BusinessDay 19 Mar 2020 by BusinessDay

5 new coronavirus cases force FG, states into frenzied response JOSHUA BASSEY, MARK MAYAH, IFEOMA OKEKE, ANTHONIA OBOKOH (Lagos), ONYINYE NWACHUKWU, GODSGIFT ONYEDINEFU (Abuja) & RAZAQ AYINLA (Abeokuta)

… FG issues travel ban on China, US, Italy, 10 others … Lagos, Ogun ban gathering of over 50 persons

ited a raft of desperate responses from the Federal Government, which had until now appeared

he confirmation of five new cases of the coronavirus in Nigeria on Wednesday has elic-

reluctant to take drastic actions to contain the virus. The five new cases of coro-

navirus, which bring the total number of confirmed cases to eight, involve two Nigerians

and three foreigners, Osagie Ehanire, minister of health, said Continues on page 38

businessday market monitor

Biggest Gainer MTNN N95

Foreign Exchange

Biggest Loser

Nestle +10.00 pc N915.3 22,789.64

FMDQ Close

Everdon Bureau De Change

Bitcoin

NSE

-3.86 pc

Foreign Reserve - $36.1bn Cross Rates GBP-$:1.29 YUANY - 52.00 Commodities Cocoa US$2,293.00

Gold $1,491.67

news you can trust I ** thursDAY 19 march 2020 I vol. 19, no 523

₦2,065,891.97 -0.08

N300

Sell

$-N 370.00 378.00 £-N 476.00 489.00 €-N 406.00 418.00

Crude Oil $ 26.00

Buy

www.

Market

Spot ($/N)

I&E FX Window CBN Official Rate Currency Futures

($/N)

fgn bonds

Treasury bills

368.02 307.00

3M 0.00 2.87

NGUS feb 24 2021 367.00

-0.06 3.61

-0.11

10 Y -0.67

30 Y -0.56

11.14

13.57

12.98

NGUS feb 22 2023 375.00

NGUS feb 26 2025 380.00

Hit by oil price collapse, Nigeria N readies for long-delayed reforms

LOLADE AKINMURELE

Seeks to converge exchange rates To securitise CBN loans to FG Oil price benchmark revised down to $30 per barrel

Fiscal, monetary limits mean Nigerian businesses, workers mostly on their own ... See page 39 Umaru Ibrahim (l), MD/CE, NDIC, being decorated by Mohammed D. Abubakar, president, Alumni Association of the National Institute (AANI)/former InspectorGeneral of Police (IGP), when the latter led exco of the association on courtesy visit to the NDIC MD/CE.

igeria’s Federal Government appears to be days from the implementation of some of the long-awaited economic reforms made more urgent today by the unprecedented collapse in the price of oil, the country’s major revenue and foreign currency earner. BusinessDay learnt last night that three reforms recommended by teams appointed by government, including naira exchange rates convergence which will put more cash in the treasury of all tiers of government, a cut in the oil benchmark for the budget to $30 a barrel, as well as the acknowledgement and securitisation of the Federal Government’s borrowing by ways and means via the central bank, may have received the nod Continues on page 38

Inside

Petrol price cut signals way out of subsidy P. 2 Nigeria not prepared for Coronavirus crisis ahead – Atedo Peterside P. 37

Thursday 19 March 2020

BUSINESS DAY

news MARKETS

T-Bill auction records N81bn unsuccessful bids amid low investment opportunities … as stop rates slide further … Naira reverses gain after trading HOPE MOSES-ASHIKE & ENDURANCE OKAFOR

ore than N81.11 billion worth of unsuccessful bids were recorded at the Nigerian Treasury Bills (T-Bills) auction conducted Wednesday by the Central Bank of Nigeria (CBN) on behalf of the Federal Government of Nigeria (FGN) due to the excess liquidity in the financial system. Fixed-income investors seeking high-yielding securities were disappointed as attempts to buy the Federal Government short-term debt

instruments at attractive rates were denied as coronavirus outbreak presents limited investment opportunities. Ayodeji Ebo, managing director, Afrinvest Securities Limited, said the further decline in stop rates is as a result of the lack of alternative investment options in Nigeria. “We have noticed that Nigeria’s secondary T/bill market has not been very liquid as most investors are holding to their investments,” Ebo said. Investors bid at rates which were as high as 5 percent, 7 percent and 13.18 percent on the 91-day, 182day and 364-day bills, re-

spectively. Subsequently, the apex bank cleared bids at 2.3 percent and 3.4 percent on the 91-day and 182-day maturities, a further drop from the 2.49 percent and 3.78 percent recorded in the previous auction. Akintunde Olusegun, financial market analyst at Polaris Bank Limited, said the amount on offer was low. Total aggregate subscription at the auction, he said, was N128.6bn as against N10.4bn offered. The investors that desired to win at all cost bid as low as 4.33 percent. It was a case of demand outweighing supply.

“This gives the CBN the leeway to reduce the rate as they are not willing to allot more that the quantity on offer,” Olusegun said. Investors’ rush for the long-term maturity crashed the rate to 4.6 percent down from the 5.3 percent reported in the last auction. “We expect the trend of declining stop rates to continue amidst the coronavirus outbreak which has triggered global economic instability,” Ebo said, adding that it is expected to impact negatively on Nigeria’s revenue, constraining the government’s ability to fund and implement the 2020 budget.

L-R: Joseph Makoju, immediate past group managing director, Dangote Cement plc; Emmanuel Ikazoboh, non-executive director, Dangote Cement plc; Babajide Sanwo-Olu, governor, Lagos State, and Michel Puchercos, group managing director, Dangote Cement plc, during a visit to commiserate with Lagos State government on the gas explosion in Abule-Ado area of the state and to introduce the new Dangote Cement plc group managing director, in Government House, Marina, Lagos, yesterday.

Petrol price cut signals way out of subsidy

igeria’s government Wednesday cut the price of Premium Motor Spirit (PMS) to N125, from the current N145, but fuel dealers and oil marketing firms are unsure if this signals a pathway to the much-desired deregulation of the country’s downstream sector of the oil industry. This price reduction, necessitatedbyafallincrudeoilprices, represents a 13.7 percent cut from the previous price. Crude plunged as much as 9 percent, touching a low of $24.42 a barrel on Wednesday due to crushing combination of excess supply and shrinking demand. AskedifhethoughtWednesday’s pump price cut should be seen as signposting the de-

regulation of the sector, one key industry player said, “The sharp drop in the international price of crude oil meant that subsidy removed itself. There is nothing in thestatementsbytheministerof stateforpetroleumandNNPCto suggest that government really opted to dismantle the subsidy regime.” BusinessDay learnt from dealers across Lagos that while they have canvassed an end to the fuel subsidy regime, they have not received any notification that this has happened. The worry is that in a deregulated regime, the regulator, the PPRA, should be the one announcing the new PMS pricing template, but it has so far been quiet while NNPC, which is the retailer, is the one making all the announcements. In addition, there has been nothing said about the www.businessday.ng

adjustment of margins for the dealers and retailers. Today, a large petrol station, say, along Awolowo Road in Ikoyi-Lagos, which sells an estimated one million litres a month, gets a margin of N2.36 and this translates into a total margin per month of N2.36 million. If he rented the property, he should be paying virtually all of that for rent and he is left with nothing for salaries and diesel to power the petrol pumps. Oil marketers, keen to see an end to the misery that has emasculated their business, have expectedly thrown their weight behind the government’s action to slash the price of petrol from N145 to N125, saying they are ready to support any government policy that would help to alleviate the economic problems

DIPO OLADEHINDE

rude oil prices dropped further on Wednesday, with United States’ West Texas Intermediate (WTI) prices falling to an 18-year low of $22 as global market expects an extra oil of about 3 million barrels per day in April, with even more pending in May. WTI plunged 15.3 percent to $22.90 a barrel on March 18, the lowest level since 2002, while Brent crude was down 8.9 percent, at $26.17 a barrel, after falling earlier to $28.40, the lowest since early 2016. “While Organisation of Petroleum Exporting Countries’ (OPEC) leadership retains hope that the price collapse will be a catalyst for a reconciliation between the two oil heavyweights, President Putin may not quickly capitulate,” Helima Croft, head of global commodities strategy at RBC, tweeted. The coronavirus crisis is weighing on prospects for demand as people refrain from flying or driving amid lockdowns and border closures. The world’s global demand has also seen a steep decline on flight cancellations, industrial shutdowns, quarantines and travel bans, a development which has further reduced the need for oil consumption by many more millions of bpd, widening the imbalance that already

of the masses. Tunji Oyebanji, chairman, Major Oil Marketers Association of Nigeria (MOMAN), said the association hopes the policy would lead to the long-term sustainability of the downstream sector. Muda Yusuf, directorgeneral, Lagos Chamber of Commerce and Industry (LCCI), said the current oil price slump offers government the opportunity to exit the oil subsidy conundrum. “What is desirable ultimately is for the Federal Government to come up with an exit strategy to pave the way for a complete liberalisation of the downstream oil sector,” said Yusuf. He said over the years, the Nigerian economy has suffered huge losses as result of

Continues on page 38

https://www.facebook.com/businessdayng

existed before the OPEC+ meeting. A new report by Rystad Energy, a Norway-based independent energy research and business intelligence company, has revealed extra oil coming into the global market from April will be as much as 3 million barrels per day (bpd) if a cease-fire is agreed upon in Libya and the country reaches preshut-in levels. Libya’s daily oil production has dropped from more than 2.8 million barrels to less than 100,000 barrels, due to the closure of oil ports and fields by tribal leaders in eastern Libya in protest against the UN-backed government. “Any large political power sometimes needs to remind its adversaries and competitors of its might. We believe Saudi Arabia seeks to teach the market a lesson,” says Bjørnar Tonhaugen, Rystad Energy’s head of oil markets. Tribal leaders in eastern Libya in January closed oil ports and fields, accusing the UN-backed government of using oil revenues to support armed groups against the eastern-based army. There is a risk of production shut-ins as the world’s oil storage capabilities will be put to the test, with oil’s spot price subsequently collapsing, Tonhaugen said, “in which case countries with higher break-even prices will be the first to be affected”.

US Embassy cancels visa appointments amid increase in coronavirus cases ENDURANCE OKAFOR

… but oil marketers and dealers are unsure OLUSOLA BELLO, ISAAC ANYAOGU (Lagos) & TONY AILEMEN (Abuja)

Oil slumps to 18-year low of $22, as more crude tsunami expected

nited States Embassy and Consulate in Nigeria has cancelled visa appointments amid the increase in coronavirus cases in the country. The Embassy sent text messages and email to applicants who already had confirmed interview dates on Wednesday. “As of March 18, 2020, the United States Embassy and Consulate in Nigeria is cancelling routine nonimmigrant visa appointments,” the mail seen by BusinessDay read. The embassy said it “will resume routine visa services as soon as possible but are unable to provide a specific date at this time”. It said in the mail that the Machine Readable Visa (MRV) fee would remain valid and may be used for a visa application in the country where it was purchased within one @Businessdayng

year of the date of payment. For those that have an urgent matter and need to travel immediately, the embassy instructed that they follow the guidance providedonitswebsitetorequest an emergency appointment. Countries around the world have enacted several policies to contain the spread of the coronavirus. The Nigerian government on Wednesday announced a travel ban on 13 countries including China, Italy, Iran, South Korea, Spain, Japan, France, Germany, United States of America, Norway, United Kingdom, Netherlands & Switzerland. The ban, which takes effect March 21, came after five new cases were reported in Lagos. It is part of Nigeria’s efforts to avoid the pitfalls that greeted the late response of countries that now have high cases of the virus which they are now battling to control, the government said.

Thursday 19 March 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 19 March 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 19 March 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 19 March 2020

BUSINESS DAY

news

Covid-19: FIRS unveils automated system to block funding gaps … as experts advise FG on rising inflation

he Federal Inland Revenue Service (FIRS) has unveiled a new Electronic and Automated platform for taxpayers to file transfer pricing declaration and disclosures with a view to block leakage in tax collection in Nigeria. Abdullahi Ahmad, director, communications and liaison department, FIRS, made this known in a statement issued by the service in Abuja on Wednesday. While unveiling the electronic solution platform in Lagos before bank executives and other stakeholders in the tax sector, executive chairman, FIRS, Muhammad Nami, said this was necessary because of the stamp duty being collected by banks across the country. Nami explained that the step was due to the coronavirus (COVID-19) pandemic that had crippled the global economic system with dire consequences

for fiscal planning by all countries of the world. He stated that the Service was deploying the automated platforms to ensure 100 percent compliance, and tasked the banks to get fully prepared for the adoption of the new compliance programme. “The need for total compliance and aggressive revenue drive is imperative now in view of the recent crash of oil price from 50 dollars to 29 dollars which will definitely affect our collection from the Petroleum Profit Tax. “Similarly, the outbreak of the COVID-19 has occasioned a global economic meltdown with serious consequences to our economy. “You will recall that recently about 50 Nigerian oil bearing trucks could not discharge crude oil to buyers because of this COVID-19 pandemic. “This has the combined effect of reducing government

revenue target and, subsequently, the provision of infrastructures and social amenities. “We earnestly need to shore up against the looming economic meltdown. It is on this note that I solicit your cooperation and understanding in the drive to use automation to rev up our revenue so that the government of President Muhammadu Buhari will be able to deliver on its mandate”, he explained. Meanwhile, a professor of Economics, Sheriffdeen Tella, has advised the Federal Government to stop external borrowing for now and settle for local ones. Te l l a, o f t h e O l ab i s i Onabanjo University, AgoIwoye, Ogun, spoke with the News Agency of Nigeria on Wednesday in Lagos, said while reacting to February inflation figure released by the National Bureau of Statistics (NBS) on Tuesday.

Coronavirus outbreak shows folly of medical tourism, ignoring healthcare financing ISAAC ANYAOGU

ince the outbreak of the novel coronavirus, Nigeria’s leaders including President Muhammadu Buhari, have cut back on frequent medical trips abroad as years of underfunding the health sector comes back to haunt everyone. Buhari, who spent nearly six months away on medical treatments abroad in his first tenure, has continued the tradition of poorly funding the health sector, allocating a paltry N427.3 billion of the N10.59 trillion 2020 budget to health. Politicians who get into office promising to fix the broken health system fly themselves and their families abroad for qualitative healthcare, leaving the sector worse than they met it. With the coronavirus now,

there are better chances that a trip abroad at this time may likely result in contracting an infection. In any case, Western countries have shut their borders to international flights as their healthcare systems are ravaged by Covid-19. In its 2020 budget, the Federal Government is spending N2,000 provide for the healthcare of each of the estimated 200 million Nigerians, according to the N427.3 billion proposed for healthcare. To put this in proper context, this miserable sum includes the salaries of all health workers in the Ministry of Health, cost of running government hospitals and the provision of drugs, vaccines and medical equipment. Yet, this is a country where about 20 percent of all global maternal deaths happen, where over 700,000 Nigerians live with HIV, and millions are treated

yearly for malaria. It is also battling yellow fever, Lassa fever, polio and the coronavirus. Though Nigeria churns out about 3,000 doctors yearly, many leave the country for better opportunities abroad after completing their studies. Of the 72,000 doctors on Nigeria’s medical roll, less than 42,000 are practising in the country, according to the Medical and Dental Association. Doctors in government hospitals are paid N5,000 as hazard allowance, indicating that each time they attend to a patient with highly infectious disease, they are engaging in extreme sports. The pathetic state of healthcare in Nigeria has sometimes turned public hospitals into vectors for infectious diseases. Many now rely on faith healing and experimenting with unregulated, sometimes virulent herbal remedies.

Joke Bakare, Francesca Emmanuel, Omawumi celebrate IWD with pharmacists BUNMI BAILEY

n commemoration of International Women’s Day, Joke Bakare, CEO, Medplus joined by Francesca Emmanuel, the first female federal permanent secretary in Nigeria, and Omawumi, a multi-talented singer and songwriter, hosted an exclusive breakfast event for female employees pharmacists and pharma-techs last week. The breakfast event, which took place at the Medplus headquarters, Victoria Island, Lagos, was aimed at celebrating and encouraging Medplus female employees and honouring the women who continually thrive in a male dominated field while

creating countless opportunities for women to achieve the holistic approach providing healthcare and beauty services in the country. Speaking with employees during the session, Bakare discussed the importance of the celebration and also encouraged women to do and be more. “The essence of this International Women’s Day celebration is to reflect on the progress we have made as women, and strategise on the necessary actions required to advance together as we proceed in our individual lives. To every woman at Medplus, I’d like to say that you are intelligent, a forward thinker and you have done well for yourself, family, this organisation and the society at large. “Be relentless in whatever www.businessday.ng

you do because you spark a fire that sweeps through our network and the world is watching, I’m definitely excited to see what the future holds,” Bakare said. Also at the event, Emmanuel, emphasised on the important roles women play across various Nigerian sectors. “The role we play as women is enormous, celebrating International Women’s Day has shown that we all have come a very long way, we have the capability and power to do and be whatever we want to be. We have to always recognize how powerful we are and leverage on it. I’m really happy to be part of this event with you all and I encourage you to keep the fire burning because you are unstoppable,” Emmanuel said. https://www.facebook.com/businessdayng

@Businessdayng

Thursday 19 March 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 19 March 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 19 March 2020

BUSINESS DAY

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

In association with briu@businessday.ng

08098710024

Why Nigeria must consider its untapped gold deposits to spur economic growth ISAAC ESOWE

ith the outbreak of coronavirus, coded as COVID 19 by the World Health Organisation (WHO), the source of Nigeria’s foreign earnings, crude oil prices, have plummeted to below $30 a barrel. This already signals danger for an economy that is oil dependent, with over 80 percent of the nation’s revenue coming from the sale of crude oil. Nigeria is endowed with abundant mineral resources. However, their extraction and processing through mining activities especially of the solid minerals are going on at different scales of intensity. Below the soil lies an expansive precious metal considered as the valuable resource in Nigeria, apart from oil and gas. A single query on the internet gives anyone an idea of its abundance, spread across several parts of the schist belts in North-west and South-west of the country, with several small occurrences beyond. It is the world’s most valuable stone to mankindGold. In South Africa, mining accounts for a noticeable portion of country’s GDP which means, if well tapped, Nigeria should be able to earn sizable amount of non-oil

Nigeria Gold Reserves in Tonnes

revenue from mining activities, especially gold. “In South Africa, mining accounts for 11% of gross fixed capital formation, but also for 16% of all foreign direct investment in South Africa. The industry accounts for only 0.3% of corporate taxpayers, but they were responsible for 6% of tax assessed in 2014. Although mining employs almost half a million people, this is only 5% of the country’s workforce. As we shall see later in this paper, however, some of these relatively low figures understate the sector’s contribution to the economy. For example, mining currently accounts for a third of all merchandise exports”, Federation for a Sustainable Development

(FSE) said on its website. Sadly, however, many of its occurrences can be justly described as mineral ‘showings,’ as it has remained largely untapped to translate into shared wealth and sustained economic development for the country. According to the Nigeria Mining Growth Roadmap, the country’s gold reserve is estimated at 200 million metric tons, and Trading Economics placed Nigeria as the sixth largest country with gold deposits in Africa, with an average of 21.46 tonnes since 2000 to 2019 and reaching an all-time high of 21.51 tonnes in July 2019. Yet, mining this resource has continued to receive investors beating, a situation which Nigerian Investment Promotion Commission (NIPC) said is costing the country about $40 billion in annual revenue for its unexploited gold. In 2019, according to the Fraser Institute, companies expended over $1.9 billion as exploration expenses and 10 of those companies came from Africa out of 2,400 companies that participated in the survey. Notably, companies from Nigeria were missing from the list despite the country’s vast gold mineral deposits. Also, a recent report by the Nigerian Extractive Industries Transparency Initiative shows that in 2018, gold production activities contribute only 0.01 percent to the total mineral production in the country, compared to Limestone, granite and laterite with 86 percent contribution. Losses to illegal gold mining The Nigerian Extractive Industries Transparency Initiative (NIETI), which recently confirmed the il-

legal mining activities in Nigeria, said in its recent Solid Mineral Sector Audit Report that activities of unlicensed miners were becoming prevalent within the industry, leading to a loss of government revenue. The body decried the incessant smuggling of solid minerals out of the country by middlemen and smugglers. In 2017, NEITI reported that Nigeria earned N1.3 billion as gold royalty to the federal government, representing 7.7 percent decrease in royalty revenue when compared with the previous year. The poor contribution of gold to royalty payment is not as a result of lack of activity but rather it is believed that gold mining in Nigeria is largely under-reported, occasioned by illegal mining and smuggling. Economic Benefit Gold has the potential to attract foreign exchange into Nigeria. Unfortunately, the mineral has not received the attention it deserves in the forms of policy formulation and investment promotion. It has been left at artisanal operational level and whatever is extracted is mostly smuggled out of the country. Gold mining companies are a major source of income and economic growth, and playing important role such as in supporting the sustainable socio-economic development. In 2013, gold mining companies contributed over $171.6bn to the global economy through their production activities and expenditure on goods and services. That figure was more than the gross domestic product of Ecuador, Ghana and Tanzania combined, or close to half of the gross domestic product of countries such as South Africa or Denmark.

Source: NBS, BRIU

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Private investment Resolved to arrest the ugly trend and formalize gold production, trade and exports which contribute to ensure increased government revenue from the subsector for the mining sector to be able to account for about 3 percent of the nation’s GDP as contained in the mining target by 2025, the introduction of the national gold policy-National Gold Purchase Scheme and 315 Strategic minerals - gold titles issued in 2018, is a welcome development. One of such licenses is the approval of TSXV-listed mineral exploration company Thor Explorations to construct the most advanced gold exploration project in Nigeria in Segilola Osun State. On March 19, 2020, history would be made in the mining sector as the formal stone laying foundation for the commencement of the construction of Segilola Gold Mine was billed to take place today in Segilola, Osun State, a huge feat for a sector that has been beclouded with uncertainties. “The success of Segilola is a strong statement that indicates the seal of success of the future of the gold sector in Nigeria,” Nere Teriba, vice chairman, Kian Smith Trading & Co. said. Teriba added further that the coming of Segilola project is an opportunity for Nigeria to realise its potential in gold mining sector of the economy. She said: “Segilola has opened the doors for Nigeria to become a gold mining destination.” “As Segilola is coming on stream at the appropriate time, it will surely serve a great purpose to the nation’s economy,” another director at Kian Smith Trading & Co., said. Unlike oil where few people are involved, mining business is a very heavy labour intensive. The involvement of labour in mining is astronomical, implying that many Nigerians will be employed with the attendant impact on poverty reduction in the country. “This is the first time we are having a fully mechanized gold mining industry in Nigeria,” Linus Adie, program director, MinDiver, World Bank mining program, MMDS, said in a conversation. It is believed that one successful major mine will attract mining investment for other projects and infrastructural development within the vicinity.

Thursday 19 March 2020

BUSINESS DAY

comment is free

comment

Send 800word comments to comment@businessday.ng

Sanusi & the dog, which fraternises with goats

ik MUO

n 9/3/2020, the government of Kano dethroned Mohammed Sanusi II, the Emir of Kano, banished him to Nasarawa State, and placed him under house arrest. Since them, Malam el-Rufai has absconded from his duties to become the Strategic and PR adviser to the deposed Emir. And then, in one of the swiftest judicial hearings in Nigeria, his motion against his detention was received, assigned, heard and approved, all within 24 hours. I never knew that our judiciary was this effective and efficient. The thunderous downing of Sanusi as the Emir of Kano was predicted and predictable. And for those who have forgotten, this is his second dethronement because in 2014 was dethroned as the “Emir” of the Central Bank of Nigeria. And while at CBN he declared that being an Emir was his greatest dream. I don’t know whether he used his CBN position and resources to ‘suo-ohia’ (clear the bush) for the exalted throne. It is also noteworthy that both at CBN and at the Kano Emirate, his travails had to do with talkativeness and finances. I will discuss the Sanusi ordeal in the context of our peoples saying about the dog that enjoys the company of goats. But before then, I will share with you some snippets of my views of Sanusi. It will become obvious that a leopard does not readily change its spots, that Sanusi will always be Sanusi and that if fate thrusts another role on him, it may well end up as it has always ended up. I first “interrogated” Sanusi when he declared in 2012 that the indefensible Boko Haram madness was caused by deprivation. I examined the issues at stake and concluded inter alia: “Sanusi… has a runny mouth. He talks and talks, both on issues that concern his brief [where ordinarily, silence is the norm] and the ones that do not concern him. He forgets he is a public servant; he forgets

he is a CBN governor; he forgets that he is a technocrat (real or so-called). It is because of him that I have aligned with some hardcore statisticians to develop a flippancy index (in simple terms, the degree of talkativeness). Sanusi’s flippancy is the highest in Nigeria and among the top-rangers in the globe... His talkativeness creates some paradoxes. He presents himself as a revolutionary but he is serving in an ultra-conservative government and in an ultra-conservative institution… as a rebel (with or without a cause) when he attacks the government of which he is a high-ranking member in the market square. He is the only CBN governor in the whole world… who talks this much and this often and most of the time, he talks himself into trouble. (Ik Muo, Revisiting Sanusi’s BokoHaramDerivation Linkage Theory, 29/5/12) I also “intervened” when he was thrown out of the CBN. My first intervention was impromptu and part of it went thus, “it was a bumpy ride that ended on a bumpy note. Sanusi came in on a wave of high expectations and raised serious dusts in the process of settling the issues he met on ground. He also left, raising even more dusts and creating another record-that of suspension. … My key charge against him-which I have levelled publicly severally- is his talkativeness, which is not good for anybody of his status. Furthermore, it is difficult for a CBN governor to be an activist. The Sanusi affair also shows clearly that personality is a critical factor and that the next CBN governor must be brilliant but more important, INTELLIGENT! (Ik Muo, reaction to BusinessDayonline, 20/2/14). Few days later, I made a detailed analysis of the Sanusi Affair and commented inter alia “Sanusi came in with the furiousness of Jehu (2nd Kings 9:20) as indicated with his brand of reforms, releasing the list of debtors (which never worked) several summersaults, and regulation by the media. His tenure was characterised by unnecessary and avoidable controversies. His departure is also characterised by controversies and a lot of dusts have been raised that will take quite a while to settle. His suspension… gave rise to a suspended governor, an acting governor and a governor in waiting! Surely, we will never forget that Sanusi was here. Already, cases and charges are building up from the government side while Sanusi has declared that he was

never appointed by the President (?), that he was only surprised that it did not happen earlier and that he would test the legality of the action in court in the interest of the incoming CBN governor(how patriotic of him!). He has argued that CBN under his care is not as bad as NNPC that runs an illegal subsidy regime and has not audited its account since 2005. (Sanusi and the words of our elders! Ik Muo, 25/2/14). The words of elders’ aspect will come in due course!) Much later, I did a detailed analysis of his tenure and stated among others that we had a CBN Governor that was operating as the spirit directed and would rather refer you to his Financial Times interview if one enquired about his agenda. He had an unhidden divided loyalty, serving two masters as it were, and his loyalty to the Kano Emirate was actually paramount. He had a strange interpretation of CBN independence and while he behaved like a social crusader against the government of which he is a critical player, he did not deem it necessary to resign in protest. He was the only CBN governor in our history (and probably across the globe) who ran down (badmouthed) his banks and bankers, castigated the executive, legislature and judiciary and lied with official statistics and did not give a damn about it... He is also the only one in Nigeria who left his banking job, went to study a totally unrelated course (Sharia and Islam) returned to the same job and even got to the top. If somebody like me had tried that, it would have been the end of my career! He thrived in controversy and seemed to embellish in stroking it when there is none... There were also some wonderful developments though some were however Sanusitised into controversy. These include the cashless banking, the Islamic banking (the groundwork was laid by Soludo) and Sustainable banking (The Central Bank of Nigeria under Sanusi. Ik Muo, 11/11/14) In between, and after his coronation as an Emir my good friend, Abraham Ogbodo weighed in as follows: Sanusi has been sanctified and must cultivate a new set of attitudes to maintain his sanctity. He must drop the mallam title which does not fit the emirship; pull down the bohemian façade which presents him like a labour activist, cut down on his loquacity and histrionics because traditional rulers, especially those on the first-class category do not talk like men in

‘

Power by its nature when offended can destroy an individual. For that reason, a few people speak. But no society changes until people are able to speak truth to power. He also added that Prison is nothing, I’ll go in and come out

Note: The rest of this article continues in the online edition of Business Day @ https://businessday.ng Dr Muo is of the Department of Business Administration, OOU, Ago-Iwoye

AI can give Africa’s youth a fair shot at jobs

frica’s youth are anxious. As African countries struggle to create jobs, African youth face the real risk of unending joblessness. Scarce job opportunities are met with overwhelming demand. For example, in Nigeria, when the tax authorities advertised 500 vacancies, more than 700 000 people applied, an applicant to job ratio of 1400/1. A stubbornly high unemployment rate has created a similar situation in Kenya. In Kakamega, in the west, hundreds of young people crowded outside a supermarket which had advertised for only 15 jobs, nearly causing a stampede. Lopsided labour markets across the continent can make job hunting seem hopelessly unfair. For it isn’t the strongest or the most talented who win, but those with resources and social networks. Hiring managers face an impossible challenge to vet high volumes of potential candidates. To cope with the high volumes of applications, recruiters’ resort to hiring through their personal networks. Hiring by proximity, along with human bias, undermines a fair recruitment process and further shuts out young people from equal opportunity But, artificial intelligence (AI) can help even

the playing field. Managers should use AI tools in the hiring process to ensure a fairer selection process that is based on merit, not proximity. By better matching job seekers to jobs, hiring managers can contribute to building a job market that is fair and inclusive to young people. In African countries, young people’s fears of unemployment - or underemployment - are well founded. Every year, roughly 11 million young people enter Africa’s job market, but they find few jobs. To keep pace with a ballooning labour market, the continent needs to create 18 million jobs annually. Yet, it isn’t reaching those targets: only 3 million jobs are currently being created each year. Barring a dramatic increase in jobs, the gap will only widen. By 2030, 30 million youth are expected to enter the job market annually, with no certainty of available jobs. In Nigeria, more than half of those under the age of 35 are unemployed. Include the underemployed, and the number rises. No wonder that somewhere between 200 and 1000 people apply for every job advertised by the Nigerian government. This lopsided supply-and-demand situation makes hiring a nearly impossible task. Simply sorting through - let alone reviewing - high volumes of applications is beyond any human

www.businessday.ng

ability. Hiring managers thus resort to their personal connections, or proximity. For example, in Nigeria, one survey found that 62 percent of its respondents said they relied on referrals, in-house CVs and social media channels, suggesting a need for convenience in hiring. While the dependence on referrals is a global trend referrals represent 30-50 percent of hires in the US - its high number in Africa’s largest market points to a desperate need for shortcuts in hiring. A reliance on proximity in recruitment results in three negative outcomes. First, the probability of mismatches between an applicant’s abilities and the job requirements greatly increases. An employee who is a poor fit for the job has negative knock-on effects: higher employee turnover, lower output, and weakened productivity. One study shows that, on global averages, employees poorly suited to their roles can reduce employer’s profitably by a quarter, and increase staff turnover by 60 percent. Employers - and the economy at large - suffer. Second, the bias toward hiring based on proximity entrenches existing bias and promotes nepotism. If young Africans find no stake in a system that they perceive to be stacked against them, they have little reason to respect and

https://www.facebook.com/businessdayng

the street…! He should avoid the temptation to mount the podium and perform verbal stunts at every opportunity. He should speak words that will not return to him empty; there is no need to shout wolves when sheep are in sight. If the man says $49.8 billion, that figure should not change form like an amoeba within weeks to 12, 10 and finally, 20 (Abraham ogbodo: Now that Sanusi Has been sanctified. Guardian, 15/6/14, p10) Obviously, talkativeness, defiance and rebelliousness are in his DNA. He also doesn’t know that there is a word called diplomacy. In an interview on 22/2/14, he declared There is an underlining philosophy to my approach to life, which is that I believe we should speak truth to power. Power by its nature when offended can destroy an individual. For that reason, a few people speak. But no society changes until people are able to speak truth to power. He also added that Prison is nothing, I’ll go in and come out. That is Sanusi for you and the latest happening has shown that Sanusi will always be Sanusi. (To be concluded). Other matters: Glad to be an elder at Ikoyi Passport office I think it was the UNICEFF who declared any 40-year-old to be an elder. Since I crossed 40, I have been seriously claiming this eldership. As I grew older, as where I am going became nearer than where I was coming from and as I found myself among the oldest 25 percent wherever I am at any point in time, I realised that this elder business has become real. Of course, there are elders and there are elders. Professor Uchenna Nwosu is 81 and yet he is busy managing Igbo-Ukwu WhatsApp groups and using his knowledge of medicine to “counter mote” a lot of inanities going on African science. My in-law, Ide JNC Ezeife, a principal extraordinaire, is 96, if not more. And yet, he is the first to arrive at the Town Union or Idu Cabinet meetings. Anyway, our people say that after a man has grown, he will wait for others to join him. They have grown and they waited for me. As I am growing, I am also waiting for other boys who would soon be men.

Clemens Weitz

uphold that system. Globally, it is less unemployment and more a perception of grave injustice that drives young people into the arms of extremists. The violent extremist group in northern Nigeria, Boko Haram, which has killed tens of thousands and displaced millions, has recruited most successfully in northern Nigeria, where 25 percent more people live in absolute poverty. Third, and more subtly, in many African countries social networks are often closely equivalent to ethnic group identities. Networks, then, simply become a proxy for hiring in one’s own ethnic group and can undermine social cohesion. It also erodes meritocracy in hiring. According to BrighterMonday, a job portal in Kenya, young Kenyans don’t bother to apply to jobs for which they qualify if the hiring manager is of another ethnic group, assuming bias. Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng Weitz is the CEO of ROAM Africa, Africa’s leading classifieds group.

@Businessdayng

Thursday 19 March 2020

BUSINESS DAY

comment

comment is free

Send 800word comments to comment@businessday.ng

Nigeria versus recession

Remi Adekoya

hat to say that Nigerians have not yet heard in the past few days? Countries shutting their borders, global economy grinding to a halt, stock markets in freefall, oil prices plunging, Nigeria in financial trouble. As coronavirus wreaks havoc on health-systems and markets worldwide, it is clear to all but the most incurable optimists that we are headed for a serious global recession. The only question is how long it will last. No one can answer that today. Everything is up in the air now. Everywhere. Nothing is certain. No one knows. The world is in unchartered territory. The two most consequential events of this century so far – the 9/11 attacks and the 2008 financial crisis – were not nearly as disruptive to the everyday global economy as coronavirus is proving to be. As consumers from America to Japan hunker down because of the health scare, businesses ranging from restaurants, cinemas and pubs to shopping malls, airlines and amusement parks are taking a pounding. Consumer spending accounts for the majority of GDP in most major economies. In America, it’s 70 percent. People not spending money is the worst thing that can happen to such economies. Precisely what is happening now. Worst of all, no one has any idea how long it will take to halt the spread of the virus that is scaring people from going out and spending money. Even in the optimistic scenario COVID-19 does not hit Africa as hard as it is hitting Europe, North America and Asia, those three continents account for 90 percent of the world’s $87 trillion GDP, so African economies will be affected ir-

respective. The shit has hit the fan, as they say. So, what to do in Nigeria? Obviously, the first and absolute priority is to contain the spread of the virus and save lives. Nigeria and Africa have not yet seen infection rates like in other continents, but detected cases are rising in Africa with South Africa now reporting 62 confirmed cases of COVID-19, the highest number in sub-Saharan Africa. Nigeria has so far reported ‘just’ 3 cases, but it is not clear if that number is not due to a lack of systematic testing and low detection rates. Beyond tackling COVID-19 in Nigeria, the second priority is to survive economically in the short-term. It is unlikely the limited measures rolled out by CBN this week will cushion the impact of the global economic turmoil to an adequate extent. CBN can cut interest rates, but it can’t force banks to lend to customers. Something more will be needed. Western countries are scrambling to pump money into their economies. The UK government will guarantee £330 billion worth of loans to British businesses to keep them afloat. The US is planning a $850 billion stimulus package set to include mailing checks to Americans, according to Treasury Secretary Steve Mnuchin. Nigeria obviously doesn’t have that kind of money. To be honest, I was surprised the government suspended its planned $22.7 billion loan package to finance infrastructure projects. While in the long-term more debt is not a good idea, you have to survive today to see tomorrow. I had actually expected the government to ask China to facilitate speedier release of those funds so it could start pumping money into the economy as fast as possible, especially towards infrastructure projects that could provide much-needed jobs. It has however decided otherwise and there are certainly sound arguments for that. But it is difficult to see how Nigeria’s economy can stay afloat without some form of stimulus. It is unclear where that money might come from. Of course, the 2020 budget will need to be revised and absurd expenses like 37 billion naira for the renovation of the National Assembly

complex should be scrapped immediately and those funds put to better use. As for long-term solutions to Nigeria’s economic fate being so dependent on oil prices, the answer is well-known. The phrase ‘we need to diversify our economy’ has been uttered so many times in Nigerian public debate over the past few decades it no longer elicits more than an agreeable shrug from most Nigerians. Heard that one before. Yawn. But the fact a thing has been said a thousand times and not (seriously) acted upon does not mean it should no longer be said. Especially if it is a matter of survival. And never has diversification of Nigeria’s revenue been more a matter of survival than today. The infrastructure projects the government has been embarking on are definitely a step in the right direction of achieving this though it is now unclear how many will be financed without the $22.7 billion. One of the many reasons for Nigeria’s persistent economic underachievement is its lack of adequate-topotential inter-regional trade and economic cooperation. A 2018 World Bank report emphasized Nigeria’s economy could benefit hugely from focussing on leveraging regional connections and coordination to enhance Nigeria’s internal and external competitiveness. The report noted that while there are 65 million economically active Nigerians spread across the country, this large domestic market “suffers from spatial fragmentation.” In other words, poor inter-regional infrastructure limits the abilities of producers and consumers to connect in a mutually beneficial manner. If a Lagosian has a product to sell, getting that product to an end-buyer in Kano needs to be much easier and cheaper than it is today. Each region of Nigeria has something to offer economically, but they need to be able do so in a cost-effective manner. “Spatial integration and subnational specialization are key for creating a nationally-integrated market for goods and services as well as attracting muchneeded private investment, which in turn could enhance productivity though scale and specialization,” wrote the World Bank. This would involve not just improv-

‘ Economic development is not rocket science that has only been understood by a select few. Out of 204 countries in the world, the World Bank classifies 68 as “high-income”. This means they each have a Gross National Income per capita of $12,235 or more

ing intra-Nigerian economic links via better connective infrastructure in terms of region-to-region and rural-to-urban, but also focussing on different policy and investment priorities along sub-national lines, taking into consideration regionspecific challenges and opportunities. Nigeria is way too diverse a country for a one-size-fits-all economic approach. What may work in the South-West might not work in the North-West and vice versa. Economic development is not rocket science that has only been understood by a select few. Out of 204 countries in the world, the World Bank classifies 68 as “high-income”. This means they each have a Gross National Income per capita of $12,235 or more. Another 59 are classified as “upper middle-income”, meaning they have a GNI per capita of between $3956 to $12,235. Thus, over 60 percent of the world’s countries, spread across various continents, have achieved either high-income or upper middle-income status. Nigeria is in the minority of countries that have not been able to get their act together and join the majority. Of course, the problem has always been less about a lack of knowledge on what needs to be done and more about a lack of positive elite will, a non-existent sense of urgency and limited coordinative capacity to do what needs to be done. That will, urgency and coordinative genius must now be found. They are there to be found. They emerged like magic when Nigeria successfully escaped an Ebola disaster in 2014. All hands came on deck. Things moved. Ebola was escorted to the front door and shown the way out. In the face of an existential crisis, Nigeria was made to work. The next few months will be an existential crisis. They should be treated the way Ebola was treated; as a do or die moment. Who knows, maybe this is the crisis that will finally wake up Africa’s sleeping giant? Dr Adekoya is a journalist and political scientist. He has written for the UK Guardian, Foreign Policy, Foreign Affairs, Washington Post and Politico among others. He tweets @ RemiAdekoya1

The Nigerian society makes it difficult for good leaders to emerge II

ast week I weighed-in on the leadership question in Nigeria and made the point that the entire society, not just the leadership, is out of joint. As against the popular tendency to see our problem as basically leadership deficit, I argued that every society produces leaders that mirror the society, its customs, beliefs and values, which made me assert it is more a problem of followership than of leadership, even if the leaders exploit those societal vulnerabilities to gain and retain power. I proceeded to cite examples of our right-based conception of the social contract and the middle class’ abdication of responsibility in bringing about an accountable government that works for the good of all. What I omitted was the role of crude ethnicity and religion in bringing about this deficit in followership. Even if for political correctness we like to deny it, the reality remains that elections in Nigeria are basically ethnic censuses – a situation where, according to Donald Harowitz, elections are little more than a head count of identity groups. This, in the view of some political theorists, is responsible for the perennial lack of government accountability. Claude Ake, for instance, argued that “where voters cease to reward and punish leaders for good performance, and rather vote on the basis of community identity, the accountability of the government to the wider public is undermined, whatever the political system.” In Nigeria where no particular ethnic group is large enough to sorely determine elections, politicians are forced into broadening their appeal by

appealing to broader identity groups – religion, language, regional affinities – and most importantly, by creating coalitions with politicians from other ethnic or identity groups. Take Nigeria’s president, Muhammadu Buhari for instance. He began contesting for elections in 2003 where his support remained largely within his Hausa-Fulani ethnic base in the north. He consistently failed at the polls until he was able to forge a winning coalition with politicians from the Yoruba ethnic group. And to ensure that some Yorubas are not alienated, the inter-ethnic coalition went for a Christian pastor as Buhari’s running mate. And to prove that elections in Nigeria are basically ethnic censuses, despite Buhari’s abject performance in office in his first term in office and his demonstrable incapacity to forge a vision for a new Nigeria or even present a modest plan for the next four years, his inter-ethnic coalition still won the 2019 elections by an even higher majority. In the mainly educated and so-called liberal and progressive Yoruba enclave where the government’s failures could not be disguised or hushed over, sensing the deep disaffection, the partners in the ethnic coalition abandoned all pretences to policy appeals and began to campaign sorely along ethnic lines, reminding their fellow Yorubas that it will be their turn in 2023 to rule but only if they vote for the Coalition again in 2019. The Vice President, a Christian Pastor and Professor of law, during the campaigns in 2019 at the palace of the Alaafin of Oyo was quoted as saying: “The 2019 general elections is our own. We are

www.businessday.ng

not looking at 2019 but 2023. If we get it in 2019, Yoruba will get it in 2023. Because if we don’t get it in 2019, we may not get it in 2023 and it may take a very long time to get it. We need to look at tomorrow and not because of today. What we are doing now is for tomorrow and not for today.” Babatunde Raji Fashola, the former poster boy for progressive ideologies and a super minister in the Buhari administration, also became an ethnic champion urging his fellow Yorubas to vote in Buhari again so that they could take over power in 2023. In October 2018 at a town hall meeting, and speaking in Yoruba, he was quoted as saying: “Did you know that power is rotating to the South-West after the completion of Buhari’s tenure if you vote for him in 2019?” spicing it up with a beautiful Yoruba proverb, he continued: “Your child cannot surrender her waist for an edifying beads and you will use the bead to decorate another child’s waist.” A vote for Buhari in 2019, means a return of power to the South West in 2023. I am sure you will vote wisely,” he counselled. At another occasion, he was again quoted as urging his people to vote for Buhari-Osinbajo “because my people stand to gain more from it... The South-West is at present occupying the position of the vice president. We have three sitting ministers and many different federal appointments from the present administration which we cannot afford to lose.” The same scenario played out in 1999 and 2003. Although the South-West region in 1999

https://www.facebook.com/businessdayng

CHRISTOPHER AKOR

overwhelmingly rejected then candidate Olusegun Obasanjo who’s also from the region, the main reason he was rejected was because the two contestants were Yorubas. In 2003 when Obasanjo was contesting against politicians from other ethnic groups, the entire South-West rallied round him and even ensured their ethnic party, the Alliance for Democracy, did not present a presidential candidate, to enhance Obasanjo’s chances. I use the Yorubas of the South-West as an example here only to show how even the most educated, liberal, progressive and western-facing ethnic group in Nigeria quickly succumbs to the lure of ethnicity in times of elections. To be sure, ethnic politics did not start in Nigeria in 2015. It has always been there even before independence where the parties were formed along ethnic and identity lines and even subsequently, where deliberate attempts were made to form national parties. The pull of ethnicity and other such identities like religion and language has held sway over the Nigerian system making it virtually impossible to select leaders based on policy, track record or performance.

