demand in both the US and Europe would fall next year while orders in the third quarter of this year dropped dramatically. Truckmakers, like car manufacturers, are facing the need for hefty investments in the next few years due to the rise of electric and self-driving vehicles just as many economists and companies fear an economic slowdown.

De Beers ends a tough 2019 with more of a flourish Top diamond producer sells $425m of rough stones in this year’s final sale HARRY DEMPSEY

tough year for the world’s biggest diamond producer has ended on a more positive note with De Beers reporting a pick-up in sales at its latest auction. De Beers, which is owned by Anglo American, sold $425m of rough stones in its final sale of 2019, up from $400m at its previous “sight”. However, sales were down 20 per cent from the same period a year ago, highlighting the tough market conditions facing De Beers and other major producers. “This is an encouraging sign that the rough diamond market is showing signs of stability and holding this demand level,” said analysts at Berenberg. Diamond producer sales and margins have been hit hard by a liquidity crisis affecting diamantaires, the middlemen who cut and polish diamonds for use in jewellery, after a high-profile bank fraud scandal in India cut off lending. The growth of diamond sales online has squeezed processors as retailers now carry less inventory, reducing demand for polished stones, according to Bain & Company. Pressure has been piled on the industry by a supply glut of rough

diamonds and competition from lab grown stones, while unrest in Hong Kong and the US-China trade dispute have knocked demand. Analysts at Citi said De Beers’ full-year rough diamond sales were likely to come in at around $4bn, down from $5.4bn in 2018. In response to the troubles of the diamond industry, De Beers has offered greater flexibility on prices and terms to buyers. Along with major Russian producer Alrosa, it has also reduced the supply of rough diamonds to the market but built up their own stockpiles. “Following continued polished diamond price stability in the lead-up to the final sales cycle of the year, we saw further signs of steady demand for rough diamonds,” said Bruce Cleaver, chief executive of De Beers. Diamond cutters and polishers are expecting the industry downturn to last for at least another six months but mining executives are hopeful that robust retail demand and tightening supply will help the industry to recover quickly. The Berenberg analysts said that if De Beers and Alrosa continue to “act as market custodians, as they have been in recent months, we think that this could start a period of sustained price stability for roughs”. www.businessday.ng

Saga launches its cryptocurrency as Libra waits in the wings The new digital currency’s experience could bring important lessons for Libra MARTIN ARNOLD

ast week brought the launch of a new digital currency called Saga that has portrayed itself as the academic’s answer to the cryptocurrency craze. Saga first emerged in early 2018, but it has changed quite a lot since then. Many of those changes are telling when it comes to analysing the increasingly hostile regulatory climate for digital currencies, particularly so-called stablecoins that aim to rival more traditional currencies. The experience of Saga could bring important lessons for Facebook’s plan to launch Libra as a digital currency for the masses — a move that already has central banks launching reviews and regulators sharpening their pencils. Saga was designed with help from some top economists including Myron Scholes, the Nobel Prizewinning professor; Jacob Frenkel, outgoing chairman of JPMorgan Chase’s international business; and Dan Galai, co-creator of the Vix volatility index. They are all on its advisory board. Like Libra, it is designed to address the shortfalls of bitcoin, the world’s biggest cryptocurrency, by

reducing the wild price swings and anonymity for holders that have attracted heavy criticism from the financial and political establishment. It does this by tethering itself to reserves in a basket of currencies held at commercial banks. Holders of Saga can claim their money back by cashing in the cryptocurrency. So far, so similar to Libra. But there are several crucial differences. Unlike Libra, Saga does not have Facebook’s 5.4bn subscribers as a ready-made user base. It also requires buyers to pass antimoney laundering and knowyour-customer checks before they own it — a major concern of regulators about Libra. Most of these checks will be fully automated, but they also have a four-person team who will do manual checks for people buying more than €15,000 of Saga. Nor is it a stablecoin in the strictest sense. Ido Sadeh Man, founder and president of Saga, calls it a “stabilisation coin”. This is because it operates a variable fractional reserve system. This means its price can rise and fall as the amount held on deposit automatically fluctuates in proportion to the amount of usage achieved by the coin.

These differences to Libra are useful attributes in dealing with the intensifying regulatory clampdown on stablecoins in Europe. Last week, the EU Council and Commission issued a joint statement declaring that “no global ‘stablecoin’ arrangement” should begin operation in the region until “the legal, regulatory and oversight challenges and risks have been adequately identified and addressed.” Mr Sadeh Man said the statement did not apply to Saga because it is neither global, nor a stablecoin. When he set up Saga, the idea was that it would be run by a Swiss foundation — much like Libra — but that changed and it is now run by a UK company. Saga struggled to get clarity from Swiss regulators and found it easier to switch to the UK, which is a worrying sign for Libra. “We wanted an affirmative ruling from the Swiss, but they took one-and-a-half years,” he says. Highlighting the urgent need for authorities to develop a regulatory framework for digital currencies, Mr Sadeh Man says that the company has not been able to find anyone to approve its launch or to give it a licence — because such things don’t exist.

Louis Dreyfus names new finance chief in latest management change Ex-investment banker Patrick Treuer appointed CFO at agricultural commodity trader NEIL HUME

he managerial merry-go round continues at Louis Dreyfus Company with the agricultural commodity trader announcing a new finance director. The privately owned company said Patrick Treuer, a former Credit Suisse investment banker, would take the job with immediate effect and keep retain his role as chief strategy officer. Mr Treuer, a close confidant of LDC’s majority shareholder Margarita Louis-Dreyfus, replaces Federico Cerisoli, who held the role for just over a year. LDC said Mr Cerisoli would remain with the company to help co-ordinate its cost efficiency programme, launched last month in response to tough market conditions. Uncertainty created by the USChina war, the spread of deadly

