BusinessDay 20 Jul 2020

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news you can trust I ** monDAY 20 july 2020 I vol. 19, no 609

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Eurobond funds outperform local bonds What investing pattern in mutual funds says about economy

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In search of yields, investors drive three-fold jump in bond funds nvestor exposure to bond funds has tripled since the beginning of 2020 as they rotate from money market and equity funds to the higher-yielding fixed income funds.

Bonds, money market and equity funds are all types of Mutual funds.

A Mutual fund is a professionally managed investment scheme, usually run by an asset management firm that pools funds from a group of people and invests their money in securities such as bonds, short-term debt Continues on page 30

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How FG can quickly displace petrol with gas-powered vehicles … remove duties on CNG conversion kits – experts advise

ISAAC ANYAOGU (Lagos), IDRIS MOMOH & CHURCHILL OKORO (Benin)

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phased implementation of fossil fuel replacement with Compressed Natural Gas (CNG) powered vehicles beginning with government Continues on page 30

Inside

COVID 19: Slow access of government interventions

by SMEs raises question on delivery mechanism P. 2

Umaru Ibrahim (l), MD/CE, Nigeria Deposit Insurance Corporation (NDIC), in a chat with Abbas Masanawa, CEO, Nigerian Security Printing and Minting, during the public hearing on the amendment of Banks and Other Financial Institutions Act 2004 (Repeal and Re-enactment Bill, (BOFIA) 2020, at the National Assembly, Abuja.

Incompetence in governance, poor policies seen eroding quality of agric produce P. 2

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news Inefficiencies in two agencies could cost Nigeria N125.26bn yearly Olusola Bello & Olufikayo Owoeye

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he last may not have been heard of how agencies under the Ministry of Petroleum Resources swindle the nation of huge cash flow while taking advantage of government’s reluctance to fully deregulate the downstream sector of the oil and gas industry.

Investigations by BusinessDay show that two agencies involved in fixing and controlling the price of petrol, the Petroleum Equalisation Fund (PEF) and the Petroleum Products Pricing and Regulatory Agency (PPPRA), would be costing the country over N125.26 billion annually, an amount that would have been channelled into providing other developmental projects and bolstering the nation’s dwindling revenue base.

Specifically, the PPPRA’s Administrative cost was formerly 30 kobo, however, it has been increased to N1.23k per litre, according to industry sources.

It is estimated that the country consumes 40 million litres of petrol daily,givingatotalN17.95 billion annually when N1.23k is multiplied by 40 million litres.

Marketers are already com-

plaining about this new development they say is an attempt to raise money for the agency whose impact is barely felt.

The story is not different with PEF at N7.35k as a bridging cost. This gives an estimated N107.31 billion annually when multiplied by an average 40 million litres consumed daily and over a year. Sadly, most of their disbursement is still shrouded in secrecy as payments to marketers cannot be verified. This has also left many petroleum marketers being owed their bridging cost by these agencies of government.

“They would tell you they have many other things they are doing, but that is the reality on ground,” a marketer who spoke with BusinessDay lamented.

According to the investigation, many of the marketers say if the government had fully deregulated the industry such a huge sum that may not be used mostly to the benefit of the industry by the agencies would have been deployed to other development sectors such as schools and health centres.

Instead of the government going to the World Bank and IMF for loans, such money could have been effectively harnessed for the benefit of Nigerians, they say.

COVID 19: Slow access of government interventions

by SMEs raises question on delivery mechanism HARRISON EDEH, Abuja

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everal pending applications by Small and Medium Enterprises (SMEs) to access various government interventions have raised concerns by sector analysts who now want the Federal Government to urgently reassess the delivery mechanisms of its various interventions geared towards saving jobs and supporting businesses.

The Federal Government has rolled out several initiatives and interventions on the back of the negative impact of the coronavirus (COVID-19) pandemic to support SMEs and save jobs. But the real challenge, many say, has been the cumbersome delivery mechanisms that are apparently defeating the purpose.

“Government needs to reform the delivery process of such interventions. Most concerned agencies appear overwhelmed by thousands of applications, which make delivery poor, and have kept lots of business under huge economic distress,” Celestine Okeke, an associate consultant to British Department for International Development and Lead Partner Small and Medium Enterprise Advocacy Initiative, tells BusinessDay. Okeke notes, “For instance, Central Bank of Nigeria (CBN) launched the N50 billion Covid response fund, but there are thousands of applications that have been pending from that time till date. Most of the persons have not even got a communication on whether they are approving or not.”

The ideas are laudable, he

says, but queries the mechanisms used to deliver them and how effective they are, saying, “For a business that Covid has affected in March, you launched an intervention since March and in July, the person has not got response. What does the process tell you? If the mechanism and process of delivery of these interventions are not virile enough, it could make a mess of the intervention.”

He states further that the CBN loan through the Nigeria Incentive-Based Risk Sharing System Lending (NIRSAL) was doing pretty well before the Covid started, but has slowed down on the impact since the Covid pandemic, owing largely to pending applications sitting on its desk.

“They need to ensure list of financial and non-financial interventions.Withthehugeap-

plications streaming in on their portal, it would be better they work with a third party to help them in short term with regard to listing, interviewing and recommending applicants to ease burden on them,” he advises.

He also observes that lack of proper institutional and sectoral reforms could weaken the much expected impact of the government’s Economic Sustainability Plan, with which it plans to reset the recession prone economy.

“We don’t have a singular approach that addresses our institutional and economic problems. We don’t have a sectoral approach to our economic diversification. We need a longterm approach, for instance, in agricultural sector, itemising key problems that we want to solve, and steps to be deployed as well as time lines,” he says.

How private sector’s intervention is aiding fight against COVID-19 SEGUN ADAMS

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he intervention of the private sector in the ongoing fight against coronavirus pandemic (COVID-19) in Nigeria has come with some significant socio-economic benefits. This gives hope of a sustained management of a pandemic, which the World Health Organisation (WHO) has warned may not be eradicated in a long time to come.

The social intervention of the collaboration involving about 50 of Nigeria’s corporate players, the Federal Government and some of its agencies and development partners under the aegis of the Coalition Against COVID-19 (CACOVID), is three-pronged.

It involves building of world-class testing, isolation and treatment centres for the management and treatment of COVID-19 cases across the country; advocacy to get Nigerians involved in the fight against the pandemic and distribution of palliatives to the less privileged who bear the brunt of the various lockdowns across the country.

Sources say the collaboration is the brainchild of Herbert Wigwe, managing director/CEO of Access Bank, who was spurred by the desire to sustain the bank’s tradition of leading initiatives and rising to the occasion when leadership

is required in times of crisis.

Withoutdoubt,theintervention has had enormous benefits for the country’s healthcare deliveryasitaffectsthefightagainst COVID-19. Barely four months since the collaboration came into place on March 26, the impact of the exercise is being felt across the country. In a rare show of patriotism in pursuit of a national cause, the coalition was able to mobilise over N29 billion through donations from its members for the execution of thelaudableprojectsinvolvedin the exercise.

TheCACOVIDhassofarbuilt 32 highly sophisticated testing, isolation and treatment centres across the country, equipped with facilities that are comparabletothoseinotherpartsofthe world.Thishasenabledramping up of tests, which reflects in the high number of confirmed cases recorded every day, with correspondingincreaseinthenumber of persons regularly treated and discharged.

The latest addition to the list of such facilities is a 150bed isolation and treatment centre the coalition donated on June 28, 2020, to the Lagos State government. The centre, which is equipped with facilities to handle moderate to severe cases of COVID-19, brings to six the number of centres dedicated to the treatment of such cases in the state that remains the epicentre of the pandemic in the country. www.businessday.ng

L-R: Ahmed Lawan, Senate president; President Muhammadu Buhari, and Femi Gbajabiamila, speaker, House of Representatives, during a meeting at the Presidential Villa, Abuja, weekend.

Incompetence in governance, poor policies seen eroding quality of agric produce Cynthia Egboboh, Abuja

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ncompetence in government coupled with weak policies have been seen as responsible for poor standard of agriculture produce, which explains huge amount of export rejects Nigeria has experienced in recent time.

Agriculture, the largest economic activity in Nigeria, contributes over 40 percent of the Gross Domestic Product (GDP) as well as employs about 70 percent of the working population in Nigeria has been seen by experts to have received inadequate attention from the government.

According to Vincent Isegbe, director-general, National Agriculture Quarantine Service, issues around standard have posed setbacks to the nation’s ability to export nonoil produce.

“Nigeria, which is among

the top producers of agriculture goods, has faced series of setback in exporting its non-oil produce as they are often below international standards,” Isegbe says.

Speaking with BusinessDay, Yusuf Sule, a Kadunabased maize farmer, states that the poor standard of agricultural produce in Nigeria is due to weak policies coupled with negligence of the government.

“I am a maize farmer in Kaduna, and I don’t think there is any policy document governing the affairs of farmers in Nigeria, or if there is any, it has not been effective as it ought to.

“And it is not supposed to be so, every day we see people move into agriculture, especially farming, and produce items for either consumption or sales, without knowing what good agricultural prac-

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tices are,” Sule says.

He harps on the need for the development of workable policies and coordinated body of specialised official dedicated to monitoring the activities of farmers on the farms, adding that the COVID-19 pandemic has further thrown many Nigerians without the knowledge of good agricultural practice into farming.

“As a country, we are supposed to have a body with officials around the country that inspect all farm activities and ensure that the right things are done, both at the big farms and for those at the grassroots,” he says.

Recall that in June 2017, Nigeria recorded failed yam export that was reportedly rejected due to poor quality, and having got rotten even before reaching its destination.

Similarly, in November 2018, Snipper - an insecticide @Businessdayng

- was reportedly used by some people to preserve beans, making the product unsafe for consumption and detrimental to the environment.

“Let’s look away from promoting standards only for products to be exported, but also look to ensure that the foods we consume locally are of the right standards,” he states.

“We need a workable policy to correct the errors of production in Nigeria, this really is not a huge task, but I think the government lacks the will power. I think the government is yet to see the potentials and importance of the agriculture sector,” the maize farmer argues.

Speaking on producing for export, he says, “We still have a lot to do. Fortunately, players in the various value chains are waking up to the task and making efforts to see that their produce are up to standard.

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Magu’s case: Nigeria is fighting graft with corrupt institutions global Perspectives

OLU FASAN

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igeria has an acute corruption problem. But it is not just individual corruption; it’s also systemic and institutional corruption. A country that has the problem of endemic corruption but lacks robust institutional arrangements to tackle it is doomed unless it radically transforms itself. That, sadly, is Nigeria’s state of affairs!

To be sure, no country is inherently immune to corruption. What makes the difference between a fantastically corrupt country and the least corrupt one is the incentive structure embedded in their anti-corruption institutions and the integrity of those running those institutions. Thus, as the United Nations Development Programme, UNDP, rightly says, “Corruption is a failure of institutions, in particular, those in charge of investigation, prosecution and enforcement.”

Unfortunately, that institutional failure is extremely acute in Nigeria.

There is no credible national integrity system. Look around, you will not see what sociologists call “pillars of integrity”, credible institutions that can act as powerful countervailing forces against corruption. Rather, corruption infests every state and social institution in Nigeria, and flows directly from the top. In Nigeria, the fish rots from the head down!

Over the past few years, the heads of Nigeria’s legislature, judiciary, police and intelligence service have been accused and charged with corruption offences. In fact, in 2005, a former inspector general of police, Tafa Balogun, was jailed for corrupt practices!

The latest evidence of top-down corruption in Nigeria is the recent suspension, arrest and investigation of Ibrahim Magu, the acting head of Nigeria’s most famous anti-graft body, the Economic and Financial Crimes Commission, EFFC, on various allegations of corruption. Surely, if the head

of a country’s anti-corruption agency could be accused of corruption, which damages the institutional integrity of the organisation and undermines public trust in it, you don’t need further evidence that the country is losing the battle against corruption!

Yet, the presidency thinks differently. It puts a spin on Magu’s arrest and detention, arguing that it shows Buhari is serious about his war against corruption. In a statement dripping with spin-doctor’s sophistry, Garba Shehu, President Buhari’s senior media assistant, said “there is no better indication that the fight against corruption is real and active”!