@Businessdayng

BUSINESS DAY

Thursday 19 March 2020

Editorial Frank Aigbogun

FG, impose travel restrictions now

editor Patrick Atuanya

Half measures not enough to curb covid-19 pandemic

Publisher/Editor-in-chief

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

Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

igeria risks eroding the gains it has made tackling the threat of the spread of covid-19 by allowing travellers from high-risk countries into Nigeria. We call on the government to immediately impose travel bans from countries with cases of infections and deaths from the novel coronavirus. The response from the Nigerian government authorities including the Federal Ministers of Health and the Lagos state government has been commendable, so far. On Monday, Olorunnimbe Mamora, the minister of state for Health told journalists that Nigeria has designated eight countries including France, Germany, Spain, China, Japan, Iran, Italy and the Republic of Korea as high-risk nations. Travellers from these countries will undertake secondary screening at on arrival and self-isolate for 14 days after entry. We think this is not enough. And the latest case, a Nigerian returning from the UK, confirms our doubts. If there’s anything this pandemic has taught us, it is that everything else pales into insignificance without good health.

Other African countries are taking no chances as they race to stop the spread of the virus on their shores. Sudan has sealed off all sea ports, land crossings and airports. Egypt is suspending all flights from all its airports to contain the virus ravaging the country. Djibouti even though has recorded just a single case of coronavirus, has suspended all international flights into the country. South Africa, with about 61 cases and the highest in sub-Saharan Africa, has placed restrictions on foreign nationals entering into the country from high-risk countries including Italy, the United Kingdom and the United States, Across Africa, hundreds of international flights have been cancelled and even visas issued to nationals from affected countries have been revoked. Why then is Nigeria, a country with a shambolic health infrastructure and an insanely abnormal poverty rate unwilling to close its doors to prevent the spread of virus that has infected 183,850 people, killed 7,181 across the world, as at today? This is a government that wasted no time to shut the land borders to check the inflow of smuggled goods including rice. Yet it hesitates to entertain the risk it faces from leaving

its borders open as the novel coronavirus spreads, upends daily lives and disrupts economies. Coronavirus, surely, is much more lethal than rice smuggling. To be clear, we think it is unwise to shut the borders to trade on account of smuggling when we could employ market measures. It is important to note that the World Health Organisation (WHO) has advised countries not to apply blind travel bans and restrictions in a way that would imperil trade and travel but as the crises in Italy shows, no one talks about trade and travel in the midst of rising number of the dead. Besides, western nations ignored the WHO advice in 2014 during the Ebola epidemic and banned travellers from even African countries with no recorded cases. The Nigerian government needs to be more pragmatic. It must learn from measures being applied by other African countries. Our healthcare system marked by a shortage of doctors, failing primary healthcare centres and run on a shoe-string budget is incapable of dealing with this crisis. Patients go to federal and state teaching hospitals to treat malaria; a major outbreak will stretch our resources thin and lead to the avoidable death of thousands of

patients and healthcare workers. The limited cases of the virus recorded in Nigeria provide an opportunity to improve our preparedness. We must identify the age-range that are most susceptible, especially those above 60, are diabetic and cancer patients and plan for their care. We must begin active sensitisation of citizens using the mass media and social media platforms to teach proper hygiene and social distancing from people have symptoms. As can be seen in the infections of prominent people, including the wife of the Canadian prime minister and a government minister in Australia, no one is immune. WHO on Monday said it is possible the virus can survive in the air which adds a new dimension to the threat it poses. Wisely, the government has set aside funds to deal with the pandemic. It must resist the temptation to fritter it away on unnecessary frivolities like “project cars” for irresponsible lawmakers or mindless allowances for ineffectual government officials. It should be spent on equipping health workers, gowns, masks, gloves, oxygen etc. It should also wisely impose travel restrictions to curb the spread of covid-19.

HEAD, HUMAN RESOURCES Adeola Obisesan

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

Enquiries NEWS ROOM 08169609331 08116759816 08033160837

} Lagos Abuja

ADVERTISING 01-2799110 08033225506 SUBSCRIPTIONS 01-2799101 07032496069 07054563299 DIGITAL SERVICES 08026011296 www.businessday.ng The Brook, 6 Point Road, GRA, Apapa, Lagos, Nigeria. 01-2799100 Legal Advisers The Law Union

Mission Statement To be a diversified provider of superior business, financial and management intelligence across platforms accessible to our customers anywhere in the world.

OUR Core Values

BusinessDay avidly thrives on the mainstay of our core values of being The Fourth Estate, Credible, Independent, Entrepreneurial and Purpose-Driven. • The Fourth Estate: We take pride in being guarantors of liberal economic thought • Credible: We believe in the principle of being objective, fair and fact-based • Independent: Our quest for liberal economic thought means that we are independent of private and public interests. • Entrepreneurial: We constantly search for new opportunities, maintaining the highest ethical standards in all we do • Purpose-Driven: We are committed to assembling a team of highly talented and motivated people that share our vision, while treating them with respect and fairness. www.businessday.ng

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

BUSINESS DAY

Thursday 19 March 2020

comment

comment is free

Send 800word comments to comment@businessday.ng

Stopping the accursed $22b loan bid The Public Sphere

CHIDO NWAKANMA

elief has been the dominant emotion on news that the Federal Government has halted the ill-fated quest for a $22.7 billion foreign loan to tackle what it called infrastructure projects. Finance Minister Mrs Zainab Ahmed announced the decision of the government to back track on Monday, 16 March 2020. The federal government gave acceptable and sound reasons for stopping the quest. Mrs Ahmed stated, “The current market indices do not support any external borrowings at the moment, despite that the parliament is still doing its work on the borrowing plan. One arm of the parliament has completed their work, and the other arm is still working. So, it is a process controlled entirely by the parliament itself. We are waiting. “The expenditures that are not critical must be deferred to a later date when things become more normal. Several national plans, programmes and projects have been directed at diversifying the production and revenue structures of the economy.” A confluence of factors contributed

to the stoppage of Nigeria’s journey to debt peonage in the guise of a do-good loan. The loan bid did not pass the test of common sense in the first place. Nigeria has been doing a Ben Johnson on the debt track under PMB and now owes four times what we owed in 2015. The new loan would have put us in hock straight. It took 25 years to be free from the loans of the 1980s that did not serve useful purposes. The convenient rationale is that coronavirus infected the loan. The drop in oil prices followed the convergence of the virus with its debilitating effect on production across the world with the ego wars of Russia and Saudi Arabia. Any pretence to using oil earnings as grounds for repayment of the loans went out the window. Many other factors nailed the loan bid. Nigeria was over-leveraged in the eyes of the experienced risk managers in all the places where we sought the loans. We simply did not meet the criteria for grant of such huge loans given our track record on existing loans. Remember we wanted this loan from a bouquet of agencies including the World Bank, African Development Bank, Islamic Development Bank, Japan International Cooperation Agency, German Development Bank, China-Exim Bank and the French Development Agency. Negativism was a central feature, as is the character of the Federal Government of Nigeria circa 2015-to date. In listing projects that Nigeria would fund through the loan, the Federal Government conveniently forgot the South East region. Senate Minority Leader the distinguished Enyinnaya Harcourt Abaribe drew the attention of his colleagues

to this fundamental error to no avail. The Senate acted without the maturity expected of the upper chamber and went ahead to approve the loan request. The South East has been boiling in anger over this slap in the face. The Buhari administration has yet to read the Fundamental Objectives and Directive Principles of State Policy in our constitution that charges the government to “promote national unity and command national loyalty” as well as “promote national integration” by ensuring there is no discrimination on any grounds. In passing the request without substantial debate and deliberation, the Senate walked the paths of error, illegality and dishonour. Like the Federal Government, the Senate showed crass ignorance of legislative procedure on such a crucial matter. It is scary and sad. The Senate rubber stamped the loan request in full disregard of constitutional and legal procedures outlined in various legislations. Both the Senate and the Federal Government pretended as if these laws do not exist or that we are a nation of heedless persons. The House of Representatives stood down debate on the loan last week in the first inkling that the National Assembly was now alert to its wrong path. We must thank Dr. Sam Amadi and his Logosphere Resources team for their citizen advocacy effort in the form of a briefing to a member of the House. The $22.7 billion loan bill as packaged by the Federal Government and sent to the National Assembly breached the Fiscal Responsibility Act, the Debt Management Office Establishment Act 2003 and the provisions of the Investment and Securities Act 2007.

‘

Note that the federal government presented and positioned the loan as a critical step in its economic programme. Yet, they could not do basic homework of compliance with all the bureaucracy available to it. So, too, the National Assembly. It is frightening

rom the leadership capacity perspective, the story of Sanusi Lamido Sanusi, the dethroned emir of Kano was a case of mismatched potential and opportunity. Sanusi Lamido in the first place failed to take the road less travelled with his ambition to be the Emir of Kano as his topmost priority among being a bank’s managing director and a governor of the central bank of Nigeria. Providence has it that Sanusi who openly declared his vision to be a bank MD, a CBN governor and the emir of Kano to his colleagues when he was none of these dreams got all his desires but ended it as a valiant or a victim when he was dethroned from the palace. I will be candid in my opinion and draw out lessons that are invaluable to future leaders from Sanusi’s dethronement. Sanusi Lamido is not a man to be pitied. I am sure he is a free man given that his entanglements have been removed and he can now use his capacity to help himself if not others. Given his exposure, SLS, as he is fondly called, has no business to be an emir. He is a cerebral international figure, and I wonder why such a massive capacity could be subjugated to the powers of a local government chairman in Kano state. For your information, emirs are to report to the local government chairmen in their states. But I won’t blame Lamido for failing to be different in his aspiration for power. After all, he is not like Prince Harry and his wife Meghan, who recently see a mismatch in the life they desired and the demands of the monarch’s roles. An average African man is power intoxicated and will do anything to get to the power. A man of high exposure like the disposed emir should have had the capacity to know that being an emir is a snag on his personality and what he can contribute to the society outside the throne. He doesn’t need the throne to do any good except for his psychological egoism. So, he is a product of power and what made him took him out. That’s simple.

He failed as an emir but succeeded being the person he is by his audacity in telling the truth to the northern political leaders with statistics on how poor the north is in terms of poverty, out of school children and insecurity. How did I know he was a failed emir? In his farewell message, SLS stated the renovation of existing buildings and erection of a new one in the palace as his achievement in six years. Maybe he was still under the shock of his dethronement. It was wasted years for someone who seated on N200 million library and with billions of naira emirate fund (Nigerians’ money) not to have done anything to reduce poverty or advance the education of his subjects except for his open criticism of the government, acquisition of Rolls-Royce and renovation of the palace. Of whose benefits are these? The reasons for his removal by Governor Ganduje was to preserve the culture and tradition. No one whose stomach is hungry with little hope for survival or, who has children as almajiris begging on the streets of Kano and as expatriate beggars in Lagos cares for the preservation of a culture or tradition that does nothing than giving the state’s wealth as allocations to the emirs. Sanusi’s removal might be justified for insubordination for failure to work and rule in line with the emirate’s constitution but not because of any culture. The elites could not cope with what he was using the throne to do. Sanusi was a radical emir that says the truth to everyone even when he is not living the standard he preaches. One would have excepted Sanusi to justify his preaching for fairness, education, development and use his knowledge and exposure to radically change the roles of the emirs beyond telling the apparent truth. What if he had spent millions of the emirate fund for which he was accused of mismanagement to train teachers within the Kano metropolis to redeem the failure of the government? What if given his broad exposure he had started what is called

www.businessday.ng

the Duke of Edinburgh Challenge in the United Kingdom (a developmental programme for the youth with the royal Princes acting as members of the board of trustees) and spent his allocation of the people’s wealth in a different? The narrative would have been different than the rhetoric’s of six-year criticism of a system that is not ready to change nor develop from its parodied fixation on power, religion and ethnicity at the expense of the population but to the benefit of few political elites. The dethroned emir words and speeches urging the northern leaders to do something radical on education and reduce the imbalance in Nigeria are no different from Bashir Tofa recent warning to the Nigerian big men to prevent the Rwanda experience. Sanusi’s audacity is not fiercer than that of Olusegun Obasanjo, a man we need more of his kind and less of luck as past presidents. The difference, however, was that the emir’s throne is tied to the political power of the state. The throne was a wrong platform for Sanusi’s motives to make changes which never went beyond courageous words and speeches. Sanusi tried to tell his political leaders in Kano and across the north what they never wanted to hear. Unlike few other apostles like El-Rufai in the recent time, Sanusi’s audacity is atrocity from a throne being funded by the government. His action is like biting the hands that fed him. No need to argue that the hand that fed the emir was withdrawn and the emir cannot be in the emirate without the support of the one who pays the pipers that must call the tunes. Sanusi, in my opinion, lived a doubled standard life, though intending to make a difference whichever way you see things. He preaches against marrying many wives and having many children. The preacher has 24 children, four wives, including the one he married as a teenager on the platform of culture and tradition. Maybe he is still producing

https://www.facebook.com/businessdayng

A request before the National Assembly must meet three criteria. The application should have, in Section 44 (1) of the Fiscal Responsibility Act, “cost-benefit analyses” detailing the economic and social benefits of the purpose to which the intended borrowing would be applied. There must exist “prior authorisation in the Appropriation Act or any other Act or Law for which the borrowing would be used” and “the proceeds of such borrowing shall solely be applied towards long-term capital expenditure”. Note that the federal government presented and positioned the loan as a critical step in its economic programme. Yet, they could not do basic homework of compliance with all the bureaucracy available to it. So, too, the National Assembly. It is frightening. Only two of 35 projects listed under that loan are in the 2020 Appropriation Act, in accord with the law. The rest are a jumble of projects with titles sounding like student essays. The projects when executed will earn income in Naira. Yet Nigeria would repay in foreign currency. There is a clear mismatch and it runs across all the projects. It is good that this loan bid that would have added to the wounds of Nigeria has been rested. It should rest. Should the government need to revive it for any reasons it should pay attention to process, be inclusive and be sensitive to all Nigerians. 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.

Muhammadu Sanusi II: A mismatch of capacity and opportunity

Positive Growth with Babs Babs OlugbemI children like our powerful parliamentary, Alhassan Ado Daguwa with 27 children and still counting amidst of banditry, beggars and people living in the poverty center of the world. I encourage Sanusi to continue to preach against marrying many wives and children for people who cannot fund such a big family. After all, not everyone will be privileged with the backings of the political power and opportunity to use the state fund for recklessness. However, he should come from the point of conviction to drive his post-emirate messages to make an impact. He should start by acknowledging that marrying more wives in this era is erroneous teachings and state if he would have done things differently if he is to start all over again. He should go beyond rhetoric for his words to cause the change he wants. The dethroned emir has what it takes to help Nigeria and the world. The two appointments given by El-Rufai matches he experience. However, a man that fell from his greatest desire should do beyond the standard to make impacts. I see Sanusi doing things beyond being a board member or a talking economist to people who are unwilling to change or listen to him. Note: The rest of this article continues in the online edition of Business Day @https://businessdayonline.com/ Babs Olugbemi FCCA, the Chief Responsibility Officer at Mentoras Leadership Limited and Founder, Positive Growth Africa. He can be reached on babs@babsolugbemi.org or 08025489396.

@Businessdayng

Thursday 19 March 2020

BUSINESS DAY

COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

DEALS

ODV leads $1.5m investment round in Youverify MICHAEL ANI

range Digital Ventures Africa (ODV) has led a $1.5m seed investment round in Youverify, a start-up, founded in Lagos, Nigeria. The investment round would help Youverify improve its technology and accelerate business development in Nigeria and the continent, the company said Youverify is the fifth company to join the portfolio of Orange group’s African investment initiative. “We are always at the forefront of these transformational challenges and we are proud to support Youverify, which intends to resolve this triple objective of fostering financial inclusion, strengthening security and preserving user rights over their data,” said Grégoire de Padirac, Investment Manager at ODV. Youverify engages in the

automation of identity and background verification processes for financial and telecommunication service providers.

Since its launch in Lagos in 2018, Youverify has already performed more than 300,000 customer registrations and verifications

Union Bank clarifies alleged acquisition plans by Zenith Bank

ollowing media reports suggesting that an agreement has been reached with Zenith Bank for the acquisition of Union Bank, the management of Union Bank has denied such plans. The bank in a state ment to the Nigerian Stock Exchange said there is no such agreement and no binding offer has been made by anyone to either its shareholders or the board of Union Bank. In its recently released 2019 full-year result, gross earnings grew 14.4percent to N166.5bn compared to N145.5bn recorded in full-year 2018, on the back of an increase in earning assets, Interest income was up 11percent to N117.07bn compared to N105.2bn in full–year 2018. Driven by growth in fees and commission

to accelerate their development on the continent. Verification tasks remain complex and manual for major players, fintech and

L-R: Adetokunbo Kayode, president Abuja Chamber of Commerce and Industry (ACCI) with Boss Mustapha, secretary to Government of the Federation (SGF), during the visit of the ACCI team to the latter in Abuja. Picture by TUNDE ADENIYI.

BANKING

OLUFIKAYO OWOEYE

for some of Nigeria’s largest banks and financial companies. Financial and mobile payment services continue

income as well as recoveries, Non-interest income surged 24.7percent to N42.8bn against N34.3bn recorded in 2018. Profit after Tax surged 9.8percent to N19.87billion from N18.09billion. During the period under review, gross loans increased 20percent to N595.3bn from N496.8bn in December 2018, customer dep osits was up 5percent to N886.3bn from N844.4bn in December 2018. Active users on Union Bank’s enhanced mobile and online banking platforms increased 60percent and 42percent- 2.1 million and 1.3 million users respectively. Coupled with increasing efficiency and growth in its traditional channels (e.g. ATM, P OS), e-business income grew by 64percent t o N 7 . 7 b n i n 2 0 1 9 f ro m N4.7bn in 2018. The bank also broke an 11 year jinx with the

announcement of a proposed dividend of 25kobo p e r 5 0 k s ha re f o r 2 0 1 9 financial year ended 31 December. T h e t i e r- 2 l e n d e r i n Ja n u a r y a n n o u n c e d i t has entered a share sale and purchase agreement to divest its 100percent equity stake in its UK subsidiary. According to the management of the bank, this is to align with Union Bank’s strategy to geographically streamline its business operations to focus on growth opportunities in Nigeria. “Following a competit i v e b i d p ro c e s s, M B U Bi d C o L i m i t e d , a n a cquisition vehicle wholly owned by MBU Capital Limited, was selected as the preferred bidder,” the bank said in a notice. The completion of the sale is subject to regulatory approvals from the relevant regulator y authorities in Nigeria and the United Kingdom.

www.businessday.ng

large corporates and the rise of RegTech companies, such as Youverify, is key for the market to speed up and simplify these tasks. Youverify Co-founder and CEO, Gbenga Odegbami said the company aims to help other companies automate the verification processes of different types of data treated separately today, such as identity, academic background, home address, credit history, facial recognition, for example, while respecting the highest standards of regulation and data protection. “This constitutes a unique opportunity for us to take further our ambition to simplify and secure our client’s internal processes, whether in the recruitment of staff, customer onboarding etc. Our ambition is to be the leading African player in verifying people and companies’ identities by making data protection and security the core of our proposal,”Odegbami said.

AVIATION

Turkish Airlines adopts stiffer safety and hygiene measures in fight against coronavirus IFEOMA OKEKE

urkish Airlines has said it has continued to prioritize safety measures to minimize the effects and spread of COVID 19. In line with the guidelines of both local and international civil aviation authorities, all Turkish Airlines planes are disinfected with substances approved by the World Health Organization (WHO) and aircraft manufacturers. All surfaces passengers come in contact with, go through extensive cleaning processes by a dedicated special hygiene team. “We have taken extra measures since the beginning of the Novel Coronavirus (COVID-19) epidemic to minimize both its effects and spreading. Our foremost priority being the safety and well-being of our passengers and crew members”, a statement on the airline’s Website reads.

https://www.facebook.com/businessdayng

At the point of passenger boarding, crew members monitor passengers while welcoming them on board and throughout the flight. In the case of a passenger showing symptoms of the disease, the passenger in question undergoes a medical check with the directives of the host country’s health authority. During flights, the cabin air is repetitively purified with hospital-grade Highefficiency Particulate Air (HEPA) filters. The filtration system constantly disinfects the air of any harmful substance in the air during flights. All passengers are also required to complete the passenger self-reporting form distributed by the Federal Ministry of Health. Items such as forks, spoons, glasses and plates used during meals, are also disinfected asides the regular washing routine. All fabrics and devices used onboard, go through an extensive cleaning process and are replaced with fresh sets for each flight. @Businessdayng

Since the epidemic, the airline said it has increased the number of face masks, disposable gloves, sanitizers, and other disinfectants on its fleet of aircraft. The statement also revealed that the airline prioritizes travel safety and is unwaveringly committed to working with local and international authorities to contain the spread of the virus. The airline’s statement reads “As the airline that always puts the travel security at the forefront, Turkish Airlines will continue to monitor the latest developments on the situation with the national and international health authorities and take appropriate precautions. As the World Health Organization declared the potential risk of the virus, we have been acting per the recommendations and instructions of the World Health Organization, IATA, and related national and international authorities since the first week of January 2020.”

Thursday 19 March 2020

BUSINESS DAY

COMPANIES&MARKETS

Business Event

CONSUMER GOODS

Promasidor launches SunVita Choco Crunch into cereal market DESMOND OKON

roducers of Cowbell Milk, Promasidor Nigeria Limited has launched another product— SunVita Choco Crunch, into the cereal market to continuously offer more options to the Nigerian consumers. The new offering comes in 40g sachet and 500g block bottom pouch with re-sealable Zip-lock which allows the product to be kept fresh even after opening. The product launch was also a medium to mark World Cereal Day by the company. Managing Director, Promasidor Nigeria Limited, Anders Einarsson who spoke at the event described the product as a “proudly Nigerian healthy family cereal.” He further talked about the unique attributes of the product, stating that it contains a

branded ingredient known as NUTRI-V, a blend of 7 powerpacked micro-nutrients (vitamins and minerals-vitamin A, B6, B9, C, Zinc, Calcium, Iron) necessary for a healthy body and brain development. “SunVita Choco Crunch is a proudly Nigeria healthy family cereal made from locally sourced maize, soya and premium quality Cocoa powder,” Einarsson said, adding that the company supports the government initiative for local content as up to 80 percent of its content is locally sourced. “Our Onga brand has soya and cassava flour which are sourced from Nigeria. Likewise, this new SunVita Choco Crunch has maize and soya which are sourced from Nigeria. We believe in growing the economy of Nigeria, as such, we will continue to support every initiative of the Nigeria government regarding local www.businessday.ng

content,” he adds. Although the day was for the cereal product, Einarsson wants consumers to expect more from the company hinting on a big launch coming this year in the beverage segment. “We believe this new beverage brand has all it takes to compete with the current competitions in the market and succeed,” he said. Addressing journalists, Head of Marketing, Abiodun Ayodeji, restated the organisation’s commitment to offering quality products to its consumers at affordable prices, and reaffirmed company’s goal to continue to support Nigerian government initiative for local content. Ayodeji said the launch of SunVita Choco Crunch confirmed their commitment to using unique and deep knowledge of the Nigerian market in creating nourishing and healthy foods for all.

L-R: Seyi Olusore (a.k.a Shedams), fitness instructor; Abigeal Itunu Oluwasegun, winner, Three Crowns Mum of the Year 2019; Femi, Ogunsanwo, CEO, Blueprint360, and Omolara Banjoko, marketing manager, Three Crowns during the ongoing Three Crowns fitness challenge in Lagos.

Mohammad Mahmood-Abukakar, minister of environment discussing with Sharon Ikeazor, minister of state for environment, in Abuja.

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 19 March 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 19 March 2020

BUSINESS DAY

Investor

In association with

Helping you to build wealth & make wise decisions Market capitalisation

NSE All Share Index

NSE Premium Index

The NSE-Main Board

NSE ASeM Index

NSE 30 Index

NSE Banking Index

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

1,149.44 975.65

327.43

117.93

431.16

235.88

1,824.35

1,162.79

974.73

975.65

111.25

367.40

215.81

1,642.03

1,099.87

852.50

-15.12

-26.15

-5.66

Week open (06-3–20)

26,279.61

N13.695 trillion

26,279.61

1,015.86

734.99

Week close (13-3–20)

22,733.35

N11.847 trillion

1,919.68

918.35

734.99

Percentage change (WoW) Percentage change (YTD)

-13.49

-16.14 -15.31

-15.31

-9.60 -20.27

0.00 0.00

-32.24

-17.17

-14.79

-11.58

-38.03

NSE Lotus II

-8.51

-9.99

-17.80

-10.50

NSE Ind. Goods Index

-5.41 2.26

NSE Pension Index

-12.54 -19.12

Positive sentiments trail Access Bank shares despite significant surprises in FY’19 Iheanyi Nwachukwu

ccess Bank Plc recently released its audited full year results for the period ended December 31, 2019. The bank financials attracted many analysts who pointed out key misses against their projections. In line with its desire to reward shareholders, the bank proposes final dividend of 40kobo per share, plus 25kobo interim dividend which translates to total dividend of 65kobo for the year 2019. Access Bank shares have underperformed the NSE All Share Index (ASI) lately, fueled among others by significant misses in the full year results, coupled with the market rout that is driven by oil price war and coronavirus. The bank stock stood at a 52week low of N5.50 per share as at Monday, March 16. This represents negative year-to-date (YtD) return of -45percent against -15.30percent return by the NSEASI. The stock had reached record 52-week high of N12 per share. Access Bank full year 2019 financial scorecards The bank’s gross earnings rose 26percent year-on-year (y/y) to N666.7billion in FY 2019, (FY 2018: N528.7billion), with interest and non-interest income contributing 81percent and 19 percent respectively. Interest Income grew by 41percent to N536.8billion in full year (FY) 2019 (FY’18; N380.9billion), largely driven by the growing efficiency of our enlarged balance sheet. On the other hand, Access Bank

Last 7 Days Trades (Access Bank) Date

Price (Naira)

Volume

March 16th 2020 5.5 35,227,131 March 13th 2020 5.4 20,770,585 March 12th 2020 5.85 17,446,720 March 11th 2020 6.45 27,014,578 March 10th 2020 6.9 7,372,179 March 9th 2020 7.65 2,659,662 March 6th 2020 8.5 24,655,607 Non-Interest Income (NII) decreased by 12percent y/y to N129.8billion in FY2019 from N138.2billion in FY2018, driven by our strategic intent to grow income sustainably through traditional banking. Profit before Tax (PBT) for the period was N115.4billion (+12percent; FY2018 N103.2billion) while Profit after Tax (PAT) increased by 3percent to N97.5billion from N95billion in FY2018. Return on Average Equity (ROAE) stood at 17.7percent with a Return on Asset (ROA) of 1.6percent in the period. Net Interest Margin (NIM) of 6.6percent in FY2019 from 5.3percent in FY2018, while Cost of Funds (CoF) decreased 50basis points (bps) y/y to 5percent from 5.5percent in FY2018. Yield on Assets of 12.8percent, up 120bps year-on-year (y/y) from

www.businessday.ng

11.6percent in FY2018. Cost-to-Income Ratio (CIR) increased by 300bps y/y to 65.2percent in FY2019 (FY2018: 62.2percent), on the back of the merger costs incurred within the period. The negative surprise seen in non-interest income (NII) was underpinned by a net FX loss of -N83.9billion in 2019 (versus N23.8billio FX lost in 2018) due to unwinding of derivative contracts most of which came through in fourth-quarter (Q4), and a decline in gains on fair valuation of equity investments. Analysts’ comments “We have a price target of N8.70 per share for Access Bank. Given the upside relative to current price of N6.90, we maintain our Buy

https://www.facebook.com/businessdayng

recommendation”, said Coronation research analysts. “We have cut our 2020E earning per share (EPS) forecasts by circa 4percent and our price target by a similar margin to N16. Our new price target implies a potential upside of 132percent from current levels. As such, we retain our Outperform rating on the shares”, said FBNQuest Research analysts. “Due to the significant misses in Access’ FY results, we have made significant adjustments to our FY’20 PAT estimate. We forecast FY’20 PAT of N103.1billion, with an EPS projection of N2.90 and a 12-month target price of N11.35. Thus, we maintain our buy rating on the stock”, said Joshua Odebisi’s team of analysts at Vetiva research. What did management say?

@Businessdayng

Speaking on the result, Herbert Wigwe, GMD/CEO, Access Bank Plc said: “Access Bank in 2019 completed the merger and business combination of the erstwhile Diamond Bank making the bank the biggest bank in Nigeria by Total assets and number of customers as well as a significant retail footprint and infrastructure”. “The business combination allowed us to complement our existing strong wholesale business with Diamond’s extremely developed retail business. In October 2019, we achieved full integration of both bank’s operating system, which further stabilised us for growth across all our platforms. “Our financial performance in 2019 was significantly influenced by the merger, as we recorded a modest growth in profitability. However we saw a temporary dip in our metrics as we sought to create excess capacity and IT redundancies to ensure that we continue to provide seamless service to our customers throughout the integration period”, he noted. “Having completed this phase, we are now seeing positive and sustainable momentum across all our business lines. Our thrust for 2020 will be to significantly improve our cost of funds, productivity and efficiency of people and resources whilst optimising our cost”, said the GMD/CEO. “We intend to carry on the positive momentum from 2019 and invest in digital solutions including Artificial Intelligence and advance analytics. Our resolve is to ensure that our customers have best in speed, service and security. We projected merger synergies of N153.9billion (cost and revenue) over 3 years”, he said.

Thursday 19 March 2020

BUSINESS DAY

Investor Helping you to build wealth & make wise decisions

Investor’s Square

United Capital Investment Views

Wheezing from Coronavirus

he performance of the equities market in the previous week was heart-breaking, as the updates surrounding Coronavirus and the tank in crude oil prices fuelled a massive selloff in Nigerian stocks. As a result, the All Share Index lost a whopping 13.5percent, closing the week at 22,733.4 points. Also, the Yearto-date loss fell into the doubledigit region, at -15.3percent. Market capitalisation undertook a massive haircut, as investors’ lost N1.8tn w/w, bringing market capitalisation to N11.8trillion. Elsewhere, activity levels were off the chart, as average volumes and value traded increased by 118.5percent and 68percent to 792.8million and N8.7billion respectively. Analysing the performance of broad sector classes, all five sectors under our coverage re c o rd e d d e c l i n e s. T h e Banking (-26.2percent) sector was the biggest loser, due to massive selloffs in Tier-1 banks – ZENITH (-36.7percent), ACCESS (-36.5percent), FBNH (-25.2percent), GUARANTY (-22.8percent) and UBA (-10.9percent). The Consumer goods (-14.8percent) sector

sentiment, a risk-off attitude was seen, as market breadth was 0.03x, with 2 stocks gaining and 60 stocks declining. Notably, following rumours of a potential merger between First Bank Plc, Heritage Bank and Polaris bank, First Bank Plc released a notification stating it would make appropriate disclosures if need be, however not totally ruling out the rumours. This week, seeing as the market closed up only on Friday in the previous week, we could see the market rebound, as investors dive into stocks with strong fundamentals and attractive dividend yields, given the current depressed prices. However, negative developments in the oil price war or coronavirus could spark further selloffs in local equities. Money Market: Yields at the secondary OMO market touch 16percent In the previous week, overall system liquidity remained elevated, as net inflows outweighed outflows. In terms of inflows, OMO maturities (N223.7billion), NTB maturities (N86.3billion) and FX retail refunds (worth N200billion) were mopped up partially by only an NTB auction (N86.3billion).

followed suit, owing to losses in C ADBURY (-38.9%), NB (-31.4%) and INTBREM (-18.4percent). The Oil & Gas (-8.5percent) sector came in third, pressured by OANDO (-25.9percent), CONOIL (-19percent) and SEPLAT (-10percent). For the Insurance sector (-5.7percent), WAPIC (-18.2percent) and NEM (-16.8percent) led the losses. Finally, the lowest loser, the Industrial (-5.4%) sector, was pulled by WAPCO (-22percent) and DANGCEM (-10percent). In addition, Telecom giant, MTNN (-19percent) pulled the performance of the NSE-ASI lower. In terms of investors’

Notably the CBN was not in the market for an OMO auction, limiting the number of outflows recorded during the week. As a result, average interbank funding rates Open Buy Back (OBB) and Over Night (ON) fell to a week low on Thursday, at 3.6percent. However, following an FX retail auction that occurred on Friday, average interbank funding rates closed the week at 9.6percent (versus 12.3percent in the previous week). At the primary market segment, the CBN steered clear of the OMO market, by not offering securities. The absence of the CBN from the OMO market was expected, as foreign

www.businessday.ng

investors were net-sellers of OMO at the secondary market, with the long end peaking as high as 17percent. For the NTB market, demand across board was significant at N243.5bn, versus N86.3bn that was offered. Notably, demand was highest on the 91-day bill (bid to cover: 13.2x), with the 182-day (2.1x) and 364-day (2.7x) also receiving strong buying interests. In terms of stop rates, the CBN was able to tweak stop rates lower on the 91-day (2.49percent versus 3percent previously), 182-day (3.78percent versus 4percent previously) and 364-day (5.30percent versus 5.70percent previously). For the secondary NTB market, unmet demand from the NTB auction filtered into the secondary market. Hence, average yield decline 13bps w/w, to close at 3.87percent. The opposite was observed for OMO market, with FPIs aggressively exiting Nigeria’s OMO bills. As a result, average yield at the OMO market increased by 370basis points (bps) week-on-week (w/w), to 16.8percent. This week, we expect the buoyant level of financial system liquidity to continue, amid maturities from OMO bills (N305billion) and Bond coupons (N90.9billion), set to hit the system. Also, at the secondary OMO market, we could see continued bearish sentiments, depending on the trajectory of oil prices this week. Bond Market: Selloff was the language of the week In the previous week, the local secondary bond market remained bearish as local investors continued to selldown their exposures to naira asset amid heightened risk of naira devaluation and lack of clarity about the FG’s plan to mitigate the effect of oil price crash on the economy. As a result, average yield climbed higher by 1.4percent w/w to close at 11.65percent. Also, at the secondary Eurobond market we saw persistent sell-off by foreign investor who sold-down their positions in FGN’s Eurobond as the spreading impact of COVID-19 and crude oil price crash weakened the investment case for Nigerian Eurobond. Accordingly, average yield on the sovereign and corporate Eurobond spiked by 4.8percent and 3.5percent w/w to close the week at 11.4percent and 8.7percent respectively.

