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Everyday, Nigeria Road to 2019: spends N5.75bn on debt servicing ... twice higher than health, education combined LOLADE AKINMURELE

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igeria could be sowing seeds of an economic crisis that leaves the future of its 190 million people hanging in the balance and asks tough questions of leaders to come.

That is after fresh data coming out of the prospectus for Nigeria’s $2.8 billion bond programme show that Abuja spent USD$3.5 billion or N1.07 trillion paying interest on money borrowed from local and international sources in the first six months of 2018, which implies paying $584 million (N178.7 billion) monthly and $18.8 million (N5.75 billion) daily, according to Business Day calculations.

Debt service costs could be the biggest line item in the budget in another two years at the current pace, surpassing capital expenditure and non-recurrent expenditure.

The projected N2.1 trillion to be spent on debt servicing in

Atiku targets $900bn economy by 2025 As Buhari promises 15m jobs if re-elected A

ANTHONY AILEMEN, Abuja

tiku Abubakar, the presidential candidate of the People’s Democratic Party (PDP) has promised to set Nigeria on the path of be-

coming a $900 billion economy by 2025 if elected into office in 2019. The promise is contained in his policy document seen by BusinessDay yesterday. The pol-

icy document will be launched today at 12 noon in a planned Facebook address by Atiku.

In the policy document titled ‘Let’s get Nigeria working again’

Atiku stated that his vision is to ‘transform Nigeria into a modern economy that works for its

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Watch out Why Nigeria is broken and what it will take to fix it Starting tomorrow

L-R: Sean Hoy, Ireland ambassador to Nigeria; Abubakar Jimoh, MD/CEO, Coronation Merchant Bank; Thessa Brongers Bagu, Ireland representative to Nigeria, and Guy Czatoryski, head, research, Coronation Merchant Bank, during a courtesy visit of the ambassador to Coronation Merchant Bank in Lagos, at the weekend. Pic by Olawale Amoo

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Sweet dreams

Cocoa processing is not a golden ticket for west Africa It may smell good, but it is unlikely to bring much revenue or many jobs

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N 1876 TETTEH QUARSHIE, a blacksmith, smuggled the first cocoa beans into Ghana, hidden beneath his box of tools. He is now celebrated as a national hero; his trees, planted in the hills outside Accra, are a tourist attraction. But did cocoa make him rich? “No,” says a guide. “He harvested for the first time, and then he died.”

West Africans have been seeking fortunes in cocoa ever since.

Like Mr Quarshie, they have been short of luck. Ghana and Ivory Coast produce about 60% of the world’s cocoa. Yet they mostly sell unprocessed beans. Their cocoaexport earnings are equivalent to less than a tenth of world chocolate sales. Power lies with a small group of trading firms and chocolate-makers in rich countries.

“We send raw materials, they add value,” sighs Owusu Afriyie Akoto, Ghana’s agriculture minister.

Ghana and Ivory Coast are trying to claw up the value chain.

Ghana is close to finalising a $600m loan from the African Development Bank, some of which is expected to support cocoa processing. It is also seeking Chinese help to build a state-run processing plant. Observers see cocoa as a test-case for African in-

dustrialisation. But it is not a very useful model. Cocoa is unlikely to bring much revenue or many jobs.

Granted, there have been some successes. About 21% of the world’s cocoa is ground in Africa, up from 15% a decade ago. Ivory Coast grinds nearly a third of its beans and rivals the Netherlands as the world leader by volume.

In Ghana’s Tema “free zone”, the smell of cocoa is in the air. Niche Cocoa, one of several processors there, ships cocoa butter, liquor and cake abroad, while selling chocolate at home. Customers cannot believe it is made in Ghana, chuckles Lloyd Ashiley, the plant manager.

Most of the processing in the region is done by the same multinationals that were already grinding cocoa in Europe or elsewhere.

In Ghana, firms in free zones get tax breaks. The government, which dominates the cocoa industry, gives a discount on smaller, “light-crop” beans to encourage local processing. But when the cheap beans run out, machines sit idle. Nearly half of capacity is unused.

Gone are the days when George Cadbury built model villages for his British workers. A modern cocoa factory is a labyrinth of

juddering metal, supervised from behind computer screens. The entire Ghanaian processing industry employs just a few thousand people. The capital investment required to create one job grinding cocoa in Ivory Coast could create over 300 jobs processing cashew nuts, said the World Bank in 2012.

The biggest problem is geography. Most of the value in chocolate comes from marketing and branding. And it is a big step up from

grinding to chocolate-making.

Consumers are mostly in Europe or North America. Transporting chocolate through tropical climates is a logistical headache.

Chocolate consumption in Africa is low.

Some artisanal confectioners are breaking the mould. Instant Chocolat, an Ivorian firm, sells posh chocs in flavours including baobab and hibiscus. A Ghanaian brand named 57 Chocolate—for

the year of the country’s independence—stamps its bars with the Adinkra symbols more commonly found on Ashanti fabrics. Kimberly and Priscilla Addison, the sisters who founded it, hit upon the idea while living in chocoholic Switzerland. “Why not try to produce a chocolate brand that is uniquely African?” asks Kimberly. But these firms operate on a tiny scale. For wannabe chocolate-makers, alas, there is no golden ticket.

Mining underwater

A new robot system will reopen abandoned, flooded mines Waste not, want not

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HE IDEA of underwater mining is not restricted to the ocean floor (see article). High water tables submerge many terrestrial deposits, too. At minimum, this means doing a lot of pumping to make them workable. Sometimes, it makes those deposits altogether inaccessible. Flooding also adds to the cost of re-opening closed mines. The team behind VAMOS hopes to do something about this.

The Viable Alternative Mine Operating System, to give its full name, is being developed by a consortium of 16 European firms and research institutes. It is currently on trial at Silvermines, Ireland—which, as its name suggests, was once home to workings for silver and other metals. They are now closed and flooded. But one of them,

a source of baryte, the principal ore of barium, has been repurposed as VAMOS’s test bed.

The core of VAMOS is a pair of remotely controlled vehicles. These are floated on-board a special platform into place over the site to be mined, and then dropped through the water (to a depth of 57 metres in this case) by

a crane.

The larger vehicle is a 25-tonne tracked robot (pictured) with a powerful rockcutting head at one end and, at the other, a hydraulic gantry that can carry tools such as drills and grabs. Crushed ore-bearing rock is pumped to the surface through a flexible pipe, and a cable carries power and data between the

robot and an onshore control centre.

The smaller vehicle is called EVA. It has neutral buoyancy and swims around the mining site. It was designed at the Institute for Systems and Computer Engineering, Technology and Science, in Portugal. EVA first makes, and then continually updates, a 3D map of the area—transmitting this cartography to the main vehicle, to assist navigation.

Both vehicles use sonar, cameras and laser rangefinders to work out where they are. They send these data to a pilot in the control centre, who sees them displayed on a multi-screen console of the sort gamers can only fantasise about. A future version may also be able to analyse the ore spectroscopically as it is mined, enabling rich seams

to be pursued and poor ones abandoned.

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Nine insurers control 50% general business market share ... as motor business leads premium table MODESTUS ANAESORONYE

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ut of the total gross premium income of N201.55 billion generated by insurance underwriters in 2016 from non-life/general business risks, 50.1 percent came from nine of the companies.

Industry statistics accessed by Business Day reveal that Leadway Assurance Company Limited led the pack with N21.54 billion, translating to 10.69 percent of the total market share in general business.

This is followed by Custodian and Allied General Insurance N16.22 billion, equal to 8.05 percent, while AXA Mansard came third with N14.29 billion, equal to 7.09 percent.

NEM Insurance followed with N10.63 billion, translating to 5.26 percent; Royal Exchange General Insurance Ltd N9.00 billion, equal to 4.46 percent; Zenith General Insurance N8.56, equals 4.26 percent; AIICO Insurance Plc N7.33 billion, equal to 3.64 percent; Sov-

ereign Trust Insurance Plc N6.76 billion, equal to N3.64 percent; and Mutual Benefits Assurance Plc N6.66 billion, which translates to 3.30 percent.

Meanwhile, of the total premium on non-life/ general business, operators paid out claims amounting to N78.58 billion.

Investment income from the business was N30.44 billion, achieving a profit after tax of N31.55 billion during the review year.

Out of the total premium, motor insurance business contributed highest at N41.39 billion, and paid out 18.4 billion on claims, while Oil and gas followed with N25.42, out of which N13.16 billion was paid as claims. Fire business followed with N15.51 billion and paid out N11.38 billion on claims.

General accident business contributed N13.31 billion, and paid out 10.4 billion; Marine N7.58 billion and also paid out N6.88 billion; and miscellaneous gross premium during the period was N7.35 billion, while claims was N7.07 billion.

Atiku targets $900bn economy by 2025...

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people and capable of taking its rightful place among the top 20

economies of the world.’

He said that his ‘economic policy will be job-centred’ especially for the country’s teeming youth population. He identified some of the immediate economic challenges facing the country to include; slow and uninspiring economic growth, undiversified economy base with oil accounting for 95 percent of export earnings, uncompetitive economy which has seen Nigeria ranking 115 out of 140 countries on the World Economic Forum’s competitiveness ranking and a decline in foreign investments into the country, which he attributed to an ‘inhospitable business environment.”

He said the economy also faces a ‘precarious fiscal position, with significant portions of federal government revenues going into debt servicing, a fragile financial system where monetary policy has not been supportive of economic growth, a poor exchange rate management and significant disparities between regions.

As president, Atiku said, the country’s critical policy priority will be to build “a broad based, dynamic and competitive economy with a GDP of $900 billion by 2025.” He said that his economic agenda will be based on five pillars; competitive and open economic system; redeeming public institutions; reducing infrastructure deficit; promoting economic diversification and finally on human capital development.

He identified three main economic growth drivers with him as president. These will include; enabling business environment through reform of public institutions to make them ‘to make them

more supportive and facilitating; enhancement of private sector access to credit as a priority; and strengthening of regulatory institutions and shielding them from political interventions.

A second driver will be the use of public private sector partnerships to accelerate infrastructure delivery. The aim is to use PPP, he said, to double infrastructure stock as a percentage of GDP to 50 percent of GDP by 2025 and 70 percent by 2030. He also said that power sector reform will be a key priority with a target of 20,000MW by 2025.

The third economic growth driver is built around a stable macroeconomic environment which will be aimed at deepening monetary and fiscal policy reforms to promote a stable macro-economic environment.

“Monetary and fiscal policies shall ensure low inflation rate, stable exchange rate and interest rates that will be supportive of business quest for credit,” Atiku stated in the policy document which will made public this afternoon.

Meanwhile, President Muhammadu Buhari on Sunday kicked off his Presidential re-election bid with a promise to create over 15m jobs if re-elected.

This was contained in one of the Policy documents released at the commencement of what is seen as the flag off his campaign for reelection bid in 2019 elections.

The event which held at the banquet hall of the Presidential Villa Abuja had in attendance stalwarts of the ruling All Progressives Congress (APC) under which he is running.

Among the dignitaries include: Vice President Yemi Osinbajo, Wife of the President, Aisha Buhari, Chair-

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L-R: Andrew Nevin, chief economist, PWC; Bismack Rewane, MD/CEO, Financial Derivatives Company; Babatunde Ruwase, president, Lagos Chamber of Commerce and Industry; Joe Ogbuala, director, policy strategy and risk management, Debt Management Office; Adegoke Oyelami, partner, KPMG, and Alexander Ogedengbe, vice president, Nigeria Academy of Engineering, during the LCCI forum on Nigeria’s Debt Sustainability held in Lagos, at the weekend. Pic by Olawale Amoo

Businesses jostle for multi-billion naira presidential campaign spend DANIEL OBI & INIOBONG IWOK

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t is business time for printers, media organisations, social media influencers, blogs, advertising agencies, and political consultants as presidential candidates and National Assembly members kick off campaigns for national offices across the country.

It is a once in a four-year business opportunity but has the capacity to change the fortunes of the businesses that benefit from the huge campaign spend that political candidates are about to unleash in order to win the votes of Nigerians.

Ahead of the official campaign season taking off, political candidates have been engaging different communication specialists to help them craft a message that will sell

their candidacy to Nigerians and win their votes for the 2019 elections.

Campaigns for presidential election and NASS elections commenced on November 18 and it is expected to last until January 14, 2019; while that of governorship and State Houses of Assembly would start on December 1 and end on February 28, 2019.

Indication of such positioning has been seen in the setting up of public affairs and political campaign management services by some media agencies for governments, political parties, aspirants and candidates aimed at preparing them to structure their political campaigns better in the run up to the 2019 general elections.

Managing Director and Chief Strategist of Chain Reactions, Israel Jaiye Opayemi, which established such units, explained this is to prepare can-

didates for the tough challenges ahead.

Both print, electronic media houses to advertising buying media agencies, online media and banner printers are eyeing the multi-billion Naira spend by politiciansduringthecampaignperiod.

Already, the vice President of Organisation Outdoor Association of Nigeria, OAAN, Emmanuel Ajufo confirmed that banners have been printed and outdoor sites have been allocated, waiting to be deployed.

He said OAAN is ready to work with all parties in the campaign period.

But John Ehiguese, President of Public Relations Consultants of Nigeria, frowned at planned moves by political parties to recruit foreign agencies for marketing communication jobs in Nigeria.

•Continues online at www.businessdayonline.com

Waiting for Kachikwu’s letter of resignation ... as refineries remain dormant STEPHEN ONYEKWELU

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be Kachikwu, Nigeria’s minister of state for petroleum resources had on 22 May 2017 in an interview with the BBC World Service said he would resign if Nigeria continued to import refined petroleum products by 2019 but Nigeria’s refineries have remained moribund.

Asked when Nigeria was going to be self-sufficient in terms of refining petroleum, Kachikwu said “2019 is the target time. I target 2019. If I don’t achieve it, I will walk. I put the date and I will achieve it” he had said.

However, as at January 2018, the Portharcourt Refining Company (PHRC) performed at 20 percent, Kaduna Refining and Petrochemicals Company Limited used 4.7 percent of its capacity and Warri Refining and Petrochemicals Company Limited came in at 0.00 percent. In August only the Warri refinery recorded some activity at 10.70 percent, Kaduna and Porthacourt reported 0.00 percent performance, according to the Nigerian National Petroleum Corporation (NNPC) latest Monthly Oil and Gas report for August. This has been attributed to work going on

Analysis

at various sites.

The refineries lost a total of N68.12bn in the first six months of this year, making a profit of N928.81m in April, for the first time in 10 months, according to the data from the NNPC. “The refineries are plagued by lack of proper maintenance and security issues for over a decade and this has resulted in gross underperformance.

Besides the non-availability of crude, the refineries have not undergone a Turn Around Maintenance (TAM) in recent times as the last was done in 2013. To have them working at 90 percent by the end of 2019 is quite impossible” Ayodele Oni, energy partner at Lagos-based Bloomfield said in note to BusinessDay. “The Nigerian National Petroleum Corporation (NNPC) had declared that it would upgrade and expand refineries in 2016. The refineries are still grossly underperforming till date.”

The NNPC has four major refineries, two in Port Harcourt, Rivers State, which combine to form the Port Harcourt Refining Company (PHRC) with a combined installed capacity

of 210,000 barrels per stream day (bpsd); the Kaduna Refining and Petrochemical Company Limited (KRPC) with an installed capacity of 110,000 bpsd; and the Warri Refining and Petrochemical Company Limited (WRPC) with an installed capacity of 125,000 bpsd. All the refineries have a combined installed capacity of 445,000 barrels per day.

For 2017, the Warri refinery functioned highest in January, utilising 42.6 per cent of its capacity. The Port-Harcourt refinery, for the year, functioned at its peak in December, utilising 41.7 per cent.

The Kaduna refinery had the worst performance in terms of capacity utilisation in 2017. It functioned most in February utilising just 34.4 per cent of its capacity.

When state owned Kaduna Refinery and Petrochemical Company Limited shut down operations in February due to the non-availability of crude oil four million litres of petrol, 2.5 million litres of automotive gas oil, and 1.6 million litres of kerosene, which the refinery produced daily were lost.

“Kchikwu’s claim is clearly not feasible, for anyone who has visited

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Death of a colossus and legend

Bashorun J.K Randle Randle is Chairman/Chief ExecutiveJK Randle Professional Services Chartered Accountants Continued from last week

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ollowing the revenge coup of July 29, 1966, Nigeria was without a government for three days. The break-up of the country loomed large on the horizon. It was both the American Ambassador to Nigeria, Mr. Elbert G. Mathews and the U.K. High Commissioner to Nigeria, Sir Francis Cumming-Bruce who first raised the alarm and initiated an aggressive damage control with top civil servants as the arrow head. They warned the Northern military officers that the Northern region would be entirely land-locked (with no access to the sea).

In the midst of the chaos, the most senior officer in the Army, Brigadier Olufemi Ogundipe a Yoruba man made a feeble attempt to take over as Head of State only to be rebuffed by a subordinate of northern origin who bluntly refused to take orders from anybody other than a northern officer.

It was the British who chaperoned Brigadier Ogundipe to a ship berthed in Apapa and arranged a safe passage to Britain where he was subsequently appointed as the Nigerian high Commissioner to Britain (the Court of St. James) as compensation for his humiliation.

Separately, the soldiers were on a collision course with the civil serv-

ants. While 32-year-old Head of State General Yakubu “Jack” Gowon was somewhat in awe of the top civil servants and regarded them with utmost respect, this did not appear to go down well with Brigadier-General Murtala Mohammed who was the strongman of the military government. He was firmly of the view that the soldiers should call the shots without any meddling from civil servants particularly the “Super Permanent Secretaries” – Chief Allison Ayida; Chief Phillip Asiodu; Alhaji Ahmed Joda; Mr. Ime Ebongetc.

Perhaps, it was predictable that when Murtala Muhammed became Head of State on July 30, 1975 it did not take him and his deputy Major-General Olusegun Obasanjo long to embark on the purge of the civil service culminating in the sacking of all “Super Permanent Secretaries”. The only one left standing was Chief Allison Ayida!

On 26th February, 1984, seventeen Federal Permanent Secretaries were sacked by the Military government in one fell swoop.

It was brutal and capricious. The hurricane was on a mission of destruction and inevitably destroyed many lives (both the guilty and the innocent) – from judges (right up to the Supreme Court), to doctors, engineers, chartered accountants, architects as well as cooks, stewards and drivers. Even military officers were not spared. After the turmoil and dislocation, the public service was never the same again.

Perhaps we should rewind the tape back to a meeting of the Supreme Military Council chaired by General Gowon who inadvertently referred to his SGF (Secretary to the Government of the Federation) as “my secretary” only to be promptly corrected by the then SGF. Alhaji Abdulazziz Attah who insisted on clarifying matters:

‘

I have never seen so many Oxford and Cambridge graduates under one roof, outside England. How come your country is in such a mess?”

He then proceeded to deliver his verdict and answer to his own question.

“Because you have conceded leadership to your second eleven while the first eleven remains on the sidelines

’

“I am NOT your Secretary, I am Secretary to the Government of the Federation.”

Anyway, when Chief Ayida retired from the civil service (during the regime of General Olusegun Obasanjo) in 1977 he had plenty of time to spend at the Metropolitan Club which was only a short distance from his house at Idowu Martins Street Victoria Island; the Lagos Tennis Club; King’s College Old Boys ‘Association and other pursuits in business – Chairman, CFAO; Chairman, Credit Lyonnais Bank; Chairman, Nidogas Company Limited etc. Virtually every afternoon/evening he would play tennis at the Lagos Lawn Tennis Club with the likes of Alhaji Raheem Adejumo; Chief Molade Okoya-Thomas; Chief Philip Asiodu, Senator (Dr.) Olusola Saraki; Mr. Ime Ebong etc.

He was a self-confessed loner but he was endowed with great intellect and consummate cerebral curiosity. I

remain appreciative of his endearing and unfailing friendly disposition to me and our extensive discussion of politics, economics and history. It is common knowledge that he was very soft-spoken. He spoke in whispers. He was especially supportive of the Gold Medal Lectures which I initiated while I was Chairman of Eko Hotels Limited.

He was even kind enough to remind me that the Economic Summit (now known as the Nigerian Economic Summit Group) was my idea!

The gist of it was that while I was on a visit to the U.S. to attend a meeting with American partners of KPMG, one of their very senior partners was a participant at the retreat for senior government officials, politicians and professionals which was hosted at Camp David by President Bill Clinton.

It was a great success and I was eager to persuade the Nigerian government to follow suit by convening a similar meeting to be hosted by the then Nigerian President /Head of State. Anyway, I brought it up at a reception hosted by the British High Commissioner to Nigeria with several eminent Nigerians in the audience. Our host warmly embraced the idea and encouraged those in the audience (Chief Ayida was right there) to support it.

When the idea eventually took off, I was entirely side-lined and remain so.

However, what does it matter regarding who gets the credit?

I cannot but recall that when the Nobel laureate, V.S. Naipul visited the Metropolitan Club as my guest, he was seated at the same table as Chief Ayida along with several Oxford and Cambridge graduates. After the lunch, I escorted my guest to his car. However, before I could bid him farewell, he was thoroughly perplexed (and he remonstrated): “I have never seen so many Oxford and Cambridge graduates under one roof, outside England. How come your

country is in such a mess?”

He then proceeded to deliver his verdict and answer to his own question.

“Because you have conceded leadership to your second eleven while the first eleven remains on the sidelines.”

Something else for which I remain eternally grateful is that on one occasion at the Metropolitan Club, I shared a discussion with Chief Ayida.

He protested vehemently that he and his colleagues in the civil service had done all in their power and intellect to steer Nigeria in the right direction by being pro-active and patriotic. A case in point was when there was clamour for General Yakubu Gowon to hand over to a civilian regime.

Late Chief Obafemi Awolowo was the front runner. However, it was the top civil servants (the “Super Permanent Secretaries”) who took the initiative, when there was some semblance of resistance to the choice of Chief Awolowo, to discreetly initiate a “Plan B”. It was not by happenstance that their choice fell on an old boy of King’s College – Alhaji Femi Okunnu SAN! He was the Federal Commissioner for Works and Housing. Their “Plan C” zeroed in on Chief Anthony Enahoro the Commissioner for Information, who was a KCOB too!

No tribute to Chief Allison Ayida would be complete without giving due credit to his beloved wife, Mrs. Remi Ayida who preceded him to the grave.

She was entirely devoted to her husband in addition to being a formidable “prayer warrior”. Undoubtedly, both Chief & Mrs. Allison Ayida nurtured and groomed many men and women who have achieved greatness in their own right and remain loyal to the couple who inspired them (and whom they still regard as their role models).

May their souls rest in peace.

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Multiple taxes, levies and regulations in the Nigerian telecommunications industry

ROTIMI AKAPO Akapo is Partner/Head, Telecommunications, Media & Technology Practice Group, Advocate Law Practice

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ith elections looming and the need to deliver on earlier campaign promises, there is renewed revenue generation drive by all tiers of government. The telecommunications industry is a major source of tax revenue for governments and operators are frequently subjected to audits by tax authorities to confirm compliance with their tax obligations. It is reported that about $13billion was raised by governments in the Sub-Sahara region of Africa in the form of taxation in 2016. MTN Nigeria claims to have paid over 2 trillion naira to the Nigerian government since 2001.

There is however an intrinsic link between high taxes and levies and investments in infrastructure and

equipment by operators, quality of services and the affordability of the service by the subscribers As a result of the nature of their services, telecommunications services providers have presence in different locations across the country in order to provide services and support to their subscribers. This therefore brings them under the jurisdiction of various states and local governments, different governmental agencies, communities and tax authorities and sometime leads to conflicts in relation to taxes and levies payable on their operations.

The taxes and levies (approved list for collection) Act 1998 provides a list of taxes and levies that the various tiers of governments in Nigeria can collect. In 2015 the minister of finance published a schedule to the Act which, even though was expected to simplify taxes and levies, further compounded issues by increasing the list of taxes from 39 items to 55.

The tax burden of a typical telecommunications service provider includes not just the general taxes and levies imposed on all companies in the country, but also a myriad of sector-specific and other “bespoke” taxes and lev-

ies. These taxes include Companies Income Tax, the Capital Gains Tax, Withholding Tax Personal Income Tax, Stamp Duty, National Industrial Training Fund (NITDF),Employees Compensation Scheme, The Tertiary Education Trust Fund (TETFUND) National Housing Fund Contributory Pension Scheme, Customs Duties, Tenement Rates/Land Use Charge, Business Premises Registration Fees, Town Planning and Building Permits, Infrastructure Maintenance Charges, Signages and Mobile Advertisement, Aviation Clearance Permit Fees, Environmental Impact Assessment/ Audit fees.

In addition to the general taxes and levies certain sector specific taxes and levies are further imposed on operators. An Annual Operating Levy (AOL) of two and a half percent (2.5%) of a network operator’s net revenue is to be paid to the NCC; a levy of 0.005 per cent of all electronic transactions undertaken by telcos is required to be contributed to the cyber security fund; operators with a turnover of one hundred million naira and above are required to contribute one percent their profit before tax to the National Information Technology Development Fund (NITDF).

There have been several unsuc-

cessful attempts by the Federal government to have an effective, standardized national Right of Way (RoW) acquisition process and fee.

In an attempt to provide certainty the Federal Government in 2012 approved Right of Way fees for access to federal highways. Amongst the states however, there are wildly differing rates. In addition, states have continued to insist on a right to demand and receive RoW for federal highways, bridges and similar infrastructure running through their states.

Further complicating matters are the frequent disputes between the federal ministry of works and the National Inland Waterways Authority (NIWA). The latter demands RoW fees on bridges and other infrastructure built by the former, and on which the former has already charged RoW fees, on the grounds that such infrastructure passes over waterways over which they have jurisdiction. Added to the mix is the fact that State Waterways Authorities often bill for the same routes as NIWA. So to install network infrastructure on bridges running across federal highways, operators might be required to pay RoW fees to the federal government, state govern-

ment, NIWA and state waterways authorities.

The operators allege that there are over 38 different taxes and levies on their operations by the various tiers of government in Nigeria and different government agencies. This they consider a threat not only to their businesses but also to further investments in the industry. Government clearly has a right to impose taxes on businesses that operate and benefit from the public amenities, infrastructure and social services it provides. The expectation however is that a balance can be struck between the legitimate expectations of government and the certainty and fairness businesses expect for them to pursue and achieve their business objectives. Taxes in the telecommunications industry should be aligned with other industries and in line with international best practices. Uncertainties over taxes and levies affect investment decisions and the anticipated taxes and levies are expectedly built into the cost of services and products and ultimately passed on to subscribers.

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Another view of ‘office politics’

TAJUDEEN AHMED Ahmed, a strategy expert, with several years of senior management experience in consulting, commercial banking, and FMCG, is the General Manager/Group Head Business Development at BUA Group.

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he inspiration for this piece was accentuated by the powerful presentations made by Carla Harris, the energetic, fierytalking, 31-year Wall Street veteran and Vice Chairman/Managing Director at Morgan Stanley; author of “Expect to Win”, “Strategize to Win”, etc whose presence was the main highlight at the CFA Society Nigeria’s two-day event in Lagos, between November 8 and 9 2018, which included its Nigeria Investment Conference 2018, Women in Investment Management Workshop and dinner for new CFA charter holders.

Carla Harris, at her best in using real anecdotes through her exceptionally rich corporate experience, spoke, among others, about the distinction between “performance currency” and “relationship currency”. She propounded a strikingly refreshing theory that whereas “performance currency” might take a young, relatively inexperienced professional through the corporate ladder, via mid-level promotion, bonuses, deployment, exposure to diverse career opportunities; it is “relationship currency” that matters in

TADE OWODUNNI Owodunni is the Head, Governance Services Unit at DCSL Corporate Services Limited. Kindly forward comments and reactions to towodunni@ dcsl.com.ng.

T

here is an overwhelming consensus that 2019 promises to be an eventful year for Nigeria. Being an election year, the horse trading, forging of alliances and switching of political affiliation that characterize the onslaught of election season commenced early this year and now appears to have gained considerable momentum with the political gladiators scheming and positioning themselves for 2019. As can be expected, all other sectors of the Nigerian macro-economic spectrum are not left out, with businesses carefully analyzing the environment, engaging in extensive permutations and fine-tuning their positioning strategies for maximum effect to exploit the opportunities that will inevitably emerge from the outcome of the elections, irrespective of the direction that the tide turns.

Beyond a general acknowledgment that 2019 promises to be a year when politics will bear significant impact on both the economy and the economics of the Nigerian business environment, there are no clear certainties about the other ways in which the regulatory direction of government will have wide-

the room where his fate is sealed by top management regarding top promotions and other career-defining opportunities, in an exercise that is shorn of hard skills, but tilted heavily towards soft skills, akin to ‘politics’.

Any delegate who attended Carla’s sessions without taking home several ‘pearls of practicable wisdom’ must be upset with his/her self. I have not had a longer attention span, and taken many notes, at a public forum in a long time than I did during her sessions. Therefore, it is fitting to thank my former colleague at Arthur Andersen, Banji Fehintola, President of CFA Society Nigeria, for inviting me.

Office politics has been with us since the idea of forming a business or an organization birthed. The simplest definition of office politics, I found, was one provided by Harold Dwight Lasswell, late famous American political scientist and communications theorist, Professor of Law at Yale University, President of the American Political Science Association (ASPA), of the World Academy of Art & Science (WAAS), and of the American Society of International Law, who defined it as “the unwritten rules that determine who gets what, when, and how”- a promotion, a budget for a project, a say in the decisions of bossesand who does not. A staffing firm, Accountemps, in its 2016 survey, reported that “80% of professionals said they believe office politics are alive and well in the work place” and also that gossip and rumours are the most common forms.

With this background, is office politics truly bad, cruel, and dirty as is usually portrayed in the same manner as politics and politicians are perceived? Could office politics

‘

In socializing, you should not be popular for gossips and idleness, moving from one office to the other, and you should not necessarily be the loudest at meetings; just as you should not be seen as the one with a permanent scowl in an attempt to show ‘seriousness’ and ‘intelligence’

’

ever be good, fair, and acceptable in advancement of both personal and organizational interests?

As it is with politics of countries, associations, groups, families, etc, there are implications of ‘bad office politics’ and ‘good office politics’.

The former are easily identified, and they include backstabbing, virulent and malicious rumour mongering, wicked maneuvering, ‘sucking up’ to bosses and other powerful people,

and other forms of negatives that people deploy for undue advantage at the expense of other employees in an organization. At the centre of bad politics are the advancement of personal causes and the destruction of others! In contrast, however, good office politics have features such as being smart, savvy, networking better, being street-wise, managing diverse stakeholders, being convivial, adept at applying emotional intelligence, etc. A pivotal feature of ‘good office politics’ is advancing one’s interest without neglecting or destroying other employees’ and/or the organization’s corporate interest.

It may seem that there is a thin line between effectively playing office politics and being perceived as selfish, sly, and slandering. However, in my view, and from research, it is not; and in fact, it may actually be a necessary evil. There may be instances where decision makers retort at critical meetings, saying: “what does that guy do?” in determining the career growth of an employee who is known as a silent achiever; committed, honest, and professional.

Apparently, this employee may have had zero ‘relationship currency’, i.e. to those who matter, his taciturn nature, being a silent achiever, might be his greatest undoing.

The professional, career-driven employee is advised to develop certain skills to partake in clean, positive, office politics. First, obtain details, informally, about the culture of the organization; by this, I mean unwritten rules- beyond the employee handbook- these are things like “this is how we do it here”, influential employees of all cadres, and the organization’s hierarchy and ‘levers of power’ beyond the official

organogram. Second, learn how to socialize. In socializing, you should not be popular for gossips and idleness, moving from one office to the other, and you should not necessarily be the loudest at meetings; just as you should not be seen as the one with a permanent scowl in an attempt to show ‘seriousness’ and ‘intelligence’.

Third, be aware that the interest of the organization is paramount and should be the fulcrum of your own career interest as long as you are an employee. Fourth, seek opportunities for taking responsibilities beyond your core area, office or group. You should seek, or be eager to participate in, multi-functional committees, tasks, projects, etc with a view to giving critical decision makers an idea of your diverse skills and competences, and team-player attributes. Fifth, and most importantly, you must do the work for which you were employed; be confident, smart, and competent.

In doing this, do not only be competent in the corner of your office, but be seen as truly competent by those who matter in the organization, without being garrulous, self-indulging, and megalomaniac.

The challenge for the professional is to strike a balance between the two variants of office politics. He must avoid being perceived as manipulative and Machiavellian; but rather, seek to become self-assured, friendly, and purpose-driven, in advancing both personal and organizational interests. As Carla Harris forcefully asserted to her CFA Society Nigeria audience, in Lagos, “perception is a co-pilot to reality”.

Send reactions to: comment@businessdayonline.com

Corporate governance will take centre-stage in 2019 ‘A leader’s job is to look into the future and see the organization not as it is but as it should be’ - Jack Welch spread, direct impact on the local business environment as there are precious few reliable projections on this vital subject. With businesses currently busy with finalizing budgets and financial projections for 2019, the latent impact of the activities of key industry regulators and how new regulations will influence outcomes as well as the general climate of business in Nigeria next year, is a subject that will burden the minds of many business leaders as they prepare to steer their businesses for survival through an unpredictable, nay potentially stormy season.

An easy prediction that should help shed clarity to purpose regarding planning against the possible direction of regulatory activity in 2019, is the pending issuance of the eagerly anticipated Nigerian Code of Corporate Governance, 2018 by the Financial Reporting Council of Nigeria in the coming days. Albeit the clearly stated intent for the Code to assume reporting consequence effective from the 1st January 2020 when it is expected to reflect in the annual reports and accounts of companies, the new “National Code” is nonetheless expected to bear significant impact on the governance of public and private companies in Nigeria. To prepare all stakeholders for the code, the council had undertaken extensive engagement with other

key regulators, shareholder associations, and the general public with elaborate and well-attended public hearings organized across the six geo-political zones of the country and at the FCT. The comments and feedback generated from the exercise had been collated, painstakingly deliberated upon and vigorously milled through the internal machinery of the council to ensure that all salient areas were covered to enable the code achieve its set objective, key of which is the institutionalizing of the highest standards of corporate governance best practices in Nigerian companies, with emphasis on those not already covered by sectoral regulations.

Given the code’s ‘apply (first) and explain (afterwards)’-based principle of application, many companies that have all the while assumed an ambivalent culture towards corporate governance tenets and matters of values and ethical practices, may find themselves struggling to adapt the minimum standards set forth by the code in 2019 and worse still may, without the requisite level of foresight and preparation, wilt under the potential costs and pressures associated with the necessary changes in regulation expected to herald the issuance of the new code. The lot shall fall upon unprepared entities to hastily re-align their governance precepts and practices to measure

up to the novel standards established by the code and institutionalize appropriate structures and practices to avert the negative fall-out that will accompany the anticipated regime of regulatory scrutiny.

A cursory analysis of some of the ways in which the code will impact hitherto unregulated business segments of the Nigerian economy shall be undertaken below; The ‘apply and explain’ philosophy: Obviously intended to allow the enlarged category of companies that will find themselves ensconced within the compliance ambit of the code, a staggered adoption of code provisions, the philosophy of the code expects a scalable adoption of the provisions such as is tailored to meet the peculiarities of its users to suit the type, size and growth phase of each company with the ultimate goal of achieving substantial compliance with governance best practice principles set forth therein. It emphasizes flexibility and attempts to create some distance from the mechanical approach to code compliance. It will be quite interesting to watch this philosophy evolve in practice given the maturation stage of our society where voluntary or flexible compliance (or ‘appliance’) with simple, logical, sustainability enhancing practices had previously failed to gain acceptance amongst corporates and where as individu-

als, the citizens still struggle to obey traffic signs and lights, absent enforcement or the threat of sanction.

The application (or scope) of the code: The new code shall be applicable to a wide range of companies, with greater emphasis placed on its adherence by public companies (all PLCs whether or not they are listed), private companies that are holding companies of public companies and regulated entities; concessioned and/ or privatized (formerly public or government-held) companies and companies operating in the regulated industries sector. In practice, one can reasonably anticipate that ultimately, all companies liable to submit their financials will be held up to similar standards of governance compliance as those entities mentioned above. Such companies would be encouraged to undertake a corporate governance compliance review to ascertain the extent of their compliance framework with the provisions of the new code.

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Frank Aigbogun editor Anthony Osae-Brown DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Patrick Atuanya EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, DIGITAL SERVICES Oghenevwoke Ighure GENERAL MANAGER, ADVERT Adeola Ajewole ADVERT MANAGER Ijeoma Ude FINANCE MANAGER Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso SUBSCRIPTIONS MANAGER Patrick Ijegbai CIRCULATION MANAGER John Okpaire DIGITAL SALES MANAGER Linda Ochugbua GM, BUSINESS DEVELOPMENT (North)

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GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

Monday 19 November 2018

The Boss Mustapha doctrine on powers of boards

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he matter of the management and governance of the National Health Insurance Scheme has brought up broader issues of the governance of publicly owned corporations in our land. The federal government has made statements that go directly to the purpose and overall value of the Boards of Governing Councils of our agencies of government. The Boss Mustapha Doctrine deserves scrutiny.

The NHIS matter is complicated. The Minister of Health as supervising authority sanctioned its chief executive, Usman Yusuf.

The Executive Secretary ignored the order of the minister, Isaac Adewole, and insisted that only the President, who appointed him, could discipline him. Mr President returned his appointee to the NHIS, this agreeing with Yusuf’s reading of the situation.

A few months later, Yusuf earns another sanction from the Governing Board of the NHIS. They had issued queries which the Executive Secretary spurned. They suspend him.

Enter the Secretary to the Government of the Federation, Boss Mustapha, a lawyer. Mustapha pronounces that only Ministers and not the Councils or Boards can discipline heads of agencies of government.

In less than a year, therefore, Boss Mustapha has made two striking pronouncements on the

powers of Governing Councils of federal government agencies. In the first, he relayed the ruling of Mr President for Yusuf to the effect that only the President who appoints can discipline the head of a government agency. In the second, he now says only Ministers can do so.

Mustapha laid down the rules in October at the Induction programme for batches 2, 3 and 4 Governing Board Members of Federal Parastatals, Universities and Medical Centres at Transcorp Hilton Abuja. The Presidency had an earlier one from 26-28 July for board members of publicly owned companies.