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pig flu in China and increasingly erratic weather has made life very difficult for LDC and its peers, a group that includes Archer Daniels Midland, Bunge and Cargill. In the first half of 2019, LDC’s profit fell 45 per cent to $71m and its chief executive Ian McIntosh has said things won’t improve until 2020. There have been a string of senior management changes at LDC since the shock departures on the same day of Mr McIntosh’s predecessor Gonzalo Ramírez Martiarena and its finance director Armand Lumens in September 2018. At the same time, Ms LouisDreyfus has been tightening her grip over the company, completing the buyout of remaining family shareholders in a deal part financed by loans from Credit Suisse. LDC said Mr Cerisoli and Mr Treuer would report to LDC’s chief operating officer Michael Gelchie, @Businessdayng

who was promoted to the role last month after returning to run the company’s coffee business in July. In April, Mr Treuer stepped down as chairman of Biosev, the struggling Brazilian sugar business controlled by LDC’s holding company to focus on his responsibilities as the company’s chief strategy officer. “I would like to thank Federico for his contribution to the company as CFO since September 2018,” said Mr Gelchie in a statement. “He will continue to provide valuable support as we adapt to challenging market conditions, while we continue to implement our ambitious business strategy. I also take this opportunity to congratulate Patrick, who brings indepth knowledge of the Group and financial expertise that will serve him well in his new role.”

Thursday 19 December 2019

BUSINESS DAY

ANALYSIS

China’s global power damps criticism of Uighur crackdown Reluctance to offend Beijing breeds silence over the religious minority’s fate

rsenal footballer Mesut Ozil triggered an international stand-off when he criticised Beijing’s treatment of Uighur Muslims, prompting China’s state broadcaster to drop his club’s latest game in one of the Premier League’s biggest markets. “ Ko ra n s a re b e i n g b u r n t . Mosques are being shut down. Muslim schools are being banned. Religious scholars are being killed one by one,” the Turkish-German player wrote on Twitter. “Despite all this, Muslims stay quiet.” Muslim leaders are not the only ones to have refrained from condemning Beijing’s internment of more than 1m Muslim Uighurs in so-called re-education camps in western China. Around the world many countries have held back from criticising China, fearful of offending Beijing and suffering the wrath of the rising power. The Financial Times takes stock of who has spoken up and who has

to China this year, according to Chinese state media. Qatar, initially a signatory of a letter from 37 nations supporting China’s actions, withdrew its name in August. The government says it has now adopted a “neutral stance”. . . . as have leaders of Muslim majority countries in Asia President Joko Widodo of Indonesia leads the world’s largest Muslim-majority country and recently won re-election with the nation’s most powerful Muslim cleric as his vice-president. In an interview with the FT, however, he claimed not to know about the incarceration of Muslims in western China. “I don’t have the imagination for that. I don’t know the facts there so I don’t want to comment,” he said. In December 2018, Indonesia’s foreign minister met China’s ambassador to discuss “concerns of Indo-

Differing views: left to right: Recep Tayyip Erdogan of Turkey; Joko Widodo of Indonesia and Jacinda Ardern of New Zealand © FT montage

stayed silent on the issue. Turkey is one of the only Muslim majority countries to have criticised China President Recep Tayyip Erdogan of Turkey has cast himself as a champion of oppressed Muslims around the world. The president is also a personal friend of Ozil. In February 2019, Turkey’s foreign ministry described Beijing’s treatment of Uighur Muslims as a “great shame for humanity” and called on Beijing to close its mass internment camps. But since those comments, which sparked a row with Beijing, Ankara has been more reticent. Mr Erdogan, who is seeking to attract foreign investment from China, drew criticism from Uighur activists for failing to raise the issue publicly on a visit to Beijing in July. Most Gulf leaders have remained quiet . . . Many Arab leaders have refused to condemn the treatment of Uighurs, although some media, especially those based in Qatar, have highlighted regional powers for failing to stand up for their Muslim compatriots. Heavyweight voices in the Gulf, including Saudi Arabia and the United Arab Emirates, have voiced backing for crackdowns on terrorists — Beijing’s justification for the camps — while on state visits to China. “China has the right to take antiterrorism and de-extremism measures to safeguard national security,” said Mohammed bin Salman, Saudi Arabia’s crown prince, during a visit

nesian Muslims about the plight of Uighur Muslims in Xinjiang”. Afterwards, the Indonesian government said it did not want to intervene in China’s domestic affairs. Mahathir Mohamad, Malaysia’s prime minister, similarly refused to criticise China over its policies in Xinjiang, pointing instead to the plight of the Rohingya, the Muslim minority group driven out of Myanmar after a military crackdown, as “a much bigger problem than the Uighurs”. Imran Khan of Pakistan, for his part, has claimed not to have heard of the issue. “Frankly, I don’t know much about that,” he told the FT. In the Philippines, which has a sizeable Muslim minority and a government keenly pursuing closer economic ties with China, President Rodrigo Duterte was more forthright. “I cannot fight China. It would be a war which I can never win,” he said in a speech in Moscow in October, according to media. Western democracies have been more critical . . . Although the US administration of Donald Trump has been selective in its approach to human rights, it has been vocal in its condemnation of China’s crackdown on Uighurs. Mike Pompeo, US secretary of state, has met representatives of the Uighur community and survivors of internment camps. In March, he called for the end to “repression” and the release of all those who had been “arbitrarily” detained. www.businessday.ng