•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

Economy and Market

Privatisation: Key to economic sustainability

rivatisation of Government Owned Enterprises has become an important instrument for revitalisation and optimisation whilst also improving the overall efficiency of public sector entities. Privatisation has also served as a catalyst for promoting sustainable economic growth all over the world due to the benefits it provides which includes, improved government revenues, improved efficiency, reduced government interference and risk transfer from the government to the private sector among others. Nigeria’s privatisation programme had been one of the most successful in the Sub Sahara Africa as it meets the objective of enhancing economic efficienc y by improving firm performances, decreased government intervention and increment in revenue. A good example of the success recorded over the years is the privatisation of t e l e c o m mu n i cat i o n s i n Nigeria, an act that has not only made the Nigerian telecommunications sector one of the biggest in Africa, contributing up to 11.39percent to Nigeria’s GDP in Q2 2019 but has also catalysed improvements in the banking and E-commerce sectors. Another privatisation success story is that of The Nigerian Aviation Handling Company (NAHCO). The Federal Government’s 60percent ownership of NAHCO was hitherto vested in the Federal Airports Authority of Nigerian (FAAN) while some foreign airlines owned the remaining 40percent. Since its privatization in 2005, operational performance of NAHCO has improved greatly; for instance, in 2003 and 2004 total flights handled by NAHCO was 7,782 and 9,967 respectively. In 2005, 9,586 were handled which post privatisation grew by 34percent to 12,879 in 2006 and further increased to 16,564 in 2007 representing a 29percent growth. Growth was also seen in trading profits with the company recording N1.5billion in 2010. The remarkable improvement in operational performance, revenues and profitability

https://www.facebook.com/businessdayng

justified the privatisation of NAHCO by the Federal Government of Nigeria. In spite of good intentions by government, the public sector faces challenges in its capacity to directly operate profitable, efficient, innovative a n d c u s t o m e r- c e n t r i c enterprises across varied industries. For instance, state ownership limits the ability of an enterprise to invest or source for required funding from alternative sources as the government typically underwrites its loans and advances which become somewhat indistinguishable in the governments funding structure. Entities also have to contend with the numerous needs vying for government funding, often taking the back seat to macroeconomic issues of seeming higher priority. Political influence on state-owned enterprises also has a negative impact on efficiency. The hiring process can have other considerations with merit taking a backseat for hiring based on political considerations which can lead to elevated staff count and bloated staff costs, ultimately impacting negatively on the company’s bottom line. The private sector on the other hand, with a keen focus on profitability leverages optimum process management and efficiency. It simply puts the interest and survival of the entity above any other objective which is reflected in management decisions. This naturally leads to a higher level of efficiency resulting in better customer service, allocation of resources, research and development of new and improved products and services to meet customers’ needs all aimed to foster growth and increase profitability. Managers in @Businessdayng

the private sector know that losses cannot be passed on and therefore, tend to make better decisions. As good as privatisation is, it must however be done in a structured and transparent way with the controlling shares sold to the private sector in order to attain the full realization of the benefits associated with privatization. A number of methods can be applied to privatization of entities such as Core investor sales, Concession and divestment to the investing public through a Public Offer. The choice of a suitable method depends on the desired outcome and the nature of the entities. Some of the methods that can be applied to privatisation of the Government entities are described below: Privatisation via Public Offer - This is one of the most desirable approaches as it not only divests the government equity in these entities and allows private owners to have controlling shares, but also allays the fear of concentrated ownership by broadening the investor base. In so doing, ownership of privatised entities is more democratic and better able to represent a broad section of the population. In this process, shares of these enterprises can be bought during the initial public offering (IPO) and subsequently traded on the Nigerian Stock Exchange, making the process transparent and easily accessible. By using this method, the government will cleverly shift large areas of public concern to where they will be subjected to economic discipline, efficiency, accountability, and competition. Article contributed by State Owned Enterprises Department of The Nigerian Stock Exchange Continues next week

Thursday 19 March 2020

BUSINESS DAY

Investor Helping you to build wealth & make wise decisions

GTBank: Still a good ‘buy’ despite its record low Iheanyi Nwachukwu

he shares of Guaranty Trust Bank plc (GTBank), one of analysts’ top picks for the year 2020 trades at its 52-week low. Despite the recent rout at the market, the stock remains a good “buy”. Guaranty Trust Bank recently released its audited financial results for the year ended December 31, 2019. A review of the results released to both the Nigerian and London Stock Exchanges show positive performance across all financial indices, reaffirming the bank’s position as one of the most profitable and well managed financial institutions in Nigeria. Equity investors had priced in risk of historic oil price decline, coupled with continuous threat to markets posed by the fast spreading Coronavirus across the world. This came on the heels of perceived regulatory squeeze in the banking sector that makes some bank stocks less attractive to equity buyers despite juicy dividend proposals. GTBank stock closed last week (Friday March 13) at N19 per share. It had reached a 52-week low of N18 per share as against a 52-week high of N37.70. As at last weekend, it yielded negative return of -36. percent year-to-date (YtD). GTBank full year 2019 financial scorecards Profit before tax (PBT) stood at N231.7billion, representing a growth of 7.5percent over N215.6billion recorded in the corresponding year ended December 2018. The Bank’s Loan

Segun Agbaje, managing director, Guaranty Trust Bank

Book grew by 19percent from N1.262trillion in December 2018 to N1.502trillion in December 2019, while customers’ deposits increased by 11.4percent to N2.533trillion from N2.274trillion in December 2018. The bank maintained a wellstructured and diversified balance sheet with Total assets and Shareholders’ Funds closing at N3.759trillion and N687.3billion respectively. Full Impact Capital Adequacy Ratio (CAR) remained

very strong, closing at 22.5percent. In terms of Assets quality, non performing loan (NPL) ratio i m p rov e d t o 6 . 5 p e rc e n t i n December 2019 from 7.3percent in December 2018 while Cost of Risk (COR)remained flat at 0.3percent. Complementing the improvement noted in NPLs, the Bank maintained adequate Loan Loss coverage of126.6percent for Lifetime Credit Impaired Loans (NPLs) compared to 105.1percent recorded in December 2018.

Last 7 Days Trades (GTBank) Date

Price (Naira)

Volume

March 13th 2020

19.00

162,148,655

March 12th 2020

18.10

62,183,618

March 11th 2020

19.90

March 10th 2020

19.95

54,518,139

March 9th 2020

22.15

15,205,747

March 6th 2020

24.60

43,950,821

24.90

75,790,858

March 5th 2020

www.businessday.ng

385,180,674

https://www.facebook.com/businessdayng

The bank’s post-tax Return on Equity (ROAE) is impressive at 31.2percent, post-Tax Return on Assets (ROAA) of 5.6percent, and Cost to Income Ratio (CIR) of 36.1percent. These ratios reflect the experienced Management, and efficient Balance sheet structure coupled with operational efficiency of the Bank. The bank proposed final dividend of N2.50kobo per unit of ordinary share held by shareholders in addition to interim dividend of 30kobo per unit of ordinary share bringing total dividend for 2019 final year to N2.80kobo per ordinary share. Investment analysts views “GT Bank shares are trading on a 2020E P/B multiple of 0.8x, for an ROAE of 26.9percent in 2021. These compare with the average multiple of 0.5x for 16.8percent ROAE that our universe of bank stocks is trading on. Having shed 25.4percent year-to-date (Ytd) versus negative -4.4percent recorded by the NSE ASI, our new price target implies a potential upside of 164percent from current levels. As such, we retain our Outperform rating on the shares”, said FBNQuest Research analysts in their March 10 note. “GTBank FY’19 performance, as well as our expectations for the bank in 2020 have led to a FY’20 PAT projection of N205.2 billion, a 4percent y/y improvement (FY’19: 7percent y/y), yielding an improved ROAE of 32percent (FY’19: 31percent). “ This yields an expected earnings per share (EPS) of N6.95 and a dividend per share (DPS) of N2.90. Therefore, we revise our target price for the stock to N48.83 (previous: N47.89), 99percent above current price (N24.90) and maintain our BUY rating on the stock”, Vetiva research analysts said in their March 16 note. The analysts buy rating refers to stocks that they consider highly undervalued, but with strong fundamentals, and where potential return in excess of or equal to 15percent is expected to be realised between the current price and analysts’ target price. Though Vetiva believes that the CBN’s squeeze on banks’ activity in the Fixed Income (FI) space is likely to continue to push lenders to attempt issuing loans at competitive rates, “a scenario which GTBank has not had as much joy in”. Also with their expectations of a weaker yield environment in 2020, the analysts expect GTBank to continue to see weaker Interest Income and maintain their best@Businessdayng

in-class Interest Expense levels, evidenced by their superior cost of funds. Coronation Research analysts said their March 9 note that they made notional sales in major bank stocks including GTBank. “We were able to crystalize gains from our massively overweight positions in those stocks. Those notional stock positions are now at slighly lower levels than their respective weights in the Nigerian Stock Exchange (NSE) All Share Index (ASI). “We have swung from a highrisk model portfolio to a low-risk one. This highly cautious stance itself is a risk and we will devote time figuring out how to manage it over the coming week,” according to Coronation Research analysts. Management speaks on the results “At GTBank, we exist to provide excellent service to our customers and generate the returns that our shareholders expect. Our strong financial performance in 2019 demonstrates that we are delivering on both fronts. We achieved healthy growth across all our major businesses despite varying degrees of uncertainty and volatility, and we are making progress in positioning our business for long-term growth in the face of a rapidly changing competitive landscape,” said Segun Agbaje, Managing Director/CEO of Guaranty Trust Bank plc. He further stated that ; “Underpinning our strong financial performance is our commitment to being there for our customers when it matters most. That is why, powered by the fundamental strength of our brand, and guided by our strategy of putting our customers at the centre of everything we do, we will continue to design and deliver financial services that not only solves our customers’ real pain points but also leaves them better after every interaction.” The awards In recognition of the Bank’s bias for world class corporate governance standards, excellent service delivery and innovation, GTBank has been a recipient of numerous awards over the years. Some of the awards include Best Bank in Africa and Best Bank in Nigeria, by the Euromoney Magazine (2019), Best Banking Group and Best Retail Bank Nigeria from World Finance Magazine (2019), Bank of the Year - Nigeria from the Banker Magazine (2018), Most Innovative Bank from the African Investor (2018), and Best Digital Banking Brand in Nigeria from the Global Brands Magazine (2018).

Thursday 19 March 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 19 March 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 19 March 2020

BUSINESS DAY

Retail &

consumer business Luxury

Malls

Companies

Deals

Spending Trends

CONSUMER SPENDING

Consumer brands shift to sachet packs to keep buyers in tight economy OLUFIKAYO OWOEYE

igeria’s huge population coupled with its being the largest economy on the continent are its biggest selling point to consumer good players. However, the double whammy of weak consumer wallets and the high poverty rate has made this less compelling. Since its emergence from economic contraction in the second quarter in 2017, the disposable income of consumers have continued to tank in real terms, largely due to double-digit inflation rate, worsened by sluggish economic growth. The February inflation rate figures released by the Bureau of Statistics stood at 2.2percent, while GDP figures for the fourth quarter 2019 was 2.55percent. This has forced consumers to adopt affordability as the key factor in consumption decisions, rather than brand names. In response to this, some consumer goods players have introduced smaller product units, “sachetization”, at lower retail prices to better capture the growing value segment and capture consumers at base of the pyramid.

Survey by BusinessDay shows that sachets now litter markets and shops as smaller brands continue to battle for market share with well-known brands. Products such as detergents, energy drinks, milk, and detergents are now packaged in a sachet pack. The beer makers are also not left out as players are introducing smaller units in 45cl sleek bottles to phase out the traditional 65cl bottles. Also, to stay afloat and compete, most players had to trade cash for credit, prompting the need to raise shortterm cash (working capital) For beverage maker, Cadbury Plc, its revenue for fullyear ended 31 December surged 9.39percent to N39.32 billion from N35.97 billion the previous year. The revenue growth was largely driven by the contribution of diversified product portfolio, as the com-

pany mulls the launch of more market penetrating products. Also, the Cadbury Hot Chocolate 3-in-1 brand in a sachet pack recorded substantial growth, driven by its unique offering, while its gum and candy brands also recorded success in their respective categories. Also, Nestle the most capitalised consumer goods firm on the stock exchange, revenue for full-year ended 31 December. The growth in revenue was driven by solid growth in beverage business as the Milo RTD pack continues to gain widespread acceptance in the marketplace. Golden Morn, Maggi Signature, Milo which has several smaller packs like Nescafe are some of the newest products repackaged by Nestlé into a single-serve pack. The achieved overall rev-

enue growth by Nestle, however, halted three consecutive quarters of slower growth and is the highest since the third quarter of 2017, with Food growing at the fastest pace since that same period, while Beverages grew at the fastest pace since the fourth quarter of 2017. The story is however different for some players during the year. Beer-maker, International Breweries recorded a loss of N9.13 billion to end 2019 financial year as it continues to grapple with slow sales, rising costs, and debt pile. Total debt of the brewer has risen to a level that represents 84.15 percent of its enterprise value, a sign of distress that shows equity value falling. Nascon Allied Industries plc saw a 56.75 percent drop in profit, the worst results in five years, as revenue growth couldn’t cover or absorb spiralling cost of production. Guinness Nigeria plc’s net income dipped by 32.45 percent to N1.74 billion as at December 2019, while net margins dipped to 2.55 percent in December 2019 from 3.80 percent the previous year. An increase in the price of key products could underpin future revenue as brewers in the country are the hardest hit from a harsh and unpredictable macroeconomic environment.

Respite for Nigerian consumers as food prices begin to ease BUNMI BAILEY

igerian consumers can begin to have a sign of relief as food prices rose at a slower pace on monthly basis in February 2020. According to the National Bureau of Statistics (NBS), food inflation popularly known as food prices rose by 0.87 percentage points to 14.90 percent in February from 14.85 percent in January. The percentage difference of 0.87 is the least in exactly one year. Analysts attributed the slow rise in food prices to the impact of border closure gradually fading. “The market is gradually correcting adjusting itself. When the borders were shut,

it made local producers to focus on increasing production and capacity so that they could increase supply,” Ayorinde Akinloye, a consumer analyst at CSL Stockbrokers said. Aboidun Olorundenro, Operations Manger, Aquashoots Nigeria said that the food items that were not available before are now gradually coming into the market. The closure of the border in August last year, by the federal government to avert Nigeria from being a dumping ground for imported products and boost patronage of locally made products, hiked food prices. There are expectations that food prices will continue to gradually slowdown in the coming months.

COMPANY

Promasidor launches SunVita Choco Crunch into cereal market Desmond Okon

roducers of Cowbell Milk, Promasidor Nigeria Limited has launched another product—SunVita Choco Crunch, into the cereal market to continuously offer more options to the Nigerian consumers. The new offering comes in 40g sachet and 500g block bottom pouch with re-sealable Zip-lock which allows the product to be kept fresh even after opening. The product launch was also a medium to mark World Cereal Day by the company. Managing Director, Promasidor Nigeria Limited, Anders Einarsson who spoke at the event described the

product as a “proudly Nigerian healthy family cereal.” He further talked about the unique attributes of the product, stating that it contains a branded ingredient known as NUTRI-V, a blend of 7 power-packed micro-nutrients (vitamins and mineralsvitamin A, B6, B9, C, Zinc, Calcium, Iron) necessary for a healthy body and brain development. “SunVita Choco Crunch is a proudly Nigeria healthy family cereal made from locally sourced maize, soya and premium quality Cocoa powder,” Einarsson said, adding that the company supports the government initiative for local content as up to 80 percent of its content is locally sourced. “Our Onga brand has soya www.businessday.ng

and cassava flour which are sourced from Nigeria. Likewise, this new SunVita Choco Crunch has maize and soya which are sourced from Nigeria. We believe in growing the economy of Nigeria, as such, we will continue to support every initiative of the Nigeria government regarding local

https://www.facebook.com/businessdayng

to compete with the current competitions in the market and succeed,” he said. Addressing journalists, Head of Marketing, Abiodun Ayodeji, restated the organisation’s commitment to offering quality products to its consumers at affordable prices, and reaffirmed company’s goal to continue to support Nigerian government initiative for local content. Ayodeji said the launch of SunVita Choco Crunch confirmed their commitment to using unique and deep knowledge of the Nigerian market in creating nourishing and healthy foods for all. “The reason for launching this unique product into the market is to continuously offer more options to the @Businessdayng

Nigerian consumers who desire a convenient, great tasting and healthy breakfast (and snack) cereal option both within and outside the home. Our coverage for this new product is pan-Nigeria,” he said. The launch brought pupils and their teachers from various schools to have a taste of the new products after an exhilarating factory tour to see how the product is made. The students participated in a lot of exciting activities; including the Sing-along and dance to the new SunVita Choco Crunch Song and writing “choco” using the new product; which saw them winning exciting prizes ranging from different Promasidor brands and gifts.

Thursday 19 March 2020

BUSINESS DAY

ENERGYREPORT Oil & Gas

Power

Renewables

Environment

Will Nigeria lose the opportunity of deregulating downstream again? olusola Bello

he oil price slump offers a great opportunity for the g overnment to exit from the oil subsidy conundrum. As at Tuesday this week, price of Brent which is equivalent of the Nigeria’s Bonny Light had dropped to $31.41 per barrel. This is far below the budget benchmark which was put at $57 per barrel for this fiscal year 2020. With this, it is obvious that Nigeria would not be able to meet her economic programme this year. If there is any benefit from the collapse of oil prices, it is in the reduction of the burden of subsidy payment. Nigeria represents a paradox of being a major exporter of crude oil, and a leading importer of petroleum products at the same time. But the question is how long the oil price will remain low. And what happens if it rebounds. The oil price is difficult to predict.

According to Muda Yusuf, director general of the Lagos Chambers of Commerce (LCCI) deregulating the downstream sector of the oil and gas industry would be a good idea. The oil subsidy regime he said is perhaps the biggest fiscal burden on the economy at this time. It also presents fertile opportunities for fiscal leakage. But it is a politically difficult issue to tackle. There are powerful forces against the needed reforms, which makes it even more complicated. But it is in the long term interest of the economy and the country to fix this problem. The opportunity cost of oil subsidy is horrendous. Besides, it has been impossible to unlock value in the Petroleum downstream sector because of the policy shortcomings. Putting an end to the subsidy regime will require a great deal of political will, sensitisation and stakeholder engagement. Current socio economic conditions have put most citizens on edge. The strategy of a major policy transition or reform at

Ikeja Electric boost power supply to customers with new infrastructure, expand network Olusola Bello

ith the commissioning of new 33kv feeders by Ikeja Electric business concerns are expected to thrive while other consumers of electricity are to enjoy a reliable power supply. The feeders are cited at Igando and Ijegun respectively to further enhance the network service of the company. With the completion of these Feeders, beneficiary communities will experience improved power supply, while the project has also enabled better alignment and strengthened network. Areas such as White Sand Joint CDA, Mutairu Alli, Taiwo Olaniran, Boripe, Idi Cashew, Lasisi Ajibade, Harmony, IreAkari and environs would benefit from the Ijegun 33KV feeder, while areas including Egan Town, Ajao Jimoh, Imoba 1, Iloilo, Taiwo Along, Abibatu Oseni, Oke as well as Bayas would benefit from Igando 33KV. Meanwhile, Maximum Demand customers in these areas will also be able to increase capacity within their business for increased production and sales. Speaking on the project, Felix Ofulue, Head, Corporate Communications, explained that Ikeja Electric has consistently strengthened its network through new projects Olusola Bello, Team lead,

designed to boost electricity supply to customers and create exceptional service. He said: “At Ikeja Electric, improvement of our network and enhancement of operations is a critical requirement because we are committed to ensuring efficient service delivery. It will only get better as we roll out this expansion initiative. We will continue to strengthen our lines, embark on new projects where necessary, in order to ensure that our equipment and installations are optimized, while also reducing downtime supply in order to satisfy our customers.” These new projects he stated will address issues of fluctuations, load-shedding on overloaded distribution transformers and perennial faults resulting in frequent downtime within the network as well as improve economic activities due to quality power supply to customers within these communities. Resulting from the new project, the company noted that the alignment carried out in the the network made the Shasha 33KV feeder to be moved from T3 100MVA to T2 60MVA, Igando Injection Substation now feeds from Igando 33KV feeder, while Ijegun Injection Substation now feeds from Ijegun 33KV feeder and Egbe 33KV now feeds only line loads.

Graphics: Joel Samson.

Muhammadu Buhari

this time must be right. Other stakeholders in the downstream sector of the oil and gas industry have asked the Federal Government to capitalise on the crashing oil prices and deregulate the downstream sector of the industry. The crashing price would

downward trend continues unabated then the government may start to think of deregulations. “There must be a gestation period because the current situation cannot translate into lower prices immediately. If the situation persists at the international level and it affects landing cost then it would be proper for the government to deregulate,” he said. Two weeks ago OPEC pushed for crude output by OPEC and its allies – a group known as OPEC+ - to be cut by an extra 1.5 million barrels per day (bpd) in total until the end of 2020. Non-OPEC states were expected to contribute 500,000 bpd to the overall extra cut, OPEC ministers said. But Russia and Kazakhstan, both members of OPEC+ could not agree on further production cut that may firm up the price of the commodity, because of this, coupled with the fact that coronavirus has dealt a devastating blow on the oil sector the price of the commodity has been on free fall.

Oil demand to plunge by 10 million barrels per day …as Nigeria faces tougher time ahead Olusola Bello with agency reports

s major economies go into lockdown, oil demand continues to fall off a cliff. On Monday, WTI fell into the $20s. “The additional quarantine measures imposed in France, Spain and elsewhere over the weekend has spurred a ‘world championship’ in demand loss forecasting,” Bjoernar Tonhaugen, Rystad Energy’s head of Oil Markets, said in a statement. This would create a major crisis for Nigeria who solely depends on crude oil for her foreign earnings and who unfortunately have some of its cargoes still roaming on the high seas across the globe without buyer asking for the product. Already Nigerian crude settles below cost of production as the price of Brent crude, the benchmark of Nigeria’s major export grade, dropped below its cost of production, settling at $30 on Monday, thereby creating fears that the same scenario that happened in 2016 might resurface. Nigeria has one of the highest crude production costs among Organisation of Petroleum Exporting Countries (OPEC), which falls

www.businessday.ng

translate in the reduction in the landing cost of the product which is currently put at N142 thereby given the government the breathing space to shed off the burden of subsidy. The Major Oil Marketers Association of Nigeria (MAMON) is hoping the govern-

ment would seize the opportunities of the lower oil prices occasioned by Coronavirus to deregulate the sector and save itself of the humongous amount of subsidy payment it is using to support Premium Motor Spirit or petrol. According to the association the landing cost of Petrol today is about N142 per litre which is much lower than what it uses to be. This situation it said gives the unique opportunity to remove the whole subsidy business. Olatuni Oyebanji, chairman of MOMAN said a similar situation like this happened in 2016 when the price of oil went to $40 per barrels but the country did not seize this opportunity, but now is another period when the government can take advantage of this and see what it can do. Diran Fawibe, chairman and chief executive of International Energy Services Limited/Doris joint venture said that deregulation is good idea but it cannot happen immediately because stakeholder would have to watch the market and see if the

within the range of $27 to $30 depending on whether the field is offshore or onshore. According to Oilprice. com, a week ago, the U.S. was doing very little to curb Coronavirus. In just a few days’ time, there has been a proliferation of school cancellations, mass gathering prohibitions, and mandatory telework orders. Restaurant closures are next. Pretty soon much of the country will be on some form of a lockdown. Th e Fe d e ra l Re s e r ve slashed rates to near zero over the weekend, using up all of its ammo to head off as economic recession and financial crisis. The central bank also said that it would purchase “at least $500 billion” in Treasury securities and “at least $200 billion” in mortgage-backed securities. It’s not clear that it will be enough. Congress will be under pressure to pass bailout legislation in the coming days and weeks. Loose credit will do very little to stoke demand when tens of millions of people go into lockdown. Airlines are on track to cut flights by 75 percent for April and May. Pierre Andurand, who runs oil hedge fund Andurand Capital Management, said that oil demand could fall by 10 million barrels per day

(mb/d) for a period of time, a contraction with no historical precedent. Oil trading giant Trafigura agreed on the 10mb/d demand destruction estimate, and said demand could yet drop further. Several analysts say that oil prices will likely continue to fall. “The potential loss of demand in March-April may dwarf anything the World has ever seen, just when OPEC+ producers open the floodgates of new supply to the market,” Bjoernar Tonhaugen of Rystad Energy said. “The price of oil may in the coming months need to drop down to short-run marginal cost of production in order to incentivize forced shut-downs of production globally.” Rystad’s data suggests that only 16 shale companies have average new well costs at less than $35 per barrel, as Reuters points out. And that does not take into account debt servicing, dividends, and the array of other corporate costs – it only accounts for preparing and drilling a new well. Needless to say, if U.S. shale was struggling at $50, drilling at sub-$30 makes sense for no one. Analysts at G oldman Sachs echoed the conclusion that oil could fall further, forcing an immediate halt to drilling. “[T]here is high-risk

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

https://www.facebook.com/businessdayng

@Businessdayng

oil prices move to cash costs or breach traditional floors temporarily of average cash costs for US/Canadian oil producers ($23/$26 per bbl WTI,” the investment bank wrote in a note on Monday. “We do not believe we are at the bottom.” Goldman said total capex from the U.S. shale industry could fall by 30 percent and that U.S. oil production could fall by 1 million barrels per day between the 2Q2020 and 3Q2021. That could be underestimating the impact. IHS Markit said the supply hit to U.S. shale could be more like 2 to 4 mb/d over the next 18 months. President Trump tried to throw a lifeline to oil prices last week when he announced that the Department of Energy would buy up oil for the Strategic Petroleum Reserve (SPR) and “fill it right to the top.” Oil prices rose on Friday but were down sharply on Monday, more than erasing the price bump from the announcement. In the grand scheme of things, the SPR purchases pale in comparison to the hole in the market. The “peak pace of SPR injection of 0.5 million bpd remains short of the current surplus of 6 million bpd,” Goldman Sachs said.

Thursday 19 March 2020

BUSINESS DAY

Harvard Business Review

ManagementDigest

Tilray’s CEO on Becoming the first mover in a controversial industry Brendan Kennedy

n May of 2010 I was working at a subsidiary of Silicon Valley Bank, or SVB, where I spent all day talking to CEOs and founders of disruptive companies seeking to achieve the impossible. This gave my team a unique window into products, companies and brands that didn’t exist yet — but probably would someday. One afternoon Christian Groh (a colleague at SVB) and I met with a California startup that described itself as a “medicalcannabis technology company.” We had never thought about cannabis as a legitimate business opportunity. A few days after the meeting, I heard a news report about Proposition 19, which would be on the ballot in California that November and called for the legalization of “adult use” cannabis in the state. I called Michael Blue, a business school classmate. Fifteen states had already legalized cannabis for medical use, as had 15 countries. No state or country had legalized it for recreational use. But Christian, Michael and I began to wonder about the possibilities in this industry. A few months later, California voters rejected Proposition 19. We felt a bit relieved, because we’d worried that we were coming to the opportunity too late. We saw that industry as highly fragmented, with immature companies and no established brands. We could launch a company to gain a first-mover advantage. In December of 2010 I gave notice at the bank and started developing a business plan with Christian and Michael. Our initial idea was to create a venture capital firm that would invest in cannabis startups. Before we began researching the cannabis industry, I knew little about it. I’ve never liked the idea of smoking anything. The few times I tried cannabis, I didn’t particularly enjoy it. However, I believe that people should be allowed to use cannabis, and that the U.S. war on drugs — which has led to the incarceration of millions of Americans — is morally wrong. As we began our research,

we went anywhere people were growing cannabis, legally or illegally. We went to Jamaica and to licensed producers working in Israel near the Sea of Galilee. We bought hundreds of coffees, lunches and dinners and asked industry experts question after question. The network we built in those early days may be one of the best investments we ever made. Over time, we recognized that working as venture capitalists wasn’t the best approach. VCs focus on earlystage investments, and they need to plan on exiting within seven years so that they can return money to their limited partners. The cannabis timeline felt too unpredictable for that. We needed the flexibility to buy entire companies, to make minority investments and to deal with uncertainty around when or how we’d see a return. We decided to form a private equity firm, which we called Privateer Holdings. For the first two years, raising money felt nearly impossible. People thought we were crazy. We took a lot of meetings with prospects we knew would never invest. Some laughed us out of the room. Then, in November of 2012, Washington and Colorado legalized recreational cannabis, and two more states legalized medical use. Suddenly

we didn’t seem so crazy anymore. Our first acquisition was Leafly, a website that reviews various strains of cannabis. We liked the business, and it would allow us to gain insight into the product and consumer preferences. In 2013 the government of Canada reached out to us. It had been producing cannabis through a single contract and wanted to shift to a competitive private-sector network of cultivators, processors and distributors. Applicants for Canadian federal licenses were having trouble finding investors, and the national department of public health asked Privateer to consider backing some of those startups. We looked closely at 60 companies that had applied to the program but couldn’t find one that seemed like a good investment. So we told the government that we’d like to create and fund our own company. We quickly incorporated Tilray, applied for a license, bought land and built a cultivation facility. By April of 2014 we were shipping our first products as a licensed producer of medical cannabis products in Canada. In December of 2014 we closed an investment from Founders Fund. It was the first institutional investment in the cannabis industry. It was transformational for us, because it gave other smart people per-

mission to invest with us. By October of 2018 we’d raised $1.1 billion. By 2017 we’d begun talking about initial public offerings. When we met with institutional investors in Boston and New York, several of them said they could not invest in Canada and encouraged us to go public in the United States. They wanted a cannabis company that was U.S. listed and used generally accepted accounting principles. This was a controversial idea: Even as states have legalized cannabis, it remains illegal under U.S. federal law. But our operations were restricted to countries where cannabis is legal, so we were in compliance with U.S. law. In the fall of 2017 we decided to launch our IPO in the United States. I spent the first six months of 2018 meeting with investors all over the world. That July we became the first cannabis company to complete an IPO on an American stock exchange. Since then, more large banks and institutional investors have bought our shares, which increases the mainstream acceptance of this industry. In the fall of 2018 we issued convertible bonds, and BofA Securities was our underwriter. Some of that money has gone to build out our large facility in Portugal, enabling us to import across the European

Union. This is a tumultuous industry with growing competition, and we expect it to remain so. As I write, medical cannabis is legal in 41 countries and 33 U.S. states. Adult-use cannabis is legal in Canada, Uruguay and 11 U.S. states. Someday adult-use cannabis may be a bigger source of revenue than medical, but for the next 10 years medical cannabis will be our dominant product. We also see significant opportunities in cannabidiol. We’ve been paying attention to it for years, but even we were surprised by the pace with which CBD products have gained mainstream acceptance. CBD is just one nonpsychoactive cannabinoid, along with cannabigerol and cannabinol, for instance. In a few years we may see new formulations that emphasize them, too. The most exciting part of this journey is that it’s still day one in the cannabis industry. We have the opportunity to lead, legitimize and define the future of a multibillion-dollar global industry that is emerging from the shadows practically overnight.

Brendan Kennedy is the CEO of Tilray.

Thursday 19 March 2020

BUSINESS DAY

LegalBusiness BD Business Law Industry Report Practice Intelligence Partnerships

LEGAL BUSINESS THIS WEEK

s the global legal industry continues to evolve, experiencing several fundamental changes that are either systemic/ structural or extrinsic in nature, it behoves those elected or appointed as leaders in the profession to drive or provide direction for best practices. It is for this reason that the leadership of the Nigerian Bar Association Section on Business Law (NBA-SBL) also known as its ‘Council’ started the journey a few years ago to draft a Business Law Competency Framework, aimed at setting minimum standards for business lawyers across the country. The goal was to encourage proficiency and raise the level of expertise and capacity development within the industry. Given the huge knowledge gap that has plagued the profession in most recent times, I daresay that this is a welcome development and a worthy cause, as it would not only provide well-defined standards of performance; values and parameters for succeeding in the profession; but also an objective means for defining and assessing skills and proficiencies. Therefore, it is with great delight that we bring in this edition, highlights of the official launch of the Business Law Competency Framework, which held on Friday March 13th, 2020 at the Lagos Court of Arbitration (LCA). We commend the NBA-SBL for this laudable move and look forward to working with the Section to achieve more. See inside for more details about the event and the framework. Also in this edition, our columnists from Kevin Martin Ogwemoh (KMO) LP provide incredible perspective on the Gig economy– covering issues such as flexible working; zero hour contracts; workers paid for limited contracts; people working for multiple sources of income; jobs in the gig economy, such as ridesharing; delivery driving, selling craft, consulting, freelance writing, photography; coding and programming etc., and the issues of employees or independent contractors? Other features for the week include, an overview of the Nigerian Content Development and Enforcement Bill (“The Bill”), which seeks to promote indigenous participation in key sectors of the economy (Information and Communications Technology (ICT), Mining, Construction, Oil and Gas and Power; updates on winners of the recent essay competition held in honour of Oyetola Muyiwa Atoyebi, SAN; as well as more takeaways from the new Finance Act. We hope you enjoy the edition. Theodora Kio-Lawson

Legal business team

Linda Arifayan

Legal Business Consultant

CHUBA AGBU

Legal Business Associate

ONYINYE UKEGBU Legal Business Associate

Gig economy workers: employees or independent contractors? Ruth Nwankwo & Chibueze Muobuikwu

ig economy has been defined as an economic activity that involves the use of temporary or freelance workers to perform jobs typically in the service sector. The gig economy is characterized by flexibility, zero hour contracts, self-employment, workers paid for limited contracts, and people having more than one source of income. Jobs in the gig economy include ridesharing [Uber, Bolt, Opay, etc which is now popular, delivery driving, selling craft, consulting, freelance writing, photography], coding and programming etc. Participants in the gig economy are usually referred to as gig workers and on-demand companies. A gig worker is usually engaged under a contract for service and therefore referred to as an independent contractor. But the question of whether a person is an independent contractor or an employee often arises because there is a thin line between the two concepts which often overlap. Thus, the need for each employer/employee relationship to be determined based on the merits of each case and the Supreme Court of Nigeria, in Shena Security Co. Ltd v. Afropak (Nig.) Ltd & 2 Others, has laid down factors that should guide courts in determining each relationship. With the growth of the gig economy which has been necessitated by factors such as technology, decline in traditional manufacturing jobs, shift in the economy, tax/payment issues, unemployment, underemployment etc, comes the need to evaluate the employment relationships obtainable in the gig economy. Can some gig workers ideally be classified as typical independent contractors? This question is now crucial because many gig economy participants exhibit both the features of an employee and an independent contractor and one major attractive feature in the gig economy for employers is that an independent contractor is not entitled to benefits provided for typical employees. This has raised many concerns because with the rapid growth of gig economy and its workers engaging in gig economy jobs full time, the call to extend certain benefits to gig workers is on the rise. Globally, the gig economy has been identified as an important and

Takeaways and things you INSIDE never noticed in the new 28 Finance Act 2019

growing issue making it clear that in many countries, it is felt that the traditional model of what constitutes employment needs to be revisited in the light of the growth in gig works to avoid misclassification and some Countries are already doing so. In USA, different States are making different moves on this issue. In California, a Bill which changed the status of gig workers to employees was passed. The Bill codified a 2018 California Supreme Court decision that established a three-part test known as the “ABC test”, to determine whether a worker is an independent contractor or an employee, eligible for a minimum wage, unemployment and workers’ compensation, health care benefits, and other traditional protections. Labour experts expect the Bill to prompt similar efforts in other states and cities and so far it has as States such as New York, Illinois, Oregon, Washington and Wisconsin seem to be making a move either to adopt or mirror California ABC test. Although some ride sharing companies with Uber at the forefront are challenging the law, Uber made major changes to its app in California to make it more compliant with the law. In Tennessee, a new flexible misclassification test that provides more of a balance between the interests of employers and workers was developed and it is to be implemented starting January 2020 to determine whether a worker is a contractor or an employee. It has been noted that one important thing about the 20-factor test as opposed to California ABC test is that the factors are flexible and a wide

Overview of the Nigerian Content Development and Enforcement Bill 29

varieties of businesses can be structured in a way that is legally compliant with the test thereby, providing good balance and encouraging innovation and growth in the State. This is unlike the ABC test that provides little consideration for businesses. In New Jersey, Governor Murphy signed a legislative package also referred to as “the misclassification package” on 20th January 2020 to curb worker misclassification and control the gig economy, but omitted the Bill that calls for the revision of the ABC test. In the United Kingdom, a working person can be classified as an “employee”, a “worker” or “self employed”. A worker is entitled to certain but limited employment rights. The complex employment law issues associated with the gig economy were highlighted by the recent UK Employment Tribunal [ET] decision in Aslam and others v Uber BV and others ET/2202550/15. The Tribunal decided that the drivers in question were not selfemployed independent contractors and were in fact workers within the meaning of the Employment Rights Act 1996 and, were therefore entitled to the benefit of workers’ rights, such as paid annual leave, the national minimum wage, rest breaks and pension contributions. The Tribunal found that the level of control exercised by Uber over its drivers could not be reconciled with a finding that the drivers are independent contractors and that the contractual arrangements between Uber and its drivers did not accord with the Continues on page 27

NBA young lawyers’ forum announces winners of essay competition

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

Thursday 19 March 2020

BUSINESS DAY

BD LegalBusiness INDUSTRYFILE NBA-SBL launches competency framework to set standards & raise proficiency level in legal industry

ONYINYE UKEGBU & IFEOMA OKEKE

n a bid to set standards and raise the level of proficiency across law firms in Nigeria, the Nigerian Bar Association Section on Business Law, (NBA-SBL) has launched competency framework. The competency framework will focus on five core areas some of which include Alternative Dispute Resolution (ADR), intellectual property, business and finance and corporate law. Speaking at the launch of the framework in Lagos, Seni Adio, SAN, Chairman of the NBA Section on Business Law disclosed thatthe goal from the onset was to encourage the proficiency, expertise and human capacity development of law firms. According to him, law firms will need to look at the competency framework, customize it to suit their peculiar purposes and try as much as possible to implement the document. “The document is a starting point and once NBA-SBL makes the criteria for success transpar-

ent, it behooves on the law firms and senior members of those firms to also adhere to those standards because it is empirical for both sides.” He added that aside from the five core areas the framework is addressing, NBA-SBL may in future venture into other areas like maritime and agriculture amongst others. During his presentation, Tosin Okojie established the relevance of a competency framework, which according to him, is a very exciting part of any business because they help to set objective standards for people. He said, “The framework will be very helpful for the legal practice because it sets minimum standards for lawyers across the country. So regardless of where you are in the country, you know what is expected of you as a business lawyer in terms of your soft skills, technical skills and your general legal competencies as well. “It raises the level of proficiency within the industry because it sets minimum standards. As a lawyer, you are able to chart

your career path and figure out what things you need to learn, develop and grow on so that you can be more successful, based on the experience of those that have gone before,” Okojie said. He further explained that the framework was essential because it provides well-defined standards of performance; common values, behaviours and priorities; and an objective means of defining and assessing proficiency. These will ease the process of recruiting, promotion, and partnership, enabling organisations to become more profitable and sustainable. “In developing the framework, stakeholders identified 18 general competencies, including legal drafting, presentation skills, and entrepreneurial orientationwhich would apply to every lawyer in whatever practice area, and technical competencies for five business practice areas- Banking & Finance, Corporate, Dispute Resolution, Intellectual Property, and Real Estate. “These proficiencies were classified - novice, basic, intermediate, advanced, and expert with

clearly-defined expectations for each proficiency level as well as what proficiency level is required for each rung of the legal career ladder- Junior Associate to Equity Partner. “The way to go about implementing this is this: each company will define what its path to success is; what competencies it needs to prioritize to excel in the market, select the practice areas that apply to its organization, then set competency expectations and benchmarks for each job level within the organization, in addition to the general skills”, Okojie said. He assured the audience made up of business lawyers, that with the competency framework, law firms are able to manage their people more effectively and make them grow and develop better because there is a clear standard of what needs to be done. It is believed that this framework will change the paradigm and tilt the promotion model heavily towards competence over years at the bar. And businesses that will maintain higher standards are the businesses that will succeed with the implementation

L-R: Council Member Sam Aiboni, Anthony Nwaochei, chairman Conference Fundraising Committee, Funke Agbor, SAN partner, ACAS-LAW, Justina Lewa, Seni Adio, SAN, NBA-SBL Chairman, Kemi Segun, Toyosi Fatoki, Tosin Okojie, Efeomo Olotu, partner GEP Law, Dr Adeoye Adefulu, Ozofu Ogiemudia, partner, UUBO/ Chair, 14th Annual Business Law Conference, during the launch of the Business Law Competency Framework in Lagos.

of the framework. Dr Adeoye Adefulu, secretary of the NBA-SBL who also spoke at the event, stated that the idea behind the competency framework was to put a system behind how people are recruited, promoted and identify talents in the legal industry. “We thought that the SBL should lead that conversation and share that information to all the law firms. “To this end, the competency framework will be placed on the NBA-SBL portal and will be available to every member for free and each firm can design their recruitment processes, performance evaluation and promotion processes in accordance with the principles of the competency framework. Firms can also tweak it to match what they prioritise as important for them,” he explained. Speaking further on time frame to measure targets and implementations of the framework, Adefulu stressed that it is the responsibility of each firm to want to be better and the more they adopt the framework, the better they will get and this will also include their associates and partners

L-R; Aniekan Ukpanah, managing partner, UUBO, Kemi Segun, partner, ACAS-LAW, Seni Adio, SAN, Chairman, NBA-SBL, Lolade Ososami, partner, UUBO, Mena Ajakpovi, Council member and partner, UUBO, Guest and Theophilus Emuwa, partner, Aelex.