Mustapha said that parastatals are established to provide services and are under the supervision of the Presidency or a Minister. He added that “the roles of Governing Boards/Councils as the case maybe, are prescribed by the statutes, guidelines and extant circulars”. According to reports, Mustapha stated that the Governing Boards/Councils headed by chairman should strictly focus on providing policy direction and project implementation to enable the parastatals to achieve their mandates.

Mustapha defined the duties of the boards of government-owned corporations as follows. Set operational and administrative policies to accord with government policy directives. Supervise implementation of policies above. Avoid involvement in the daily management of a parastatal or agency.

Minister to control the parastatal through its Board. Boards operate part-time.

Mustapha added a proviso. The Governing Councils may “articulate infractions, investigate wrongdoing and make recommendations to the government through the supervisory ministry”.

We now have a situation where Governing Boards effectively have responsibility without authority.

They can design policies but how do they implement the policies and supervise them if they lack authority over the link between the Board and Management? The Chief Executive of each parastatal is the representative of the board in the execution of policies.

The managers of a business are agents of its shareholders. Boards represent the shareholders principally. Their role as representatives of the shareholders is the reason many boards act in a fiduciary capacity and have enormous powers.

The Mustapha doctrine on governing boards effectively deprives the representatives of shareholders the power of sanctions.

For the boards of the over 400 publicly-owned enterprises of the federal government, much more is at stake. The parastatals represent an investment in billions throughout more than fifty years. They are the organs for effecting the policy direction of the executive arm.

Both CAMA and other regulations spell out clear roles for Boards. CAMA, in particular, ex-

pects that the board must “ensure proper management of the company”. Boards are required to focus on strategic issues, provide intelligent “capital” including ideas to enhance performance, networking and corporate best practices and empower management while holding them accountable.

The Secretary to the Government tries an uncomfortable balancing act as the government tries to protect the interests of its appointees as Chief Executives while limiting the roles of its boards.

It cannot work. There is either a board, or there is none.

Our government-owned companies should be catalysts for value creation. The boards of such agencies should “should have the necessary authority, competences and objectivity to carry out their functions of strategic guidance and monitoring of management.

They should act with integrity and be held accountable for their actions”, as the OECD declares in its guidelines.

There is now an urgent need for the federal government to take a closer look at the expectations from its parastatals. this holistic review would look at the Agencies, their purpose and expected contributions to society, their management and governance practices. Such a review is critical to ensure that the wooliness in the declarations on the roles of governing boards does not contribute to further deterioration in the perfomance of these agencies delivering sub-optimal services.

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Monday 19 November 2018

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Britain and the European Union

Into the Brexit endgame

Continued from page 14

How Parliament should weigh up the Brexit deal

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T LAST, BRITAIN’S game of three-dimensional chess with the European Union is entering its closing phase. On November 14th the two parties published a draft divorce agreement, 585 pages in length. Nearly two-and-a-half years after the British shocked their own government by voting to leave the EU, they are about to discover what Brexit really means.

The game is by no means over. The deal still has to be agreed by the EU and, harder still, by the British Parliament. Several ministers, including the Brexit secretary, resigned in protest; Theresa May could yet be toppled.

MPs must grapple with multiple loyalties: to their constituents, their parties and their own beliefs, all of which are likely to have shifted since the referendum. Within weeks they will have to make the biggest decision facing Britain, and one of the biggest for Europe, in generations.

If the country has learned anything since 2016, it is to look before it leaps. Yet, in what well summed up the level of debate on Brexit, hardline Leavers and Remainers alike trashed the deal before they had read a word of it. This makes no sense. The terms

of the divorce will take time for MPs and those they represent to digest— and they may well be amended by European leaders before Parliament has its vote. Nor is it clear what would happen in the event that the deal were voted down: more negotiating, a second referendum or crashing out without a deal? But as the crunch vote nears, MPs must consider how to approach this fateful question.

First, forget the past. The cheating that went on during the campaign, the premature triggering of Article 50 and the thin preparations are maddening.

But they are questions for the inquiry

that will surely one day dissect this national fiasco. The task before Parliament is to decide in a cool-headed way whether adopting the terms on offer is better for the country than rejecting them.

Those who backed Remain—a group that includes this newspaper, as well as most MPs—will find little in the deal to make them think they were wrong. Although it legally sets out only a temporary framework, its terms are clearly worse than the status quo (see article). Yet if they are to respect the referendum, MPs should also judge the deal against what voters

were promised. The Leave campaign had no formal manifesto, and most of those behind it have since fled the government. But the animating idea was to “take back control”. In some ways the deal does this, notably in immigration, where Britain would reclaim the right to limit migration from Europe. The price of this is being kicked out of the single market, which would hit the economy. MPs must decide whether the government is right that the public accepts this trade-off.

In other ways Britain will unequivocally forfeit control. It will stay aligned with many of the single market’s current and future rules, to keep trade flowing and the Irish border open, something the EU has made a condition of any deal. Once outside the EU, Britain will have no say in setting these rules. European judges will still arbitrate on such matters, even though Britain will no longer be able to nominate them. This is not taking back control but giving it up.

Meanwhile, as long as it remains in a customs union Britain will not even get the consolation prize of signing trade deals with other countries, something by which many Brexiteers have come to set enormous (and unwarranted) store.

Back from the dead

Friedrich Merz stakes his claim to succeed Angela Merkel

He’s a strong contender to take over leadership of the CDU in December

“F

RIEDRICH THE great” roared one headline. The hype that attended the surprise declaration by Friedrich Merz, a politicianturned-businessman, that he would run for the leadership of Germany’s Christian Democratic Union (CDU) may have been a trifle overdone.

But as Angela Merkel’s long reign as chancellor draws to a close, Mr Merz’s gambit has exposed the party’s thirst for political novelty.

Mrs Merkel’s decision on October 29th to vacate the CDU leadership, a position she has held for 18 years, has unleashed passions that some Germans had forgotten they had.

“The CDU lives!” gushed a party vice-chairman.

At first blush, the 62-year-old Mr Merz seems a curious agent of renewal. A longtime CDU man from a small town near Dortmund, in Germany’s west, he earned his spurs as a fearsome parliamentarian in the 1990s. But in 2002 he was felled as floor leader of the parliamentary party by Mrs Merkel, whose ambition he had underestimated. He left the Bundestag in 2009 for a lucrative career in law and finance, although he kept one foot in politics, notably as chairman of Atlantic Bridge, a body that fosters links between Europe and America. Over the years, as frustration with Mrs Merkel spread inside the CDU, Mr Merz grew used to batting away questions on his

political ambitions.

Yet for many in the party’s conservative base, says Ruprecht Polenz, a former CDU general secretary, he remained a “projection screen”.

Where Mrs Merkel was cautious and consensual, he is spiky and combative. Her gestures to the left won votes from Germany’s Social Democrats (SPD) but irritated many in her own camp; Mr Merz once claimed Germany’s tax code should be simple enough to fit on a beer mat. His comment, in 2000, that immigrants should adapt to German Leitkultur (leading culture), is fondly recalled by conservatives who have not forgiven Mrs Merkel for letting in over 1m migrants in 2015-16. Some of the 1,001 delegates who will gather in Hamburg to elect Mrs Merkel’s successor next month may even secretly

feel that 18 years of being led by a woman is enough.

Yet for all that, Mr Merz is unlikely to present himself as the candidate of rupture. Despite the sense of torpor under Mrs Merkel, it remains a minority view in the CDU that renewal demands a sharp rightward turn.

(Jens Spahn, a young rival to Mr Merz who best represents that camp, has already been written off by many commentators.) At a press conference announcing his candidacy, Mr Merz seemed more interested in attacking the fringes of German politics than in bolstering his conservative bona fides.

Mr Merz also raised eyebrows by suggesting that Germany should have provided a more constructive response to the European reforms proposed by Emmanuel Macron,

France’s president. That followed his decision to sign an open letter by a group of German dignitaries urging such European reforms as a common army and an unemploymentinsurance fund. Some of these ideas may alienate precisely those party members who have supported Mr Merz’s candidacy most vocally.

His CV presents a second potential difficulty, notes one CDU deputy.

Unlike Mr Spahn, who has served in the finance and health ministries, or Annegret Kramp-Karrenbauer, the other leading candidate, who has run one of Germany’s states, Mr Merz has no administrative experience to speak of. That counts against him.

Few observers believe Mrs Merkel’s stated wish to serve out her term as chancellor until 2021 will be granted should Mr Merz become party leader.

If she goes early, the fraying coalition could collapse, leaving Mr Merz scrambling to form a new government or holding an early election.

The three leading candidates, plus a smattering of also-rans, will make their case to the CDU rank-and-file at eight regional gatherings over the next month. Plenty could happen in that time. In a country that retains an instinctive streak of suspicion towards finance, Mr Merz’s moneymaking past could throw up difficulties, for instance. But he is probably more likely to be concerned with how to lead a party that wants continuity while pretending that it doesn’t.

set up in rich countries over the past decade to invest in developing countries, including Emerging Crowd, Homestrings and Enable Impact, quickly folded.

A big problem is that few developing countries have rules about crowdfunding. Many have allowed activity so far chiefly because the industry is so small, says Anton Root of Allied Crowds, a consultancy. Cross-border transfers using such platforms easily fall foul of rich countries’ rules intended to stop money-laundering and the financing of terrorism.

Some developing countries have realised that they need to act.

Thailand, Malaysia, Singapore and Indonesia have all recently passed regulations on equity crowdfunding or peer-to-peer lending. But from a cross-border perspective, Africa seems most inventive, owing to active entrepreneurs and Western help.

Last month the British government approved a grant of £230,000 ($300,000) to the African Crowdfunding Association to help it craft model accreditation and investor-protection rules. Elizabeth Howard of LelapaFund, a platform focused on east Africa, is part of an effort to see such rules adopted across the continent.

That would help reassure sending countries that transfers do not end up in the wrong hands, she says.

She hopes to enlist the support of the Central Bank of West African States, which oversees eight Francophone countries, at a gathering of crowdfunders and regulators sponsored by the French government in Dakar, in Senegal, this month.

Thameur Hemdane of Afrikwity, a platform targeting Francophone Africa, says the industry will also study whether prospective laws could be expanded to the Central African Economic and Monetary Community, a grouping of six countries. Harmonised rules will not guarantee crowdfunders’ success, but would be a useful step towards raising the amount of diaspora capital that is put to productive use.

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Monday 19 November 2018

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CITYFile 109 Roads: Edo intervenes in Ekpoma, Irrua, Uromi

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Ugbor-Amagba Road in Benin City, being reconstructed by the Edo State Government.

Bayelsa oil spill: Victims to get compensation ... as oil company to discuss with affected communities

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ictims of the oil spill that occurred in Aghoro 1 and 2 communities in Ekeremor local government area of Bayelsa State in May this year can look to compensation, as Shell Petroleum Development Company (SPDC) is to open discussions with the affected communities.

Meanwhile, the pipeline that ruptured and spilled about 1,114 barrels of crude oil into the environment has been repaired by the company.

“The Trans Ramos Pipeline has been repaired and is undergoing extensive testing prior to restart. We cannot give precise timing yet for restart of the line as it depends on the outcome of the testing.

“Statutory post-JIV activities are ongoing, which include site assessment, reme-

diation, and payment of compensation to people and communities impacted by the spills,” Bamidele Odugbesan, media relations manager of SPDC said at the weekend.

Odugbesan also said assured that post investigation activities including discussions on compensation to impacted people were underway.

The oil spill had impacted and polluted an estimated area of 113.03 hectares.

The Joint Investigation Visit (JIV) report of the incident had concluded that the leak on the pipeline was caused by equipment failure.

The impacted areas in Aghoro 1 and 2 communities in Ekeremor local government area, Bayelsa and Odumodu community in Delta are being cleaned up and remediated.

Meanwhile, the SPDC has decried the high rate of vandalism on its pipeline network at its oilfields in Bayelsa resulting to oil leaks and pollution of the environment.

Odugbesan said although the May 17 oil spill on the Trans Ramos Pipeline was traced to equipment failure, many other leaks were predominantly caused by sabotage.

“The rate of spills on the Trans Ramos Pipeline is very worrisome, for instance between April and May 26, spill incidents were reported on that line and out of these, 18 of them were caused by sabotage, eight were operational,” he said.

He said more that 90 per cent of spills recorded in its operations in 2017 were related to sabotage while the oil firm lost an average of 9,212 barrels of crude in 2017.

NDLEA arrests 2 suspected drug peddlers IDRIS UMAR MOMOH, Benin he National Drug Law Enforcement Agency (NDLEA) has arrested two suspected drug peddlers for allegedly smuggling cannabis in Etsako area of the state.

Commander of the agency in the state, Buba Wakawa, who made this known in Benin said that the suspects were apprehended while conveying 50 bags of dried weeds, suspected to be cannabis sativa.

He said that weeds weighed 685 kilogrammes and were impounded along Okpella-Okene road.

Wakawa said that the suspects oper-

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ated in a black Toyota Hiace bus marked Ondo AKR 392 LZ and labelled with stickers bearing the emblem of Nigeria Police.

He said that the suspects were members of a drug syndicate, which specialised in smuggling cannabis from SouthSouth to North-West of the country.

According to him, the bus had reportedly taken off from Uzebba in the Owan West local government area of the state, en route Kaduna State, when it was intercepted during a search operation by officers of the agency.

The commander said that the suspected smugglers also attached a siren to their vehicle in a bid to evade security

checks by law enforcement agents.

The commander further disclosed that 2,412kg of cannabis were seized when operatives of the command raided a forest in Okpuje, in a separate operation.

“So much has been invested into this operation and I am glad that our efforts have been rewarded. If found guilty, the suspects could spend their lifetime in prison, in accordance with section 11(b) of the NDLEA Act. “The Act states that anybody that exports, transports or smuggles in the drugs, popularly known as cocaine, LSD, heroine or any other similar drugs, shall be guilty of an offence and liable on conviction to life imprisonment,” he said.

do State government says it is intensifying repair work on 109 roads across the state, including key roads in Edo central senatorial district.

The special adviser to the governor on media and communication strategy, Crusoe Osagie, said work has reached appreciable stage on Mousco -Ukpenu Road, Ekpoma; Irrua - Uromi Road; Secretarial Road, Igueben; Union Bank Road, Igueben and Uwenlebo Road, Ekpoma, among others.

He added that the ongoing work across Edo central senatorial district include cutting, earthwork, stone base and asphalting.

“We are concerned about the state of roads across the state and have ensured contractors are mobilised to undertake this remedial work during the dry season, as promised. This will touch on all parts of the state. It is to ensure that the major roads are in good state, at the least.”

He listed roads affected in Benin, the state capital to include Boundary Road and Commercial Avenue, as well as Ogbelaka/Evborhan, Yoruba Street and Dumez Road.

Contractors handling the projects were seen with their workers on site when journalists went around Benin metropolis to inspect the road projects.

The workers were seen with their equipment on Ugbor-Amagba Road, which covers 13.8 kilometres, according to the contractor.

Major reconstruction work is ongoing in parts of Government Reservation Area (GRA) in Benin, including Etete Junction on Adesuwa Road, where rehabilitation of failed portions are ongoing.

Workers handling rehabilitation of failed portions of Etete Junction on Adesuwa Road are expected to be deployed to 1st and 2nd Ugbor as well as other roads in the axis.

Man nabbed in Kogi over theft of PVCs

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he suspected hoodlum who was alleged to have snatched Permanent Voter’s Card (PVC) from electoral officers has been arrested in Dekina local government area with his hang members.

The police public relations officer, William Aya , confirmed who confirmed the arrest, said that the police recovered 55 PVCs from the suspect.

According to Aya, the command is still trailing the other fleeing suspects as well as the PVCs carted away.

He disclosed that the PVCs were snatched from electoral officers at the primary school in Egume where they had gone to distribute them.

Aya also confirmed the arrest of two vicious armed robbery suspects belonging to a gang that had been terrorising the state.

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Making a militant

Credit comesdevelopment later Crowdfunding in Africa

A mysterious Shia group has Nigeria worried But the army’s brutal tactics risk making matters worse

nis), who dominate the north, and Christians, who dominate in the south.

Mr Zakzaky has amassed followers in the impoverished north by railing against the government’s ineffectiveness and corruption (while extolling the virtues of Iran). Many are drawn to the IMN’s schools and welfare schemes. But it has evolved into something of a messianic cult, centred around Mr Zakzaky. Similar groups have a long history of stirring up trouble in the north. The IMN’s rise coincided with that of the Yan Tatsine cult, which followed a preacher called Maitatsine and clashed with the government in the 1970s and 80s. Now Boko Haram, which is much smaller than the IMN, torments the state.

For most of its existence, the

IMN was largely ignored by the government. That changed when members blocked the Nigerian army chief’s convoy in the state of Kaduna in 2015.

At least 300 of them were killed when soldiers cleared the road, say human-rights groups. (It is not clear if the soldiers were attacked.) Mr Zakzaky and his wife were injured, then arrested. For two years they were held without charge, despite a court order in 2016 to release them. In April they were charged, implausibly, with conspiracy to kill the army chief. The IMN, now banned in Kaduna, has vowed to keep protesting until Mr Zakzaky and his wife are released. On November 7th they were denied bail by Kaduna’s high court.

The government’s response is starting to resemble its tac-

Investment platforms vie to capture a share of global remittances It’s coming home

I

T

HE STREETS are quiet and the tear gas has dissipated, but no one knows for sure how many protesters were killed in Abuja, Nigeria’s capital, at the end of October. The army claims six people died when soldiers stopped demonstrators from overrunning a checkpoint. Human-rights groups say at least 45 were killed—and that the demonstrations were peaceful.

More mystery surrounds the group that organised the protests, the Islamic Movement in Nigeria (IMN). It is known to be made up mostly of Shia Muslims. Analysts count millions of members. Many gathered in Abuja to demand the release of their leader, Ibrahim Zakzaky, who was jailed three years ago.

He preaches non-violence, but the army is testing the IMN’s restraint. Some fear the government is creating a new Boko Haram, the Sunni jihadists waging a bloody insurgency in the north.

There were few Shias in Nigeria 40 years ago. Mr Zakzaky is almost single-handedly responsible for changing that.

Entranced by the Iranian revolution, he converted from Sunni Islam to Shiism in 1979, then went about converting others.

Today analysts think Nigeria has up to 3m Shias; nearly all are in the IMN. They form a small minority of Nigeria’s roughly 180m population, split between Muslims (mostly Sun-

Monday 19 November 2018

N 2016 AYO ADEWUNMI, a Nigerian-born agricultural trader living in London, bought a five-hectare farm in his homeland. It has produced little since.

“I am not in the country, so I have to rely on third parties. It’s just not good enough,” he says.

Mr Adewunmi has since discovered another, potentially more satisfactory way to make such investments: through FarmCrowdy, a crowdfunding platform that lends to Nigerian farms and pro-

tics against the Yan Tatsine and the forerunner to Boko Haram, which caused both groups to become more violent. “The state is going about this in the wrong way,” says John Campbell, a former American ambassador to Nigeria. He fears the IMN will abandon non-violence.

Others worry that the standoff could descend into a proxy war. The IMN reportedly receives cash from Iran. The group denies this—and accuses the government of being in thrall to Saudi Arabia.

Things may be coming to a head. “We don’t want to use violence,” says Ibrahim Musa, a spokesman for the IMN. “But if they keep being violent against us, I don’t know what will happen. Already some members are saying enough is enough.”

vides technical assistance to their owners. The two-year-old startup, which is considering expanding into Ghana, places high hopes in the African diaspora as a source of funds.

The case for such platforms goes beyond agriculture. Global remittances are expected to soar from $468bn in 2010 to $667bn in 2019. They are among the top two foreign-currency sources in several countries, including Kenya and the Philippines. Yet hardly any of the money is invested.

In part, this is because recipients use three-quarters of the money for basics such as food and housing. But it is also because emigrants who want to invest back home have few options. New investment channels could attract lots of extra cash—about $73bn a year in Commonwealth countries alone, according to research by the 53-country grouping.

Crowdfunding platforms would enable investors to put modest sums directly into smaller businesses in developing countries, which are often cash-starved.

Yet of the emerging world’s 85 debt- and equity-crowdfunding ventures, only a handful raise money abroad. Several platforms Continues on page 15

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AFEX, Sterling Bank to create blockchain commodity trading platform for farmers

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

INSURANCE

Consolidated Hallmark weathers tough times as revenue climbs BALA AUGIE

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onsolidated Hallmark Insurance Plc recorded a double digit growth in revenue in the first nine months of 2018, despite the lingering apathy for insurance by the Nigerian populace, driven largely by cultural and religious beliefs.

For the first nine months through September, Consolidated Hallmark’s gross premium written increased by 19.64 percent to N5.40 billion from N4.51 billion as at December 2016.

Gross premium income (GPI) and net premium income (NPI) followed the same growth trajectory as they grew by 19.14 percent and 19.46 percent to N5.20 billion and N3.36 billion in September 2018 from N3.65 billion and N2.82 billion as at September 2017.

With an efficient underwriting position, strong capital base, and improvement in investment returns, analysts say the insurer is poised to

deliver higher returns to shareholders.

The Nigerian insurer attributes the upturns in earnings to investment in latest technology that reduced operating expenses.

The company spent less to produce each unit of product as operating expenses reduced to 38.83 percent in the period under review compared to 39.79 percent the previous year.

“We are excited to report a stronger third quarter financial result. Our strong business performance made possible through capacity expansion and digital channels optimization drove revenue growth in this quarter and we remain resilient to do much more for our shareholders,” said Eddie Efekoha managing director/CEO, of Consolidated Hallmark.

With an estimated insurance penetration rate of 0.4 percent and only 1 percent of the population holding any form of insurance policy, the opportunities in the Nigerian market are enormous.

Insurer’s net income hit five year high

5 Quarter Net Premium Income (N'm) 3,368 2,435

2,435

Q3 15

Q3 16

2,820

1,831

Q3 14

Q3 17

Q3 18 Source: Company Financials

The Nigerian economy has growth potentials; this means businesses and individuals will need a cover for losses.

That l eaves ro om for Consolidated Hallmark and peers to grow revenue.

Consolidated Hallmark’s combined ratio fell t o 8 0 . 2 5 p e rc e nt i n t h e

period under review from 81.82 percent the previous year. A ratio below 100 percent means the insurer earns more in premiums than it pays out in claims.

L o s s rat i o o t h e r w i s e known as claims ratio fell to 41.86 percent in September 2018 as against 42.02 percent the previous year.

This means the insurer is spending less on claims to generate each unit of premium income.

Underwriting profit increased by 13.31 percent to N948.34 million as at September 2018 driven by increased premium income.

Consolidated Hallmark’s investment income

rose by 13.65 percent to N711.75 million in the period under review as against N626.22 million the previous year.

The Nigerian insurer’s net income was up 71.23 percent to N355.91 million in the period under review from N355.912 million the previous year.

TELECOMS

MTN stocks rally 3 days straight as likely Nigeria fine settlement calms investors ENDURANCE OKAFOR

T

he share price of M T N ro s e t h re e straight days after news that the company was close to agreeing an $800 million settlement with Nigerian authorities over claims the telco illegally transfer red $8.1 billion funds out of the country.

The share price of the telecommunication company was up Friday by 1.6 percent on the Johannes-

burg Stock Exchange (JSE) to close at 8,382 South African rand from ZAR 8,250.

Meanwhile, investors cheered the news on Wednesday last week when the share price traded 0.8 percent higher at 81.70 rand and rallied through to the close of the South African bourse, Friday, 16 November 2018.

T h i s i s c o m p a re d t o the more than 30 percent decline of the company’s stock when the allegations were made in late August.

The share price dropped

a b o u t 3 4 p e rc e n t f ro m 10,966 rand on 28 of August 2018 to 7,200 rand on 4th of September of the same year.

The year-to-date performance of the company’s stock as at market close last weekend, stood at -38.64 percent, as compiled from the Bloomberg terminal.

According to persons familiar with the situation, both MTN and CBN are making steady progress enabling Africa’s largest wireless carrier to push to settle the long-running

MTN had taken a beating in the thick of regulatory clash in Nigeria

Source: Bloomberg

dispute out of court.

However, a deal hasn’t been signed and could yet fall through, “MTN Nigeria continues to engage with the relevant Nigerian authorities to ensure a mutually acceptable resolution of the matter,” a spokesman for MTN said in a statement.

Although, the Nigerian senate is said to have raised questions against attempt by the federal government to reduce the $8.1 billion fine imposed on MTN Nigeria, to $800 million.

The upper chamber said that the planned reduction of the fine is a matter of interest to it. It noted that though it was not particularly against whatever the government would want to do with the MTN fine, it should be intimated on why the reduction became necessary.

The upper chamber said that it is equally interested in knowing what informed the penalty of $8.1 billion in the first instance.

Although, Nigeria’s apex bank had in a recent statement by its governor, God-

win Emefiele, hinted that it would reduce the amount it has ordered MTN Nigeria to repatriate.

“I don’t think it will be staying at $8.1 billion.

I want to believe that the figure will reduce. Whether it will be dropped completely, I honestly cannot say at this time, the central bank will be examining these, and then it will be escalated up to my level,” Emefiele had said.

Chairman, Senate Committee on Banking, Insurance and other Financial Institutions, Rafiu Adebayo Ibrahim, told repor ters on Tuesday in Abuja that

he was shocked when he wa s c o nt a c t e d t hat t h e CBN failed to implement Senate resolutions before conducting another investigation into the alleged infraction by MTN. Ibrahim said that his committee would immediately ask for CBN report on the matter to be batter informed.

Ibrahim said, “The last time we heard about this issue was when we had a little retreat last two weeks in Lagos, where they (CBN) did the pres entation of their biannual activities to the committee (Senate Committee).

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Monday 19 November 2018

COMPANIES & MARKETS MICROFINANCE

Petra MFB taps Meristem to raise N1bn amid new capitalisation rules JUMOKE AKIYODE-LAWANSON

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ollowing the recent order by the Central Bank of Niger ia (CBN ), mandating all micro finance banks to raise a minimum of N200 million as capital base, Petra Micro Finance Bank (MFB) has expressed confidence in attaining this through investments, as the bank assured customers of its plans to surpass the minimum recapitalisation.

The board of the bank engaged the services of Lagos-based issuing house, Meristem Securities Limited, to support the process of raising additional capital of up to a billion naira, in phase, as an addition to its current paid-up capital of N134 million.

“We are currently working on the compliance requirements that are needed by the Security and Exchange Commission (SEC) for the approval of the share issue. At the time we started the process of raising capital, we were not aware, we were working towards a mandatory future," Dike

said.

The bank made the disclosure at its 10th anniversary and Annual General Meeting (AGM), which held in Lagos recently.

Stakeholders of the bank pledged to strengthen the bank's operational capacity, grow the scale of loanable funds, and grow the bank’s capital base to meet its increasing customers' demand.

Victor Dike, chairman, board of directors of the bank, said: "It is instructive to inform shareholders that your bank is ahead in the process of complying with the new minimum capital regime announced by the CBN and will strive to continue to move ahead of the market in other things as well. In this regard, on behalf of the board and management, I request you all, to kindly invest in shares of the bank. Existing shareholders are enjoined to increase their investment in the bank."

According to Dike, the journey of Petra MFB started in 2008, an initiative of the Order of Preachers (Dominicans) to fulfill the

L-R : Faith Ughwod, chief executive officer,, Almond Productions Limited; Olorundare Thomas, deputy commissioner for Insurance Technical; Tunde Oshadiya, discussant, and Justus Clinton Uranta, chairman of the forum during the 2018 Almond Insurance Consumers forum with the theme” Relieving consumers pain points in insurance through exceptional service delivery in Lagos.

Pic by Pius Okeosisi

burning desire to attend to specific needs of the active poor and small businesses in both the Catholic community and the larger society.

“Petra micro finance bank was established to help

the active poor, improve the standard of living of families and assist in bridging the gap between the rich and the poor through access to finance to the 'enterprising poor' who are Catholics and other Nigerians who are

actively engaged in genuine economic activities but with low capital base and limited access to finance," Dike said.

Joyce Muotoh Akpome, managing director, Petra MFB said that the social

environment including security challenges remained a significant constraint to economic activities as well as challenges of irregular power supply and the vestiges of the recessionary period.

OIL & GAS

INVESTMENT BANKING

Shell repairs ruptured pipeline, pledges compensation for victims

Coronation Merchant Bank wins Best Investment Bank in Nigeria

NATHAN NWAKAMMA

T

he Shell Petroleum Development Company (SPDC) says it has repaired the Trans Ramos Pipeline that ruptured and spilled about 1,114 barrels of crude oil into the environment on May 17.

Bamidele Odugbesan, Media Relations Manager, SPDC, in an email update said integrity tests were being conducted on the pipeline.

Odugbesan also assured that post investigation activities including discussions on compensation to impacted people were underway.

“The Trans Ramos Pipeline has been repaired and is undergoing extensive testing prior to restart. We cannot give precise timing yet for restart of the line as it depends on the outcome of the testing.

“Statutory post-JIV activities are ongoing, which include. site assessment, remediation, and payment of compensation to people and communities impacted by the spills,” Odugbesan said.

The News Agency of Nigeria (NAN) reports that the oil spill had impacted and polluted an estimated area of 113.03 hectares.

A joint Investigation Visit (JIV) report of the incident

obtained by NAN had concluded that the leak on the pipeline at three spots were caused by equipment failure.

NAN also reports that the impacted areas in Aghoro 1 and 2 Communities in Ekeremor Local Government Area, Bayelsa and Odumodu community in Delta are being cleaned up and remediated.

Meanwhile, the SPDC decried the high rate of vandalism on its pipeline network at its oilfields in Bayelsa resulting to oil leaks and pollution of the environment.

Odugbesan said although the May 17 oil spill on the Trans Ramos Pipeline was traced to equipment failure, many other leaks were predominantly caused by sabotage.

“The rate of spills on the Trans Ramos Pipeline is very worrisome, for instance between April and May 26, spill incidents were reported on that line and out of these, 18 of them were caused by sabotage, eight were operational,” he said.

He said more that 90 per cent of spills recorded in its operations in 2017 were related to sabotage while the oil firm lost an average of 9,212 barrels of crude in 2017

…2018 Global Business Outlook Awards IHEANYI NWACHUKWU

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oronation Merchant Bank has been named the Best Investment Bank in Nigeria at the 2018 Global Business Outlook Awards which held recently in London, UK. Now in its 5th year, The Global Business Outlook Awards is internationally recognised as the landmark finance event to reward achievements, commend best practices and celebrate excellence in the African banking landscape.

The award also provides a platform to bring together industry leaders from across Africa whilst celebrating the achievements of those driving economic growth across Africa.

Commenting on the awards ceremony, publisher of Global Business Outlook Magazine, Daivick Bhaskar said, “Our goal is to create a platform to celebrate organizations that are at the vanguard of creating a more responsible and sustainable industry than the one that existed ten years ago.

Over the past 12 months, these organisations have helped set new benchmarks for the financial sector in terms of customer service and digital innovation. One Bank that has recorded remarkable ac-

complishments in its very short years of operation is Coronation Merchant Bank.

The Bank has established itself as a dominant player, sitting at the very top of the investment banking industry in its native Nigeria.”

Receiving the award on behalf of the bank, the Group Managing Director/CEO of Coronation MB, Abu Jimoh, said, “we started our investment banking business in 2016, and in less than three years, it has contributed immensely to the development of the capital market—both on the equity side and the debt capital side. I am happy we have established ourselves as a formidable player in the capital market, having raised over N300 billion for various companies in multiple sectors of the economy. This award demonstrates the market’s confidence in the Coronation Merchant Bank story.”

Driven by its vision of becoming Africa’s premier investment Bank, Coronation Merchant Bank has been a recipient of numerous awards over the course of the year. They include Best Investment Bank in Nigeria by World Finance Awards and Most Innovative Investment Bank of the Year

by Nigeria Finance Innovation Awards.

The Coronation Merchant

Bank Group also offers corporate banking, private banking/ wealth management and global markets/treasury services to its diverse clients. It also offers securities trading/brokerage,

asset management and trustees services via its subsidiaries; Coronation Securities Limited, Coronation Asset Management Limited and Coronation Trustees respectively.

BUSINESS

Monday 19 November 2018

COMPANIES & MARKETS

DAY

23

Business Event

AGRICULTURE AFEX, Sterling Bank to create blockchain commodity trading platform for farmers JOSEPHINE OKOJIE

A

FEX Commodities E xchange Limited (AFEX), Nigeria’s first licensed private commodities, Sterling Bank Plc and Binkabi, a builder of decentralised trading commodity network and exchange has collaborated to create the world’s first fully digital, blockchain commodity trading and financing platform for farmers.

The partnership, initiated by AFEX is hinged on the dearth of adequate agricultural finance in the sector and the critical roles AFEX’s Warehouse Receipts System (e-WRS), Binkabi’s Blockchain Technology and Sterling Bank’s access to credit play in leading the creation of a reliable source for financing in agriculture for Nigeria.

Currently, lack of adequate finance in the sector

has remained one of the major factors limiting farmers’ productivity.

Also, the traditional alternative to money lending is also costly as interests on loans are charged at very high rates, contributing to the increased challenge of indebtedness and poverty.

As a result, the collaboration has leveraged on blockchain technology to unlock cheap financing through AFEX warehouse receipt system which would lead to the creation of new opportunities and relationship for players in the commodity markets.

Ayodeji Balogun, country director, AFEX said that the initiative is needed to change the lives of farmers and the Nigerian economy, by establishing a direct link between farmers and consumers/ retailers, while empowering smallholders to better organize themselves to access the market, without interference

from middlemen.

Balogun states that the transparency of the blockchain system in the supply chain will also enable farmers get fair prices for their produce and reduce the challenge of low income.

“Blockchain does not require physical branches, since it is operated on a distributed network. It would create alternative financial structures, liberating farmers from the inefficiencies of the existing financial system.

This partnership would empower smallholder farmers, create a tokenized system and develop smart agriculture,” he said.

Blockchain technology is based on a shared ledger or DLT (Distributed Ledger Technology) and contains features that make it possible for networks such as farmers, consumers, retailers, producers and investors to not only transact, but also source and supply finance

L-R: Adesina Adedayo, deputy vice president, Chartered Institute of Taxation of Nigeria (CITN); Olajumoke Simplice, vice president; David Olorunleke, doyen of taxation; Muhammed Akaro Mainoma, guest speaker, and Cyril Ikemefuna, president/chairman of council, CITN, at the CITN 39th induction ceremony in Lagos.

INVESTMENT BANKING

PAC Capital raises acquisition finance for Teleology 9Mobile acquisition

I

n what can be described as one of the highly anticipated acquisition of the year, the long process for the successful acquisition of 9Mobile (Emerging Markets Telecommunications Ser vices (EMTS) by Teleology Nigeria Ltd has come to a productive and definitive end.

At the core of this remarkable transaction is PAC Capital Limited, the Investment Banking firm that raised the Acquisition Finance for Teleology

Nigeria Limited.

PAC Capital Limited, the Investment Banking and Advisory arm of PanAfrican Capital Holdings Limited acted in the capacity of Financial Adviser and Fund Arranger to Teleology Nigeria Limited in the acquisition of 9Mobile.

M a n a g i n g D i r e c t o r, PA C C a p i t a l L i m i t e d , Eric Okoruwa said, “I am pleased about the successful end and final outcome of the transaction. For us at PAC Capital Limited, this is a great example of

the innovative solution we bring to every mandate.”

PAC Capital is noted for similar landmark transactions, some of which include; Heritage Bank Acquisition of Enterprise Bank and Sigma-Golf Cons or tium Acqu isition of Keystone Bank Limited.

PAC Capital Ltd is the Investment Banking and Advisory arm of PanAfrican Capital Holdings, a Capital Markets & Financial Advisory Services firm in Nigeria.

L-R: Andrew Nevin, chief economist, PwC; Chi Akporji, strategy director, NMRC, and Bolaji Edu, Nigeria CEO, Broll Property Group, at the 2018 West Africa Property Investment summit and expo in Lagos.

Pic by Olawale Amoo

RETAIL

SPAR declares 8 days of black Friday sales

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etail chain, SPAR, has declared Black Friday sales for 8 days starti ng 2 2 n d Nov e mb e r t i l l 29 November, marketing head, John Goldsmith said in Lagos.

SPAR will be running the Black Friday promotion across all its 14 stores spreading across Lagos ; Abuja ; Port Harcourt ; Enugu and Calabar.

According to Golds m i t h, t h e b ra n d i s e xcited about the upcoming Black Friday sales which was introduced five years ago into the Nigerian mark e t . T h i s y e a r, S PA R i s offering a wider range of products which include food, grocery, meats, wine and spirits, electronics, home appliances, laptops, m o b i l e p h o n e s, w a t c h -

es, clothes, perfume and many other products essential for individual and family use.

“From our experience over the years, we are prepared to accommodate all our teeming customers who are gearing up to visit any of the outlets during this annual event. All our customers will have the opportunity to make their preferred choice from over 5,000 products across all categories in any of our outlets nationwide.

“Nigerians have always expressed preference for shopping in a store becaus e w e give them the opportunity to have a look and feel of the products b e f o re bu y i ng a n d t h e y can also take immediate possession of what they have purchased,” said

Goldsmith.

Goldsmith opined that SPAR current brand maxim “My Nigeria My SPAR”, the brand have been continually involved in growing the retail economy by expanding its outlets to delight customers with quality products, employi n g t h o u s a n d s o f Ni g e rians. According to him, SPAR will continue to support laudable initiatives to better the lot of the citizenry.

The hypermarket brand that recently opened two new outlets in Lagos at the Leisure Mall, Surulere and Ad e b o l a Ho u s e, O p e b i , has always translated the shopping exp er ience of Nigerians and every shopper based on their choice, quality, impeccable service and valuation.

Tam Brishe (left), chief of staff to the governor of Delta State, receiving the degree of doctor of governance and public administration (Honoris Causa) of the Lead City University, from the chancellor of the University, Gabriel Ogunmola, at the university’s 2018 convocation, in Ibadan, Oyo State...recently

L-R:Andrew Okafor, winner of Taste Tell And Win Competition, Maria Shadeko, brand manager, Legend Extra Stout, Francis Obi, winner of Taste Tell And Win Competition, Kenneth Ajakaiye, regional trade marketing manager - Abuja, NB Plc, and Chukwuemeka Rex Obi CEO De Chimex Enterprises, At Legend Real Deal Experience in Abuja.