Can European carmakers accelerate electric transition? New EU emissions standards are designed to wean consumers off larger, petrol-fuelled cars PETER CAMPBELL

hen Blas Arambilet tried to buy an electric car in April, something strange happened. Months after ordering a white Kia e-Niro from his local Barcelona showroom, he received a call from the dealership. Kia could not deliver the car this year, a salesman explained, because the company needed to book the sale in 2020 to help meet tough new targets for CO2 emissions. While not illegal, this incident demonstrates the contortions carmakers are planning to perform to pass Europe’s strict emissions rules, which come into force at the turn of the year and require them to lower average CO2 output to 95g per kilometre. To hit the targets, they must sell a large number of electric cars that the vast majority of motorists — aside from Mr Arambilet — have so far shown scant interest in purchasing. “There is going to be an imbalance between what consumers want and what manufacturers want to sell them,” says Robert Forrester, chief executive of dealership group Vertu, which operates 123 retailers and garages in the UK. Despite Mr Arambilet’s enthusiasm, vanishingly few buyers are turning to electric cars, which accounted for less than 3 per cent of the cars sold in Europe in 2018, and are still clustered in countries that offer generous incentives. Instead, consumers are shunning diesel in favour of petrol, and switching to heavier sports utility vehicles. The result is that, since 2017, CO2 emissions from cars have been rising across the EU. “The industry has been slow to accept the magnitude of the challenge,” wrote Max Warburton, an auto analyst at Bernstein. “It’s just stunning how much is going to have to be achieved in the next 18 to 24 months.” If the industry sold exactly the same mix of vehicles in 2021 as it did last year, carmakers together would face penalties of €25bn, he calculates. The impact of the carbon clampdown will therefore be felt at forecourts across the continent, and by a wide body of consumers and businesses that will be encouraged to buy electric cars, whether they want to or not. “The regulation is not aligned with what is happening in the market,” says the head of compliance at one global carmaker. “To comply, we have to get out of step with the market.” The impact of the new standards runs deeper than the array of ve-

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hicles lined up on a forecourt. For Europe’s carmakers, an industry that supports close to 14m jobs, the change also has profound, businessshifting implications. The higher input costs of electric vehicles mean they make less profit than “traditional” ones — if they make any at all — leaving carmakers with less money to funnel into new models. “Each time I’m selling an EV I’m making much less money than selling anything else,” says Carlos Tavares, chief executive of PSA, the French carmaker behind Peugeot, Opel, Citroën and Vauxhall. “I would therefore like to limit the number of EVs to a certain level.” Theoretically, carmakers could meet the regulations simply by withdrawing their most polluting models and selling battery cars at exorbitant discounts. But this would mire them in losses, at a time when manufacturers are already trying to cut costs in the region. Within Europe alone, Ford plans to axe 7,000 jobs, Daimler 10,000 and Volkswagen’s Audi another 10,000. As well as selling less profitable cars, carmakers are also seeing a reduction in their total sales, says Philippe Houchois, an auto analyst at Jefferies. He forecasts a 4 per cent decline in EU sales next year. G2348_19X European car emissionsEuropean consumers have become SUV enthusiasts “Unless there’s a generalised support to the industry, you will probably have a volume recession because you are forcing consumers to buy cars they are not familiar with.” Fears over additional electric spending and squeezed margins have already led to consolidation across the industry. PSA and Fiat Chrysler are merging to pool investments, while Ford and Volkswagen have formed an alliance to collaborate on new technologies, including some electric systems. “For mass market carmakers, electrification looks an existential threat and may require a total redesign of industry structure,” says Mr Warburton. Each carmaker faces its own CO2 target, based on the weight of its vehicles. A business selling smaller cars such as Peugeot owner PSA therefore has a lower CO2 target than a company with a heavier average vehicle, such as Mercedes owner Daimler. The targets for each company therefore vary from around 91g/km to just over 100g/km. Potential fines for missing these are punishing. Every gramme over the target incurs a penalty of €95 — multiplied by the number of cars sold @Businessdayng

in Europe. For leading groups such as Volkswagen or PSA, the bill could easily run to ten figures. Industry leaders also fear that if they miss targets they will face a public backlash in European societies which take environmentalism seriously. “Right now, we [the industry] are considered as being crooks,” says Mr Tavares. “I don’t think there is any long-lasting, sustainable position in the society if we just do not care about contributing to fixing the global warming issue. He adds: “This is not a trade-off. This is a precondition to deserve to be in the market.” Next year’s rules include some concessions, such as the exclusion of 5 per cent of sales from the calculations, and electric cars counting as double. In 2021 the rules tighten, with all sales counted and battery vehicles losing some of their added weighting. Carmakers are also allowed to form “pools” where weaker and stronger players team up to submit a single score. Fiat Chrysler has pooled with Tesla. Carmakers have known about the rules since they were set in 2008. But the ground has shifted under the wheels of the industry, leaving manufacturers scrabbling for imaginative ways to meet the targets. Diesel sales, a longtime pillar for many of the manufacturers because it emits a fifth less CO2 than petrol, have fallen swiftly after the exposure in 2015 of VW’s widespread cheating on diesel emissions tests, as well as citywide bans on the fuel. London has excluded most older diesel cars using a charging zone, while Bristol plans to ban all diesel cars in some central areas. Several German cities including Hamburg, Berlin and Stuttgart — the home of Porsche and Mercedes — have imposed limited bans. Even though many bans still permit the use of the very latest diesel models, many confused motorists are shunning the fuel. “Three quarters of searches by fuel type used to be for diesel,” says Ian Plummer, commercial director of UK-based online marketplace Auto Trader, which attracts 55m views a month. “That has fallen to a quarter within two years, and it’s still falling fast.” Industry executives privately fume that green groups which espoused diesel for its climate impact now reject the fuel over air quality concerns. They also criticise governments and local authorities for being slow to install the electric charging stations needed to convince consumers to take the plunge and switch to battery vehicles.