Arrival of the Chairman, NBA Section on Business Law, Seni Adio, SAN at the NBA-SBL Business Law Competency Framework Launch, in Lagos.

L-R: Chinyere Okorocha, treasurer, Nigerian Bar Association-Section on Business Law (NBA-SBL); Ayuli Jemide, vice chairman; Seni Adio, SAN, chairman; Felicia Kemi Segun, managing partner, ACAS-LAW; Tosin Okojie, consultant for Business Law Competency Framework; Funke Agbor, SAN, senior partner, ACAS-LAW, and Dr Adeoye Adefulu, secretary, NBA-SBL.

Theodora Kio-Lawson, Legal Business Manager, BusinessDay (L) with Justina Lewa, NBA- SBL Council member and Former Company Secretary, Sterling Bank.

Toyosi Fatoki, 2nd vice chair, NBA-SBL Law Practice Management Committee (L) and Ose Okpeku, chairman, NBA-SBL Employment Labour and Industrial Relations (ELIR) Committee

www.businessday.ng

Justina Lewa, Council Member, NBA-SBL and Former Company Secretary, Sterling Bank, Chinyere Okorocha, Treasurer, NBA-SBL; Ozofu Ogiemudia, Conference Chair, 14th Annual Business Law conference; Theodora Kio-Lawson, Chair Media & Publicity, NBA-SBL/ BDLegal Busines Manager; Efeomo Olotu, Partner, George Etomi & Partners; Kashimana Tsumba, Partner, Foundation Chambers.

Justina Lewa, Council Member, NBA-SBL and Former Company Secretary, Sterling Bank, Chinyere Okorocha, Treasurer, NBA-SBL; Ozofu Ogiemudia, Conference Chair, 14th Annual Business Law conference; Seni Adio, SAN, Chairman, NBA-SBL Theodora Kio-Lawson, Chair Media & Publicity, NBA-SBL and / Legal Business Manager, BusinessDay; Efeomo Olotu, Partner, George Etomi & Partners.

https://www.facebook.com/businessdayng

L-R: Ayuli Jemide, vice chairman, Nigerian Bar Association-Section on Business Law (NBA-SBL); Ololade Ademoroti, Client; Seni Adio, SAN, chairman; Dr Adeoye Adufulu, Wale Akoni, managing partner, Babalakin and Co..

@Businessdayng

Thursday 19 March 2020

BUSINESS DAY

INDUSTRYFILE

LegalBusiness

Banwo & Ighodalo wins big at PEBEC awards

or the 3rd time in a row, Banwo & Ighodalo has won big at the Presidential Enabling Business Environment Council (PEBEC) Awards for its consistent and trusted support to Nigeria’s Ease of Doing Business initiative spearheaded by the Vice President. The Awards ceremony was recently held at the Statehouse Presidential Villa. The firm received four Awards for its Sustained Implementation Support and Capacity Building Support to the PEBEC Secretariat. Speaking about this achievement, a representative a firm said, “we are humbled by these recognitions and remain committed to contributing to Nigeria’s improved business climate.” Established in 1991, Banwo & Ighodalo is a partnership presently comprising, over Ninety (90) lawyers. The firm has con-

sistently ranked as a leading Nigerian law firm in several practice areas including, Capital Markets, Securities, Mergers & Acquisitions; Corporate Finance & Restructuring, Project Finance and Foreign Investment & Divestments and one of the top five law firms in Shipping, Aviation & International Trade, Energy & Natural Resources and Intel-

lectual Property. BusinessDay recalls that the firm only recently won awards for Legal Adviser of the year at the ‘Deal Makers AFrica Annual Gala Awards’. This was won in the Mergers & Acquisition category and the General Corporate Finance Category. Legal Business wishes the firm more feathers to its cap.

PERSPECTIVE

Gig economy workers: employees or independent contractors? Continued from page 25

reality of the relationship. This decision of the tribunal was upheld by the UK Employment Appeals Tribunal. Uber has however, expressed its intention to appeal to the Court of Appeal as its request to bypass the Court of Appeal to the Supreme Court was denied. In Ireland, the ‘worker’ category does not exist. The individual is either an employee or self-employed. The issue of the employment status of gig economy workers in Ireland was first addressed by the High Court on 20th December 2019 in Karshan (Midlands) Limited trading as Domino’s Pizza v Revenue Commissioners and the court decided against the company operating a Domino’s franchise in respect of its appeal over the employment status of its delivery drivers. Whether the Courts would classify workers operating within the gig economy as employees, thereby according them full employment rights is for the future to tell. Each case will be determined based on its own merits. In India, a draft Code on Social Security 2019 recently published by the Ministry of Labour and Employment, introduced the concept of gig and platform workers to Indian Labour Law and contemplates social security schemes for gig workers. Although the code envisages social security schemes for them, it does not classify them

as employees. In Brazil, the issue of the employment status of gig workers has been going on for a while. Lawsuits have been brought against Uber in Brazilian Labour Courts, all seeking for the classification of Uber drivers as employees. Different decisions have been taken by Labour Courts in the first instance in different States of Brazil. However, on appeal, the Superior Court of Justice, Brazil’s second highest Court ruled that Uber drivers were independent Contractors. It was the first time a Brazilian superior court has ruled on the issue, setting an interpretation likely to influence future court decisions related to similar apps. Nigeria is not left out as the gig economy is steadily growing in the country especially in the light of the unemployment/ underemployment rate in the country. Oladapo Olatunji & Anor (Representing themselves and other Uber and Taxify Drivers in Nigeria in a Class Action) v. Uber Technologies System Nigeria Limited & 2 Ors presented an opportunity for the National Industrial Court of Nigeria; the Court with the exclusive jurisdiction to adjudicate on Labour and Labour related matters, to address the status of Uber drivers under the Labour law. Unfortunately, the Court dismissed the case because the claimants were unable to prove their case as they didn’t furnish sufficient evidence that will aid the resowww.businessday.ng

lution of the case. However, the Court recognized that forms of work have changed and the traditional or orthodox distinctions between the worker/employee and the employer no longer exists or have been stretched to absurd limits. But all of this cannot be determined if there are no facts upon which the inquiry can be done as is the case in the instant suit. Therefore, there is need for a judicial pronouncement on this issue or a legislative intervention. CONCLUSION AND RECOMMENDATION It is clear from the above analysis that the regulation of the gig economy is imperative; not just as it affects gig economy workers but also on demand companies that make use of them as its impact on the society cannot be overlooked. The key word that resonates in determining the employment status of gig economy workers is “control”. A careful consideration of the terms of engagement of some gig workers especially those in the ride-hailing companies shows that they cannot be ideally called independent contractors but employees. For instance, provision of transportation services using an online platform forms the main business of ride-hailing companies and these companies hold out their drivers as competent drivers as they carry out inspections and require that the drivers meet some set standards. These com-

https://www.facebook.com/businessdayng

panies also exert other control such as price fixing, the policy of going cashless etc. It is trite law that Equity looks at the substance and not the form. The form of engagement of some gig economy workers may qualify them to be called independent contractors but the substance of the contract and terms therein shows that they are actually employees and as such they are entitled to benefits accruing to employees. There is no doubt that there is a need to review the employment law and employment related Laws in Nigeria and an overhaul of the employment system carried out. With the evolution and rapid growth of gig economy, this issue of overhaul becomes very crucial. Globally, the economy is rapidly changing and there is need to keep pace with the challenges such change has introduced otherwise Nigeria will risk being left far behind. A legal or regulatory framework to control and regulate the gig economy is now pertinent. A look at the meaning of a worker under the Nigerian Law shows that it is similar to the meaning of a worker under English Law but the definition under English Law is broader. It is suggested that Nigeria can extend its definition of who a worker is so as to confer certain employment rights. In addition, the test to determine employment relationship can be reviewed to accommodate the gig economy. Having a regulatory frame@Businessdayng

work governing the gig economy will help immensely in the area of generating revenue through taxation. With such framework, the questions of whom to tax and how to recover the assessed amount can be easily answered. As employees, personal income tax can be deducted at source. On the other hand, it has been suggested that portable benefits which will move with a freelance worker can be introduced. Employers could pay a certain percentage towards universal benefits for all works that they commission, regardless of the nature of their contract with the worker. This would enable independent workers to accumulate and manage their benefits, and eventually acquire a safety net like that of a full-time contracted employee. Stock can be taken of which benefits workers will value the most and effective policies designed that will encourage platforms to offer them. But such policies should ensure that the benefits are portable and can move with the worker. In view of all these, it is imperative that when a person is engaged for a service, the agreement made should be carefully worded to avoid misclassification.

Ruth Nwankwo (Associate) & Chibueze Muobuikwu (Senior Associate) are of the Law Firm of Kevin Martin Ogwemoh (KMO) Legal.

Thursday 19 March 2020

BUSINESS DAY

FINANCE

LegalBusiness

Takeaways and things you never noticed in the new Finance Act 2019 On 13th January 2020, President Muhammadu Buhari might have just altered the fate of businesses and income earners in Nigeria as he signed the Finance Bill 2019 into law. The question on the lips of many business owners and tax analysts is whether these changes would be for better or for worse. However, it is first essential for stakeholders to understand the shape-shifting alterations that were made on the existing tax laws in Nigeria. Stakeholders would include large companies, SMEâ&#x20AC;&#x2122;s, partnerships, franchises, business owners, income earners, tax consultants, accountants, and others. Find out important updates from the Finance Act 2019 and how it affects doing business in Nigeria in 2020 and beyond. The Companies Income Tax (CIT) Act:

Value Added Tax (VAT) Act: VAT in Nigeria has taken a new shape with the following key changes:

Personal Income Tax (PIT) Act: Often missed, the PITA was also amended to reflect these new positions:

The Finance Act 2019 has already overseen several changes in the business landscape in Nigeria and the overall tax administration. Safe to say, that the tax net is wider and based on the recent attitude of the tax agencies to tax collection, it is important for businesses and taxable persons to ensure compliance and avoid being found in default. Furthermore, in the light of the changes introduced by the Finance Act, it is prudent for companies to analyse their positions and take steps to address any possible exposure on account of default or non-compliance with the Act. TWELVE LEGAL 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 Twelve Legal nor does it serve as legal advice. However, readers may contact us for industry-specific legal advice. www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 19 March 2020

BUSINESS DAY

LegalBusiness

Overview of the Nigerian Content Development and Enforcement Bill T

he Nigerian Content Development and Enforcement Bill (“The Bill”) seeks to promote indigenous participation in key sectors of the economy (Information and Communications Technology (ICT), Mining, Construction, Oil and Gas and Power. When enacted, the Bill will repeal the Nigerian Oil and Gas Industry Content Development Act of 2010 (‘The Local Content Act 2010’)whilst the new law will broaden reach and scope of Nigeria’s local content regulation beyond the oil and gas sector. The Bill also provides a framework for governance, monitoring and enforcement across all the selected sectors.

THE OLD (The Act) v THE NEW (The Bill) BROADER SCOPE • The Nigerian Content Development and Enforcement Bill unlike the Local Content Act 2010 is all encompassing as it applies to five core sectors which include: Oil and Gas, the ICT, Power, Construction and Solid Minerals/Mining. Unlike the Local Content Act, the Bill establishes an Enforcement Board and a Governing Council for each of the sectors. The Governing Councils will work with the Minister in charge of each sector to effect the implementation of the Bill. • The Bill further provides that Contracts with total budget exceeding USD$1 million in all the sectors shall have a Labour Clause mandating the use of a minimum percentage of Nigerian labour in specific cadres as may from time to time be prescribed by the Board. IMPORTATION OF FOREIGN SKILLS • The Bill makes it unlawful to issue visas to a foreigner seeking to work in Nigeria where the skill being imported is readily available in Nigeria. (Section 226(1)) DISPUTE RESOLUTION • Unlike the Act, the Bill prescribes that any dispute arising from the application or enforcement of the Bill shall first be settled amicably between the parties; failing which it shall then be referred to the Chief Justice of the Federal High Court who shall constitute an arbitral panel of not less than three Judges of the Federal High Court one of which shall be appointed as Chairman of the Panel to rule on the dispute. (Section 227) NIGERIAN CONTENT FUND • The Bill imposes an additional two percent (2%) charge on every unit of power sold by indigenous power distribution companies who are required to aggregate and pay same into the National Development Power Fund. This fund is to be administered by the Nigerian Content Development Board and the Nigerian Electricity Regulatory Board to promote Nigerian Content in the Power Sector. (Section 137) • The Bill also imposes an additional five percent (5%) development charge on any sale made by any Operator in the Industry who shall aggregate same and pay into a Fund to be known as National Solid Mineral Development Fund to be administered by the Board to promote Nigerian Content in the Solid Minerals sector especially in respect of the execution of projects which will enhance the procurement of equipment and technology for indigenous and independent exploitation of solid minerals. (Section 208)

OIL AND GAS SECTOR The Bill establishes the Nigerian Oil and Gas Content Development and Enforcement Board to approve, evaluate and receive the Nigerian content plan and reports submitted by Operators in the Oil and Gas Industry. It also lays down procedures to guide the implementation of the Bill, establishes plans and programmes for training of local skills. The Bill also requires Operators to maintain offices in all communities where they have significant operations. In conjunction with the Minister of Oil and Gas the Board is empowered to make regulations setting out targets for the full utilization of indigenous companies as Operators in the sector. (Sections 3, 4, 5, 7, 34 and 48) The Bill provides that Indigenous Operators shall be given first consideration in the award of oil blocks, oil licences and contracts in the oil and gas industry. (Section 11). The Bill also mandates the submission of a Nigerian Content Plan in the award of any contracts by or to an Operator. It also provides for the issuance of a Certificate of Authorization by the Board where the plan complies with the provisions of the Bill. (Section 14 and 15).The Nigerian content plan is required to depict how the Operators intend to give first consideration to Nigerian goods and services in the course of their operations.

www.businessday.ng

The Bill mandates the Operators to submit to the Board 30days prior to the first day of each quarter a list of all contracts, subcontracts and purchase orders exceeding $1,000,000 (Section 25). The Bill also mandates all Operators to submit to the Board a succession plan for positions not held by Nigerians. Nigerians are to understudy incumbent expatriates for a maximum period of five years after which such positions will be ‘Nigerianised’ (Section 38). The Bill mandates every non-Nigerian employed or to be employed in the oil and gas sector to obtain a work permit subject to expatriate quota approval by the Board.(Section 40) The Bill stipulates that contracts with total budget exceeding $1 million shall have a Labour Clause mandating the use of a minimum percentage of Nigerian labour in specific cadres as may be stipulated by the Board. (Section 41) The Bill empowers the Minister of Oil and Gas to make regulations with requirements and targets for the growth of research and development in the Nigerian oil and gas sector. (Section 43) The Bill mandates International or multinational companies in the oil and gas industry working through their Nigerian subsidiaries to demonstrate that a minimum of 50% of equipment deployed for execution of work are owned by the local entity. (Section 48(2)) The Bill also requires Operators to report to the Board on the implementation of plans and programmes promoting transfer of technology/technical know how to its Nigerian personnel (Section 50). The Bill empowers the Board and the sectoral Minister to may make regulations requiring Operators to invest in the production, manufacturing or provision of services or goods otherwise imported into Nigeria. (Section 54)

CONSTRUCTION SECTOR The Bill provides that licenses or grant of right to operate in the Construction industry shall be reserved exclusively for indigenous companies that demonstrate capacity to execute works required to be done in the sector. (Section 215) Any Operator carrying out business in Nigeria must ensure that Indigenous companies are given first consideration in the award of contracts for projects relating to the construction of houses, roads among others.

POWER SECTOR The Bill establishes the body known as Nigerian Content Development and Enforcement on Power Agency. (Section 141) The Bill provides that the issuance of licences or permit be exclusive to indigenous companies that demonstrate capacity to execute work in the Power sector. (Section 124) The Bill also provides that all contracts or projects in the power sector whose total budget exceeds $1,000,000 shall contain a Labour clause mandating the use of a minimum percentage of Nigerian labour in specific cadres. (Section 134(3)) The Bill provides that where there is inadequate local capacity and or materials for anypower sector contract, the Board may grant an approval for a waiver for the work to be undertaken by a foreign entity provided that such approval shall not be valid for more than three years. (Section 135). The Bill imposes an additional two percent (2%) charge on every unit of power sold by indigenous power distribution companies who are required to aggregate and pay same into the National Development Power Fund. This fund is to be administered by the Nigerian Content Development Board and the Nigerian Electricity Regulatory Board to promote Nigerian Content in the Power Sector. (Section 137) The Bill stipulates that the penalty for the contravention of any provisions of the Act by an individual shall be a minimum of 3 years imprisonment and a fine of Ten Million Naira. In the case of a corporate body, all the Directors and officers involved in the infraction shall be sentenced to a minimum of three years imprisonment whilst the Company will pay a fine of one hundred million naira. (Section 14o)

I.C.T SECTOR The Bill establishes the National Office for Nigerian Con-

tent on Information and Communications Technology which is empowered to appraise, evaluate and approve the Nigerian content plans and reports submitted to the Office in respect of matters in the Information and communications technology industry in Nigeria, promote mutually beneficial Private Public Partnership by direct collaboration in the manufacturing and production of such ventures between foreign manufacturers and indigenous engineering facilities and to establish a Centre for Acquisition of Technology in the oil and gas producing areas of the Country to promote technology utilization, strengthening of technology management capability and information system. (Section 97 and 99) The Second https://www.facebook.com/businessdayng

Schedule of the Bill makes provisions that all Federal MDAs, Federal Government Owned Companies (fully or partially owned), Federal Institutions/Public Corporation, Private Sector Institutions, Business Enterprises and individuals carrying out activity in any area in ICT must comply with. Its provisions will also form part of existing or future requirements for periodic accreditation and renewal of licence of ICT Companies, Original Equipment Manufacturers (OEM), Original Design Manufacturers (ODM), NITDA registered entities and NCC licensees. Its provisions shall also apply in the grant of approvals or permits for the establishment of new manufacturing or assembly plants, software houses, ICT parks and allied facilities.

SOLID MINERALS & MINING The Bill establishes the body known as Department of Nigerian Content Development and Enforcement on Solid Minerals (Section 210). The Bill grants exclusive right to operate in Solid Minerals and Mining Industry to indigenous companies that demonstrate capacity to execute any works in the sector. (Section 168) The Bill provides for the issuance of a Certificate of Authorization by the Board where the plan complies with the provisions of the Bill. The Nigerian content plan is required to depict how the Operators intend to give first consideration to Nigerian goods and services in the course of their operations. (Section 171, 173-178). The Bill also mandates that award of contracts in the Solid Minerals sector shall not be based solely on the principle of “lowest bidder” where to do so would favour a foreign entity. An Indigenous Company with capacity to execute the project must be given consideration in so far as its bid price is not more than the lowest bid by 15 percent. (Section 179) The Bill requires all Operators to submit to The Board within thirty days from the end of each quarter a list of all contracts, subcontracts and purchase orders exceeding USD$1,000,000 (or such other limit prescibed by the Board) awarded by it in the previous quarter. (Section 187) The Bill mandates that all operator or project promoters in the sector shall submit a Nigerian Content Plan which shall contain an Employment and Training Plan. (Section 192). The Bill mandates all Operators in the sector to receive the approval of the Board before applying to the Ministry of Internal Affairs for expatriate quota. (Section 196). The Bill provides that all contracts or projects in the Solid Minerals sector shall contain a labour clause mandating the use of a minimum percentage of Nigerian labour in specific cadres. (Section 197) The Bill requires all Operators in the sector to map out a plan for effective transfer of technology to Nigerian individuals and companies. (Section 205) The Bill also imposes an additional five percent (5%) development charge on any sale made by any Operator in the Industry who shall aggregate same and pay into a Fund to be known as National Solid Mineral Development Fund to be administered by the Board to promote Nigerian Content in the Solid Minerals sector especially in respect of the execution of projects which will enhance the procurement of equipment and technology for indigenous and independent exploitation of solid minerals. (Section 208)

GENERAL PROVISIONS ON PROCUREMENT OF INDIGENOUS SERVICES AND DISPUTE RESOLUTION The Bill requires every Operator, project promoters, alliance partners and Nigerian indigenous Operators to patronize insurance and legal services in Nigeria for execution of their operations. (Section 220-222) The Bill requires Operators engaged in business in any of the selected sectors to retain the services of the Nigerian Financial institutions or organisations except the transaction relates to securing loan at a lower rate compared to what is obtainable in the financial sector in Nigeria. (Section 223) The Bill also provides that every ministry, department or agency seeking to award contracts to foreign companies shall ensure that the Nigerian counterpart staff are engaged from beginning to end of the project. The Bill also makes it unlawful to issue visas to a foreigner seeking to work in Nigeria where the skill being imported is readily available in Nigeria(Section 226) The Bill prescribes that any dispute arising from the application or enforcement of the Bill shall first be settled amicably between the parties; failing which it shall then be referred to the Chief Justice of the Federal High Court who shall constitute an arbitral panel of not less than three Judges of the Federal High Court one of which shall be appointed as Chairman of the Panel to rule on the dispute. (Section 227) @Businessdayng

Thursday 19 March 2020

BUSINESS DAY

THEBAR

LegalBusiness

NBA young lawyers’ forum announces winners of essay competition

n January 21, 2020, the Nigerian Bar Association Young Lawyers Forum ( N BA Y L F ) a n nounced an Essay Competition in honour of Oyetola Muyiwa Atoyebi, SAN with the topic “My Role as a Lawyer in the Emerging Market of the Nigerian Legal Profession”. Over 500 Young Lawyers registered to participate and took a short online test; following which 88 young lawyers who excelled, were shortlisted and invited to submit their essays. After a review of the essays by a panel of judges and assessors, the NBA YLF announced the following winners of the essay competition: Ibidapo Olufade of Lagos State came first place, taking home the grand prize of N200,000. 00., while Oluwatosin Sofowora also of Lagos State, took the second position with a prize of N140,000. 00. Others were Mujahid Muhammad of Gombe, who came 3rd with N80,000. 00; Ejiamaizu

Josephine of Lagos won the 4th prize of N50,000. 00, while Dozie Ewelike of Owerri, went home with the 5th prize of N30,000. 00.

Speaking about the competition, the Chairman of the Young Lawyers Forum, Tobi Adebowale, disclosed that the winners will

be privately contacted on the modalities for receiving their prizes, in addition to which they will receive free subscriptions to LawBreed’s Supreme Court Judgment Online Report as well as a copy of the Babalola’s Law Dictionary. He said, “We are grateful to all young lawyers who participated in the competition and to our sponsor, Oyetola Muyiwa Atoyebi, SAN for supporting the essay contest. Our gratitude similarly goes to LawBreed Limited, Chief Layi Babtunde SAN and Olumide Babalola for their support. “Further, we are very grateful to our judges, Chinedum Umeche, Team Lead, Litigation & ADR, Banwo & Ighodalo; Farida Aisha Kera, Lecturer, Faculty of Law, Ahmadu Bello University, Zaria; Joseph Onele, Doctoral Candidate, University of Adelaide; Orji Agwu Uka, a Lagosbased Legal Practitioner; Prince I. Nwafuru, an Associate, Paul Usoro & Co; Suleiman Amina Ka’oje, Principal State Counsel, Federal Ministry of Justice); and

Teingo Inko-Tariah, Partner, Accord Legal for the sacrifice of their time and resources towards the task.” The YLF Chair also extended heartfelt appreciation to Gbolahan Badmus for coordinating the entire process of the competition and to the young lawyers who assisted with the first level assessment, namely Titilope Sinmi-Adetona, Omoyajowo James, Chidi Odoemenam, Bisola Akinyemi, Salami Aishat, MaryAnn Nwokolo, Temiloluwa Dosunmu, Hameedah Opeloye, Pamilerin Adepoju and Mayowa Ajileye. “We trust that this exercise has contributed significantly to helping young lawyers gain clarity on their roles in shaping the future of the legal profession in Nigeria and on opportunities for personal development. For its part, the NBA YLF will continue to create the necessary platforms for young lawyers to build capacity for efficient output as the legal industry continually evolves. Thank you,” he said.

LEGAL BUSINESSTECH SURVEY

Digitisation and accessible databases Continued from next week Much of emerging technology is already embedded in everyday tools that lawyers use Providers of technology solutions - both generic and dedicated legal tech tools are constantly using the latest technological innovations to enhance and refine their products. For example, Microsoft 365’s suite of offerings are infused with AI capabilities that users can leverage. Developments in emerging technology have led to improvements in the offerings of Nigerian legal tech provider, LawPavilion. Law firms currently use technology primarily to enhance internal processes Our survey indicates that our respondents leverage technology primarily for the purpose of saving time and enhancing efficiency. Whilst this is generally one of the key objectives for investing in technology in any industry, tech use has grown beyond this level. Most industries, including the legal services industry in other jurisdictions, now leverage technology for service delivery.

Driven by client expectations, the traditional model of legal service delivery is changing. Many of the world’s largest firms now offer multiple models of legal services delivery. Emerging models include applications and online platforms - which are capable of interacting with clients and solving their legal challenges. For example, Magic Circle law firm, Allen & Overy has developed an Advanced Delivery & Solutions toolkit. The solutions contained therein, range from client-centric tools designed to work collaboratively with client systems and personnel - such as such as online workflow platforms with autodrafting capabilities which help clients redraft specified contracts - to on-line subscription services designed to deliver the firm’s expertise in the form of reports directly to clients. Our survey indicates that the Nigerian legal services industry does not face the same pressures from clients to use technology in service delivery. However, there are several factors that suggest that it may be time for Nigerian law firms to begin to consider the use www.businessday.ng

of non- traditional service delivery models. One of the key factors is the growing impact of lawtech businesses that provide legal services directly to clients. These use automated forms and contracts as well as intelligent interfaces - at much cheaper rates than traditional firms can. Although this industry is still at its infancy, these firms are already causing a disruption in the legal services industry. They provide alternative solutions to clients and are therefore in competition with traditional law firms. Another factor to be considered, is competition from in-house counsel. Apart from the fact that more work is increasingly done by in-house counsel in order to save costs, advancements in technology mean that in-house counsel, particularly for multi-national companies that have traditionally been the largest source of income for corporate practitioners, now have access to tools which enable them to do work which would have otherwise been outsourced to law firms. And the in-house lawyers can now deliver the work faster, often better and in a more cost-efficient manner. To increase

https://www.facebook.com/businessdayng

the chances of winning work, law firms need to be able to leverage technology to deliver work to inhouse counsel in more innovative ways. Conclusion Most of our respondents use technology for the purpose of enhancing efficiency and saving time, particularly in the areas of research, legal practice management and contract drafting. Some firms have invested in dedicated legal tech tools for these purposes, while a few tech savvy firms and professionals are able to leverage on generic, free resources to achieve the same and sometimes better outcomes. Considering this state of affairs, it is therefore not surprising that most law firms are yet to evolve to the stage of using emerging technology to deliver services to their clients, particularly as there appears to be no direct push from their clients to do so. However, given developments in lawtech, the rising use of emerging technology tools by in-house counsel and advanced use of technology tools by global firms, practitioners in the @Businessdayng

Nigerian legal services industry must raise their technology game to the next level. To do so, firms need to train their lawyers, devote more attention to technology education and training in their firms and seek innovative ways to combine their expertise with technology in order to deliver bespoke solutions to their clients. Designing and implementing a cohesive and efficient approach to utilising technology in legal practice can be expensive and time consuming, but the industry in Nigeria can borrow a leaf from what has been done in other jurisdictions. The winning firm is one that hires multi-disciplinary talent, collaborates with other law firms, legal tech companies and I.T firms, and remains open to general innovation and development, to design solutions that deliver affordable, technology based solutions to clients.

LINDA ARIFAYAN, a researcher and analyst, is a member of the Legal Business team at BusinessDay.

Thursday 19 March 2020

BUSINESS DAY

BUSINESS TRAVEL We have formidable partnerships with airlines, stakeholders to provide quick, efficient services - Adewale Seyi Adewale is the Chief Executive Officer of Mainstream Cargo Limited, an indigenous freight forwarding company. In this interview, he speaks on how the company is building formidable partnerships with the airlines, Nigerian Customs Service and international technical partners to render exceptional services to its clients. What are some of the activities you do at Mainstream Cargo? ainstream Cargo is a freight forwarding company. We move shipments for our clients within Nigeria to any destination in the world and we pick from anywhere in the world to any location. It mustn’t necessarily be only Nigeria, as long at the customer has confidence in us. We also do Customs import clearance. We are a licensed import clearing company in Nigeria and we are authorised to clear all shipments at any seaport, airport or land in Nigeria. We work with airlines that we use to move our shipments. We are very strong at the sea and on air. The decision on which mode of transportation we use is based on the type of shipment, how urgent it is needed and the size of the shipment. Mainstream Cargo is building a reputation for fast track, high essential, quickly needed spare parts and raw materials which are mostly conveyed by air. We have worked with Air Peace, Arik Air and we have also exported for Azman Air. What are some of your expansion plans? The plan is to have physical presence in major cities centre in Nigeria, which are Abuja, Port Harcourt and Kano. So, we are operating principally from Lagos airport and seaport. The next level will be Abuja, Port Harcourt or Kano depending on the demand. We are building a very big, state-of-the-art warehouse, which will be ready in the next 12 months. The warehouse will be equipped with the right equipment. It will be technologically driven. We have acquired the land and we have started construction is going on at the site. It will be a novel warehouse that is not common. What do you think will be the effect of the coronavirus in the industry? Coronavirus would bring about a slowdown of business process. Something as simple as sending a bill of lading through courier to Nigeria is so difficult now that it can take between one to two weeks. Before now, it could be done instantly. Now, there are lots of protocols that is now limiting the process. Now you can have shipments at the seaport that you are not sure what time or day it will depart. Sometimes to get confirmation on whether it has departed is difficult because of movement restrictions within China. The effect on us is that a process that is supposed to start and be completed within 38 days now takes up to 60 days. Our

Seyi Adewale

www.businessday.ng

our shipments pass through its customs bonded warehouse and we have good cooperation. So, it is a win-win situation for us. I move traffic through NAHCO terminal and they make revenue from my shipments. Why should someone looking to import or export shipments come to Mainstream instead of other competitors? People will tell you that the reason why they like Mainstream cargo is because we are efficient, quick and compliant and these help us a lot. When customs see our shipments, they are assured

‘

If we have validators that will validate what we do, this will ensure Nigeria Bureau of Statistics get appropriate data to drive our economy, our businesses and efficiencies

‘

circle time to be efficient in respect of products coming in has been limited. Another major issue is getting bookings for airlines. Interconnectivity is more difficult. The security level threats are becoming higher and this has impacted the airlines. For instance, if you want to move dangerous goods, they will give it full security oversight function and due diligence has also been heightened because of coronavirus. So, it is slowing down the process. It is difficult to get connectivity for shipment and making it more expensive. For instance, a shipment which is supposed to cost me $500 to move, may be costing me about $1,500 now. For instance, a shipment could get to Istanbul or any major hub, it may be delayed because of cancellations and restrictions of flights. Having worked in NAHCO for seven years before setting up Mainstream Cargo, what wealth of experience are you bringing to Mainstream Cargo? I am very grateful to the Nigerian Aviation Handling Company Plc (NAHCO) because they trained and developed me to have the capacity, exposure and experience that I have and that wealth of knowledge helped us grow the business and ensure that Mainstream Cargo is very professional in its activities. The global networking was also helpful. So, setting up Mainstream is just like a transition. I still work with NAHCO because most of

https://www.facebook.com/businessdayng

that we fall into the category of those who are compliant. We use the right code, pay the right duty and we don’t delay. Our pricing models are tailored to fit customer’s budget. We also share some of the discounts we have from our airlines and partners to our customers. We have formidable partners everywhere in the world and they know the standards and requirements and we must keep these requirements for them to do business with us. What are some of the challenges you have faced since you started and how have you been able to manage them? When we started, we hit the ground running. Before, the challenge was cost of funding because of operations. If most customers give you a business, they want you to execute it immediately whilst waiting for payment. So, when we newly started, because of the level of networks and relationships we had, we had so many businesses at the same time. So we needed a financial partner to help us at the onset but now we are stable and strong to execute jobs and not be encumbered with financial challenge. Our bankers have seen our record and when they see our transactions they are quick to support us because they see the cash flow and know that we are a reliable, trusted company and because they see the turnover. Where do you see Mainstream Cargo in the next five years? We will have the reputation that DHL has in the specialised areas that we do business. We will be well known and be a reference point for standard for an indigenous freight forwarding company. We will be able to keep standards and procedures and be known for excellence. As our customers grow, we will grow along with them because we are an enabler to their business. For airlines, they will need us to help with spare part shipments. We are integrated into their system. What are some of your top priorities to help grow your business and the industry? The first thing that is most likely to announce us is to be very good in import clearance. Once people see that you are trustworthy and efficient, they will always recommend you and because you do import clearing business, you will interface with the foreign partners, which could be the aircraft manufacturers, repairers, aircraft spare parts suppliers in various parts of the world. Sometimes because of the regulation in their country, the transaction is not closed until it arrives, is cleared and delivered to their clients. @Businessdayng

Some of these products are so sensitive that even the originating countries want to know where that product is going. We monitor it to ensure the product has arrived and is received by the appropriate authorities. When they see your name all the time, the players over there will know you are reputable. So, when they see your shipments, they treat the import clearance as number one. This flows into freight forwarding. The next important thing that should be concentrated on is the warehousing. In as much as we have warehouses scattered around Lagos, the kind of warehouse we want to set up is unique. Our warehouse will have the kind of integrity that if you tell a client the condition your shipment will be, it will be verifiable, even by the client. When we achieve these, we will look to the next level. If you are the minister in charge of this sector and you are in the position to develop it, what will you do differently? The government is already on the right path. We will have the right protocol and the right efficiencies that we have at our sea gate and airport at the land borders. The truth is a lot of transactions within Nigeria are not captured, which is not helpful because of security and safety reasons and documentations. Because when a company wants to know whether to do business in Nigeria, they want to see the volume of transaction. A lot of our transactions are not captured because they move through the land border gates. If we have validators that will validate what we do, this will ensure Nigeria Bureau of Statistics get appropriate data to drive our economy, our businesses and efficiencies. This will lead to development. You will see warehouses, hotels and other structures around the land border. So, the government got this right but they have to see it to the end that it is as efficient as that of the seaport and the airport. This will grow our economy and boost our GDP. People in Ghana, Senegal, Mali and some other African have been lamenting over the closure of our border. This means we are so important to the ECOWAS region and this has opened our eyes to so many things. On the customs side, we should keep on improving the platform to the extent that we have efficiency where we have known shipper. If we have a known shipper, they can pay online and it reduces physical contact. This will improve efficiency. This reduces touting around the ports. This way, you know when your shipment is ready.

Thursday 19 March 2020

BUSINESS DAY

Corporate Social Impact

Onuwa Lucky Joseph (08023314782) Editor.

Are Nigerian corporates sufficiently geared up for Covid 19? Onuwa Lucky Joseph

he developed world is shutting down even as Sub-Saharan Africa stays open for business. The fear of COVID 19 has gripped the world’s imagination and even though the physical footprints are not fully indented here, a lot of folks are aware and afraid of what could it happen should it make proper landing here. A lot of the anecdotal things we hear are sort of heartwarming. The virus is supposedly unable to survive the sweltering heat that is Africa’s general weather. Some have also claimed that the melanin pigmentation in black folks helps make us resistant so that even when we get infected, it’s usually with the mild sort which is easily dealt with by naturally occurring antibodies in our system. That can’t be all true though. The death, last week in Italy, of 64 year old Nigerian pathologist, Dr. Olumide Okunuga, put paid to that line of thinking. All the major football leagues

Segun Agbaje

Jim Ovia

in Europe, (The EP, La Liga, Serie A, The Bundesliga, Ligue 1), etc., are all on forced recess, concerts are cancelled, airlines are grounded, staff are working from home, even the social niceties of hugs and handshakes are being shelved for less invasive contacts. People who ordinarily would rather not bath for days now are compelled to wash their hands every other minute and the sight of people in face masks is so pervasive nowadays that it is beginning to look like the normal way to appear. And it’s for all so that people would not contact the free ranging virus that has struck and is striking at

Abdulsamad Rabiu

will worldwide. How is Corporate Nigeria reacting? For starters, it’s surprising that most banks and public places still do not have sanitizer stands as was the case when Ebola was raging. Thankfully, our primary and secondary schools are showing the way in that direction. There are soap and sanitizer stands at most schools. It ought to be in every school. And the kids, aside using it every morning before they resume, must use it continually throughout the day. Back in Ebola time too, we had people, thermometers in your face, checking tempera-

tures. That is not happening now, except at the airports. Those thermometers need to come back out. True, there aren’t many reported cases so far. But we must not be lulled into a false sense of impregnability. This global village where people travel at will and especially with our porous borders on display, can bring in just about anything, While we expect government to do its part by policy pronouncements which are quickly and effectively backed up by action, we also expect corporate Nigeria to show leadership by its actions and not mere pronouncements. A couple of banks

have sent emails to their customers to reassure them that they are on top of the situation. They will need to do more than that. Staff need reassurance. The Sword of Damocles must not be dangling on the heads of staff as blackmail tool in view of the global economic downturn arising from the fallouts of Covid19. Aside which practical steps should be taken to see to it that staff do not contract the virus. The internal communication mechanism must be put to work to achieve this. Aside which companies need to temperature-check their people on an ongoing basis while also making available sanitizers for use in offices and homes of staff. Anything to block the free passage of the virus The doomsday scenarios based on permutations arising from the COVID 19 outbreak should not be allowed actualisation. And this means that greater effort must be made to put preventive measures in place in public places, in business environments, and of course in homes pan Nigeria.