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CEO INTERVIEW

Monday 19 November 2018

Monday 19 November 2018

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BUSINESS DAY

25

HUUB STOKMAN

CEO of OVH Energy Marketing Ltd

Interview with Private Sector Leaders

‘Diversification is key to growth and sustainability of Nigerian economy’ HUUB STOKMAN is the CEO of OVH Energy Marketing Ltd. Stokman is a Dutch national with over 20 years of international experience in the oil and gas industry, overseeing sales and marketing businesses and various international projects.

In this interview with FRANK UZUEGBUNAM, Stokman shares his insights into the downstream sector of the Nigerian oil and gas industry, his vision for OVH, Nigeria’s quest for economic diversification amongst other issues. Excerpts:

L

et’s start with a brief peep into your background and what you do.

I am the CEO of OVH Energy Marketing Ltd. Most people are probably familiar with OVH Energy for its Oando retail stations, however, we also operate a midstream jetty through which we receive petroleum product vessels in Apapa, Lagos. I am a Dutch National and have over 20 years of international experience in the oil and gas industry, overseeing sales and marketing businesses and various international projects. Prior to my appointment with OVH Energy, I was the head of Puma Energy in Angola responsible for the entire operation, which included: the retail business, storage, distribution of fuel via its own fleet, aviation business, lubricants, and B2B. How long have you been with OVH Energy?

I have been with OVH Energy Marketing for 9 months. I started in February 2018 and it is has been a wonderful journey so far. I have felt warmly welcomed, not just by the OVH Energy team, but also by our various stakeholders, customers and the communities within which we operate.

So in your few months in Nigeria, do you see the country as quite phenomenal?

Whenever people think about Africa, Nigeria is one of the countries that comes to mind. This is not as a result of its population, even though it is Africa’s most populous country, but because of its potential. The people are also spectacular, besides the high number of well-educated people, Nigerians also have a drive to succeed. Even with all its economic and social challenges, Nigeria is one of the power houses of the continent.

How will you describe your business in OVH Energy Marketing?

We are a traditional downstream company, bringing fuel into the country through PPMC, own imports mainly via our jetty in Apapa or loaded fuel products from the onshore depots.

We have depots in Apapa, Lagos and in Port Harcourt. We also distribute to our customers using a fleet of over one thousand trucks, which are handled by well-trained drivers who follow the best international operational standards. These trucks enable us to deliver products to different parts of the country to our end users, the retail sites, B2B customers, aviation and LPG customers. As a business we enjoy a strong heritage through our three shareholders who have all demonstrated success in their own

right, thereby inspiring us to keep improving. Our shareholders are: Oando, who provides us with the retail brand license, Vitol a leading and well-known global petroleum trading company and Helios Investment partners, an African-focused Nigerian investment company.

Talking about your heritage, how have you been able to manage the transition from Oando to OVH Energy Marketing?

Earlier this year, we commissioned a brand market research project with the marketing department to ascertain the strength of the Oando brand and I am delighted to say that Oando retail is a well-loved and trusted brand, with a good reputation for quality as our consumers are assured of receiving value for money. Research indicates consumers ranked Oando as one of the top three downstream oil and gas brands in Nigeria. While we have changed to OVH Energy Marketing, we still retain the Oando name as our retail brand as it gives us continuity. We are able to continue the relationship we have with our customers, while being able to provide a variety of services. In OVH Energy, we consistently explore new ways and strategies to enhance our retail networks and other businesses. For example, we are planning to inject more LPG cylinders into the market to further facilitate the conversion of firewood to LPG use.

Is OVH Energy still driving retail expansion?

Yes, we have a robust retail expansion plan to extend our footprint across areas which we have evaluated as having market potential to bring the brand closer to the consumers. We will continue to invest directly and also in partnership with franchise operators.

In 2019, we aim to grow our retail footprint by more than 20 high volume stations, ultimately growing the entire network to over 500 sites over a 5 year period. It is also our priority to continue the process of brand image refresh of our existing retail stations, in order to improve the ‘look and feel’ and offer additional non-fuel products and services.

Are there any similarities in the downstream operations between Angola and Nigeria?

Downstream oil and gas businesses in Angola and Nigeria have some similar characteristics and a few differences.

Both Nigeria and Angola are blessed with abundant natural resources and fertile land to sustain its growth and development. Much like Nigeria, Angola is dependent on imported goods to satisfy consumer desires. In terms of the downstream petroleum business, Angola has a much smaller popula-

tion compared to that of Nigeria, so distribution of fuel is easier as there are fewer road networks to ply and less retail sites (about 900 fuel retail sites when compared to the over 22,000 fuel retail sites in Nigeria). The entire distribution system is different. Also, the industry margins on products in Angola are healthier, which paved the way for more investments such as depot infrastructures. For example, while I was in Angola, we invested close to $300 million to complete a new import depot. These investments only occur where businesses get a margin to work with that can provide a healthy return on investment.

In the downstream sector, Nigeria has one of the lowest margins available to marketing businesses when compared to other countries in which I have worked. This situation presents a challenge to securing much needed investments in infrastructure, guaranteeing security of supply, safe storage and delivery of products to end destinations. This is why the Major Oil Marketers Association of Nigeria (MOMAN), which we are a member of has been advocating for deregulation as a means of attracting continuous investment in this industry, to maintain and in some cases expand infrastructure, which helps ensure sustainability and long term benefits to the consuming public. We invested heavily in our mid-stream Jetty with the intention of reducing demurrage and lightering cost (cost to bring products into the country) to the industry.

Can you compare the downstream sector in Togo, Ghana with Nigeria?

In markets where margins are depressed, the share volume of products required and distributed in such environments can make up for low margins. The market in Togo has better margins, but the product volume is small and as such, requires a completely different mode of operation.

Therefore, the logical approach is to optimize the few locations available as the market alone cannot sustain more sites. Although their margins are slightly better per litre, the total market is small and does not really differ from Nigeria, which has a larger market if you take an overall view.

Ghana, however, is known to have a decent margin, infrastructure and it is organized differently from a value perspective, hence comparing Ghana and Nigeria is not easy.

What is your opinion on the recent topic of diversifying the Nigerian economy?

Economic diversification is important for the growth and sustainability of any nation. Unfortunately, the economies of a number of African countries are dependent on the exploration of

margin?

From this, you need to build a company that can withstand challenges of all seasons and is flexible in the way it operates its business from a cost, investment and process point of view.

The company should be dynamic and able to contract and expand under these conditions, which is common with other countries in the world.

They all have periods when margins are slightly better and when they are worse, where there is an abundance of products and scarcity of products.

Nigeria is not unique in this regard.

What makes a company more sustainable today, is their ability to work within these situations. We can achieve this with the right people, finding new avenues to increase income; like new markets, new products or introducing new innovations to customers at various touch points, ensuring our organization is fit for all purposes and finding new opportunities for growth.

natural resources. The problem here is with over-dependence on a particular resource or a commodity for which pricing is completely outside of one’s control. A country’s economy is at the mercy of unpredictable market conditions, which lead to international price fluctuations, a risk that makes it difficult for any government to plan successfully for the long-term. Natural resources are important, however the focus should be on diversifying the economy for these two reasons: Natural resources are finite. It may take a significant length of time to reach point of exhaustion, however a time will come when these resources are significantly depleted and no longer available to make an economic impact; In terms of sustainability, the more options available to you, the easier it is to sustain economic growth; be it for example in manufacturing or agriculture.

For these reasons, I believe that diversification is a key element of any policy that Nigeria should have for the future.

How do you assess Nigerians’ appetite for investment in oil and gas?

There is always the need to invest in oil and gas. If you look at the upstream sector, it has a very clear investment

reward profile even with the uncertainty in prices. From an investment perspective, any investment in gas is commendable, as you see a large shift in the world economic energy demands from oil to gas. Looking at the downstream sector, and using the investment of Vitol and Helios as a case study, the investments made in the downstream business in Nigeria and across other African countries, suggests that opportunities are available to secure healthy returns on investments. Some uncertainties evident in the industry include the question on the direction of deregulation in the industry.

Looking at it from an economical point of view, a country with a population of over 190 million people will always need energy and with the right investments, we can capitalize on this need and ensure the realization of its growth.

What role do you think the government can play in supporting investment in the oil and gas sector?

There are several ways the government can aid investment in the oil and gas industry, and not only oil and gas, any sector of the economy, especially if there is an objective of diversifying of the economy. A major approach is to strengthen regulations and laws to help local and international companies invest and guarantee a healthy return on their investments. There is also the need to provide enduring infrastructure to aid movement of various products either for imports

and local distribution or export for foreign exchange earnings. Such infrastructure include good road networks, railways, fully functional harbors or ports so the vast water ways can be exploited to move goods in and out of the country. Governments can also explore public-private partnerships to support the above.

In summary, governments can aid investment with good legislation and infrastructure. With this must come investments in public education to bridge the knowledge gap in running the operations of a diversified economy as compared to the skills required of a mono product dependent-economy. Long term, no economy can depend on expatriates providing the technical know-how, their role is to transfer the knowledge to local staff to run the organisation and economy themselves.

For example, my role here is to share the knowledge, which I have gathered over the years, allowing my colleagues to ‘see, learn and apply’.

Looking at the way downstream is structured in Nigeria, how do you deal with volatility of crude oil prices in international market?

There are two ways volatility expresses itself in our business, eliciting the following corresponding questions: The first is; do you have the product available and can you do the business? The second is; how does the pricing work? Can you achieve a healthy

Considering the kind of products you handle, please tell us a little about your Health, Safety and Environment (HSE) standard.

We have recently been re-certified

by SON for ISO 9001:2015 and ISO 14001:2015 and OSHAS 18001:2007.

These certifications are measuring systems that exhibit how we deal with health, safety and environment risks, how we work through a quality process to ensure customer satisfaction. The certification highlights the workplace safety environment and they are supporting systems to achieve a mindset.

I have always held the view that Health and Safety is not just a mirror of the mind, it is also a mirror of the heart, because you can put all the systems and procedures in place, you can make it very bureaucratic and measure every dot, but people must see the need to act safely. They need to be able to stop themselves or their colleagues from carrying out activities that might create risks. Procedures and training are fundamental in ensuring the persistent application of the way work is carried out, at the end of the day, the individual hugely determines if work is carried out safely. Here at OVH Energy Marketing, besides ensuring that safety is embedded in our culture, we support this with actions such as safety training, truck audits, driver training and investments in our sites, protecting the environment by installing solar panels; we have quality laboratories in our depots for fuel and at our lubricant blending plants. What we concluded from the results of our brand market research, is that we are well known for the ‘quality of our products’ and we would like to keep it that way.

Are you making any investment

in the CSR area?

At OVH Energy, we continually demonstrate our investment in innovative corporate social responsibility initiatives and community projects to support our partners and provide relief to members of our host communities.

We founded the Oleum Academy as a technical skills enhancement programme for mechanics, where we train and equip them with modern automotive diagnostics skills and tools to enable them efficiently manage the diagnosis and repair of the 21st century automotive brands. We run an all-inclusive programme, where participants are drawn from all regions in Nigeria to foster a sense of belonging for all.

To date, we have trained approximately 3,000 mechanics across the country in general car lubrication and automotive training, whilst 1,300 mechanics have participated in the advanced car diagnostics training to ensure accurate diagnosis of faults, which ensures safety of both car and passengers. We have also created a financial empowerment programme called Project MORE (Mechanic Oleum Reseller Enterprise) initiative, where they are appointed as resellers of our Oleum lubricants within mechanic villages, to provide additional income stream for these mechanics.

We provide gas-powered industrial cooking stoves to local restaurants, popularly called “Bukkas” or “Mamaputs”, to switch them from using unhealthy cooking options such as firewood. To date, we have switched over 40 soup kitchens. Through our collaborative efforts with stakeholders and our distribution channels, we have been able to inject over 500,000 cylinders into the Nigerian LPG Market in demonstration of our competence and capacity in that space.

To demonstrate our commitment to supporting a healthier and cleaner community, we have deployed a number of initiatives to positively impact communities around us. In 2017 and mid-2018, we ran the Roll-Back Malaria Campaigns in Apapa, Lagos and in Onne, Rivers State, which involved the distribution of mosquito-treated nets, malaria prevention talks and malaria screening exercises. In September this year, we organised an awareness campaign on Lassa Fever with the Orisumbare and Marine Beach communities in Apapa, Lagos and actively providing support with rat eradication.

Furthermore, we have granted scholarships to university undergraduates in both Elikaya, Port Harcourt and we also have plans to expand the programme to Lagos.

We have implemented specific and need-based vocational skills acquisition programme for youths within our host communities on the art of paint-

ing and decoration.

To raise the level of impact in tackling health related challenges, we are engaged in discussions with Endfund, a global fund initiative that supports the prevention of non-tropical diseases across Africa and how to tackle and provide support in this regard.

We adopt a proactive approach to executing community development projects in our host communities, this enables us to ensure that these projects are most beneficial to the communities in which we operate.

Where do you see OVH Energy

5 years from now?

In the next 5 years, I see OVH Energy Marketing as the trusted marketer of choice, providing petroleum services to the Nigerian market. From a consumer’s point of view, this means that if people think about OVH Energy, they think about a great brand that offers quality products and services, a company that provides convenience to customers, which is the preferred brand of choice. I also hope that by that time, the industry is fully deregulated because I truly believe that it is the right decision for Nigeria and its future success.

Profile: Huub Stokman has in various capacities proven to be an accomplished executive leader across the international downstream value chain, with a history of successfully enhancing bottom-line performance.

Prior to his appointment, Stokman was the Head of Puma Energy International in Angola and was responsible for the overall business, which included managing retail forecourt, terminal/logistics operations, as well as B2B business for fuels, lubricants, aviation fuels and bitumen. Before joining Puma, he spent over 20 years in BP where he was responsible for Sales and Marketing as well as major projects across 15 European Countries.

Huub brings a wealth of international and industry-wide experience which will be leveraged in driving the growth of our overall business in Nigeria, with particular focus on making OVH Energy the downstream marketer of choice for all petroleum products in the market.

26

BUSINESS DAY

C002D5556

Monday 19 November 2018

Live @ The Exchanges Top Gainers/Losers as at Friday 16 November 2018 GAINERS Company

Market Statistics as at Friday 16 November 2018

LOSERS Opening

Closing

Change

Company

Opening

Closing

Change

GUARANTY

N34

N36.9

2.9

NESTLE

N1500

N1480

-20

ZENITHBANK

N23.3

N24

0.7

DANGCEM

N205

N203.5

-1.5

FLOURMILL

N16.5

N17.2

0.7

TOTAL

N200

N199.1

-0.9

DANGSUGAR

N12.5

N12.85

0.35

ETERNA

N4.95

N4.5

-0.45

MANSARD

N1.73

N1.9

0.17

CILEASING

N2.27

N2.06

-0.21

ASI (Points)

32,058.28

DEALS (Numbers)

2,272.00

VOLUME (Numbers) VALUE (N billion)

2.788

MARKET CAP (N Trn

Investors with multiple accounts: SEC extends forbearance window to Dec 2019 Stories by Iheanyi Nwachukwu

T

he Securities and Exchange Commission (SEC) has extended the forbearance window for investors with multiple accounts and subscriptions to December 31, 2019.

This is in a move to ensure more investors regularise their accounts thereby reducing the volume of unclaimed dividends in the Nigerian capital market.

Recall that the SEC had announced December 31, 2018 as deadline for regularisation of multiple accounts.

The extension of forbearance window among others was part of the decision reached at the end of the 3rd Capital Market Committee, CMC meeting held last week in Lagos.

While briefing capital market journalist after the CMC meeting, Acting Director General of the SEC, Mary Uduk said the committee considered the

issue and saw the need to give investors more time to regularise their multiple accounts in order to derive the benefits from their investments.

She said “I am delighted to report that on the lingering issue of mul-

tiple subscriptions and forbearance for shareholders with multiple accounts, the CMC agreed that the forbearance window should be extended by another year from the December 31, 2018 deadline previously communi-

cated. We expect investors to take advantage of this opportunity to claim their unclaimed dividends and bonuses”.

Uduk also announced a two-pronged approach to addressing the intractable challenges associ-

L – R: Pai Gamde, chief human resources officer, The Nigerian Stock Exchange (NSE); Yahaya Hamza, director/head of sectors, Sustainable Development Goals (SDGs); Mr. Bola Adeeko, Head, Shared Services Division, NSE, Lawrence Deborah of Good Shepherd School, Lagos, 1st Price Winner, 2018 NSE Essay Competition Award; Ashiru Oluwalanoayo of Corona Secondary School, Agbara, Ogun State, 2nd Price winner; Dominic Charles of GEC Comprehensive College, Ipaja, Lagos State 3rd Price winner; Yemisi Durojaye representing Ogun State First Lady, Olufunso Amosun and Abimbola Babalola, head, surveillance, NSE during the Closing Gong Ceremony in commemoration of the winners of 2018 NSE Essay Competition at the Exchange.

Nigerian insurance industry: Winners, losers, and NAICOM reform – Coronation Research

N

igeria’s insurance industry offers growth, even against a weak GDP backdrop. Although skeptical of widespread retail (or ‘middle class’) take-up of insurance, we cannot deny that the industry is growing.

The pattern of growth is complex. There is no correlation between the size (measured by Solvency Capital, SC) of insurance companies and their growth; nor between size and shareholder returns In this context, we might question the National Insurance Commission’s (NAICOM) new rules on SC. Prior to the introduction of its new rules, NAICOM required a

simple level of SC for each type of insurance company: N5billion for Composite Insurers; N3illion for General Insurers; and N2billion for Life Insurers, but the new NAICOM’s regime introduces a system of tiers.

According to its category (Composite, General or Life), and according to the amount of its SC, each insurance company will be allocated to one of three tiers. Note that the tiers overlay each other, so that a company in the highest tier, Tier-1, has the right to do insurance business in Tier-1, Tier-2 and Tier-3.

A Tier-2 company may carry out Tier-2 and Tier-3 business. These give the biggest (Tier-1) compa-

nies the right to lucrative Oil & Gas and Annuity businesses, and limit the scope of smaller (Tier-2 & Tier-3) firms.

The result is a scramble to raise capital, or otherwise to raise SC in order to qualify for Tier-1. The logic for merging companies to create new Tier-1 entities is strong, though we believe few companies accept it.

It is noticeable that insurance companies with the highest RoEs and growth rates tend to be either Composite (General + Life) or Life businesses.

The reasons for this are both organic and regulatory.

We also notice an enormous gap between the

164,263,686.00

growth of Net Premium Income among Nigerian Insurance companies.

For their combination of growth and superior shareholder returns we highlight Leadway Assurance, Custodian Life Insurance, and AIICO Insurance. For growth we highlight ARM Life Insurance, Lasaco Insurance, FBN Insurance and Wapic Insurance.

For shareholder returns we highlight Custodian & Allied Insurance, NEM Insurance, Mansard Insurance, and Law, Union & Rock Insurance. We expect these companies, particularly those with a combination of growth and superior returns, to emerge as the winners.

ated with transmission of shares related to the estate of deceased investors.

“The first step would involve engagement with and enlightenment of the Probate Registry with a view to providing solutions to the cumbersome process of transmitting shares.

“Secondly, Rules would be developed around the time frame for transmission shares and the fee structure” Worried by issues of identity theft in the capital market, the Acting DG said the Commission will work with other major stakeholders in setting up a committee that will look into and proffer solutions to problems around identity management in the Nigerian capital market.

Similarly, Uduk said as part of efforts to eliminate underhand dealings, the Commission is set to take enforcement actions against any persons engaged in trading in the shares of public unlisted companies outside a recognised securities exchange as provided by the Rules.

11.703

Prestige Assurance bonus issue of 41 to 100 gets SEC approval

S

ecurity and Exchange Commission (SEC) on November 9, 2018 approved the bonus share issue by Prestige Assurance Plc. Prestige Assurance Plc disclosed this capital market apex regulatory nod in a public notice released at the Nigerian Stock Exchange (NSE).

The insurance company is issuing bonus shares on the basis of 41 shares to every 100 shares held by its shareholders.

The qualification date for the bonus issue is November 27, 2018 while the closure of Register for the bonus issue is November 28 to December 5, 2018, both days inclusive.

At the Annual General Meeting of the Prestige Assurance Plc held on June 11, 2018, the shareholders resolved for the directors to issue bonus shares from its share premium account in the sum of N782.569million being 41 new shares for every 100 share held, thereby increasing the issued share capital of the company from N1.908billion to N2.691billion.

CMC inaugurates FinTech roadmap committee

T

he Capital Market Committee (CMC) has inaugurated a market wide FinTech Committee to come up with a FinTech Roadmap for the Nigerian Capital Market.

Inaugurating the Committee which has Ade Bajomo, Executive Director at Access Bank as Chairman, during the third quarter CMC meeting in Lagos Wednesday, Acting Director General of the Securities and Exchange Commission (SEC), Mary Uduk expressed the need for the Nigerian capital market to transit towards a technology-driven one as is obtainable in other economies.

Uduk who pointed out

that the commission was interested in investments that Nigerians were making, especially with the advent of digitalization, enjoined the committee to come up with guidelines on the direction the market needs to go on FinTech.

Uduk said “We don’t want a situation where we would be doing things differently, we want a cohesive FinTech Roadmap that would guide and help the market to be able to operate in an optimal way” “If we will regulate and operate in this market and understand what is happening we need to understand the rudiments of FinTech.

C002D5556

Monday 19 November 2018

BUSINESS DAY

This is M NEY A daily guide to your Personal Finance

27

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

International Men’s Day and single men

I

t’s nice to know that International Men’s Day is marked on November 19. “It celebrates worldwide the positive value men bring to the world, their families and communities.” Here are 12 money tips for single men: 1. Set SMART Goals It is so easy when you are young and single to be “foot loose and fancyfree.” The truth is that without a plan, you are going nowhere, rather like a ship without a rudder.

Look at your life; how do you want it to be? It takes focus, effort and a plan to make those big dreams come true.

2. Live on a budget Budgeting sounds boring, but a budget is an invaluable tool that helps you prioritize your spending and manage your money no matter how much or how little you have. Can you account for where your money goes?

Are you spending all that you earn, and more? The truth is that if you stick to a budget and redirect part of your income to long-term financial goals you will have financial freedom before long.

Do you have to eat out every single day? Learning to cook is a great moneysaving skill. Have your mother teach you! The costs of eating out might seem affordable but it really adds up to much.

3. Start to save Saving as a single man is easier said than done.

Social expectations tend to be to spend excessively to keep up. Without being disciplined and focusing on your own goals as opposed to what society expects, it is easy to get lost in a cycle of debt and end up broke.

Those that start saving in their 20s and 30s have a great opportunity to achieve early financial

security. Automate your savings and try to save at least 20% of your income.

Set aside enough money in an Emergency Fund to pay for at least 6 to 12 months of your expenses in an easy access savings or money market account or fund.

4. Don’t let debt consume you We all have to borrow from time to time. But if you borrow, plan to pay back. Particularly when you are young and starting out it might be difficult to get a loan from your bank. The primary source of credit will tend to be family and friends. Many people abuse this opportunity. Don’t be that friend who doesn’t pay back loans.

Credit can be a powerful tool that can help you to create wealth. It can also be devastating to your finances. Use credit judiciously and mainly for things that should appreciate in value and add value to your life; property, education etc.

5. Where will you live?

One of the largest costs of living is housing. Even though it might seem somewhat undignified to continue to live at home, it makes sense as you build your independence and save towards your own accommodation. Rather than rent alone, consider sharing an apartment with roommates. Splitting costs between two or three people can save you huge

sums each year.

Transport costs can be another bummer. Explore opportunities for car pooling, remote working etc. that can significantly reduce your transport costs.

6. Talk about money early The choice of a life partner is one of the most important decisions you will ever make. You need to get this right; it has huge implications for your attaining your full potential.

When you are in a serious relationship, money talk doesn’t have to wait for marriage. Money conversations should start before you walk down the aisle, and then continue as your relationship evolves; and your lives and finances change.

Paying attention to how someone manages their money will give you some insights as to what kind of money personality they have, and if this is what you wish to move forward with for the rest of your life. Lookout for those opportunities that come from time to time, when you are dating.

Be observant; perhaps she insists that you pay for her designer bags on your meager salary, or insists on eating out everyday.

Perhaps you are forced to pay for her aso-ebi every weekend. If this is an issue for you, look for a partner that believes in you and your prospects and is not overly impressed by shortterm excesses and out-

‘

It is better to hang out with people better than you. Pick out associates whose behavior are better than yours and you’ll drift in that direction

‘

ward appearances.

7. Club life Naturally for a young single man, it’s fun to socialize with friends every evening at the club or bar, but just imagine what you can save if you cut back on going out with the boys to bars, restaurants, night clubs etc. You have the cash, and you want to flaunt it. But regularly running up huge bar tabs, and always buying the latest gadget without considering your income and expenses, will eventually make you broke. Skip a few perhaps, and invite friends over with each person bringing something.

If home is not a place that you can confidently entertain in, there are cheap options such as the beach for lots of fun if everyone contributes.

8. Invest in yourself You are your greatest

asset. Investing in yourself is the best thing you can do. Each of us has unique gifts, marketable skills or talents. Discover yourself.

What are you passionate about? What are you exceptionally good at? It is your responsibility to identify, cultivate, nurture and use your talent. Tap into the potential for these effortless skills to earn income.

9. Take care of your health Health is wealth; the choices that you make today regarding how you treat your body from now, can have a significant impact on your future health and financial security. Be careful of some the pressures of the excesses of your generation: cigarettes, alcohol, prescription drugs, hard drugs, unprotected sex etc.

10. Invest for the future It may seem absurd to talk about retirement when you are young and starting out. Even though the future seems so far away now, if you save and invest when you are young, you have an exciting opportunity to build significant wealth. It is tempting to take huge risk.

Overconfident and inexperienced young investors sometimes approach investing much like gambling and often get caught out in scams.

Invest rather than speculate; carefully consider the risk and create a diver-

sified investment portfolio that includes cash, bonds, mutual funds, stocks, real estate and business interests. Get on that property ladder as early as possible.

11. Protect your assets with insurance Do you have adequate insurance in place for your car, home, health, or your life? As an adult, you are responsible for protecting yourself and your possessions. Don’t wait for an accident, a fire, a flood or a serious illness before you realize the importance of considering insurance.

12. Mind the company that you keep “It is better to hang out with people better than you. Pick out associates whose behavior are better than yours and you’ll drift in that direction”. - Warren Buffett The saying that you are the average of the five people you spend the most time with is scary but true.

Now is the time to establish the foundation for your financial future. You are young and have the advantage of time. Don’t waste it. Seek professional advice and remember that you are in the right place at the right time.

Instagram and Twitter: @ mmwithnimi, Facebook and Google+: ‘Money Matters with Nimi’. www. moneymatterswithnimi. com, or send us an email info@ moneymatterswithnimi. com Nimi Akinkugbe has extensive experience in private wealth management. She seeks to empower people regarding their finances and offers frank, practical insights to create a greater awareness and understanding of personal finance.

For more personal finance tips, contact Nimi: Email: info@ moneymatterswithnimi Website: www. moneymatterswithnimi. com Twitter: @MMWITHNIMI Instagram: @ MMWITHNIMI Facebook: MoneyMatterswithNimi

28

BUSINESS DAY

Monday 19 November 2018

Access Bank Rateswatch Market Analysis and Outlook: November 16 - November 23, 2018

KEY MACROECONOMIC INDICATORS GDP Growth (%)

1.50

Q2 2018 — lower by 0.45% compared to 1.95% in Q1 2018

Broad Money Supply (M2) (N’ trillion)

25.28

Increased by 1.73% in Oct’ 2018 from N25.28 trillion in Sept’ 2018

Credit to Private Sector (N’ trillion)

22.72

Increased by 0.72% in Oct’ 2018 from N22.56 trillion in Sept’ 2018

Currency in Circulation (N’ trillion) Inflation rate (%) (y-o-y) Monetary Policy Rate (%) Interest Rate (Asymmetrical Corridor) External Reserves (US$ million) Oil Price (US$/Barrel) Oil Production mbpd (OPEC)

1.97 11.28 14 14 (+2/-5) 41.64 71.40 1.75

Increased by 1.54% in Oct’ 2018 from N1.93 trillion in Sept’ 2018 Increased to 11.28% in September’ 2018 from 11.23% in August’ 2018 Raised to 14% in July ’2016 from 12% Lending rate changed to 16% & Deposit rate 9% November 14, 2018 figure — a decrease of 0.72% from November start November 16, 2018 figure— a decrease of 8.12% from the prior week October 2018 figure — a decrease of 0.96% from September 2018 figure

COMMODITIES MARKET

STOCK MARKET Indicators

NSE ASI Market Cap(N’tr)

Friday

Friday

16/11/18

9/11/18

32,058.28 11.70

Change(%)

16/11/18

1-week Change

YTD Change

(%)

32,200.21 11.76

(0.44) (0.44)

Volume (bn)

0.16

0.12

35.46

Value (N’bn)

2.79

1.58

76.40

MONEY MARKET NIBOR Tenor

Indicators

Friday Rate

Friday Rate

Change

(%)

(%)

(Basis Point)

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

Cotton ($/lb.)

Sugar ($/lb.)

Wheat ($/bu.)

Metals Gold ($/t oz.)

Silver ($/t oz.)

Copper ($/lb.)

(%)

71.40 4.02

(8.12) 12.29

10.77 31.54

2215.00 114.00 78.23 12.68 514.50

(2.68) (4.52) (2.82) (0.94) 2.49

14.41 (12.44) 0.94 (17.29) 18.69

1216.22 14.30 274.40

(0.24) (0.28) 1.61

(7.69) (16.81) (16.29)

16/11/18

9/11/18

OBB

6.3300

4.2500

208

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

O/N CALL 30 Days

7.1700 7.1250 11.9443

5.0000 4.2083 11.9443

217 292 0

Tenor

90 Days

14.1529

13.8393

31

1 Mnth 3 Mnths

10.95 13.30

12.25 13.24

(129) 5

6 Mnths 9 Mnths 12 Mnths

13.68 14.83 16.82

13.28 15.03 16.50

40 (20) 32

FOREIGN EXCHANGE MARKET Market

Friday

Friday

1 Month

(N/$)

(N/$)

Rate (N/$)

16/11/18

9/11/18

16/01/18

Official (N) Inter-Bank (N)

306.70 360.52

306.65 361.73

306.50 362.48

BDC (N) Parallel (N)

363.50 364.00

363.50 363.00

362.99 362.00

Friday

Change

(%)

(%)

(Basis Point)

16/11/18

9/11/18

3-Year 5-Year

0.00 15.23

0.00 15.09

0 14

7-Year 10-Year 20-Year

15.46 15.50 15.70

15.49 15.48 15.67

(3) 3 3

Indicators

9/11/18

Friday

Friday

Change

(%)

(%)

(Basis Point)

16/11/18 2,665.09

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

8.32 5.19

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

8.49 -47.70

9/11/18 2,663.24

0.07

8.31 5.20

0.06 (0.17)

8.42 -47.24

0.07 (0.46)

TREASURY BILLS (MATURITIES)

Disclaimer

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

(Basis Point)

Index

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

Change

(%)

ACCESS BANK NIGERIAN GOV’T BOND INDEX

AVERAGE YIELDS Friday

Friday

(%) 16/11/18

BOND MARKET Tenor

Friday

91 Day 182 Day 364 Day

Amount (N' million) 3,384.18 16,920.90 107,938.48

10.95 13.16 14.45

Rate (%)

Date 14-Nov-2018 14-Nov-2018 14-Nov-2018

Global In China, export rose by 15.6% y-o-y customs data showed. Continued strong export growth in October reflected accelerated deliveries of export orders ahead of the U.S. tariff hike. Similarly, imports increased by 21.4% from a year earlier and suggest that Beijing's stimulus measures are having an impact. The trade surplus widened to $34 billion from $31.3 billion previously.

The stronger-than-expected import figures for China soften the concerns about a slowdown in global demand. Elsewhere, in the UK, a preliminary estimate by the Office for National Statistics (ONS) showed that the economy grew by 0.6% q-o-q in the third quarter. This follows a 0.4% expansion in Q2 and marks the quickest growth rate since the end of 2016. Household spending grew by 0.5%, but business investment fell by 1.2%.

This was the third quarterly contraction and likely reflects a hesitation from businesses to commit to investment given the persisting uncertainty surrounding Brexit. In a separate development, credit rating agency, Fitch, affirmed India's 'Long-Term ForeignCurrency Issuer Default Rating' (IDR) at 'BBB-' with a stable outlook. The rating agency said that a weak fiscal position continues to constrain the ratings and there were significant risks to macroeconomic outlook.

Government debt at close to 70% of GDP and expenditures being difficult to control in the run-up to general elections were main reasons for the weak fiscal position. In a statement, Fitch said it expects India's real GDP growth to rise to 7.8% in the current year, from 6.7% last year.

Domestic The Central Bank of Nigeria (CBN) has released its Consumer Expectations Survey Report for Q3 2018. According to the report, the Consumer Overall Confidence rose to 1.5 Index points, compared to the previous quarter of Q2 2018 when the index was recorded at -6.3 points. Respondents attributed the change in outlook to improved economic conditions. The consumer outlook for the next quarter and next 12 months were also positive at 24.7 and 30.1 points respectively, attributable to the expected increase in net household income, the anticipated improvement in Nigeria's economic conditions, and expectations of increased savings over the next 12 months.

The survey covered a sample size of 1,770 Households randomly selected from 207 Enumeration Areas (EAs) across the country, with a response rate of 96.9%. In another development, the CBN reported that Nigerian banks recorded 20,768 cases of frauds and forgeries (attempted and successful) amounting to N19.77 billion in the first half of 2018. The apex bank disclosed this in its economic report for the first half of 2018. According to the CBN, the actual loss by banks to frauds and forgeries, amounted to N12.06 billion, compared with the N0.78 billion and $0.03 million, suffered in the first half of 2017. It noted that fraud and forgery incidences were perpetrated by both bank staff and non-bank culprits.

Stock Market The stock market closed last week on a negative note amid tepid investor sentiment.

The All Share Index (ASI)- the main index that tracks share prices at the Nigerian Stock Exchange (NSE) dropped by 141.93 points, representing a loss of 0.44% to close at 32,058.28points. Aggregate market capitalisation of quoted equities similarly declined by N5 billion to close at N11.70

trillion. This week, we expect the market to remain largely downbeat in the absence of any immediate positive impetus.

Money Market Money market rate increased marginally amidst a quiet week. Net outflow for the week was N6 million which might explain the slight upward trend. Consequently, short-dated placements such as Open Buy Back (OBB) and Over Night (O/N) rates edged up to 6.33% and 7.17% from 4.25% and 5% respectively the previous week. Longer dated placements settled in varying directions, as the 30-day NIBOR closed lower at 11.94% from 13.09% and 90-day NIBOR settled higher at 14.15% from 13.84%. This week, rates are expected to trend upwards due to expected Retail Secondary Market Intervention Sales Foreign Exchange Market The naira-dollar exchange rate depreciated at most market segments last week. At the official window, it lost 5 kobo to settle at N306.70/$ from N306.65/$ the previous week. Similarly, at the parallel market the local unit weakened N1 to close at N364/$ from N363/$. Meanwhile, at the interbank market the currency appreciated by 60kobo to settle at N360.52/$ from N361.73/$. The weakening seen in the official and interbank markets comes amidst sustained intervention in the FX market by the monetary regulator. This week, we expect the naira to continue trading within current rates in all markets as the CBN continues to supply FX. Bond Market Bond yields inched higher across most maturities. Sell-off were witnessed majorly among long-dated instrument such as the 2034 and 2037 bond. Yields on the five-, seven-, ten- and twenty-year debt papers settled at 15.23%, 15.46%, 15.50% and 15.70% from 15.09%, 15.49%, 15.48% and 15.67%respectively the previous week. The Access Bank Bond index increased slightly by 1.85 points to close at 2,665.09 points from 2,663.24 points the previous week. This week, we expect the market to remain quiet, with trades largely order-driven as market participants anticipate the outcome of the MPC meeting.

Commodities Oil prices retreated last week, as fears of a supply squeeze receded following the US government's decision to permit eight nations to keep buying some crude from Iran despite a new set of sanctions against the OPEC member. Bonny light, Nigeria's crude oil benchmark, settled $6.31 lower at $71.4 per barrel. Precious metals prices declined on muted demand and stronger dollar. Gold was down 0.24% at $1,216.22 per ounce, while silver eased 0.3% to $14.30 per ounce. This week, oil prices will likely be supported by expectations OPEC would start withholding supply soon. For precious metals, we expect prices to draw strength from on-going Brexit turmoil in the UK and trade tensions between US and China.

MONTHLY MACRO ECONOMIC FORECASTS Variables

Nov’18

Dec’18

Jan’18

Exchange Rate (Official) (N/$)

363

364

365

Inflation Rate (%)

11.30

11.32

11.45

Crude Oil Price (US$/Barrel)

75

77.00

78.00

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

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Fidson Healthcare remains strong despite pharma industry snag

Stories by ODINAKA ANUDU

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igeria’s pharmaceutical industry is faced with the challenge of competitiveness, but this has not so much affected the performance of Fidson Healthcare Plc. The drug maker was founded in 1995 and has since maintained the culture of producing competitive products ranging from vitamins and minerals to cardiovascular medicines.

A peep into the company’s financials shows that the drug maker is sound.

The company’s audited financial report submitted to the Nigerian Stock Exchange (NSE) shows that for the January to June 2018, Fidson recorded revenue of N7.43 billion as against N6.67 billion reported in the corresponding period of 2017. Profit before tax (PBT) was N766.77 million as against N685.39 million in the same period of 2017.

Similarly, profit for the period was N521.40 million as against N466.07 million in the same period of 2017.

For the year ended De-

cember 2017, Fidson’s net margins increased to 7.54 percent from 4.13 percent as of December 2016.

Net margin is the ratio of net profits to revenues. A higher ratio means a com-

pany is growing its profit.

Return on equity (ROE) increased to 14.98 percent in the period under review as against 4.79 percent the previous year.