Well, there is a less generous interpretation. The arrest and detention of the head of Nigeria’s anti-graft body on corruption allegations shows that corruption is truly systemic and institutionalised in Nigeria, and that tackling it is tough. Surely, if a country can’t have irreproachable anti-graft bodies and officials, where is the hope that it can win any war on corruption? Can you fight corruption with corrupt institutions and leaders? Of course, not!

Sadly, rather than the Magu case vindicating Buhari’s war against corruption, it shows that the “war”, after five years, is unwinnable. President Buhari himself more or less admitted that in a recent statement. In a recent letter to the South African president Cyril Ramaphosa, current chairman of the African Union, President Buhari, writing as the AU’s Anti-Corruption Champion on the occasion of the “Africa Anti-Corruption Day” on July 11, said: “The massive corruption being perpetrated across our national governments has created a huge governance deficit”.

That’s true. But President Buhari failed to say two things in that letter.

First, he should have admitted that Nigeria has given Africa the worst reputation on corruption. Second, he should have admitted his own failure.

For, truth is, despite his undisputed personal integrity, Buhari has failed to exercise good judgement in fighting corruption in Nigeria.

Think of it, Buhari said in 2015 when running for president that, if elected, “the corrupt will not be appointed into my administration.” Yet, some of the serious allegations of corruption over the past five years have been made against his political appointees, including a secretary to the government, who allegedly misappropriated funds for internally displaced people.

Leadership is about exercising sound

judgement in decision-making. Buhari hasn’t done so with some of his appointments.

Take Magu. Most of the allegations against him are not new. As long ago as 2016, the Department of State Service, DSS, indicted him on serious corruption allegations. The Senate rejected his nomination twice and passed a resolution calling for his removal as acting head of the EFCC. But in 2017, Vice President Yemi Osinbajo, then acting president, said: “Magu will be EFCC chairman as long as Buhari and I remain in office.” Talk of giving a hostage to fortune. So, what changed?

Truth is, Magu’s indictment by the DSS cast a shadow over his suitability as head of such a key anti-corruption body. But President Buhari has a tendency to stand by his favoured, if tainted, appointees until doing so becomes untenable. As it did with Magu!

Which is why the presidency’s attempt to use Magu’s suspension to burnish Buhari’s anti-graft reputation stretches credulity! It was bad judgement to have kept him in that post despite the allegations swirling around him!

But the wider issue is institutional failure. The United Nations Convention Against Corruption, UNCAC, stipulates that “Each State Party shall ensure the existence of a body or bodies, as appropriate, which prevent corruption.” The African Union Convention on Preventing and Combating Corruption, AUCPCC, also requires member states to “establish, maintain and strengthen independent national anti-corruption agencies.”

Nigeria ticked these boxes. Under President Obasanjo, Nigeria created key anti-graft institutions: The Independent Corrupt Practices and other Related Offences Commission (ICPC), the Economic and Financial Crimes Commission (EFCC) and the Code of Conduct Bureau (CCB). So, why, despite the existence of these bodies, is Nigeria still a fantastically corrupt country? Why is corruption deeply systemic and institutionalised in Nigeria?

The answer is simple: the anti-corruption institutions were not created to succeed. They lack the essential ingredients for success. As the UNDP says in its report on institutional arrangements for combating corruption, “the creation of anti-corruption institutions is not a panacea to the scourge of corruption.” To succeed, they must have critical attributes.

First, anti-corruption agencies must be headed and manned by people with unimpeachable personal integrity.

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Truth is, Magu’s indictment by the DSS cast a shadow over his suitability as head of such a key anti-corruption body. But President Buhari has a tendency to stand by his favoured, if tainted, appointees until doing so becomes untenable

Second, they must enjoy operational independence, free from political or other external interference. Third, they must be well-resourced, both in terms of material resources and personnel, and have first-class investigatory and prosecutorial expertise. Fourth, they must be transparent and accountable, with appropriate scrutiny, especially from the media and civil society organisations. Fifth, there must be proper inter-agency coordination. Sixth, they must enjoy public confidence, trust and support.

Well, it’s obvious that Nigeria’s anticorruption agencies utterly lack these attributes. For instance, the fact that all previous heads of the EFCC left office in controversial circumstances and that Ibrahim Magu has actually been accused of corruption show that Nigeria’s anti-corruption agencies suffer from the absence of personal and institutional integrity. What about independence? Well, although the anti-graft bodies are independent on paper, in reality, they are often accused of being used for political vendettas.

With respect to resources and expertise, everyone knows that the antigraft agencies lack investigative and prosecutorial abilities, which is evident from the fact that they lost several cases on technicalities. And, of course, they lack transparency and accountability.

To date, neither ICPC nor EFCC has published audited accounts! Then, the acute problem of inter-agency rivalry rather than coordination. Of course, all these inevitably erode public confidence, trust and support! No anti-graft agency can succeed in those circumstances.

So, the Magus case has simply exposed the truth: Nigeria is fighting corruption with corrupt and utterly deficient anti-graft institutions. No country can fight graft without a supreme audit system; none can combat corruption without a competent and incorruptible judiciary; and, certainly, none can tackle the scourge of corruption without ruthlessly efficient and irreproachable anti-graft bodies. But Nigeria has none of these institutional qualities!

Magu shows that Nigeria is fighting a losing battle on corruption! Only systemic reforms, radical restructuring, can change that!

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

Technology & brands: A match made for the future Brand personality uilding a brand can take many years to actualise into a single, unique, discernible and distinct entity.

Within the construct of a brand’s core promise, its essence and persona, is a canvass that lends itself to the ability to create and be created, over again. An introduction between brand and consumer happens at an intersection where many brand owners hope for something magical, but only few achieve something close to a lasting impact.

A brand embodies its personality and so does the consumer – two distinct personalities – whose tastes and preferences change with trends, advancements in technology and societal evolutions.

Brand connection A brand must speak to the consumer consistently too, without being obtrusive - to

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maintain a relationship that deepens with time. If a brand does not know its consumer, it fails to establish a connection when it communicates. As with many brands, marketing communications is the channel that allows for conversations between brand and consumer, but an integral consumer insight to consider when planning marketing communications, is consumer behaviour as is shaped by technology. The consumer of today enjoys content across multiple social media platforms, engages with cross-cultural challenges that span various passion points and desires relevance as it relates to his/her individual preferences. So, what does your brand know about its consumer?

How does it seek to engage this consumer?

Where does it hope to connect with this consumer?

Brand technology www.businessday.ng

Brands like Coca Cola have a central promise, “to refresh the world in mind, body and spirit, and inspire moments of optimism; to create value and make a difference.” They express this promise in innovative ways that employ the use of technology, be it with gesture-based marketing like the Hug Me campaign in Singapore. The central premise here revolved around perception.

Coca Cola wanted its target consumers to see it the way it has built itself over the years - as a brand that has kept pace with its promise and the times.

In a world where Facebook likes and Instagram comments are considered “social gestures,” getting consumers to make specific gestures become a synergy that creates the magic you seek between brand and consumer.

Innovation is ever evolving and good

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Ndidi Obinwanne

branding should keep pace. Technological advancements can affect how consumers engage with your brand. The future for great brands lie at the intersection between branding and technology.

Ndidi Obinwanne is the Client Success Manager at Squad Digital Nigeria. She’s adept at Digital Transformation, Brand Building, Voice Over Artistry and passionate about building sustainable solutions for the African continent

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The resilience fund against the virus (2) Bashorun J.K Randle

Dear Mr Governor

W

hen the alar m was raised that as many as one million Lagosians (and close to ten million Nigerians) may be vulnerable to the CoronaVirus, we

instinctively responded by challenging the computer modeling.

Now, it turns out we are ALL vulnerable and we are at the mercy of a ruthless invader which has scant respect for age, gender, religion or ethnicity /tribe.

Hence, we are now faced with the ugly prospects and monumental challenge of grappling with a SECOND WAVE of the monstrous pandemic which appears inevitable.

Our strategy must be proactive, agile, quick, responsive and ROBUST. What is urgently required is a joint Government (Public)/ Private Sector Initiative to raise funds under the aegis of WHO and other critical stakeholders such as Committee of former Presidents of various countries (chaired

by UK’s Mr Gordon Brown); Bill Gates Foundation; McCarthur Foundation; G-20; World Bank; United Nations; IMF; African Development Bank; Afrexim Bank;

IFAD etc in order to acquire in the shortest time possible the additional/new hospitals dedicated to victims of the CoronaVirus.

China was able to accomplish it within two weeks. So also did the United States of America and Britain. These spectacular achievements are worthy of emulation and replication in Lagos State.

Towards this objective, we envisage rewarding every donor with a Hall of Fame plaque/badge.

This formidable challenge will also involve huge investment in Information Technology and provide vast opportunities for our fledgling tech entrepreneurs. Regarding the structure, we need to ensure that the Private Sector is in the driving seat and international agencies/donors are represented at the Management level as well as The Board of Trustees. Accountability, transparency and world class corporate governance are of utmost importance.

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Regarding the structure, we need to ensure that the Private Sector is in the driving seat and international agencies/donors are represented at the Management level as well as The Board of Trustees

As regards logistics and accommodation, the former Presidential Guest House and the former residence of the Governor of Lagos State, both on the Marina appear to be under-utilized.

We have not more than one hundred (perhaps two hundred days at most) to put everything (including legal backing and public enlightenment) in place. The clock is already ticking as we seek to remain cautiously optimistic – vigorous data gathering as the basis for a new dose of optimism as we struggle to isolate / mitigate / prevent. It is self-evident that our mortality is directly linked with what we do or fail to do. In any case, it is always the poor who pay the highest price.

Warmest regards J.K. Randle is a former President of the Institute of Chartered Accountants of Nigeria (ICAN) and former Chairman of KPMG Nigeria and Africa Region. He is currently the Chairman, J.K. Randle Professional Services.

Email: jkrandleintuk@gmail.com

Understanding project management

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he take-off of the first ever Boeing 747 Jumbo Jet, the launch of the World Wide Web, the birth of the first IVF baby, Apollo 11’s putting the first man in space, or perhaps it the building of Dubai’s Burj Khalifa (the tallest structural standing building in the world with 160 floors; it was built by 10,000 people and only a single death casualty), these are the most ground breaking projects of our generation. But beyond these dramatic and life changing projects, we have personal everyday projects we are either proud of or have failed in too.

So, whether it’s that exam, your wedding, that board presentation, your mere postgrad, your company finally registered and incorporated, a deal lost or the contract delivered and signed off on, these are all projects. In all projects, if you knew better, you’d do better. A project is a temporary endeavour that requires inputs to yield an output within a constraint.

The practice of leading the work of a team to achieve goals at a specified time is known as project management.

Although project management and operations management are often used interchangeably, these two concepts differ. The former is concerned with distinct events which often births new products, e.g., construction of a bridge, a wedding or even life. On the other hand, operations management is centred on similar repetitive events, e.g., printing of bank tellers, freight forwarding, and customer care. Another distinction between projects and operations is the level of skills required.

A standard project requires a wide variety of skills. However, an operation requires limited skills due to the repetitive nature of events.

A program is a collection of related projects that contribute to a similar outcome. For instance, the construction of an airport will be considered as a program due to the multiple projects involved. A portfolio is a group of programs and/or projects that may be unrelated.

While a project is the subset of a program, a portfolio is a superset of a program.

A comprehensive understanding of project management is required for any organisation’s success. However, no matter how good an intention may be, when being executed, a poor project management may dissipate it. The fol-

lowing are the process of project management, with greater emphasis on the first two phases: 1. Initiating 2. Planning 3. Executing 4. Monitoring and controlling 5. Closing and delivery Initiating: This is performed to define a new project or a new phase of an existing project. It is also used to give authorization to the project manager. This phase is very crucial as it is the bedrock of the whole project. One essential feature of this phase is the initial meetings and the Project Initiation Documentation (PID). A PID can be likened to a charter document or the business plan of an organisation. It provides a reference point throughout the project for both the client and the project team. At the beginning of any project, it is imperative for the project manager to authenticate his control of such project. This is contained in a project charter, stating the project client as well as the project team. A project charter is essential to avoid duplication and misinterpretation of roles and authority.

Also, the initiating phase features preliminary meetings with major stakeholders of the project. This helps to concretely define the scope of the project. Resolutions from the meetings are pivotal to the Planning phase of a project management.