Thursday 19 December 2019

BUSINESS DAY

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Thursday 19 December 2019

BUSINESS DAY

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Thursday 19 December 2019

BUSINESS DAY

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Thursday 19 December 2019

BUSINESS DAY

FINANCIAL INCLUSION

& INNOVATION

Stakeholders identify informal banking, low transaction cost as key to extending financial inclusion boundaries Stories by Endurance Okafor

o r t he Central Bank of Nigeria (CBN) to onboard the count r y ’s 3 6 . 6 m i l lion excluded population, stakeholders have identified important measures that are key to achieving the set target. The provision of sustainable job opportunities, stronger bank operation, reduction of inequality, creation of empowerment programmes, reduction of formal financial services and a boost in financial security and operation were the key measures recommended by experts in the financial services industry. The industry experts made this known at the recent Inclusive Finance Nigeria Conference and Awards (IFINCA) and were optimistic that if successfully implemented Africa’s most populous nation will record a higher inclusion rate. Titilola Shogaolu, the Divisional CEO of Interswitch Financial Inclusion Service, while proffering on what’s still missing in Nigeria’s financial inclusion, said: “there’s an existing gap despite various initiatives that have been deployed by relevant stakeholders”. She therefore identified lack of identity card, which is needed for bank accounts opening as a barrier to digital financial inclusion. The CEO said the following must be implemented to achieve inclusive financial inclusion in a country where 36.8 percent don’t have access. According to the Central Bank, the implementation of the National Financial Inclusion Strategy (NFIS) in 2018 did not meet the expectations of the industry

regulator. According to the bank’s annual NFIS report, the strategy did not give room for changes in the financial services industry as it was constrained by economic and security challenges. “Though financial inclusion numbers improved in 2018, effective implementation of the strategy (NFIS) was constrained as it did not give room for innovation and changes in the financial services landscape,” the apex bank said in the report. Launched in 2012 to reduce the percentage of adult Nigerians who do not have access to financial services from 46.3 percent in 2010 to 20 percent in 2020, the NFIS articulated the demand, supply-side and regulatory barriers to financial inclusion, identified areas of focus, set targets, determined key performance indicators (KPIs) and established the implementation structure. The latest figures by EFInA put Nigeria’s financial inclusion rate at 63.2 percent, meaning as much as 36.8 percent of adult still

lack access. While addressing the theme of FINCA , which asked, is it time to reinvent and push the boundaries? Ronke Kuye, the Managing Director/CEO of Shared Agent Network Expansion Facility (SANEF) identified several measures that are required to deepen financial inclusion in Nigeria. “All the regulators and central service providers, agency banking such as SANEF and other developmental organization, super agents, Fintech and Telcos and the microfinance banks, state governments and the security agencies must work together to bring the excluded Nigerians into the financial ecosystem”, she said. In her words, the impediments that are slowing down the wheels of financial inclusion in Nigeria include but not limited to the high cost of banking transaction, lack of attractive financial products, inadequate financial literacy programmes, poor customer service, inadequate infrastructure and cumbersome

banking process. The Central Bank plans to include 95 percent of the adult population in Africa’s largest economy by 2024, a 15 percentage points increase from the 80 percent the regulator targets to give access by 2020. If the apex bank is going to achieve its target, it would have to bridge the 16.8 percent inclusion gap by next year; a target many have said is too ambitious. Speaking on the yardsticks for measuring financial inclusion, the Managing Director/CEO of Xpress Payments Solutions, Oluwadare Owolabi said the results and goals of financial inclusion could only be measured through the provision of access to affordable financial service that meets people’s needs, secure financial services, the establishment of proper financial institutions that cater to the needs of the poor and the use of agency banking. He identified “access indicator” - the number of bank branches, PoS devices, number of bank accounts

and remittances, banking agents, loans and savings with the banks, level of literacy among others - as an important means to deepen financial inclusion and bring more Nigerians into the formal financial service. In its quest to spur financial inclusion and achieve its targets, the apex bank plans to loosen its policies to allow Telcos and retailers to partake in the financial services industry. Before October 2018 when the Central Bank released an exposure draft that requested an application from Telcos, retailers and other industry players to apply for Payment Service Bank (PSB) aimed at giving financial access to Nigeria’s excluded population, Nigeria only depended on its bank-led model in driving financial inclusion. According to SANEF boss, the Central Bank is making an effort to ensure that financial inclusion target is met by initiating the mobile money agents, SANEF and agency banking services. Through the initiatives, SANEF had rolled out 156,000 agents, this is however far from the 250,000 agents target. The Managing Director/ CEO of E-Settlement and Paycentre, Olaoluwa Awojoodu in his presentation on the viability of agent banking networks stressed that the challenges facing financial inclusion must be pulled down before the CBN can achieve its goals. He listed unavailability of affordable banking services, threesome documentation and onboarding process, low literacy level, non-presence of banks in a rural area and “negative view of banks as being overly complex” as the key challenges. He said his team carried

out a survey and realized that many local areas lack access to financial services, adding that 80 percent of the banks in Nigeria are sited in Lagos while other states are suffering. “We need to tackle these barriers to promote financial inclusion for suitable economic development”. Explaining how the banks can apply themselves to extend the boundaries of financial inclusion while speaking during the Future of Financial Inclusion panel sitting, the Managing Director and CEO of Precise Financial Systems, Yele Okeremi noted that Nigerians are not interested in the banks but in banking services; as such, the banks must “re-engineer their minds by deploying technological innovations that will make them lead the space”, he emphasized. In a similar vein, the Head, Executive Support and Corporate Strategy of Grooming Centre, Nnaemeka Nwachukwu delved into how technology is disrupting the financial inclusion space and redefining all sectors of the economy. He said Grooming has completed the bank processor information to boost financial inclusion and that the motive is to work optimally with technology and address challenges facing financial inclusion. “There are technological infrastructure deficiencies in the rural part of the country which we are working towards addressing by partnering with major stakeholders in the industry. We are also training some Nigerians on how to use some technology especially software to access data. But the industry needs to do more”, he noted.

CBN, Bankers’ Committee to spur rural inclusion with new BVN Lite

he Central Bank of Nigeria (CBN) and banks, under the support of the Bankers’ Committee, have concluded plans to simplify the requirements for the Bank Verification Number (BVN) for certain types of transactions. The CBN Governor, Godwin Emefiele, said the introduction of the BVN Lite is aimed at giving access to the country’s unbanked population who are most residents of rural communities with

limited documents to open a bank account. “For our brethren in local communities, we think that by being allocated the BVN Lite, they would be automatically migrated into the banking system,” the CBN Governor said at the end of a two-day annual Bankers’ Committee retreat at Ogun State. The BVN which is a biometric identification system implemented by the CBN to curb illegal banking transactions in Nigeria is a security

measure aimed at reducing fraud in the banking system. “Some of our brethren that are doing the Anchor Borrowers’ Programme or the Social Investment Programme, we believe we can use the BVN Lite as an arrangement so that everybody can be financially included and can conduct banking transactions,” Emefiele said, stating that the important thing is “we can have a view of total number of people in the financially included.” Speaking at the Bankers’

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retreat with the theme, “Delivering Inclusive Growth: Leveraging Digital Finance, the CBN Governor said: “What it entails is to reclassify and segregate transactions that can be held by BVN. For instance, we have two classifications. The existence BVN requirement that we have in the system has almost about 18 lines of information that are required, and where your 10 prints and fingers are taken to ensure that all transactions that you take are within the banking system.”