One of the biggest

achievements of Fidson Healthcare is the completion of its multi-billion ultra-modern plant at Ota, Ogun State. The facility is one of the five requirements for World Health Organisa-

tion (WHO) certification in Nigeria. It is high-tech machinery and is equipped with six production lines for tablets, capsules, liquids, cream and ointments, dry powder and intravenous fluids. These are targeted at meeting the needs of the Nigerian and West African markets.

When Isaac Adewole, minister of health, visited Fidson’s plant recently, he pledged federal government’s support for the company.

Adewole, who spoke to journalists during his familiarisation visit to the factory, described the facility as a ‘wonder’, saying he was impressed with its enormous production capacity.

“What Fidson has built here is extraordinary. We must encourage and support this project in terms of patronage and tax relief in order to ensure that the company is able to coordinate production in a sustainable manner,” he said.

The minister stated that part of the support would relate to importation of raw materials. “We will get the Sovereign Wealth Investment Authority to witness this so that there can be

support in terms of getting on board more raw materials needed for drug manufacturing”.

O n his par t, Fidelis Ayebae, managing director, Fidson, said the new plant would not only boost local pharmaceutical manufacturing capacity but will also transform the country’s pharmaceutical industry and the economy.

Ayebae said the present position of the country’s pharmaceutical manufacturing business required transformational investment like the new Fidson plant in order to meet future healthcare demands of Nigerians. He noted that with the completion of the plant, Nigerian pharma industry stood a chance of being launched into global reckoning and attract foreign investors.

Ayebae highlighted the several benefits of the factory to include high quality and affordable healthcare products, world-class pharmaceutical manufacturing capacity, employment generation, increased local content, generation of stronger partnerships, as well as strategic brand and market positioning.

How Atlantic Shrimpers creates value, earns FX from seafood

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tlantic Shrimpers Limited (ASL) has continued to create jobs and value for Nigerians while earning foreign exchange through export of seafood products.

The company deals in crabs, shrimps, lobsters and other forms of seafood. The company is silent and cautious in approaching publicity but its footprints on the Nigerian economy are visible.

It has been active in shrimp trawling since the 1990s as the largest fishing company in West Africa, having a fleet of over 70 ultra-modern trawlers.

According to the Central Bank of Nigeria (CBN) annual report for 2017, this company exported $38.397 million worth of sea frozen shrimps and crabs to the Netherlands, China (Taiwan), United States Of America and Vietnam.

The firm was Nigeria’s

fourth largest exporter after British American Tobacco, Olam Nigeria, and Indorama Eleme Fertilizer &Chemicals Limited. In 2016, in the heat of foreign exchange crisis in Nigeria, it inaugurated a 160-hectare shrimp farm

in Lagos. A statement by the company then said the farm would hatch, nurture and process shrimps that would serve both local and export markets.

“This new shrimp farm is a proof of the company’s continued dedication to in-

vesting in Nigeria. The company’s tropical shrimps are distributed worldwide to over 20 countries, including all the European countries and the United States of America, bringing the much-needed foreign exchange into the Nigerian economy. This farm will substantially increase our export volumes and foreign exchange generation,” Kamlesh Kabra, managing director of the company, was quoted as saying.

Nearly two years after, the company unveiled two newly acquired trawlers—Seven Stars I and Seven Stars II— as part of its growing trawler fleet.

The two state-of-the art vessels were the largest investment of the company in fisheries in West Africa in the last 28 years.

Kabra said consistency, both in terms of quantity and quality, remained the driving force for the expansion of ASL

fleet and also the intrinsic value of the Prim7Stars brand.

“Prim7Stars is a seafood brand known for a high quality range of wild caught products. Approximately 3,500 metric tons of tropical shrimps are caught annually and distributed worldwide.

This is why we as a company are proud of the investment in the new trawlers, which are set to improve various aspects of our business, including consistency in the quality of our produce, personnel safety and overall efficiency.

“ASL remains committed to the continuous supply of high quality frozen seafood products caught by our fleet in a responsible and sustainable manner to the Nigerian market, providing affordable fish protein to Nigerians,” he said.

He i n e ke n L o kp o b i r i , minister of state for Agriculture and Rural Development (FMARD), said the company’s

investment in the new vessels would not only support existing jobs, replace aging vessels and processing technology, but would also usher in new opportunities.

“Our ultimate goal is to attain self-sufficiency in fish and aquaculture production and the ministry is striving to create an enabling environment for the private sector to thrive and fill in the missing gap, as the ministry has placed fisheries and aquaculture top among its value chains development programmes.”

Olusegun Awolowo, chief executive officer, Nigerian Export Promotion Council (NEPC), said, “We have emphasised over 22 sectors where Nigeria can make money in the international market by selling our products and 19 of these sectors are in the agricultural sector. I believe this will showcase what we can do and produce outside oil.”

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real sector watch Presco’s investment in palm oil underscores confidence in Nigerian economy Stories by ODINAKA ANUDU

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resco Plc, one of the leading palm o i l p ro d u c e r s in Nigeria, has pumped billions of naira into the palm oil industry.

Analysts believe that this is an indication that the company has confidence in the Nigerian economy despite policy flip-flops and smuggling that could have discouraged it from doing so.

“It is not easy to continue to invest in an economy like ours, especially if such investments are long term.

For an investment like palm oil, you put billions into oil palm plantations and allow them a gestation period of six to 10 years. It only takes a company with confidence in Nigerian economy to do so, which is why government needs to provide the right environment for companies like Presco,” Ike Ibeabuchi, analyst and managing director of MD Services Limited, said.

Presco has so far invested N75 billion into the palm oil industry.

The company offers premium-grade palm oil with less than three percent free fatty acid (FFA) content, ex-

tracted from the mesocarp of palm fruits.

It also has the palm fatty acid distillate (PFAD), a by-product of the refining process, used mainly in the soap industry. It likewise produces the palm olein, the palm stearin, crude palm

kernel oil and refined palm kernel oil.

It currently manages the Cowan Estate and Ologbo Estate.

The company recently acquired 14,400 hectares and another 2,500 ha in Orhiomwon Local Government Area

of Edo State.Felix Nwabuko, managing director of Presco, told BusinessDay recently that the company planned a capital expenditure investment of N46 billion over the next five years (2018-2022).

Nwabuko said the investments would go into

plantations development, processing facilities, energy infrastructure and other supporting machinery, equipment and infrastructure.

“Our current capacity is 63 percent in the peak season and 24 percent in the lean season. Estimated production for 2018 is 47,000 MT of CPO. An average annual rise of 11 percent is expected over next five years,” he told BusinessDay. He revealed that the company had a total land bank of 40,000 hectares, of which total planted areas were 20,136 hectares of oil palm plantation and 138 hectares of rubber plantation.

“Our programme with smallholder farmers comes in the form of making available high yielding planting materials raised in our own nurseries to those who are interested,” he stated.

“Corporate social responsibility (CSR) is one of the three elements of the management principles of our Group in all the countries in which it operates.

Our CSR programme delivers overall positive impact and long-term improvement on wealth creation, education and living conditions (job creation, equipping schools, scholarships, elec-

tricity, potable water, and roads maintenance, among others),” he explained.

On what it would take Nigeria to achieve sufficiency in palm oil production, the managing director said the country must take seriously, a sustained aggressive planting of additional hectares of oil palm plantations and commensurate expansion in processing facilities capacities, supported with well thought-out and wellmonitored government policies together.

Nigeria produces between 900,000 and 1.2 million MT, out of 2.1 million MT local demand. The gap is filled by imports from Indonesia and Malaysia. Palm oil is used in foods as well as for the manufacture of the majority of packaged foods, ranging from biscuits to ice cream.Presco made a revenue of N12.825 billion in the first half of 2017, from N7.518 billion in the corresponding period of 2016. Its profit after tax was N5.555 billion, up 84 per cent from N3.012 billion in the corresponding period of 2016.

Some experts argue that Nigeria needs to plant two million hectares of oil palm to be self-sufficient, which will cost over N2 trillion.

NACC to discuss cross-border trade, investment at 18th presidential inauguration ceremony

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he Nigerian-American Chamber of Commerce (NACC) is gearing to hold its 2018 Annual Dinner Dance, which also coincides with the inauguration of the 18th president of the chamber.

The event will take place on 14th December in Lagos.

The Annual Dinner Dance presents an opportunity for

Oluwatoyin Akomolafe

members of the chamber and invited guests to interact, in a relaxing environment, while networking and discussing initiatives to further encourage cross border trade and investment.

The evening will also witness the inauguration of the 18th president of the chamber, Oluwatoyin Akomolafe.

Akomolafe was the deputy president, NACC, prior to his election as the current president. He is the chairman, Index Brook Limited and has devoted his career to nurturing of Index Brook into a group of companies operating in different countries, providing consultancy services, project management and engineering services to the major oil and gas companies in the industry

and across the world. These companies include Index Brook Nigeria, Index Brook Guyana, Canyon Offshore Mozambique, Pasedena Exploration and Production, Index Brook Angola and Index Brook Ghana Akomolafe is also an active member of several societies, social clubs, and professional associations.

NACC is the first and oldest bilateral chamber of commerce in Nigeria and, for more than 58 years, has grown into a dynamic organisation.

It stands as a pillar of the relationship between the United States of America and Nigeria, serving as an important catalyst in bringing together people and ideals to bolster bilateral commercial relations between Nigeria and the United States.

L-R: A Representative from Uber Nigeria; Darrell McGraw, senior partner, PWC and vice -president, American Business Council; John F. Bray, US Consul General; Leonard Mary Beth, US Ambassador to the African Union at the reception to host new members to American Business Council in Lagos.

American Business Council onboards 7 new member-companies

J

ohn F Bray, the US Consular General, held a welcome reception for seven new American Business Council members.

These are leading global corporate brands in sectors

critical to the country – security, infrastructure, ICT, manufacturing, health, and investment. The companies are America Tower Corporation, Worldwide Canine Inc., Uber Technogies, Ren-

deavour, Tropical General Investment, Bristol Scientific Company and Management Science for Health.

The event held on the 1st of November at the Consular General’s residence.

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Special Report

Nigeria’s leading wealth creators and employers of labour Entrepreneurship is a marathon not a sprint - Femi Otedola FEMI OTEDOLA, CON, chairman Forte Oil Plc, is a wealth creator and employer of labour who has distinguished himself particularly with his philanthropic projects. In this interview with TELIAT ABIODUN SULE and CHIJIOKE ONYEOGUBALU, he shared his inspirations on what motivated him to become an entrepreneur and what up and coming entrepreneurs should do to be successful. Excerpts:

A

but you would agree with me that faced with seemingly unsurmountable challenges with nowhere to turn, you are forced to face them head on. Giving up was not an option and Forbes Magazine aptly dubbed me “The Billionaire who bounced back”.

The traits that came in handy during that time and other times were unwavering focus, resilience and self-belief.

t what point in your career did you make up your mind to be an entrepreneur and why?

I have always had an interest in business and entrepreneurship and it was just a matter of progression for me. I started my first business shining shoes for my parents’ visitors for a fee at age six.

Apart from the time spent working in the family business, I have always been an entrepreneur and I have gone through the full cycle of ups and downs, most of them fully documented.

Entrepreneurship keeps my blood flowing.

What informed the choice of businesses or sectors of the economy you invested in overtime?

My business choices are driven by value and reach. However, I have also built businesses as complimentary services to my core businesses.

I am also a firm believer in investing in businesses you understand, and I know the petroleum business like the back of my hand. I progressed from direct-to-home (peddling) supply of diesel measured in a few thousand litres to becoming the majority shareholder in a major marketer of petroleum products, power generation and upstream services.

Entrepreneurs must learn the importance of information whether they are trying to grow their existing businesses or when seeking new opportunities.

How do policies of government (federal and state) empower entrepreneurs to create wealth in Nigeria?

Government is an enabler of the wealth creation journey and it works both ways especially in the tax-driven business environment we currently have.

It is believed that the various interventionist funding and policy initiatives of the Federal

What advice do you have for young and up and coming entrepreneurs?

Entrepreneurship is a marathon not a sprint. With that in mind, any aspiring entrepreneur must be in it for the long haul.

Work on yourself and improve your understanding of your business in your spare time, build a strong network, you cannot do it all alone so you need to look for good people to work with you and assist you on the journey; seek a mentor for guidance especially during the inevitable trying times; if it does not work, change it! If it works, refine it!

Femi Otedola

Government are designed to improve the business environment and wealth creation at all levels and encourage entrepreneurship.

What are the good policies you might have seen in other countries that you would like the Nigerian government to implement here?

Every country has its peculiarities and it would be unfair to expect a cut and paste scenario with respect to policies.

That said, the problem in Nigeria has never been lack of policies but implementation by all concerned.

The most important policy for now is the Ease of Doing Business which takes a holistic view of business from registration to day-to-day running of the businesses.

I strongly believe that the full cooperation of all the parties involved in the process, especially sub-national tax authorities,

would go a long way in creating the right environment.

You are one of the richest Nigerians and a leading philanthropist, what encourages you to give back to the society?

Growing up, we were taught that it is more blessed to give than to receive. I am sure wealth only increases the ability to give if you already have it in you. I feel blessed to be able to give to causes dear to my heart especially education.

What are the challenges you have encountered and how did you overcome them?

My past challenges have been well documented in the various publications. The biggest of them all was losing a billion dollars during the oil market crash in 2009/10 which resulted in a tumultuous period for me, my companies and employees.

I am not one to give up easily,

Profile of Femi Otedola, CON Femi Otedola joined the board of Forte Oil Plc as Chairman of the Board of Directors in May 2007. His vision transformed African Petroleum Plc into Forte Oil Plc. The Company has grown in leaps and bounds to become a model of the possibilities inherent in Nigeria, winning numerous accolades in recognition of the successful business turnaround, prompt Financial Reporting, strong Corporate Governance and investment of choice within the Oil and Gas Industry and the Nigerian Stock Exchange.

In 2013, with a firm belief in the power reforms of the Federal Government and overall vision “to be the foremost integrated energy solutions provider in Nigeria” he made a very strategic decision to participate in the Privatization Programme of the Nigerian Government and his doggedness culminated in the acquisition of a majority stake in the 435MW Geregu Power Plant by a subsidiary of Forte Oil Plc, Amperion Power Distribution Company Limited.

He has held several board memberships including President of the Nigerian Chamber of Shipping and as past Chairman of Transcorp Hilton Hotel, Abuja. He was appointed Member of the Governing Council of the Nigerian Investment Promotion Council in January 2004 and in December of the same year, he was appointed a Member of the Committee saddled with the task of fostering business relationship between the Nigerian and the South African Private sectors.

He was a member of the National Economic Management Team from September, 2011 to May, 2015 and the Honorary International Investors Council under the leadership of Baroness Lydna Chalker.

Otedola was further recognized for his immense contributions to the growth of the Nigerian economy with the conferment of the prestigious National Honour of “Commander of the Order of the Niger - CON” in May, 2010.

A philanthropist with deep involvement in educational causes at all levels via the Sir Michael Otedola Scholarship Awards Foundation, he has continued to demonstrate his passion for his community, Epe, Lagos State and Nigeria in general, committing huge financial resources to the sponsorship of promising but financially disadvantaged students.

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Why Jigawa matters in Nigeria

J

igawa state is one of the states in the northern part of Nigeria that has a bright prospect for investors. Its strategic location makes it the gateway to the North West, North East, and the Republic of Niger. The presence of a free trade zone in Jigawa State, coupled with the fact that the State Government is continuously improving its business environment and expanding infrastructure, makes the State an ideal location for local and global brands. The State receives support from the World Bank, DFID, USAID, UNICEF, UNDP, EU and other multilateral agencies. This pervasive international collaboration confirms the confidence that global institutions have in the Jigawa State Government.

The state’s determination to opening up the economy for private sector participation is gradually yielding results as evidenced by the number of large scale agri-investments that have flowed into the State in the last couple of years. Businesses are attracted to Jigawa by a lot of factors some of which we will look at critically in this report.

Favourable investment Climate There is a strong political will in support of development initiatives, partnerships and sustaining investor friend y policies. Under the leadership of Governor Muhammad Badaru, the tate has proactively pursued policies and programmes to strengthen public sector institutions and make them function more efficiently. Jigawa has a conducive and progressive regulatory environment for business and is among Nigeria’s leading States in ease of doing business ranking according to the World Bank Doing Business Report [2018].

Jigawa has enjoyed peace, security, low crime rate and absence of communal strife such as youth restiveness, thuggery and vandal-

than 12,000 hectares have been demarcated. This offers an opportunity for investors to enter into long term lease agreement for the utilization of these reserves as animal ranches or large scale poultry farms. Most of the reserves are linked with all-weather roads and are close to the national power grid. The state is also endowed with vast, relatively untapped solid minerals deposit awaiting exploration.

H.E Muhammadu Badaru Abubakar, MON, mni, Governor, Jigawa State

ism; there can be no better attraction to foreign or domestic capital.

Vast Resource Base Jigawa enjoys a fair share of all the major natural climatic conditions for agricultural development – land, vegetation, water and

sunshine-but production remains at the subsistence level and the vast opportunities that abound remain untapped. Approximately 1.9 million hectares –constituting more than 80 percent of the State’s total land areas are estimated to be cultivatable during the rainy season.

There are 20 major irrigation schemes and 14 bore hole - based irrigation schemes in the State.

Some of these schemes are located in the Fadama areas. There are over 450 grazing reserves scattered across the State.50 out of these reserves covering more

The Fadama lands [flood plains] are estimated to cover nearly 400,000 ha [more than 16 percent of land mass] stretching for more than 150 Km from Zakirai, a border town in Kano through Ringim, Auyo, Hadejia and Kirikassama to Nguru in Yobe State. It is estimated that less than 50 percent of the total Fadama lands is being utilized.

Approximatel y 1.9 million hectares –constituting more than 80 percent of the state’s total land area are estimated to be cultivatable during the rainy season. The Fadama lands [flood plains] are estimated to cover nearly 400,000 ha [more than 16 percent of land mass] stretching for more than 150 Km from Zakirai, a border town in Kano through Ringim, Auyo, Hadejia and Kirikassama to Nguru in Yobe State. It is estimated that less than 50 percent of the total Fadama lands is being utilized.

Nearly 15 percent [or 285,000 ha] of the State’s arable land is irrigable although less than 50,000 ha are cultivated.

Unique and Strategic location Jigawa State’s geographic location is both unique and strategic: It is a vital transit point and trade route between the crop producing North West and the livestock-rich North East Nigeria. Its proximity to Kano city, Nigeria’s second largest city and industrial centre, provides enormous market opportunities for agro-processors and industries varying scales.

Its border with Niger Republic provides huge opportunities for regional and cross border trade with neighbouring countries in North, Central and West Africa.

The development of a tax free Export Processing Zone at Maigatari near the border with Niger Republic provides opportunities for the investor to tap a potentially huge market of over 300 million people in west and central Africa.

The EPZ is envisaged to cover a total of 6.5 square kilometres with robust and modern infrastructure to support light and medium m a n u f a c t u ri n g e n t e r p ri s e s targeting the export market Partnership between the State Government and a private investor that led to the creation of an agricultural export terminal in Andaza in 2018 is opening up the State for the international export market.

The terminal is set up with the full complement of customs and federal plant inspectorate. Agric export businesses in the Northern region can now benefit from this facility for cleaning their grains, baggage operations , container

sealing and final clearance for export, thereby eliminating the need to join the long clearing queues at the Tincan Island.

Improved Infrastructure There is a strong commitment to infrastructure development in Jigawa State. There are over 2,000 kilometres of high quality, all season roads linking towns and villages across the State, improving the ability of businesses to access regional markets in Northern Nigeria. Between 2015 and now, the state government embarked on the construction and rehabilitation of about 1300Km of regional, township and feeder roads across the State.

Little wonder the 2017 competitiveness report ranked Jigawa as having the best quality of roads in the country. The State has invested in the construction of a modern airport, suitable for both cargo and passenger transportation. Ef-

forts are being made to stimulate export development through the proposed cargo terminal and pack house at the airport facility.

An existing rail line links the State with the Northern Nigeria’s commercial towns of Kano and Kaduna and even more strategically with Nigeria’s largest sea port located in Lagos. It is also strategically placed along the proposed Port Harcourt Maiduguri rail development project.

Institutional Support The Jigawa State Government maintains an open door policy for investors. In 2016, Governor Muhammad Badaru signed a bill establishing the Investment Promotion Agency, popularly called Invest Jigawa into Law. Invest Jigawa has the Government’s mandate to support prospec tive and existing investors in establishing and running businesses in Jigawa. Aside from its role in advocating for a conducive business environment, the agency also offers various services to the investors , as would be examined in subsequent publications

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Stocks

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Commodities

Rates + Bonds

Economics

Funds

Week Ahead

BUSINESS DAY

Watchlist

economy

Nigeria Euro bond yields second highest among seven largest African economies BALA AUGIE

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igeria will pay a higher interest on its recent Eurobond as its yields are the second highest among seven largest Africa’s largest economy.

The country’s bonds with maturities of 30 years were priced at 9.25 percent, this compares with Ivory Coast, (6.60 percent), Ghana ;( 8.60 percent), South Africa; (6.30 percent), but lower than Angola’s price of 9.38 percent, The higher pricing for Nigeria’s bonds is due to the emerging market risk off emanating from the continuous rate hike by the United States’ (U.S) Federal Reserve (Feds) that has resulted in higher U.S treasury yields and the on-going trade war between China and the U.S that is taking its toll on developing market economies.

On the home front, the record drop in the price of crude oil since October, falling direct investment, inflationary pressures, and the risks associated with the forthcoming presidential elections have heightens investors jitters.

Nigeria issued $2.86 billion in Eurobonds on last week Wednesday to plug its 2018 budget deficit. The bonds with maturities of 7, 12 and 30 years were priced at 7.625 percent, 8.75 per-

cent and 9.25 percent, respectively. The issue was 3 times oversubscribed, as investors continue to have confidence in the country’s fundamentals.

“Specifically, when compared to the February 2018 Eurobond issuance where the spread between Nigeria’s Eurobond rates and comparable US treasury was 427 bps and 456bps for the 12year and 20 year respectively, the recent issuance which portends a 563bps and 589bps spread for the Nigeria’s 12 year and 30 year appears expensive,” said analysts at ARM Securities.

Nigeria’s inflation for the

month of September is 11.23 percent, which is above the Central Bank of Nigeria’s (CBN) target of 6 percent and 9 percent.

Total outflows from July – October 2018 stood at $20.6 billion (monthly average of $4 billion) with offshore demand at the IEW accounting for c.31 percent of the total outflow, while total inflows stood at $14.8 billion (monthly average of $3.8 billion), according to data from ARM Research.

“Consequently, the CBN depleted the reserve by $5.8 billion in a bid to keep the naira stable,” said analysts at ARM Research.

Analysts have expressed fears over Nigeria’s rising debt profile which has put pressure on government revenues due to associated high debt service cost as latest National Bureau of Statistics (NBS) data show that over 90 percent of government revenues was channelled toward debt servicing between January and June last year.

The country’s total public debt is at N22.30 trillion ($73.20 billion) using an exchange rate of $306/N, this compares with N21.7trn as at December 2016 and N17.3tn as at December 2015.

Federal Government’s debt serving cost has been

eating deep into revenue, at the detriment of a fragile economy.

In 2011, debt servicing was taking 20 percent of Federal Government revenue.

By 2017 it has risen to 61.59 percent.

Nigeria’s FG funds up to 60 percent of its annual budget from the proceeds of oil sales.

If the federal government’s share of oil revenue at N1.12 trillion is compared with the associated cost of servicing debt of N1.64 trillion, clearly, the federal government oil revenue is not enough to pay interest on Nigeria’s expanding debt.

The broader US market swung between gains and losses in morning trade, capping off an already shaky week for stocks

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P.E

SHORT TAKES 379.84 billion naira HSBC and UBS have closed their offices in Nigeria; the country’s central bank said in a report on Friday as it revealed the foreign direct investment in Nigeria fell to N379.84 billion ($1.2 billion) in the first half of the year from N532.63 billion ($1.7 billion) a year earlier

Diamond Bank

Wall Street swings between gains as losses as chip stocks drop ech names and retailers were hurting the most on Friday, with semiconductor stocks keeping the Nasdaq Composite lower after Nvidia forecast revenue weaker than analysts expected, and department store Nordstrom reported cooling sales in its third quarter.

The S&P 500 was down 0.1 per cent in late morning trade, pulling back from a gain of as much as 0.3 per

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cent, and having dropped as much as ⅔ of 1 per cent earlier in the session. Owing to a six-day losing streak that ended on Thursday, the benchmark is facing a drop of 2.1 per cent for the week.

The telecommunications sector was the best performer on Friday, up 1.2 per cent.

Next best was the utilities sector, up 1 per cent, followed by healthcare, up 0.7 per cent.

Utilities were under-

pinned by a 35.9 per cent rebound in the shares of Pacific Gas and Electric, the company whose equipment may have been the cause of one of the deadly California wildfires. The bounce comes after a Californian regulator was quoted as saying that he does not want the utility to go into bankruptcy as a result of significant liabilities associated with the fires.

The stock closed lower for

the sixth straight sessions on Thursday in a rout that has wiped out about 64 per cent of its market capitalisation.

Consumer discretionary was the worst-performing sector, down 0.9 per cent, as shares in Nordstrom dropped 13.9 per cent. Next worst was technology, led by a 17.6 per cent drop in Nvidia.

The Nasdaq Composite was down 0.6 per cent, while the Dow Jones Industrial

Average was up 0.1 per cent.

US Treasuries continued to rally as yields fell in the wake of cautious comments from the Federal Reserve’s vice-chair about the probable pace of interest rate rises. The yield on the benchmark 10year US Treasury was down 3.3 basis points at 3.0847 per cent.

The dollar remained weaker, with the DXY index down 0.4 per cent at 96.521.

Diamond Bank last week denied it was in talks with investors to raise cash but said it was managing its capital, which borders on the regulatory minimum, to grow.

Central Bank of Nigeria

The Central Bank of Nigeria has directed banks to intensify efforts at debt recovery, realisation of collateral for lost facilities and strengthening their risk management processes

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

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

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Markets Intelligence Economy

How investors missed out on decades of easy profit IFEANYI JOHN

Only portfolio, his portfolio will have grown to N96 million as at the end of H1 in 2017, providing the investor with almost 10x returns. If he invested in a H2 only portfolio, his portfolio will be N9.59 million as at the end of H2 2017 in December last year. Quite bizarre!

Investors will give more than a thousand different reasons to factors that may explain the anomaly but what we know for sure is that market can’t claim to be anywhere near efficient if anomalies like this continue to consistently occur.

The old adage of “sell in May and go away” may need to be rephrased in Nigeria to be “sell in June and run-away” as H1 market performance consistently delivers strong results while weak performances in H2 consistently hurt investors overall performance which will be annual return of 12 percent if you played the “buy and hold” strategy between January 2000 and December 2017.

Before you run away feeling like

you have learnt the trick to beating the market consistently, anomalies never remain forever, and future performance of the H1 portfolio may not mimic the past. But in the meantime, it may be worth the risk.

H1 2019 is likely to deliver positive returns for investors if elections are held successfully.

Non-fundamental selloffs in 2018 driven largely by political tensions, election risk and emerging market selloffs will give way for a more positive and economic and market outlook in 2019. IMF predict Nigeria economic growth will reach 2.3 percent in 2019, its fastest growth in 3 years. Oil prices is also expected to remain above $70 per barrel which will help oil rich Nigeria to grow external reserves, maintain currency stability and reduce budget deficit, thereby boosting investor’s confidence.

Analysts expect that stocks are bound to rise after the general elections which means a rally in H1 is still a big possibility.

Fast-food chains among winners of Wall St’s securitisation machine Taco Bell latest to have found way to lower debt costs and ease investor access Joe Rennison and Alistair Gray

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t is not just ingredients being cut up by restaurant companies.

Franchise chains serving everything from burgers to burritos are also offering sliced-and-diced debt to investors, as appetite for restaurant securitisations reaches record levels.

Taco Bell served up almost $1.5bn of debt this week using a Wall Street structuring technique that gives investors more direct access to its fast food revenues than a regular corporate bond.

The 6,900-strong chain, part of New York-listed Yum Brands, is the latest restaurant franchise to tempt investors with a so-called wholebusiness securitisation.

Using the complex funding mechanism — cutting up its debt into tranches with different levels of risk, and promising investors first dibs on revenues from franchises and company-owned restaurants — Taco Bell has been able to lower its borrowing costs and boost its credit ratings.

The financial engineering of Mexi-

German carmaker ramps up spending on electric vehicles, self-driving and ride-sharing

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T

iming the stock market is never an easy game. There is usually more money to be made investing in the long run than chasing yields in the short term.

Yet, market anomalies occur rather too frequently in the short term that provides courageous investors ample opportunities to make outsize profits in the short run.

One such anomaly we spotted is the “H1 optimism rally” and the “H2 pessimism rally” that has ravaged the Nigerian market since year 2000. In the first half of the year since 2000, the stock market has delivered positive returns 16 out of 18 years while in the second half of the year, the market has rallied only 9 times out of the last 18 years. This means that if you were a probability driven technical investor, you will see easily that there is an 88 percent chance of an upside in the stock market in the first half of the year and a 50 percent chance of suffering a market loss staying in the market in the second half of the year.

If an investor invested only in the first half of the year between 2000 and 2017, he would have earned an average annual return on his portfolio of around 14.23 percent versus an average annual portfolio loss of around -0.58 percent if he only invested in the second half of the year. This performance excludes dividends earned and assumes that the investor holds in his portfolio all the companies in the stock market at market weights.

To put this bizarre anomaly into perspective, if an investor invested N10 million in year 2000 in a H1

VW pledges to spend €44bn on new technologies

can food is the latest example of Wall Street seeking to marry investors’ demand for high-yielding assets with junk-rated companies desire for more cash.

But the technique also brings with it new risks, and can reduce business managers’ financial flexibility.

Taco Bell takes the number of whole-business securitisations completed in 2018 to 11, mostly from restaurant companies such as Domino’s Pizza and burger group Sonic, surpassing nine last year. Issuers have raised more than $25bn in these kinds of transactions over the past five years.

“Securitisation debt right now, relative to other forms of debt Yum could access, is the most cost effective,” said a person familiar with the deal.

A typical structure moves all of the company’s revenue-generating assets, such as franchise agreements, into a separate entity that issues the securitised debt. That entity would be ringfenced should the parent company go bust, helping credit

rating agencies view its debt more favourably and often lifting the debt into “investment grade”.

“What is unique here is that the structure allows for all the revenue generating assets to be segregated in a bankruptcy remote entity. They are protected,” said Jesse Sable, an analyst at the rating agency S&P Global, which gave the Taco Bell deal a triple-B rating, one notch above Yum’s double-B corporate rating.

The higher rating reduces borrowing costs, but investors are happy, too. Because the structure is more complex than straightforward debt from pristine companies, it often carries a higher return than comparatively rated corporate bonds.

Taco Bell’s new debt was priced on Thursday with an all-in yield of 4.34 per cent for the senior tranche and 4.97 per cent for the second tranche. That is less than a typical double-B rated company such as Yum is paying — the yield on the Bank of America Merrill Lynch index of double-B bonds was 5.8 per cent on Thursday.

olkswagen has pledged to spend €44bn on technologies for electric cars, autonomous driving and new mobility services, such as ride-sharing, over the next five years.

The €44bn, one-third of total expenditure in the next halfdecade, compares with a pledge last year to spend €34bn on future technologies and underscores increasing moves towards the switch to battery-powered vehicles.

Herbert Diess, chief executive of the world’s largest carmaker, said €30bn of the money will be spent on electric vehicles.

Mr Diess added that VW’s coming wave of electric cars, beginning late next year with the ID hatchback, will be far superior to its current line-up.

They will offer 450-550km of range, be capable of fastrefuelling, and the charging infrastructure around Europe will be “ubiquitous” thanks to the efforts of Ionity, a joint-project with BMW, Daimler and Ford.

“This is why, by 2020-2021, it will be difficult to take a decision against electric cars, because they offer so many convincing points,” he said at a press conference in Wolfsburg.

“For those who don’t drive more than 30,000km a year, electric cars will be the first choice.”

Mr Diess also quashed speculation that VW would merge with Ford after rumours that its limited alliance talks with its US rival on commercial vehicles would be the first step to a full-blown tie-up.

The VW boss acknowledged that the transformation will “curb earnings” in the first years, but that VW was working hard to save costs by building a variety of cars off a smaller number of shared platforms.

The 12-brand VW Group, which includes Porsche, Audi, and Skoda, is targeting a 30 per cent production efficiency increase by 2025, at which point

Volkswagen plans to sell 50 different pure-electric models and another 30 plug-in hybrids.

Volkswagen shares fell nearly 3 per cent after the press conference, in part because some investors had anticipated VW would lift margin targets. The shares ended the day 2.5 per cent lower.

Ingo Speich, an investor at Union Investment, added that capital markets see VW’s “all-in” approach as a risky, make-orbreak-move for VW given the possibility that fuel cell cars or some other form of clean technology wins the day against electric cars.

Mr Speich, however, said Volkswagen already has “the most serious, strongest strategy” among incumbent carmakers, and he supports it investing even more heavily.

“Other competitors are coming up, and if you don’t invest now you can’t stop them,” he said.

“You can only create a gap to your competitors now.”

Arndt Ellinghorst, analyst at Evercore ISI, said VW shares are still not getting any credit for its ambitious moves. “We’re not sure how long it will take to prove sceptics wrong to put this company on a higher multiple,” he said.

Mr Diess spoke about the fiveyear plan alongside Bernd Osterloh, the powerful head of VW’s works council, and Stephan Weil, prime minister of Lower Saxony.

Each sits on the supervisory board that oversees management, making it clear the plan has their full support.

Mr Diess won their support in part because, as announced earlier this week, two German VW sites in Emden and Hanover will be transformed into electric vehicle factories.

This ensures that German workers’ jobs are safeguarded. The plan includes a pledge to reduce headcount over the next decade only through retirement.

Fidelity promotes tech chief to run $2.6tn asset management arm

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idelity has promoted technologist Steve Neff to run its sprawling asset management division following the retirement of Charlie Morrison, a three-decade veteran of the Boston investment giant.

Underscoring how technology has become increasingly important to the money management industry, Mr Neff has been Fidelity’s head of technology since 2013, and has over his 22 years at the company also run a series of other more tech-oriented areas, rather

than more traditional portfolio management jobs that make up the backbone of Fidelity’s business.

In a memo sent to staff, seen by the FT, Fidelity’s chair and chief executive Abigail Johnson said: “It’s an opportune time for Steve to lead Asset Management, as technology is becoming increasingly important in our efforts to deliver outstanding investment performance and solutions for our customers.”

Fidelity’s asset management arm manages $2.6tn in assets.

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Monday 19 November 2018

Start-Up Digest

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In association with

Rose Azuike: Revolutionising eye care business ODINAKA ANUDU

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ose Azuike is the the founder of Eyecare NG, a healthcare promotion and marketing service provider.

Founded in June 2018, the main focus of the start-up is to promote public eye health while supporting the growth of professional eye care businesses across the country.

It is public knowledge that almost all entrepreneurs are inspired by events—past or present.

For Rose, three things inspired her to set up Eyecare NG. First was an eye health scare she had towards the end of 2017.

Second was the strategic marketing gap she identified in the sector.

Third was her love for online and digital communications.

Health business is not an allcomers’ affair. So, a mere peep at Rose’s curriculum vitae shows why this business is a perfect fit.

She has Doctor of Optometry degree from Abia State University Uturu; master’s degree in Public Health (MPH) from the University of Sheffield, UK, and a certificate in Leadership and Management in Health from the University of Washington, USA. Rose is also certified in Development Project Management, with solid experience in different capacities as an optometrist, public health professional and eye care marketer.

For the entrepreneur, rising cases of eye problems present an opportunity and also a challenge.

“On one hand, the high prevalence of eye-related problems presents an opportunity for us and the eye care sector as a whole,” she says.

“One of the major challenges the eye care sector experiences is poor eye care-seeking behaviour by the Nigerian people. Most people do not go for annual eye checks. They visit eye care centres only when they have obvious eye problems and many of them go in late after other (non-professional) care options have failed. So with many people having eye-related

Rose Azuike

problems, there is an opportunity to inform, educate and motivate them to take care of their eyes, seek eye care from professionals and avoid patronising quacks. This also presents an opportunity for us to boost eye care service utilisation and product purchases for our customers through our marketing activities.

“On the other hand, high prevalence of eye-related problems is a problem for society. Eye care is better when handled with a preventive and prompt treatment approach because eye problems— particularly severe vision loss and blindness—present an economic burden to the society. Loss of productivity due to severe vision loss/blindness, for instance, is a problem for the eye care sector because a person who is unable to work and earn an income due

to severe vision loss or blindness may not afford to pay for his eye care/vision rehabilitation bills,” Rose explains.

Rose understands that this is 21st century, so, she is tapping on technology to market eye care products/services and promote positive eye health behaviours.

“We have a website that has a directory of professional eye care centres, a large collection of eye health information, a marketplace that showcases eye care products from authorised distributors and genuine retailers and a marketing blog for eye care businesses,” she discloses.

“We also have accounts on different social media platforms. The most active ones are Instagram, Facebook and Twitter. In addition, we do email marketing, SMS marketing, search engine marketing,

WhatsApp chats and phone calls,” she says.

The entrepreneur started from home with about N500, 000, a computer and a website. About half of the fund was used to obtain tools and resources for web design and maintenance as well as for initial marketing activities. The remaining half was used to hire and pay an eye care professional that wrote the eye health articles on the website as well as a digital communications assistant.

“I didn’t borrow any money when I started,” she discloses.

Rose explains that what makes Eyecare NG unique is its application of behaviour change principles to marketing.

She explains that many marketers, particularly those who have worked with Fast-moving consumer goods (FMCG) companies, have an assumption that consumers are mainly influenced to use services or buy products based on price.

Rose points out that while pricing plays a role in influencing the use of services and products generally, its influence does not hold in many cases in eye care business.

Her reason is that seeking eye care is a behaviour that is influenced by a lot of other factors beyond costs.

She says that Eyecare NG is unique because it is industryspecific.

“We strictly promote and market eye health and eye care businesses. Being focused has helped us understand the industry better and specialise in the field of eye care marketing.”