She’s tackling Nigeria’s period poverty with reusable pads Valentine Iwenwanne

t wasn’t your typical summer camp. In August, Lolo Cynthia, a public health specialist and sexuality health educator, taught some 250 girls in southwest Nigeria how to sew their own reusable menstrual pads from linens and cloth. Each teenager went home with two washable pads, materials to make more at home — and straight talk about sexual health that is hard to come by here. Backed and funded by the first lady of Nigeria’s Ondo state, Betty Anyanwu-Akeredolu, the camp is just one example of how the 24-yearold founder of social enterprise LoloTalks — an online channel that has attracted more than 1.5 million views — is changing the conversation in Nigeria. Cynthia’s period pad initiative has become a powerful symbol in a conservative country where discussions around menstruation and sexual health are often seen as taboo. A 2015 United Nations Children’s Fund (UNICEF) study in three Nigerian states revealed that many school girls “believed that menstruation was a secret and unclean experience.” With their periods, they experienced anxiety, abdominal pain and cramps, nausea and vomiting, dizziness and a loss of appetite — which in turn took a toll on their studies. Nigeria is one

Lolo Cynthia

of many countries that place a heavy tax on menstrual products; a pack of sanitary pads costs an average of $1.30, even as an estimated 44 percent of Nigeria’s population (87 million people) lives in extreme poverty, earning less than $1.90 per day. “Lolo’s eco-friendly pad is a viable business that should be replicated across Nigeria,” says Oritseweyinmi Erikowa-Orighoye, a friend of Cynthia’s and project manager at the Coastal and Marine Areas Development Initiative. “If women learn how to make reusable sanitary pads, they can also use it as a means of livelihood, turning it into a wealth-creation avenue.” Indeed, women in Ondo have already started to make money since the training. SHE TOOK WHAT SHE CALLS A TRIPLE-A APPROACH TO PERIOD POVERTY — ACCESS, AWARENESS www.businessday.ng

AND AFFORDABILITY. But to make Cynthia’s work more widespread, challenges abound, from cultural beliefs around sex to raising funds and making contacts to penetrating certain corners of society. “Most times I reach out to people to donate for projects, and we haven’t been able to get proper grants and sponsors,” Cynthia says. She partnered with Ondo’s first lady and her friend Dolapo Olaniyan, executive director of the Gender Equality and Empowerment Network, when she realized she couldn’t raise enough money on her own for the camp. Cindy Ikpe, program manager at the entrepreneurship incubator Fate Foundation, first met Cynthia when she was applying for a job at the assisted living facility. Then as now, Ikpe says, Cynthia was “a target-driven person” with smarts and energy. The target on menstruation began when Cynthia was studying in South Africa and came across girls complaining of expensive and unhygienic sanitary pads. Upon her return to Nigeria, she took what she calls a triple-A approach to period poverty — access, awareness and affordability. It started with the NoDayOff Campaign, which distributed more than 1,000 disposable menstrual pads to women and girls in her local community of Festac Town. “As a woman, when you grow

https://www.facebook.com/businessdayng

up in Nigeria, you would see so many things that are unacceptable and you would see real big issues that affect every single woman,” Cynthia says. “We sometimes look at it as a conversation that doesn’t matter and prefer talking about the economy, so I decided to do something about it.” Born and raised in Lagos, Cynthia relocated to South Africa in 2009 for post-secondary studies. She earned two degrees at Monash University by age 19, in public health and sciences and HIV-AIDS and health management. But instead of academia, she ended up in media. She worked as a medical social worker with an assisted living facility in Lagos, but she performed well on a TV screen test in 2017. She then joined Nigeria’s Rave TV as a broadcaster on a live breakfast show about current affairs, politics and lifestyle. She also produced an ongoing documentary series called Stories Unheard, focusing on the lives of street children, abuse of anti-malaria medication and other issues that affect women in Nigeria. “Broadcasting was just a platform for me to air my own views and opinion,” she says. She launched LoloTalks back in 2013 while still living in South Africa, but her true passion has always lay in sexual health and social inequality — from tutoring 2,000 students with her MyBodyIsMine comprehensive sex@Businessdayng

education curriculum to delivering free condoms and sexually transmitted infection tests to sex workers around Lagos. Cynthia comes off as melancholy yet bold and hardworking. Perhaps her greatest weakness is her frank style of speech and willingness to delve deep on issues surrounding menstrual and sexual reproductive health, which can be off-putting to some audiences. As the work has taken off, it’s earned Cynthia broad recognition, from the UN Refugee Agency to the “New Establishment List” by Nigerian news outlet YNaija to the continent-wide “Social Good Awards.” Her long-term goal is to partner with Nigeria’s Federal Ministry of Health and Education to make six reusable pads accessible to each female student every new school year. In her free time, she devours books and loves travel to new places, for the opportunity to strike a conversation with anyone. Cynthia takes on consulting work to help fund her initiative and is always scrambling for more donations and partners. Her goal is nothing less than a nationwide behavioral and mental shift. Aside from making sure more women get reusable pads, she is designing a sexuality education syllabus so schoolchildren across the country can get a frank, fact-based conversation at last.

(Culled from Ozy.com)

Thursday 19 March 2020

BUSINESS DAY

Corporate Social Impact

GE Africa’s gender strategy is paying dividends – Patricia Obozuwa

strategy focuses on encouraging women to choose STEM related careers with an aim to address ongoing gender imbalance in technical fields. It also focuses directly on recruiting women into GE. We initiate and support programmes across s e condar y schools and universities to encourage girls and women to pursue STEM related studies. This starts creating a base/pipeline of women to potentially work at GE. Numerous studies suggest that, consciously or not, individuals are more likely to hire people like them and women are more likely to choose companies with women leaders. We ensure women are included in recruiting/interviewing panels thus increasing GE’s chances of hiring women.

ack Welch, that great CEO of GE who passed away at 84 on the 1st of March this year was famous for his epochal GE business strategy which specified that if GE was not Number 1 or 2 in the industries it participated in, it had no business being there. He was a brutally frank, results-driven CEO who was named by Fortune Magazine in 1999 as its Manager of the Century and who we fully expect would have been comfortable in the GE pivot to women. For two reasons: One, women’s elevation purely on merit to help them self-actualize and to be the critical factors that they have potential for being if given the opportunity; and two, to help elevate the GE bottomline. We tried to say that second part like Jack would have said it, “Straight from the Gut”. In our continued commemoration of International Women’s Day, we spoke with Patricia Obozuwa, Chief Communications & Public Affairs Officer for GE Africa who took us through the company’s diversity initiatives and how it’s paying off handsomely. One reason behind the publication of CSI is for so that corporates can see best practices which they can apply to their own practice of CSR/Sustainability.

Patricia Obozuwa, Chief Communications & Public Affairs Officer for GE Africa

The Strategy GE Africa’s strategy is to attract, retain and promote women into GE leadership positions. Our focus is not just on developing women but on ensuring African women leadership in the company. The GE Women’s Network was established

22 years ago globally to serve this purpose and as we started expanding in Africa, we established the GE Africa Women’s network with this specific aim. Attract The ‘attract’ aspect of our gender

Retain The ‘retain’ aspect of our gender strategy focuses on providing a conducive environment and career opportunities that enable women thrive in GE Africa. Providing gender-friendly work environments and conditions. E.g. ‘Mother’s Room’ for nursing mothers, flexible working hours, paid and unpaid maternity leave with jobs guaranteed. Helping women in GE to develop their networks of influence and providing mentorship. Granting top female talent access/ visibility to leadership (both men

and women). Designing targeted programs to develop women’s leadership. E.g. GE’s GROW program provides in-depth training, coaching and mentorship to enable female senior managers develop into executive leaders. Supporting external programs that drive women’s empowerment and gender equality. Promote This aspect focuses on ensuring that women have a fair chance at securing leadership positions when they are available. Deliberately advocating, sponsoring and placing women in leadership roles. Results – We have seen remarkable growth in the number of senior women in GE. In the past one year, out of 86 promotions 40% have been women. In the past 18 months, we have appointed African women into important executive leadership roles raising the percentage of African women in the GE Africa Executive Leadership Team to 40%.

(Kindly send feedback to 08023314782 / csrmomentum@ gmail.com)

Zedcrest charges women to excel and to lead Onuwa Lucky Joseph

edcrest Group, the financial solutions powerhouse, marked the International Women’s Day by organizing a career and mentoring programme for its female staff and customers at its Marina Office. Speaking on the theme of this year’s IWD event #EachforEqual, the company’s Group Managing Director, Mr. Adedayo Amzat, who was represented at the event by Mr. Gbenga Adigun, Business Head, Zedcrest Investment Managers (ZIMVEST), urged women to continuously strive for excellence as true empowerment of people comes only through achieving excellence. Even as he commended women for their contributions to nation building, he stated that the career and mentoring programme organized by the company was not just to advocate for gender equality but to also empower all female staff of the company. “To all women out there making impact, breaking barriers, striking a balance, juggling the many bills, you deserve the ovation associated with this day”

L-R: Adedoyin Samo, Group Head, HR & Admin., Zedcrest Capital Limited; Ms Stella Duru, Non-Executive Director, Zedcrest Capital Limited; Gbenga Adigun, Business Head, Zedcrest Investment Managers (ZIMVEST); Enife Atobiloye, Managing Consultant, Human Leadership Resources, and Chioma Adu, IT Auditor, Zedcrest Capital Limited during the Zedcrest Group 2020 International Women’s Day celebration held on Monday, March 9, 2020 at the company’s Marina office, Lagos.

he said, to applause from the audience. Further expounding on his company’s approach to gender equality, he revealed that, “we are passionate about women and their overall well-being. We are interested in their growth – their career, health and other areas. www.businessday.ng

We will continue to provide platforms and support programs that will help women through. “At the core of our services is catering to the needs of women and we are constantly gearing efforts towards promoting women-focused initiatives and providing opportunities to help

https://www.facebook.com/businessdayng

them maximize their potential. We are proud to say that we have about 50% of female staff at Zedcrest Group (206 female and 221 male staff)”, he added. The guest speaker, Mrs. Enife Atobiloye, Managing Consultant, Human Leadership Resources, in her remark said gender equal@Businessdayng

ity does not mean that men and women become the same; only that access to opportunities, resources and protections should be the same irrespective of their sex. “Guaranteeing the rights of women and giving them opportunities to reach their full potential is critical not only for attaining gender equality, but also for meeting a wide range of international development goals. Empowered women and girls contribute to the health and productivity of their families, communities, and countries, creating a ripple effect that benefits everyone”, she said. “To make equality a reality we need to draw more into the conversation”, Ms Stella Duru, Non-Executive Director, Zedcrest Capital Limited said. “Despite all the progress made, men still dominate positions of power. And, as a string of recent harassment scandals has shown, the behaviour of some men has had profound effects on women’s careers, their success and their lives. The good news, as we mark International Women’s Day, is that many men are acknowledging the importance of playing their part to make gender equality a reality”, she said.

Thursday 19 March 2020

BUSINESS DAY

TECHTALK Innovation

Apps

Fin-Tech

Start-up

Gadgets

Ecommerce

IOTs

Broadband Infrastructure

Bank IT Security

Why adding new mobile subscribers is difficult for 9Mobile FRANK ELEANYA

t a little above 13 million voice subscribers, 9 Mo b i l e n ow accounts for only 7.08 percent of the mobile subscriber market from 7.4 percent in December, according to the latest data from Nigeria Communications Commission (NCC). The telco also had 16,385,317 subscribers and by January 2020, the figure had dropped to 13,157,543 representing a decline of 3,227,774 year-on-year. The telecommunication sector saw over 2 million voice subscribers (from 184,426,187 to 185,742,016) and about 3 million internet subscribers (from 128,365,704 to 125,728,328) added to it from December to January 2020. While MTN, Airtel, and Gloworld grew both their voice and data subscriber bases, 9Mobile lost on both ends. 9Mobile, the fourth largest telecom operator in Nigeria, extended its voice subscriber losses by almost 500,000 becoming the only operator to go for eleven months (March to Decem-

ber) stretch without recording growth. On the data subscriber side, 9Mobile saw about 28,000 subscribers exit its platform, extending a run of losses that began in April 2017. By January, the number of internet subscribers on the telecom was at 8,040,261 from 8,068,175 in December. Data from GSMA suggest that for 9Mobile the times ahead might get tougher to turn the corner despite efforts and investments to

attract new customers. The telecom operator had moved to rejig its human capital investment with the appointment of Ibrahim Musa Umar as chief of Human Resource in July 2019. “I believe Ibrahim’s experience and proven industrywide leadership will drive fresh thinking and new ways of managing our talented team of employees for optimal service delivery across our nationwide operations,” said Stephane Beuvelet, 9mobile’s acting managing

DSMI targets 2 million digital marketing jobs by 2030 FRANK ELEANYA

igerian-based Digital Marketing Skill Institute (DMSI) said it plans to reach one million people and create two million jobs by training people in digital marketing. After training, most of the talents are retained by the institute while the majority are linked to corporate organisations for employment, according to a statement. DMSI is a global institute that empowers people on digital marketing to gain employment or become self-reliant to curb unemployment in the society. “This is the only way we can help our youths gain employment and also impact in the Nigerian economy and globally because we are a global company registered in the US and also in Nigeria. Today, most of our

students have started companies employing people and some are working for companies earning reasonable salaries around the world,” said Tobi Asehinde, founder of the institute. Asehinde says one of the viable ways of fighting insecurity in the country is by creating jobs for youths and constantly providing training. “This is what we expect the Nigerian government to do in order to harness the potentials embedded in our youths,” he said. He says that digital marketing creates a lot of job opportunities. While some business owners prefer to hire digital marketers to address their marketing gaps, there are those which would rather outsource their online advertising, website development, and social media to people with digital marketing skills. This is partly driven by

the high cost of billboard advertisements. Some digital marketing campaigns cost as low as N1,000. This has led to an increase in demand for digital advertisements. “Digital marketing provides you the opportunity to earn a living without being in a working environment and also hire other people. As a digital marketer, you can work with a company on a full-time basis, you can work as a freelancer and also become an agency where you begin to hire additional hands thereby creating jobs,” Asehinde said. Asehinde said that those that completed their training with the institute can easily work with 10 customers that pay N100,000, he or she stands to make N1 million a month and N12 million a year, and by hiring one or two people, that basically takes two people out of unemployment.

director. In August, the company also secured a $230 million (N83 billion) loan from the African Finance Corporation (AFC) to improve its infrastructure and re-invigorate their services as they compete in the Nigerian telecom market. It was the first public finance the company was getting from a third party investor after its divorce from Etisalat and the settlement of loan disputes by Teleology and its partners in 2018. However, between Janu-

ary 2019 and December, 5.2 billion people have subscribed to mobile services, accounting for 67 percent of the global population. According to GSMA, adding new subscribers has become increasingly difficult as markets become saturated and the economics of reaching rural populations become more difficult to justify in a challenging financial climate for mobile operators. In Nigeria, the market is already reaching a tipping point with 185 million mobile services subscribers onboarded. Operators have gone from fighting over who covers the most territory to who is quick enough to unveil the latest innovation. But despite saturation fears, GSMA says it expects Nigeria, India, China, and Pakistan to collectively contribute 600 million new subscribers by 2025. There are also concerns that the competition is leaving 9Mobile behind in terms of investment in infrastructure and reach. For instance, it wasn’t until February that the telecom operator moved to expand its 4G reach to 10 more Nigerian cities. It currently provides 4G services in only six cities.

At 61%, Nigeria’s startup failure rate tops African peers FRANK ELEANYA

he rate of startup failure in Nigeria is at 61.07 percent, the highest among the top three biggest tech ecosystems and investment destinations in Africa. A report by Weetracker in collaboration with GreenTec Capital Africa Foundation ranked Nigeria seventh on the continent in the top ten countries with the most number of startup shutdowns. Ethiopia and Rwanda shared the top two positions accounting for 75 percent shutdowns each. Ghana, Zimbabwe, DRC, and Tanzania ranked ahead of Nigeria with 73.91 percent, 66.67 percent, 66.67 percent, and 62.50 percent respectively. While South Africa, Kenya, and Nigeria have shared the top three spots in terms of investments and size of the ecosystem on the continent, more start-ups in Nigeria have failed compared to its peers. Kenya and South Africa have seen 58.73 percent

and 54.39 start-ups fail. Generally, the African continent has a startup shutdown rate of 54.20. Globally it is estimated that 137,000 businesses are given birth to every day or 50 million per year. Out of this 90 percent of them fail according to Failory. While funding is critical to the survival of a startup, the Weetracker report showed that there were other factors. The overall shutdown rate of funded startups during the analysis period stood at 20.30 percent. Countries like Ethiopia, Rwanda, Rwanda, Zimbabwe, and Morocco, etc with the highest startup shutdown rates involved mostly companies that were not externally funded. In essence, most of them died for a lack of external funding. However, South Africa which has led the continent in terms of investment in startups also had the highest rate of startup shutdowns post-funding with nearly half of the funded startups closing shop. Nigeria also faced a similar situation with 32.76 percent shutdown rate

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

Mobile connectivity requires continuous investment by operators to keep up with demand and provide the service consumers and businesses expect, whether through densification in cities or plugging coverage gaps in rural areas. While 9Mobile is just starting to push to increase its 4G coverage in Nigeria, MTN has tested the viability of a commercial 5G in Nigeria and Airtel is stepping up its market share in mobile money services across Africa with the waiving of transaction fees across all bands. Airtel also has the largest 4G network in Nigeria as well as one of the cheapest data bundles among the operators. With the Nigerian government considering a travel ban following the discovery of a third case of the pandemic coronavirus, nearly every business, including telecom operators will be impacted. It is difficult to see how 9Mobile hopes to control further slide especially with the NCC expected to release the February data. What experts agree with is that the company is in dire need of fresh capital and a new direction.

https://www.facebook.com/businessdayng

@Businessdayng

amongst funded startups. Even when they get external funding, the report shows that the majority of startups face casualty after the seed stage amounting to 69.09 percent. Startups that also received grants and non-equity assistance also faced shutdowns. The shutdown rate of startups in these categories was at 10.91 percent of overall funded shutdown startups. What led to the shutdown? The report points to the health of the economy where the startups are located. In the case of Nigeria, shutdowns began to climb after 2014 when the country experienced a boom in the economy. The industry where the startups were also played a role in their demise. For instance, the most casualty rate was among startups building social networking platforms. The inability of the startups to offer consumers services at par with global brands like Facebook, Instagram, Twitter, LinkedIn among others may have accelerated the demise. The shutdown rates for these startups were at 95.65 percent.

Thursday 19 March 2020

BUSINESS DAY

news SON takes campaign against substandard Dangote Fertiliser contractor staff tests products to Alaba Market negative to Covid-19

s part of its renewed efforts to fight the growing number of fake and substandard products in Nigeria, the Standards Organisation of Nigeria (SON) has taken its sensitisation campaign to importers and traders at the Alaba International Market in Lagos. Speaking at the sensitisation workshop with the Electronics section of Alaba International Market in Lagos, Osita Aboloma, director-general of SON, stressed the need to fight against the buying and selling of fake and substandard products. Represented by Yahaya Bukar, a director from his office, Aboloma told the traders that both SON and the market association had decided to constitute a taskforce that would comprise of traders as well as SON officials, with the mandate of taking regulation closer to the importers and traders. According to Aboloma, SON believes that fighting against fake imports among traders would help to identify those importers, manufacturers and traders, who are not complying and those who are genuine and highly committed to complying with the required standards. “There are those, who are not willing to comply with standards. These set of people are enemies of the public and their acts are not only dangerous to lives and property, but

also drains people’s pockets. We must also protect the businesses of genuine importers and traders by eradicating substandard products from the markets and ensure that Nigerians get value for the money spent on electronics,” he said. It is the responsibility of SON to make sure that electronic products sold in Nigerian markets are safe to use, especially owing to the fact that Alaba International Market is regarded as the largest electronic market in West Africa, he said. Stating that electronics market of Alaba International was reported to be the largest in West Africa if not in Africa, he pointed out that it would be a thing of joy if the market was also known for only good quality products. “This is not impossible to achieve. It only requires your collective effort, dedications, patriotism, truthfulness, uprightness and more importantly, the fear of God,” he said. The SON boss however urged Nigerian importers to approach SON for the branding of their locally manufactured products with customised brand-names rather than using labels of already established foreign brands, which according to him, amount to promoting and creating employment to those countries nationals.

n Indian staff of Onshore Construction Company, an instrumentation contracting firm with Dangote Fertilizer Limited, who had shown symptoms associated with Covid-19 and was subsequently isolated, has been confirmed negative. Akin Abayomi, Lagos State commissioner for health, who disclosed the outcome of the test via his Twitter handle, said, “An Indian national that was admitted in our facility yesterday (Monday) night with symptoms suggestive of #COVID19 has tested negative to #COVID19. He is doing perfectly well in our isolation unit. His case will be reviewed in the morning (Wednesday).” It would be recalled that the management of Dangote Industries Limited had announced that an Indian national working for a third party firm at its fertiliser plant had shown up at the site clinic exhibiting symptoms suggestive of Covid-19 pandemic and was immediately quarantined and taken to the Lagos Mainland Hospital, Yaba. According to the company, “The patient’s complaint triggered our COVID-19 Preparation and Prevention

Protocols which necessitated further screening and isolation immediately.” DIL said one Akhil Kunyil, of the Health and Safety Environment unit of the Onshore Company, had reported the development to it, following which local authorities were contacted. “The suspected Covid-19 patient was immediately moved to the Lagos Mainland Hospital where he was placed in isolation ward for confirmatory test, which later turned out to be negative. “As an organisation, we have taken the following stringent proactive measures across our entire group. These include: Development of a comprehensive risk identification, control prioritisation and escalation plan executed by our Covid-19 Task Force constituted in January 2020. “Identification and retention of a competent team of medical consultants; Travel ban for all employees to/ from high risk countries as per WHO publications of country exposures; Travel tracking of all employees and contractors staff arriving/ leaving Nigeria and obligations for completion of medical checks to validate health status, and other”.

Farmer-herder clashes: Obaseki meets security chiefs, deliberate on framework for state’s vigilante outfit … to convene special Exco over coronavirus

overnor Godwin Obaseki of Edo State has said the state government is firming up strategies to evolve a vigilante outfit that would form part of the base of the state’s security architecture as part of moves to check farmer-herder clashes in the state. Obaseki disclosed this while briefing journalists on the outcome of the state monthly Security Council Meeting held at the Government House in Benin City, on Wednesday. The governor said the security meeting reviewed a wide range of security issues in the state particularly the farmersherders’ clashes, noting that the state was doing all that was needed to strengthen the state security architecture with a view of reducing crimes to the barest minimum. “We want to create a standard operating procedure for vigilantes to form a part of the base security system in the state. The Department of State Security (DSS) and Police are working with the state government to come up with a framework for the vigilantes so they can work in the community policing structure of the Nigerian Police Force,” he said. The governor added that the condition of inmates in the state was also reviewed to ensure continuous deconges-

tion of correctional centres in the state. He said the state would convene a Special State Executive Council (EXCO) Meeting, to be held on Monday, March 23 to deliberate on ways to sustain the state’s economy amid the growing threat of the pandemic. According to Obaseki, “During the meeting on Monday, our position on Covid-19 would be finalised and the state’s decision would be made known to members of the public.” The governor said that specific actions on the spread of coronavirus would be taken on Monday, March 23 after discussions with the federal government, noting, “At that point, we will be able to decide what policies and social distances that will apply in the state, how to improve contact tracing for suspected cases and also monitor those coming into the state.” He said at the weekly EXCO meeting held on Wednesday, March 18, 2020, the council members decided that expenditure would have to be curtailed as the Coronavirus pandemic persists, adding “We looked at areas where we need to improve revenue and we also looked at how to communicate decisions taken to the public.”

US cites these 5 Nigerian human rights issues as significant in 2019 ENDURANCE OKAFOR

he unlawful and arbitrary killings, unlawful infringement on citizens’ privacy rights, and the substantial interference with the rights of peaceful assembly in 2019 are considered by the US as significant human rights issues. According to the 2019, Country Reports on Human Rights Practices: Nigeria by the US Department of State human right issues which include harsh and life-threatening prison conditions, and violence against and unjustified arrests of journalists were recorded last year. While acknowledging that the government took some steps to investigate alleged abuses it said all the above were caused “by both government and nonstate actors,” adding that only a few public reports of prosecutions of officials who committed violations, whether in the security forces or elsewhere in the government were recorded. “Impunity remained widespread at all levels of government. No charges were filed in some of the significant allegations of human rights violations by security forces and cases of police or military extortion or other abuse of power,” the report stated. Recall that US President Donald Trump on January 31 announced a visa ban for immigrants from Nigeria and five other countries. Nigeria must improve on its data intelligence to ease

the investigation of its citizens wishing to migrate to the US, Mary-Beth Leonard, the U.S. ambassador to Nigeria, said in the capital Abuja adding it must meet the expected standard of information-sharing, including on the issues of terrorism and global crimes. “We look forward to Nigeria in a very short while being able to meet those informationsharing goals so that the decision can be reviewed,” the envoy said. From the seven sections of the US human right report for Nigeria, the following five issues were considered significant. Arbitrary deprivation of Life and other unlawful or politically motivated killings According to the US human right report, there were several reports that the government or its agents committed arbitrary, unlawful, or extrajudicial killings. “The national police, army, and other security services sometimes used lethal and excessive force to disperse protesters and apprehend criminals and suspects. Improving from previous years, police forces engaging in crowd-control operations generally attempted to disperse crowds using nonlethal tactics, such as firing tear gas, before escalating their use of force,” the report read. It also stated that authorities did not always hold police, military, or other security force personnel accountable for the use of excessive or deadly force or for the deaths of persons in custody.

L-R: Rauf Aregbesola, minister of interior; Lai Muhammed, minister of information and culture, and Timipre Silva, minister of state for petroleum resources, addressing State House correspondents on the reduction of fuel pump price (to N125.00) and other measures taken by Federal Government to contain the spread of Covid-19 at the at the Presidential Villa in Abuja, yesterday. NAN

‘Manufacturers’ inability to study consumer taste, mentality kills industries in Nigeria’ RAZAQ AYINLA, Abeokuta

… Ogun Assembly pledges to enforce law on consumer protection

and companies are fast dying. Speaking at a conference organised by the Consumer Protection Advocacy Initiative (CPAI) in Abeokuta in recognition of 2020 World Consumer Rights Day on Monday, Oluwatolasaidseriesofunwarranted sharp practices and substandard products were ongoing in almost every sector of the country, which result in sudden closure of many companies, loss of employment and revenue. While commenting on the theme of event tagged, “Sustainable Consumer: The Roles of Stakeholders,” Oluwatola said until the right steps were taken to curb the sharp practices within the manufacturing and service-based industries in terms of quality and value of

ormer director of the Consumer Protection Council, Olatunde Oluwatola, has revealed that a very large number of manufacturing and service-based companies are dying in Nigeria and Africa since consumer taste and mentality have not been studied and understood by producers since sustainable consumers couldn’t be guaranteed in such a circumstance. The former director also noted that sharp practices by manufacturers and services providers in terms of value and quality of goods supplied and services rendered to the consumers are negatively impacting on demands and supplies of goods and services, and are capable of demarketing such brands, hence, brands

www.businessday.ng

https://www.facebook.com/businessdayng

goods and services offered for sales through implementation of Consumer Protection Act of 2004, goods and services produced in Nigeria might not compete favourably with the imported ones. “Simply put, sustainable consumption is defined as the consumption of goods and services that have minimal impact upon the environment and are socially equitable and economically viable whilst meeting the basic needs of humans, worldwide. “Sustainable consumption targets everyone, across all sectors and all nations, from the individual to governments and multinational conglomerates. Sustainable consumptionhasalsobeendescribedas the use of products and services in a @Businessdayng

waythatminimisestheimpactonthe environment, so that human needs canbemetnotonlyinthepresentbut also for future generations. “The aim of sustainable consumption is to increase resource efficiency and fair trade while helping to alleviate poverty and enable everyone to enjoy a good quality of lifewithaccesstofood,water,energy, and more”,he said. Ola Animasahun, head of Advocacy, CPAI, who co-convened the event, said “enough of being short-changed in this land, we can’t continue to spend our hard-earned money on substandard goods and services. Thank God there is an Act at Federal level on the Consumer Protection and I hope the law will be domesticated in Ogun State.”

Thursday 19 March 2020

BUSINESS DAY

Interview

‘Integrating content, data, artificial intelligence will enhance firms’ brand marketing success’ Andisa Ntsubane is an African brand activist with over 15 years of working experience for top African and international brands across multiple industries, including Microsoft and Standard Bank. He is currently the marketing chief for Africa at Old Mutual Limited. In this interview with Desmond Okon, he speaks on trends that will shape Africa’s brand marketing and growth strategies for companies in 2020. Excerpt:

ow would you describe brand marketing in Africa today, after over 15 years of experience working with the some of the best brands? I think we have come a long way as a continent. Africa is one of the last frontiers for global growth with some of the fastest-growing economies when compared with subdued growth in the rest of the world. Africa also has significant demographic and digital dividends, with a young population and high mobile penetration, and this makes it a continent of great potential. My sense is that over the past 15 years there has been a significant shift in how the world perceives Africa. Global and Pan African brands have come to recognise the continent’s uniqueness. They have come to realize that it’s not a cut and paste effort and for them to succeed on the continent, they really must take time to understand every country because Africa itself is not a country, every single country has unique cultural nuances, the brands that immerse themselves in that contextual understanding of customers and what the key insights are the ones that will succeed. The manifestation of this has been the emergence of more global and pan African brands translating their brand messages into local languages and using slang to connect better with markets in Africa. Other brands have also begun to use images of local people across their creative assets unlike in the past where they used similar images across multiple geographies which did not always resonate. Another significant shift is in the area of culture and influence. If you think about the global music stage, African music and culture is being exported globally with music and fashion artists sharing playing leading roles on the global stage. Brands have recognised the appeal of these icons and have begun to leverage them to help drive and promote brands locally as key part of their marketing connection strategies. Brand Marketers are definitely making significant progress in reaching and connecting with audiences across the continent. Using Nigeria as an example, what brand marketing strategy do you think works best? For me, Nigeria is like the heartbeat of Africa. The resilience and vibrancy of the consumers in this market is unrivalled. Many brands look at the unique demographic dynamics in this market and see a lucrative opportunity to build their businesses. The challenge though is that many brands have failed. Some have entered this market and exited only within a few years. To win in this market you have to have a clear path to growth and key part of that is playing a role, not only building the brand, but also building the category within which the brand is playing. This means that you need to be clear about which cities you want to be in, and ensure the customer value propositions are crisp and compelling and then from a marketing mix perspective, I would recommend that brand awareness is supplemented by digital and physical engagement. Brand engagement is key as brands need to engage and ideate with consumers so that there

Ntsubane is a level of awareness and education around products and services in order to drive brand advocacy. Nigeria represents a melting pot of opportunities with its dynamic and diverse market but it is crucial that brands take time to understand customers from a cultural and religious perspective and then focus on the customer journey to drive conversion and advocacy. What is the future of brand marketing in Africa, especially the role of chief marketing officers (CMOs) because whenever there is a challenge in the economy, marketing budgets get the axe first, some other companies go as far as removing the position? Well, I think we have got to start with assessing what the role of the CMO is and how this has changed over the past few years. My sense is that there has been a big shift from CMO’s performing the role of driving Marketing Communications campaigns and supporting corporate business plans to operating in today’s digitally-led era where CMOs are now playing the role of the Chief Growth Officer for an organisation. This means that the CMO’s role has become more commercially led and Marketing leaders have to lead in identifying sources of business growth and winning customers and play a critical role in driving market competitiveness for the business and brand they are overseeing. Marketing must be the function that identifies the markets/customer segments where the brand must play and then define the go-to-market strategies that will enable the brand to connect and drive advocacy. I also think that for CMO’s to be indispensable to any organisation, there must be a strong drive to link brand communications to customers’ experience, because ultimately, your brand is a reflection of how customers experience a product or service. CMO’s must also take up the responsibilities to really crystallize what the brand stands for and what that means from an experience point www.businessday.ng

of view. The brands that are going to succeed are the ones delivering exceptional customer experience. How do you think storytelling in marketing can resonate with Africans? The most interesting point for me is that the very concept of storytelling started here on the continent so brands that can articulate their purpose and value propositions in the form of a narrative will be the ones that connect better with consumers on the continent. The delivery of that narrative needs to be in short bite-size content that is produced across multiple platforms aligned to the customer journey so that the right message lands with the right consumers in the right context at the right time. There is no doubt that whilst content is key, context will be king in 2020. How will you evaluate professionalism and expertise in Africa’s brand marketing? I think that one of the key things is for Brand Marketers’ to focus more on delivering on business outcomes. Marketers’ have always been good at asking for money but have mostly fallen short of accurately articulating what the business is going to get for that money. Marketers’ have got to spend a lot more time upfront talking about the key outcomes that marketing is going to deliver and then aligning the marketing scorecard to those outcomes so that teams are focused on delivering achieving those goals. Brand Marketers can also play a significant role in supporting efforts to protect the reputation of their businesses and brands at a strategic level. In an increasingly digital world, where social media platforms can erode brand equity in an instant, Brand Marketers should be taking a leadership role to proactively engage and develop strategies to mitigate brand risk online. So what would you describe as the major shortcoming of brand marketing professionals? For starters, I think that as Brand

https://www.facebook.com/businessdayng

Marketing Professionals, we sometimes execute with a lot of media wastage and inefficiencies and this ties back to the ROI story. Brand Marketer’s must make sure they develop their Marketing strategies based on data and customer journeys. The world is moving towards mass personalisation and therefore, media and content needs to be highly targeted and my sense is that we have some way to go to raise the bar and reach maximum efficiency standards across the industry. What are the trends you think will shape brand marketing in 2020? I have spoken about content and context being important to ensure that brands drive resonating messaging strategies. Data will be at the heart of innovation and growth over the next decade. The emergence of Artificial Intelligence as a platform to gather, analyse and store large amounts of data must be leveraged by Marketers to ensure that it helps us to easily understand and predict customer trends and incorporate that knowledge into our marketing strategies. Aligning brand positioning with a seamless customer experience will be important to maintain integrity between what the brand says and how it is experienced. Employee brand and culture will be a massive focus to unlock customer centricity and demonstrate how the brand can be lived within an organization and aligned to the experience. All of these are important but where I think the biggest trend will be in the ability of brands to seamlessly integrate brand content, data, artificial intelligence, customer experience, employee brand and culture in service of the customer’s needs. Brands that will win in 2020 will be the ones that are able to create cross functional teams that are able to lead this integration in order to drive organisational competitiveness in the market. On the agency side, this will also be a year where there will be a lot of consolidation on the continent. Agencies are seeking to provide full services to clients and therefore I suspect there will be a lot of integration of different creative, online, offline and through the line services aligned to media which will be interesting to see. A consequence may be the growth of independent agencies or the entry of global agencies with networks acquiring independent agencies to leverage synergies. Last but not least, 2020 will be the year that there will also be an increase in the investment in Marketing Technology. In fact, some organizations have introduced the role of Marketing Technologist to support the implementation of a Marketing Technology stack to support marketing operations and execution tracking. Marketing Technology will be a key enabler in assisting Brand Marketers to report on performance. What would you say has been the high point of your career as a brand strategist? I have been blessed to have worked across multiple industries and on global and local brands in my career. From building brands to rebranding and integrating brands on the continent, I have really enjoyed being able to play a part in building brand equity for businesses. At the moment, at Old Mutual, I am particularly proud of the @Businessdayng

work that we have done as a Marketing team to influence our Executive team to support our recommendation to revitalize and reposition our 175 yearold brand to ensure that we enhance its promise and relevance within the markets where we operate whilst making it meaningfully differentiated from our competitors. We have an amazing brand which plays an important role to sustain and grow the prosperity of the customers, families and communities that we serve. The responsibility that we play as brand leaders is to ensure that we enhance the equity of the brand we manage and leave them in a better position that we found them and that is the work that we have been driving at Old Mutual and I am extremely proud to be making a contribution in service of that ambition. Another special memory in my career was when I was at Standard Bank and had the amazing opportunity to launch innovative sponsorship platforms that delivered on business outcomes as well as achieved global recognition and served as best practice. Two examples of this are the launch of the 20 over cricket property called the Standard Bank Pro20 series to capture the youth market in South Africa. The property captured the hearts and minds of the South African market in general and the youth market in particular. Some of the innovations were a world first and ended up being adopted at the 20 over ICC Cricket World Cup and the Indian Premier League. We won awards for the innovations. On the rest of the continent, I had the opportunity to be part of the team that oversaw the sponsorship of the Africa Cup of Nations football property. With football being the other language of Africans, it was amazing to leverage it to build the Standard Bank and Stanbic Bank brand across the African continent. Truly special moments. What actually influenced your career choice as a brand marketing specialist and passion for African brands? It is interesting, because I almost stumbled across marketing much later on learning journey. Everyone wanted to be a lawyer, doctor, or an engineer, we never had marketing advertising people come to talk to us about it, but I have always been fascinated by people’s behavior and how people are influenced. So, I love the fact that our industry is about creating ideas and the power of ideas to help change lives. We have a significant role to play in creating value for customers and employees in the markets where we operate whilst also leading the growth of the businesses and brands that we serve, and that is what drives me today. I am optimistic and passionate about the continent. I really think that the story of Africa rising has gone on for too long. Now is the time to actually take our rightful place on the global marketing stage; this is the decade for Africa. Final words If you’re looking for a vibrant career where you will be challenged, stretched, developed and fulfilled, then certainly Brand Marketing is the profession to be in. A massive responsibility, but trust me, it is hugely rewarding both personally and professionally.

Thursday 19 March 2020

BUSINESS DAY

INTERVIEW

Nigeria not prepared for coronavirus crisis ahead – Atedo Peterside

In the wake of the coronavirus pandemic which has ravaged the global economy, Atedo Peterside, the founder of Stanbic IBTC Bank, in a Channels TV interview monitored by BusinessDay, speaks on the impact the outbreak would have on Nigeria.

hen you were invited for the Central Bank of Nigeria (CBN)’s roundtable, you declined. Were your reasons sufficient enough to boycott that meeting? If you look at the photographs of that meeting, it was a rich men’s club. It was not representative of Nigeria. And almost everyone on that roundtable knows my views on all issues. And I give my views every day, anytime and anywhere. The reason I chose not to go was to draw attention to an illegality that was being brought out, which was to banish and exile a Nigerian citizen. It is very clear in our laws that that is illegal. So I was trying to pass a message that even if you want to talk about investments, economy, etc, the first thing that investors cherish is their freedom. If you are sending a signal to them that their freedom is not guaranteed, why will they invest here? So the point I was making is, let’s have a holistic discussion where we discuss all the issues that worry investors and that concerns the economy, not narrow discussions on interest, loans, treasury bills, etc. Meanwhile the major thing that is worrying the economy is lack of growth. And that arises because there are no investments. So we have to do all those things that will boost investors’ confidence, including rule of law, guarantee the rights of citizens and their freedom. This is not the first time that I draw attention to the Nigerian government criticising citizens. I was brought out on the matter of Sowore, MKO Abiola when he was imprisoned and Vision 2010. So it is nothing new to me. Government should focus on the right thing and follow the rest of the world in respecting the law. The government has announced some packages to see how to mitigate the spread of coronavirus on the economy, part of which the CBN has said is the reductions of interest rates for intervention funds, stimulus packages, etc. How far do you think these decisions will go on the economy? Coronavirus is global but you have to understand why Nigeria is unique. There are four distinct reasons why our coronavirus

crisis could be worse than the rest. Number one, Nigeria has a very high population density; we are not like other countries where individuals are far apart from each other. When you have the disease, and you are close to others, you can transit it. Number two, the virus has led to less travel and movement, making people to demand less fuel to move around and that led to less demand on crude oil which is our number one revenue source, so at a time when every other country is talking about stimulus packages, talking about money to fight a virus, we are entering this same crisis with our revenue stream collapsing and disappearing. Number three, we have a fragile health structure, our ratio of doctors to a population is the worst in the world. Countries like Italy have a much better ratio. And number four, we talk about global supply chain disruption that could affect everybody. But hold on a second! Even before this, Apapa port, our biggest port complex, was already inefficient and log-jammed. So, any delays caused by global supply chain will be exacerbated that even if the essential things that we need land in our ports, we cannot bring them out speedily. So these are four unique reasons to know why the crisis will be worse for us. The first thing that is missing is an elite consensus; please note I did not say government. In many countries, it was an elite consensus that dragged government to begin to take actions in response. But to answer your question directly, the sum total economic measures that have been taken so far are as reassuring as someone that is standing in bar beach with www.businessday.ng

a bucket in his hand; a tighter wave is coming and it is assuring you that, don’t worry, you have a bucket in your hand, you will be ok. What this basically means is that in the worst case scenario, we could be dealing with the worst case scenario that any of us has never seen in our lives. And I worry because the measures

‘

My advice is that the federal, state, local government, entire business community, all social groups, the academia and intellectuals to try and put our brains together to fight the virus that the whole world is doing we have failed to embrace properly. One is social distancing. In Israel, they don’t have a gathering of more than 10 persons, it is illegal. In Lagos, people are travelling unavoidably in congested buses packed like sardines and if someone sneezes, the virus will spread. Even this self-isolation, we all have to go out there to enforce it. I suspect that people are in the Ebola mood because it never threatened oil when it occurred.

https://www.facebook.com/businessdayng

This coronavirus is the mother of all crises. You first have to believe that you are facing the mother of all crises before you leave everything else that you are doing and begin to think of measures. The measures we are talking about so far on the economic side are lagging within measures. Also one last comment on how ready we are. Some of these other countries are coming into this crisis on the economy fiscally buoyant. We are already borrowing massively and our revenue sources are drying up. So where are we going to get the money from if we face a serious crisis? Some countries are already talking about giving helicopter money, that means you will ask people to close down their businesses. You have to find some way for them to earn income. Some countries can close down shops and depend on online orders. Here, we have a very fragile online industry that is immature. So we have serious problems to address. So my advice is that the federal, state, local governments, entire business community, all social groups, the academia and intellectuals to try and put our brains together to fight the virus. What measure will you like the fiscal authorities to announce, so that when they take those steps to ban or resist people, they cushion people’s bottom-line, businesses and companies? Well, that is very complicated question and not an economic question but it concerns all of us. When you ask people to close their businesses and not travel, it is very difficult in the poor countries. They will turn to you and @Businessdayng

ask, if I don’t sell my wears in the market will you feed me? What I am trying to say is that the magnitude of the crisis will be such that the government will have to put into a bowl all the revenues that it has and also consider all the revenue that we are wasting. Can we afford to continue to waste those ones? Can we afford those things that we thought we could afford before? Can we afford those subsidies that we are still pursuing because those are where the largest sums of money were disappearing? So my point is that we need a broader discussion. The CBN does not control how much we spend on oil subsidy. We need a holistic discussion. And I believe that the head of the Economic Advisory Council of the government and others who have a holistic approach are welcome to ideas. Some of us are in contract with them. But my point is that the range of measures sounds like economic but they go far beyond that. Some of them are actually also bordered on individual freedoms that may have to be contained but sadly by a government at the federal or state level that has no resources to compensate people. What do you think the elites should do now so that we can come out of the woods quicker than imaginable? The reason I am on this programme is to help to achieve an elite consensus. I don’t work for the government but I can see a crisis arising. I am not taking about money elites but people who have ideas and knowledge in fighting this crisis in a holistic fashion. So, civil society groups, academics and Nigerians that have a contribution to make; we should encourage them to come out. And please when I talk about the elite consensus, I don’t mean in terms of economic power but in terms of ideas. For example, pastors or imams can take the lead by telling people to stay at home and not come for gatherings. So I mean people who can influence society to embrace social distancing. And this is the broad consensus that I am looking for. We have to embrace social distancing as best as we can. Even if some people don’t comply, there will be an improvement in reducing the spread of the virus. Government should be at the forefront to change our ways. But right now, sorry to say, we are not taking this crisis seriously enough.