Planning: Here, the project team develops the project management plan and project documents that will be used to carry out the project. Here, the project manager also plans the capabilities, inputs, tools, techniques and expected outlook it needs. These variables usually cut across different knowledge areas.

These knowledge areas include integration management, scope management, time management, cost management, quality management, human resource management, risk management, stakeholder management, communication management and even procurement management. It is imperative for a project manager to understand these knowledge areas, plan each accordingly and then integrate it to arrive at a successful plan.

To aid this process, all knowledge areas and their elements relative to the project are planned. But it must be progressively elabowww.businessday.ng

rated from the major parts broken down into the bits. But each bit must be interrelated.

For this, a project manager can use a Work Breakdown Structure (WBS). The WBS identifies various areas of importance and their bits interdependently. As opposed to the Gantt chart, which deals with time control, the WBS focuses on integration and scope control.

Another fundamental feature of the Planning Phase after defining your WBS is budgeting. Project budgeting has to do with creating a financial plan on how to expend the funds allocated for a project. To get a budget, you must first define the cost elements. There are three methods of designing a project budget: Analogous budgeting: This has to do with reaching a project budget based on previous similar projects. A project manager can draft a budget because he has recurrently carried out similar projects. This approach is historical in nature. It may not be suitable due to economic and situational differences.

Top-bottom budgeting: Here, the project owner indicates his budget which the project manager is expected to execute with. The budget is determined by the client and then allotted among different cost elements. A project manager is constrained to the budget of the client. This approach may also lead to a poor project execution if the allotted fund is too low. On the other hand, it could lead to wastages of resources if the budget is too high.

Bottom-up budgeting: The project manager ascertains the budget of different cost elements and sums it up to form the total budget. Budgeting starts from the bottom and is channelled up to the aggregate cost. This approach encourages smooth execution of the project, thereby reducing the likelihood of project failure.

As a proactive plan for possible unforeseen circumstances, a contingency fee is added to the total budget. Contingencies differ for various projects, hence the need to make provisions for them. A contingency reserve is the amount set apart for contingencies. An aggregate of the total budget and contingency reserve makes up the invoice to be sent to the client. However, contingency fees are meant to be refunded when there is no risk resulting from the use of that fund.

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EIZU UWAOMA Executing: This is the phase where the plans designed in the Planning phase are executed. This phase is also critical to avoid discrepancies between expectation and performance.

Monitoring and control: The project manager is required to follow up with the execution process. This is important to ensure strict compliance by the project team. Where any glitch is identified, the project manager is expected to find a remedy. This helps the project to be delivered in due time with a good quality.

Closing and delivery: This is the final phase where the project is presented to the client. At this point, the project charter becomes invalid except if otherwise stated. Oftentimes, client’s feedback is necessary for better service delivery.

What makes a project successful is really the need for the project, its benefit over cost, and how the project is initiated, planned, executed, monitored and controlled within the triple constraints of time, scope and cost. The level of efficiency that the project achieved to reach the project objectives defines project management success. Efficiency is related to how the project manages its limited resources to meet the goals while building good relationships with internal and external stakeholders.

A project is considered successful when the product it produces is of great value and it was delivered within the predefined time, within budget and scope. When this happens with minimal risk yet maximum quality possible with key stakeholders carried along, it becomes a project manager’s delight. Hexavia as a strategy, business development and project management firm look forward to working with you.

Uwaoma is a start-up, corporate restructuring and strategy consultant. contacteizu@gmail.com

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BUSINESS DAY

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The grave sin of Godwin Obaseki Tony Usidamen

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f you have been following events on the Nigerian political scene, then you would know about the protracted battle between the erstwhile national chairman of the All Progressives Congress (APC), Comrade Adams Oshiomhole, and the incumbent governor of Edo state, Mr. Godwin Obaseki. The feud cost the former his exalted position in the party and forced the latter out. But what is the real cause of the rift? What is Obaseki’s grave sin? Well, I’ve got answers.

Here’s how it all started. Following Comrade Oshiomhole’s tenure as president of the Nigeria Labour Congress in 2007, he had more or less settled into private life when a few Edo professionals who were dissatisfied with the quality of governance and the socio-economic condition of the state reached out to him. They prevailed on the former union leader and dogged fighter to wrest power from the political elite by running for the office of governor. He acceded.

Numbering twenty, these wellmeaning sons of Edo mustered up the funds to prosecute the election. They backed the Comrade all the way to the Court of Appeal, which—on 11th November 2008—upheld the 20th March 2008 judgment of the State Election Petition Tribunal declaring Oshiomohle the duly elected governor of Edo. The court deemed that he had polled the highest valid votes in the 14th April 2007 elections. Godwin Obaseki led that group.

When Oshiomhole assumed office, he understood that a clear vision of the future was necessary to guide

the journey of change. So, he set up an Economy and Strategy Team (EST) to assist in developing a comprehensive roadmap that would ensure a better, more prosperous future for all Edo citizens. And, to lead this critical task, he called on Mr. Godwin Obaseki. For seven and a half years, he served the state diligently. May I add that he did so without requesting a dime?

Before that time, Edo was akin to a rudderless ship on a shoreless sea. The privileged ruling class was divorced from the realities of the masses. At best, they saw their office as a means for self-enrichment. And you could feel the people’s disillusionment with the machinery of government. But under Oshiomhole’s leadership and Obaseki’s guidance, Edo was transformed from a disarticulated political structure to one with a sense of mission. There was renewed hope.

It came as no surprise, therefore, that the Comrade Governor found in Obaseki a worthy successor. His background as an investment management expert of over thirty years, and the experience garnered as chairman of the EST, had prepared him well for the task of governance.

He had a firm grasp of the issues confronting the state, and had articulated a clear vision. Edo people concurred. And—at the September 19, 2016 polls—handed him the mandate to lead.

Since his inauguration on 12th November 2016, Governor Godwin Obaseki has continued to demonstrate that the government can, indeed, work for the people—with policies and programmes that benefit the majority, rather than a few. His strides across the six focal areas— institutional reform, social welfare enhancement, economic revolu-

tion, infrastructure development, environmental sustainability, as well as culture & tourism—are visible for all to see.

While Edo can’t be said to be El Dorado—the fabled city of gold where everything works—the state has made real progress in critical areas of human development. Citizens have greater access to healthcare, as primary healthcare centres are being revamped and upgraded statewide.

The quality and enrolment rate of school-age children in public primary schools has increased, thanks to the reforms in basic education.

And there has also been a boost in Technical and Vocational Education and Training. Young people are being equipped with vital skills to make them more employable or to start their own business.

According to data obtained from the Edo State Skills Development Agency, and verified by independent agencies, an estimated 161,271 multisectoral jobs have been created (as at the time of writing this piece). The bulk has been from the state’s agriculture development programmes.

Under this administration, salaries of civil servants are regular and prompt. Arrears of pensioners, dating back to 1996, have been cleared. And monthly pensions and death benefits are paid as and when due. Also, there are massive infrastructure projects ongoing across the state. And marked progress has been made in sports development.

So—now that we know the history that both men share, and have a clear picture of happenings in the state— what grievous offense did Obaseki commit? To have made him an outcast in a party on whose platform he emerged governor? From all the Comrade and his loyalists in the APC have said in public, nothing remotely

‘

While Edo can’t be said to be El Dorado—the fabled city of gold where everything works—the state has made real progress in critical areas of human development.

Citizens have greater access to healthcare, as primary healthcare centres are being revamped and upgraded statewide

Usidamen, a public affairs analyst, writes from Lagos.

Email: tonyusidamen@yahoo.com

This is why you struggle as a millennial leader

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ll of us have dreams - hopes for what our lives could be in the future. For many of us, those dreams include a desire to expand our territories and spheres of influence. Those kinds of big dreams can never be achieved by working alone. To make them happen, we need to attract, motivate, and manage people. Being a good boss is hard, but there are some sure-fire ways to make yourself a terrible boss. We’ve compiled a list of things to avoid. Here’s what not to do as a millennial leader.

Be unclear about people’s roles, responsibilities and desired impact: This isn’t about writing up a second-by-second job description - such JDs aren’t super helpful in the world of start-ups where people must be flexible, wear multiple hats, and often rotate responsibilities.

It’s about ensuring your employees aren’t confused about what they’ll be doing when they come to work in the morning. Don’t give them one responsibility, then undercut the time they’ll need to develop mastery in the sphere you’ve assigned.

Give responsibility then meddle: Success breeds success. If you give Jane a job to do and she does it well, she’ll be motivated to raise the stakes on the next task you give her. She’ll have built the muscle memory to do good work.

But if you give her a job and then meddle, you

don’t just deprive her of the chance to build those useful muscles, you also ensure you never get an employee who’s getting stronger on the job. Jane doesn’t grow, your workload grows, you burn out, your dream dies. See how quickly that happened?

Give ownership then undermine authority: You hired someone to manage marketing. He makes a decision about the marketing campaign. Because they aren’t used to it, his team comes to ask you if it’s okay to proceed. Rather than refer this team back to their marketing manager, you butt in and undo aspects of the campaign without first consulting with said manager. Pretty soon, everyone in the company realises that the marketing manager has no real authority. Well done! You’ve ensured that A-players will never be attracted to you and what you’re building. You’ve ensured you’ll be surrounded by yes-men. You’ve ensured your place in the league of mediocrity.

Get emotional and angry when you’re given feedback: Feedback is a gift. This line was said so often that it became a running joke during my MBA. But it wasn’t until I returned to the workforce that I realised just how true a saying it is. Without feedback, you’re flying blind as a leader. Don’t let your ego be so fragile that you cultivate an army of sycophants around you. It’s the quickest way to sink a ship. www.businessday.ng

If you get defensive, vindictive, or otherwise emotional when you receive feedback, it’ll ensure no one is ever honest with you. The higher you go in your career, the harder it’ll be to get any kind of honest feedback. So, if you don’t cultivate that culture around you, you won’t even know when your ship is sinking.

Yell or berate them publicly: No one likes to feel like an idiot. If you think someone on your team is an idiot, well, you hired that person in the first place - or hired the person that hired that person. So, what does that make you? Good.

I have been in companies where the boss would berate someone so loudly that folks in other offices could hear it. This sort of fear then breeds the worst instincts in your team. It’s either they’ll avoid you at all costs, or there’ll be a cover-your-back mentality that stops people from taking smart risks.

Most humans want to do a good job. Start them off by giving them what they need to succeed. And when they fail – because we all do – point out where they’re doing well and how they can do better. If the person isn’t responding as expected, put her or him on a plan, with clear consequences for what happens if performance doesn’t improve. Simple.

We don’t need to get into a shouting match over this. Keep it classy.

Pit employees against each other: A natural

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suggests that Governor Obaseki has failed in his duties as the chief executive officer. That would not be consistent with the glaring record of achievement. The only coherent tune from the cacophony of voices is the lack of patronage from the governor.

And that says a lot about the values of our leaders.

Obaseki’s grave sin—it seems—is putting the interest of Edo people before those of entitled politicians, his refusal to channel public funds into private pockets. That is the paradox of the Nigerian society. It goes against the principles of democratic governance, which—as American civic activist, Nick Hanauer, puts it—is to maximise the inclusion of the many to create prosperity, not to enable the few to accumulate money.

Indeed, the loyalty of elected public officials should be to the people, not self-acclaimed godfathers. Governor Obaseki has modeled this over the last three years. And Edo people are the better for it.

In reality, the fight is not about the person of Godwin Obaseki; it is a struggle for the “heart and soul” of Edo. Political buccaneers—led by a former comrade-in-arms who has morphed into the same imperious figure he once fought against—are laying claim to the state’s treasury.

But power lies in the hands of the people. And only we can determine our fate. We have the choice to go back to biblical Egypt—where a few greedy men held the reins, and brazenly plundered our commonwealth.

Or go forward to the Promised Land.

That is, a modern and progressive Edo where every citizen is empowered to live life to its fullest. Choose Wisely!

Money Brain with JR

JR Kanu corollary of the bad behaviours described thus far is that they create strife in your team.

But it’s worse if you are cultivating this sort of backstabbing competition. You are one company, and you all have the same goal - to see the company succeed. If the employees seem more interested in pleasing the boss above all else, you have failed.

It’s not.

About.