How are Nigerians buying into your message? Rose responds that she has been getting positive responses from the public—including eye care enquiries and messages, among others.

“However, the response from eye care businesses has been quite slow. We have a few businesses who have bought into what we are doing and some have even given us testimonials. That said, a lot of eye care businesses seem sceptical. We are less than six months old and so we know that

ANDE launches Ibadan, Port Harcourt entrepreneurial ecosystem snapshot Josephine Okojie

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he Aspen Network of Development Entrepreneurs (ANDE), a global network of organisations that support small and growing businesses in emerging markets, has, through a support from the Department for International Development (DFID), launched Ibadan and Port Harcourt entrepreneurial ecosystem snapshots.

The launch has increased the

number of ANDE West Africa entrepreneurial ecosystem snapshots in Nigeria to four, which aims to identify organisations that actively support entrepreneurs and the kind of support they provide in specific cities.

“Ibadan and Port Harcourt are cities in Nigeria with great entrepreneurial potential and which are receiving increasing local and international attention,” said Joshua Adedeji, senior program coordinator, ANDE West Africa.

Also, during the launch, the online entrepreneurial ecosystem portal and printed copies of the snapshots by ANDE West Africa were made available and it featured the gaps, opportunities and recommendations for increased entrepreneurial development in the Ibadan and Port Harcourt.

“The investment landscape in the Port Harcourt ecosystem is gradually improving and gaining more attraction,” Friday Essienenkak, investment executive, GroFin

Port Harcourt, said.

“As an investor in Port Harcourt, we have supported several small and growing businesses through their various sector associations,” Essienenkak said.

The report also shows that the top focus for entrepreneurial support is youth entrepreneurship and that stakeholders in Port Harcourt pay more attention to the information and communication sector while stakeholders in Ibadan are sector agnostic.

will change over time,” Rose says, confidently.

The female entrepreneur has expansion plans. “The eye care market in Nigeria remains largely underdeveloped and we see many opportunities for eye care promotion and marketing. With adequate funding and right partnerships, we will expand,” she says.

Like any other entrepreneur, Rose faces some challenges.

Her key challenge is getting professionals who own eye care centres to understand that the practice of eye care is different from the business of eye care.

“Some of them understand this and it is usually evident in the way their practice and other eye care related businesses are structured.

However, there are quite a lot of them who are finding it difficult differentiating the call to be an eye doctor from the responsibility that comes with running an eye care business. They focus on practising their profession and do not have a proper system that takes care of the business functions that are beyond their skills and capacity.

Therefore, we have many eye care practices that do not intentionally market their services and many of those who do, don’t have a strategic marketing plan. They actually carry out random acts of marketing and this greatly limits the potentials of their practices. It a challenge because we can’t help businesses whose owners do not know or believe that strategic marketing is important for the success of an eye care business,” she states.

Rose has some advice for the upcoming entrepreneurs.

“Entrepreneurship is hard work and things don’t always go as expected. One thing I have found out that keeps one going is a growth mind-set. Many people say ‘passion’, but I don’t completely agree with that. Passion often inspires the business but it is your mindset that will determine whether your passion for the business will grow or die when you encounter challenges. So, before you start a business you love, make sure you develop a growth mind-set and continually build on it.”

Start-Up Digest Team Odinaka Anudu Editor

odinaka.anudu@businessdayonline.com 08067478413

Reporters Josephine Okojie Bummi Bailey Fifen Eyemisanre Famous Graphics

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Start-Up Digest How Idia changes African narrative through media Josephine Okojie

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any entrepreneurs are driven by a passion to solve societal problems. For Idia Aisien, founder of the International Development Initiative in Africa (IDIA)

Project, her driving force is to change the African narrative through the media.

Through IDIA project, Idia is changing African conversation about natural disasters, political instability, recession and economic downturn, among others.

“The bad news from Africa creates apathy towards the economy, politics and

social initiatives that are being implemented. This is making investors avoid doing business on the continent,” she says.

“We want to shift the perspective of the African narrative by documenting individuals, groups and corporates doing great works and that is what IDIA stands to obtain. We want to ensure that we multiply the number of solutions in our community by portraying positive stories that can attract more investors on board to partner with those already doing these great work to scale,” Idia says.

Idia was inspired to establish the IDIA Project by her parents who are philanthropists. She was also inspired by the need to bridge the knowledge gap among people from Europe and America about Africa.

To do this, the journalist-turned-entrepreneur is using media and digital platforms to change the conversation about Africa through video documentary of individuals, corporates and groups making positive impact on various societies across the continent.

Also, through the IDIA project, she is connecting these entrepreneurs with investors. She has collaborated with some corporate organisations to empower marginalised communities,

students from underprivileged societies and individuals with poor income, among others.

The former investment banker tells Start-Up-Digest that she intends to produce a yearly report to provide information and data across sectors for policy makers and investors looking at investing in Africa.

Idia says that a lot of investors want to invest on the continent currently, stating that their inability to recognise credible platforms and processes has deterred them from making such investments.

“I am connected to a lot

of investment bankers who just do not trust certain processes and platforms in Africa to invest in. IDIA project would be changing that by putting certain things in place to ensure the funds would be going into the right places and measure what the money would be used for,” Idia explains.

“With this, we would be connecting entrepreneurs to investors that would want to invest in their businesses,” she states.

She says that the initial capital used to start up the project was from her personal savings and from family members.

The young social entrepreneur laments that long bureaucratic processes in getting certain approvals are a big challenge that confronted her project in its early stage.

“It has not being easy.

The first challenge is getting things done within the shortest possible time was quite difficult. When I started the project, getting things done was the major challenge I faced. In Nigeria, something that is supposed to take a month to get done can take months,” she recalls.

Idia says funding was another major challenge that confronted the business as funds meant for the project had to be diverted to other areas owing to unpredictable nature of things.

The entrepreeur states that she has been able to address the issue of funding as the project is reaching out to others through the crowd sourcing platforms and investors looking at investing in it.

“Initially, I had the required capital to kick-start but the long processes and unpredictable nature of things diverted the funds into other things. But all that has changed as we have been able to overcome that by reaching out to others through crowd sourcing platforms and people looking at investing in others.”

How SMEs can create purposeful, sustainable innovation ODINAKA ANUDU

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xperts have suggested practical ways in which Nigerian micro, small and medium enterprises (MSMEs) can create purposeful and sustainable innovation.

At the Lagos Small Business Summit organised by SME 100 Africa last Thursday, experts stressed the need for business owners to build relationships and do proper due diligence while accessing capital.

Akin Oyebode, executive secretary of the Lagos State Employment Trust Fund (LSETF), said access to capital was a necessary but not a sufficient condition for success.

Oyebode said investors were always seeking to put their money in businesses that would guarantee them returns, stressing that it was also important for business

owners themselves to do due diligence on investors before allowing them in.

“On the equity side, when investors are doing due diligence on you as a business owner, also do a due diligence on them. On the debt side, people should know I have a lending target to meet, but many businesses are not just ready,” he said, urging businesses to ensure they have the right requirements that would enable them to get funding from financial institutions, including the LSETF. Oyebode said some of the entrepreneurs who were exhibiting that day told him that they were struggling to register their businesses at the National Agency for Food and Drug Administration and Control (NAFDAC) or the Standards Organisation Of Nigeria (SON), stressing that without such registrations, their products could not get to large distri-

bution channels.

“These are issues around bu s i n e s s e nv i ro n m e nt, which we are working to resolve with the Presidential Enabling Business Environment Council (PEBEC).”

O n her par t, Bukola Smith, executive director at First City Monument Bank (FCMB), said one way small

businesses could overcome their challenges was by building networks.

Smith said building transformational businesses required change of mind-set, urging entrepreneurs to update their leadership styles while building partnerships within the network.

She disclosed that FCMB

had disbursed N3.1 billion of the CBN’s N220 billion SME Fund to several businesses, stressing that the bank was always ready to help entrepreneurs on business registration and other related processes.

Oluranti Adebule, Lagos State deputy governor, said MSMEs should be given the

confidence to grow. Represented by Yinka Ayopdele, Adebule said business owners must be brave and constantly engage in capacity development to match market expectation.

She said that Lagos State had established the LSETF to funD small business owners and organised a trade fair for them annually, setting up an industrial park at Imota for them.

Charles Odii, executive director, SME 100 Africa, said there were over 30 business displaying their products that day, out of which 24 would pitch for N1 million provided by FCMB. Odii said SME 100 had partnered with Google to train 1,241 entrepreneurs, growing its subscription network from 15,000 to 26,250 in one year.

He stressed that SME 100’s target in 2019 would be to reach 100,000 entrepreneurs through its network.

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Start-Up Digest

Meet Modupe Olakanye, Nigerian crochet designer Modupe Olakanye is the CEO of Modhan, a Nigerian crochet and knit brand. Modupe, a Biology Education graduate from Adeyemi College of Education, Ondo State, sits down with BUNMI BAILEY to discuss her love for creative crochet pieces.

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Tell us about Modhan? odhan is a Nigerian crochet and knit brand that makes creative and unique handmade yarn wears for all occasions. The brand was founded in 2015. Gone are the days when yarn was only used for creating blankets, sweaters, hats and stockings. It has really evolved into something big and interesting, where you see dinner wears, jumpsuit, tops, to mention a few, being made from yarn.

How did the journey start?

It all started when I was depressed in my secondary school days and thought of ending my life. I blamed my mum for dying, leaving my siblings and I in care of my dad. I was the introvert so I became withdrawn from my peers and environment. Fortunately, one day, I saw a classmate of mine crocheting and that was when I begged her to teach me and she taught me the basics of crochet. Soon, I took it up as a hobby and diverted my negative thoughts into crocheting.

Little by little, I started projects like caps, purse and the rest. I derive joy whenever I crochet, and it taught me to be patient and optimistic.

In 2014, when Adeyemi College of Education was on strike, instead of sitting at home, I used the opportunity to go for three-month training in machine knitting. I soon incorporated

Modupe Olakanye

the knowledge got from knitting to making crochet clothing. Reading and understanding of crochet patterns were self-taught with the help of YouTube videos. With all I have learnt, I began creating and writing out my own patterns.

What was your initial start-up capital?

I started with a very small amount

of money that wasn’t even up to N2, 000.

How is the crochet fashion industry performing today?

The crochet fashion industry is performing better than it used to, some years back. Although it is a very challenging industry, it takes a lot of hard work, good content and creativity to compete in the regular

JSAID empowers interior designers, SMEs BUNMI BAILEY

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enniez School of African Interior Design (JSAID), an approved interior decoration educator in Africa, recently empowered interior designers, skilled workers, manufacturers and small to medium enterprises in the fashion design industry through its Blueprint Conference.

The conference, which was themed, ‘The Business of Design 2018’ took place on the 10th of November 2018 in Lagos.

Jennifer Chukwujekwe, founder, JSAID, said the idea of the conference came about when Keia McSwain, the president of Black Interior Designers

Network (BIDN), decided to come to Africa to empower interior designers.

“This conference is dynamic because it involves expert designers, professionals and business experts who will empower interior designers, skilled workers, artisans, manufacturers and small and medium enterprises in the design industry that will take their business to the next level,” Chukwujekwe said.

Titi Ogufere, president of Interior Designers Association of Nigeria (IDAN), Steve Harris, a sort after business strategist, Keia McSwain, the president of the Black Interior Designers Network (BIDN), and other panelists were the keynote speakers at the event.

The design industry is one of the

fastest growing communities in the creative sector. Although emerging talents have learned and developed creative skills, many have limited knowledge and experience on how to run a business.

“Worldwide, interior designers and decorators do not know how to make money. They don’t understand the business aspect of interior design. They are only interested in the creative aspect of it,” Titi, president of Interior Designers Association of Nigeria (IDAN), said.

“And in Nigeria, my fear has been that after all these, are we going to die? In most business here, there is no continuity because the structures are not in place. And the business aspect rests on one person,” Ogufere further added.

Nana Spio-Garbrah, creative director, Blueprint Africa, said interior designers needed to be clear to know which strategy is dominative in their businesses. “You need to know which strategy will make you the most money, the one that is more realistic and also make sure you do all the upfront work and research.”

JASID, which started in 2016, was founded out of the desire to bridge the gap in the interior decoration education in Nigeria and Africa and ultimately to raise entrepreneurs through design.

fashion industry. People now appreciate crochet and knitwear more than ever, especially in the foreign countries. You see top brands like Chanel, Dolce and Gabbana and others showcasing crochet wears on the runways.

You recently emerged as the Womenswear Designer of 2018 at the Nigerian Student Fashion and Design Week held in Houston, Texas.

How has this affected your brand?

Emerging as the Womenswear Designer of the Year has affected my brand greatly. It is an exposure for my brand. People love what I do and support me. Some brands that I never thought I would meet in my life want to collaborate with me. I want to thank the founder of Nigerian Student Fashion and Design Week, Abiola Orimolade, and his team, for this privilege. Not only was I awarded and given a computerised machine, I also showcased at African Fashion Week Houston as a prize from Nigerian Student Fashion and Design Week. It was really an eye opener for me and a great platform, to be honest.

What are the skills and tools needed to set up your kind of business?

The most important thing is to have passion and every other thing can follow (like crochet hooks, yarn, knitting machine or pin). If there is no passion for this kind of business and you are just interested in the money, it

will be so frustrating. It takes patience to be able to compete. For example, when making a gown, if there is a rush or a mistake, it will definitely tell with the outcome. Now loosening the dress and starting all over will be a big deal for someone who doesn’t have passion for it and have zero patience.

One also needs to concentrate. All of these keep you going so you don’t give up with time.

What are the challenges you are currently facing in your business?

Nigerians should appreciate and value our handmade wears. Much preference is given to foreign wears instead, which does not encourage the designers.

Who are your mentors in the industry?

I wouldn’t say mentors, but I have lots of people and firms that inspire me— Chanel, Orange Culture, Mariecastro, Noorvana, to mention a few.

How would you say your business has grown since you started?

Emerging as the Womenswear Designer of the Year has opened doors of opportunities for me. My kind of fashion is now appreciated more than ever.

What would you tell your younger self?

I would tell my younger self that I am proud of me for being brave, focused and not giving up on myself when everything was falling apart.

Entrepreneur opens Ace Supermarket in Ilorin SIKIRAT SHEHU, Ilorin

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n entrepreneur, Yinka Afonja, has opened a branch of Ace Supermarket in Ilorin, the Kwara State capital.

Speaking at the commissioning of the Supermarket on Saturday, Afonja, chief executive officer of Ace Supermarket, said Ace had come to Ilorin to tap into the business potential, generate employment, add value to the economy and prove that indigenous players could also compete.

The supermarket, according to him, currently operated in Ibadan, Abeokuta, Oshogbo, Oyo, Ile-Ife and Ogbomosho. “We have built our biggest branch in Ilorin by popular demand. We pledge we shall continue to operate as responsible institution to offer best services and value always,” Afonja said.

While describing Kwara State as one of the best investment hub states in Nigeria after Lagos, Afonja, attributed his investment in the state to business oriented policies created by the governor.

He said, “I can say confidently

that his administration`s excellent policies in urban renewal, peace and security, ease of doing business have made Ilorin an investors’ and tourist destination.

“From my observation and going by my investment across major cities in Southwest Nigeria, I make bold to say that Ilorin is the fastest growing economy in the Southwest cities in Nigeria apart from Lagos.”

Afonja, however, called on the state government to provide adequate power supply for businesses to continue to strive.

Governor Abdulfatah Ahmed, who commissioned the supermarket, promised that his administration would not force investors to pay tax but rather, it will create conducive business environment that will enable them to pay without being forced.

The governor praised the investor for bringing such a laudable business to the city which will create jobs for teeming youths in the state.

The governor, however, called on business tycoons to bring their investments to the city, saying that the state has created business sustainable policies that will enable business development.

40

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In association with

To give a great presentation, distill your message to just 15 words Maryam Kouchaki

F

earless public speaking is about more than combating nerves.

It’s about knowing the technique, the art and the business of public speaking. You must also: KNOW HOW TO PITCH. When you master the written pitch, you’ll get to speak on more stages. Start with the idea, and why you are the right person to deliver it onstage. While it must be a big idea, you need to be able to communicate it in 15 words or less. Don’t save the most important part of

your pitch for the end; people may stop reading before they ever get to it. And don’t try to sell your book or business in a pitch for a speaking gig.

KNOW YOUR AUDIENCE. When you do research on your audience ahead of time, you can craft your talk with the language your audience speaks. You have to know who you’re talking to.

KNOW YOUR OBJECTIVE. If you want your audience to accept your ideas, or change their opinion about something, how are you going to get them to do it? You can inspire, motivate or even scare them into

changing their minds.

But you can’t do any of those things until you know what you want the ultimate outcome to be.

KNOW THE DIFFERENCE BETWEEN A GOOD AND A BAD TALK. A bad talk is one that meanders, does not have a clear throughline, ends more than once and is apologetic.

A bad talk is so well rehearsed that you sound robotic and scripted, or so unrehearsed that you stumble too often.

KNOW YOURSELF. Public speaking is hard work. It’s time-consuming, and it’s emotionally and physically draining, especially if you are an introvert. Practice

by going to events and coming out of the corner.

Fearless speaking is the sum of many parts; it’s not just about wrangling the butterflies in your stomach.

(Tricia Brouk is a director, writer and TEDx producer, and executive producer of Speakers Who Dare.)

The economics of discrimination in 1930s Germany Kilian Huber, Volker Lindenthal and Fabian Waldinger

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arge-scale, government-directed discrimination against a group of people is extremely damaging to those being targeted. It also permeates every aspect of society, including business.

Despite the importance of the issue, we currently have little evidence on how costly discrimination against highly qualified individuals in leading positions can be.

We analyzed discrimination against senior managers with Jewish origins in Nazi Germany. Using data on individual managers and corporations, we learned more about

how the stock prices and the profitability of firms evolved when Jewish managers were removed from the German economy because of rising antiSemitism.

We collected new data on almost 30,000 manager positions in German firms listed on the Berlin Stock Exchange, and found that managers of Jewish origin (either

practicing Jews or Christians with a Jewish ancestor) held around 15% of senior management positions in 1928 and 1932.

By 1938, virtually no Jewish managers remained in firms listed in Berlin.

We then compared firms with Jewish managers to other firms that had not employed any managers of Jewish origin and, therefore, re-

mained unscathed. We controlled for a number of factors that may have affected firm stock prices, including connections to the Nazi party; the financial reporting period; and the firm size, age and industry.

We found that losing the Jewish managers changed the observable characteristics of senior managers at firms that had employed Jewish managers in 1932. Specifically, the number of managers with managerial experience, university degrees and connections to other firms (measured by seats on other supervisory boards) fell significantly. These effects persisted at least until the end of our sample pe-

riod in 1938. Firms that had lost Jewish managers did not replace them with managers of similar characteristics. A likely explanation is that there were very few adequate replacements.

The stock prices of firms with Jewish managers fell sharply after the Nazis grabbed power in 1933, as the Jewish managers started to leave their firms. These losses persisted until the end of our stock price sample period in 1943. The stock price of the average firm that had employed Jewish managers in 1932 declined by about 12% after 1933, relative to a firm without Jewish managers in 1932.

While our study covers

(C) (2017) Harvard Business Review. Distributed by New York Times Syndicate

what’s arguably the most severe form of discrimination against a particular group of individuals, even less severe forms of discrimination can lead to a loss of talent.

(Kilian Huber is a fellow in macroeconomics at the Becker Friedman Institute of the University of Chicago. Volker Lindenthal is a postdoctoral researcher at the Ludwig Maximilian University of Munich. Fabian Waldinger is a professor of economics at the Ludwig Maximilian University of Munich.)

Monday 19 November 2018

Harvard Business Review

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BUSINESS DAY

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In association with

Using analytics to align sales and marketing teams For example, a telecom company can use predictive analytics to help account managers orchestrate outreach to underperforming, high-potential customers.

The insights can help account managers offer the right products with the right sales messages, thus increasing sales.

As the volume, variety and velocity of business data escalate, analytics, including artificial intelligence, will play an even bigger role in the effort to improve the customer buying experience.

Andris A. Zoltners, PK Sinha and Sally E. Lorimer

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any companies struggle to deliver a consistent and easy buying experience for their customers. As customers have begun interacting with sellers through websites, emails, texts, social media posts and print and TV ads, as well as salespeople, it’s become difficult for companies to synchronize these communications. When it’s time to actually buy, customers may do so via purchasing portals, internet chat reps, call centers, field salespeople or other sources.

For companies that sell to businesses, meeting the buying needs of today’s customers requires a mindset shift.

Companies need an orchestrator to ensure marketing and sales outreach is wellcoordinated and aligned with customer buying needs.

In some cases, the orchestra-

tor is a computer system. In other cases, the orchestrator is a person enabled by data and analytics.

Amazon is a prime example of a company using a computer system to effectively orchestrate customer buying. Amazon’s analytics use data to make inferences about what products each customer might buy. The analytics also suggest an automated yet coordinated way

to reach each customer with the right offer at the right time. For example, Amazon makes customized purchase suggestions on its website; if a customer clicks on a suggestion but doesn’t purchase, Amazon can follow up with a reinforcing email or post on the social media platform the customer uses.

For larger accounts and more complex purchases, companies are giving account

managers responsibility for orchestrating marketing and sales outreach to customers.

In their expanded role, account managers decide what the company should offer each customer, along with the best message timing and delivery channel (e.g., digital message, phone call, personal visit). Account managers are more effective when they are armed with insights from data and analytics.

(Andris A. Zoltners is a professor emeritus at Northwestern University’s Kellogg School of Management and a co-founder of ZS Associates. PK Sinha is a founder and co-chairman of ZS Associates. Sally E. Lorimer is a marketing and sales consultant and a business writer based in Northville, Michigan.)

How to help your employees learn from each other possible, these sessions should focus on genuine problems to solve.

ENCOURAGE NETWORKING. Some organizations build companywide campaigns in an effort to get everyone involved.

With a well-built peer-topeer learning program in place as a complement to more traditional learning programs, your team will build lasting skills and relationships that will allow them to bring the skills they learn in those programs into their daily work.

Kelly Palmer and David Blake

W

hen your team wants to learn a new skill, where do they turn first? YouTube?

Their corporate training programs? No. Think of all the smart people you hire and surround yourself with every day, and how much could be gained if peers shared their expertise with one another to learn and build new skills.

Unlike some learning methods — like tests or exams, or high-pressure demonstrations of skills — peerto-peer learning creates a space where the learner can feel safe taking these risks without a sense that their boss is evaluating their performance while they are learning. The dynamics of hierarchy disappear. And the format itself helps em-

ployees develop management and leadership skills.

To make any peer-to-peer learning program successful for your team, we recommend a few best practices: APPOINT A FACILITATOR. Although the structure of peer learning is horizontal

rather than hierarchical, it’s important to have a neutral party who is not the team’s manager facilitate the program to keep in on track.

BUILD A SAFE ENVIRONMENT. Some suggestions: confidentiality must be honored; feedback should always be met with grati-

tude; participants should practice empathy, putting themselves in others’ shoes; and participants should never be mocked or embarrassed for expressing themselves in front of their peers.

FOCUS ON REAL-WORLD SITUATIONS. Whenever

Brought to you courtesy of First Bank Nigeria

(Kelly Palmer is the chief learning and talent officer at Degreed and co-author, with David Blake, of “The Expertise Economy.” Blake is a co-founder and the executive chairman of Degreed.

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BUSINESS DAY

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43

Live @ the Stock exchange Prices for Securities Traded as of Friday 16 November 2018

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 222,745.38 7.70 -1.28 109 12,338,794 UNITED BANK FOR AFRICA PLC 266,755.49 7.80 0.65 153 21,464,372 753,515.85 24.00 3.00 217 9,810,373 ZENITH BANK PLC 479 43,613,539 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 267,419.93 7.45 -0.67 156 13,335,668 156 13,335,668 635 56,949,207

BUILDING MATERIALS DANGOTE CEMENT PLC 3,467,743.26 203.50 -0.73 30 367,084 LAFARGE AFRICA PLC. 138,774.85 16.00 - 34 104,929 64 472,013 64 472,013

EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 384,077.76 652.70 - 34 51,006 34 51,006 34 51,006 733 57,472,226 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 72,258.68 75.75 - 7 48,124 OKOMU OIL PALM PLC. PRESCO PLC 66,250.00 66.25 - 3 4,500 10 52,624 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 511.20 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,710.00 0.57 9.62 3 107,274 3 107,274 13 159,898

DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 953.02 0.36 - 3 29,187 JOHN HOLT PLC. 171.23 0.44 - 2 20,000 S C O A NIG. PLC. 2,111.93 3.25 - 2 3,948 47,964.63 1.18 0.85 39 2,667,404 TRANSNATIONAL CORPORATION OF NIGERIA PLC U A C N PLC. 27,372.32 9.50 - 17 97,160 63 2,817,699 63 2,817,699

BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 28,182.00 21.35 - 6 9,170 165.00 6.60 - 0 0 ROADS NIG PLC. 6 9,170 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 3,741.69 1.44 - 2 3,522 2 3,522 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,900.00 95.00 - 1 50 11,300.89 45.20 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) UPDC REAL ESTATE INVESTMENT TRUST 21,612.98 8.10 - 0 0 1 50 9 12,742

AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 11,352.77 1.45 - 5 13,399 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 162,088.33 74.00 - 24 358,267 INTERNATIONAL BREWERIES PLC. 259,595.03 30.20 - 18 88,103 NIGERIAN BREW. PLC. 662,143.49 82.80 -0.24 63 363,378 110 823,147 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 30,000.00 6.00 - 41 709,434 DANGOTE SUGAR REFINERY PLC 154,200.00 12.85 2.80 35 1,146,955 FLOUR MILLS NIG. PLC. 70,526.53 17.20 4.24 92 1,350,674 HONEYWELL FLOUR MILL PLC 8,247.41 1.04 0.96 27 594,099 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 891.00 5.00 - 0 0 NASCON ALLIED INDUSTRIES PLC 47,689.89 18.00 - 6 16,060 UNION DICON SALT PLC. 3,676.41 13.45 - 0 0 201 3,817,222 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 17,373.37 9.25 0.54 17 335,116 1,173,131.25 1,480.00 -1.33 31 76,481 NESTLE NIGERIA PLC. 48 411,597 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 3,491.94 3.35 - 6 39,706 VITAFOAM NIG PLC. 6 39,706 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 35,734.29 9.00 - 27 163,321 UNILEVER NIGERIA PLC. 226,927.71 39.50 - 27 362,020 54 525,341 419 5,617,013

BANKING DIAMOND BANK PLC 20,844.35 0.90 -5.26 103 22,837,945 ECOBANK TRANSNATIONAL INCORPORATED 289,005.43 15.75 - 9 19,825 FIDELITY BANK PLC 57,659.85 1.99 0.51 52 1,981,707 GUARANTY TRUST BANK PLC. 1,086,010.51 36.90 8.53 254 47,640,833 JAIZ BANK PLC 13,258.91 0.45 4.65 6 241,140 SKYE BANK PLC 10,687.83 0.77 - 0 0 STERLING BANK PLC. 46,064.67 1.60 - 35 2,109,292 UNION BANK NIG.PLC. 147,059.80 5.05 - 19 152,071 UNITY BANK PLC 10,871.08 0.93 9.41 10 636,480 WEMA BANK PLC. 21,215.96 0.55 -1.82 19 1,064,500 507 76,683,793 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 4,435.33 0.64 - 11 237,050 19,950.00 1.90 9.83 10 373,112 AXAMANSARD INSURANCE PLC 2,310.00 0.33 - 2 1,050 CONSOLIDATED HALLMARK INSURANCE PLC CONTINENTAL REINSURANCE PLC 14,625.57 1.41 - 6 65,650 CORNERSTONE INSURANCE PLC 3,240.49 0.22 - 1 60 GOLDLINK INSURANCE PLC 2,411.47 0.53 - 0 0 GREAT NIGERIAN INSURANCE PLC 1,913.74 0.50 - 0 0 1,535.00 0.25 - 0 0 GUINEA INSURANCE PLC. INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,123.80 0.29 7.41 19 2,048,891 LAW UNION AND ROCK INS. PLC. 2,448.91 0.57 - 3 55,004 LINKAGE ASSURANCE PLC 4,960.00 0.62 - 0 0 2,000.00 0.25 - 0 0 MUTUAL BENEFITS ASSURANCE PLC. NEM INSURANCE PLC 14,098.94 2.67 - 6 42,300 NIGER INSURANCE PLC 1,857.48 0.24 9.09 5 255,085 PRESTIGE ASSURANCE PLC 2,137.75 0.56 9.80 3 812,400 REGENCY ASSURANCE PLC 1,333.75 0.20 -4.76 4 1,000,000 SOVEREIGN TRUST INSURANCE PLC 1,668.16 0.20 - 0 0 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 2 2,150 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 3,189.33 0.23 - 0 0 WAPIC INSURANCE PLC 5,620.75 0.42 5.00 16 232,136 88 5,124,888 MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 3,109.83 1.36 - 5 22,000

Company 5 22,000 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 4,452.00 1.06 - 0 0 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 INFINITY TRUST MORTGAGE BANK PLC 5,922.05 1.42 - 0 0 5,664.87 0.50 - 0 0 RESORT SAVINGS & LOANS PLC UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 7,500.00 3.75 - 24 470,767 31,173.88 5.30 2.91 8 4,192,995 CUSTODIAN INVESTMENT PLC DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 30,496.17 1.54 -0.65 62 4,940,270 FCMB GROUP PLC. 411.91 552.20 - 0 0 NIGERIA ENERYGY SECTOR FUND ROYAL EXCHANGE PLC. 1,029.07 0.20 - 0 0 485,456.37 48.00 - 4 13,802 STANBIC IBTC HOLDINGS PLC UNITED CAPITAL PLC 17,100.00 2.85 - 45 837,579 3,312.39 103.20 - 0 0 VALUEALLIANCE VALUE FUND 143 10,455,413 743 92,286,094

HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 1 328 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 888.28 0.25 - 8 478,683 9 479,011 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 544.04 0.55 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 7,350.00 4.90 - 1 1,100 FIDSON HEALTHCARE PLC GLAXO SMITHKLINE CONSUMER NIG. PLC. 14,410.31 12.05 - 15 31,980 2,450.00 2.50 4.17 11 245,900 MAY & BAKER NIGERIA PLC. NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 1,035.90 0.60 - 3 82,860 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 329.57 1.52 - 1 1,500 PHARMA-DEKO PLC. 31 363,340 40 842,351

COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 710.40 0.20 - 0 0 0 0 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 680.40 6.30 - 0 0 NCR (NIGERIA) PLC. TRIPPLE GEE AND COMPANY PLC. 381.11 0.77 - 0 0 0 0 PROCESSING SYSTEMS CHAMS PLC 1,127.05 0.24 - 0 0 16,590.00 3.95 - 1 2,500 E-TRANZACT INTERNATIONAL PLC 1 2,500 1 2,500

BUILDING MATERIALS BERGER PAINTS PLC 1,912.83 6.60 - 3 6,500 CAP PLC 18,620.00 26.60 - 2 7,608 CEMENT CO. OF NORTH.NIG. PLC 23,185.70 18.45 -0.27 15 142,277 675.31 0.32 - 0 0 FIRST ALUMINIUM NIGERIA PLC MEYER PLC. 313.43 0.59 9.26 2 100,500 1,999.41 2.52 - 1 100 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,279.20 10.40 - 0 0 PREMIER PAINTS PLC. 23 256,985 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 2,923.79 1.66 - 6 26,860 6 26,860 PACKAGING/CONTAINERS BETA GLASS PLC. 31,048.26 62.10 - 4 2,000 GREIF NIGERIA PLC 388.02 9.10 - 0 0 4 2,000 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 33 285,845

CHEMICALS B.O.C. GASES PLC. 1,752.39 4.21 - 1 2,500 1 2,500 METALS ALUMINIUM EXTRUSION IND. PLC. 1,803.64 8.20 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 1 100 1 100 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 50.60 0.23 - 0 0 0 0 2 2,600

ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 -4.76 9 1,354,679 9 1,354,679 INTEGRATED OIL AND GAS SERVICES OANDO PLC 62,157.06 5.00 -0.99 35 902,986 35 902,986 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 54,089.29 150.00 - 21 22,338 CONOIL PLC 15,613.92 22.50 - 11 15,352 ETERNA PLC. 5,868.65 4.50 -9.09 18 403,222 FORTE OIL PLC. 26,831.11 20.60 - 22 87,225 MRS OIL NIGERIA PLC. 8,701.65 28.55 - 1 1,609 TOTAL NIGERIA PLC. 67,598.80 199.10 -0.45 14 27,300 87 557,046 131 2,814,711

ADVERTISING AFROMEDIA PLC 2,219.52 0.50 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 18,818.75 1.93 - 1 2,000 1 2,000 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 447.02 0.38 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,652.74 4.50 - 3 4,000 TRANS-NATIONWIDE EXPRESS PLC. 304.75 0.65 - 6 80,245 9 84,245 HOSPITALITY TANTALIZERS PLC 674.44 0.21 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,801.22 3.10 - 0 0 IKEJA HOTEL PLC 4,261.53 2.05 - 1 5,000 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 0 0 TRANSCORP HOTELS PLC 46,362.46 6.10 - 0 0 1 5,000 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 5,280.00 0.44 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 302.40 0.50 - 1 2,222 LEARN AFRICA PLC 894.88 1.16 - 9 78,000 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0

44 BUSINESS DAY NEWS

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Lawyers disagree on effect of Buhari’s declaration as illegal Minister of Petroleum ODUNAYO OYASIJI & INIOBONG IWOK

S

enior lawyers have disagreed on the likely impact of an Abuja High courts declaration that President Muhammadu Buhari cannot hold the office of Minister of Petroleum while still being president of the country.

Buhari had at the inception of his administration in 2015 declared himself Minister of Petroleum and later appointed Ibe Kachikwu as the Minister of State for Petroleum Resources, which is a deputy minister position.

But a Federal High Court, Abuja delivered judgement on November 15, 2018 in a case filed by a prominent lawyer, Olisa Agbakoba SAN, which had challenged the legality of President Buhari occupying the position of both president and the minister of petroleum at the same time.

The former president of the Nigerian Bar Association asked the court to determine the constitutional qualification of the president to hold executive office as minister of petroleum.

The basis of the Agbakoba’s legal challenge was that sections 138 and 147(2) of the constitution of the Federal Republic of Nigeria states that the president cannot hold any other executive office or be involved in a paid employment.

But delivering a judgment, Justice Ahmed Raji Mohammed said there

would have been a violation of the constitution, if Buhari had not appointed Kachikwu to oversee the day-to-day running of the Ministry of Petroleum Resources.

Justice Mohammed held that there was no violation of Section 138 of the Constitution.

The judge maintained that: “the phrase ‘hold’ as contained in S. 138 meant to preside, act, to possess, occupy or conduct the actual day to day running of the office.

He said: “That merely proclaiming/announcing that he (the President) was the Minister for Petroleum was not enough to conclude that he holds the office of Minister.”

“That if the president had not appointed anybody to see to the day to day running of the office, the court’s decision would have been different.”

The court further held that: “Unless it can be shown that the President is directly conducting, directing, occupying the office of the Petroleum Minister then, it cannot be said that the President actually holds the office of the Petroleum Minister.”

Section 147(2) of the Nigerian constitution also lays emphasis on the need for confirmation of anybody that will occupy a ministerial position by the senate, the judge said.

In his suit, Agbakoba had said that the basis for filing the suit was because of the management crisis in the NNPC. Both the Minister of State for

Petroleum, Ibe Kachikwu and the Managing Director of the NNPC are constantly at loggerheads.

He believes that this would not have been the situation if the President was not also acting as the Minister of Petroleum. He noted that the sector generates 90 percent of the country’s income and the country will suffer for it if it is not properly managed.

But lawyers have expressed different views on the possible impact the judgement will have on any document signed by the president in his capacity as petroleum minister.

Agbakoba, said the ruling invalidated previous document signed by Buhari, stressing that it was Kachikwu that that is recognized by law.

“The judgment said it was improper for Buhari to proclaim himself the Minister of Petroleum without carrying out the function attached to such office and since it is Kachikwu that was appointed by him and has been carrying out that function, he is the one recognized.”

“He may have proclaimed him-

self but I agree with you, document signed by Buhari are invalid, anything like that are invalid and unconstitutional,” Agbakoba said.

Akeem Kolawole, Head of Chambers of Siji Soetan & Co, backed Agbakoba’s position.

“Anything done by him as Minister of Petroleum are illegal. My reason for this is clear, the constitution already spelt it out that he cannot be a president and still be under a paid employment /position. Anything done in the capacity of a minister of petroleum by him is therefore null and void as you cannot place something on nothing and expect it to stand.”

But this view was countered by Jhon Bayeshia, Senior Advocate of Nigeria (SAN), who stated that the judgment was not specific on invalidating previous document signed by the president. Bayeshai stressed that such situation could create unnecessary chaos in the country, stressing that the president carried out the previous function because it was presumed he had the powers.

“I do not believe that the judg-

ment would invalid all that he has done before because it would cause chaos, it may however; mean that he cannot sign again. It was presumed that the president has the power to do that, moreover the ruling is subject to appeal.”

“If you invalidate all he has signed it would affect international contract entered by the country. In law we believe that there is a relief in a judgment until the judgment is specific that previous action is invalid.”

“I believe previous document would be preserve until when the judgment is specified,” Bayeshai said.

Adetola Adeleke, lead partner of Crowncourt Attorneys and former 2nd Assistant Secretary General of NBA Lagos branch, also said he does “not take the view that all actions taken in the capacity of a Minister automatically becomes a nullity.

This will create a chaotic situation, and this is the essence of the doctrine of necessity, whereby validity can be given to some acts of a nullified appointee during the period of his control of the office.”

Former govs, Dariye, Nyame get reprieve from Appeal Court, sentences reduced FELIX OMOHOMHION, Abuja

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ailed former Governor of Plateau State, Joshua Dariye got a reprieve from the Court of Appeal in Abuja on Friday.

This is as the court reduced his jail term from 14 to 10 years.

Dariye was sentenced to 14 years in prison on June 12 this year by Justice Adebukola Banjoko after an FCT Federal High Court sitting in Gudu convicted the former Governor and Senator for criminal breach of trust.