Thursday 19 March 2020

BUSINESS DAY

news 5 new coronavirus cases force FG... Continued from page 1

at a briefing in Abuja on Wednesday. Of the five

L-R: Boss Mustapha, secretary to the government of the federation; Vice President Yemi Osinbajo, and President Muhammadu Buhari, during the Federal Executive Council Meeting at the Presidential Villa in Abuja, yesterday.

Hit by oil price collapse, Nigeria readies... Continued from page 1

of President Muhammadu

Buhari. The measures are meant to soothe an economy reeling from policy misalignment as well as the collapse in global oil prices, according to sources familiar with the matter. On Tuesday, the president met with his economic advisory council chaired by the well-respected economist Doyin Salami. Also present at the meeting were the vice president, the governor of the central bank as well as the finance minister. Today, there will be a crucial meeting of the National Economic Council chaired by Vice President Yemi Osinbajo at which state governors will be briefed on the urgent steps to be taken to avert a collapse of the Nigerian economy. The government already announced the decision to adjust its budget oil price benchmark Wednesday with the announcement of other decisions to be made in the coming days, according to the sources. “The reforms are well overdue and seem to have been forced down the throat of the government by the abrupt plunge in oil prices,” a senior investment banker said. For one, “the convergence in fx rates will be a welcome boost to the economy in terms of investment inflows as it offers better clarity around our exchange rate policy,” the person said. “Investors have long

clamoured for an end to the confusing multiple exchange rates for a long time.” The International Monetary Fund (IMF) had also urged an end to the practice to build investor confidence and unfreeze investment flows. As winds of a severe economic meltdown swirl around the world, leaders have come under intense pressure to strengthen national economies and offer relief to their people. But Nigeria appears to face an even more severe fallout given that its economic buffers are hugely depleted. “Nigeria’s economic buffers are non-existent or at best very weak,” said economist Keith Halloway, a senior researcher and investment analyst at London based Brentworth Research. “So the Nigerian economy is in a far more vulnerable position today than what you will find elsewhere.” Halloway added, “The solution to the problem in Nigeria will require significant reform of the economy to allow the country tap into the massive liquidity out there in the world. This cannot happen with the perception investors have of the way Nigeria headed and also how the country manages its currency.” A convergence of Nigeria’s exchange rates would imply higher allocations to the three tiers of government including the states and local governments at a time when

Petrol price cut signals way out of ... Continued from page 2

overregulation of the downstream oil sector. Chuks Nwani, an energy lawyer based in Lagos, said, “A drop in oil prices should naturally lead to lower pump price of fuel but the naira may yet be devalued. What will happen when the government factors in devaluation and sees it has to raise

prices again? That may create new problems.” Nwani said the cut in price is one way the government is managing the fallout of global fall in oil prices which has shrunk government revenues and threatened private businesses. The Nigerian National Petroleum Corporation (NNPC) sells crude and rewww.businessday.ng

revenues are constrained. Allocations have been made at N306 per dollar despite the market rate being much weaker at above N360. The securitisation of CBN loans to the Federal Government which surged to a 20year high of N4.4 trillion as at August 2019 will help repair the CBN’s troubled balance sheet which has taken a hit from the increased funding of the Federal Government via ways and means in response to lower revenues. Sources familiar with the matter say the loans will now be securitised and sold to private investors. The securities would be created and sold by the Debt Management Office (DMO). Demand for the securities is mostly anticipated to come from the pension funds and other non-bank local investors who have been banned from buying Open Market Operations (OMO) bills. The N4.4 trillion, which is the net sum of outstanding CBN overdrafts to the FG minus the government’s treasury single accounts (TSA) deposits with the CBN, went into plugging a higher-thanexpected government budget deficit in 2019 as well as some carry-over obligations from the last two years. As at the end of December 2018, the CBN had net financed the Federal Government to the tune of N400 billion, less than 10 percent of the recent figure. “This will help free up the CBN’s balance sheet and help it stay within the limits of the

CBN Act which caps how much the apex bank can lend to the Federal Government at 5 percent of revenues,” a senior banker who did not want to be quoted told BusinessDay. The third reform to reduce the oil price benchmark will likely reduce the N10.59 trillion 2020 budget by as much as 14 percent to N1.5 trillion and increase the budget deficit to over N3 trillion. The government’s response team which was chaired by Finance Minister Zainab Ahmed had briefed the cabinet meeting on the current state of the economy as a fall-out of the coronavirus pandemic and crash of crude oil price. A statement by the presidency on Tuesday said the PEAC had expressed concern over possible weakening economic growth as a result of the coronavirus and recommended the revision of the 2020 budget to prioritise spending on health care, infrastructure and basic needs. The Council had painted sobering scenarios of what could happen to the Nigerian economy if the Covid-19 pandemic lasted for too long. Nigeria, Africa’s biggest oil producer, relies on crude oil exports for more than half of government revenue and 80 percent of dollar earnings. The Council also forecast an oil glut, trade imbalance, drop in foreign reserves, and rise in unemployment and advised the government to curtail recurrent expenditure and mobilise private capital.

mits the value at the official rate of N306/$1. A devaluation of the naira may translate to further increase in the pump price. However, with a price template pegged at the international price of oil, the Nigerian government is signalling an intention to exit the costly fuel subsidy programme. Oil price recovery will test this intention. The Petroleum Products Pricing Regulatory Agency (PPPRA) stock data indicates

that Nigeria has 2.2 billion litres of petrol in its stock which is capable of lasting for 39 days. BusinessDay gathered from presidency sources that the approval for a cut in prices followed presentation by Timipre Sylva, minister of state for petroleum resources, to the Federal Executive Council (FEC) on Wednesday on the need to reduce the pump price following the global fall in oil price.

https://www.facebook.com/businessdayng

new positive cases, three arrived from the United States, while two came in from the United Kingdom. Following the discovery of the new cases, the Federal Government issued a travel ban on 13 countries, including China, Italy, Iran, South Korea, Spain, Japan, France, Germany, United States of America, Norway, United Kingdom, Netherlands and Switzerland. The restrictions, which will come into effect on March 21 and are expected to last for four weeks in the first instance, are part of Nigeria’s efforts to avoid the pitfalls that greeted late response of countries that now have high cases and wide spread of the virus which they are now battling to control, the government said. Boss Mustapha, secretary to the government of the federation and chairman of the Presidential Task Force on COVID-19, said the government was temporarily suspending the issuance of all visas on arrival. The Federal Government also ordered the immediate closure of all National Youth Corps Service (NYSC) orientation camps nationwide. The 2020 Batch A Stream One NYSC members arrived at the camp on March 10 and were expected to leave three weeks after. But Sunday Dare, minister of youth and sports development, on Wednesday said the NYSC members would be released to resume at their places of primary assignment. The closure was a precautionary measure on coronavirus, Dare said in a tweet. “Today across the country, the NYSC Orientation camps will be closed and Youth Corpers will be paid and sent to their places of primary assignment. This again is a precautionary measure on the part of the government to check the spread of COVID-19. The DG NYSC will provide details,” he tweeted. The NYSC management also informed of the closure on its Facebook wall, clarifying, however, that “no corps member or camp official has contracted the virus”. The government is also making plans to close schools nationwide, sources at the Ministry of Education told BusinessDay. Already, the West Afrca Examination Council (WAEC) has shifted the commencement date of its 2020 Senior School Certificate Examination (SSCE) from March 28 to April 24. The examination body was initially billed to kick-start this year’s SSCE with Practical Biology on March 28. “Series of meetings had @Businessdayng

being going on by stakeholders in the nation’s educational system with a view to closing all schools nationwide,” a senior Education Ministry official told BusinessDay in confidence on Wednesday. “The minister of education, the permanent secretary, directors, heads of parastatals in the ministry, as well as stakeholders and health experts had held meetings between Friday, March 13 and Tuesday, March 17, at the boardroom of the Federal Ministry of Education headquarters, Abuja. The meeting was unanimous on closing down all schools for now so as to prevent escalation of the dreaded disease to our schools nationwide,” the source said, pleading anonymity. It was also gathered that the ministry’s decision to close down schools had been forwarded to the presidency for ratification. “In a matter of days from now, presidency decision will be announced,” said the source. On its part, the Lagos State government has banned large religious gatherings of above 50 people for four weeks as a measure to check the spread of the coronavirus. Anofiu Elegushi, the state commissioner for home affair, who announced the measure on Wednesday, said it takes immediate effect. Elegushi said the decision was reached after extensive deliberations with religious leaders, including leadership of the Lagos chapter of the Christian Association of Nigeria (CAN) and Islamic leaders. In a communique after the deliberation, the commissioner said the decision was taken in the interest of Lagosians. The Ogun State government has also announced the immediate ban of all high-density gatherings that would bring together 50 or more persons in the same place, such as social clubs, halls, cinemas, night clubs, restaurants, cafes, and sport arenas. According to a statement signed and made available to journalists in Abeokuta on Wednesday by Kunle Somorin, chief press secretary to Ogun State governor, this measure would be in effect for the next 30 days in the first instance. The statement said the restriction has to be enforced without prejudice to people’s fundamental rights to association and movement, because safety of the people and their welfare are priorities that cannot be toyed with. It said the government would continue to engage all the stakeholders, including religious leaders, to sensitise the populace on the need to maintain social distancing and collective effort to combat the pandemic.

Thursday 19 March 2020

BUSINESS DAY

news

Fiscal, monetary limits mean Nigerian businesses, workers mostly on their own MICHAEL ANI, DIPO OLADEHINDE & SEGUN ADAMS

he Federal and S t a t e g ov e r n ments, as well as the Central Bank of Nigeria (CBN), are largely short of firepower in their battle to ward-off any impending economic turmoil arising from the coronavirus pandemic. Governments in other advanced and emerging countries have all swept into action, rolling out various fiscal stimulus that will complement those coming from the monetary side, to assist businesses in boosting output as well as household demand, as the global economy totters on the verge of sliding into a recession. Government fiscal stimulus in other countries The US is planning a $1 trillion fiscal stimulus plan that would put cash in the hands of Americans after the Federal Reserve on Sunday cut interest rate to near zero and launched a $700bn asset purchase program. Similarly, the Canadian government has announced an $82bn package to provide $27 billion in direct assistance to workers and families, as well as making $55 billion available in liquidity as part of efforts to support the economy. Poland also announced a package of around $52 billion while France announced a €45 billion / $48.8bn aid package for small businesses and Oman’s central bank said it is prepared to support the economy with $20.8 billion Nigerian’s still awaiting Buhari’s response For Africa’s largest economy, not much has been heard from the federal government, with the CBN’s taking up the duty of using monetary tools to do the heavy lifting. CBN Governor, Godwin Emefiele, Monday announced some policy measures that include a moratorium of one year on all principal repayments on CBN intervention loans, effective March 1, 2020, as well as interest rate reduction on all applicable CBN intervention facilities from nine per cent to five per cent per annum for one year effective March 1, 2020. President Buhari is yet to make an official statement like other leaders have done, regarding the government’s move to stimulate growth at a time in which the economic activities have almost been brought to a halt. The Federal government has only announced a cut in the price of petrol from N145

to N125 and has restricted flights coming in from about 13 high-risk countries. But analysts, as well as renowned economists who spoke to BusinessDay, says those are still not enough to cause the needed boost of output for businesses. This could imply that businesses operating in the country are left alone to survive in the wake of slow economic growth as well as weak consumer demand that has enveloped the country, without much fiscal push from the government. FG finances stretched to limit The Nigerian government appears to be more cashstrapped than ever, with the fall in oil prices which has further cut deep into the revenue into the country. Crude oil proceeds, which accounts for over 70 per cent of the government revenue, and 85 per cent of the country’s dollar earnings, has suffered greatly as the Pandemic outbreak of the coronavirus continues to spread across countries of the world. Brent crude which is the international benchmark for oil tumbled to $25.42 per barrel yesterday, its lowest level in 18 years. That is less than half the $57 in which Nigeria pegged its 2020 budget. It is also lower than the $28 levels in which oil traded in 2016 that made the country record fivequarters of negative growth. The federal government is almost handicapped as it appears it has little room to manoeuvre such as making a new borrowing plan or using (non-existent) buffers to engage in an expansionary plan to boost spending and output. In terms of debt stock, the Federal government alone has increased its borrowing by 54.7 per cent to N13.90 trillion as at September from N8.98 trillion in 2015. The Excess Crude Account (ECA), which could have stood as a fiscal buffer for the government has also been depleted by more than 96 per cent to $70 million from $2.07 billion, a level where it was in 2015. Dwindling oil prices has also made the governmentrun to the CBN for life support to the tune of over N4 trillion, a move it might not be able to replicate given that the apex bank’s balance sheet is almost stretched to breaking point. Businesses worst-off now than in 2015 The stock market shed 17.36 percent in 2015 following the decline in oil price, and extended the loss by 6.17 percent in 2016. www.businessday.ng

Federal Government Debt

Excess Crude Account FG recurrent

N2.62 tn

N8.98tn in 2015

N13.90tn in 2019

$2.07bn

2015

The debt increased by

54.7%

between 2015 and 2019

96.6%

State Debt

reduction between 2015 and 2019

N2.20tn in 2015

N4.04tn in 2019

Investors gained N120bn in 2015 but in dollar terms lost $1.26bn due to currency movement. By the end of 2016, investors lost N817bn or $3.2bn in the year. By sector, banking stocks were the worst hit with a year-to-date plunge of 23.59 percent in 2015 as investors priced in risk of bad loans given the high exposure of lenders to the Oil and Gas industry. The Consumer Goods shed 17.41 percent over demand and currency shock, and Pension stocks fell at similar rate. Also, Oil and Gas stocks plunged 6.2 percent while Industrial stock’s gained by 1.27 percent. By the end of 2016, Industrial Goods stocks lost 26.37 percent to end the year as the worst performing sector and Oil and Gas fell 12.31 to emerge second-worst. So far in 2020, investors have lost N1.82trn since March 9, just before Russia’s refusal to agree to OPEC+’s planned cut sent oil price in a downward spiralling. States’ Unsustainable Addiction to FAAC Handout

‘‘

Data compiled by BusinessDay shows that state governments on the average, rely on allocations from the federation account (FAAC) for virtually 86 per cent of their revenues

The debt increased by

83.42%

between 2015 and 2019

2020 budget

It’s not only the Federal government that is facing a tough time, but also Nigerian state governments majority of whom have also, over the last 45 years been unable to build economically viable entities and are now in a more precarious financial state, with the falling oil prices which have collapsed to its lowest levels since 2016. It is the norm that at the end of every month in Nigeria, commissioners of finance of the 36 states and their accountant-generals, evacuate their states and get domiciled in Abuja to await their monthly allocations from the national treasury. These allocations are the most viable source of income available to practically all the states. State governments get their revenue from two main sources. The first being the revenues generated internally by each state governments (IGR) and those received from the federal government when receipt from crude oil sales are shared (FAAC). These 36 states of the federation and the capital city could see their revenues come under intense pressure as the price of oil which accounts for the biggest chunk of their revenues, collapse. With lower allocations for February, some states will find balancing their budgets difficult. With no alternative means of income, will states require another bailout soon? Average FAAC allocation to state governors at 86% Data compiled by BusinessDay shows that state governments on the average, rely on allocations from the federation account (FAAC) for virtually 86 per cent of their revenues, a pointer to how vulnerable their finances would be in the wake of a collapse in oil prices. A decline in the revenue gotten from oil would invariably mean that state government would have less to spend. Bayelsa, Kebbi, Yobe most affected

https://www.facebook.com/businessdayng

$70m

N4.842 tn

2019

States like Bayelsa, Kebbi, Yobe, would have their finances hit hardest as they rely on FAAC for 98 per cent, and 97 per cent of their revenues respectively, while Katsina, Taraba and Bauchi follow next having exposed 96 per cent of their finances to the volatility that comes from oil. At the other end is Lagos and Ogun, the outliers, as the state’s finances are exposed to only 49 and 55 per cent to FAAC. “The FG can still find a way around the situation due to its sovereignty, as they can easily borrow from local markets due to low rates compared to the states government,” said Moses Hammed, a research analyst at financial services firm, Investment One. “For most of the states it would be a bad time for them as even tourist sector which should be a boost to the Internally Generated Revenue is affected due to the Coronavirus Pandemic,” Hammed said. Nigeria National Petroleum Corporation (NNPC) remitted a total of $7.29 billion to FAAC in 2016 despite oil settling at $28.9 in January 2016. However, things have gotten worse, as the oil price is trading at $27.73, a development that points how weak the finances of the government would be, a situation that has made the government call for a review of the budget. “Whatever happens to the federal government is what happens to the state but just at a varying degree. While the state’s revenue are limited to largely Payee and other smaller levy, the FG has the benefit of generating revenue from not just oil but also from Company’s Income Tax (CIT), education taxes, custom duties and other income,” said Oluwapelumi Joseph, head of investor relations at africapractice, a strategic advisory firm, operating at the nexus of industry and government. @Businessdayng

According to Joseph, the biggest string for most of the states is actually their people’s cost, and with the increase in minimum wage to N30, 000, it becomes a challenge as they would not be unable to fund it. “I see a backlog of salary payment which would lead to a contraction in economic demand and that would depend on whether the FG would be able to bail them out as we saw in the past,” Joseph said. Minimum wage payment under threat A plunge in FAAC would hamper states ability to fund their budget and pay salaries, worsen states debt already at uncomfortable thresholds and increase the poverty level in the country. It would also mean an inability to meet up with the 67 per cent increase in the new minimum wage to N30,000 which they agreed with the organized labour group. As at September last year, 14 states owed more than N100bn each according to Debt Management Office data which showed sub-national debt at N4trn (compared to their estimated IGR+FAAC of N5.73trn in 2019). Using annualized revenue for states, our data shows only Sokoto, Anambra, Jigawa, Delta, Ebonyi, Gombe, Bayelsa and Yobe states have their total debt- revenue ratios less than 100 per cent. A debt-revenue ratio of less than 100 per cent means that a state can conveniently offset its debts from its current income stream. For the FG, it might mean another round of state bailout to prevent the collapse of their respective economies. Last year the FG began deductions from states FACC allocation to recover its N614bn national budget support loan facility it gave to 36 states of the federation as bail-out in 2018 to enable them to meet their obligations after months of owing workers’ salaries and pension.

Thursday 19 March 2020

BUSINESS DAY

news

Nigeria can achieve 1m mobile insurance annually – Jim Ovia BALA AUGIE

obile insurance, a new product launched by Zenith Insurance and Prudential Zenith Life Insurance, will help 1 million people take a cover through the mobile phone yearly, according to Jim Ovia, chairman/founder of Zentih Bank plc. “Some people think it will take 40 years to write traditional insurance for one person, but with this product it can be done in one year,” Ovia said, noting, “We expect this to be the game changer and definitely it will be.” The chairman and founder of the largest lender by profit in Africa’s largest economy, while addressing audience at the launch of Mobile Insurance in Lagos, said no country could develop without bringing banking service closer to the people and that insurance was a powerful tool to pull people out of poverty. The country’s financial inclu-

sion rate stood at 63.2 percent in 2018, according to The Central Bank of Nigeria’s (CBN) 2018 Annual Report on the National Financial Inclusion Strategy Implementation. The CBN said the figure showed a marginal increase of 4.8 percent from 58.4 percent in 2016 to 63.2 percent in 2018. Nigeria’s insurance penetration is less than 1 percent, which is one of the lowest in Sub Saharan Africa as poor regulations, slow growing economy, and apathy towards insurance continues to undermine the industry. Over 50 percent of a population of 200 million live below $1.98 while unemployment rate is at an all-time high of 23 percent. “As we adopt digital technology, we are very optimistic millions of Nigerians will embrace the product,” said Keninde Aborishade, CEO of Zenith General Insurance Limited.

Education for the handicapped suffers neglect Mark Mayah

ducation for the handicapped, despite its entrenchment in Section (8) of the National Policy onEducation,hascontinuedtobe a neglected arm of education in Nigeria, BusinessDay Education research has shown. Outofabout5.3millionhandicapped children of school-age throughout the country, only about 70,000 of them are enjoying any form of special education while about 5.23 million handicapped still require such education. Data from the Special Education Unit (SEU) of the Federal MinistryofEducationindicatethat many states of the federation and Abuja have not shown much interest in the education of the

… as 5.2m retarded children out of school handicapped. A statistical study carried out by the unit in 2018 states in part: ‘’Special education in Nigeria may yet commence the necessary metamorphosis towards rationalisation of objectives and harmonisation of modalities. ‘’Thiswillbeachievedthrough Nationalworkshopsandseminars that come out with innovative scientific and grassroot-oriented guidelines for the coordination of special education development in Nigeria. ‘’It is hoped that the Joint Consultative committee will marry the different implementational approaches as well as the varying socio - religion - cultural thoughts in Nigeria into the long - sought - for realistic special education guidelines. ‘’

Education for the handicapped, apart from the apparent apathy of the supposed implementers, suffers lack of uniform guidelines on teacher/pupil ratio, our research also shows. It was found out that whereas in some states, the teacher/pupil ratio stood at 1:1, others it was up to 1:50, 1:30, and 1:25. Stakeholders in the Education sector as well as affected parents, however, urged the government to ‘’redouble efforts to revitalise primary education in the country through the improvement of the learning environment, the provision of more books and employment of additional and qualified teachers. It will be necessary to look into the plight of handicapped children of School age.’’ A senior official at the Federal

Ministry of Education, who didn’t want his name in print, said, ‘’The situation is a worrisome trend. There is no commitment on the partofourpolicymakers.Governmentmakepronouncementsand that is finality. ‘’Three retarded children are in my family but I had to enrol them in private school because the nation’s education authority pays lip services period. ‘’ Efforts by our correspondent to reach Education Minister, Adamu Adamu on phone proved abortive, as his phone ranged severally without response. However, the Nigerian constitution guarantees the right of education at least up to primary school level for all Nigerian children, irrespective of tribe, religion and natural endowment.

Aladumo School wins Spelling Bee the 5th time

ichelle Michael-Orwu of Aladumo International School has emerged the 2020 winner of the Rotary Club of Trans-Amadi Spelling Bee competition. The Grade 6 pupil won the competition after several stages that saw 975 pupils from 325 primary schools across Rivers State participated. Aladumo International School made history with her pupil emerging winner of the competition for the fifth consecutive year. All three participants

from Aladumo School qualified for the finale where Michelle Dakare and Ojiezele Anegbode dropped at the 17th and 19th rounds, taking the sixth and fourth positions, respectively. Determined and focused all through the competition, Michelle Michael-Orwu put up a strong spirited fight and continued valiantly to the 23rd round, spelling the word of her contender ICHTHYOPHAGIST and her winning word, INTERREGNUM to be crowned Queen Bee, 2020.

Edo intensifies campaign to ward off coronavirus

do State government has intensified efforts to contain the spread of coronavirus (COVID-19) in the state by mobilising health teams on aggressive screening of travellers coming into the state from different entry points, especially the Benin Airport and motor parks. In a statement, special adviser to the governor on media and communication strategy, Crusoe Osagie said the state government had continued to monitor the situation in the country and across the world and was actively updating its response mechanism to tackle the outbreak. According to Osagie, “We are keeping a close watch on the developments with coronavirus across the country, especially with the five newly confirmed cases. We have intensified efforts to ensure that we ward off the virus and ensure we are ready to address any eventuality. We do not want to leave any stone unturned as the relevant medical facilities for the management of any outbreak in the state are ready. We have built the expertise overtime with the management of the Lassa Fever outbreak. “To ensure that we have the right coverage to contain the outbreak, the state government has partnered with different stakeholders in the health sector and also liaised closely with the Health Departments in the Local Government Areas, to ensure that any suspected case is tested

promptly. “The presence of the Irrua Specialist Teaching Hospital (ISTH) in the state is helpful, as we can easily test for the virus at the World Health Organisation (WHO) designated laboratory in ISTH.” On how to reduce the risk of spread of coronavirus, the governor’s aide advised, “Members of the public should to wash their hands regularly with soap under running water; cover the mouth and nose properly with a handkerchief or tissue paper when sneezing and/or coughing. You may also cough into your elbow if a handkerchief is not available. “Avoid close contact with anyone showing symptoms of respiratory illness such as coughing and sneezing; avoid self-medication, report to the nearest health facility when you experience any of the abovementioned symptoms. Healthcare workers are always advised to observe standard infection prevention and control measures when attending to patients and take a travel history,” he added.

www.businessday.ng

L-R: Pattison Boleigha, chief compliance officer, Access Bank; Ben Afudego, advisory leader, EY West Africa; Aisha Ahmad, CBN deputy governor, Financial Systems Stability Directorate; Benson Uwheru, partner, Risk Advisory Services Partner, EY; Adeyemi Ogunmoyela, chief compliance office, First Bank of Nigeria, and Paul Asiemo, head, Risk Analytics and Reporting, Access Bank, at a breakfast session on ‘Building Trust in the Banking sector for the next decade’, organised by EY Nigeria in Lagos.

Lagos to leverage ‘Greater Lagos Regatta and Festival’ for economic growth SEYI JOHN SALAU

he Greater Lagos Regatta and Festival (TGLARAF) will accelerate the economic growth of Lagos State by heightening investors’ interests in the potentials of the state, the organisers have said. The objective of the TGLARAF is very simple, focusing on growth and not meant to have another party that will be forgotten till the next one. “We saw an opportunity to do what will help Lagos beyond just the entertainment and to see how we can combine what nobody else has done before. We have put together a conference, which centres on the prospect, growth and opportunities in Lagos and combine that with the regatta and festival. So, this provides a wonderful opportunity to combine these elements and have a greater impact,” said Ivor Ekpe, the principal consultant, Gradient Hill Limited. At a press conference to

announce the event on Tuesday, Ivor Ekpe, CEO of Gradient Hill Limited, organiser of the event, said TG-LARAF was conceived to combine elements that have never been put together before to draw attention to the economic prospects of the state. The event, being organised in partnership with the Lagos State Ministry of Tourism, Arts and Culture, is scheduled to hold from April 10-12. It will open with a conference tagged “Greater Lagos Inland Waterways Optimisation and Business Conference.” The conference, slated to hold at the Eko Atlantic City, will be addressed by experts in tourism/hospitality, finance, insurance, maritime as well as arts and culture sectors, who are expected to come up with ways on how best to harness water assets of the state to accelerate its economic growth. The same day, the event will be formally declared open at an elaborate ceremony by the Lagos State governor, Babajide Sanwo-Olu.

https://www.facebook.com/businessdayng

Covid-19: Facebook earmarks $100m to keep small businesses alive Jumoke Akiyode-Lawanson

s the Covid-19 outbreak escalates, Facebook has embarked on different measures to keep people safe by way of stopping misinformation and supporting global health experts. In addition, it announced that it is investing $100 million to help 30,000 small businesses in over 30 countries where it operates. “We’ve listened to small businesses to understand how we can best help them. We’ve heard loud and clear that financial support could enable them to keep the lights on and pay people who can’t come to work. That’s why today I’m announcing that Facebook is investing $100 million to help 30,000 small businesses in over 30 countries where our employees live and work. “We also want to make it easier for businesses everywhere to find help and receive training and support from our teams. We’ve made our Business Hub [Facebook.com/resource]—a resource for Facebook employees and health experts—readily avail@Businessdayng

able for all. We are also creating new virtual training to support businesses operating in this new and unsettling environment,” the company said in a statement. According to the company, its focus has always been to keep people safe and informed by making sure everyone has accurate information. “In recent weeks, we have seen inspiring examples of individuals and groups helping each other. People across the globe are stepping up, rising to the enormous challenge in front of us. We want to do our part too. Small businesses are the heartbeat of our communities, and many of the people who run these businesses are heavily affected by the crisis – especially as more and more people sensibly stay home. The longer the crisis goes on, the greater the risk to small businesses and to the livelihoods of their owners and employees,” Facebook said. Teams across the company are working every day to help businesses, and are looking at additional ways to host virtual trainings – and will have more to share in the coming weeks.

Thursday 19 March 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 19 March 2020

BUSINESS DAY

news

Nigeria’s credit bureau penetration at 14% lowest among peers Hope Moses-Ashike

igeria’s credit bureau penetration in 2019 was 14 percent, compared with 30 percent in Kenya, 25 percent in Morocco, 79 percent in Brazil and 83 percent in Malaysia. “Of course, credit bureau penetration will certainly be low where credit to the private sector is low. It is just an expression of the fact that only few consumers and businesses have access to formal credit facility,” Tunde Popoola, managing director/CEO, CRC Credit Bureau said on Wednesday. According to Popoola, the presence of credit bureau mitigates the pains of access to credit, especially for consumers and small businesses. The World Bank in a study of 5,000 firms in 51 countries conducted in 2003 revealed that the percentage of small businesses reporting high financing constraints reduced from 49 percent to 27 percent with the introduction of credit

bureau. The same study also confirmed that the probability of obtaining a bank loan by small firms increased from 28 percent to 40 percent with the introduction of credit bureau in a country. Speaking at a bi-monthly forum organised by Finance Correspondents Association of Nigeria, he said the presence of credit bureaus promotes strong credit systems, and a strong credit system promotes a productive economy by encouraging credit to SMEs and enhancing quality of life of people through credit to consumers. A strong credit system normally and usually has a strong credit risk management system (CRMS) to fill the trust gap with reliable information. The rate of low credit penetration in Nigeria despite all the policies of government and the presence of credit infrastructure that have helped other economies to deepen access to credit, he said was an indication that there were some fundamental challenges that required ruthless and focused solutions.

Explosion: FG to work with Lagos on resettlement of victims, relief materials ... 276 displaced, 170 houses, 40 vehicles destroyed as victims count losses Joshua Bassey

he Federal Government says it will work with Lagos State government towards the resettlement of victims of last Sunday’s explosion in Abule-Ado area of the state, which left over 20 dead and several others injured. The assessment of the extent of damage so far carried out by the Lagos State Emergency Management Authority (LASEMA) as at Wednesday morning, showed that 276 people were displaced, 170 buildings, 40 cars and three articulated vehicles were destroyed in the aftermath of the explosion. A breakdown of the 170 buildings showed they involved five schools, three churches, one hotel, one shopping mall, while the rest are residential. A further breakdown showed 93 buildings mildly affected, 44 moderately affected and 33 severely affected.

Sadiya Umar Farouk, minister of Disaster Management and Humanitarian Services, who flew into Lagos from Abuja and arrived the scene of the disaster at about 1:25pm, said the Federal Government would join hands with Lagos State to work out modalities for resettling the victims as well as dig into the cause(s) of the explosion to prevent a future occurrence. “I am here on behalf of President Muhammadu Buhari to commiserate with the government and people of Lagos State, as well as sympathise with the families who lost their loved ones in this unfortunate disaster. “The Federal Government will be part of the investigative committee and develop a strategic framework towards rebuilding these structures,” said Farouk. According to her, the National Emergency Management Authority (NEMA), whose DirectorGeneral was in the minister’s entourage, would also be providing

relief including food and non-food items to the victims. Obafemi Hamzat, Lagos State deputy governor, who was also at the scene and conducted the minister around commended the efforts of the various emergency responders and security agencies, who have worked hard since Sunday to bring calm to the area. Hamzat, who is the chairman of the investigative committee set up on Monday by Governor Babajide Sanwo-Olu, said that the committee was already gathering facts and data to aid its work. He thanked the Federal Government for sending the minister and appealed to the people loitering around the disaster site to move out to enable the evacuation team get to work. Femi Oke-Osayintolu, Managing Director of LASEMA, said enumeration was still ongoing. Meanwhile, victims of the explosion have continued to count their losses just as some whose

houses are partially damaged were seen making arrangements to fix their homes to enable them return. Peter Okuofo, a brother to Festus Oyemere, who was killed in the explosion, said his deceased brother whose house was severely damaged, was to have his child dedication that Sunday, when he met his untimely death. Okuofo, who was in the house to move out his late brother’s damaged Corolla Toyota car, explained that Oyemere, who was outside when the explosion rocked the area, had rushed back to rescue his sick mother-in-law, when concrete slabs in the building collapsed on his head and killed him instantly. However, the mother-in-law and other members of the family escaped the horror. BusinessDay observed that foods already prepared for child dedication, including jollof rice still littered the house and the immediate surroundings.

Mandilas Group deepens fight against coronavirus with donation to NCDC MIKE OCHONMA

s part of the fight to combat the ravaging coronavirus pandemic, Mandilas Group Limited has donated sets of Carrier airconditioners to the Nigeria Centre for Disease Control (NCDC). The donation was to assist in the fight against the disease in Nigeria and to make the isolation centre in Lagos conducive for the purpose. The donation by the Mandilas team was received on behalf of the director-general, NCDC, by Everistus Oniaku, head of Emergency Operations Centre of NCDC, and Olajumoke Babatunde, deputy director, Central Public Health Laboratory, NCDC.

While commending Mandilas for the gesture and applauding the team for their pro-activeness, Oriaku called on other corporate organisations to do the same. Mandilas is a foremost brand in the Nigerian auto and cooling business terrain and the sole franchise distributor of Carrier residential and industrial air-conditioners in Nigeria. Carrier is the pioneer air-conditioner brand in the world with unrivalled quality and performance in the industry. The company will be celebrating its 70th anniversary in May, and is totally committed to improving the lives of all Nigerians. The initiative is one of the CSR efforts by Mandilas towards giving back to Nigeria.

NFF shuts down all football activities for four weeks Anthony Nlebem

he Nigeria Football Federation (NFF) has announced the cessation of all forms of football activities in the country for the next four weeks, as a result of the global coronavirus pandemic. According to the countr y’s football governing body, the shutdown affects all on-field activities - the various National Teams, the Nigeria Professional Football League, the other Leagues, youth football programmes, and even street football. President of the NFF, Amaju Melvin Pinnick, said the cessation would be for

four weeks after which the situation would be reviewed in line with events and trends worldwide. He also advised all members of the football family to observe the various safety precautions and conduct as advised by the Federal Ministry of Health and the Nigeria Centre for Disease Control, such as hand-washing, the use of sanitizers and social distancing. Pinnick also stated that the only football activity that will be permitted is the work of the NFF investigation committee into the death of Chineme Martins, which was inaugurated yesterday in Benin City and will submit its report within the next 10 days. www.businessday.ng

L-R: Enorbong Effiong, Commander, 107 Air Maritime Group, Nigerian Air Force (NAF); Godwin Obaseki, governor, Edo State, and Ayoola Ajala, Edo State deputy commissioner of police, during a press briefing after the state monthly security council meeting, at the Government House, in Benin City, yesterday.

‘Manufacturers’ inability to study consumer taste, mentality kills industries in Nigeria’ RAZAQ AYINLA, Abeokuta

ormer director of the Consumer Protection Council, Olatunde Oluwatola, has revealed that a very large number of manufacturing and service-based companies are dying in Nigeria and Africa since consumer taste and mentality have not been studied and understood by producers since sustainable consumers couldn’t be guaranteed in such a circumstance. The former director also noted that sharp practices by manufacturersandservicesprovidersintermsof value and quality of goods supplied and services rendered to the consumers are negatively impacting on demandsandsuppliesofgoodsand services, and are capable of demarketing such brands, hence, brands and companies are fast dying. Speaking at a conference organised by the Consumer Protection Advocacy Initiative (CPAI) in Abeokuta in recognition of 2020 World Consumer Rights Day on Monday, Oluwatola said series

… Ogun Assembly pledges to enforce law on consumer protection of unwarranted sharp practices and substandard products were ongoing in almost every sector of the country, which result in sudden closure of many companies, loss of employment and revenue. While commenting on the theme of event tagged, “Sustainable Consumer: The Roles of Stakeholders,” Oluwatola said until the right steps were taken to curb the sharp practices within the manufacturing and service-based industries in terms of quality and value of goods and services offered for sales through implementation of Consumer Protection Act of 2004, goods and services produced in Nigeria might not compete favourably with the imported ones. “Simply put, sustainable consumption is defined as the consumption of goods and services that have minimal impact upon the environment and are socially equitable and economically viable whilst meeting the basic needs of

https://www.facebook.com/businessdayng

humans, worldwide. “Sustainable consumption targets everyone, across all sectors and all nations, from the individual to governments and multinational conglomerates. Sustainable consumptionhasalsobeendescribedas the use of products and services in a waythatminimisestheimpactonthe environment, so that human needs canbemetnotonlyinthepresentbut also for future generations. “The aim of sustainable consumption is to increase resource efficiency and fair trade while helping to alleviate poverty and enable everyone to enjoy a good quality of life with access to food, water, energy, and more”, he said. Ola Animasahun, head of Advocacy, CPAI, who co-convened the event, said “enough of being short-changed in this land, we can’t continue to spend our hard-earned money on substandard goods and services. Thank God there is an Act at Federal level on the Consumer @Businessdayng

Protection and I hope the law will be domesticated in Ogun State.” Responding, the speaker of Ogun State House of Assembly, Olakunle Oluomo, who was the special guest of honour, decried increasing level of sharp practices and deliberate sales of substandard products, saying it was high time State Houses of Assembly passed laws on the Consumer Protection and implement the already established Consumer Protection Act of 2004topreventNigerianconsumers from being further short-changed. Oluomo, who assured the gathering and all residents of Ogun State where most of the goods manufacturedinNigeriacomefrom,said,“As Legislative Arm of Government in Ogun state, we shall make effort to domesticate the law on Consumer Protection in Ogun state and I hope that the Governor will assent to it, I want to appreciate the Group that did this and I will say count me in for it.”

Thursday 19 March 2020

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

Joe Biden wins Florida, Illinois and Arizona primaries Former US vice-president’s triumph puts pressure on Bernie Sanders to exit Democratic race Lauren Fedor

oe Biden swept the Democratic presidential primaries in Florida, Illinois and Arizona on Tuesday, giving him an overwhelming lead in the race to take on Donald Trump in November and putting pressure on rival Bernie Sanders to exit the race. Democrats voted in the three US states even as public health officials clamped down on large gatherings and encouraged Americans to stay at home to prevent the transmission of coronavirus. With 99 per cent of precincts reporting in Florida, Mr Biden had 62 per cent of the vote, compared with 23 per cent for Mr Sanders. In Illinois, with 96 per cent of precincts reporting, Mr Biden led 60 per cent to 36 per cent. The Associated Press projected Mr Biden would also win Arizona, on a 13-point lead over Mr Sanders’ 30 per cent of the vote, with 41 per cent of precincts reporting. Meanwhile, Mr Trump secured enough delegates to seal the Republican nomination. In a reflection of the changes to daily life spurred by coronavirus, Mr Biden thanked supporters in an address from his home in Wilmington, Delaware, rather than at a rally. Standing alone in front of American flags, Mr Biden struck a sombre tone, thanking poll workers and health officials for their efforts, and saying: “It’s important for us to get through this crisis, protecting both our public health and our democracy.” The former US vice-president’s strong performance at the ballot box will bolster calls from some Democrats for Mr Sanders to concede and find a way of uniting his coalition of predominantly younger voters behind Mr Biden ahead of what is certain to be a bitterly fought general election.