You. When your employees measure themselves by who is in the boss’s good graces, who’s in and who’s out, you’ve created a political party - the very opposite of private enterprise.

Kanu is the creator of the app, REACH: Expense & Money Manager - www.reach.africa. He is also the author of the book, Money Brain: Career & Money Management in Your 20s and 30s - moneybrain.reach.africa. jrkanu on Instagram or email stories@reach.africa

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BUSINESS DAY

Monday 20 July 2020

EDITORIAL Publisher/Editor-in-chief

Frank Aigbogun editor Patrick Atuanya

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

Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

For many Nigerians, working remotely is a luxury

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Pandemic presents opportunity to revamp education, close digital divide

s the COVID-19 pandemic continues to threaten economies of the world, the discovery of a vaccine has been described as the exit strategy as most countries struggle to flatten the curve. Until then, the coronavirus will continue to ravage and remain a devastating threat to lives and livelihoods.

Maintaining social distance, masking up, and ensuring personal hygiene has become the new sermon every government preaches to its people daily.

Also, organisations have had to adopt “teleworking” as the new normal as they can’t afford to shut business operations indefinitely while fighting a pandemic, particularly when it’s uncertain when it will end.

Social distancing and teleworking may be viable options to combat the spread of the virus, however, it threatens jobs requiring employees’ physical presence or face-to-face interactions.

In Nigeria, the COVID-19 pandemic is overwhelming its labour market. Nigerians are losing their jobs due to the growing

effects of the pandemic. The National Bureau of Statistics (NBS) COVID-19 impact monitoring survey conducted between April and May this year revealed that of 1,950 households, 42 percent of the respondents who were working before the outbreak were no longer working for reasons related to COVID-19. About 79 percent of households reported that their total income had decreased.

Many who are unable to work remotely, face a significantly higher risk of reductions in hours or pay, involuntary leave of absence, or permanent layoffs.

The International Monetary Fund (IMF) in a survey on the feasibility to work from home in a large sample of advanced and emerging market economies, revealed that given same occupations in both markets it is easier to telework in advanced economies than in emerging and developing economies. This is because more than half the households in most emerging and developing countries don’t even have a computer at home.

Given the large size of Nigeria’s informal sector and the concentration of small and medium

enterprises (SMEs) in the formal sector, workers in these sectors are at a higher risk of losing their jobs because of the inability to do their jobs remotely. SMEs for example accounts for 96 percent of businesses and 84 percent of employment in the formal sector.

According to the IMF report, workers in food and accommodation, and wholesale and retail trade, are the hardest hit because their jobs are the least “teleworkable”.

Yet some are more vulnerable than others. Young workers and those without university education and women disproportionately concentrated in the food service and accommodation sectors and part-time workers of SMEs were identified as largely prone to job loss.

The effect of this is that it worsens income inequality in Nigeria as these groups of people are located at the bottom of the income distribution table. They are largely concentrated in the hardest hit sectors identified earlier.

In the short to medium term the more vulnerable will need some form of social insurance and safety net to weather the ravaging effects of the COVID-19 pandemic. Providing such should be the priority

of the Federal Ministry of Women Affairs and Social Development to cushion affected households against loss of income and employment.

Also, we must buttress the need to revamp Nigeria’s education system. Life-longeducation and training will help prepare students, workers for the jobs of the future.

The need to close the digital divide and invest in digital infrastructure is also important. The reduction by 97 percent of Right of Way charges for telecommunication infrastructure by the Ekiti state government is a good example other states must imbibe.

It is a move that will encourage investment in digital infrastructure.

The new workplace is online.

Some firms have continued operation successfully because they have embraced technology and exposed their workers early enough to the digital world.

Nigeria isn’t off the hook yet.

Effects of the COVID-19 pandemic are still being felt across households. It is therefore imperative that discourse and actions towards lifting the costs of the pandemic currently borne by those least able to.

HEAD, HUMAN RESOURCES Adeola Obisesan

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

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OUR Core Values

BusinessDay avidly thrives on the mainstay of our core values of being The Fourth Estate, Credible, Independent, Entrepreneurial and Purpose-Driven.

• The Fourth Estate: We take pride in being guarantors of liberal economic thought • Credible: We believe in the principle of being objective, fair and fact-based • Independent: Our quest for liberal economic thought means that we are independent of private and public interests.

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Monday 20 July 2020

BUSINESS DAY

13

COMPANIES&MARKETS CONSUMER GOODS

Guinness sinks deeper after full-year revenue warning OLUFIKAYO OWOEYE

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hares of Guinness Nigeria traded at an alltime low at N13.9 on Thursday, sustaining sell-offs after the beer maker released a profit warning ahead of its full-year financial result release.

Diageo-owned Guinness Nigeria plc recently issued a revenue warning ahead of the release of its full-year audited financial result for the period ended 30th June.

According to the brewer, the adverse impact of the sharp contraction in economic activities and the knockon effect of the COVID-19 lockdown took a toll on the on-trade segment of its business across all markets with production and revenues have been negatively affected.

The brewers of Origin drink said it carried out a comprehensive review of its asset base and made a strategic decision to impair a certain category of assets, which were generating suboptimal returns, in line with the company’s long-term strategy of delivering value to shareholders.

“Due to a combination of the impact of COVID-19 and

the asset impairment, we expect the profitability of the Company for the Financial Year to 30th June 2020 to be impacted. The Company’s balance sheet however remains strong, and this gives the Board the confidence that the Company has the right resources to continue to deliver the strategy,” the statement said.

The audited financial results for the year as approved by the Board will be published

in accordance with extant rules and guidelines after the completion of the year-end audit in the month of August 2020. Guinness reported revenue of N96.08 billion for the nine months that ended March 31, 2020, showing a fall of 5.3% compared with N101.40 billion recorded in the corresponding year of 2019.

In addition, financing cost rose by 97% to N3.582 billion compared to N1.817 billion

recorded in 2019. Guinness Nigeria PLC ended the period with a profit after-tax of N1.672 billion, plunging by 60% from N4.252 billion recorded in 2019.

On Thursday, the company’s market capitalization was N30.446billion, its price to book ratio, which is valued at 0.3496 and a dividend yield valued of 10.94 percent showed the stock was highly undervalued with great potential in the long term.

FINANCIAL SERVICES

United Capital Sees Record Revenue Surge in First Half of 2020 Defying Virus SEGUN ADAMS

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inancial and investment Services Company United Capital weathered the storms of the novel coronavirus pandemic, growing half-year revenue by the most in at least five years on better trading income and advisory business.

Revenue rose 37% to N4.45 billion in the six months compared to N3.24 billion last year owing to a 348% surge in net interest margin, 85% jump in net trading income and the 77% higher fees and commissions earned in the period.

The coronavirus pandemic has disrupted business operations in Nigeria, and abroad, lowering expectations of a good performance for most firms this year.

United Capital’s Group CEO Peter Ashade said the financial services provider was able to endure the challenges of the pandemic due to the well-articulated and diligent implementation of its plans set out last year.

“Going into the remaining half of the year, we remain assiduously committed to delivering greater

returns to our shareholders, by constantly reviewing our strategy in the light of global and domestic happenings, ensuring that we provide value to all our stakeholders from time to time,” said Ashade.

Shares of United Capital rose 3.4% Thursday and 0.74% Friday to close the week at N2.72 per unit. The company’s shares have returned a 13.33% capital gain this year compared to the broader market’s decline of 9.52%. The revenue growth helped boost bottom-line although profit as a percentage of revenue was lower.

The financial services provider grew profit after tax by 15.98% to N1.91 billion compared to a decline of 17.96% seen in the comparable period of 2019.

Profitability of in relation to the equity rose to 10.56% from 8.42% last year while the profitability of United Capital’s assets in generating revenue fell to 0.87% from 1.10%.

Total Assets grew 46.03% to N219.73 billion from the start of the year due to over 242.09% increase in cash and cash equivalent holdings and 9.29% increase in trade and other receivables.

On the other hand, liabilities rose by 54.04% to N201.6 billion owing to the growth in managed funds by 95.22%, 22.56% increase in current tax liabilities and 15.96% rise in other liabilities. Shareholder’s wealth, as a result, declined marginally by 7.47% year-to-date to N18.12 billion owing to 6.47% decline in retained earnings and 42.28% increase in the negative other reserves.

United Capital’s costto-income ratio rose by 10.35 percentage points after a sharp rise of 363.79% in impairment allowance, in compliance with IFRS 9 requirement for some financial assets to be measured at amortized costs.

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BANKING

Keystone Bank trains MSMEs on ways to boost sales during COVID-19 HOPE MOSES ASHIKE

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eystone Bank Limited has concluded a 5-day capacity building initiative for Micro, Small and Medium Enterprises (MSMEs) in the country on the need to increase online presence and grow sales using digital tools.

The training which was tagged: “Boost With Facebook Digital Marketing Webinar Series,” was organised by the bank in partnership with Facebook via its Nigerian representative, Rabbington Media.

According to the lender, the Webinar explored new ways to help SMEs wade out of the harsh economic tide posed by the onset of the corona virus pandemic.

“The widespread outbreak of the novel Covid-19 (Coronavirus) has impacted the world economy negatively and has led to significant shift in customer needs and behaviour as well as a total overhaul of operating models of businesses. In the face of this current socioeconomic reality, the need to increase online presence and grow sales using digital tools has become a burning concern for a lot of small businesses.

“It is in the wake of this rising need that Keystone Bank partnered with Rabbington

“In line with our initial strategy for the 2020 business year, we shall continue to push further our market diversification and costoptimization initiatives, as well as implement, phased automation of our business processes whilst upholding our commitment to ensuring a significant improvement in our value delivery to all our stakeholders,” said Ashade.

During the same period, United Capital successfully issued its N10 billion Series 1 bond under the N30 billion Medium-Term Debt Program – The first to be issued by an investment banking firm in Nigeria which was oversubscribed by about 24%, it said.

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Media to host the “Boost with Facebook Digital Marketing Webinar Series”, a 5-day session which ran from the 1st to the 7th of July with two sessions per day.

“The topics covered ranged from: Using Facebook Ads to reach your target audience; Using WhatsApp to scale your business; Finding new customers using Instagram and more. It was a packed series of 10 episodes of exciting trainings with over 2,000 attendees participating in the sessions,” the bank said.

Commenting on the initiative, the Head of MSME at Keystone Bank, Helen Nwelle, said: “the COVID-19 pandemic has affected a large number of SMEs who can no longer operate through physical stores and outlets and as such, the need to have an active online presence cannot be over-emphasised.

“Hence, the sessions provided a lot of learnings to enable businesses take advantage of the digital tools available on Facebook, WhatsApp, Instagram etc to reach new customers and grow their businesses.”

Also speaking, Chief Executive Officer of Rabbington Media, Okemini Otum, said the sessions were very impactful and engaging, with an everready and keen audience for each session.

14

Monday 20 July 2020

BUSINESS DAY

COMPANIES&MARKETS NAHCO Profit Before Tax grows to N1.34bn Passport Legacy expands into Nigeria ..shares N487m divid­ends among sharehold­ers to strengthen African market IFEOMA OKEKE

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he Nigerian Aviation Handling Company (nahcoaviance) Profit Before Tax (PBT) has grown to N1.34 bil­lion in the year end­e d December 31, 2019, representing 166 per cent increase when compared to the sa­me period in 2018.

The ground handling company also paid N4­87 million as divide­nds at 30 kobo per ordinary share of 50 kobo each, as approv­ed by its shareholde­rs.

Seinde Fadeni, the Chairman of NAHCO stated this on Thur­sday in Lagos at the 2019 Annual Reports and Accounts of its Annual General Meet­ing (AGM), which was transmitted virtual­ly to its shareholde­rs in compliance with the World Health Organisation (W.H.O) and Presidential Tas­kforce (PTF) on Covi­d-19 pandemic.

Fadeni in his speech at the virtual AGM, disclosed that NAHCO in its PBT 2018, had N503.237 million, but grew to N1.34 billion in 2019, which he attributed to the several measures put in place during the financial year to control costs and income revenue by the company.

According to him, Pr­ofit

After Tax (PAT) increased significa­n tly from N196.8 mil­lion in 2018 to N717­.2 million in 2019, representing 264 per cent increase within the period.