He was said to have diverted the sum of N1. 62bn ecological funds the Federal Government gave the state.

The Appeal Court ruled that the lower court erred in law when it sentenced Dariye, a first time offender, to the maximum 14 years term contained in the charge against him.

According to the court, the sentence was handed down in the season of the Administration of Criminal Justice Act which does not allow maximum sentence for first time offenders.

Also, the Abuja Division of the Court of Appeal on Friday commuted the 14-year imprisonment sentence imposed by the High Court of the Federal Capital Territory, Gudu, Abuja on a former Governor of Taraba State, Jolly Nyame, earlier this year, to 12 years.

But the Justice Abdul Aboki-led three-man panel of the Court of Appeal, in addition to the 12-year sentence, also imposed a fine of total sum of N525m on the convict, a fine that the lower court had omitted while dispensing the earlier sentence.

It would be recalled that FCT High Court,hadonTuesday,June12,2018sentenced Dariye who was a serving senator

to 14 years’ imprisonment on charges of criminal breach of trust and criminal appropriation of the state’s funds.

Dariye who was governor of Plateau State from 1999 to 2007 and the current Senator representing Plateau Central, was found guilty on 15 out of the 23-count criminal charge the Economic and Financial Crimes Commission brought against him.

The court said it was satisfied that the defendant, being a public officer that had full dominion and control of ecological funds the Federal Government released to Plateau State in 2001, converted and diverted same for his personal use.

It held that the ex-governor criminally misappropriated funds and acted in violent breach of public trust and his oath of office. Nevertheless, the court discharged and acquitted the exgovernor on 8-counts which it said was not sustained with sufficient evidence.

The court in the judgment that lasted over six hours, noted that following a Mutual Legal Assistance Request from the Metropolitan Police in London, it was uncovered that Dariye sequentially laundered funds from Nigeria into National West Ministers Bank in the United Kingdom, using an account he opened in the name of a fictitious firm.

It observed that a former detective with the Met Police, Peter Clarke who testified as the ninth prosecution witness, PW-9, during the trial, disclosed that Dariye wired funds from an account the fictitious firm- Ebenezer Rednar Ventures- operated with All States Trust Bank in Nigeria, into nine separate accounts he opened at Barclays Bank in London.

L-R: Fabia Ogunmekan, executive secretary, Women in Successful Careers (WISCAR; Amina Oyagbola, chief executive officer, WISCAR; Bayo Oyagbola, managing director, Oyagbola Chambers, and Habiba Balogun, principal consultant, Habiba Balogun Consulting, at a news conference on the 2018 WISCAR annual leadership and mentoring conference, in Lagos.

FG begins commercialisation of four River Basins JAMES KWEN, ABUJA

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he Federal Government has begun the process for the commercialization of four River Basin Development Authorities (RBDAs) in the country - the Niger-Delta, Sokoto-Rima, Ogun-Osun and Upper Niger.

Alex Okoh, Director General of the Bureau of Public Enterprises (BPE) announced this during the kick-off meeting for the commencement of Transaction Advisory services by Agri-Africa Consultant A&E Law and Partnership Consortium for the Partial commercialisation of the four RBDAs. Okoh who said the main objective of the advisory service is to restructure and reposition the RBDAs for partial commercialisation and optimum performance, stated that the kick-off meeting was to formally introduce the advisers to the Minister and other key stakeholders.

He further explained that the scope of work for Agri-Africa Consultant A& E Law and Partnership Consortium is basically to provide the requisite advice and support required for the Federal Government to successfully implement the partial commercialisation of the RBDAs in a manner consistent with relevant national policies, laws and international best practices.

The BPE Director - General added that the scope of work to be done by the Consultant also include, the conduct of diagnostic study on the four RBDAs and define their business objectives and to develop a strategic plan to achieve its operational goals.

“Identify, verify, record, classify and value the key assets of the RBDAs including status of title documents of their lands. Implement in conjunction with the BPE, the Partial Commercialisation of the four (4) RBDAs. “Develop quality management system, chart of Accounts and opening balance sheets for

the four (4) pilot RBDAs based on internationally acceptable standards and introduce operational tools developed through a one off training; and the Advisers shall Incorporate, Restructure and Reposition the four (4) named RBDAs to be self-sustaining,” Okoh revealed.

Also speaking at the meeting, Minister of Water Resource, Suleiman Hussein Adamu who was represented by the Director, River Basins Authority and Inspectorate of the Minister of Water Resources, John Chigbo said the RBDAs project was in line with the vision of the ministry and promised to support and cooperate with Adviser in the course of the project.

The Team Leader of the AgriAfrica consultant A&E Law and Partnership Consortium, Chigbozu Ekwekwuo expressed gratitude for the opportunity avail to the consortium to serve the nation, adding that the consortium had assembled a credible team to deliver the project and make agriculture work in Nigeria.

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46 BUSINESS DAY NEWS Atiku targets $900bn economy by 2025...

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man of the APC, Adams Oshiomhole, Secretary to the Government of the Federation, SGF, Boss Mustapha, top APC lawmakers, Ministers and top government officials.

In his opening remarks, Boss Mustapha, Secretary to the Government of the Federation recalled how the Buhari’s administration was overwhelmingly elected in 2015.

He noted the achievements of Buhari to include huge investment in infrastructure development, revival of the quality of education and health care, combating corruption and recovery of looted assets, reviving security, and efficient management of public resources.

He also recalled how the fight against corruption earned president Buhari the award of African Champion against corruption. He disclosed that the administration will continue to put the nation on the top echelon of the comity of nations.

Mustapha boasted that Buhari’s re-election bid has been made easier with the election of Atiku Abubakar in the People’s Democratic Party PDP primary in Port

Harcourt.

He congratulated the APC for winning the recently concluded bye-elections held in some states across the country, especially in Kwara state.

The event was also attended by Governors Abdulazeez Yari, Yahaya Bello and Tanko Almakura of Zamfara, Kogi and Nasarawa States respectively.

Minister of Power, Works and Housing, Babatunde Fashola, in his own remarks, recalled how the nation built massive infrastructure under the Petroleum Trust Fund PTF. He regretted that Nigeria lost such opportunities thereafter.

He revealed that the administration is currently working on a total of 356 roads some of which were awarded but abandoned by the previous administration.

According to him, this administration is the second after that of Shehu Shagari to have embarked on mass housing projects which are currently ongoing in 24 states.

“Let me conclude by saying that we are building a house of prosperity whose fruits will come in a matter of time.”

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Rotimi Amaechi, Minister of transport who also doubles as the Director General of the Buhari campaign Organization, declared that “ one good thing in this election is that there is no opposition party” “The truth is that the country is about to make a choice between the good and the bad,” he stated.

He said that the Warri to Itakpe road had been on the drawing board for 34 years but was only completed by the Buhari administration.

He said $500m was borrowed to start the Abuja to Kaduna rail project, which the country should not have borrowed because at that time oil was selling at $140 per barrel.

“Now we have four locomotives and ten coaches. Now, we are almost completing Lagos to Ibadan rail. We paid the 15% counterpart fund all at once.”

He declared that the government is about to award the Central rail line from Abuja to Itakpe, while the coastal rail line, has already been awarded.

Campaign activities are expected to intensify across the country this week as different parties jostle to get the attention of Nigerian voters. A total of 79 candidates are contesting for the Presidency.

Waiting for Kachikwu’s letter of resignation... the site of these refineries. Work is ongoing but to get the refineries working, this will involve civil and mechanical engineering work, fabrications, installation and protection equipment, these things take time.

It is easy to visualise how much of a tough call it is. Besides, Kachikwu is not the one financing these projects, so it is difficult to see how he has arrived at this timeline of end of 2019” a source who spoke on condition of anonymity said on phone.

During the three months ending June, Nigeria imported 4.79 billion litres of premium motor spirit (PMS), 1.11 billion litres of automotive gas oil (AGO), 43.79 million litres of household kerosene (HHK)and 200.39 million litres of aviation turbine kerosene (ATK), according data obtained from the National Bureau of Statistics.

Refining in Nigeria began as decade after oil was discovered in the oil-rich Niger Delta region in the 1950s. Initially starting in 1965 with a refining capacity of 38, 000 barrels per day, Nigeria’s refining capacity has grown over the years is considered the fourth largest in Africa. The nameplate capacity of 445, 000 bpd is housed by four refineries strategically located in various states around the country: Rivers, Delta and Kaduna.

The economic viability of a refinery is dependent on the interaction of three elements: type of crude oil used the complexity of the refining equipment (refinery configuration) and the desired type and quality of products produced.

Different types of crude oil yield a different mix of products depending on the crude oil’s natural qualities. Crude oil types are typically differentiated by their density (light/sweet and heavy).

Heavy crude tends to produce a larger yield of lower-value products (fuel oils) and also requires significant investment in the refining process. On the other hand, light, sweet produces large yield of highervalue products (transportation fuels) and requires less investment in the refining process. Nigeria currently produces light, sweet crude.

“Some conditions are necessary to get the refineries working again. Access to funds is critical because Nigeria does not have the money to revamp those refineries. Deregulation of the downstream sector is critical too because no private investor will put down for as long as the sector remains as it is” said Henry Ademola, team leader, Facility for Oil Sector Transformation (FOSTER), a project under the Oxford Policy Management, an international development consulting firm.

budgeted, N1.64 trillion went into debt servicing between January and August.

Given that recurrent expenditure accounted for 92 percent of total government expenditure, it means the federal government was basically borrowing to pay for salaries and overheads, which exposes how the country is channelling borrowed funds in an unsustainable manner.

Privatisation proceeds and nonoil asset sales which was expected to deliver N306 billion and N5 billion respectively has failed to earn a single kobo, in a signal of the government’s preference for debt rather than equity.

The government admits that “high debt service payments relative to revenues is a source of concern as it may constrain government’s ability to fund its expenditure programmes,” according to the MTEF document, but only racked up more debt, suc-

cessfully raising some $2.8 billion from international investors last week.

The Federal government sold benchmark-sized dollar bonds maturing in 2025, 2031 and 2049 at a price higher than its previous issuance. It sold January 2049 bonds at 9.25 percent which compares with the 7.625 percent yield achieved on a similar 30-year bond a year ago.

Abuja also raised a 12 year bond at 8.625 percent compared with the 7.875 achieved on a similar tenor in February and sold a 7-year bond at 7.625 percent.

Debates over whether the government should start considering single digit IMF loans have subsided recently, but analysts say it may be a matter of time before Nigeria comes calling for an IMF bail-out.

In its report on Nigeria, the IMF advised that rather than rack up debt,

the government should improve tax compliance and consider raising its VAT rate, which have the potential to boost government revenues.

At 7 percent, Nigeria’s tax to GDP ratio shows there is room to earn more from taxes. The emerging market average for tax to GDP is 20 percent, nearly three times the size of Nigeria’s.

“Countries in sub-Saharan Africa accumulated external debt at a faster pace than low- and middle income countries in other regions in 2017: the combined external debt stock rose 15.5 percent from the previous year to $535 billion. Much of this increase was driven by a sharp rise in borrowing by two of the region’s largest economies, Nigeria and South Africa, where the external debt stock rose 29 percent and 21 percent respectively,” the World Bank said in a report released on Friday.

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Everyday, Nigeria spends N5.75bn on debt...

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2018 dwarfs the budget for health care (N340 billion) and education (N605 billion) combined, in a possible sign of how little the government values human capital.

That implies that the Federal government spends N2.5 billion daily on providing health care for its people and educating them, less than half the amount spent servicing debt.

The picture gets worse if the capital component of the government’s health care and education spend is singled out. It adds up to N132.7 billion, with healthcare getting N71 billion while education accounts for N61.73 billion.

Using this metric, the Federal government spends N363 million daily on healthcare and education, a paltry 6 percent of the money spent on debt servicing.

In a sign of how the country’s debt has ballooned over a short period of time, the $3.5 billion debt servicing cost incurred in the half year period alone is 66 percent of the total $5.3 billion paid to creditors in the whole of 2017 and 80 percent of the $4.4 billion spent in 2016.

Going by the half-year trend, Abuja could be spending as much as $7 billion servicing debt by year-end, the highest since 2013. According to the 2018 budget, the government planned to spend $6.57 billion (N2.01 trillion) on debt servicing, which is 6.5 percent less than it may end up with come December.

Nigeria’s cost of servicing debt, which climbed to an 8-year high of 69 percent in 2017, has come to the fore in the past six months, as critics of the government’s borrowing spree, from the IMF to local economists, warn that it is unsustainable and leaves little or no capital for government to invest in infrastructure and economic growth enablers.

Members of the current government have often fired back at its critics, claiming that borrowing became inevitable in a bid to balance infrastructure spending with dwindling public revenues. They also say work is being done to prop up revenue, particularly through taxes.

Both claims are not entirely false, as far as efforts to raise tax revenue

goes. But data from the same government contradicts its stance that borrowed funds have mostly been channelled into capital projects.

As at August 2018, the Federal government had spent N3.6 trillion of the N6.1 trillion budgeted spending for the period, with recurrent expenditure taking up the larger part, 92.6 percent, according to a budget performance document or MTEF. In the period between January and August, only N4.38 billion was spent on infrastructure. To understand how abysmal that amount is, the capital expenditure of 40 listed non-financial companies (on the Nigerian Stock Exchange) within the same period of January to August 2018 was N210 billion which works out to N5 billion per firm, according to data compiled by BusnessDay. The government, however, claims that capital expenditure reached N486 billion as at October 11, which implies a 10,995 percent increase since August. In 2017, capital projects gulped N1.44 trillion, the highest over an 8-year period, although representing only 22 percent of government spending while recurrent expenditure made up for the remaining 78 percent.

About the claim on efforts to boost taxes, that is true but also unfruitful.

The target was to raise some N306 billion ($1 billion) through a tax amnesty program, Voluntary Assets Income and Declaration Scheme (VAIDS) that compelled businesses to pay their outstanding tax arrears. So far, the program has only managed 10 percent of that target, or N30 billion.

In 2018, the amnesty program was budgeted to fetch N292 billion, but eight months into the year not a kobo has been achieved.

The poor revenue outturn of the VAIDS scheme, coupled with lower the expected oil and non-oil revenues meant that the government could only raise N2.48 trillion, 52 percent of the prorate 2018 budgeted revenue targets for the period of N4.77 trillion.

To soften the blow of lower than expected revenues, the government has turned to borrowing. Debt service cost turned out higher than the budgeted amount. Of the N1.47 trillion

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COMPREHENSIVE COVERAGE OF NATION’S CAPITAL

Ingardas boosts bitumen processing in Nigeria with N2.2bn investments ADEOLA AJAKAIYE, Kano

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L-R: Christian Cochet, CEO, Rubis Energie; Olivier Nechad, chairman, Rubis Energie; Funsho Adebiyi, director of works, South West, who represented Babatunde Fashola, minister of power, works & housing; Ambassador Jerome Pasquier, French Ambassador to Nigeria, and Jean-Jacques JUNG, managing director, Ringardas Nigeria Limited.

NECA extols ITF Director General for transforming Industrial Training Fund OYIN AMINU, Abuja

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he out-going DirectorGeneral of Nigeria Employers’ Consultative Association (NECA), Segun Oshinowo, has described the Director-General of the Industrial Training Fund (ITF), Sir Joseph Ari as ‘a gift to the ITF’ for transforming and turning around the fortunes of the organisation.

Oshinowo stated this during a visit to the ITF headquarters in Jos on Thursday to formally announce his exit from the Agency and introduce the incoming NECA DirectorGeneral, Timothy Olawale to the ITF. He said that in his 19 years as the Director General of NECA, during which time he interacted and worked with five Directors-General of the ITF, none could be compared to the incumbent in terms of positive impact and leadership skills.

Oshinowo noted that Ari’s leadership skills are manifested through tangible positive achievements rather than rhetoric; “the only way to know a true leader and a performing leader is through positive development. Leadership is not a matter of rhetoric or words of mouth.

“It is about the works of your hands. I came in here and I saw the

works of the hand of my brother and I cannot help it but thank God for giving him to ITF, he is a gift to the ITF,” he said.

The outgoing DG assured that despite his exit, the existing collaboration and cordial relationship particularly under the Technical Skills Development Project (TSDP), which he said had received tremendous boost under Sir Ari would still be sustained.

Oshinowo, who thanked the ITF for the support accorded him throughout his tenure, urged them to extend the same support to his successor.

Also speaking, Timothy Olawale, the newly appointed NECA Director General lamented that although the shoes of his predecessor would be difficult to fill, he observed that with guidance from his predecessor, the challenge would be made easier.

He said: “When a stream forgets its source, it would definitely dry up and the only way I can make success of this journey, is to periodically look back and tap from that source.”

Olawale assured the ITF that he would always tap from the wisdom of the outgoing DG as a means to further strengthen the bond of collaboration between the two organisations.

In his response, Ari who likened the outgoing Director General to the Lee Kuan Yew of Singapore, said he would be remembered for his mentorship of many people, firm principles and unimpeachable integrity.

Ari recounted his first encounter with the outgoing Director General 11 years ago when as Head of Public Affairs, he organized the ITF/NECA interface with stakeholders to address issues between the ITF and organized Private Sector.

The interface, which gave rise to the Technical Skills Development Project (TSDP), a skills acquisition programme, was successful because of the endorsement and support of Oshinowo.

He noted that the TSDP had become a reference point in view of the successes recorded in equipping Nigerians with technical skills for entrepreneurship and employability in line with the job creation policy of the Federal Government.

Ari who congratulated the outgoing Director General for his hard work and commitment to the ITF, prayed God to sustain him and bless his future endeavours, just as he assured that ITF would continue to work with NECA as it had during his tenure.

AEA trains 500 FCT residents in MSMEs JAMES KWEN, Abuja

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he Abuja Enterprise Agency (AEA) has carried out a fourday free training programme for about 500 FCT residents on MIcro, Small and Medium Enterprises (MSMEs) to accelerate business, create employment opportunities, as well as reduce poverty in the territory.

The free training programme is part of the annual Global Entrepreneurial Week, aimed at celebrating the contributions of entrepreneurship to world growth.

Arabi Tukur, Managing Director and Chief Executive Officer of AEA explained that the programme,

which is taking place in about 170 countries of the world, was also meant to reduce over dependent on government employment and to improve on the skills of participants.

Tukur who spoke at the commencement of training in Abuja called on participants to take the training programme very serious and to leverage on the opportunities to become entrepreneurs and business owners.

One of the resource persons and Executive Director of Digitalskills4africa, Tayo Olosunde noted that the programme was an opportunity for entrepreneurs and every other person, supporting entrepreneurship to

advance entrepreneurship as a way to providing opportunities for every single person.

Olosunde explained that it is an opportunity to drive the google digital skills programme which according to him has been discovered as one of the ways through which entrepreneurs are going global.

He said: “We are happy that the participants have been so inspired and have been connected to online portal, where they can continue to do the online training, and connect the other global entrepreneurs to actually exchange resources and values and create the job as well as leverage on the wealth in the web.”

igeria’s aspiration for an improved road infrastructure has received a boost, with the commissioning a N2.2 billion Bitumen Storage Plant by a French-owned CompanyRingardas Nigeria Limited (RNL).

The new bitumen storage plant built by the Company, described by Industry experts as one of the biggest in Africa, was commissioned by the Minister of Power, Work, and Housing, Babatunde Fashola, last week Thursday.

The Minister, who was represented by Funsho Adebiyi, Director of Works (North-West Zone) described the multi-billion naira plant as a significant milestone in Nigeria’s bid to having good road network.

The Plant which is situated in Kwali area of the Federal Capital Territory, Abuja, was built from the N5.8 billion new capital injected into the company by its French owner– RUBIS Energie, in the last three years.

In his welcome address at the occasion, Jean–Jacques Jung, managing director of RNL said his company`s investment in the plant was a mark of its commitment to Nigeria `s Economic Development.

Jean-Jacques said building the plant was the first major investment made by the company since it was acquired by RUBIS ENERGIE in 2015.

He noted that for the company to be able to make such investment, despite the huge challenges it experienced in 2015 and 2016 operational year, was a thing of joy.

“In spite of these challenges, Ringardas has remained resilient, and with the support of its shareholders, particularly, RUBIS ENERGIE, which was able to inject additional new capital which amounted to about 200% above its initial holding in the company.

“In order to overcome the challenges, the company embarked on a restructuring which led to the reduction of its expatriate workers from 46 to 6. The company has also been able to contribute to the government’s efforts to create employment by providing jobs to over 460 permanent employees, 98% of which are Nigerian.

“This is in addition to the 107 local suppliers that were engaged to supply materials and other forms of services during the period that the plant was being constructed” he stated.

Jean-Jacques noted with delight that the entry of the company into the bitumen business in Nigeria has revolutionized the supply of the product in the country, pointing out that prior to this time, road construction projects were regularly interrupted due to shortage of bitumen in the country.

“It is on record that in spite the challenges posed by the prevailing economic situation in Nigeria in 2015 and 2016, both management of Ringardas and its shareholders ensured that the bitumen supply was not adversely affected. In other words, the supply of bitumen to road contractors never ebbed, thanks to the unabated support of our parent company.

“Ringardas was able to do this by establishing storage terminals in all the geo-political zones in the country from where bitumen was being made available to all contractors

with ease; thus, making the product readily available all over Nigeria for road construction projects.

“The company also put in place a fleet of customized trucks that deliver hot bitumen, ready to be used on delivery, to road contractors at construction sites all over the country. The innovations introduced by the company eliminated the need to re-heat bitumen supplied by the company before use, thereby saving time and energy hitherto expended by the contractors in heating the product before use.

“In doing these, we did not compromise the global best practices which we are known for, and we are prepared to continue with the good will of our Company in a manner that is socially responsible and commanding respect for its integrity” he further disclosed.

Giving an insight into the nature of activities of the company, Olivier Nechad, chairman of the company, said RNL also known as ASCA is owned by a French Group- RUBIS Energie, and primarily involved in the business of importation, storage, marketing and distribution of bitumen, as well as, bituminous products and Automotive Gas Oil (AGO) across Nigeria.

In his address, Christian Cochet, chief executive officer (CEO), RUBIS Energie, said his company is delighted with the construction of the storage facility, as it is in line with its global corporate vision of getting bitumen from places where they are available to areas of need.

“RUBIS is an established, French based international private limited company founded in 1990, who specialized in the downstream petroleum and chemicals sector, operating bulk liquid storage facilities (for petroleum products and chemicals) through our subsidiary, RUBIS Terminal and distribute fuels through our subsidiary, RUBIS Energie.

“Since 2000, RUBIS has expanded its presence across three regions, (Africa, Europe and the Caribbean) through direct investments and acquisitions. The Group has enjoyed strong, regular growth since 2000, driven by organic growth, new sites and acquisitions, while also constantly improving its productivity.

“In 2015, we acquired Ringardas together with its sister companies in Belgium, Senegal and Togo. The intention behind acquisition of Ringardas is to further build on the success of Ringardas in Nigeria by deploying its wealth of know-how, experience and resources towards improving the successes Ringardas has achieved in Nigeria over the years.

Christian commended the management, and staff of RNL for their zeal and commitment to the quick execution of the project geared at aiding road development in the country.

Delivering his address, French new Ambassador in Nigeria, Jerome Pasquier, who represented his country at the occasion, also expressed delight with the commissioning of the Plant, promising that his country would continue to encourage more French companies to invest in Nigeria.

Jerome said that the continued flow of French investment into Nigeria was an indication of the warm relationship existing between the two countries, which he is out to promote.

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Opportunity knocks in the US for rundown areas — and investors

As the climate changes, ESG investing powers into the mainstream

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World Business Newspaper

US-China fight for influence spills over at Apec summit Gathering fails to issue communiqué for first time as rivals compete for influence Lucy Hornby

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ivalry between the US and China broke into the open at the Asia Pacific Economic Cooperation meeting on Sunday, with leaders failing to issue a joint communiqué for the first time in the summit’s 29-year history.

The competition between Washington and Beijing to influence the economic and political structure of Asia played out in real time as diplomats sparred over the wording of a closing statement on Sunday.

Tensions spilled over into a spat between Rimbink Pato, Papua New Guinea’s foreign minister, and Chinese diplomats, when the latter arrived unannounced in a bid to persuade him to back their wording. Mr Pato refused to meet them and threatened to call security to evict them.

Peter O’Neill, Papua New Guinea’s prime minister, told reporters that the wording related to reform of the World Trade Organisation. The US has become increasingly frustrated with the WTO as China gains influence.

Apec foreign ministers also failed to come up with a communiqué after their session.

Mike Pence, the US vice-president who attended the event after President Donald Trump snubbed the gathering, pushed for a vision of Asia tethered to Washington through bilateral trading agreements.

He warned developing nations such as Papua New Guinea against infrastructure projects that come with heavy debt strings. “Do not accept foreign debt that could compromise your sovereignty,” he said. “Protect your interests. Preserve your independence. And, just like America, always put your country first.”

“The United States deals openly, fairly. We do not offer a constricting belt or a one-way road,” he added, in a jab at China’s Belt and Road programme of infrastructure investment.

Mr Pence also announced on Saturday that the US would join Australia to expand a naval base on Papua New Guinea’s Manus island, solidifying Washington’s position as part of a quadrilateral security co-operation arrangement that includes Japan, Australia and India.

China wants to keep the existing international multilateral institutions built largely by western powers after the second world war but argues that it deserves

a bigger role as its economy and global reach have expanded.

President Xi Jinping used his speech to depict China as a beacon of multilateralism, appealing to the value of arrangements such as the WTO. “Every age has its challenges. In and of themselves they are nothing to fear. The issue is how we address them,” he said.

Wang Xiaolong of the Chinese foreign ministry’s international

economic department, said: “No one is trapped because of working with China. Not one country,” adding that the country was still on a “steep learning curve” in its international aid programme.

Asian countries have found themselves in the middle of the increasingly tense US-China spat. At the Asean meeting last week in Singapore, leaders of south-east Asian countries ex-

pressed disquiet that the organisation was being sidelined.

Both countries also alienated their hosts with their approach.

Officials and journalists from Papua New Guinea fumed as Chinese officials excluded them from meetings with Mr Xi on Friday.

Mr Pence’s appeal to Christianity in Asia at the end of his Apec speech also caused many in his audience to cringe.

India’s tea growers scalded as US sanctions hit Iran

Trump says responsibility for Khashoggi killing may never be known

Traders and producers struggle as campaign against Tehran sees exports and prices fall

Courtney Weaver and Andrew England

Benjamin Parkin

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resident Donald Trump’s decision to take the US out of the international nuclear deal with Iran and impose new economic sanctions is causing anguish in unexpected places: Iran is India’s largest buyer of tea, and traders and growers are feeling the pinch.

Demand for prized black tea from Assam in north-east India, a favourite brew for Iranians, has fallen. Sales have dropped, prices have taken a hit, and some companies have opted to start planting cheaper teas for domestic consumption instead.

“If business has to stop, it’ll be a

disaster for us,” said Vivek Goenka, president of Warren Tea and chairman of the Indian Tea Association, who said the drop in prices exacerbated by sanctions had already started to strain his company. “I don’t know what will happen.”

Tea growers in India, the world’s second-largest producer, are now struggling to work out how to continue selling to Iran. The US sanctions do not cover food and agricultural goods, but exporters anticipate difficulty in financing their trade and are looking for ways to avoid using US dollars and engaging in potentially risky dealings with Iranian banks targeted by the US. Continues on page A2

President’s comments come after reports CIA concluded crown prince gave the order

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resident Donald Trump said he had seen no evidence that the killing of Jamal Khashoggi had been ordered by Saudi Arabia’s Crown Prince Mohammed bin Salman, opening up the prospect of a new rift with his intelligence services.

The US president’s comments came amid media reports that the CIA had concluded responsibility for the killing lay with Saudi Arabia’s de facto ruler.

“Who can really know?” Mr Trump said on Sunday in an interview with Chris Wallace of Fox. Prince Mohammed had told him as many as five times — including as recently as a few days ago — that he had not been in-

volved, the president said, and he suggested there was no recourse to finding out whether the crown prince was lying.

“He told me that he had nothing to do with it,” Mr Trump said, adding that “many people” also said the crown prince had no knowledge of the killing. “Will anybody really know?”

The Washington Post, the New York Times, the Wall Street Journal and CNN have reported the CIA’s findings, citing unnamed officials.

The agency’s conclusion was based on Prince Mohammed’s leadership role in the country and the belief that no operation against Khashoggi, a veteran journalist, could have been authorised without the heir apparent’s con-

sent. The assessment is the first to explicitly link the 33-year-old royal to the killing, which has triggered Riyadh’s biggest diplomatic crisis since the September 11 attacks of 2001 on the US. But the US State Department said this weekend that it had not reached a final conclusion on who was responsible for the Khashoggi killing in the kingdom’s consulate in Istanbul.

In a statement that emphasised the important strategic relationship between the US and Saudi Arabia, the State Department on Saturday said the administration was determined to hold those responsible for the killing of the journalist responsible, but “recent reports indicating that the US government has made a final conclusion are inaccurate”.

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FT India’s tea growers scalded as US sanctions..

Credit boom: Private equity bounces back on cheap debt bubble

Continued from page A1

With India seeking to boost its overall agricultural exports, the country’s tea industry has spent years investing in ties with Iran. Last year, Iran pipped Russia as India’s largest export destination by value, at about $100m of bulk tea, according to Tea Board India, though Russia remains ahead in quantity terms. Exports of tea to Iran doubled to about 31m kg in 2017-18 from the start of the decade.

But sales to Iran in the six months to September fell 13 per cent from a year earlier to about 12m kg. Prices, meanwhile, fell 10 per cent to roughly $3.50 per kg over the same period.

The Trump administration’s sanctions were designed to punish what it called Iran’s threatening behaviour in the Middle East and elsewhere. But they have caused headaches for countries such as India that are dependent on imports of Iranian oil. The US gave India and seven other countries a temporary waiver from the sanctions to allow them to work towards cutting imports.

Merkel and Macron make eurozone budget breakthrough Financing could still be tough to agree and faces resistance from other EU Guy Chazan and Mehreen Khan

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ermany and France have made a breakthrough on a new budget for the eurozone ahead of a trip by Emmanuel Macron to Berlin on Sunday.

The move is good news for the French president, who has long believed that giving the single currency area its own resources will make it more resilient to economic crises. A joint FrancoGerman paper outlining the proposal is due to be presented to European finance ministers on Monday.

But in a significant concession France has acceded to a German demand that the new instrument be part of the EU budget. Diplomats said that meant it could take years to agree, since all the EU27 member states — including those outside the euro-area — would have to sign off on it.

Talks on the size and priorities of the EU’s next long-term budget are already bogged down as governments grapple with the loss of the UK’s contributions after Brexit.

However the fact that Germany is even contemplating the idea of a eurozone budget is being seen as progress in Paris. Berlin was initially sceptical about Mr Macron’s proposed reforms of the eurozone, unveiled in a landmark speech in the Sorbonne in September 2017.

The joint paper, seen by the Financial Times, builds on an agreement reached between Mr Macron and Chancellor Angela Merkel in the German town of Meseberg in June, in which Germany for the first time embraced the idea of a eurozone budget.

The joint paper does not specify the size of the budget. It says it will be financed by contributions from eurozone member states, for example from a financial transaction tax — which does not yet exist.

It will be aimed at achieving a “higher level of convergence and competitiveness within the eurozone” — phrasing that reflects Berlin’s priorities.

Paris had pushed for the money to be used for “stabilisation” purposes, where emergency cash helps economies ride out shocks.

Monday 19 November 2018

Buyout deals are being financed with debt levels not seen since the last crisis Eric Platt and Mark Vandevelde

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Prime minister Theresa May: ‘A change of leadership at this point isn’t going to make the negotiations any easier and it isn’t going to change the parliamentary arithmetic’ © Reuters

May tells rebels leadership challenge risks derailing Brexit Prime minister says next 7 days ‘are going to be critical’ and uncertainty won’t help Laura Hughes

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heresa May has warned critics that replacing her as party leader risks delaying or frustrating Brexit and would not make the negotiations with Brussels “any easier”.

About 25 MPs have publicly said they have sent a letter to Graham Brady, chairman of the backbench 1922 committee. He will notify the prime minister if the threshold of 48 letters needed to trigger a vote of no confidence in her leadership is passed.

Speaking on Sky News, Mrs May said she believed the threshold had not yet been reached.

“A change of leadership at this point isn’t going to make the negotiations any easier and it isn’t going to change the parliamentary arithmetic”, she said.

“What it will do is bring in a degree of uncertainty. That is uncertainty for people and their jobs.

“What it will do is mean that it is a risk that we delay the negotiations and that is a risk that Brexit gets delayed or frustrated.”

Sir Graham told BBC Radio 5 Live’s

Pienaar’s Politics he hoped “some tweaks” could be made to the draft Brexit deal, but refused to comment on how many letters of no confidence he had received.

He said a leadership contest probably would not be sensible.

“We are coming to the end game of a very serious, very difficult negotiation, and for the Conservative party to be plunged into uncertainty, for the government to be plunged into uncertainty would have implications for that,” he said.

“But . . . it is crucially important that colleagues know that whatever my own views, they not going to affect the way I conduct my responsibilities as chairman of the 1922 committee.”

Mrs May’s defiant comments came after Dominic Raab warned the UK government not to allow itself to be bullied by Brussels over the draft Brexit deal.

Mr Raab resigned as Brexit secretary last week in protest at a withdrawal treaty he said presented a threat to the integrity of the UK. In an interview with the Sunday

Times, Mr Rabb criticised “lack of political will and resolve” in dealing with EU negotiators and warned the UK against looking “like we’re afraid of our own shadow”.

He said Mrs May needed to secure a deal that allowed the UK to unilaterally leave any customs union arrangement.

“If we cannot close this deal on reasonable terms we need to be very honest with the country that we will not be bribed and blackmailed or bullied and we will walk away,” he said.

“I think there is one thing that is missing and that is political will and resolve. I am not sure that message has ever landed.”

He also urged MPs to get behind Mrs May and said calls for her removal were “a total distraction”.

Mr Raab told the BBC’s The Andrew Marr Show: “We need to get Brexit over the line, we need to support our prime minister.”

Mrs May said on Sunday morning that the next seven days “are going to be critical” and revealed she would be meeting Jean-Claude Juncker, the European Commission president.

Netanyahu government heads towards collapse Jewish Home party withdraws support over Hamas ceasefire handling Mehul Srivastava

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rime Minister Benjamin Netanyahu raced to save his coalition on Friday, as the Jewish Home party withdrew its support over the handling of a ceasefire with Hamas and the rejection of its own candidate for defence minister.

Mr Netanyahu said in a statement that he was making “every effort to preserve the rightwing government,” and warned of the consequences of toppling the Likud-led coalition.

He urged his coalition part-

ners “not to repeat the historical mistake of 1992 when the rightwing government was overthrown, the left came into power and brought the Oslo disaster to the State of Israel,” referring to the Oslo Peace Accords with the Palestine Liberation Organization.

Mr Netanyahu’s lost his majority in parliament with the departure of the Jewish Home party, with his coalition dropping to 53 of the Knesset’s 120 seats. Earlier this week, he held on to a razor thin majority after the departure another coalition partner over his handling of the

Gaza cease fire.

The leader of the Jewish Home party, Naftali Bennett, reportedly told the prime minister of his decision after being denied the defence portfolio, which was vacated earlier this week by Avigdor Lieberman, a rival of Mr Bennett’s in Israel’s rightwing politics.

Mr Netanyahu agreed a ceasefire with Hamas on Tuesday after two days of the worst rocket attacks on Israeli cities since a war in 2014. Seventy per cent of Israelis were disappointed in the decision, a poll said earlier on Friday.

Airbnb bags more than $1bn in quarterly revenue Matthew Rocco

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irbnb said Friday it booked more than $1bn in thirdquarter revenue, driven by international growth in bookings.

The home rental start-up is seen as a candidate to go public in 2019. Wall Street has speculated that Airbnb, along with Uber and Lyft, could launch initial public offerings next year. Airbnb is cur-

rently valued at $31bn.

Revenue was “substantially more” than $1bn during the period, Airbnb said in a memo, adding that it was the “strongest quarter” in its 10-year history. The company did not disclose additional financial data.

Airbnb said investments in its global footprint have contributed to growth, with the number of guest arrivals during the third

quarter climbing 91 per cent in Beijing and 79 per cent in Mexico City year-over-year.

The San Francisco-based company also expects that nearly 1m US guests will book a stay through Airbnb for the Thanksgiving holiday.

The company marked its first full year of profitability in 2017, as Ebitda hit $100m on 150 per cent growth in bookings.

rivate equity dealmakers are riding high on a wave of cheap debt, pushing buyout values to levels not seen since the financial crisis.

The deals may not yet be quite as large as those in the last buyout bubble that blew up spectacularly a decade ago, such as the $44bn buyout of energy company TXU that ended in one of the biggest bankruptcies on record.

But in one respect at least, 2007 is back: today’s deals are once again fuelled by supersized portions of cheap debt, with few strings attached.

Four leveraged buyouts worth $10bn or more have been announced since the beginning of January, a higher tally than in any year since 2007.

Chart showing the return of the megadeal with private-equity backed LBOs over $10bn The largest was Blackstone’s $17bn acquisition of Thomson Reuters’ financial and risk business, now known as Refinitiv.

In about half of this year’s deals, private equity firms were able to raise debt financing amounting to at least six times the annual earnings before interest, tax, depreciation and amortisation (ebitda) of the company they bought.

Ebitda is a widely followed measure of profit that is calculated by taking a company’s headline earnings and adding back tax and interest payments, as well as non-cash charges such as depreciation and amortisation. It provides a rough indication of the money available for debt repayments.

This year’s latest big buyout is the $13.2bn takeover of the power solutions unit at Johnson Controls International by the private equity arm of Brookfield Asset Management, which plans to raise over $10bn of debt — close to six times its ebitda.

Leverage on this scale has not been used so aggressively since 2007, when a sudden dearth of buyers for corporate debts meant banks were forced to clog up their balance sheets with risky loans they had originally planned to sell on.

Now a plentiful supply of cheap credit is once again pushing asset prices higher, allowing private equity bidders to offer more money upfront for every dollar of profit they expect a company to earn.