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Giving details of the BVN classification, the apex bank revealed that while there is already BVN classic and BVN premium, the BVN Lite will be established specifically for people who are financially excluded. However, under the BVN Lite, Emefiele pointed out that the number of transactions to be carried out by such persons would be limited. “BVN as it is today, we have close to 40 million people enrolled on the platform. @Businessdayng

We think that because of the benefits of the BVN today to bank customers and, indeed, to the economy, there is need to move to what is called BVN 2.0,” the CBN boss said. According to the Governor with the BVN Lite, minimal information about the person will be held. “What is means is that if you are classified a BVN Lite, then there is a limit to the kind of transactions you can conduct in the banking sector, maybe in terms of deposit or loans.”

Thursday 19 December 2019

BUSINESS DAY

Garden City Business Digest Women accountants in Rivers roll out schemes for market women, girl-child career • As deputy governor charges new SWAN executives Ignatius Chukwu & Favour Ichemati

omen accountants in Rivers State have rolled out schemes to bring financial literacy and basic bookkeeping to market women in the state to prepare them for bigger loan handling. This is as the deputy governor, Ipalibo Gogo Harry, has charged the newly inaugurated executives of the Society of Women Accountants of Nigeria (SWAN) led by Chinedu Nwachukwu to partner with other groups to bring more underprivileged market women into economic prosperity. SWAN rolled out the schemes when the executives were unveiled at the investiture event at Landmark Hotel in D-Line area of Port Harcourt on Sunday, December 15, 2019. Unveiling the schemes in her presidential address, Nwachukwu said: What financial ignorance does to our people, especially market women. We see how it keeps them out of financial inclusion and benefits. We plan to expand the programme to take place monthly. To encourage the women, we propose a small loan package for the best book keepers.” On scholarship scheme, she said: “This is a girl-child emancipation scheme. The few underprivileged girls that have so far benefited in this scheme have always been transformed from helplessness to hope. When we visit them, we see fire in the eyes and a determination to excel. This gives us joy. They represent hope from the hopeless. SWAN also unfolded a mentorship scheme for girls thus: “This scheme is another turn-

Middle; Inegogo Fubara (representing the deputy governor) with a physically-challenged scholar (Rejoice Eluu), flanked by the right by the new chairperson, Chinedu Nwachukwu, and representative of the national chairperson, Elizabeth Oyeduntan.

ing point. The situation of most girls that fell off the ladder was so touchy that a one time First Lady in this state saw the great decay in the girl-child community and had to set up a scheme to rescue girls that lost their way through unwanted pregnancy, school dropouts, those surviving by selling their bodies, drug addicts, etc. Her research showed that many of them are hooked and would want to trace their steps back but cannot. It is easier to arrest the situation before damage is done. “Our scheme thus tries to do a bit of this by going to schools to try and stop the calamity from taking place in the first place. We continue to seek partnerships in trying to accomplish this task.” She said the SWAN has an awareness drive because awareness remains their

most important scheme and tool in getting the girl-child into substance. “Accounting as a branch of study does not only offer a girl a career or profession but it plays a big role in creating order and discipline in the life of a student of the course. It deals with figures and projections and thus helps a girl-child to begin early to respect figures, data, plans and projections. When a girl is dealing with this, she would easily assess any relationship that is put on her palms. She would deploy the tools of analysis and assessment to interpret what is before her and take wise decision. “We will continue to preach this message to female students in Rivers State through our various outreach programmes with the support of our partners.” Commending the SWAN, the deputy gov-

ernor, who was represented by her senior special assistant, a lawyer, Inegogo Fubara, urged the Nwachukwu-led executives to join her various emancipation schemes in the state towards women and the girl-child. She said the governor, Nyesom Wike, was doing huge job on women emancipation. The chairman of the occasion, the senator, Olaka Nwogu, represented by the managing director of Hinterland Limited, Obarido Nwogu, commended the women accountants and described them as pillars of modern professionalism. He said Nwachukwu has been a huge influence on her fellow women as well as male colleagues in Hinterland, saying much is expected of her in SWAN. In her lecturer, the professor, Chinyerem Madumere-Obike, represented by a senior lecturer in Uniport, Catherine Ukala (PhD), said a career woman has no accepted definition because there can be no career woman without managing the home. She also showed that those regarded as housewives were truly career women in many other duties and trades they sustain successfully. She urged professional women to watch their health because of multi-tasking. The first chairperson of SWAN in PH, Omubo-Dede Felicia, who won awards along with other past leaders of the Society, urged past chairpersons to rally round the executives to move the Society forward. She said she was impressed by what Nwachukwu is doing so far. The national chairperson of SWAN, Felicia Aina Bangbose, who was represented by a council member and Fellow, Elizabeth Modupe Oyeduntan, urged the new executives to stick to the core values of ICAN and carry all members along with integrity and transparency.