Also, Fadeni added that the group closed the year ended Dece­mber 31, 2019 with total revenue of about N9.99 billion, a marginal increase of 2.3 per cent over the 2018 figures of ab­out N9.8 billion.

He, however, express­e d that the year wou­ld have ended on a better note, but the United States – China trade issues and the virus in the Asian country affected importation and reduc­ed flight frequencies at the tail end of 2019.

He added: “In line with our business str­ategies, the initial problems of increas­ed costs of operatio­ns and administrative expenses have been taken on board by management and are be­ing released.

“The transformation agenda, being facili­tated by KPMG, is on course. This transf­ ormation agenda incl­u des our five-year strategic plan and th­is plan is anchored on five strategic pi­llars and three key enablers.

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“ The strategic trans­ formation pillars ar­e ; operational excel­lence, digital trans­formation, people and culture transforma­tion, organic and in­organic growth, and diversification and the key enablers are: adequate funding and capitalisation, financial grip and en­hanced risk manageme­nt.”

Fadeni added that the year 2019 was fair­ly good to the compa­ny, adding that the management was worki­ng to win more clien­ts, while it renewed it a number of its existing contracts within the past year.

Also speaking, Olatokunbo Fagbemi, the Group Managing Director, NAHCO, said that in the year un­der review, the grou­p’s PBT increased to N1.340 billion, whi­le group’s operating cost decreased by 1.4 per cent and admi­nistrative expenses decreased by 12.1 per cent.

Within the year, Fag­bemi explained that the group expended resources into re-fle­ eting, which produced immediate result as the company was ab­le to provide a more efficient service, reduced degreasing and cost of maintenan­ce.

MODESTUS ANAESORONYE

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assport Legacy, a leading citizenshipby-Investment and Residence-by-Investment advisory firm with global headquarters in Dubai, U.A.E, has announced the opening of a new office in Nigeria, targeted at strengthening the company’s partnership with clients and families in Africa.

This expansion positions Passport Legacy as the only Citizenship-and-Residenceby-Investment firm with a strong presence in Africa.

Passport Legacy’s global operational network spans across the Middle East and Southeast Asia. Its recent expansion to Africa is part of the company’s commitment to bring excellence in services closer to its clients in Africa.

“The decision to expand into Africa and open a second office in Nigeria was a logical step in our business growth strategy,” said Jeffrey Henseler, managing partner, Passport Legacy. “Some of our most important clients are in

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Africa and Nigeria is one of the most sophisticated emerging markets in Africa. it only makes sense that we reduce the hassle of access to our services by meeting clients where they live to service them most effectively.”

As the fastest growing citizenship and alternative residence company in the industry, Passport Legacy offers one of the most affordable solutions to getting second citizenship, acquiring residency, or buying real estate in Europe and the Caribbean.

Passport Legacy’s mission is to become the premier partner to Nigerians looking to acquire a second passport to do business globally, engage in international travel with fewer restrictions, or buy real estate abroad for sustained upward mobility. With attractive professional fee structures, Passport Legacy continues to lead with the most competitive industry rates globally.

“Thanks to our presence in Dubai, Passport Legacy can establish even closer ties with our clients in the Gulf and this way we are better positioned

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to introduce our offerings to entities throughout the region,” said Zaid Al Hindi, Partner, at Passport Legacy.

“Opening an office in Nigeria will strengthen our service capabilities in the region and position us for success in Africa”, said Benjamin Eisenring, manager, Passport Legacy.”We are seeing exponential demand in this region for second citizenship especially due to the continued growth and rising purchasing power of Nigerians.”

Passport Legacy is a firm with over 12 years of combined experience in the citizenship-by-investment and residence-by-investment industry. We provide a range of professional services to our private clients including the acquisition of alternative residence or citizenship as well as real estate.

Our clients receive a superior experience at an economical rate. We are dedicated to providing our clients with the highest service standards, ensuring a smooth and efficient process to gaining alternative residence or citizenship.

Monday 20 July 2020

BUSINESS DAY

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15

16

Monday 20 July 2020

BUSINESS DAY

In Association With

Huawei and the tech cold war

ARhyme Balkan betrayal and punishment

China v America

A charity in Burkina Faso teaches criminals to sing

Trade without trust

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INETEEN YEARS ago an unknown Chinese company set up its first European sales offices, in a suburb of Frankfurt and an English commuter town, and started bidding to build telecoms networks. Today Huawei symbolises the daunting rise of China Inc—and a global trading system in which trust has collapsed. With sales of $123bn, it is known for its razor-sharp prices and dedication to the industrial goals of China’s rulers. Since 2018 America has subjected it to a legal assault, making it a flashpoint in the trade war. Now Britain has said that it will block Huawei from its 5G networks (see article). Other European countries may follow. But far from showing the West’s resolve, the saga reveals its lack of a coherent strategy. If open societies and authoritarian China are to keep their economic links and avoid a descent into anarchy, a new trade architecture is needed.

America’s security chiefs have always worried that Huawei’s equipment was designed to aid spying and would make its customers dependent on subsidised Chinese technology. But over 170 other countries decided the risks were manageable. Britain, which works closely with America on intelligence, created a “cell” of cyber-experts to monitor Huawei’s gear in 2010 and, later, confined it to less sensitive parts of the network. Other countries mirrored this approach. It offered a middle way between a naive embrace of Chinese state capitalism and a cold war.

Such a finely balanced judgment has proved untenable. The Trump administration has urged the world to ditch Huawei and enforced a unilateral embargo on its suppliers, preventing sales of some components as well as chips made abroad using American tools. Forced to choose between an ally and a supplier, Britain was inevitably drawn to this week’s decision. It has become riskier for anyone to do business with a

firm Uncle Sam wants to cripple.

Huawei, for its part, has failed to reassure Britain’s cyber-experts, who have complained that its buggy software is getting harder to monitor, or to reform its opaque governance and ownership. Any remaining illusions that China’s leaders respect the rule of law when it really matters have been shattered by events in Hong Kong.

The direct cost of ripping Huawei out of European networks is tolerable—adding less than 1% to Europeans’ phone bills if amortised over 20 years. Ericsson and Nokia, two Western suppliers, can ramp up production and new competition may emerge as networks come to depend more on software and open standards.

The true burden has nothing to do with antennae but stems from the decay of the world’s trading system. Perhaps a dozen countries might end up banning Huawei—Germany is sitting on the fence (see article). But it will still be used in much of the emerging world, hastening the splintering of the tech industry. Trade relies on common rules but Britain’s decision has been made amid a swirl of lobbying and threats. It is hard to elicit a principle behind it that can be usefully applied more broadly.

If the problem is gear made in China, then Ericsson and Nokia do that, too. If it is Chinese firms building systems which connect devices (in the case of 5G, robots and machines), then a similar

logic could be applied across a digitising world economy. German cars and Apple phones sold in China are packed with software, data and sensors. Is China entitled to ban them, too?

This feeds a spiralling sense of lawlessness. The average tariff on Sino-American trade is 20%.

Direct investment flows from China to Europe have dropped by 69% from the peak in 2016, according to Rhodium, a research firm. Other firms are caught in the crossfire. TikTok faces a ban in India and, perhaps, America.

China plans to impose sanctions on Lockheed Martin for selling arms to Taiwan. Now that President Donald Trump has ended Hong Kong’s special status, HSBC, a bank with huge interests there, could be subject to punishment by both China and America. Some Chinese lenders may be banned from dealing in dollars.

The logic of the Huawei ban is one of disengagement and containment. But this will not work if it is applied across the entire economic relationship. The West’s last great authoritarian rival, the Soviet Union, was a trade minnow.

China accounts for 13% of world exports and 18% of world market capitalisation, and is the dominant economic force in Asia.

Instead a new trade regime is needed that acknowledges China’s nature. That is not easy.

The World Trade Organisation (WTO), which aims to set universal rules, has failed to evolve with

the digital economy. Nor was it prepared for President Xi Jinping’s drive to increase state and Communist Party influence over private Chinese firms and those, like Huawei, which say they are mutually owned by workers. Disillusioned with the WTO, the Trump administration’s negotiators unilaterally tried to wrestle China into liberalising its economy and cutting subsidies, using the threat of tariffs and embargoes. That has been a fiasco.

So how should the trade architecture work in an age of mistrust?

The goal should be to maximise trade consistent with both sides’ strategic security. That means fencing off flashpoints, such as tech, that generate lots of tension but a minority of trade: perhaps a third of Western firms’ sales to China based on our analysis of Morgan Stanley’s data, for example. These sectors will require scrutiny and international security certification of the kind Britain tried with Huawei. It may not work. But at least commerce in other areas can flourish.

Chinese firms should also be required to accept open governance of their big subsidiaries in the West, including local shareholders, foreign directors and managers with real autonomy, and disclosures that all help create a degree of independence from the state. This is not hard: multinationals such as Unilever have been doing it for decades. TikTok could be a pioneer.

The ultimate network effect Open societies are stronger when they act in unison. Europe may be tempted to go it alone, ending decades of transatlantic cooperation. Yet at some point, soon if Mr Trump fails to win a second term, America will reinvigorate its alliances because it has been less effective without them. The West cannot fundamentally change China or ignore it. But by acting together, it can find a way to do business with an authoritarian state it mistrusts. Huawei marked a failure to do this. Time to start again.

Finding rehabilitation, and stardom, behind bars

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HEN ROLAND TAPSOBA went to prison in 2015 he never dreamed he’d emerge a rock star.

The 31-year-old former estate agent was convicted of fraud in Burkina Faso’s capital, Ouagadougou, and sentenced to five years behind bars.

He had sung hip-hop for fun in high school. In jail, music became his salvation. Mr Tapsoba learned to play the guitar, huddled with ten inmates over one instrument. His favourite song was “Wata Beogo” (“I’m

coming tomorrow”, in Mossi, a local language). It made him think about seeing his family.

“In jail you might feel hungry or have needs, but those are physical needs. In your mind the main priority is to get free, to go beyond the gates,” he says.

Almost three years into his sentence he entered a music competition run by African Culture, a local charity that tries to rehabilitate prisoners through the arts. Mr Tapsoba competed against six inmates and won an album deal and a music video, which he produced in jail. Since his release last year, fame has helped Mr Tapsoba (who now goes by the stage name Rolby) Continues on page 17

Monday 20 July 2020

BUSINESS DAY

17

In Association With

Let them learn

The risks of keeping schools closed far outweigh the benefits Millions of young minds are going to waste Editor’s note: Some of our covid-19 coverage is free for readers of The Economist Today, our daily newsletter. For more stories and our pandemic tracker, see our hub

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LL AROUND the world, children’s minds are going to waste. As covid-19 surged in early April, more than 90% of pupils were shut out of school. Since then the number has fallen by one-third, as many classrooms in Europe and East Asia have reopened. But elsewhere progress is slow. Some American school districts, including Los Angeles and San Diego, plan to offer only remote learning when their new school year begins.

Kenya’s government has scrapped the whole year, leaving its children idle until January. In the Philippines President Rodrigo Duterte says he may not let any children return to the classroom until a vaccine is found. South Africa has reopened casinos, but only a fraction of classrooms.

Many parents are understandably scared. Covid-19 is new, and poorly understood. Schools are big and crowded. Small children will not observe social distancing.

Caution is appropriate, especially when cases are rising. But as we have argued before, the benefits of reopening schools usually outweigh the costs.

The new coronavirus poses a low risk to children. Studies suggest that under-18s are a third to a half less likely to catch the disease. Those under ten, accord-

ing to British figures, are a thousand times less likely to die than someone aged between 70 and 79. The evidence suggests they are not especially likely to infect others. In Sweden staff at nurseries and primary schools, which never closed, were no more likely to catch the virus than those in other jobs. A new study of 1,500 teenage pupils and 500 teachers who had gone back to school in Germany in May found that only 0.6% had antibodies to the virus, less than half the national rate found in other studies. Granted, an outbreak at a secondary school in Israel infected over 150 pupils and staff. But with precautions, the risk can be minimised.

However, the costs of missing school are huge. Children learn less, and lose the habit of learning. Zoom is a lousy substitute for classrooms.

Poor children, who are less likely to have good Wi-Fi and educated parents, fall further behind their betteroff peers. Parents who have nowhere to drop their children struggle to

return to work. Mothers bear the heavier burden, and so suffer a bigger career setback. Children out of school are more likely to suffer abuse, malnutrition and poor mental health.