This is starting to raise alarm bells. Janet Yellen, the former chair of the US Federal Reserve, told the Financial Times last month that she was worried by a “huge deterioration” in corporate lending standards, particularly for leveraged loans. The IMF has also singled out leveraged loans as a potential source of financial instability.

In the US at least, Obama-era regulations until recently prevented businesses from ratcheting up debt even further. But private equity groups have taken advantage of the Trump administration’s more relaxed approach by doubling the proportion of deals done with leverage of seven times or greater, which had often been barred under the old rules.

Monday 19 November 2018

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BUSINESS DAY

FINANCIAL TIMES

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COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Global bond and equity markets shrink $5tn in 2018 Rare parallel declines in capital markets could result in biggest contraction post financial crisis

Robin Wigglesworth

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inancial markets are headed for an unusually bad year, with the overall global bond and equity universe shrinking by a cumulative $5tn since the start of 2018 — the biggest contraction of capital markets since the financial crisis.

Parallel declines in both bonds and equities are rare, as stocks tend to do better when growth is robust and fixed income thrives more in subdued or poor economic conditions. In 2008 the global equity market shrank by more than $18tn, even as the bond market was buoyed by investors desperate for the relative safety it offers.

But 2018 is starting to look like an inflection point for the postcrisis market era, as central banks have started paring back monetary stimulus. The Federal Reserve has led the charge, lifting even threemonth Treasury yields to a 10-year high of 2.37 per cent this week.

That has left almost every major asset class nursing losses in 2018.

“Markets will be nervous when we move from one environment to something new,” said Vinay Pande, global head of trading strategies at UBS Wealth Management.

Rising US interest rates have tripped up the global bond market this year, with almost every corner of the fixed income universe losing money in 2018. While issuance has continued to be robust, that has meant that the Bloomberg Barclays Multiverse — the biggest, broadest bond market benchmark — has lost $1.34tn of its market capitalisation this year.

At the same time, stock market momentum initially triggered by a robust global growth spurt and corporate earnings-enhancing tax cuts in the US has faded lately.

Rising bond yields, the spluttering global economy and investors starting to factor in less ebullient corporate profits next year triggered a drop in the US stock market last month, which added to the malaise in Europe and Asia.

As a result, the FTSE-All World stock market index has lost 5 per cent this year, shaving off more than $3.6tn of market capitalisation, which in nominal terms is the biggest dollar loss since 2011.

Of the international equity index’s 3,208 members, more than 500 are down by at least 30 per cent this year, over 1,000 have fallen by at least 20 per cent and less than a third are up for the year.

Russian oil groups hit sweet spot as profits surge Companies awash with cash, but falling crude price means good times may not last Nastassia Astrasheuskaya

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ussian oil companies have rarely had it so good. Rising oil prices coupled with a weakening rouble have sent profits for exporters surging above forecasts.

Some companies have already made investment decisions to capitalise on high earnings, but the moves came just as the oil price started to slide.

It has dropped about $20 a barrel since its four-year peak of $86 in early October. The joy for the oil groups, therefore, may be shortlived.

However, the weakness of the rouble, which plunged to a two-year low in September, is still propping up earnings for groups as they repatriate foreign currency-based revenues back to Russia.

Indeed, third-quarter profits have been on the rise across commodities — for oil, gas, and metals companies, which together contribute a large chunk of Russia’s budget.

But while metals businesses are more used to high earnings, and their shareholders to high dividends, it has taken energy companies by surprise.

“They [Russian oil and gas companies] are having an absolutely fabulous year,” said Alexei Bolshakov, general director of Citigroup Global Markets. “They earn more per barrel than they did even during $100 a barrel oil prices. These guys have exorbitant profitability.”

Another senior analyst at one of Russia’s leading banks said: “Russian oil and gas companies are

flooded with cash, they don’t know what to do with it.”

Additionally for the oil companies, an improved macro environment and an increase in production quotas under Russia’s deal with Opec and other non-Opec producers since June, has resulted in higher sales at higher prices.

Rosneft, Russia’s top crude producer and the world’s largest listed oil company, kicked off Russia’s oil reporting season in November with a tripling of net profits in both the third quarter and the first nine months of the year as well as a more than quadrupling of free cash flow, one of the key numbers looked at by investors.

Novatek, the country’s top independent gas producer, increased net profit by 22 per cent on the year in the third quarter as it started exporting liquefied natural gas last year at a time when largely oillinked gas prices also rose.

Russian oil and gas companies’ 2018 earnings before interest, tax, depreciation and amortisation will be 30-40 per cent higher year on year on high oil prices, including for Russian Urals blend, said Denis Perevezentsev, vice-president of Moody’s.

The trend continued on Friday with the announcement by Gazprom Neft, Russia’s third-largest crude producer, that it had also sharply increased net profits, by 70 per cent on the year in the third quarter.

Pipeline export monopoly Gazprom is also widely expected to post solid numbers on rising gas prices and supply growth as it nears a record in gas deliveries to Europe for a third year in a row.

A protester from Extinction Rebellion is held by police in London. The group wants the UK to be carbon neutral by 2025

As the climate changes, ESG investing powers into the mainstream BlackRock’s Larry Fink says sustainability will become core but doubts persist Attracta Mooney and Peter Smith

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hen Larry Fink, BlackRock chief executive, outlined plans for the $6tn fund house to become a leader in sustainable investing, he was outspoken about the prospects for funds that use environmental, social and governance criteria.

“Sustainable investing will be a core component for how everyone invests,” he told the Financial Times.

“We are only at the early stages.”

The boss of the world’s largest asset manager is not the only one who believes ESG investing will grow rapidly. Asset managers worldwide are piling in, launching ESG funds or integrating sustainable investing across various asset classes.

Assets under management in portfolios that use sustainable investing grew more than 600 per cent to $23tn in the 10 years to the end of 2016, according to a report from the Global Sustainable Investment Alliance.

But as asset managers embrace ESG, there are questions over whether the investment case is solid. There are also fears that some asset managers are piling in because of ESG’s popularity and that their lack of expertise may lead to disappointing returns.

An ESG specialist says: “There is a big danger that the massive spike in attention is diluting what ESG means.”

For decades, responsible investing was a tiny part of asset management, often reserved for religious investors.

The focus was typically on excluding

“sin stocks”, such as tobacco companies.

This has changed as corporate scandals, including the Volkswagen emissions cheating issue, led to sharp share price falls. Investors questioned whether ESG issues could affect a company’s performance.

A Harvard Business School study in 2015, “Corporate sustainability: first evidence on materiality”, marked a turning point in how investors viewed ESG. Its analysis of stock returns found that “firms with good performance on material sustainability issues significantly outperform firms with poor performance on these issues, suggesting that investments in sustainability issues are shareholdervalue enhancing”.

Other studies conclude that ESG investing is beneficial. Hermes, the UK asset manager, said this month that companies with good or improving social characteristics tend to outperform by an average of 15 basis points a month.

A 2015 study of studies, which examined 2,200 pieces of research, found that the “business case for ESG investing is empirically very well founded”.

Jamie Carter, chief executive of UK asset manager Oldfield Partners, last year found that companies with repeated ESG violations performed poorly but that shareholder engagement after a bad ESG event worked well.

Despite such studies, however, many people believe the robustness of ESG returns requires more research rooted in experience. One challenge

is that ESG, sustainable investing, responsible investing and impact investing are ill-defined, making it difficult to see if they add value.

Paul Lee, who has specialised in ESG for various companies, says: “The evidence of ESG adding value is a bit flaky. It is blurred by the fact that it is ill-defined.” Despite this, he says sustainable investing “absolutely” does add value. “The question is what time horizon are you looking at.”

Masja Zandbergen, head of ESG integration at Robeco, the Dutch asset manager, says that data looking at value added by ESG are not as robust as that for other aspects of investing.

“We see there is value but it is not as strong yet as it is for some of the traditional [financial] factors,” she says.

Ms Zandbergen adds, however, that many issues have to be addressed globally, ranging from climate change to inequity to cyber security. “[These] are leading to change in markets and regulation that is affecting companies.

Taking these issues into account leads to better long-term investment decisions,” she says.

BlackRock’s Mr Fink believes sustainable investing will be a core component for how everyone invests. He told the FT: “We are going to see evidence, in the long run, that sustainable investing is going to be at least equivalent to core investing. I personally believe it will be stronger, just because of the overwhelming growth in demand.”

He says demand will push the need for better analytics: “We’re moving towards the ability to have quantifiable data.”

Top investors continue to dump Flybe shares Chief’s stock options lose £1.2m in value Josh Spero

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ajor investors in UK regional airline Flybe, which has put itself up for sale, have continued to dump their stock following a profit warning and poor set of results.

Shares have fallen 76 per cent in a year, including 9.9 per cent on Friday.

They closed at 8.9p.

Edinburgh-based investor Aberforth Partners, with £2.4bn under management, has reduced its holding from 15.9 per cent in mid-October to 4.1 per cent last week, according to regulatory filings. This relates to Aberforth’s direct holding with voting rights; it holds more shares indirectly.

A second shareholder sold down its

position via Swiss bank UBS from 9.4 per cent to below the notifiable threshold of 3 per cent, according to further filings.

UBS held a large position in Flybe on behalf of Pelham Capital Management, a hedge fund that was listed in the 2018 annual report as the airline’s fourth-biggest shareholder. This stake had increased to 9.4 per cent only in September.

The Wellcome Trust, the secondbiggest charitable foundation in the world, has cut its holdings from 6.2 per cent to less than 3 per cent.

Flybe said: “We are responding to the external industry factors we face, notably the weaker value of sterling and higher fuel prices, by reviewing every aspect of our business, especially further

capacity reduction. Importantly, bookings remain ahead of last year, which demonstrates the popularity of Flybe for our customers and the vital role we play in UK connectivity.”

Last week, after its first-half results, Flybe said it was “undertaking a comprehensive review of the various strategic options” as it struggled with falling profits, a weaker pound and rising oil prices. The options included cutting its fleet further, selling assets with a potential value of up to £20m or an outright sale.

Low-cost carrier easyJet and infrastructure group Stobart, which made a failed approach for Flybe earlier this year, have expressed interest in buying part or all of Flybe.

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BUSINESS DAY

FT

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Monday 19 November 2018

ANALYSIS Who will challenge Trump in 2020?

Senators, billionaires and governors among those weighing White House runs Courtney Weaver and Demetri Sevastopulo

S Opportunity knocks in the US for rundown areas — and investors Supporters see the new zones as a bold plan to develop poor areas. But they could also deliver generous tax break for rich investors Joshua Chaffin

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enator Cory Booker cited the Torah and deployed his limited Hebrew as he pleaded with a group of New Jersey real estate executives — many of them Jewish — to join his investment crusade for poor neighbourhoods. Doing so, Mr Booker declared, would be a chance to “do the greatest mitzvah” — or good deed — “of all.”

Not that the executives needed much convincing at the meeting in October: many were already salivating at what could be the biggest tax break of their lifetimes.

Known as Opportunity Zones, Mr Booker’s initiative was a little-noticed element of President Donald Trump’s 2017 tax bill. In simplest terms, it allows investors to reduce their capital gains by investing in deprived areas.

At a time of extreme political polarisation, the proposed Opportunity Zones have brought together some unlikely bedfellows, with the backers including Obama progressives such as Mr Booker, Manhattan allies of Mr Trump and Silicon Valley pioneers.

There is less consensus, however, on their likely impact. Proponents argue that Opportunity Zones may one day come to be seen as the boldest economic development plan for poor areas in a generation. But they could also end up presenting the most generous tax deal to the rich in decades.

The revelation that the new Amazon headquarters in Long Island City is located in one of these Opportunity Zones has only increased the interest in — and scrutiny of — the proposal.

“When Opportunity Zone legislation came out last December, in some ways we thought it was almost too good to be true,” said Sherry Wang, managing director at Goldman Sachs’ urban investment group, which focuses on disadvantaged communities.

She was speaking last month at a conference organised by the real estate programme at Rutgers University Business School. “I think it’s a once-in-a-decade — maybe once-in-a-lifetime — opportunity,” Ms Wang added.

James Nelson, who heads the New York-area practice at Avison Young, a real estate broker, expresses similar enthusiasm. “I’ve been doing this for 20 years and I’ve never seen anything as close to exciting as we think this can be,” Mr Nelson says, predicting Opportunity Zones would become the method of choice for high net-worth individuals and family offices to make “intergenerational” transfers of wealth.

When he gave a talk on Opportunity Zones in Manhattan in October, the room was bulging with

attendees. “Every other investor you’re speaking to is talking about this because the implications are massive,” Mr Nelson says.

There is a long history of trying to bend the tax code to lift up impoverished areas. It is a matter of wonkish debate whether Opportunity Zones will fare any better than previous efforts. Some worry they may actually worsen gentrification.

Still, even before the final rules are written, opportunistic money managers are scrambling for a piece of the business. Among them is SkyBridge Capital, the alternative asset manager founded by Anthony Scaramucci, Mr Trump’s shortlived communications director. His firm is trying to raise a $3bn fund to invest in Opportunity Zones. Daniel Barile, a managing director at the firm, says it is targeting the “mass affluent” sitting on inflated stock portfolios after a long bull market and facing big capital gains taxes if they sell.

“It will benefit the billionaire, but for this programme to be a success it will [also] be the doctor, the lawyer, the dentist with some Netflix stock,” he says.

John Lettieri, one of the architects of Opportunity Zones, says the aim is to shift some of the estimated $6.1tn of capital gains built up in the US — particularly in the easy-money years that followed the financial crisis — to deprived communities.

The authors of the plan settled on a simple incentive: allow investors to defer capital gains — from the sale of property, stocks, a business, anything — as long as they reinvest the profits in one of 8,700 Opportunity Zones around the country. These are deprived areas chosen by each of the states where the average income is less than 80 per cent of the surrounding area or poverty levels are above 20 per cent.

For those who qualify, their original capital gains tax will be reduced by 10 per cent if they hold the new investment for at least five years. It will be cut by 15 per cent after seven years. After 10 years, there is an added bonus: any profits generated from the Opportunity Zone investment become tax-free.

“This is by no means in our view a silver bullet but it’s one very powerful tool to deploy on behalf of communities that have been left behind,” says Mr Lettieri, president of the Economic Innovation Group, a Washington think-tank founded

by Sean Parker, the technology entrepreneur who upended the music industry with the creation of the Napster file-sharing service and was an early investor in Facebook.

When details first trickled out, some viewed Opportunity Zones as another handout to billionaires in a Trump tax bill already tilted toward

the wealthy. That perception was not helped by the discovery that one of Mr Trump’s golf courses is located in an Opportunity Zone.

(It is not eligible for any benefits.)

There is also the fact that real estate developers — renowned for their determination to avoid taxes — are expected to be big users of the funds. At present, their favoured tax vehicle is a “1031 exchange”, which allows a developer to defer capital gains by ploughing the proceeds from one property sale into another property investment. Opportunity Zones have been described as a 1031 exchange on steroids.

Even some real estate investors have their suspicions. “There’s got to be a pony here somewhere,” says one.

While Opportunity Zones may benefit Mr Trump and his inner circle, they came to life during President Barack Obama’s administration. A 2015 white paper published by the EIG served as a blueprint for a bill co-sponsored by two African-American senators from opposite ends of the political spectrum: Mr Booker, a progressive Democrat who grappled with poverty as mayor of Newark, New Jersey, and Tim Scott, a free-market Republican who grew up poor in Charleston, South Carolina.

The legislation attracted bipartisan support. Mr Scott was instrumental in tucking it into the larger Trump tax bill that Congress passed late last year.

Mr Booker, who many expect to run for president in 2020, describes it as a way to use capitalism to address the inequality that has become one of the left’s most urgent concerns. “I want to create a business case for low-income areas in America,” he says, predicting Opportunity Zones “will probably be the biggest economic development thing to come out of Washington in this generation.”

Tim Weaver, an urban policy professor at the State University of New York at Albany, is sceptical.

“This approach is nothing new,” he wrote in a scathing review.

Whether they were Thatcher-era “enterprise zones” in Britain or Clinton-era “empowerment zones” in US inner cities, such policies tended to deliver little for the money, he argued: “Sadly these policies almost inevitably result in tax giveaways for investment that would have occurred anyway.”

Adam Looney, a fellow at the Brookings Institution, says the benefits of a variety of “place-based” policies was “inconclusive”.

Mr Lettieri is reluctant to overpromise but insists that in designing Opportunity Zones, he and his colleagues examined a slew of predecessors to understand where they had gone awry.

even senators. Four billionaires.

Three former presidential candidates. And the made-for-TV lawyer for a porn star suing Donald Trump.

The November midterm vote has just ended, and already a wide field of potential Democratic presidential contenders is coming into focus.

If 2016’s small pool of candidates was viewed as a coronation of Hillary Clinton, the 2020 Democratic primary is set to be the opposite. Already, as many as three dozen hopefuls are flirting with a White House bid.

The field is shaped in part by Donald Trump’s surprise White House victory in 2016, with some Democrats taking his win as proof that a deep political resume is no longer a pre-requisite for the job.

The lack of a clear frontrunner or two has expanded the field of potential candidates even further.

The 2016 primary season kicked off nearly 20 months before the vote, and the 2020 primary could begin even sooner — especially now that California’s primary, previously held in June, has been moved to March.

Having the California vote so early in the primary season could potentially upend the process, said Larry

With Democrats back in control of the House, several lawmakers believe they have a shot at the White House in 2020 — particularly if the House chooses to push ahead with several investigations of Mr Trump. Adam Schiff, the soon-to-be-chair of the House intelligence committee who represents a district in California, has already travelled to New Hampshire, while Tim Ryan of Ohio and Seth Moulton of Massachusetts, two younger rising stars, have visited Iowa.

The biggest name of all may be Beto O’Rourke, who, despite losing his bid to represent Texas in the Senate, is still considered a contender — particularly given his fundraising prowess.

History may not be on their side.

The only person to go straight from the House of Representatives to the White House was James Garfield, who was assassinated six months after taking office in 1881.

THE BILLIONAIRES Mr Trump has upended the logic that being a billionaire tycoon would be a disadvantage to a presidential run, opening the door for several of his wealthy peers.

Michael Bloomberg, the financial data businessman and former New

From left: Michael Bloomberg, Nikki Haley, Beto O’Rourke and Elizabeth Warren © FT montage

Sabato of the University of Virginia, handing an advantage to candidates who are wealthier or better known in that state, such as Kamala Harris, a US senator for California; Los Angeles mayor Eric Garcetti and hedge-fund billionaire Tom Steyer.

“Or maybe, as usual, the results of Iowa, New Hampshire, and South Carolina will have a slingshot effect provided by free media that will carry them through the California voting,” he added.

Here is a look at who might be running.

THE SENATORS More than a dozen senators, including Bernie Sanders from Vermont, who lost the 2016 primary to Hillary Clinton, are considering runs.

Some, such as Elizabeth Warren, a progressive from Massachusetts, Kirsten Gillibrand from New York and Ohio’s Sherrod Brown, have said they are weighing a decision, while others have spurred speculation by refusing to rule themselves out.

Others such as Cory Booker from New Jersey and Kamala Harris have sent strong signals by going to Iowa, the state whose caucuses kick off the nomination process.

While former presidents Barack Obama, John F Kennedy and Richard Nixon all served in the Senate, senators generally have a tough time in presidential runs, as Hillary Clinton, Joe Biden and John Kerry learned.

THE CONGRESSMEN

York City mayor who flirted with a run as an independent in 2020, is eyeing the White House again, saying he will decide by early 2019.

Starbucks’ Howard Schultz has begun hiring political operatives, including John McCain’s former campaign chairman. Tom Steyer, the progressive billionaire who is funding a campaign to impeach Mr Trump, has also not ruled out his own run.

Meanwhile, some Democrats are pinning their hopes on Oprah Winfrey. The media mogul says she will not run but was active in this year’s midterms.

While all four are unconventional candidates, some in the party believe they could benefit from their status as outsiders, as the president did.

THE GOVERNORS Several current and retired governors are eyeing the top prize. Two of them — Steve Bullock from Montana and John Hickenlooper from Colorado — hope that their ability to get re-elected in states with significant conservative and rural populations will give them an advantage.

Jay Inslee, the governor of Washington state and chair of the Democratic Governors Association, has said that he is considering his options, while Deval Patrick, a retired governor of Massachusetts, has not ruled out jumping into the race. And Terry McAuliffe, the former governor of Virginia and close friend of the Clintons, is also testing the waters.

Monday 19 November 2018

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A5 NEWS

BUSINESS DAY

N800bn subsidy debts: MOMAN, DAPPMA NDIC says N28.48bn recovered from debtors of DMBs in-liquidation … pays N1.45bn to 34 closed DMBs in 2017 appeal to FG on quick settlement … assure products availability across the country OLUSOLA BELLO

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il marketers, under the aegis of Major Oil Marketers Association of Nigeria (MOMAN) and Depot and Petroleum Products Marketers Association (DAPPMA), have appealed to the Federal Government for prompt payment of over N800 billion outstanding subsidy debts owed to save marketers from total shut down of operations.

The two associations, while appealing at a joint interactive session with journalists weekend in Lagos, spoke on the need for government agencies saddled with the payment to expedite action to save marketers from closing shop, as bank interest on loans kept increasing.

It could be recalled that the Senate Committee on Petroleum (Downstream), in its resolution on October 31, directed the Ministry of Finance and Debt Management Office (DMO) to hold a meeting with the oil marketers and other stakeholders to agree on the grey ar-

eas and report back within one week.

Clement Isong, executive secretary, MOMAN, appealed to government to hasten payment of the outstanding debts on fuel imports subsidy arrears owed marketers as the continued non-payment had severely limited their access to credit and negatively impacted their working capital, leading to their inability to pay their banks and their service providers.

Isong urged the government agencies concerned to address the bureaucratic bottlenecks causing the delay in the payment process, adding that the delay in payment had resulted in the degradation of the downstream subsector of the oil and gas industry, and affected the marketers’ business operations.

MOMAN is a downstream oil and gas group made up of six major marketers - 11 plc (formerly Mobil Oil Nigeria), Conoil plc, OVH Energy Marketing Limited, Forte Oil plc, MRS Oil Nigeria plc, and Total Nigeria plc, which has progressively gained a reputa-

tion in the Nigerian petroleum industry as a key player, he said.

According to Isong, the major challenge the Nigerian downstream petroleum sector is facing is the non-payment of the long outstanding fuel subsidy to oil marketers.

“We appreciate the efforts of the National Assembly and the Federal Executive Council in approving payment, but the non-payment creates a significantly negative impact on the operational efficiency of the downstream sector of the oil industry, thereby placing a severe strain on its efforts to continually invest in infrastructure and raise industry standards. We hope that the debts will be paid in full to the oil marketers as soon as possible,” he said.

The MOMAN scribe said the debt owed its members alone stood at over N130.7 billion as of August 2018, saying once reconciliation had been done and a particular figure agreed as debt, he could not understood why settlements had not been made.

Similarly, Oludemi Ade-

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igeria Deposit Insurance Corporation (NDIC) says it recovered N28.48 billion from debtors of deposit money banks (DMBs) in-liquidation as of December 31, 2017.

Umaru Ibrahim, NDIC’s managing director/CEO, said this in the Corporation’s 2017 annual report, a copy of which was made available to the News Agency of Nigeria on Sunday in Abuja.

Ibrahim said the sum was higher than the N28.16 billion realised in 2016, saying, “To date, a total of N125.13 million was realised from debtors of closed microfinance banks (MFBs) as at December 31, 2017.

“Debt recoveries from primary mortgage banks (PMBs) increased by 22.60 percent from N195.17 million in 2016 to N239.27million in 2017.

“The sum of N21.39 billion was realised from disposal of physical assets of closed DMBs compared to N21.21 billion in 2016.

“The sum of N386.11million was also recovered from the sale of physical assets of MFBs in the period under review as against N361.45 million re-

covered in 2016.

“Also, the value of physical assets recovered from PMBs was N77.87 million in 2017, compared to N75.50 million as at Dec. 31, 2016.”

According to Ibrahim, the NDIC paid N11.50 billion to depositors, creditors, shareholders and other stakeholders of closed financial institutions in the year under review.

The NDIC boss said the corporation’s Deposit Insurance Fund (DIF) stood at N959.55 billion, Special Insured Institutions Fund (SIIF) was N114.39 billion, and its Non-Interest Deposit Insurance Fund (NIDF) stood at N0.693 billion in the period under review.

He said NDIC operating income increased from N122.68 billion in 2016 to N146.47 billion in 2017, and its total operating expenses decreased from N93.60 billion to N63.55 billion in 2017.

He further said the corporation remitted N22.77 billion per audit to the Consolidated Revenue Fund (CRF) of the Federation as of December 31, 2017.

Meanwhile, it paid N1.45 billion to 16, 324 depositors of 34 closed DMBs in 2017, a figure higher than the N0.61

million paid to 13 depositors in 2016.

He said N8.25 billion was paid to 442,661 insured depositors of DMBs in-liquidation as of December 31, 2017, as against N6.80 billion paid to 426,337 depositors as at December 31, 2016.

The figure represents an increase of 21.32 percent over the amount paid in 2016.

“NDIC paid N13. 24 million to 173 insured depositors of MFBs in-liquidation in 2017 compared with N8.49 million paid to 110 depositors in 2016.

“To date, the sum of N2.88 billion has so far been paid as insured deposits to 81,611 depositors of 187 closed MFBs as at December 31, 2017, as against N2.87 billion paid to 81, 438 depositors in 2016.

“Similarly, N15.38 million was paid as insured deposits to 170 depositors of PMBs in 2017 compared to N7.97 million paid to 75 depositors in 2016.

“On the aggregate, N68.40 million was paid to 840 depositors of 46 PMBs in-liquidation as at Dec.311, 2017, as against N53.03 million paid to 670 depositors in 2016,’’ the report quoted Ibrahim as saying.

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Four Nigerian banks technically insolvent with N1.57trn capital requirement – NDIC HOPE MOSES-ASHIKE

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he number of deposit money banks that were technically insolvent rose to four with capital requirement of N1.57 trillion in 2017, as against three lenders with N398.60 billion capital requirements in 2016, according to a report by the Nigeria Deposit Insurance Corporation (NDIC).

All the capital adequacy indicators of the banks witnessed a decline in the period under review. Consequently, the adjusted shareholders’ fund decreased by 33.66 percent to N1.7 trillion in 2017 from N2.6 trillion in the corresponding year of 2016.

Similarly, the Average Capital to Risk-Weighted Assets Ratio (CAR) of banks decreased by 4.55 percentage points from the 14.78 percent in 2016 to 10.23 percent in 2017.

However, the ratio was slightly above the 10 percent threshold for national/ regional banks but far below the 15 percent regulatory benchmark for international banks.

The economic downtown, the challenges faced by the oil sector, the depreciated domestic currency, among others, led to increasing provisions for loan losses, which combined with operating losses to erode the capital base of some banks.

The banking sector total loans to the domestic economy stood at N15.91 trillion in 2017, which was a 2.33 percentage line from the N16.29 trillion recorded in 2016. The industry NonPerforming Loans (NPLs) increased by 13.46 percent from N2.08 trillion in 2016 to N2.36 trillion in 2017.

The banking industry was exposed to high credit risk as the asset quality, which is depicted by the NPLs to total

loan depicted by the NPLs to Total Loans Ratio, further deteriorated from 12.80 percent in 2016 to 14.84 percent in 2017. That compared unfavourably with the maximum prudential threshold of 5 percent. The NPLs to Shareholders’ Fund Ratio significantly increased from 43.84 percent in 2016 to 69.21 percent in 2017.

The report revealed that the banks earnings performance indicators showed a declining trend of profitability. Profit before tax (PBT) decreased by 65.90 percent from N440 billion in 2016 to N150 billion in 2017. Operating expenses increased by 15.79 percent from N380 billion in 2016 to N440 billion in 2017.

The rise in operating cost could be attributed to the high transportation cost, hike in fuel and its scarcity as well as exchange rate pass-through high imported cost of inputs.

NCC foresees promising future for VAS operations in Nigeria JUMOKE AKIYODE-LAWANSON

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he Nigerian Communications Commission (NCC) says a great future awaits Channel Value Added Service (VAS) operations in Nigeria, and has pledged to support promising players, given the recent announcement by another major global investor, South Africa-based Ethos, which recently invested $50 million in Channel VAS, an originally Nigerian company.

Olabiyi Durojaiye, chairman, NCC, made the disclosure during a meeting at the ongoing AfricaCom convention in Cape Town, South Africa, as he congratulated Bassim Haider, founder/ CEO of Channel VAS for the company’s achievement.

Durojaiye commended the continuous growth of Channel VAS and its achievements in recent times.

Channel VAS is a marketleading provider of mobile

financial services, big data analytics and airtime credit services to mobile subscribers in Africa, the Middle East, Asia, Latin America and Europe, through internationally patented proprietary technology.

“It gives me great pleasure to watch the continuous growth of Channel VAS, a company that has originated out of Nigeria.

“The achievements, including a continuously growing global footprint, patenting of innovative intellectual properties internationally and drawing the interest of large investment groups worldwide, are truly commendable. NCC and I personally will continue our unwavering support to companies like Channel VAS to grow even more and honour their origins,” Durojaiye said.

Haider thanked Durojaiye for the commendation and pledge of support, saying, “Channel VAS has been at the forefront of the FinTech revolution through mobile finance from its very

beginning, so working together with visionary investors such as Ethos will help us continue to expand our already massive geographical footprint at an even faster pace, bringing financial inclusion to more unbanked and underserved people globally through our innovative services.”

Channel VAS is the premium FinTech and data analytics provider, offering mobile financial services, micro and nano cash loans, handset loans and airtime/ data loans through big data and proprietary analytics tools. It is currently operating in more than 30 countries globally, working together with over 27 mobile network operators (MNOs).

The company says its mission is to provide the best of breed technology and means to improve people’s lives, delivering financial inclusion and affordable loans by utilising big data, credit analysis and a unique human-centric customer experience.

International Drinks Festival: Experts to tackle role of regulation, knowledge gap

Peter Obi (l), vice presidential candidate of the PDP, being received by the head of European Union (EU) delegation to Nigeria and ECOWAS, Ketil Karlsen, during his visit to the EU office in Abuja.

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FRANK ELEANYA

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Minimum wage: Labour insists on N30,000 JOSHUA BASSEY

… says not frightened by sack threat

rganise labour at the weekend insisted there was no going back on the N30,000 new minimum wage agreed by the tripartite committee, stressing that the sack threat by state governors would not deter it from the legitimate wage increase demand.

According to the Trade Union Congress of Nigeria (TUC) and the United Labour Congress (ULC), any amount that rubbishes what the legitimate committee set up by the Federal Government to negotiate the national minimum wage will not be accepted.

Recall that the Nigeria Governor’s Forum (NGF)

had said states might downsize their workforce to be able to pay the N30,000 proposed to the Presidency.

Most states of the federation have been unable to pay the current N18,000 minimum wage, which had been due for a review since February 2016.

But Musa Lawal, secretary general of TUC, said in Lagos on Friday that labour would not accept any sum less than what was agreed by the committee, saying, “It is the tripartite committee decision for workers to be paid N30,000 as minimum wage and not individual. There is no going back by labour.”

According to Lawal, the governors’ threat to sack

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Monday 19 November 2018

workers runs contrary to the agreement reached by the tripartite committee.

He said labour would not hesitate to return to Abuja to further dialogue as a way forward to the issue.

Chris Onyeka, deputy general secretary, ULC, said the governors were bound to pay the N30,000 minimum wage because they were represented in the committee.

Onyeka said the delay in submitting the committee’s report for implementation of the new minimum wage was a cover up, saying, “The delay is a cover up, except President Muhammadu Buhari wants to say that the tripartite committee report submitted to him has become

irrelevant.

“For now, the meeting between the President and the governors and threat by the later to sack workers are delay tactics to implement the wage. We will not take it.” He urged the President to craft a bill on the new wage and forward to the National Assembly to avoid labour taking over such decision.

President Buhari had on November 5, received the recomm endation of the tripartite committee he had set up in November 2017 to propose a new minimum wage for workers.

The organise labour had demanded N65,500 in a memoranda submitted to the National Minimum Wage Tripartite Negotiation Committee.

n a bid to change perception and deepen consumers’ appreciation of the drinks’ market in Nigeria, experts at the upcoming International Drinks Festival will address the role of regulation, high cost of operating environment and high import dependency stakeholders face.

The general market sentiments often pit regulators against businesses in the drinks segment instead of partners.

While regulators see owners of companies in the space as the bypassing rules, the players on their part believe they are being witch-hunted with rigorous procedures. At the basics, both really want to ensure that high standards are maintained and quality of beverages is not detrimental to consumers’ health.

Organisers of the festival, the Balmoral Group, a 360-event company, disclosed in a statement that it had concluded plans to secure the full participation of regulatory and management agencies who would educate and enlighten attendees on core areas of standardisations and regulations in the Nigeria drinks industry.

The expected agen-

cies include Standards Organisation of Nigeria, Manufacturers Association of Nigeria, National Agency for Food and Drugs Administration and Control, Federal Inland Revenue Service, Lagos Inland Revenue Services, and Nigerian Customs Service.

The first day of the festival will feature the summit, which will focus on government and brand education. Topics to be discussed include Government Regulations in Promoting the Drinks Industry and Brand Education and its Impact on Society. Regulators will anchor the sessions.

On the second day, participants will engage in sessions on taxation and manufacturing with topics like ‘Understanding Taxation in the Drinks Business and Sourcing Raw Materials in the Nigerian Landscape.’

“Knowledge is power and we need to be able to distinguish between taxes, levies and fines,” a tax expert said of the first edition of the festival.

Other sessions at the festival include Branding and Marketing, which will feature topics such as Drinks Industry as a major contributor to the Nigerian Lifestyle and Branding African Drinks for the World as focal points.

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10 banks lost N10.5bn to fraud cases... managers in oneaccounted year for- NDIC 25.9%

HOPE MOSES-ASHIKE

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en top deposit money banks lost a total of N10.5 billion to fraud and forgery incidences in 2017, according to the annual report of the Nigeria Deposit Insurance Corporation (NDIC).

The loss represents 38.05 percent compared to N7.6 billion lost in 2016. This implies that these 10 out of 24 banks accounted for 87.63 percent share of reported fraud cases in the year under review, while the remaining lenders accounted for 12.37 percent share.

In 2015, top 10 banks accounted for 90.23 percent share of reported fraud cases with a total loss of N16.26 billion, showing a 35.26 percent decline in fraud cased when compared with the 2017 figures.

“The number of fraud

cases and the amount involved remained historically high, while efforts were being made to stem the tide through adequate supervisory foresight and interventions by the authorities, as well as initiatives by the respective bank management to broaden the depth of internal control processes,” NDIC said in the report.

However, an analysis of the most used instruments by the fraudsters were mainly through cards, cash and cheques.

The frequency and actual loss recorded in ATM/ card related channels were 16,397 and N0.798 billion. This was higher than N0.504 billion and N0.476 billion in 2015 and 2016, with respective frequencies of 8,039 and 11,244 cases.

The ATM/card related channels were followed by

web-based frauds (internet banking) and fraudulent transfers/withdrawal of deposits with 7,869 and 936 attempts, respectively.

The actual loss recorded through these channels stood at N0.709 billion and N0.318 billion in 2017, representing 30 percent and 13 percent of total losses during the period under review.

The number of fraud cases perpetrated by banks staff in 2017 increased by 38.5 percent from 231 cases reported in 2016, but declined by 31.2 percent and 24.7 percent from 425 and 465 cases recorded in 2014 and 2015, respectively.

The report revealed that the cadre of bank staff engaged in fraudulent practices were temporal staff, representing the largest proportion, which comprised 132 out of 320 staff involved.

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Reform: Edo tours forest reserves, decries degradation, partners Proforest on sustainability

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do State government has decried the conversion of forest covers in the state to farmlands, noting that government has taken inventory of its forest reserves with a view to design a roadmap that will ensure sustainability of the existing forest resources.

Special adviser to Governor Godwin Obaseki on Agriculture, Forestry and Food Security Programme, Joe Okojie, said this after a two-day assessment of the forest reserves alongside experts from Germany and Proforest Africa.

Okojie expressed regret that much of the forest covers had been degraded and turned into farmlands, adding that it was worthwhile to assess forest covers still standing in the state, as government intensified plans to set up a Forestry Commission.

“The governor wants to set up a Forestry Commis-

sion that will be responsible for managing our forest. So, we decided to take a physical inventory of what we have left and design a roadmap for their efficient management. Climate change is one of the greatest threats to mankind and preserving our forests can help stabilise the climatic effects. The forest regulates the ecosystem and promotes biodiversity. That is why we are doing this,” he said.

Some of the forest reserves visited were Iguobazuwa Forest Reserve, Okomu Forest Reserve and the National Park in Ovia South West Local Government Area as well as Odighi Forest Reserve in Ovia North East Local Government Area of the state.

He said actions would be taken to regenerate the reserves as well as decide on the fate of the farmers, who have converted parts of the forest to cocoa and cassava farms.

According to him, “It has been quite an interesting experience seeing the different forest reserves in some parts of the state.

There are still heavy forest trees in some parts of Okomu reserve, but the forest covers in some parts of Iguobazuwa and Odighi are badly degraded.

“What we are looking at is what we can do with the portions that have been deforested. We have brought in experts to see if we can reforest some parts of the degraded forests.”

Africa Regional Director, Proforest, Mr. Abraham Baffoe, said that about 35 to 40 per cent of the forest covers are still left in the forest reserves assessed, and could still be preserved and maintained.

He said the state government would need to come up with implementable laws to protect the existing forest and adopt reforestation strategy.

Nine Ondo Assembly members pass amended 2018 appropriation bill YOMI AYELESO, Akure

N L-R: Abimbola Afolabi- Ajayi, company secretary, Investment One; Tadeni Balogun of United Capital Trusttes; Adebayo Adejumo, fund manager; Tope Omojokun, MD, Investment One Funds Management; Abimbola Ibrahim of United Capital Trustees, and Yewande Kukoyi of Stanbic IBTC, shortly after the annual general meeting of Investment One Funds Management in Lagos. Pic by Pius Okeosisi

PEFON charges professionals to embrace politics for nation building MODESTUS ANAESORONYE

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group, Professional Excellence Foundation of Nigeria (PEFON), has charged professionals across the different sectors of the economy to embrace politics to contribute their own quota to nation building.