Who owns Soku oil: Wike or Amaechi? Port Harcourt

IGNATIUS

he judicial question has been answered in the vexatious matter of who owns Soku oil field; between Rivers and Bayelsa states. What remains now is the deeper issue of who is the moral owner of the victory that Rivers State just won? Let’s go back a little. The Soku oil field remained the property of old Rivers State which included present day Bayelsa. By 1999, a dispute reared its head and as usual, the accruals were lodged in an escrow account pending resolution. It was then governor, Peter Odili, that took the matter to court when it was realized that the boundary had been shifted in Map 11. When Goodluck Jonathan, a Bayelsa State man, became vice president and president, the money in Escrow was given to his home state, causing tears in Rivers Govt house in PH. The National Boaundary Commission (NBC) is always controlled by vice presidents. It was at this point that the sitting governor at this time,

Chibuike Rotimi Amaechi, took the matter to court for not obeying the Supreme Court and handing the proceeds to Bayelsa. Amaechi shouted himself hoarse, saying he was a true Rivers son and must fight for their right. His Bayelsa counterpart, Seriake Dickson, rather mobilized Ijaws and all those seen to be Amaechi’s enemies, to argue that it was an Ijaw oil asset and that Amaechi was no Ijaw. At that point, Wike was a minister under Jonathan and many say a decision had been taken in Aso Rock to remove Amaechi. The task needed an arrowhead and some said Wike, who was Amaechi’s nominee in Jonathan’s cabinet, was drafted for this. Thus began the fierce wars that started as the 2012 Rivers political crisis that tore the then ruling PDP in the state into two parts. Wike ran away with the Felix Obuah faction recognised by law while Amaechi left to the APC with the Ake faction. With federal might, Wike defeated the Amaechi team and became governor, but the lingering issue of what happens to Rivers interests and oil wells remained an issue. After some years, Wike, now a governor (where Amaechi is now minister), began to have thirst for the Soku oil wells, and went to court to press for declarative actions and enforcement of the Supreme Court decision, This has just been won. Now, there is jubilation on both camps in Rivers; Amaechi men think it belongs to their Lion of Niger Delta politics while Wike’s men think it belongs to High Tension. The Wike men say it

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was their hero that won the Federal High Court victory for Rivers State, but the Amaechi men say it is Wike’s master, Jonathan, that took away the oil in the first place. They think Wike was complicit in weakening the ability of Amaechi to win the case. They point to karma as the real winner of the battle. The truth however is that every single Rivers governor from Odili to Wike has gone to court over the Soku oil field. They all ay have to share the moral award. What the federal high court ruled: A Federal High Court sitting in Abuja on Monday ruled that Rivers State owns the disputed Soku Oil Wells/Fields located in Akuku-Toru Local Government Area of Rivers State. In a judgment in Suit Number FHC/ABJ/ CS/984/19, the Attorney-General of Rivers State versus National Boundary Commission, Justice Inyang Ekwo of the Federal High Court declared that after examining all the documents from relevant Government agencies and facts before the court, the Soku Oil Wells/fields belong to Rivers State. The Federal High Court made an order compelling the National Boundary Commission to rectify forthwith in the 12th Edition of the Administrative Map of Nigeria the erroneous interstate boundary between Rivers State and Bayelsa State as contained in the extant 11th Edition of the Administrative Map of Nigeria. The Court declared that the continued failure and refusal of the National Boundary Commission to rectify the admitted mistake in

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the 11th Edition of the Administrative Map of Nigeria since 2002 which erroneously showed St Batholomew River instead of River Santa Barbara as the interstate Boundary between Rivers State and Bayelsa State is a breach of its statutory duty and a flagrant disobedience of the order of the Supreme Court contained in its judgment delivered on 10/7/2012 in Suit Number SC. 106 /2009. Justice Ekwo declared that the continued reliance on the said defective 11th Edition of the Administrative Map of Nigeria by the other Government Agencies/Statutory Bodies especially the Revenue Mobilisation , Allocation and Fiscal Commission and the Accountant General of the Federation in the computation of revenue accruable to Rivers State from the Federation Account has resulted in the continued unjust denial of derivation funds accruing from the Soku Oil Wells/fields situate within Rivers State to the Detriment of the State Government. The Court also ordered that pending the formality of compliance by the National Boundary Commission deeming the administrative boundary between Rivers State and Bayelsa State to be River Santa Barbara in accordance with the admission of the National Boundary Commission as per letter of 3/7/2002 and the definitive order of the Supreme Court made on 10/7/2012. Justice Ekwo granted the two reliefs and directed that notice be served of the Decision of the Court on the Revenue Mobilisation, Allocation and Fiscal Commission and the Accountant General of the Federation.

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Thursday 19 December 2019

BUSINESS DAY

Investing in Rivers State Total E&P begins construction of $500m Ikike offshore oil field • Targets additional 32,000 bpd, plus huge gas • As Saipem assures of best safety standards Ignatius Chukwu

section of top oil industry players gathered at Iwofe backside waters in Port Harcourt, Rivers State, where Total E&P flagged off construction job on its new 32,000 barrels per day offshore oil project known in the oil sector as Ikike. The project may gulp $500m to be delivered in 2021. The country chair/MD of Total, Mike Sangster, who flagged off what he called first steel cutting said the epoch-making event came soon after the Egina landmark project, a top offshore platform fabricated in Nigeria at Aveon in Port Harcourt also. Background checks indicate that Ikike oil field is located in a water depth of 20m in the Oil Mining Lease (OML) 99, approximately 20km offshore Nigeria. The OML 99 is owned by a joint venture (JV) comprising Total E&P Nigeria (40 per cent, operator) and Nigeria National Petroleum Corporation (NNPC, 60 per cent). The JV signed the Nigerian Content Compliant Certificates (NCCCs) with Nigeria Content Development and Monitoring Board (NCDMB) in July 2019, moving the project into the tendering and execution phase. The field lies in the northern part of OML 99 and is estimated to hold 70 million barrels of oil equivalent. Total MD, who was represented by the deputy for Port Harcourt District Guillaume Dulout (because of flight landing difficulties), said Ikike represents a template project for the company, the success of which he said should allow the launch of several other similar developments. He said the execution strategy