School closures are bad enough in rich countries. The harm they do in poor ones is much worse (see article).

Perhaps 465m children being offered online classes cannot easily make use of them because they lack an internet connection. In parts of Africa and South Asia, families are in such dire straits that many parents are urging their children to give up their studies and start work or get married.

The longer school is shut, the more will make this woeful choice. Save the Children, a charity, guesses that nearly 10m could drop out. Most will be girls.

Education is the surest path out of poverty. Depriving children of it will doom them to poorer, shorter, less fulfilling lives. The World Bank estimates that five months of school closures would cut lifetime earnings for the children who are affected by

$10trn in today’s money, equivalent to 7% of current annual GDP. With such catastrophic potential losses, governments should be working out how to reopen schools as soon as it is safe. This should not be a partisan issue, as it has sadly become in America, where some people assume it is a bad idea simply because President Donald Trump proposes it.

In some countries teachers’ unions have been obstructive, partly out of justified concern for public health as cases climb, but also because teachers’ interests are not the same as children’s—especially if they are being paid whether they work or not.

The main union in Los Angeles urges that schools remain closed until a long wishlist of demands has been met, including the elusive dream of universal health care in America.

Children cannot wait that long.

Places that have restarted schooling, such as France, Denmark, China and New Zealand, offer tips for minimising the risks. They let the most vulnerable teachers stay at home. They commonly reduced class sizes, even though that meant many children could spend only part of the week with their teachers.

They staggered timetables to prevent crowding in corridors, at school gates and in dinner halls. They required or encouraged masks. They boosted school-based testing and tracing.

The Centres for Disease Control and Prevention has used these to draw up sober guidelines, which include measures such as separating desks by six feet (though the vice-president this week said that schools should feel free to ignore them).

There will be pain

With oil cheap, Arab states cannot balance their books The crisis is an opportunity to move beyond hydrocarbons

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MID WARLORDS and bandits, as smallpox spread around him, George Bernard Reyno l d s s e a rc h e d t h e sands of Persia (now Iran) for oil. The British geologist drilled for seven years—and found little.

Finally his financiers said enough was enough: it was time to dismiss the staff, dismantle the equipment and come home. Instead Reynolds kept drilling. And in the early morning hours of May 26th 1908, he struck a gusher. It was the first big petroleum find in the Middle East, but certainly not the last. Oil would soon transform the region’s economies, enrich its ruling families and attract more foreign influence.

A century later another big change is coming, as countries around the world adopt cleaner sources of energy. Peak demand for oil may still be years away, but covid-19 has given the Middle East and north Africa a taste of the future. Prices of the black stuff plummeted as countries went into lockdown. The region’s energy exporters are expected to earn about

half as much oil revenue this year as they did in 2019; the IMF reckons their economies will shrink by 7.3%. Even when the virus recedes, a glut of supply will probably keep prices down. Faced with budgets that no longer add up, Arab states must adapt.

The challenge they face is daunting (see article). Take Algeria, which needs the price of oil to be over $100 a barrel for its government’s books to balance. The price of Brent crude, a benchmark, is just over $40. So in May the Algerian government said it would cut its budget by half. Things are no better in Iraq, a big oil exporter,

which is nearly broke. Even stable producers such as Oman and Kuwait are living beyond their means. Saudi Arabia, the world’s biggest oil exporter, has been burning through its cash reserves for months. Money that was meant to smooth the kingdom’s transition to a less oily economy is now propping up the old petrostate.

The effects will be felt across the region. Egypt exports little oil, but over 2.5m of its citizens work in oil-rich countries. Remittances are worth 9% of its GDP. As oil revenues fall and some of those jobs disappear, Egypt will suffer, too.

The same is true of Jordan, Leba-

non and the Palestinian territories, which have long relied on the Gulf to absorb their jobless masses.

These countries also count on oil producers as customers. Around a third of exports from Jordan and Lebanon go to oil-rich states, which send back wealthy tourists.

Kuwaitis, Saudis and Emiratis account for about a third of tourist spending in Lebanon.

The good news is that many Arab countries have plans to wean their economies off oil. Reform programmes with fancy names like “Vision 2030” aim to unleash the private sector, employ more women, cut subsidies and invest in non-oil industries. The bad news is that these states are moving too slowly. Some have cut their bloated bureaucracies and pared back subsidies. Saudi Arabia recently tripled its value-added tax.

But the public sector is still the region’s main employer. Despite talk of diversification, the Gulf’s economies continue to revolve around oil. Now Arab leaders speak of a wave of privatisations to bring in new revenue. What have they been waiting for?

A charity in Burkina Faso teaches criminals to sing Continued from page 16

chart a new course in life. His lyrics thrum out over the airwaves and in concerts.

Even at the best of times Burkina Faso’s prisons are overcrowded and dangerous. Almost 8,000 inmates languish in them.

Many have not been convicted of anything, since suspects can wait for more than a year before they are tried. And overcrowding is getting worse because the government is rounding up young men suspected of supporting jihadists. Human-rights groups say that some prisoners are tortured. Many are depressed or traumatised and get no treatment, either for their psychological problems or for HIV or TB. Freeman Tapily, the founder of African Culture, has spent a decade trying to support prisoners through song and dance and to reduce the stigma they face when they are released.

The group, which is funded by the French government, runs an annual music festival, during which it hosts concerts in prisons. This year inmates will have the opportunity to write a play, which they will perform in venues around the capital. The arts give “inmates the opportunity to express themselves, to help build resilience and trust,” says Melodie Safieddine, a psychologist who has worked in several conflict zones.

It is not just Mr Tapsoba’s ascent from cell to concert hall that offers hope, but his lyrics, too.

One of his winning songs goes: “After effort there is comfort.

After sweat there is happiness.

If life doesn’t end, there is no despair. Take courage.”

18

Monday 20 July 2020

BUSINESS DAY

Harvard Business Review

ManagementDigest

6 reasons your strategy isn’t working Michael Beer CONNECTING Due to the COVID-19 pandemic, businesses everywhere are grappling with strategic challenges and confronting the need to re-imagine their very purpose, identity and structure. What puts most of their transformation efforts at risk is the possibility that organizations might simply not be able to carry out the proposed new strategies.

My experience in studying corporate transformations points to six common reasons for strategic failures, which I call hidden barriers. Leaders often don’t know — and sometimes do not want to know — about their hidden barriers. People do not speak up about them, fearing consequences. That in turn makes it nearly impossible for leaders to confront them.

Let’s look at the six barriers and how they are detrimental to your organization: 1. UNCLEAR AND CONFLICTING PRIORITIES: This barrier arises when the company’s strategy is developed by a few select executives with conflicting priorities and only then is presented to the rest of leadership. If the whole senior team is not involved from the start, stra-

tegic priorities will lack clarity, and commitment won’t be possible. People will end up feeling overloaded due to everything being labeled a priority.

2. AN INEFFECTIVE SENIOR TEAM: In almost all the organizations I have studied, this type of ineffectiveness was due to leaders not speaking with a common voice about strategy and value. The organizationwide consequences of this were low trust, low commitment to strategic decisions and conflict-

ing understandings of what the strategy even was. To prevent this, members of the senior team should get together early to talk about strategy honestly and constructively and reach a common understanding.

3. INEFFECTIVE INDIVIDUAL LEADERSHIP STYLES: When it comes to individual leadership, there are two ineffective styles: a top-down approach that does not involve team members sufficiently and a nonconfrontational style. As a

result of their leadership style, these leaders doesn’t learn about what members of the senior team or lower levels really think about what’s not working and why.

4. POOR COORDINATION: Senior teams whose members fail to cross-collaborate are unable to overcome everyday obstacles together. Their lack of collective conversations prevents the organization from recognizing and correcting its flaws. This creates a culture in

which executing cross-functional initiatives is painfully hard and is seen as secondary to meeting the goals of each business unit.

5. INADEQUATE LEADERSHIP DEVELOPMENT: Research shows that people usually develop leadership skills when tasked with challenging new assignments. But that requires managers to lend their high potential leaders to other parts of the organization for their development. When this doesn’t occur naturally and regularly, it damages the company as a whole and its future prospects.

6. INADEQUATE COMMUNICATION: This happens when information about an organization’s strategic direction does not circulate from the senior team down to the rest of the company, and back up from lower-level employees to the senior team. Rather than having productive conversation that flows both ways, there is increased confusion.

If your organization is struggling in one or more of the areas described above, then it will probably have a hard time transforming. It is only by targeting its barriers that it will be able to foster honest companywide conversations, adapt and survive the COVID-19 crisis.

Taking care of our caregivers Jessica Dudley HEALTH or front-line caregivers, emotions have run high during the pandemic. There is anxiety about getting the virus and exposing one’s families, and grief about the loss of patients, family members or colleagues.

While we have seen the remarkable support for health care workers in communities across the United States, what leaders are doing within their own organizations to help their workforce cope has been less visible.

To learn from what health care organizations have done to support clinicians, Press Ganey (where I work) convened a virtual group of patient-care professionals. Over the past 12 weeks, members of this “caregiver collaborative” have met virtually to discuss their experiences.

Here are five strategies that the institutions our project participants belong to have employed to address the emotional needs of caregivers: 1. SEND ENCOURAGING

F

MESSAGES: At many institutions, leaders highlighted the caregivers’ compassionate work and emphasized the need for self-care through phone and text messages. For example, at Valley Health System in Bergen County, New Jersey , the CEO and chief operating officer recorded weekly phone messages for staff members with words of support and gratitude. The organization also posted notes of appreciation in elevators and other common areas.

2. CREATE SPACES FOR RECHARGING: Providing staff with www.businessday.ng

ways to connect, either on-site or virtually, encourages mutual support and a sense of community. At many institutions, for instance, vacant family lounges were repurposed and stocked with snacks and drinks for the staff’s use.

3. PROVIDE RESILIENCE RESOURCES: These include meditation, fitness and yoga classes; togo meals; and on-site facilities to shower and change before leaving work. Boston Medical Center developed a suite of mindfulness practices ranging from physical movement to meditation, avail-

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able both on demand and in live sessions. Sessions are free and available to the workers, as well as to their family members.

4. OFFER FACILITATED SUPPORT GROUPS: Many institutions have developed virtual support groups that use trained facilitators to help build peer group communities and provide behavioral strategies for dealing with the emotional challenges of caregiving during the pandemic.

Brigham & Women’s Hospital in Boston offers physicians and other clinical staff virtual “wellness huddles” led by a peer support specialist and a behavioral health professional. The short video lectures offer basic instruction in behavioral strategies for dealing with stress, insomnia, grief and trauma.

5. GIVE MENTAL HEALTH SUPPORT: Before the pandemic, many institutions actively promoted mental health resources for their workers, often through employee assistance programs.

Recognizing the current increased need for support, some organizations have also instituted additional services. Brigham @Businessdayng

& Women’s Hospital transitioned its in-person, rapid access mental health program to a secure virtual platform. The program provides a free 30-minute confidential consultation with a psychiatrist or psychologist to any physician feeling stressed, anxious, overwhelmed or burned out.

Many versions of the five support strategies described above have long existed but have been dramatically expanded to meet caregivers’ needs during the pandemic. As this pandemic subsides, leaders should evaluate whether they should be continued in their expanded form.

Many of the stressors front-line workers are experiencing are amplified versions of issues they’ve always experienced. Programs that validate those stressors and provide mental health care can address the challenges clinicians face every day, during a pandemic or otherwise.

Jessica Dudley is the chief clinical officer at Press Ganey and a professor at Harvard Medical School.

Monday 20 July 2020

BUSINESS DAY

19

real sector watch

Manufacturers spend 18% less on diesel, gas as power supply improves in clusters Odinaka Anudu

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ost of alternative sources of energy i n c u r re d by m e mb e r s o f the Manufacturers Association of Nigeria (MAN) dropped from N82.6 billion in 2018 to N67.38 billion in 2019, signifying an 18.4 percent decrease over the period, data from MAN say.

This is an indication that power supply from electricity distribution companies (DisCos) to industrial clusters improved in 2019.