“Senator Sanders and I may disagree on tactics, but we share a common vision,” Mr Biden said, before directly addressing his rival’s supporters. “Let me say especially to the young voters who have been inspired by Senator Sanders: I hear you,” Mr Biden said. “I know what’s at stake, I know what we have to do. Our goal as a campaign and my goal as a candidate for president is to unify the party and then unify this nation.” Mr Sanders live-streamed remarks on the coronavirus earlier in the evening, when polls were still open, but was not expected to make further public comments on Tuesday night. Mr Biden’s victories on Tuesday night came one week after he secured key wins over Mr Sanders in five states: Michigan, Mississippi, Mis-

souri, Idaho and Washington. Despite disappointing finishes in the early voting states of Iowa, New Hampshire and Nevada, Mr Biden re-energised his campaign late last month with a nearly 30-point victory in South Carolina, which propelled him to a string of wins on “Super Tuesday” on March 3 and again last week. He currently leads Mr Sanders in the delegate count with 1,147 delegates, compared with the US senator from Vermont’s 861, according to the Associated Press. A candidate needs 1,991 delegates to secure the party’s presidential nomination. Mr Biden, 77, a moderate, also maintains a significant lead over Mr Sanders, a self-described Democratic socialist, in nationwide opinion polls, commanding 56 per cent of support among likely Democratic voters

compared with Mr Sanders’ 35 per cent, according to the latest RealClearPolitics average. Mr Biden, who was vice-president for eight years under Barack Obama, has enjoyed overwhelming support from African-American voters. While fears of coronavirus prevented traditional exit polling on Tuesday, telephone polling of likely primary voters in Florida and Illinois showed Mr Biden won 75 per cent of AfricanAmerican voters in Florida, and 70 per cent in Illinois. But Mr Biden has also managed to build a diverse coalition that includes centrist white voters in suburban areas, whose backing was key to Democrats’ success in the 2018 midterm elections, when the party regained control of the House of Representatives.

He has staked his campaign in part on his ability to win over moderates and carry the Democrats to success in “down ballot” congressional, state and local races in November. Mr Sanders, 78, has argued that he is better positioned to energise younger voters and increase turnout. In a televised debate on Sunday night, held in a CNN studio in Washington DC with no live audience in an effort to prevent the spread of coronavirus, Mr Sanders argued that while Mr Biden was leading in the delegate count, his campaign was winning the “ideological” and “generational” struggle. “If I lose this thing, Joe wins, Joe, I will be there for you,” said Mr Sanders. “But I have my doubts about how you win a general election against Trump — who will be a very, very tough opponent — unless you have energy, excitement [and] the largest voter turnout in history.” The latest RealClearPolitics polling average shows voters favour Mr Biden over Mr Trump by more than a six-point margin, and favour Mr Sanders over Mr Trump by five points. Ohio had also been scheduled to hold a primary on Tuesday, but the state’s Republican governor, Mike DeWine, ordered the closing of all polling stations late on Monday, citing the “unacceptable health risk” that coronavirus posed to poll workers and voters. Primaries due to be held in Louisiana, Georgia, Kentucky and Maryland in March and April have also been postponed. Tom Perez, chairman of the Democratic National Committee, said on Tuesday that the remaining primary states should make voting “easier and safer” by using mail-in ballots and expanding in-person voting hours to reduce queues.

Government bonds buckle as investors dump haven assets for cash Wall Street set for losses as fund managers worry that antivirus measures are inadequate

Tommy Stubbington Philip Georgiadis, Hudson Lockett, and Leo Lewis

overnment bond prices around the world sagged along with stock markets on Wednesday, in a sign that even assets typically seen as havens are buckling under the pressure of the coronavirus pandemic. Bond yields in the US and Europe rose to their highest levels in weeks as fund managers under pressure to return cash to investors were forced to dump their most liquid holdings, according to traders. Yields move in the opposite direction to prices. “This is fire-selling of liquid assets by those who need to meet redemptions,” said Mike Riddell, a portfolio manager at Allianz Global Investors. “A lot of people need cash and they’re liquidating the only thing that they can.” The 10-year US Treasury yield surged by 0.2 percentage points to 1.19

per cent, its highest in nearly a month. Germany’s 10-year yield climbed sharply to minus 0.24 per cent, the highest in two months, while UK 10-year yields leapt to 0.74 per cent. Stocks were weaker almost across the board, as governments’ efforts to shield economies from the impact of coronavirus failed to provide much comfort to investors. The pressure was even more intense in riskier eurozone government bonds. Italy’s 10-year yield surged to 2.78 per cent, the highest in more than a year. As recently as early March, Italy was able to borrow for a decade at roughly 1 per cent. Investors said that the prospect of a big increase in bond issuance in the US and Europe to fund efforts to tackle the health crisis was further weighing on bond markets. But the absence of any flight to assets normally considered safe, amid a renewed exodus from risky assets, suggested forced selling. Sterling also slumped under $1.20 — a level it has not breached consistently www.businessday.ng

since the 1980s. “It’s not necessarily something that makes economic sense,” said Peter Schaffrik, global macro strategist at RBC Capital Markets. “It’s just investors doing what they need to do.” London’s FTSE 100 deepened its declines through the trading day to fall nearly 5 per cent a new wave of concerns over the global economy snuffed out a brief market rally. The losses were spread across Europe, as in Frankfurt the Dax slid nearly 6 per cent per cent and in Paris the Cac 40 was down by a similar margin. Futures trading suggested that selling would resume on Wall Street on Wednesday with contracts for the S&P 500 dropping 3.7 per cent. The index had rebounded 6 per cent on Tuesday in a volatile US trading session as the Federal Reserve unveiled the latest in a series of support measures and the White House opened talks with Congress on a $1tn fiscal stimulus package. Oil prices tumbled, as US bench-

https://www.facebook.com/businessdayng

mark WTI crude hit a 17-year low just above $25 a barrel, with Brent falling towards $27 a barrel. “The trajectories of Covid-19 are likely being contained in Europe but not in a complacent US and the economic damage is severe,” said Sebastien Galy, senior macro strategist at Nordea Asset Management. Governments this week have rolled out big initiatives designed to cushion the blow from coronavirus, which has caused an economic standstill in parts of Europe, Asia and the US. But US Treasury secretary Steven Mnuchin warned late on Tuesday that the pandemic could send US unemployment to as high as 20 per cent if Congress does not come up with further measures to boost the economy. “The jury is still out on whether these measures will help stabilise financial markets,” said Michael Strobaek, chief investment officer at Credit Suisse, who added that investors should stay on the sidelines. @Businessdayng

In volatile trading in Asia-Pacific on Wednesday, Australia’s S&P/ASX 200 slid 4.8 per cent as Scott Morrison, prime minister, warned that the crisis could disrupt life in the country for up to six months. Hong Kong’s Hang Seng index fell 4.2 per cent while China’s CSI 300 slipped 2 per cent. The Japanese yen gained ground as stocks sold off, rising 0.3 per cent to ¥107.3. Traders in Tokyo and Hong Kong said they were treating all moves with caution given that correlation across global markets was at its highest in a decade. “The markets are seeing real signs of government and central bank stimulus and that was always eventually going to get a response. The issue you have, though, is that nobody is taking a longterm view of this market,” said one Tokyo-based trader. “My hedge fund clients are basically turning into daytraders because nobody wants to run a big book overnight.”

Thursday 19 March 2020

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

SoftBank warns it could back out of WeWork stock deal Japanese group promised to purchase $3bn in shares as part of office provider’s rescue Eric Platt, James Fontanella-Khan and Andrew Edgecliffe-Johnson

oftBank has warned it could withdraw from a $3bn purchase of shares in WeWork, the lossmaking office space provider that it rescued late last year as the company was staring down insolvency, according to four people briefed on the matter. The Japanese telecoms-totechnology group notified WeWork investors, which include the group’s co-founder Adam Neumann and venture capital firm Benchmark Capital, that regulatory investigations into the company could let it back out of its planned share purchases. US securities regulators in Washington have been scrutinising WeWork and how it presented its financials and valuation to investors and employees, people with knowledge of the matter said. SoftBank had told investors it was planning to complete the $3bn share purchase around April 1, after it received signoff from antitrust authorities. Mr Neumann was allowed to tender WeWork stock worth as much as $970m in the offering as part of a deal the co-founder struck when he agreed to give up control of the property company to SoftBank. The Japanese group may still go ahead with the stock purchas-

Masayoshi Son, chairman and chief executive, in November after SoftBank disclosed the damage from its WeWork investment that led to the Japanese group’s first quarterly loss in 14 years © Bloomberg

es at a later date and will update investors again before April, one of the people added. SoftBank, which was set to own roughly 78 per cent of WeWork after it completed the tender offer, is still contractually obliged to finance a $3.3bn debt package it previously agreed to fund as part of the rescue package. However, it is unclear if SoftBank will attempt to rehash the entire rescue agreement, which could open the door to litigation between the two companies, investors and Mr Neumann. One person close to the Japanese group said that SoftBank is still committed to its investment

in WeWork and does not face any financing issues in supporting the property company. The global economic shock triggered by the coronavirus pandemic has raised stark questions about the outlook for all commercial property companies, and in particular for coworking providers such as WeWork. The related slide in stock markets around the world has also dragged down SoftBank’s stock by roughly 38 per cent in the past month — a fall that accelerated on Wednesday after the credit rating agency S&P Global cut its outlook on the company, send-

ing the stock down as much as 12 per cent in Tokyo. WeWork and SoftBank declined to comment. Two lawyers who have drafted similar agreements to the one that SoftBank signed with WeWork said it would be difficult for the Japanese company to walk away from the deal it reached with the office rental lessor following its failed stock market listing last year. Coronavirus business update How is coronavirus taking its toll on markets, business, and our everyday lives and workplaces? Stay briefed with our coronavirus newsletter.

Sign up here WeWork’s business would need to be affected in a specific way to allow SoftBank to change the terms of its tender offer, said one of the lawyers, who asked not to be named because they were not authorised to discuss client matters publicly. SoftBank agreed in October to save WeWork with a multibillion-dollar rescue package after the company aborted its hotly anticipated initial public offering. The company’s decline last year captivated the corporate world; in a matter of months its valuation plummeted from $47bn to $8bn. SoftBank agreed to lend Mr Neumann more than $400m to replace a loan he had defaulted on and pay him a $185m consulting fee as part of the emergency bailout. As part of the tender, the Japanese group had planned to purchase shares at $19.19 each, a price that would have nonetheless left most WeWork employees with stock options underwater. WeWork has already received a $1.5bn cash injection from SoftBank, sorely needed capital as executives internally fretted over a potential bankruptcy. The company also secured a new credit line from Goldman Sachs, which was guaranteed by SoftBank. The Wall Street Journal first reported the shareholder notification on Tuesday.

Emerging markets hedge funds stung in Covid-19 sell-off Pharo Management and Autonomy Capital suffer double-digit losses this month Laurence Fletcher, Jonathan Wheatley and Robin Wigglesworth

wo of the world’s biggest emerging marketsfocused hedge funds have suffered large losses as stocks and bonds in the developing world were caught up in the coronavirus-induced rout. Guillaume Fonkenell’s London-based Pharo Management, which has around $10bn in assets, has suffered a drop of about 13 per cent this month in its $5bn Gaia fund, according to people familiar with its performance. Pharo’s $5bn Macro fund is down about 9 per cent. And New York-based Autonomy Capital, which was founded by Robert Gibbins and manages around $6bn in assets, has lost 17 per cent, say people

who have seen the figures. Emerging markets have been convulsed by fears over the economic damage caused by the Covid-19 outbreak, at the same time as an oil price war between Saudi Arabia and Russia clobbered several big developing, oil-exporting economies, such as Mexico. In a letter to investors, Mr Gibbins said he was “disappointed” by Autonomy’s performance and blamed it on what traders call a “value-at-risk shock” caused by these two factors. VAR shocks occur when volatility spikes so violently that many funds are forced to ratchet back their exposure to several asset classes at once, fanning the flames of a sell-off. This has led investors to say “get me the hell out of here NOW” www.businessday.ng

across all markets, Mr Gibbins wrote. “The virus and oil price war has resulted in a repricing of assets along with changing fundamentals,” the letter said. “The VAR shock has resulted in a severe dislocation in prices, as investors are forced to sell all assets regardless of quality, fundamentals or price.” T h e b e n c h ma rk M S C I Emerging Markets index is down almost a quarter since the sell-off took hold in the main markets just over three weeks ago, in line with the US S&P 500 index. Meanwhile, the gap between the average yields on bonds in the JPMorgan EMBI-GD bond index and comparable US Treasuries has spiked to 5.9 percentage points, its widest since the global financial crisis.

https://www.facebook.com/businessdayng

Yields move inversely to prices. “People are pretty much selling what they can,” said one bond portfolio manager at another specialised EM fund management company. “Markets are pretty broken.” Autonomy also suffered a tough time last year when its bets on Argentina were hit by a primary election result in August that knocked the country’s stock market, bonds and currency. The Argentine government’s plans to restructure its debts has deepened the blow to Autonomy, which had bet heavily on former president Mauricio Macri’s promise to turn one of Latin America’s perennial economic disappointments into a “normal country”. Pharo has made strong gains in recent years but after the losses this month it is down 8.5 @Businessdayng

per cent in the Gaia fund this year, while the Macro fund has lost 4.7 per cent, year to date. Pharo declined to comment. Pharo and Autonomy are among the most influential traders of emerging markets in the hedge fund industry, which predominantly places bets on developed markets. Emerging markets have recently suffered their biggest cross-border outflows on record, according to the Institute of International Finance (IIF), with non-resident investors withdrawing $55bn from EM stocks in 53 days between January 21 and March 16. That is double the amount of cross-border outflows seen in the 90 days beginning September 8 2008 — the most intense phase of the financial crisis — according to the IIF.

Thursday 19 March 2020

BUSINESS DAY

ANALYSIS

Ukrainegate: Rudy Giuliani’s new campaign against Joe Biden Donald Trump’s lawyer has new fixers in Kyiv to help revive claims discredited as conspiracy theory Roman Olearchyk and Joshua Chaffin

u r i ng t h e p a r t i san impeachment saga that convulsed Washington at the start of the year, even some prominent Republicans acknowledged they were uncomfortable with the way President Donald Trump created a parallel foreign policy structure outside the state department to deal with Ukraine. That separate operation was run by Rudy Giuliani, the former New York mayor who is Mr Trump’s personal lawyer, and was aimed at digging up dirt on Joe Biden. According to businessmen, diplomats and politicians in Ukraine and Washington, Mr Giuliani has since relaunched his effort to prod the Ukrainian government into investigating Mr Biden and his son, Hunter, and is working with a new set of local accomplices in Kyiv. Mr Giuliani’s activities, though widely discredited during the impeachment proceedings, have become newly relevant given Mr Biden’s decisive victories in Tuesday’s presidential primaries, which all but guarantee the former vicepresident will be the Democratic candidate facing Mr Trump in November’s election. The former mayor’s efforts, which have included interviewing potential witnesses and recruiting two former Ukrainian officials with close ties to Washington to help in his investigation, assures that the debunked conspiracy theory regarding Mr Biden that triggered January’s impeachment will once again become a feature of the 2020 presidential campaign. Troublingly for Mr Biden, William Barr, Mr Trump’s attorneygeneral, last month said he was maintaining an “open door” for Mr Giuliani to submit any findings to the justice department, raising the prospect that federal prosecutors could open an investigation into the presumptive Democratic nominee. As part of the fallout from the impeachment investigation, the two most important fixers for Mr

Giuliani in Ukraine — the Sovietborn émigrés Lev Parnas and Igor Fruman — were arrested on charges of violating US campaign finance laws. As a result, Mr Giuliani has been forced to find new helpers in the country. They include Andrii Telizhenko, a former low-ranking official at the Ukrainian embassy in Washington whose social media feeds suggest he shares Mr Giuliani’s fondness for whisky and cigars; and Andrii Artemenko, a former MP in Ukraine who now resides in Washington and has tried to reinvent himself as a bridge between Kyiv and the Trump administration. Together, they are pursuing some of the same claims made during the period last year when Mr Trump pressured the Ukrainian president to open an investigation into Hunter Biden: that Joe Biden, while still serving as vice-president, pushed Ukraine to fire its then prosecutor, Viktor Shokin, in order to thwart an investigation of Burisma, an energy company where the younger Mr Biden earned $50,000 a month as a board member despite an apparent lack of experience. But Mr Giuliani, a former federal prosecutor in Manhattan who took on the mafia before becoming New York mayor, is now seeking to prove a much broader case: that Burisma was but one asset in a post-Soviet Ukraine that a group of Democrats — which include Bill and Hillary Clinton and George Soros — has been milking for years to enrich themselves and fund their political operations. Mr Giuliani’s new fixers also claim that the Democrats’ malign influence extends through a web of conspiracies to Naftogaz, Ukraine’s state-owned oil and gas company, and even include a large US investment group. If the claims by Mr Giuliani and his accomplices are to be believed — and there is so far scant public evidence to support any of them — the sums at stake are not the $50,000 a month that Burisma was paying Mr Biden, but instead run into billions of dollars. www.businessday.ng

“[The Democrats] are still using Ukraine to fight a political war in the United States,” Mr Telizhenko told Mr Giuliani in a recent interview broadcast on the former mayor’s social media feeds. The two men were seated in leather wing chairs, before a fireplace, in a wood-panelled office that was arranged like a television talk show. “If this case gets uncovered — the real way — a lot of people are going to go down and they’re going to go to jail,” he added. Mr Giuliani replied that the “crooked” US media was determined to bury the matter but added: “I think we’re getting through, and I would say you’re one of the primary reasons, Andrii Telizhenko. You’re a good man. You’re a brave man.” While Mr Telizhenko and Mr Artemenko have gained Mr Giuliani’s trust, their credibility is questioned in Ukraine, where some political analysts view them as fringe figures. Olexiy Haran, a Kyiv-based professor of political studies, doubts their reliability as sources. “If Mr Giuliani is really in contact with these people, then it highlights . . . that he is ready to contact with anyone to uphold his narratives.” Although the two men have attempted to court the Republican elite, they have also begun to attract critical scrutiny. A Senate committee that has been investigating the Bidens and Burisma last week abruptly postponed a vote to subpoena Mr Telizhenko as a witness after its Republican chairman, Ron Johnson, acknowledged some “discrepancies” in his claims. In private briefings, US intelligence officials told members of Congress they are examining whether Mr Telizhenko is a Russian asset, according to people briefed on the matter. Others who have observed the pair question whether they are working behind the scenes to further the interests of Ukrainian oligarchs. Mr Telizhenko has rejected this and denies being a Russian asset, saying he was filing lawsuits in

https://www.facebook.com/businessdayng

the US and Ukraine in response to reports making such claims. He says he used to work as an adviser for Pavel Fuks, a Ukrainian oligarch who used to be a big property developer in Moscow but has since ceased working in Russia. Mr Artemenko also denied being a Russian asset or an agent for Ukrainian oligarchs, describing such labelling as “standard practice” with respect to anyone who is pro-Trump. “I was never any oligarch’s man, never got money from them. I’m a self-made man . . . capable of upholding my own views,” Mr Artemenko says. The suspicion surrounding the two men has been deepened by the fact that one of their chief aims appears to be to reduce the influence of the IMF in Kyiv. The fund threw a lifeline to Ukraine after its economy went into freefall in 2014 following Russia’s invasion and subsequent annexation of Crimea. Mr Artemenko argues that a limited debt restructuring — supported by Washington — would allow the country to meet its obligations without the need for an IMF loan deal. Whether or not that is so, it would almost certainly benefit Igor Kolomoisky, one of Ukraine’s richest men. As a condition of its financial support, the IMF has demanded that Mr Kolomoisky plug the $5.5bn hole in PrivatBank, the lender he controlled and which the government nationalised in 2016. “Giuliani’s conspiracies fully contribute to the narrative of oligarchs . . . and pro-Kremlin forces in Ukraine,” says Daria Kaleniuk, head of Kyiv-based anti-corruption watchdog Antac, which is partly funded by Mr Soros’ Open Society foundation. Antac has itself become a target of Mr Giuliani and his allies, who deride the organisation and a network of other NGOs not as a means to combat corruption and nurture democracy in Ukraine but as a weapon for the Democrats and their allies to wield against their rivals. “I think it is a well planned campaign aimed to discredit civil @Businessdayng

society and many change-makers in government,” says Ms Kaleniuk. But there are some in Washington and Kyiv — even those suspicious of Mr Telizhenko’s motives — who do not discount the idea that an investigation of Mr Biden might be a worthwhile exercise. “I happen to believe there’s real evidence on the Biden stuff,” says one veteran Republican operative in the US capital who has dealt with Ukraine. Igor Novikov, an adviser to Ukrainian president Volodymyr Zelensky, asks: “Do you have any doubt that Burisma is corrupt? Is there any substance to what Giuliani is saying? The only way to know is to investigate.” Mr Giuliani’s efforts are playing out in a country caught between east and west, one that is mired in corruption and intrigue, and whose competing political factions have made a practice of boosting their domestic fortunes by forging close ties in Washington. As an official in Kyiv put it: “Ukraine’s a fucking soap opera. Everybody’s back-stabbing everybody.” An early practitioner of the Washington influence game was Victor Pinchuk, an oligarch who became one of the biggest donors to the Clinton Global Initiative and who hosts an annual forum that has become an elite meeting ground for Ukrainian and western politicians and executives. Some rivals in Kyiv are convinced Mr Pinchuk used his influence in Washington to their detriment, prompting Democratic administrations to scrutinise their business interests and limit their ability to operate in the US. With Mr Trump’s surprise election in 2016, those in Kyiv who felt they had been shut out of Washington saw a sudden opportunity to reestablish themselves inside the Beltway — provided they had something to offer the new administration. For Mr Parnas and Mr Fruman, it was the possibility of substantiat-

Continues on page 46

Thursday 19 March 2020

BUSINESS DAY

NATIONAL NEWS

African countries move swiftly to head off coronavirus spread Fears over health systems prompt states to take early preventative measures David Pilling, Joseph Cotterill and Neil Munshi

any African states are taking earlier action than Europe to suppress coronavirus in an effort to stamp out a disease that may be impossible to control if it takes hold in countries with crowded informal settlements and fragile health systems. In a strategy that borrows more heavily from Asia than from Europe, a succession of African governments, including Ghana, Kenya and Rwanda, have sought to get ahead of the disease by announcing school closures, bans on social gatherings and travel restrictions despite having recorded only a handful of cases. In South Africa, which has 62 confirmed cases, the government has declared a national emergency. In Kenya, Safaricom, which is part government owned, has waived transaction fees for electronic money transfers below $10 to limit public interaction and the handling of cash. Tanzania has joined other countries in banning handshakes and hugging. The unfolding strategy comes after a sudden spike in the number of African states with confirmed cases rising to at least 27, roughly half of all states in a continent of 1.2bn people. Benin, Liberia and Somalia are among the latest to report their first case. The continent as a whole has around 450 confirmed cases and 11 reported deaths, according to the latest data collated from the World Health Organisation and national governments, relatively low by European and Asian standards though experts warn that a lack of testing kits means the caseload could be far higher. Sudan’s first case was reported

A vendor at the Kimironko market in Rwanda wears a handmade ‘kitenge’ cloth mask, attempting to protect against the coronavirus disease © Margaret Andresen/Reuters

posthumously. “The window is narrowing,” said Michel Yao, head of emergency response at the WHO’s regional headquarters in the Republic of Congo. “We still have a chance to avoid the worst,” he said, adding that Africa had some advantages including a younger population and warmer weather, which some predict could slow the spread of the disease. “If we miss it, it could be a very serious issue. The health system cannot absorb a big number of people falling sick.” South Africa, which is moving into winter, has only about 1,000 intensive unit care beds in both public and private hospitals for a population of 57m. Nigeria, with 200m people, is estimated to have far fewer. Health experts say conditions in Africa are different from those in Europe and Asia. Africa’s median age of 19.4 may reduce fatalities, but transmission could be harder

to prevent in crowded, poorly sanitised cities, they said. In the countryside, where population densities are lower, problems from malnutrition to weak immune systems owing to the high prevalence of HIV-Aids in some communities, could also make people more vulnerable. In South Africa, experts warned of what might happen if the virus reached the townships and informal settlements where most of the black population lives. “There’s overcrowding and a lack of sanitation. In these areas, once it gets in, we will have widespread infection,” said Atiya Mosam, a doctor and public health specialist in Johannesburg. Measures to stop transmission were difficult to implement given shortages of piped water and other services, she added. “We say, ‘Wash your hands’. Someone in the informal settlements will say, ‘With what?’”

Jan Egelund, secretary-general of the Norwegian Refugee Council, warned that the situation was even more dire in refugee camps, such as those in the Sahel where up to 1m people have been displaced by intercommunal violence and a growing jihadist threat. “How can you do social distancing when thousands of people are crowded together in a tiny camp or refugee settlement?” he said. Gyude Moore, a government minister in Liberia during the 2014 Ebola outbreak that killed more than 11,000 people in west Africa, said conditions were generally more difficult in Africa because of widespread poverty and unemployment. It was no good asking people to stay at home when they needed to work every day to survive, he said. “People do not have resources to stock up. They have to go out and hustle daily to feed their families.”

But Christian Happi, a Cameroonian scientist and director of the African Center of Excellence for Genomics of Infectious Diseases in Nigeria, said African health systems gained experience of dealing with mass infections during Ebola and other outbreaks. “In terms of understanding diseases and combating outbreaks with limited resources, Africa is much better prepared because they have been for years dealing with these diseases: Ebola, yellow fever, lassa fever, monkey pox,” he said. “They are permanently in outbreak response mode.” Mr Happi — one of the continent’s leading scientists — has sequenced the genomes of the Ebola virus, yellow fever and, last week, the coronavirus that an Italian businessman brought to Nigeria in late February in sub-Saharan Africa’s first case. Nigeria has so far limited the outbreak to three cases but has been slower than other countries to impose social restrictions. One irony of the coronavirus spread in Africa, said Mr Yao at the WHO, was that it came mostly from Europe, rather than from China as had been expected. That was because China, with the exception of Wuhan, had been more successful in containing the virus than Europe, from where flights to many African countries had continued, he said. With Europe and the US now at the epicentre of the outbreak, Mr Moore, the former Liberian minister, warned that if the virus takes hold in Africa, traditional donors would be of little assistance. “Health systems back home are not in any way as robust as in the west. They will be overwhelmed quickly,” he said. “In the past, you could look to the west to help. But they are battling the same thing, so it’s not clear any help is coming at all.”

Ukrainegate: Rudy Giuliani’s new campaign against Joe Biden Continued from page 45 ing the alleged corruption of the Bidens and the Clintons — something that has long been an obsession of Mr Giuliani’s, according to people who know him well. “They’re just the latest characters who thought they could manipulate the Americans for their own purpose — and Giuliani took the bait,” says an observer of Ukrainian politics. Another adds: “We’ve got plenty of Parnases and Frumans here.” In Mr Telizhenko, aged 29, Mr Giuliani is relying on a political consultant and former low-level diplomat who has publicly echoed Mr Trump’s unsubstantiated claims that Ukraine interfered in the 2016 US presidential elections. Mr Telizhenko claims in 2016, when he served as a staffer at the Ukrainian embassy in Washington, that a Democratic party political

operative asked him for help in digging up dirt on Mr Trump’s campaign, specifically his campaign chief at the time, Paul Manafort. Mr Manafort was later jailed for his activities working for proRussian politicians in Ukraine, including tax evasion and money laundering. Mr Artemenko, a 51-year-old former MP and a businessman, is a veteran of the country’s often brutal, politics. In 2002, he was jailed on fraud charges that he says were politically motivated, and which were later dropped. Two years ago he made headlines after promoting to Trump officials a controversial peace plan in which Ukraine would agree to “lease” Crimea to Russia for 50 to 100 years as a compromise to end the war in the eastern Donbass region. As part of the deal, the west would also lift sanctions on Russia. www.businessday.ng

Soon after floating his proposal, Mr Artemenko was accused of treason by rivals and his citizenship was stripped by former president Petro Poroshenko on grounds that he held other passports — a violation of Ukrainian law. Mr Artemenko, a self-described patriot, is unapologetic about what he views as a realistic approach to make Ukraine a “Switzerland of eastern Europe” — a prosperous country that can sit comfortably between Russia and the west. “We want to flip this country. We want real reform,” he says, outlining plans to attract investment and technology into industries like aviation and agriculture. It was at the 2016 Republican National Convention where Mr Artemenko claims to have become a convert to Mr Trump’s team on seeing the party’s thennominee on stage. “I said, ‘Wait

https://www.facebook.com/businessdayng

a second: This is exactly what Ukraine needs!’” he recalls. Also etched in his memory — with resentment — is a rousing speech that Mr Biden, then vicepresident, delivered at Ukraine’s parliament in December 2015, when he demanded that Mr Poroshenko fight corruption by overhauling the country’s prosecutors office. At the time, Ukraine was fighting separatists in the east, its economy was teetering and it was desperate for Washington’s help. “He looked like the boss holding a meeting with his employees,” Mr Artemenko recalls. “I was so embarrassed.” In November last year, he signed a contract with Mr Giuliani to assist him in defending his client, Mr Trump, against “false claims”. “He needed my help. He said the president needed my help,” Mr Artemenko explains. @Businessdayng

In an example of the almost incestuous nature of Ukraine’s politics, Mr Artemenko says he met Mr Parnas and Mr Fruman for breakfast at the Trump International Hotel in Washington last year, before the impeachment scandal erupted. He had known Mr Fruman for years from Ukrainian and Russian circles in Miami, where their wives are friends. But he had not previously encountered Mr Parnas, who soon launched into a boastful presentation about his connections in the Trump administration. “I can open any door at the White House,’” Mr Artemenko recalls him saying. He then asked about his guest’s contacts in Ukraine. Mr Artemenko politely declined, he says, and later warned Mr Fruman about the game he had joined, telling his friend: “It’s not risky — it’s dangerous.”

Thursday 19 March 2020

BUSINESS DAY

POLITICS & POLICY Ibadan rally: PDP preaches unity ahead of 2023 …As Oyinlola, Arapaja, Akinbade, others return, decamp to party REMI FEYISIPO, Ibadan

ormer governor of Osun State, Olagunsoye Oyinlola; former deputy governor of Oyo State, Taofeek Arapaja; former Secretary to the State Government in Osun State, Fatai Akinade Akinbade alongside other members on Wednesday officially returned to the People’s Democratic Party (PDP). The decampees, who were received during the PDP Southwest Zonal Unification Rally held at Mapo Hall, Ibadan also had Akeem Ademola Ige former Minority Leader, Oyo house of assembly and Olugbenga Arole, former Chairman Ibadan North East Local Government, Dele Ojo and Fatai Adeshina who are former members of Oyo State House of Assembly, Abiodun Ekolo and Ganiyu Obelomo who are former Chairmen of Ibadan South East and O luyole L ocal G overnments, respectively as well as Akeem Ayelagbe, chairman of ADC, Oluyole Local Government, among others who decamped yesterday. Speaking at the event, Oyinlola said: “I have to make a U-turn when I realised that my former party were a bunch of deceits. “This is the high time for

L-R: Taofeek Arapaja, former deputy governor of Oyo State; Austin Akobundu, PDP national organising secretary; Bode George; Seyi Makinde, Oyo State governor; Duoye Diri, Bayelsa State governor, and Yemi Akinwonmi, PDP deputy national chairman South, during the PDP South West Zonal Unification Rally held at Mapo Hall, Ibadan. PHOTO: Oyo State Government.

our party to restructure; I prayed for wisdom among the stakeholders in steering the affair of the party,” he added. According to him, “As far as politics is concerned in Nigeria right now, people currently at the helms of affairs in the country are not getting it right”, adding that “the only thing they are used to is by deceiving Nigerians…” The former governor said before now, “they were clamouring for restructuring

but when it’s now time to restructure, they said they don’t know anything like restructuring again.” He emphasised that it is time to restructure politics in southwest for the people of the region to continue to enjoy the dividends of democracy. Oyinlola berated the present administration of being very selfish and corrupt, saying that “most of the appointment they made came from the North. When former Minister of Finance,

Kemi Adeosun was removed, a Northerner succeeded her; Ayo Oke was replaced by Northerner, also Peterside Dakuku was also replaced by Northerner.” “When I told my people that we are going to Ibadan to decamp to PDP, some people asked me why and I told them that Ibadan is the capital city of democracy in South-west.” He called on all members of the party to be faithful and to remain steadfast. While saying that the uni-

ty of party members must be a priority in order to win more states in the next election, he thanked the party for the love shown to him and other decampees. He said that he was optimistic that the party would regain its lost glory. While welcoming decampees, the governor of Oyo State, Seyi Makinde said: “It is through genuine love, accommodating and togetherness we can achieve our plans and goals in this region and also extend it to

the federal level.” He stated that the coming back of the former members of the party and others is the beginning of unity in southwest PDP, calling on the party faithful to show love and unity to the decampees because everybody is going to gain from the party. “You are all welcome back into our party; I urge our democratic party members to receive the new members with open arms and love. “The leader of the ruling party has said it that there is coronavirus in their party, but there is no coronavirus in our party, those we are welcoming back to our party include members from African Democratic Congress (ADC), Zenith Labour Party (ZLP), Social Democratic Party (SDP) and African Democratic Party (ADP).” Dignitaries at the event included the National Chairman, Uche Seconds, represented by Austin Akongbondu; governor of Bayelsa State, Duoye Diri; ex-governor of Ekiti State, Ayo Fayose; PDP Deputy National Chairman (South), Yemi Alkiwonmi; PDP National vice chairman (Southwest), Eddy Olafeso; Senator Kola Balogun, Bode George, Ladipupo Adebutu, Olushola Obadan, Mutiat Ladoja, Abosede Adedibu, Mutiat Ladoja, all the PDP states chairmen, among others.

APC crisis: Buhari, Tinubu’s intervention commendable - Razak

ADP attacks Gbadamosi over defection to PDP

anre Razak, a chieftain of the ruling All Progressives Congress (APC) in Lagos State, has said that the intervention of President Muhammadu Buhari and Bola Ahmed Tinubu, the party’s national leader, that brought an end to the crisis that rocked the party in the immediate past was commendable. Razaq said were it not for the quick inter vention, the crisis had the potential of tearing apart the par ty, adding that the leadership qualities exhibited by President Buhari and managerial prowess brought to bear by Tinubu saved the party from implosion. Razak was reacting to the last minute settlement

he Lagos State chapter of the Action Democratic Party (ADP) has attacked Babatunde Gbadamosi, the party’s governorship candidate in the 2019 gubernatorial election, over his defection to the People’s Democratic Party (PDP), saying that his defection will not affect the fortune of the party. Gbadamosi who was a former member of the PDP joined ADP to actualise his governorship ambition last year, he, however, returned to the PDP with his supporters last Monday. The former gubernatorial candidate said the decision to go back to the PDP was necessitated by the need to join hands with members to build a united party capable of winning elections in the state. However, in a statement Wednesday by Adelaja Adeoye who is the National Publicity Secretary of the ADP, a copy

of the internal wrangling b e t w e e n t h e Na t i o n a l Chairman of the party, Adams Oshiomhole and some aggrieved stalwarts of the party that resulted in the attempts to remove the latter from office. Recall that the matter was in and out of the court before the leadership of the party intervened to douse the tension already being created by the imbroglio. The elder statesman in a media interaction in Lagos stressed that with the crisis out of the way, the party would be able to settle down and concentrate properly to be able to strategise ahead of the party’s primaries and governorship elections coming up in Edo and Ondo states. According to him, nowww.businessday.ng

body can be under any illusion that he can achieve electoral victory in a divided house, stressing that electoral battles require all hands to be on deck, high level of preparedness, united house and cooperation of all stakeholders. “Now, with all the warring factions sheathing their swords and agreeing to work together, victories at the coming polls are settled. The serene atmosphere enveloping the party now would give President Muhammadu Buhari ample opportunity to focus more on the onerous task of fixing the country properly and moving it to the next level of socio-political and economic height of global standard,” the elder statesman said. “This APC”, Razak fur-

ther said, “is a large house peopled by members of the same family. I have never entertained any fear or doubt that the crisis would be resolved in time. With the leadership quality of Buhari and managerial ability of Tinubu, the crisis was doomed to die a premature death from the onset.” Razak therefore, urged all the members involved in the crisis “to forgive and forget so that they can have clear minds to work tirelessly for the success of the party in all the coming polls,” enthusing that “with the Oshiomhole’s magnanimity and maturity exhibited by apologising to everybody, the party has come back on its legs firmly and victory in all the future elections is sure”.

https://www.facebook.com/businessdayng

Iniobong Iwok

@Businessdayng

of which was made available to BusinessDay, the party noted that politics remained a game of interest, stressing that anyone was free to join and exit at any time. According to him, “No person or individual can be conditioned to stay in a party against his or her wish. Gbadamosi’s exit does not and cannot tamper with the formidable structure of our great party in Lagos State.” “ADP is in all the 20 local government and 37 Local Council Development Areas (LCDAs) in Lagos State, as a formidable political party, even before Babatunde Olalere Gbadamosi joined in 2018,” he further said. Adeoye stated that ADP, as a party of democrats, accepted all interested members of the public, of age 18 and above, who could vote and be voted for and emphasised that the party had arrays of great personalities, who would run in future elections, not only in Lagos but across the country.

Thursday 19 March 2020

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Wednesday 18 March 2020

Top Gainers/Losers as at Wednesday 18 March 2020 LOSERS

GAINERS Company

Company

Opening

Closing

Change

N915.3

N880

-35.3

OKOMUOIL

N60

N55.05

-4.95

DANGCEM

N137.7

N133.4

-4.3

N7.5

N7.2

-0.3

N3.49

N3.23

-0.26

Opening

Closing

Change

N95

N104.5

9.5

NESTLE

N19.6

N20.9

1.3

N5.7

N6.25

0.55

MTNN

GUARANTY CADBURY

N4.05

N4.45

0.4

CAVERTON

N2.28

N2.5

0.22

UACN AFRIPRUD

ASI (Points) DEALS (Numbers) VOLUME (Numbers)

22,789.64 7,247.00 671,519,295.00

VALUE (N billion)

10.578

MARKET CAP (N Trn)

11.876

Nigeria stocks rebound by 1.09% after steep falls Stories by Iheanyi Nwachukwu

igeria stocks reb ou n d e d by about 1.09percent on Wednesday March 18 after steep falls on Tuesday, aided by MTNN Plc. The stock market had lost huge value the preceding trading day (Tuesday) as persisting oil price war and spreading coronavirus pandemic continued to dampen investors’ appetite for naira assets. At the Nigerian Bourse, investors gained N129billion as evidenced in the value of listed stocks which increased from preceding day low of N11.747trillion to N11.876trillion. MTNN increased most, from N95 to N104.5, adding N9.5 or 10percent, followed by GTBank which moved from N19.6 to N20.9, after adding N1.3 or 6.63percent. Nestle Nigeria Plc led the decliners’ league after it moving from N915.3 to N880, losing N35.3 or 3.86percent, and Okomu Oil Palm Plc which decreased from N60 to N55.05, shedding N4.95 or 8.25percent. The Nigerian Stock Exchange (NSE) All Share Index (ASI) increased from 22,543.07points to 22,789.64 points. Weekto-date (WtD), the market increased by 0.25percent;

L-R: Ibikunle Amosun, chairman, senate committee on Capital Market; Degi Eremienyo, member of the committee; Michael Nanji, member and Mary Uduk, acting director general Securities and Exchange Commission during an oversight visit by the Committee to SEC in Abuja .

month-to-date (MtD) it has decreased by 13.07percent, while the year-todate (Ytd) return is still in negative of 15.10percent. Equity dealers in 7,247 deals exchanged 671,519,295 units valued at N10.578billion. GTBank, Zenith, Access, FBNH, and Stanbic IBTC were highly traded stocks. Brent crude was trading down $1.39, or nearly 5percent, at $27.34 a barrel, after dropping to $27.31, its lowest since early 2016. “The oil demand collapse from the spreading coronavirus looks increas-

ingly sharp,” Goldman Sachs said in a note forecasting a fall in the price of Brent to as low as $20 in the second quarter, a level not seen since early 2002. Nigeria, an oil producing country has confirmed five new cases of the coronavirus in four weeks but has not recorded any death. The latest cases bring the total confirmed cases so far to eight. All 5 cases had a travel history to the UK and USA according to the Nigeria Centre for Disease Control (NCDC). The agency also urged Nigerians to remain calm

as public health response activities are intensified across the country. Nigeria has placed travel restrictions to 13 countries. The countries include China, Italy, Iran, South Korea, Spain, Japan, France, Germany, the United States of America, Norway, the United Kingdom, Netherlands and Switzerland. All travelers returning from these countries prior to the restriction will be in supervised selfisolation, monitored by Nigeria Center for disease control (NCDC) and Port Health Services.