Engineers and top managers cut first steel in Ikike oil field project

(basic+detailed engineering and procurement) including call for temder stages in parallel, has allowed for significant work leading to construction after only four months. He stated that most of the critical stages from engineering contract and four packages, with ongoing drilling contracts, call for tenders, will be domiciled in Nigeria. A major milestone is the fact that the basic and detailed engineering has been successfully executed in Nigeria by NETCO, which continues to provid construction assistance. « The construction of jacket, modules, topsides, and the risers in Nigerian yards will boost local employment with 3000 direct and indirect jobs. » Confessing that the first steel cut-

Shell MD thumbs up volleyball competition in Port Harcourt

ting (foundation laying ceremony) gave him joy, Sanster said the Ikike Development Project, coming on the heels of the Egina Project, is further commitment of the Total E&P group to Nigeria and the growth of the oil and gas industry. On key objectives, the CEO said it would develop the Ikike reservoirs as a tie-back to the existing Amenam field with incremental production of 32000 barrels per day of oil and 3.3 Msm3 of gas per day by drilling five new wells including water injection’ capitalise on lessons learnt from previous projects (OFON, OML-58) to assure a development with srategy fit for content, maximise local content at sustainable cost, minimalsist/simplified design, economic and fast execu-

Education: Do like the Germans – Rabboni Bells founder

• Team wins, carts home N1m Kelechi Esogwa, Port Harcourt

he managing director of Shell Development and Production’s Company, Okunbor Osagie, has hailed the organization of this year’s taxes volleyball tournament by the She’ll Club Harcourt. He spoke shortly after the tournament held at the Shell Residential Area before presenting trophies to the winners of the competition. Commending the players and coaches for a good display throughout the tournament, the Sheii MD advised them to always demonstrate discipline in whatever they are doing. Osagie, who described sports as a unifier, thanked the players for their show of sportsmanship while congratulating the Shell team for emerging champions. ‘I’m quite pleased to see that you shared the honors . I congratulate the Shell team for redeeming the image of the club. The only thing I’ll advise is that when things go wrong, you take things easy,” he said. Earlier, the General Manager, External Relations of Shell, Igo Welii, said that the volleyball tournament was an annual event organised by Shell Club, adding that over the years,

many big names in Nigeria, including the Super Eagles, have participated in the football section of the tournament. He said that eight teams from different states participated in this year’s event and that most of the players are members of the national team. The Shell GM said; “This is the third time the MD is sponsoring the competition. It’s a way of bringing Shell and the communities together. Sport helps to keep our staff fit, so we encourage them to participate in sports,” he said. At the end of the tournament, Shell Spikers emerged winners of the male category after beating City Spikers of Bayelsa. Trailblazers of Bayelsa beat Sunshine Stars of Akure to win the 3rd place For the female category, City Spikers of Bayelsa defeated Shell Spikers to emerge champions. Speaking to Business Day shortly after the competition, captain of City Spikers of Bayelsa, female category, Ijeoma Ukpabii, attributed their victory to hard work unity and focus. Ukpabii who said she hails from Abia State, added; “I felt like great because last year we were champions. This victory will boost out morale to work harder.” www.businessday.ng

tion to first oil ; and create a template for future similar developments by Total E&P. He revealed that the final investment decision was taken in January 2019 and that the NNPC board appoval and NCDMB-NCCC Certification were secured in June 2019, while the LOI for contracts of the four major packages was launched in August 2019. « The first steel cut that we are celebrating today marks the commencement of the construction phase (Jacket, piles, etc) are in Saipem. » At Total, he added, safety is a core value, not just a priority. « This core value, we must share with our contractors, working hand in hand to ensure the higehst safety standard on

this project. The objective of the group remains zero lost time injury and zero fatality. We must ensure our contractors share our safety values and implement same in all our pojects. « Ikike is a testament of cooperation and working together. Though each oil and gas development project has its peculiar challenges, a key success factor is always the willingness of all parties involved to cooperate and address the challenges. Clearly, without the cooperation of all parties (DPR, NAPIMS, NCDMB), nothing would have been achieved. I must thus thank the executive secretary of the NCDMB and the group general manager, NAPIMS for their personal commitments, guidance and support. For Ikike, the drive to be a low/ controlled capital expenditure project in the context of current oil prices, very few similar projects and many countractractors and yards with low activities, and remain an economic development clearly pose a profound challenge. However, ai am confident that with greater support, cooperation and working together, we will achieve our objectives. « I express my thanks and congratulations to our project team, our contractors, and Saipem. The chairman/CEO of Total has assured the company’s strong willingness to fast track this project and to make it not only a joint NNPC-TEPENG success but a success for Nigeria. Let us all now work for the next milestone of this project. » The project manager from Saipem as well as top officials of the DPR, NAPIMS and the Nigerian Content Board officials commended Total E&P for another sensitive step in the oil industry with local content as a centrepoint.

Ignatius Chukwu

igerian education must aim to make the youths think outside the box right from primary school. The new generation must adopt entrepreneurial spirit learnt from school. I all, Nigerian education objective must be like the German prototype. This is what led an engineer, Basil Chukwuemeka Nwosu, to establish his own school, Rabboni Bells International, which is now at full primary

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level, ready to go into secondary school level by 2020. Rabboni Bells has secured government approval in a state where over 423 schools did not make it this term. In an interview, the founder said the philosophy of the school is to apply practice-based learning to shape a child so as to reflect this in the society later. He said entrepreneurship is key of every education system; to show kids how to think outside the box. The man whose passion for teaching seems to have no end opened

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Rabboni in 2017 and his wife, Nnenna, is the proprietress while he does not mind teaching all the way. He said: “We adopt pragmatic teaching and use Nigerian and British curriculum.” The key objective at Rabboni Bells is to get to the inner mind of a child and use interactive approaches to draw out the inner mind of a child. This is because formal examination may not be the best way to find out the true level of a child’s brilliance or knowledge. He said the school is designed to fit into international partnerships especially the German way of learning and reasoning. There is no pressure to sort for grades because the child is capable. Yet, the fees there are very affordable. The stand outs at Rabboni Bells include; No ugly incidents in our school. Proper procedures, close circuit cameras, etc. School is government-approved. CCTV, highly qualified teachers, facilities in each classroom, sanitary conditions are top gear, inverter system to give steady power supply, audio visual way of teaching to make the child see things. Robotics and artificial intelligence are the new frontiers in child education.