Expenditure on alternative energy sources incurred by MAN members has declined by 48.14 percent between 2016 and 2019, falling from a record high N129.95 billion to N67.38 billion over the four-year period. However, the 2019 figure was significantly higher than N25 billion spent by the manufacturers on alternative energy sources in 2015. Alternative energy sources in the manufacturing sector include: diesel, fuel, gas, low-pour fuel oil (LPFO), USPs and coal-fired plants. MAN has over 2,000 members, including the Dangote Group, Cadbur y, Flour Mills of Nigeria, Honeywell, Nestlé, Unilever, PZ Cuss ons, among many others.

“In recent times, particularly with the privatisation of the power sector, more attention has been given to electricity supply to the industry, leading to marginal improvement in

Source: MAN, BusinessDay

the country in terms of hourly supply and number of outage per day,” MAN says, while explaining the cause of the 2019 decline in alternative energy spend. ”Since the first half of 2018, electricity supply from the distribution companies to the sector has stabilised at 10 hours per day on the average just as power outage stabilised at 3 times daily,” MAN further says.

The association further

explains that reduction in power outages means improvement in electricity supply to the sector.

Thirty to 40 percent of manufacturing expenditure goes to energy sourcing. The sector’s annual self-generating capacity is estimated at 13,223 megawatts, according to a 2015 survey undertaken by Adeola Adenikinju, professor of economics, funded by the European Union and German government. “ Th e i mp o r t a n c e o f

power to manufacturers cannot be overemphasised. For you to do any production, you need to run your plant and those plants need energy, which takes about 40 percent of our production cost and that is not good for our business, especially when you have to compete with imported products. Therefore everything we can, we must do to ensure we bring our costs down,” Reginald Odia, former chairman of Economic Policy Com-

mittee of MAN and CEO of Bennett Industries Limited, said in an interview with journalists in 2017 when the report was unveiled in Lagos.

MAN established a power development company in 2016 to improve energy supply in industrial clusters across the country.

Power has been a major challenge for households and firms in Nigeria for decades. Africa’s most populous country generates about 5,000 megawatts

of power and distributes 2,000 to 3,000 for 200 million people and millions of firms. This is grossly inadequate, experts say.

Eighty million Nigerians living in 8000 villages across the country lacked access to electricity by 2017, Mac Cosgrove-Davies, World Bank global lead, Energy Access, said in Abuja in December of that year.

A new tariff hike, which was supposed to take effect in this month, has been postponed to the first quarter of 2021 due to COVID-19 pandemic ravag i ng ma ny h ou s e h o l d s a n d bu s i n e ss e s.

The tariff is targeted at removing electricity subsidy in order to make bills paid by consumers costreflective.

A 2016 PwC report entitled ‘Powering Nigeria for the Future’ said Nigeria’s per capita power consumption was then only 151 kWh per year, making it one of the lowest in the region and globally.

The report said based on ongoing projects then, the per capita power consumption in Nigeria could reach 433 kWh per year in 2025.

“Given the re quirements of the economy and the population, there is a critical need to drive higher power availability, and we believe a stretch target of 982 kWh per year (6.5 times the current level) by 2025 is realistic. This is based on benchmarking with other growth markets, like Vietnam,” the PwC report further said.

COVID-19: Industry Ministry pledges N65bn stimulus package for firms Gbemi Faminu

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s part of efforts to revive the economy and encourage the Organised Private Sector (OPSN), Adeniyi Adebayo, minister, Industry, Trade and Investment, has announced the provision of N65 billion stimulus package for members of the organized private sector.

Adebayo disclosed this at a virtual meeting held

recently between him and members of the OPSN, made up of the Manufacturers Association of Nigeria (MAN), Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Nigeria Employers’ Consultative Association (NECA), Nigerian Association of Small and Medium Enterprises (NASME) and Nigerian Association of Small Scale Industrialists (NASSI).

He announced that a www.businessday.ng

series of stimulus packages would be made available soon to assist operators in the private sector. These, according to him, included N50billion Survival Funds for MSME and N15billion Guaranteed Uptake Scheme to save 500,000 jobs.

He further said that under some of the interventions, 40 percent of the funds would be reserved for women-owned businesses.

He said that the private

sector had an important role to play in rejuvenating the economy and assured them of the ministry’s support.

He pledged that the ministry would support and work closely with the private sector as the government worked to reboot the economy in the face of the COVID- 19 pandemic Beyond the announcement of the stimulus package, he tapped the implementation of projects and programmes under the

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Economy Sustainability Plan(ESP), recently approved by National Executive Council (NEC), as some of the programmes targeted at revivifying the economy.

Saratu Iya Aliyu, OPSN president, in her address, thanked the minister and also called for closer ties between the OPSN and the ministry, especially as the country struggles to save and reboot the economy after the pandemic.

Aliyu, who is also NAC@Businessdayng

CIMA president, added that the present situation offered an opportunity to diversify the economy and make it more self-reliant, stressing that steps must be taken towards that goal.

The meeting agreed on a quarterly consultative meeting of the OPSN with the minister as part of strategies to work closely with the private sector for the implementation of appropriate policies across all sectors of the economy to ensure desired impact.

20

Monday 20 July 2020

BUSINESS DAY

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These insurers may not reward shareholders

SHORT TAKES N312m

…Guinea, Royal Exchange, Niger Insurance records accumulated losses BALA AUGIE

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nvestors who have put their money into Niger Insurance, Guinea Insurance, and Royal Exchange Insurance may have to wait for a long time before they are rewarded in form dividend payment.

This is because these ventures have been recording recurring loses that has left a hole in their balance sheet and the law only allows payment of dividend from profit.

Across the globe, regulators always pay attention to the capital position of insurance companies because it is essential to ensure insurers hold “robust level” of reserves to protect policy holders and absorb losses.

The Companies 2013 states that a company could declare or pay dividend out of its profits for the current year or profits for any previous full years (FYs).

However, before declaring any dividends, the companies are required to make following adjustments to the profits which would be available for distribution as dividends: a. Make a provision for depreciation (in accordance with Schedule II to the 2013 Act)b. Setoff carried over previous losses and depreciation not provided in the previous year(s) against its profits for the current year.

Niger Insurance has a negative retained earnings of N2.78 billion as at December 2019, same as 2018’s negative figure of N1.36 billion. As a result of a sharp drop in premium

income and rising management expenses, the insurer posted a loss after tax of N1.65 billion in the period under review.

Niger insurance is beleaguered by spiraling claims/operating expenses, resulting in deteriorating underwriting performance.

And insufficient liquidity that hinders it from investing in government securities to earn sizable investment income to augment battered bottom line (profit) exposes it to the vagaries of macroeconomic shocks. Interestingly, Niger Insurance incurred management expense of N2.53 billion as at December 2019, a figure that is 1.37 times net

premium income of N1.43 billion.

In short, operating expenses ratio increased to 137.15 in December 2019 from 49.05 percent the previous, thanks to a 54.93 percent reduction in net premium income to N1.84 billion.

Guinea Insurance has negative retained or accumulated losses of N1.75 billion in its balance sheet as at December 2019, while it posted a loss after of N795.04 million.

The insurer is reeling from a N645 million loss on disposal of assets. It acquired four properties in choice areas in Lagos for a combined amount of N1.82 billion and disposed them for N1.10 billion.

Royal Exchange also has negative retained earnings of N3.19 billion as at December 2019 and a loss after tax of N215.13 million.

At 1.176 percent as at December 2019, the insurer’s combined ratio has exceeded the 100 percent bench mark; what this means is that it is expending more on claims, underwriting and operating expenses than it is earnings in premium income.

While Sovereign Trust Insurance has negative retained earnings of N1.18 billion as at December 2019, it recorded a profit after tax of N503.38 million.

There more companies that have accumulated losses in their books but they have not released financial statement in the last three years.

That’s slap on regulator and cast a pall over its ability to coordinate an industry that contributes less than one percent to the country’s GDP. A strong capital buffers ensures insurers have the financial ammunition to surmount economic headwinds and meet obligations to policy holders while delivering higher returns to shareholders.

Analysts have warned that insurers’ capital position isn’t strong enough to support bumper dividend payment as they need to conserve cash in order to meet regulator’s new minimum capital requirement.

The European Union has advised insurers and reinsurers to postponed dividends, buybacks, and bonuses as the coronavirus has led to lockdowns of economies and a rising number of insurance claims as travel and events are cancelled and business disrupted.

Stocks waver on fears European recovery fund will be watered down Global indices flat as investors await summit outcome Colby Smith, Harry Dempsey and Hudson Lockett, FT

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S stocks reversed earlier losses on Friday despite the release of new data that showed consumer sentiment soured in July in the face of surging coronavirus cases across the country.

The S&P 500 was a fraction higher headed into lunchtime in New York and the Nasdaq, too, clawed back previous losses even though one of its biggest constituents, Netflix, fell hard. The streaming giant said overnight that subscriber growth would slow in the second half of the year and its shares

dropped by as much as 7.3 per cent.

Wall Street is on track for its third consecutive weekly gain and the S&P 500 briefly turned positive for the year this week before a mixed bag of corporate earnings and further increases in coronavirus cases across the US stymied progress.

In Europe, the continent-wide benchmark Stoxx 600 was also almost flat as investors focused on a vital EU summit to discuss a €750bn pandemic recovery fund. The index was on course to grind out a third week of gains. London’s FTSE 100 closed up 0.6 per cent after prime minister Boris Johnson urged workers to return to offices in a push for normality by November.

“Amid low summer liquidity, the uneven recovery and the persistent fears of a second wave of infections could keep volatility elevated after the strong second-quarter rally,” said Emmanuel Cau, head of European equity strategy at Barclays.

He added that “all eyes are now fixed on the EU summit” over the next two days for clues on how the 27 member states resolve their differences.

When we look at the fundamentals, governments still need to support the economy Salman Baig, Unigestion “We expect the recovery fund to be watered down,” warned strategists at ABN Amro, with the proposed €500bn for grants and €250bn

P.E

for loans likely to be adjusted so the split is more even.

Mark Rutte, prime minister of the Netherlands, told a Dutch broadcaster that he was “not optimistic” before the talks. He added that the Netherlands, one of the so-called frugal four, will stick to its position that countries receiving support must sign up to economic reforms.

Salman Baig, investment manager at Swiss asset manager Unigestion, said the comments were a “bit of jawboning” and more fiscal support was likely given low borrowing costs. “When we look at the fundamentals, governments still need to support the economy,” he said.

After a disappointing 2018, Fidson healthcare seems to have regained its mojo as it records an after-tax profit of N312 million in full-year 2019 for the period ended 31 December. Revenue dipped 13.5 percent to N14.06bn from N16.22bn in the same period in 2018. Efficient cost management saw its cost of sales decline 17.35percent to N8.19bn from N9.91bn

5 The stock market declined for the fifth-straight trading session on Friday to end its worst week after CBN’s CRR policy weighed on banking stocks and set off 2020’s longest bear-run.

Nigerian equities fell for all five trading sessions last week to close 2.65 percent lower weekon-week, and end January on a very different tempo than it began the month.

Bank stocks shed 5.17 percent to push Year-to-date return to 7.46 percent, down from around 10 percent at the beginning of the week, while analysts say the bearish sentiment will likely extend to trading this week.

“Next week, we expect bearish pressures on the equities market to remain, as investors continue to selldown on banking counters,” said analysts at Lagos-based Chapel Hill Denham in a note to clients.

N23bn Interswitch Limited has listed its N23bn callable senior unsecured bond with a tenor of seven years at a fixed rate of 15percent, embedding a call option that can only be exercised from the second year, are payable in full at maturity A callable bond is a bond that the issuer may redeem before it reaches the stated maturity date. In essence, a callable bond allows the issuing company to pay off their debt early.

According to the company, this is part of its N30bn debt issuance programme through a special purpose vehicle, Interswitch Africa One Plc.