NSE lists additional 336.8m units of Red Star Express …at N4 per share

he Nigerian Stock Exchange (NSE) has listed additional 336,855,291 ordinary shares of Red Star Express Plc. The additional shares listed on the Daily Official List of the Nigerian Stock Exchange

arose from Redstar Express Plc Rights Issue of 336,855,291 ordinary shares of 50 kobo each at N4 per share. It was on the basis of four (4) new ordinary shares for every seven (7) ordinary shares held as at 21 August www.businessday.ng

2019. The Rights Issue was 100 percent subscribed. Dealing Members were notified on Friday March 6, 2020 according to a notice signed by Elizabeth Ekpo for Head, Listings Regulation Department, NSE.

With this listing of the additional 336,855,291 ordinary shares, the total issued and fully paid up shares of Redstar Express Plc increased from 589,496,760 units to 926,352,051 ordinary shares of 50 kobo each.

https://www.facebook.com/businessdayng

Global market indicators FTSE 100 Index 5,090.87GBP -204.03-3.85%

Nikkei 225 16,726.55JPY -284.98-1.68%

S&P 500 Index 2,394.43USD -134.76-5.33%

Deutsche Boerse AG German Stock Index DAX 8,539.48EUR -399.62-4.47%

Generic 1st ‘DM’ Future 19,873.00USD -987.00-4.73%

Shanghai Stock Exchange Composite Index 2,728.76CNY -50.89-1.83%

Foot-printing Nigeria’s Food & Beverage Industry: The Chi Limited Story

he manufacturing sector and particularly the food and beverage sub-sector remain crucial to every economy of the world; the realities in Nigeria are not different. In recent years, the performance and contribution of these category players to the Nigerian economy has grown in value and relevance. Data from the World Trade Organization states that Nigeria ranks as the largest food market in Africa, with significant investment in the local industry and a high level of imports. The food and beverage sector is estimated to contribute 22.5% of the manufacturing industry value, and 4.6% of the country’s GDP. Food & Beverage Manufacturing in the 1980s Prior to the 1980s, production capacity of local farmers was somewhat sub-optimized, with little or no investment in local production or local sourcing of raw materials. Employment and other inherent economic potentials of the food industry were also untapped and sub-optimally leveraged. The economic recession following the global fall in oil prices in the early 1980s has been credited to opening up the local manufacturing sector in Nigeria. The subsequent economic “austerity” rise saw a recorded decline in inflow of foreign products, which in turn led to a sharp surge in the prices of imported goods. With obvious economic realities, indigenous businesses across multiple sectors sprang up to fill the gap with locally produced quality goods to meet consumer needs. Amongst the sectors that have recorded tremendous growth since then is the Food and Beverage sector, which has been enabled by growing local investment over the years. Chi Limited and the “Nigerian Footprint” In 1980, Chi Limited was set up with the vision of local production of goods and products to meet the needs of Nigerian consumers. According to the company, the aim was to provide locally relevant products for consumers. The vision hinged on leveraging local natural resources, where available, to provide high quality, nourishing beverages for

@Businessdayng

the Nigerian population while benefitting communities by creating jobs for the local population. To achieve this objective, Chi Limited pioneered heavy investments and drove innovation across the value chain of Juice, Dairy and Snacks products in Nigeria. Through this, the company quickly established itself as a lead campaigner for quality, healthy, and nourishing homegrown brands whilst driving local economic development and growth. To emphasize its commitment to local content, the company has consistently managed its brands for sustained local appeal through its “Be Nigerian, Buy Nigerian” strategy, thus projecting it as a Nigerian brand of international quality. Chi’s Limited’s products and innovations Over the last 40 years, Chi Limited has steadily emerged a “giant of force and reckoning” in food and beverage manufacturing by revolutionizing the industry. It is safe to say that many Nigerians have encountered or directly consumed one or more of the various brands from Chi Limited. As a matter of fact, it is very likely that every Nigerian family of the over 190 million population has continues to experience at least one of the company’s brands every day. Such brands include CapriSun, the number one children’s fruit juice worldwide, which is also currently the largest selling fruit juice drink for children in Nigeria with clear market leadership. The company’s flagship brand, Chivita 100% Fruit Juice is also the market leader locally and occupies visible presence in several African markets where the product is currently being exported to. In the snacks category, Chi Superbite, Beefie Beef Roll, Beefie Meatpie, and Chi Classic Cake are also competing favourably. Beyond the market leadership of its brands, the company is also at the forefront of technology and packaging innovation in the industry. The use of the Tetra aseptic packaging has afforded the company the unique opportunity of providing all its juices, yoghurt, evaporated milk, and drinking milk products in a clean, hygienic and safe packaging format.

Thursday 19 March 2020

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.’

GTBank utilizes asset to create profit than peers BALA AUGIE

apital efficient firms are fundamentally strong and generate wealth for shareholders. In this regard, Guaranty Trust Bank or GTBank Nigeria Plc has utilized its resources efficiently, and it is financially and fundamentally strong, surviving a squeeze brought on by a tough macro and regulatory environment. The largest lender by market value has a return on average equity (ROAE) of 31.18 percent as at December 2019, that compares with Zenith Bank, (23.76); United Bank for Africa (UBA), (16.19 percent), First Bank Holdings, (10.67 percent), and Access Bank, (17.12 percent). Return on equity (ROE) is a measure of financial performance calculated by dividing net income by shareholders’ equity. ROE is considered a measure of how effectively management is using a company’s assets to create profits. That means GTBank is using the resources of its owner in generating higher profit more than peers as continues to curtail costs while bolstering profit despite operating in a high inflationary environment. It has a total asset of N3.35 trillion as at December 2019, the lowest among tier 1 lenders, but its market capitalization of N573.90 billion is the largest in the entire banking industry. That means the lender is efficient in the deployment of its asset in maximizing shareholderss value. G T B a n k ’s e a r n i n g s growth rate justifies its price

to earnings ratio as it has a price to earnings growth ratio (PEG ratio) of 0.4, which makes its stocks attractive, and investors purchasing it are paying less per unit of earnings growth. The price/earnings to growth ratio (PEG ratio) are

a stock’s price-to-earnings (P/E) ratio divided by the growth rate of its earnings for a specified time period. A ratio less than 1 means a stock

is undervalued. While GTbank is thriving as evidenced in stable earnings and improved asset quality, the macro and regu-

latory environment has been deteriorating faster in the last one year. The regulator woes started in 2014 when a sharp drop in crude oil price that stoked severe dollar scarcity and tipped the country in its first recession in 25 years forced the central bank to maintain a fixed foreign exchange stance that led to sharply higher open market operation (OMO) issuances. While in the introduction of a new foreign exchange window in 2017 spur lenders to growth as they had access to foreign exchange to meet customers demand, a slew of regulations in the past one year has cast a pall to future earnings growth. Also, the new regulations could result in ballooning non-performing loans, a dark memory of 2016 when banks were heavily exposed to the oil and gas as valued customers couldn’t service interest on money borrowed because of an economic downturn. The slew of 2019-2020 regulations includes 1) forcing the banks to achieve a higher loan-to-deposit ratio, 2) pushing local private and institutional investors out of the OMO market, and 3) The hike the cash reserve ratio (CRR) to 27.5 percent, have enabled the CBN to raise even more zero-cost funding from the banks. Despite the regulatory woes, GTBank’s net income increased by 6.57 percent to N196.84 billion in December 2019, compared to N184.711 billion the previous year. The growth in profit was largely driven by a 8.39 per-

BD MARKETS + FINANCE Analysts: BALA AUGIE www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

cent increase in noninterest revenue to N136.22 billion in the period under review from N125.83 billion as at December 2018. Fees and commission income was up 17.78 percent to N59.44 billion in the period under review as against N50.47 billion the previous year. GTbank has an excellent cost control mechanism that has helped bolter profit as cost to income ratio fell to 37.80 percent in the period under review as against 39.30 percent the previous year. GTBank plans to scale up its operations in Kenya and probably Cote d’ lvoire, with a view to spreading its tentacles across Africa. The largest lender by market value leads the charge with its Habari app, launched in November 2018, with the goal of becoming the payments engine behind a range of services. Management describes it as more than a banking app – a full lifestyle app that incorporates banking, payment, chat, e-commerce and entertainment. It’s the bank’s attempt to replicate some of the success stories in Asia, particularly China. Separately, GTBank also has its legacy mobile banking app (simple, functional, no frills) which targets all customer ages, and GT World app, which targets younger and more digitally- native customers typically aged 18-35 with more advanced technological features but largely similar functions as the other. We think Habari can, for example, be carved out under a holding company structure, i.e. set up separately to create a unique business model separate from the legacy bank. Guaranty Trust Bank has a return on average asset (ROAA) of 5.56 percent in December 2019, this compares to Zenith Bank, (2.10 percent), First Bank Holdings, (1.10 percent), United Bank for Africa, (1.70 percent), and Zenith, (3.40 percent). The lender’s ROAA has been growing steadily in the last four years, which validates management and board of directors’ focus and market penetration strategy.

Thursday 19 March 2020

BUSINESS DAY

Garden City Business Digest MAN council meeting:

Choice of Garden City evidence that PH is back as investment destination • Security wont be an issue, the host boss says Ignatius Chukwu

Introduction ould it be true that Port Harcourt has regained its position as investment destination? This is the thinking of top business leaders and top government officials following the decision of the biggest business group in Nigeria to come to Port Harcourt to hold its all-important council meeting. Port Harcourt for long lost its appeal as the destination of choice for both nationals and international business moguls. This was due to political crisis that snowballed into violence on the streets and communities as well as general insecurity that scared investors and businesses away to other welcoming cities. Gov Nyesom Wike is seen to have given huge efforts in bringing back the companies and at least attracting new ones. He threw the doors of the city wide open to visitors during national and international conferences to come and see for themselves if Port Harcourt was open or not for businesses. There seems to have been cautious responses. Many companies may have tiptoed back, to test and taste. Now Manufacturers As-

Adawari Michael Pepple, MAN chairman (Rivers/Bayelsa chapter)

sociation of Nigeria (MAN), the biggest umbrella of manufacturers and a very strong advocacy group, has brought its council meeting for the second time in history out of Lagos to Port Harcourt, next only after Kano. The host chairman, Adawari Mc-Pepple, who made waves in the senate some years back, in an exclusive interview with BusinessDay, explained the significance of the PH event. Mc-Pepple who is a national council member stated: “This is the second time the council meeting will be leaving Lagos. All these years, it has been Lagos and so, it is quite significant that Port Harcourt is hosting. That

is to emphasise the economic importance of Port Harcourt as an investment heaven. “We thus want to use this opportunity to invite investors to see Port Harcourt as an investment destination because if the national council can see Port H as the right place to go, it means investors are safe here. “We enjoin all hands to help make this meeting a remarkable success. The need for this cannot be over emphasised. The state governor has just set up a committee on the Ease of Doing Business (EoDB). That is to say that even the government is on the side of showing that there is progress in this area. We enjoin the organised private sector (OPS) to come together so that not only the aspirations of the state government but also that of MAN comes to fruition.” On key areas of attention to prepare for the crucial programme, the Rivers/Bayelsa chapter chairman the success of every council meeting depends on logistics and that his chapter has put this in place to ensure that the delegates are very comfortable. “We have also made sure that throughout the period, there would be no security breach. As a branch, we have done all that we should do to ensure it’s a success. We have ensured that the state government is fully

behind the council meeting.” No more tax harassment or illegal levies Urging all producers who give value to products to consider themselves as manufacturers and join the MAN, McPepple maintained that the benefits were overwhelming. “If you are a manufacturer you should belong to MAN. All you need is to convert something from one state to another that has market value. It could be a two-personnel or thousandpersonnel company, it does not matter, so long as you are producing something the market would want to buy. We enjoin all manufacturers, whether micro, small or large scale, to come into MAN and enjoy all the benefits. “You will not be harassed by anybody for illegal levies. We have the support of the state government to ensure there are no illegal levies. You pay that which is legal for you to pay and no thugs can come to your premises and make unnecessary demands. The moment it comes to our notice, we take it up and it stops there. “Our national president, Mansur Ahmed, will be here with us and hopefully would have interaction with the governor and entire state executive council. We all need to come out and welcome him.”

NAWORG in PHCCIMA wants women recognized based on competence

here has been a consensus on the need to stop recognizing women based on their gender, but rather to recognize them by the content of their competence, capability and intelligence they possess. This consensus was reached by resource persons, stakeholders and other top women who gathered to celebrate the International Women’s Day, organized by Port Harcourt Chamber of Commerce, Industry, Mines and Agriculture (PHCCIMA) wing of the National Association of Chamber of Commerce, Industry, Mines and Agriculture (NACCIMA) Women Group (NAWORG), held at the council hall of the PHCCIMA. PHCCIMA President, the chief, Nabil Saleh, in his welcome address noted that women should be held in high esteem following their high efficiency rate in positions of trust and ability to balance professional and personal leadership skills. In her keynote address, PHCCIMA’s Publicity Secretary and Lead Consultant of IHP Consulting Limited, Mercy Bello Abu, speaking

on the theme of the year, challenged women to pursue the bigger objectives of achieving more in their endeavours by thinking futuristically. She urged them to invest in developing themselves by way of competence, capabilities and versatility. She mentioned top women that succeeded due to diligent work. Earlier on, the Rivers State coordinator of NAWORGPHCCIMA, Oriaku Hanson Oyet-Ille, had said NAWORG is a trade group within NACCIMA and is supported by all city chambers. She enjoined all women operating businesses in Rivers State to join the chamber movement to get many benefits. Also speaking, the Rivers State Commissioner for Commerce and Industry, Ifeyinwa Nwankpa, urged women to continue to appreciate their intrinsic value, and boundless opportunities for success. She noted that women needed to actively listen to each other and support each other. Others who spoke include the Proprietress of Jephtah International Group of Schools, Ifeoma Edith Chukwuogu, who gave an eye-opening insight into successful business tips.

PH business leaders see great opportunity in Nigeria’s crashing economy He said: “This is a golden opportunity to completely deregulate and develop the local economy. This oil price crash is another opportunity and the FG must immediately remove subsidy.” Bobmanuel wants the forces of demand and supply to be allowed to decide the market just as he has urged the FG to close the rate differences in the various foreign exchange windows. He said: “Let the private sector take over fully and run the economy. Borrowing to support infrastructure is no more viable. Instead, create

Port Harcourt by Boat

IGNATIUS CHUKWU

conditions for private investors to come in and invest in them. Open up the space instead of borrowing to invest in infrastructure. Yes, scale back on the 2020 budget but allow the private sector to take over provision of infrastructure”. Ekama Emilia Akpan On her own, the immediate past national vice chairperson and council member of the Manufacturers Association of Nigeria (MAN),

igeria may be sweating in the face of crash of its economic pillar, oil, but some business leaders in rather see huge opportunities to spring a surprise. The top business leaders in PH have thus refused to see panic and danger in the crash caused by coronavirus and Russia oil price war with Saudi Arabia. Ibifiri Bobmanuel The president of the Rivers Entrepreneurs and Investors Forum (REIF), Ibifiri Bobmanuel, a tractor assembly plant CEO (Bobtrack), called this a golden moment to do what is necessary. The engineer and globetrotter called for complete deregulation of the downstream sector and closing the foreign exchange differentials on different windows.

Ibifiri Bobmanuel

www.businessday.ng

Ekama Akpan https://www.facebook.com/businessdayng

Ekama Emilia Akpan, urged the FG to look inwards right now. She joined in seeing this as an opportunity to readdress the nation’s situation. She urged the government to sit down with MAN on how to manufacturer almost all national needs locally. She went on: “Give easy loans to SMEs to support a new economy through a Do-It-Yourself scheme. She warned that importation is no more an attraction and that even of something is ordered from abroad right now, shipping may be an issue because importation has been endangered. “This is a blessing in disguise, so manufacture things locally now especially foods and medicines. Let government agencies slow down on harassing businesses for levies. Most schools abroad have closed down. The FG should find ways to keep children busy and alert in the brain. “Let there be coaching on emergency approaches and use of things such as lime. Bring back retired health officials to help in a national emergency scheme ahead of serious epidemic in our land based on what we see happening around the world. Women and children should be given special attention in the coming days “Finally, Israel prayed against Coronavirus and God seems to have answered them. Senegal has made progress. We should seek the face of God in all matters”

@Businessdayng

Thursday 19 March 2020

BUSINESS DAY

Investing in Rivers State Rivers war against COVID-19:

Information boss, Nsirim, charges religious leaders, media on roles • Says state is commercial hub with many visitors Ignatius Chukwu

he Rivers State Commissioner for Information and Communications, Paulinus Nsirim, a pastor, has called on religious leaders and the media in the state to contribute towards prevention of the COVID-19, popularly called Coronavirus, in Rivers State. The commissioner, who made the call on Monday, March 16, 2020, said as part of awareness creation, said sensitisation for stakeholdergroups is for them to be fully involved in either preventing the virus from the state or checking its spread. He urged both the religious leaders and the media to be really involved in the campaign against the virus. Noting that the need to work together against the Coronavirus became more imperative given the declaration of the disease by the World Health Organisation (WHO) as a pandemic, he urged the religious groups to take the message of the roles expected of them to their congregation. “The whole essence is to bring everyone on board, because when something has been declared a pandemic by the WHO, it’s a serious issue. So, all hands must be on deck. “As you get the message today, it’s important that you pass the message to people around you. For the religious leaders, we’re expecting that in their various churches and mosques they begin to pass this prevention messages”, he said. He explained that the position of Rivers State as a commercial hub makes it vulnerable for the virus to be easily contacted, hence the need for all and sundry to be aware of preventive measures for

Governor Nyesom Wike

Golden Owhonda, Rivers State Director of of Public Health/Disease Control, teaching on COVID-19 in PH

the safety of all. “Why this is important”, the Commissioner stated, “is that Rivers State is a commercial corridor, Rivers State is like the commercial hub of Nigeria with the international airport, the seaports, and of course, the thriving hydrocarbon industry, which is the major revenue earner for Nigeria. You expect that a lot of people from all works of life would come into Rivers State. “So, if we have the influx of people coming from all parts of the world to Rivers State, it’s important that those who are living and doing business in Rivers State also begin to adopt preventive measures, if perchance they come in contact with people from other parts of the world”, he said. To the media, he said, “we understand quite clearly the piv-

otal role you’re supposed to play in information dissemination. As a major stakeholder group it is important that we call you to buy into sensitization program. Without the media we cannot achieve much. That’s why I’m quite excited that the ‘who is who’ in the media industry are all here to hear what we want to say. “This is a call for collective action, it’s a call for social responsibility, and we want to invite you to please collaborate with the Rivers State Government to ensure that all those living and doing business in Rivers State get the prevention message, and ensure that Coronavirus doesn’t have a place in River State”. Emphasising on the importance of religious leaders in the campaign against the virus, the State Commis-

sioner for Health, Professor Princewil Chike, explained the impact of the Coronavirus as a pandemic, noting that given the position of religious leaders in the society, they stand a better chance of passing on the prevention message to their followers. “If all the religious leaders follow the (Prevention) steps, the chances of infection will be greatly reduced”, he said. Also speaking, the Director, Public Health and Disease Control, Rivers State Ministry of Health, Dr Golden Owhondah, emphasised on the various steps required to prevent contacting the virus. Beyond the greatly publicised hand washing, Keeping social distance from persons suspected to be portraying symptoms of the virus, and practicing good respira-

tory hygiene, the Director charged the media not to spread fake news. “This is a time for facts, not fear. This is a time for rationality, not rumours. This is a time for solidarity, not stigma”, he said. It will be recalled that the State Executive Council, under the leadership of His Excellency, Nyesom Ezenwo Wike, appointed a 5-man committee to carry out an aggressive awareness and sensitisation campaign on the Coronavirus, shortly after the WHO declared it a pandemic on the 11th of March, 2020. The campaign started last Friday with the leadership of Community Development Committees (CDCs) of all the 23 Local Government Areas of the State. Today’s campaign was in two sessions with religious leaders and the media respectively.

Bureau de change operators accuse Wike’s task force of extorting over N5m from them …Vow to resist further harassment Sam Esogwa

oreign exchange traders (mostly of northern Nigeria origin) operating near Presidential Hotel, Aba Road, Port Harcourt, have accused the antistreet trading task force of the Rivers State government of so far extorting them to the tune of over N5m. According to them, they were made to pay this huge amount of money as fines and bail fees in the process of trying to release their members arrested by the task force for one alleged offence or the other. The foreign exchange traders revealed this during a chat with newsmen at their Aba Road operational base, Port Harcourt, last week. Vice chairman, Presidential Exchange Bureau de Change, Isaka

M. Sani, confirmed the incessant harassment and extortion by the anti-street trading task force, a development he said his people are not happy with. Sani said: “My people are very angry now because they will arrest us and we pay N120,000. We have the list of persons they arrested and calculated it to amount to N5m as at today. “Now, they don’t even carry the people to court; they carry them to this Kala Police Station or Abacha Road Police Station. They will not bring bail paper. Our people will just give them N50,000, they count it and see that it is complete and they will release the brother. I am only telling my people to take it easy because they are very angry.” Reacting to the death of the Hausa trader allegedly killed by the task force members, Sani said they would www.businessday.ng

not blame Governor Nyesom Wike but the task force members who he said had abandoned the work they were sent to do and were now doing a different thing. One of the bureau de change operators, Chijioke Chibundu, also lamented over their incessant harassment and extortion by the task force members, saying it is becoming too much. He blamed confirmed that arrested persons pay N120,000 but sometimes pay N50,000 to free themselves. Another bureau de change operator from the north, who said he had bailed about three persons arrested by the task force revealed that he paid N100,000 for each of them through a Keystone Bank account given to him by the task force, late last year. “Sometimes I ask myself: why are we in Rivers State? May be

https://www.facebook.com/businessdayng

we’re not part of this country. But we’re not here to make trouble; we’re here to find our stomach (look for our daily bread). We’re not criminals; we’ve been here for many years. Narrating his own ordeal in the hands of the task force, one of the bureau de change operators said he was arrested for doing nothing, and taken to a mobile court at Ikwerre Road, where he was fined N120,000. “I explained to them that I didn’t do anything but was going to my brother’s place when they arrested me. They said they didn’t want to know and that I should go and pay N120,000. They carried me; we slept in prison for one week. I told them that I was not well; they said how did that concern them? It was not possible to reach the head of the anti-street trading task force, Bright Amaewhule, for his @Businessdayng

reaction to the allegations, as at the time of filing this report. However, a member of the task force (Zone 6 unit), who pleaded that his name should not be mentioned on print, debunked the extortion claim by the bureau de change operators mostly from northern Nigeria. The task force member added: “Street trading has been banned in this state and they are aware. But if you go there, you will see them hanging along the road, looking for customers. So, when they’re arrested and prosecuted for violating this law and later fined or bailed, they say they’re being extorted. We’re not extorting anybody. Are we tax collectors? We’re only doing our work which is to maintain sanity on the streets and the roads. Government is saying that people should not trade on the road.”

Thursday 19 March 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 19 March 2020

BUSINESS DAY

Live @ The STOCK Exchanges Prices for Securities Traded as of Wednesday 18 March 2020 Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 215,048.62 6.05 2.48 488 87,964,031 UNITED BANK FOR AFRICA PLC 182,966.90 5.35 0.94 352 23,913,033 ZENITH BANK PLC 423,852.67 13.50 1.85 1,375 147,007,838 2,215 258,884,902 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 143,581.17 4.00 1.25 546 60,824,261 546 60,824,261 2,761 319,709,163 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,127,046.61 104.50 10.00 155 3,678,165 155 3,678,165 155 3,678,165 BUILDING MATERIALS DANGOTE CEMENT PLC 2,273,203.69 133.40 -3.12 439 16,005,288 LAFARGE AFRICA PLC. 173,964.19 10.80 -1.82 139 1,675,563 578 17,680,851 578 17,680,851 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 320,408.06 544.50 - 9 559 9 559 9 559 3,503 341,068,738 REAL ESTATE INVESTMENT TRUSTS (REITS) SFS REAL ESTATE INVESTMENT TRUST 1,386.00 69.30 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 8,538.46 3.20 -1.56 79 14,060,785 79 14,060,785 79 14,060,785 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 1 10 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 1 10 1 10 80 14,060,795 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 1 3,000 OKOMU OIL PALM PLC. 52,512.75 55.05 -8.25 6 110,375 PRESCO PLC 40,450.00 40.45 - 2 900 9 114,275 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,500.00 4.25 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,650.00 0.55 - 1 8 1 8 10 114,283 DIVERSIFIED INDUSTRIES JOHN HOLT PLC. 217.92 0.56 - 0 0 S C O A NIG. PLC. 1,903.99 2.93 - 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 27,640.63 0.68 1.47 51 2,566,046 U A C N PLC. 20,745.34 7.20 -4.00 99 4,039,228 150 6,605,274 150 6,605,274 BUILDING CONSTRUCTION ARBICO PLC. 469.26 3.16 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 29,436.00 22.30 - 173 2,171,620 ROADS NIG PLC. 165.00 6.60 - 0 0 173 2,171,620 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 2,468.48 0.95 - 12 187,772 12 187,772 185 2,359,392 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 5,558.94 0.71 - 6 14,221 GOLDEN GUINEA BREW. PLC. 220.45 0.81 - 0 0 GUINNESS NIG PLC 55,197.65 25.20 - 33 59,894 INTERNATIONAL BREWERIES PLC. 141,025.86 5.25 0.96 11 1,005,020 NIGERIAN BREW. PLC. 239,907.06 30.00 - 111 1,420,387 161 2,499,522 FOOD PRODUCTS DANGOTE SUGAR REFINERY PLC 118,200.00 9.85 - 55 279,912 FLOUR MILLS NIG. PLC. 87,748.12 21.40 - 13 21,686 HONEYWELL FLOUR MILL PLC 6,582.06 0.83 - 11 182,839 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 0 0 NASCON ALLIED INDUSTRIES PLC 22,652.70 8.55 - 5 77,480 UNION DICON SALT PLC. 2,993.06 10.95 - 0 0 84 561,917 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 11,738.76 6.25 9.65 37 906,741 NESTLE NIGERIA PLC. 697,537.50 880.00 -3.86 141 627,962 178 1,534,703 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 4,940.83 3.95 -1.50 53 2,517,944 53 2,517,944 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 17,668.62 4.45 9.88 11 4,502,300 UNILEVER NIGERIA PLC. 66,929.31 11.65 - 29 305,614 40 4,807,914 516 11,922,000 BANKING ECOBANK TRANSNATIONAL INCORPORATED 90,830.28 4.95 - 34 472,037 FIDELITY BANK PLC 51,575.14 1.78 1.14 186 26,331,990 GUARANTY TRUST BANK PLC. 615,111.65 20.90 6.63 1,575 177,750,796 JAIZ BANK PLC 12,080.34 0.41 -2.38 49 4,461,198 STERLING BANK PLC. 28,502.51 0.99 -10.00 37 1,627,336 UNION BANK NIG.PLC. 209,669.42 7.20 - 39 386,716 UNITY BANK PLC 5,377.10 0.46 9.52 7 654,409 WEMA BANK PLC. 18,901.49 0.49 2.08 51 4,824,253 1,978 216,508,735 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 1 10,000 AIICO INSURANCE PLC. 8,950.86 0.79 -4.82 37 1,975,824 AXAMANSARD INSURANCE PLC 17,850.00 1.70 - 3 69,893 CONSOLIDATED HALLMARK INSURANCE PLC 2,439.00 0.30 - 0 0 CORNERSTONE INSURANCE PLC 7,806.64 0.53 - 0 0 GOLDLINK INSURANCE PLC 909.99 0.20 - 0 0 GUINEA INSURANCE PLC. 1,228.00 0.20 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 1,611.16 0.22 10.00 12 882,364 LAW UNION AND ROCK INS. PLC. 4,124.48 0.96 -6.80 17 1,157,729 LINKAGE ASSURANCE PLC 3,440.00 0.43 7.50 6 200,962 MUTUAL BENEFITS ASSURANCE PLC. 2,234.55 0.20 - 9 1,806,320 NEM INSURANCE PLC 8,343.19 1.58 - 18 225,090 NIGER INSURANCE PLC 1,547.90 0.20 - 2 50,500 PRESTIGE ASSURANCE PLC 2,960.40 0.55 - 3 1,962 REGENCY ASSURANCE PLC 1,333.75 0.20 - 0 0 SOVEREIGN TRUST INSURANCE PLC 2,272.89 0.20 - 0 0 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 0 0 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 0 0 WAPIC INSURANCE PLC 5,278.17 0.22 -4.35 59 13,386,184 167 19,766,828 MICRO-FINANCE BANKS NPF MICROFINANCE BANK PLC 2,309.50 1.01 8.60 15 433,620 15 433,620

www.businessday.ng

MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 6,784.62 1.05 - 0 0 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 5,671.82 1.36 - 0 0 INFINITY TRUST MORTGAGE BANK PLC RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 2,949.22 3.02 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 6,460.00 3.23 -7.45 60 2,503,856 CUSTODIAN INVESTMENT PLC 30,585.69 5.20 4.00 10 212,659 495.00 0.33 - 2 2,500 DEAP CAPITAL MANAGEMENT & TRUST PLC FCMB GROUP PLC. 30,496.17 1.54 -3.14 81 6,126,030 ROYAL EXCHANGE PLC. 1,131.98 0.22 - 0 0 317,775.26 30.25 - 48 27,086,657 STANBIC IBTC HOLDINGS PLC UNITED CAPITAL PLC 15,600.00 2.60 7.44 112 4,950,403 313 40,882,105 2,473 277,591,288 HEALTHCARE PROVIDERS EKOCORP PLC. 2,991.61 6.00 - 1 10,000 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 710.63 0.20 - 1 30,000 2 40,000 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 494.58 0.50 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 5,111.58 2.45 - 3 21,611 GLAXO SMITHKLINE CONSUMER NIG. PLC. 4,125.77 3.45 - 9 91,132 3,709.26 2.15 - 4 9,500 MAY & BAKER NIGERIA PLC. NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 759.66 0.40 - 0 0 556.71 3.62 - 0 0 NIGERIA-GERMAN CHEMICALS PLC. PHARMA-DEKO PLC. 325.23 1.50 - 1 55,000 17 177,243 19 217,243 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 745.92 0.21 5.00 2 102,000 2 102,000 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,000.21 0.34 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 237.60 2.20 - 1 11,500 287.07 0.58 - 0 0 TRIPPLE GEE AND COMPANY PLC. 1 11,500 PROCESSING SYSTEMS CHAMS PLC 939.21 0.20 -9.09 11 769,500 E-TRANZACT INTERNATIONAL PLC 10,962.00 2.61 - 0 0 11 769,500 TELECOMMUNICATIONS SERVICES AIRTEL AFRICA PLC 1,123,311.48 298.90 - 6 1,570 6 1,570 20 884,570 BUILDING MATERIALS BERGER PAINTS PLC 1,767.92 6.10 - 9 51,353 BUA CEMENT PLC 1,195,411.70 35.30 - 5 100,200 CAP PLC 12,600.00 18.00 - 28 321,048 MEYER PLC. 244.37 0.46 - 0 0 1,769.32 2.23 - 0 0 PORTLAND PAINTS & PRODUCTS NIGERIA PLC PREMIER PAINTS PLC. 1,156.20 9.40 - 0 0 42 472,601 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,192.12 2.03 - 0 0 2,043.13 1.16 - 15 256,688 CUTIX PLC. 15 256,688 PACKAGING/CONTAINERS BETA GLASS PLC. 34,998.04 70.00 - 0 0 GREIF NIGERIA PLC 388.02 9.10 - 0 0 0 0 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 57 729,289 CHEMICALS B.O.C. GASES PLC. 1,685.79 4.05 - 4 21,308 4 21,308 METALS ALUMINIUM EXTRUSION IND. PLC. 1,781.64 8.10 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 77.00 0.35 - 0 0 0 0 4 21,308 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 - 1 24,000 1 24,000 INTEGRATED OIL AND GAS SERVICES OANDO PLC 27,473.42 2.21 9.95 58 1,944,172 58 1,944,172 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 52,827.21 146.50 - 11 11,479 ARDOVA PLC 17,974.24 13.80 - 14 31,086 CONOIL PLC 10,131.70 14.60 - 13 10,938 ETERNA PLC. 2,895.20 2.22 9.90 12 353,575 MRS OIL NIGERIA PLC. 4,206.05 13.80 - 4 15,072 TOTAL NIGERIA PLC. 36,328.84 107.00 - 19 50,654 73 472,804 132 2,440,976 ADVERTISING AFROMEDIA PLC 1,509.28 0.34 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 15,796.05 1.62 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 235.27 0.20 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,779.06 3.00 - 0 0 421.96 0.90 - 0 0 TRANS-NATIONWIDE EXPRESS PLC. 0 0 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 1 2,000 1 2,000 HOTELS/LODGING CAPITAL HOTEL PLC 4,259.15 2.75 - 0 0 IKEJA HOTEL PLC 2,058.01 0.99 - 2 39,300 TOURIST COMPANY OF NIGERIA PLC. 7,076.28 3.15 - 0 0 TRANSCORP HOTELS PLC 30,401.62 4.00 - 2 1,600 4 40,900 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 3,960.00 0.33 - 2 22,000 2 22,000 PRINTING/PUBLISHING ACADEMY PRESS PLC. 223.78 0.37 - 1 500 LEARN AFRICA PLC 771.45 1.00 - 0 0 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 427.10 0.99 - 4 51,770 5 52,270 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 513.89 0.31 3.33 4 128,568 4 128,568 SPECIALTY INTERLINKED TECHNOLOGIES PLC 688.80 2.91 - 1 1,000

https://www.facebook.com/businessdayng

@Businessdayng

industry Insight

BUSINESS DAY Thursday 19 March 2020 www.businessday.ng

Managing looming crisis in dollardependent manufacturing sector ODINKA ANUDU

igeria’s manufacturing sector is facing a looming crisis from falling global oil prices. The United States West Texas Intermediate (WTI) crude oil dropped to $26 per barrel on Monday, the lowest since 2003. Brent crude fell by 1.32 percent to $25.96 per barrel on Wednesday, from $26.20 on Monday. This is the lowest in four years. Goldman Sachs slashed its oil forecast on Tuesday as Covid-19 continues to dislocate markets and cut demand. Analysts at Wall Street investment bank say oil demand is shrinking by an unprecedented 8 million barrels a day as a result of the virus and price war fuelled by OPECRussia-Saudi fiasco. The crisis will hit Nigeria’s revenue by over 100 percent as the country relies on crude oil for over 90 percent of its foreign exchange and 70 percent of revenue. The general feeling is that oil price will drop to $20 per barrel or below, which is bad news for an oil-dependent Nigeria and its manufacturers, many of whom need dollars to import inputs and machinery. The crisis is already exposing the fragility of the Nigerian economy as leaders after leaders fail to look beyond oil for revenue and budget benchmark. The manufacturing sector is entering into a crisis mode as China, India and other countries where it imports inputs shut down on Coronavirus spread. Pharmaceuticals are hard hit as they mostly depend on India and China for excipients and other raw materials. Players in the industry are already rationing supplies as uncertainty hovers around when the virus spread will be over. Drug stores are in panic over supplies and there are fears that drugs might be hoarded at some point in the future. The reason why crisis like this continues is that Africa’s largest economy has no reliable and functional petrochemical industry which should produce resins, excipients and other raw materials needed by drug makers. “Virtually every raw material in this sector has a high import dependency ratio. If you then face the scarcity of forex like we do have in this country, it poses further challenge,” Okey Akpa, chief executive officer of SKG Pharma, told BusinessDay in 2019. Local input sourcing in the chemicals and pharmaceutical industries is below 50 percent

‘‘

The manufacturing sector is entering into a crisis mode as China, India and other countries where it imports inputs shut down on Coronavirus spread as most of the resins and other excipients are imported. “We need to have a petrochemical industry that will substitute what we are presently importing. It is a sector with a big potential, but this is largely unrealised because of lack of petrochemical industry,” Akpa further said. All eyes are on the imminent Dangote Petrochemical Company, but an emerging economy like Nigeria must have more than one petrochemical company and should not rely on one company for essential things needed by the entire population, analysts say. Apart from pharmaceuticals, many other sub-sectors are also importing raw materials from wheat to concentrate. They would need dollars to import these inputs and even machinery. Exporters too are affected because their business goes into other countries’ borders. With economic shutdown across the world and tighter border monitoring, Nigerian exporters are already in a fix and, like other manufacturers, might cut jobs and stop production process at some point in the future—unless the situation across the world improves. The Manufacturers Association of Nigeria (MAN) has con-

sistently pointed out that the best way to plan for and manage a crisis of this proportion is to look inwardly. A lot of companies are already sourcing inputs and packaging materials locally to hedge against FX risks. “We will continue to substitute imports with local production. We have moved quickly from 53 percent local sourcing two years ago to about 80 percent of total production,” Baker Magunda, managing director of Guinness Nigeria plc, told BusinessDay recently. Many have embarked on multi-billion naira backward integration projects to reduce FX exposures, cut costs and maximise profits. Dangote Group is investing billions in sugarcane plantations in several parts of the country. PZ Wilmar has put billions into palm oil plantations in Cross River State. Olam has also invested heavily in this area. This, according to experts, remains one sure way of managing the looming crisis. But there is a twist to the whole story. Amid recession in the first half of 2017, many manufacturers sourced local alternatives to foreign inputs, pushing up percent-

age of local input preference to 60.72 percent, according to data from MAN. But with several market interventions by the Central Bank of Nigeria (CBN), which resulted in foreign exchange stability, many manufacturers resumed chase for foreign inputs at the expense of local alternatives, pushing down local input preference to 57 percent. “The relatively more available forex, resulting from the CBN intervention, may have been rubbing off negatively on backward integration agenda as firms prefer to import raw-materials as against inward looking,” MAN said in its latest economic review obtained by BusinessDay. The CBN first gave manufacturers 40 percent preference in the FX market, meaning that they had exclusive right to 40 percent of available FX in the market. The apex bank subsequently created special windows for exporters and small businesses, leading to some stability in the market. “Local raw-materials utilisation in the manufacturing sector has maintained downward trends since the first half of 2017 when the CBN commenced policy intervention in the official forex market,” MAN, led by Mansur Ahmed, said. This is already a challenge. Some manufacturers say that they do not often get the type of inputs they want at the required quantity and quality. This is one area where investments are needed. For a fragile economy like Nigeria, the government and the private sector might do well to look closely at the quality of inputs in the economy. Also, in 2016 crisis, manu-

facturers, especially small and medium-scale players, resorted to locally fabricated machinery. This was not an easy decision for many firms because it made commonsense. Higher demand for local inputs gave rise to higher demand for locally fabricated machines that were suitable for local raw materials. What helped was the consciousness among manufacturers to look inwardly for machines suitable for local raw materials. However, some local institutions fabricating these machines did not show leadership in many areas as they delayed fabrication in some instances and produced some machines that were not suitable for a number of companies. One manufacturer said in 2016, “This is why we have to change the Nigerian education system towards Science, Technology, Engineering and Mathematics (STEM).” The manufacturer added, “Education should be tailored towards solving the problems of the industry.” Another strategy adopted during periods of economic slump is cost management. Some manufacturers had to cut unnecessary costs without sacking workers. Others cut jobs and reduced departments or subsidiaries that were not contributing meaningfully to revenue or the company good. Whether anybody believes it or not, crisis is looming and the best response is to cut FX exposures. The majority of the Nigerian population are poor and the looming recession will further deepen their misery. It is debatable whether manufacturers can shift high costs resulting from FX exposures to the struggling consumers.

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