The group believes that though it is not a political group, leaving business of politics to charlatans and mediocre will continue to endanger national growth and development.

“As professionals, we must be involved in nation building because we have a role to play in instituting good value system in all areas of our nation, otherwise we would have scarified the future of our dear

country,” according to the group.

Wale Oguntade, who represented Julius Adelusi, chairman, Board of Trustees of PEFON, made the remarks during the induction and investiture of new members in Lagos.

He said professionals should not sit and watch from the side and expect change to take place, but should play actively to bring the needed change.

Oladipupo Bailey, founder, PEFON, said professionals must come together to reverse the situation of things in our country, as “we will through this foundation help build strong capacity to influence change economic growth and development.”

The foundation is selective in headhunt of membership because it must ensure excellence at all times, he said, calling on the new inductees to help build the required energy to positively influence the society.

He said the objectives of PEFON were to identify Nigerian professionals at home and abroad who might wish to be part of the foundation, and to recognise those among them who had excelled in their chosen professions.

The foundation has the objective to recognise individuals, who though do not possess professional qualifications, have established conglomerates that have employed a large number of professionals, he said.

ine members of the Ondo State House of Assembly have passed the 2018 Appropriation Amendment Act into law.

Speaker of the House, David Oleyelogun, said the amendment of the 2018 appropriation law became imperative to allow the state government execute some projects and also implement new policies beneficial to the people.

He said the last tranche of the Paris Club refund released to the state would be captured in the amendment for the payment of salary arrears of workers in the state.

The speaker said the House took the decision after considering the recommendations of the House Committee on Finance and Appropriation.

He said the House resolved that approval be given to the pooling of the sum of N10Billion from capital expenditure component of the 2018 budget and the reallocation of the funds without any alteration to the budget size.

Also, he said the House approved the pooling of N4.2 billion from recurrent expenditure component of the 2018 budget and the re-allocation of the funds without any alteration to the budget size.

Agbaje promises to abolish tolling on Lekki-Epe road if elected JOSHUA BASSEY

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overnorship candidate of the People’s Democratic Party (PDP) in Lagos State, Jimi Agbaje, says one of his first steps in government if elected in 2019, will be the abolition of tolling on the Lekki-Epe Expressway.

Agbaje stated this via his twitter handle on Friday. He based his decision on the fact that the tolling was on an existing road, but said he would retain the Lekki-Ikoyi Link Bridge tolling because the concessionaire started it from the scratch.

Recall that hundreds of residents of Lagos and motorists in February took to the streets to protest hikes

at the Lekki-Epe tollgate, describing it as anti-masses policy.

Lagos State government, through the Lekki Concession Company (LCC) on February 1, 2018, increased the toll tariffs, forcing commercial transport buses and motorcycles plying the axis to pay N100 as against N80 paid previously. Those with etag will pay N90.

Saloon cars and tricycles now pay N200 from N120, but N180 with etag; SUVs, mini-vans, light pick-up trucks pay N400 and N360 with e-tag; noncommercial buses with maximum capacity of 26 seats, N1000 and N900 with e-tag, and motorcycles with 200cc capacity and above pay N200 and

N180 with e-tag.

Agbaje said Lagos was in need of urgent change and not continuity.

“Most of the problems afflicting the state remain the product of vested interest,” saying, the impact of the ruling All Progressives Congress (APC) had not been felt by the residents, as they (residents) were cut off from governance.

According to the PDP candidate, the residents have not been positively touched in terms of healthcare delivery and education.

“Despite the promises of the state government on free health services, Lagosians paid heavily at government hospitals,” he said.

A10 BUSINESS DAY NEWS Enforcement on NB not illegal - NLRC ...reopens business premises JOSHUA BASSEY

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he National Lottery Regulatory Commission (NLRC) at the weekend vowed to enforce the provisions of the Act setting up the organisation, insisting that its recent clampdown on Nigerian Breweries (NB) plc was done within the ambit of the law.

The commission was reacting to an earlier statement by the Nigeria Employers’ Consultative Association (NECA), which had described the shutting down of business of NB nationwide as illegal since there was a pending case in court involving the regulator and the company.

According to the commission in a statement signed by Magnus Ekechukwu, head, public affairs, the NLRC enabling Act 2005 (as amended) and the National Lottery Regulation, 2007, the interest of the Lottery Commission is to ensure that organisations who wish to carry out lottery operations comply with the provisions of the Lottery Act and not carry out such lotteries without due regards to the law.

“In a bid to discharge its mandate as empowered by the National Lottery Act, 2005 (as amended) and the

National Lottery Regulation, 2007, the director-general, NLRC, Lanre Gbajabiamila, said that the commission would continue the clamp down on all illegal lottery operators anywhere they be found within the shores of Nigeria.

The commission alleged that the Nigerian Breweries conducted promotional lotteries valued at about N1.3 billion but failed to regularise such promo lotteries as required by law, thereby denying the Federal Government of over N326 million revenue.

“The NB continued to rebuff attempts by the commission to get them to comply. It is our duty to enforce to ensure the Federal Government is not short-changed in the transactions. The commission acted within its mandate. On the claim by NECA, it is public record that there is no pending action against the commission.

“The case filed in 2012 –Suit No: FHC/ABJ/CS/306/2012 was dismissed by the court.

Therefore, the claims by NECA that NLRC showed disregard to the rule of law in the discharge of its lawful duty, is not only mischievous, but an attempt to distort the facts in order to deceive the general public,” he said.

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NSACC holds breakfast forum in Lagos Workers uncontrolled exposure to hazardous

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he Nigeria-South Africa Chamber of Commerce (NSACC) will hold its November breakfast forum scheduled for November 29, at the Iris hall, Eko Hotel and Suites in Victoria Island, Lagos, at 7.30am prompt. Sales director of Vocadom Business Nigeria, Zakari Usman, will be the guest speaker for this month’s edition.

Usman, a seasoned sales director, will share insights on the topical issue: “The Future Belongs to the Intelligent Enterprise” given the dynamics of navigating one’s business in our ever evolving society.

Executive secretary, Iyke Ejimofor, states that the event is primarily for captain of industries, business owners and top-level executives as well as other interested parties. He says the chairman of the Chamber, Foluso Phillips and other executive directors are expected to attend the forum, noting that as in previous times, this edition will be educative and also insightful.

Ejimofor, on behalf of the Chamber, encourages everyone who wants to grow and strengthen his or her business or gain insights on how to thrive glob-

ally to make effort to attend, expressing that the meeting is a “great door opener and participants will benefit in many ways, including: finding personal contacts for future follow up and initiate new vendor relationships, and so on.

Since the inauguration of the NSACC in 2000, the bilateral relation between both countries has grown tremendously. The Chamber has been a veritable economic tool responsible for the increment in trade between Nigeria and South Africa.

Through the Chamber activities, many South African firms have indicated interest in joint partnership with Nigerian firms and other forms of economic co-operations with several business establishments in Nigeria.

South African firms or firms with South African participation are active in Nigerian business sectors such as telecommunications, broadcasting, petroleum, banking, hospitality and to mention but a few.

Membership comprises both Nigerian and South African owned firms and a combination of those with ownership by both Nigerian and South African investors.

workplace not acceptable - Ngige SEYI JOHN SALAU

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s the crises generated by the N30,000 new national minimum wage continue to linger between government and organised labour, Chris Ngige, minister of labour and employment, has reiterated the Federal Government’s commitment towards ensuring a safer working environment for Nigerian workers, saying his ministry will no longer accept excuses for workplace related hazards.

“Let me reiterate that the uncontrolled exposure of workers to hazardous work is totally unacceptable and calls for concerted effort and collaboration among all the relevant stakeholders,” Ngige said.

The minister stated this at the Society of Environmental Health Physicians of Nigeria (SOEHPON) annual conference and AGM, themed “Providing Occupational Health Best Practices in Nigeria” held recently in Lagos.

Ngige, who was represented by Adedamola Dada, medical director, Federal Medical Centre (FMC), Ebute-Meta, Lagos, said the theme of the conference was opt and timely,

considering that Nigeria was currently pursuing a national agenda of inclusive socioeconomic growth and development.

According to Ngige, the country needs collaboration from all stakeholders to ensure safety at workplace. “Combined efforts and resources of relevant stakeholders for prevention of workplace accidents, diseases, injuries or death, is the right way to go, for improvement of occupational safety and health standards that will enable businesses to thrive,” he said.

Okon Akiba, national president of SOEHPON, said, “A healthy and safe working environment forms the basis for a more productive workforce, which in turn generates sustainable development and successful businesses.”

According to Akiba, the conference allows the society to present paper on occupational issues as it affects the work force in Nigeria. “This year’s conference marks the 40th anniversary as a society; as such it is more of a landmark conference. The standard of occupational health in Nigeria is falling, it is not feasible and the awareness is very low,” he said.

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A12 BUSINESS DAY NEWS GreenHouse hosts lab demo day under tech accelerator programme

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n November 17, at 4pm, GreenHouse Lab, Nigeria’s first female focused tech accelerator and the only “Powered by Google Launchpad” accelerator in Africa, concluded its first accelerator programme by hosting “Demochella” the GreenHouse Lab Demo day.

At the event, the five participating companies presented their businesses to investors, tech executives and other industry leaders.

GreenHouse Lab, launched August 14, 2018, is a three-month accelerator programme focused solely on early-stage, women-led technology start-ups in subSaharan Africa with tech/tech enabled products that are scalable in African markets.

The programme is run

by GreenHouse Capital, an investment holding company within Venture Garden Group (VGG) – a leading provider of innovative, datadriven, end-to-end technology platforms to solve real socio-economic challenges in impact sectors critical to sustainable economic development.

As one of Africa’s leading technology focused venture capital firms, GreenHouse Capital uses its unique positioning to offer expertise, a strong investor and mentor network and resources to grow strong companies. Over the past three years, GreenHouse has invested in 15 companies and combined, they’ve raised $53 million in capital.

The programme featured an intensive curriculum delivered in-person by various industry experts and leveraged existing entrepreneurship

education frameworks and focused on a variety of key topics including, product development, market segmentation, human capital, financial strategy, technical due diligence, marketing and more.

Other channels of engagement included weekly guest lectures and office hours with the Entrepreneurs in Residence (EIRs).

The programme’s five exceptional companies will be pitching at the GreenHouse Lab Demo Day, they include: Bankly: A voucher based payment solution for the unbanked, that enables people without bank accounts or debit cards make payments easily at Point of Sales Merchant locations and Online channels using USSD and existing telco distribution network.

AMPZ: An online media platform that connects the African sports ecosystem from grassroots using mobile and web technology.

AMPZ mobile solution aims to bring Africa’s 928 million sports enthusiasts together connecting them with like minds and African grassroots sports talents to opportunities. AMPZ engages over 6,000 enthusiasts on its social media channels and plans to launch across 10 countries in Africa with focus on the 7 most viable sports.

BitMama: A fintech company that allows people to make payments and trade by converting their local currency to cryptocurrency.

BitMama provides an exchange platform for traders to exchange their Bitcoin and Api for merchants to accept crypto payments while getting the local currency value in their bank accounts.

Ibadan traders seek more FG’s financial inclusion funds KELECHI EWUZIE

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raders at the Bodija and Oje markets at the ancient city of Ibadan, Oyo State, have urged the Federal Government to increase the disbursement of funds for the ongoing financial inclusion initiative.

The call is coming 32 days after about 27,000 traders in Gbagi International Market Ibadan, benefited from the Federal Government’s TraderMoni to grow their socioeconomic activities across Nigeria.

Monsurat Ajadi, a pepper seller in Bodija Market, said the initiative was a laudable development, adding that her family had been praying that she was chosen among the latest beneficiaries.

Another beneficiary, Romoke Aweni said the amount, though small, but was capable of changing the fortunes of petty traders, just as she promised to make judicious use of it to better her trade.

Vice President Yemi Osinbajo, while speaking at Oje Market, said the government remained committed to alleviate sufferings of the poor masses through the TraderMoni being implemented under the Government Enterprise and Empowerment Programme (GEEP).

Osinbajo said the government was sincere about empowering two million traders for the scheme, assuring that more traders would be captured nationwide.

He stressed that the policy of the Federal Government was to support businesses through the scheme, not just big businesses but particularly small, mediumsized and micro businesses.

He appealed to those yet to benefit to exercise patience, just as he charged those who had benefited so far to use it judiciously.

The scheme is being managed and financed by the Bank of Industry on behalf of the Federal Government.

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Review direction of debts to stimulate economic growth, experts urge FG

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ome economists at the weekend called on the Federal Government to review the direction of the country’s debts in order to spur productivity and economic growth.

The experts expressed their views at a forum on “Nigeria’s Debt Sustainability: Issues and Way forward’’ organised by the Lagos Chamber of Commerce and Industry (LCCI).

Bismark Rewane, managing director, Financial Derivatives Company, said the country’s debt profile would not be a concern if its Gross Domestic Product (GDP) was growing at about 8 to 10 percent.

He said existing data showed that the country’s debt was growing at a faster rate than GDP, growing at a time that productivity level had declined resulting to less prosperity for the citizens. The economist said borrowing to spend and borrowing to in-

vest were two different things, and that funding fiscal debt amounted to the government borrowing to spend.

According to Rewane, Nigeria floated its first Eurobond of $1 billion in 1978, and used it to complete 25 sector specific projects, among which was Apapa ports, Inner Marina road and aircraft purchase.

“Tell me what roads would be completed or refinery that would be functional by the time the various bonds floated by government matures; lending should be sector specific and impactful,” he said.

He stressed that government should reset its debt profile, adding that the country was moving from debt problem to debt crisis and if left unchecked, it would result in a debt trap.

He added that elongated debt could translate to intergenerational debt.

“The solution is to increase the injection at the investment level, when you do that, it grows employment,

and to grow investment means that you increase the level of confidence of domestic and foreign investors.

“Also, government’s policies should be well aligned, create equitable distribution of wealth and equal opportunities for citizens, strengthen tax institutions to increase revenue collections and reduce leakages,” he said.

In the same vein, Andrew Nevin, chief economist, Pricewaterhouse Coopers (PwC), said the country had declined in per capita GDP since 2015 to 2017, and this was likely to decline in 2019 also, adding that the IMF also predicted a decline in 2020 to 2022. “This indicates that we are getting poorer each year,” Nevin said.

He said government should eliminate fuel subsidy and dual foreign exchange rate, improve on the country’s ease of doing business, and also tap into the potential of the real estate sector.

Ayo Salami, partner,

KPMG Nigeria, said there had been consistent shortfall in government’s projected revenue in the last few years, and that the country’s debt would surpass its revenue in the next five years, if the trend was left unchecked.

Salami urged the Federal Government to review some of its abandoned and ongoing projects, saying the Ajaokuta Steel plant and the refineries were not generating revenue, but that the government kept pumping funds into them annually.

Salami, therefore, called for a review in cost of governance, block leakages in Customs revenues and check inefficiencies at the ports, which were contributing to cost of production and affecting economic growth.

Earlier, Babatunde Ruwase, president of LCCI, said the chamber was concerned about the rapidly growing public debt and its implications for the country‘s fiscal sustainability.

Monday 19 November 2018

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Atiku to Buhari: Only plans, not promises, can get Nigeria working again INNOCENT ODOH, Abuja

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ormer Vice President and the presidential candidate of the People’s Democratic Party (PDP), Atiku Abubakar, has criticised the launch of the campaign initiative of President Muhammadu Buhari and the ruling All Progressives Congress (APC) entitled “next level,” stressing that it is full of promises and vague on policy.

Atiku, in a statement issued on Sunday by his campaign organisation, said, “Our attention has been drawn to the launch of the so-called ‘next level’ campaign initiated today by the Buhari campaign and we congratulate them even as we make bold to ask one or two questions as part of our efforts to run an issuebased campaign.

“Reading through the presentation, we note that it is very vague on policy and very big on promises. Promises are cheap. Anyone can make promises and indeed, President Muhammadu Buhari and the APC did make quite a number of promises, which they either denied or did not fulfil, such as the promise to

create 3 million jobs per annum and to equalise the value of the naira with the dollar.

“However, policies are the plans and roadmaps that will be used to achieve those promises. Promises made without policies are like a house without a foundation, they will fall. And we have seen proof of that in Nigeria in the last three years.”

The former Vice President said further that without a concrete policy, these ‘next level’ promises were nothing more than next level propaganda, even as he counselled the Buhari campaign organisation that the time for propaganda had gone and Nigerians were now interested in proper agenda.

“In fact, the feedback we have received from Nigerians is one of alarm. Over the last three and a half years of the Buhari administration, Nigeria was officially named as the world headquarters for extreme poverty. Nigerians are asking if this administration is planning ‘next level’ poverty for them?

“Under this government, 11 million Nigerians have lost their jobs and the administration is so panicky that it has refused to fund the National

Bureau of Statistics to release the latest unemployment numbers. Nigerians are asking if this administration is planning ‘next level’ unemployment for them?

“Under Buhari, the value of the naira has been so devalued that Bloomberg rated the naira as the worst performing currency on earth. The nation wants to know if this government plans ‘next level’ devaluation of the naira for them?”

Atiku asked.

The statement said in 2018, Transparency International announced that Nigeria made her worst ever retrogression in the Corruption Perception Index moving 12 steps backwards from 136 under the PDP to 144 under Buhari. Atiku again said that Nigerians were asking if this administration was planning ‘next level’ corruption for them?

“The so-called ‘next level’ launch was an anti-climax in that it just exposed the fact that all that the Buhari government is promising Nigerians is more of the same. If the state of the average Nigerian has not improved in the last three and a half years, more of the same is obviously not what they need.

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BUSINESS DAY

Congested Lagos ports may ease as preferred bidder emerges for Ibom Deep Seaport ISAAC ANYAOGU

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he heavily congested Lagos ports may soon see relief as a consortium of French and Chinese companies has emerged the preferred bidder for the Ibom Deep Seaport Project (IDSP) following a rigorous evaluation process, officials of government of Akwa Ibom State say.

In a release signed by Mfon Ekong Usoro, made available to BusinessDay, the state government says the selection followed a rigorous evaluation process conducted by the Evaluation Com-

mittee convened by the IDSP Ministerial Project Development and Steering Committee (MPDSC) on competing bids received in response to the IDSP Request for Proposal (RFP).

Bolloré Africa Logistics – PowerChina International Group Limited Consortium emerges preferred bidder, while China Harbour Engineering Company Limited is reserved bidder.

“On behalf of the Akwa Ibom State Government (AKSG), I thank the Federal Ministry of Transportation (FMOT), Nigerian Port Authority (NPA) and the Infrastructure Concession

Regulatory Commission (ICRC) for giving full and unstinting support to the AKSG throughout the IDSP PPP procurement process, including the recently concluded RFP bids opening and evaluation milestones which saw to the selection of the Preferred and Reserved Bidders,” Emmanuel Ekuwem, secretary to the state government, who spoke on behalf of Udom Emmanuel, governor of Akwa Ibom State, said.

Ekuwem further said, “The AKSG is unwavering in its determination and will work in tandem with the FMOT and NPA to realize the IDSP.

Tunji Olaopa delivers Lead City University inaugural lecture

T

he 10th inaugural lecture of the Lead City University, Ibadan, the Oyo State capital, is scheduled to be delivered

by Professor Tunji Olaopa on behalf of the Faculty of Social and Management Sciences, Lead City University, Ibadan, tomorrow.

The lecture titled ‘The Big Bad Bureaucracy? Reinventing the Bureaucracy as a new Public Service’ is an intellectual and critical diagnosis of the Nigerian Public Service including the administrative maladies and conditions,

that have stifled its optimal functionality and relevance in the socio-political set up of the nation.

The lecture, which represents a statement of Olaopa’s research and practical sojourn as a scholar-practitioner for close on 30 years, shines the lights on the strategic institution of the Civil Service highlights its failure to live up to its potentials and deliver, a development that mirrors the failing of the Nigerian state, which is still crawling in spite of its vast human and material re-

sources.

Olaopa, who is also the executive vice-chairman of the Ibadan School of Government and Public Policy (ISGPP), retired as a Federal Permanent Secretary and has written and researched extensively on civil service reforms, including the problems of implementation and management of reform efforts. He believes that the critical issue of full execution is strategically important to reform success instead of the regularity of the reform agenda.

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BUSINESS DAY

Monday 19 November 2018

Monday 19 November 2018

BUSINESS DAY

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LegalPerspectives

With

Monday 19 November 2018

Odunayo Oyasiji

Case Review

C. N. Okpala & Sons Limited V. Nigerian Breweries Plc (2017) Lpelr-Sc.36/2007

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hat to note: This was a matter that was decided at the Supreme Court of Nigeria in 2007. It bothers on estoppel by conduct in contractual matters. It provides a perfect example of when the principle of estoppel will be applied to deny a plaintiff of getting remedies or compensation in a situation where his conduct does not align with his claims.

Facts The plaintiff/appellant is a customer of the defendant/ respondent. It is the claim of the plaintiff (while giving oral evidence in court) that the respondent after receiving a demand letter from their solicitor delivered 1,272 cartons of Gulder beer and 1,050 cartons of Star beer. Thereby leaving a balance of 822 cartons of Gulder beer and 350 cartons of Star beer. He claimed that the outstanding balance is still yet to be delivered. However, in the pleadings filed before the court the plaintiff is claiming for 2100 cartons of Gulder beer and 1400 cartons of Star beer without deducting and stating the quantity that have been supplied.

The defendant on the other hand claimed that it notified all its customers of an increase in the prices of its products. It further pointed out that the notice indicated that all orders made up till October 27, 1993 will be supplied using the old price while subsequent orders will be supplied using the new price. The defendant stated that while trying to the plaintiff’s order it was discovered that the date on the plaintiff’s invoice was altered to 27th October instead of 28th of October. The reason for the alteration was to enable them take benefit of being supplied under the old price. The defendant claimed that the plaintiff had been supplied under the new price and they have accepted same. Therefore, the defendant does not owe the plaintiff any carton of beer.

The plaintiff instituted an action at the High Court of Edo State against the defendant.

The High Court gave judgement in favour of the plaintiff.

The defendant being dissatisfied with the judgement appealed to the Court of Appeal.

The Court of Appeal set aside the judgement of the lower court and ruled in favour of

the defendant. On this basis, the plaintiff appealed to the Supreme Court.

Issues for determination The appellant’s counsel formulated two issues for determination. The issues are“1. Whether from the totality of pleadings and evidence at the trial, the Court below was right in its holding that the trial Court made a case for the parties different from what they pleaded and equated abandonment of material facts pleaded and evidence at variance with such pleadings to mere technicality instead of simply holding that the appellant did not prove his case.

2. Whether the Court below was correct to hold that the trial Court did not at any time consider the case put forward by the respondent and thereby occasioned a miscarriage of justice.”

The respondent counsel adopted the issues formulated by the appellants. The court determined the matter based on the two issues quoted above.

Argument/ Submissions On the first issue, the learned counsel to the appellant argued that it was wrong for the Court of Appeal to set aside the judgement of the High Court. This is because all that the appellant did was to prove a lesser quantity of products that what was claimed and the court can do justice by granting a lesser relief than what the claimant claimed.

The counsel to the respondent on the other hand submitted that the Court of Ap-

peal was right by reversing the judgement of the lower court. His reason was that the evidence tendered before the court was at variance with the pleadings. He stated that the appellant was claiming immediate supply of 1400 cartons of Star beer and 2100 cartons of Gulder beer and not the difference between what had been supplied to it and what it claimed it is entitled to.

He further noted that despite the evidence given at the trial the claimant still refused to amend its pleadings to align with the evidence.

On the second issue, the appellant’s counsel contended that the trial court considered the respondent’s defence before arriving at its decision.

He referred to some portions of the judgement and urged the Supreme Court to hold that the trial court gave adequate consideration to the defence put forward by the respondent.

The respondent’s counsel submitted to the court that the judgement of the trial court was solely based on the evidence and case presented by the plaintiff. He claimed that the court failed to consider other exhibits presented before it which the appellant signed indicating that it had collected the product ordered for at the new price and that the defendant does not owe it anything. The appellant admitted signing the documents.

He submitted that the failure of the trial court to consider the evidences and defence of the defendant makes the judgement to amount to a miscarriage of justice.

Judgement The Supreme Court held that “the Appellant, having been informed of his fraudulent alteration of the invoice Exhibit CNO.1 (in order to beat the new price regime) and told that he would only be supplied on the old price regime which suggestion he accepted and subsequently took supplies on the basis of the old price regime, was stopped from insisting to the contrary of this his conduct. Section 150 of the Evidence Act 1990 provided that when a person has, by his act or omission, intentionally caused another person to believe a thing to be true and to act upon it, neither such person nor his representative in interest shall be allowed, in any proceedings between himself and such person or such person’s representative in interest, to deny the truth of that thing. This Court applying this estoppel by conduct in JOE IGA & ORS V. EZEKIEL AMAKIRI & ORS (1976) 11 SC 1 at 11 - 13 held inter alia: if a man whatever his real meaning may be, so conducts himself that a reasonable man would take his conduct to mean a certain representation of facts and that it was a true representation, and that the latter was intended to act upon it, and he with such belief, does act on in that way to his damage, the first is estopped from denying the facts as represented. See also ROWRAFIC & FAR EASTERN LTD v. JOHN CHIEF AVBENEKE & ORS (1958) WRNLR 92.

The Court of Appeal was right in reversing the judgment of the trial Court that

was clearly perverse. “The Supreme Court further held that “the entire conduct of the Appellant smacks of attempt to obtain by false pretences. That is what makes the filing of the suit not only frivolous but also very dubious. The Respondent was able to establish that the Appellant’s Exhibit CNO.1, a serialized invoice, was unilaterally altered to bear the date of 27th October, 1993. The invoices immediately after Exhibit CNO.1, that is Exhibit CNO.9 and CNO.10, bear the date: 28th October, 1993. The evidence of the defence witness, to the effect that when the Appellant’s alter ego, the PW.1, came in person to the office of the Respondent he was informed of the alteration and was told that his supply would be on the basis of the new price as per Exhibit CNO.6, was not challenged nor discredited. The Appellant also admitted signing Exhibits CNO.7 & CNO.8 as evidence that he took delivery of the goods. And this was clearly in furtherance of his agreement w ith the Respondent. The Respondent had raised in paragraph 13 of the Statement of Defence the defence of estoppel by conduct, which defence availed him under Section 150 of the Evidence Act, 1990. The Appellant, as the plaintiff, failed to join issues on this defence.

By the rules of pleading, the Appellant is deemed to have admitted this defence. At the trial the Appellant’s witness also did not deny that he was informed of the alteration; and that he was going to be supplied on the basis of the new prices and further that he had agreed to be so supplied. The trial Court completely failed to advert to and consider the defence put forward by the Respondent. By this, the trial Court had not been fair to the Respondent in its judgment.

This also makes the decision perverse. “ Conclusion You cannot eat your cake and have it. The law will not favour you if you have conducted yourself in a way as to suggest that you agree with something and you then turn back to claim otherwise. In contract, it is essential that your conduct should align with your position. You cannot approbate and reprobate at the same time.

BUSINESS DAY

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NEWS YOU CAN TRUST I MONDAY 19 NOVEMBER 2018

fivethings

Insight Mixed verdict: International businesses adjudge Nigeria GLOBAL PERSPECTIVES

OLU FASAN Dr. Fasan, a London-based lawyer and political economist, is a Visiting Fellow at the London School of Economics. e-mail: o.fasan@lse.ac.uk, twitter account: @olu_fasan

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ast week, I wrote about this year’s Global Trade Review (GTR) Africa conference, held in London.

The conference was attended by about 300 people, over80% of who represented European companies with business interests in Africa.

Although trade, on which I spoke, was a key theme of the conference, it was not the only subject. Elizabeth Stephens, managing director of Trendline Analytics, gave an interesting talk on “Africa’s shifting geopolitical landscape”, and Robert Besseling, executive director of EXX Africa, spoke on “Managing Africa’s debt burden and meeting its infrastructure requirements”.

But the most interesting parts were the panel discussions and interactive sessions, during which several international business people – bankers, financiers, traders, insurers, risk analysts, lawyers etc – gave their views on Africa but more frequently on Nigeria.

Indeed, there was a specific session on Nigeria, entitled “Is Nigeria in rude health?”, chaired by Edward George, Country Head, UK Representative Office and Head of Group Research, Ecobank.

What came through in all the discussions about Nigeria was a mixed picture. There was a clear view about the Buhari government’s inertia and failure to undertake critical economic reform, but also a recognition of the central bank’spartial liberalisation of the foreign exchange regime, which has improved the liquidity situation in the country. Worryingly, however, there was consensus that electioneering might frustrate the economy’s tentative recovery, and that foreign investors were suspending investment decisions because of uncertainties about next year’s elections. That’s the summary, but, now,let’s unpack it!

The starting point is that the international business community sees the Buhari government as patently incompetent in the management of Nigeria’s economy.

The president’s lack of business experience, his perceived antipathy towards the private sector and his protectionist rhetoric and policies have certainly fuelled the perception that his government is weak on the economy. As the managing director of a company with strong business interests in Nigeria put it, protectionist policies such as restriction on accessing foreign exchange to import certain goods, outright prohibitions of several imports and high tax on outputs “inhibit the objectives that the government says it wants to achieve”.

Several business leaders made unfavourable comparisons between Nigeria and other African countries, such as Kenya, Ghana and Rwanda. For instance, one

recalled that when he met President Uhuru Kenyatta, the Kenyan president told him, “I want jobs, what do you want from me?” It is hard to imagine President Buhari saying that to any business leader. Yet, that’s the attitude that any leader who recognises that businesses, not governments, are the real job creators must have.

Positive references were also made to Rwanda, described as “a little Singapore”, and Ghana, credited for its transparency and efficiency.

One chief executive said: “When I meet government agencies across Africa, I use Ghana as an example”.

By contrast, Nigeria, according to the business leader, “lacks the ability to get things done in a cohesive manner”. There is a wide gap between what Nigeria needs to develop and the structure to make that happen, one pointed out.

Another said that Nigeria should be growing at around 4 or 5% like Egypt, but for government inertia and stalled reform, coupled with political, security and regulatory risks.

Nigeria’s image came up in one of the panel discussions. The question was: “What can be done to change the perception of Nigeria among outsiders?” The general view was that some of the negative perception was undeserved. As someone put it, “Nigeria is terrified from afar, but when you get in it’s not a terror”. He was, of course, talking about the general friendliness and hospitality of Nigerians!

But virtually everyone agreed Nigeria doesa lot of damage to its own reputation with self-inflicted harms. As one business leader said, “I don’t think that Nigeria Plc cares a lot about its image”. The government’s heavy-handed handling of the MTN case, which sent a shock to the international community, was widely seen as a terrible mistake. And, of course, since then, two world-renowned banks, HSBC and UBS, have closed their offices in Nigeria. The Buhari gov-

ernment’s intemperate response to HSBC’s criticism of its economic policy, including accusing the bank of aiding money laundering without evidence, certainly feeds the narrative about the government’s anti-business orientation. Elsewhere, large businesses criticise, or disagree with, government policies without risking an administrative backlash. Truth is, the MTN, HSBC and UBS sagas are bad PR for Nigeria, further harming its image.

However, there was a good story on the country. The question of whether Nigeria is in rude health triggered positive comments about the management of the currency.

Two or three years ago, some recalled, no one was willing to work with any of the Nigerian banks on any long-term basis, but now things are changing. This is because, thanks

to the central bank’s partial liberalisation of the currency regime, there is now significant liquidity and certainty in the forex market. That said, one corporate lawyer pointed to the problem of stamp duty and said that “If you want to address the issue of finance in Nigeria, look at how you

‘

...one recalled that when he met President Uhuru Kenyatta, the Kenyan president told him, “I want jobs, what do you want from me?”

It is hard to imagine President Buhari saying that to any business leader. Yet, that’s the attitude that any leader who recognises that businesses, not governments, are the real job creators must have

,

deal with stamp duty registration”.

But there was real excitement about the increased liquidity and certainty in the forex market; of course, there still exist multiple currency exchange rates, which must be unified for greater economic efficiency.

Interestingly, Nigeria’s debt capacity was regarded as one of its attractions. Nigeria’s low Debt/GDP

ratio, with total debt representing about 20% of its GDP, means that it has “a huge capacity to take on further debt” to fund its gaping budget deficit and infrastructure need, a credit analyst said. Of course, that view contrasts with the discussion rightly going on at home, and supported by the IMF, that the focus should not be on Nigeria’s relatively low Debt/GDP ratio, but rather on its unsustainable debt service/ revenue ratio. As the IMF said recently, “Nigeria’s Debt/GDP ratio at between 20 and 25% is quite low but debt servicing, which takes about 50% of revenue, is certainly high”. It’s not rocket science that when you spend about 50% of your revenue to service your debt, there is no comfort in saying that your debt level is low. You must either increase your revenue or cut your

spending, or both; failing these, you must think seriously about accumulating more debt. Yet, the Buhari government has an insatiable appetite for borrowing!

From the liquidity situation and the debt position, the discussion turned to what someone described as “the elephant in the room”: next year’s elections. First, there was a sense of uncertainty about who will win, given that the presidential race is currently “too close to call”. Secondly, there was the question about the differences between the two main candidates, the incumbent, President Muhammadu Buhari, and his main challenger, former Vice President Atiku Abubakar. A chief executive put it starkly. The choice, he said, was between “an ineffectual president who perhaps have good intentions and an effectual but not well-intentioned president”.

That, let’s face it, is how Buhari and Atiku are being characterised in the West. As I wrote in this column recently, Buhari is seen as an incompetent leader who nevertheless seems serious about fighting corruption, while Atiku is perceived as a competent and market-oriented leader, who would, however, be laxed about fighting graft – a major reputational issue for Nigeria. The truth is that, in politics, perception matters, and Atiku would serve himself well to confront the corruption perception head-on!

But the more immediate concern about the 2019 elections is that they are already affecting investment decisions. As the Head of Africa Desk of a major international bank put it, “There is a wait-and-see attitude”, adding that “investors are sitting on key investment decisions until the elections”. While current projects are not being stopped, they are being slowed, and new investment decisions are being suspended. The question, one financier said, is this: “When push comes to shove, would I sign before the elections or would I sign after?”. He added: “I think we would sign after”. This is not surprising, of course. Money will go where it will get the best and safest returns, and there is hardly anything that inhibits investment decisions more than uncertainty.

Which makes it imperative that next year’s elections must be free, fair and peaceful so that the current wait-and-see attitude does not crystalize into negative investment decisions.

The GTR Africa conference was a good barometer of the international business community’s views on Nigeria. The views are mixed.

There is certainly a good story on the forex front, but also a view that the economy is suffering from inertia and stalled reform, including in the oil sector. Even more worrying is the view that electioneering and uncertainties about next year’s elections may worsen the economic situation.

For me, tying all this with the theme of last week’s piece, it’s interesting that the countries being used as role models in Africa – Ghana, Kenya and Rwanda – were among the first to sign and ratify the AfCFTA agreement. They are the real reformers and liberalisers in Africa. Nigeria must join their ranks. It must sign AfCFTA and embark on far-reaching reforms.

Of course, it must conduct free, fair and peaceful elections next year. Then, and only then, would the verdict of the international business community be wholly positive, rather than mixed!

for your new week

Fascinating business facts

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$129m

unit of Glencore in the Democratic Republic of Congo has had a ban on imports and exports from its giant copper and cobalt mine lifted by authorities there. it had been blocked on Nov.9 from exporting copper and cobalt from Congo over a dispute around payments on copper that was never actually mined years ago. Congo is asking for $129.8 million to settle the dispute. Katanga Mining and its Kamoto copper and cobalt mine is one of Glencore’s most important growth projects. It restarted production in December after a two-year hiatus. It had expected to produce as much as 300,000 metric tons of copper and 34,000 tons of cobalt in 2019, which would make it Congo’s largest copper project and the world’s biggest source of cobalt.

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$300m

anzania will still receive $300 million in World Bank funding for secondary school education the presidency said after a visit by the lender’s vice president, Hafez Ghanem.

The Bank blocked the funding after President John Magufuli said his government would not allow girls who fall pregnant and deliver a baby back to school. The Washington-based lender has development projects in Tanzania worth $5.2 billion.

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$50bn

year after throwing down the gauntlet with an unprecedented outlay on next-generation mobility, Volkswagen AG has boosted its five-year spending plan by more than a quarter to $50 billion. With the new record through 2023, the German carmaker is highlighting the huge stakes in moving from the combustion era into an electric future. Volkswagen said it now plans more than 50 fully-electric models on the road by 2025, more than any other manufacturer. The push, including next year’s Porsche Taycan, is part of keeping old rivals and new competitors like Tesla Inc. and Uber Technologies Inc. at bay.

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$1.09bn

here is a new wave of young Nigerians taking the risks involved in experiencing life in some of the country’s tourist locations including the gushing waterfalls of Ikogosi in western Nigeria but the country’s unenviable reputation for violent crime and corruption largely deters international travellers. Nigeria is thus losing out on tourism revenues to other countries perceived to be safer such as Kenya, Ghana and the Gambia. Nigeria brought in $1.09 billion from international tourism in 2016, the latest year available, according to the World Bank. By comparison, Kenya received $1.62 billion that year, Tanzania got $2.16 billion and South Africa $8.81 billion.

Despite government assurances, problems persist for Nigeria’s tourism industry. Infrastructure is a major challenge: as well as decrepit roads, trains are a rarity and flights are notorious for delays and cancellations. Travel can also be dangerous. Many roads are plagued by kidnappings and accidents, police are more likely to ask for money than offer a service and deadly communal clashes have erupted across parts of Nigeria’s hinterland states, particularly this year.

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1.74%

terling has just had its worst weekly performance against the dollar since the beginning of August, as the UK government grapples with political turmoil over the proposed Brexit treaty. The pound fell sharply on Thursday morning after draft proposals for Britain’s exit from the EU sparked several ministerial resignations. A small recovery on Friday morning put sterling down 1.74 per cent over the week, approaching the 1.87 per cent it fell in the week ending August 10.

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Ghana Office: Business Day Ghana Ltd; ABC Junction, near Guinness Ghana Limited, Achimota – Accra, Ghana.

Tel: +233243226596: email: mail@businessdayonline.com Advert Hotline: 08034743892. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Anthony Osae-Brown. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.