industry Insight

BUSINESS DAY Thursday 19 December 2019 www.businessday.ng

What early budget passage means for Nigerian manufacturers MICHAEL ANI

igerian manufacturers would be among the biggest beneficiaries of an early budget implementation as this would enable them to plan ahead and position for growth. That’s after President Muhammadu Buhari, during his 77th birthday, signed the N10.59 trillion budget for 2020 into law. The signing halts 12 years of budget delays by Nigerian politicians, ushering in a January-toDecember budget cycle for the third time since 1999. Within the last 12 years, it has taken Africa’s most populous country an average of six months into a new fiscal year to get its budget signed into law— a situation that has left investors guessing. Following the Federal Government’s return to January –December budget calendar with the 2020 version, economic and financial analysts have said that the early passage will add value to the economy and also lead to some measure of stability which manufacturers will benefit greatly. The impact could be widespread if the budget is implemented. For instance, early release of funds for roads and bridges could boost cement and iron/steel industries as long as local manufacturers are patronised. Part of the challenge facing local manufacturers is indebtedness, and key players are already excited that they could be paid for supply contracts they have made in 2019, BusinessDay gathered. Pharmaceutical firms could benefit with possible order for drug supplies in public hospitals and an assurance that they could be paid on time. Like many other sectors of the economy, manufacturing companies also operate a fourquarter financial year, opening their books from January of a new year and closing them in December. Implementing the budget at the start of a fiscal year provides companies with appropriate information to make informed decisions, since, to a large extent, they know the direction the government is moving. “Returning the budget to the January-December fiscal year will, to a large extent, remove some of the uncertainties associated with the delayed budget, as the delay has been known to make business leaders and operators apply brake in order to know the budget direction before taking their investment

President Muhammadu Buhari, signing the N10.59 trillion budget for 2020 into law.

decision,” said Johnson Chukwu, CEO of Lagos-based investment house, Cowry Asset Limited. As usual, the budget shows a breakdown of various sectors, ministries, agencies and departments of the government, including the amount the government hopes to disburse with the period. This will provide manufacturers with in-depth information on the particular sector the government will be paying more attention— to so as to prompt them into deciding whether to channel their investments to these sectors or not. According to financial analysts, returning the budget to the January-December fiscal year would provide the opportunity to forecast properly the direction of demand so as to take advantage of market opportunities. To a large extent, the ability a budget has to impact on an economy is dependent on the amount earmarked for capital spending. Expenditure on infrastructure such as roads will help in fixing the bottlenecks which manufacturers face when carrying raw materials from the farm to the warehouse, and from the warehouse to the market. According to the Manufacturers Association of Nigeria (MAN), over N20 billion is being lost annually by manufacturers operating within the Amuwo Odofin and Kirikiri industrial zones as a result of dilapidated infrastructure. This is worrying when the

losses incurred by other manufacturers who do not operate within Lagos or within the country’s busiest port city are factored in. According to Chukwu, with the budget being signed into law, ahead of the commencement of the fiscal year, manufacturers as well as companies can hope that the government will be able to disburse the cash back capital expenditure budget early enough to implement capital projects in the first quarter of the year. For power, its expenditure from the budget could help in reducing the enormous amount spent yearly by manufactures in fuelling their plants while creating alternative sources of energy for production. In 2017 alone, manufacturing companies in Nigeria spent as much as N117.38 billion on fuelling their plants to run their daily operations, MAN said. This affected their ability to expand operations and acquire new machinery to produce more in order to give juicy returns to shareholders. “The biggest challenge facing manufacturing companies as well as small and medium scale enterprises is power. This has led the death of many businesses in the country,” Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry, said recently. This is so not good for a nation that eyes the African Continental Free Trade Area (AfCFTA) opportunities.

Although the allocations to capital expenditure in the 2020 budget were N2.6 trillion, about N721.33 billion or 23 per cent lower than the N3.18 trillion earmarked in the 2019 budget, its early implementation would go a long way. After all, the major problem with the capital expenditure is not just its size but ability to use it fully for the purpose for which it was allocated. The early passage of the budget, to a large extent, sends positive signals to both domestic and foreign investors on the seriousness of the government to boost economic growth. This would, in turn, help in boosting their confidence in carrying large investments whether as a direct or portfolio investors. Manufacturing companies that are listed on the stock exchange will probably see their share price appreciation in the event of such investment deals. However, much of the analysis is based on the bet that government, ministries, departments and agencies (MDAs) will patronise local manufacturers, and manufacturers on their part will produce quality and useful products. The Nigerian manufacturing sector is made up of 77 industries, dominated by food, beverages and tobacco, with sugar and bread products generating the greatest value of output, based on data from the National Bureau of Statistics. As a critical sector, it has a lot of opportunities that, if har-

nessed effectively, and could attract the needed investments while creating jobs for the country’s teeming youths. The sector in the third quarter was the biggest beneficiary from the Central Bank’s monetary policy directives which mandate deposit money banks to loan out a minimum of 65 per cent of their deposits to the real sector of the economy. Data from the NBs show that the sector grew 1.10 per cent, its fastest expansion since the start of the year, against a negative growth of 0.13 per cent in the previous quarter. BusinessDay reported recently that the sector has the potential to hit an average growth of 7 percent growth, according to an estimate by the global consulting firm, PricewaterhouseCoopers, if such policies from the monetary authorities are complemented side by side with policies from the fiscal side. Such fiscal reforms would help in fixing the several bottlenecks that manufacturers have outlined to be their biggest threat to productivities, which include dilapidated road network, epileptic power supply and supply variability of raindependent agricultural inputs, among others. A country’s budget is a financial plan for a defined period, often one year, showing the government’s planned expenditure in various sectors of the economy as well as revenue projections for the period.

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