BusinessDay MARKETS INTELLIGENCE Team Lead: BALA AUGIE, IFEANYI JOHN; Graphics: FIFEN FAMOUS

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 Continues on page 37 Email the BMI team balaaugie@yahoo.co.uk; augiebala@gmail. www.businessday.ng

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Monday 20 July 2020

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Friday 17 July, 2020

Top Gainers/Losers as at Friday 17 July, 2020 LOSERS

GAINERS Company

Company

Opening

Closing

Change

N11.65

N12.55

0.9

NB

ARDOVA

ASI (Points)

Opening

Closing

Change

N30.7

N30

-0.7

DEALS (Numbers) VOLUME (Numbers)

GLAXOSMITH

N4.35

N4.75

0.4

GUARANTY

N22

N21.5

-0.5

OANDO

N2.23

N2.31

0.08

DANGSUGAR

N12.2

N12

-0.2

NAHCO

N1.98

N2.06

0.08

NEM

N2.06

N2

-0.06

CAVERTON

N1.83

N1.9

0.07

UBN

N5.45

N5.4

-0.05

VALUE (N billion) MARKET CAP (N Trn)

24,287.66 2,997.00 160,501,175.00 1472 12.679

Nigeria’s stock investors lost N11bn in one week Iheanyi Nwachukwu

N

igeria’s stock investors booked about N11billion loss in the remote trading week ended Friday July 17 amid a mix of bargain hunting and profit taking activities in notable counters.

All NSE sectoral indices closed the review trading week in red except that of NSE Industrial Goods which increased by +0.52 percent.

This month alone, the stock market has decreased by -0.78 percent while this year’s negative return stood at - 9.52 percent.

The stock market maintained its bearish weekly performance amidst weak investors confidence and persistent uncertainties in the global and domestic space.

Twenty-six (26) equities appreciated in price during the review week, higher than 25 equities in the precedin week. Thirty-six

L-R: Lamido Yuguda, director general, Securities and Exchange Commission; Ibrahim Boyi, executive commissioner Corporate Services, SEC; Dayo Obisan, executive commissioner operations SEC and Ebade Atuola, deputy director, Home Finance Department, Ministry of Finance after a Meeting between SEC Management and the Minister of Finance in Abuja.

(36) equities depreciated in price, higher than 33 equities in the preceding week, while 101 equities remained unchanged, lower than 105 equities recorded in the preceding trading week.

In the absence of any positive market catalyst, analysts expect the market to remain pressured in the near term, though the attractiveness of a number of fundamentally sound

stocks may trigger some buying interest.

The Nigerian Stock Exchange (NSE) All-Share Index and Market Capitalisation depreciated by 0.08 percent to close the review trading week at 24,287.66 points and N12.669trillion respectively as against week open high of 24,306.36 points and N12.680 trillion.

The market recorded

total turnover of 1.016 billion shares worth N7.436 billion exchanged in 18,092 deals in contrast to a total of 901.542 million shares valued at N13.453 billion that exchanged hands the preceding week in 18,676 deals. The Financial Services industry (measured by volume) led the activity chart with 784.322 million shares valued at N3.305 billion traded in 10,592 deals.

United Capital grows H1 profit by 16% to N1.91bn Iheanyi Nwachukwu

U

21

nited Capital Plc has released its unaudited financial result for the half-year (H1) period ended June 30, 2020.

Highlights of the result at the Nigerian Stock Exchange (NSE) show revenue of N4.45 billion in H1 2020, compared to N3.24 billion in H1 2019, representing 37 percent year-on-year (YoY) increase.

Operating Income of N4.10 billion in H1 2020, compared to N2.82 billion in H1 2019, implies 45percent YoY increase.

Operating expenses of N2.18 billion in H1 2020, compared to N1.25 billion in H1 2019, implies 74 percent YoY increase. Profit Before Tax (PBT) of N2.27 billion in H1 2020, compared to N1.99 billion in H1 2019, represents 14 percent

YoY increase; while Profit After Tax (PAT) of N1.91 billion in H1 2020, compared to N1.65 billion in H1 2019, represents 16 percent YoY increase. Earnings Per Share (EPS) increased to 32 Kobo (2019: 28kobo).

The company’s statement of financial position shows Total Assets of N219.73 billion in H1 2020 compared to N150.46 billion as at FY 2019, which implies 46 percent yearto-date (YtD) growth. Total liabilities stood at N201.60 billion in H1 2020, compared to N130.88billion as at FY 2019 (54 percent YtD growth). Shareholders fund of N18.12 billion in H1 2020, decreased by 7.5percent YtD as at FY 2019 N19.59 billion.

Commenting on the group’s performance, the Group CEO, Peter Ashade said: “The COVID-19 pandemic has lasted than envisaged and caused www.businessday.ng

greater speculations of global recession and slower global recovery from the pandemic.

The Nigerian economy has been greatly affected by the pandemic as seen in the increasing depreciation of the exchange rate, inflation rate

Peter Ashade, group performance, Group CEO, United Capital

and other economic indicators. As we stated at the release of our last quarter result, our business was not immune to these challenges; however, the Group was able to endure the challenges- Thanks to the well-articulated and diligent implementation of our plans set out last year.”

“With our well-articulated plans, business continuity plan in economic crisis and solid risk assessment framework we were able to deliver an increased revenue of over 37.26percent, increased PBT of 14.10percent and PAT increase of 15.98percent. During this same period, we successfully issued our N10 billion Series 1 bond under the N30 billion Medium-Term Debt Program – The first to be issued by an investment banking firm in Nigeria - which was oversubscribed by about

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Global market indicators FTSE 100 Index 6,290.30GBP +39.61+0.63%

Nikkei 225 22,696.42JPY -73.94-0.32%

S&P 500 Index 3,215.60USD +0.03+0.00%

Deutsche Boerse AG German Stock Index DAX 12,919.61EUR +44.64+0.35%

Generic 1st ‘DM’ Future 26,558.00USD +5.00+0.02%

Shanghai Stock Exchange Composite Index 3,214.13CNY +4.03+0.13%

NSE commemorates Axxela debut bond listing of N11.5bn Iheanyi Nwachukwu

A

xxela Limited has joined the register of companies to successfully raise capital on the floor of the Nigerian Stock Exchange (NSE) even in these challenging times.

The company listed the Axxela Funding 1 Plc’s N11,500,000,000 Series 1; 14.30percent Fixed Rate Bond due 2027, under the N50billion Bond Issuance Programme on Thursday July 16, 2020. The listing was commemorated with a digital Closing Gong ceremony.

Speaking on the listing, the Chief Executive Officer, NSE, Oscar N. Onyema, stated, “I congratulate Axxela Limited on the listing of the Axxela Funding 1 Plc Series 1 N11.5billion Bond. It is worthy of note that this debut debt issuance was over-subscribed by 24percent, and I must commend the management of Axxela as well as the professional parties to the issue for this laudable achievement.

The admittance of the Axxela bond is a testament to the opportunities The Exchange con-

tinues to avail to corporates in diverse business areas and our commitment to supporting stakeholders effectively even as they carry on their activities in the face of the pandemic.”

Commenting on the transaction, the Managing Director, Axxela Limited, Bolaji Osunsanya said, “We are pleased to mark this historic occasion with the management team of The Exchange, investors and all other key stakeholders, particularly our bond holders.

Despite these peculiar times, Axxela has remained resilient and we are quite pleased with the resounding support received from the capital market. The success we have achieved in this issuance is evidence of the increasing confidence in our company’s reputation, brand and performance, and we look forward to returning to the market as we continue to grow.”

Osunsanya was also given the opportunity to sound the digital Closing Gong signalling the end of trading to the applause of Onyema and the Doyen of the market, Rasheed Yussuff.

Nigerian Breweries donates food items, drinks, sanitisers to community, media in Imo GODFREY OFURUM

N

igerian Breweries Plc, foremost beverage firm in the country, has donated relief materials to Awo Omamma community, one of its hosts communities, to support members of the community to overcome difficulties, occasioned by the coronavirus pandemic.

Items donated to the community, by NB Plc, include noodles, rice and vegetable oil.

This is as the firm also donated malt and soft drinks and packets of sanitiser of different sizes to staff of Nigeria Television Authority (NTA) Owerri, Imo Broadcasting Corporation (IBC) and members of the state correspondents’ chapel.

As the world adjust to the harsh realities, brought about

by COVID-19, we realised that more than ever, this is the time for us to support our friends in the media, who are in their own rights front liners in the fight against the spread of the virus, Sade Morgan, corporate affairs director, NB plc, stated.

Morgan, who was repre-

@Businessdayng

sented at the presentation of the items, by Chukwuemeka Aniukwu, corporate affairs manager, south, NBplc, said: “We decided to provide some palliatives to members of the correspondents chapel in Imo, staff of NTA, Owerri and IBC, Owerri, to support and motivate them, while they continue to stay safe and follow World Health Organisation (WHO) and Nigeria Centre for Disease Control (NCDC) guidelines.

She thanked media practitioners in the state, for their partnership, support and coverage of the firm’s initiatives in Imo state and Nigeria at large.

“Your objective reportage of our activities has no doubt contributed to sustaining our company’s reputation and image, which is critical to our continued business operations and success in the country,” she stated.

Recall also that NBplc, made a cash donation of N20 million each to Imo and Abia state governments in support of their efforts to eliminate coronavirus (Covid-19) from the states.

22

Monday 20 July 2020

BUSINESS DAY

BD Money Personal Finance

Financial health check-up? These personal finance ratios come in handy (1) Segun Adams

H

ave you ever caught yourself going through your mobile banking app to see your bank balance, or checking your portfolio to see how much it has grown or your clock to tell the time? It is simply a natural tendency for humans to be curious about what is going on.

Personal Finance Ratios are important tools that help you understand what is happening to your financial health. These ratios are often easy to compute when you know what to look out for and can help you make better decisions regarding finance.

Savings Ratio Savings Ratio shows how prudent you are.

It measures the size of the income portion you are setting aside for future consumption and can be computed by dividing total savings by gross income.

Gross income includes

all your earnings from salary, side jobs, interest received, bonus, dividend, etc.

Suppose you earned N500,000 in January and you kept N100,000 aside whether, in a fixed deposit account, savings accounts, liquid funds and the likes, your savings ratio is 100,000 divided by 500,000 then expressed as a percentage. This gives you 20 percent.

Elizabeth Warren advises

people to save 20 percent of their income (the 50:20:30 rule) while some financial planners say it should be a minimum of 10 percent.

Financial Freedom Ratio Many times when we talk about financial freedom we imagine having enough money to spoil ourselves anytime we want to.

One way to measure this is to look at how many times your monthly income can cover your expenses (a better version adds savings to expenses.)

The rationale is that once you can meet your monthly expenses (and savings or investment target) the extra money can be used to “make your dreams come true.”

To calculate your financial independence, add up all

your monthly income including side jobs then divide by your monthly expenses (and savings/investment target).

For example, if you have a monthly income of N700,000 and monthly expenses and investment target amounting to N350,000 then your financial freedom is 2. This means you have twice as much as you need to provide for your needs every month.

A higher expense like N800,000 will result in a ratio of less than one which means you do not earn enough to consider yourself financially free.

Inflation Protection/ Hedge Ratio This ratio helps you know how insulated your investment is from the purchasing power erosion that comes with rising price levels in the economy.

As you are well aware a naira today is worth two tomorrow; this means keeping a naira till tomorrow will only be worth it if that naira earns enough interest to offset losses due to inflation.

To calculate your inflation hedge you simply need

to compute the difference between the performance of your portfolio and annual inflation rate, or in the case of savings, the difference between interest rate offered by the bank and annual inflation rate. This is the real rate of return.

For instance, if you have a mutual fund that is up 10 percent till date and annual inflation is say 8 percent, then your real return or inflation hedge is 2 percent. That 2 percent guarantees that your naira today is at least worth one naira tomorrow.

Personal Worth/Net Worth How much are you worth?

It is an uneasy question for some but one that would require answering if you want to improve your net worth.

Ask Dangote.

To calculate your net worth, you need to subtract all your liabilities from all your assets.

It’s easy, only that tracking all your obligations (current and long-term) and assets (including liquid or near cash and fixed like properties) will require meticulousness.

Investing

How AbiT makes your portfolio diversification goal easier Lucky Nwanekwu

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BiT Network has officially launched two of its apps on Google Play store, ABiT Farms and ABiTrader, a move to make investing and trading more convenient, and provide alternatives for investors to diversify their portfolio.

ABiT Farms is a generational agricultural investment platform that brings investors together to coinvest in long-term agriculture and earn returns in investment after every harvest. ABiT Trader is a unique system focused type of service that allows access to credible cryptocurrency trading signals and suggestions from experts on the best possible ways to profit from trading.

“It is great to know that we have launched two of our apps on Google Play store

and ABiT farms already has more than 1,000 downloads,” said Gaius Chibueze the CEO of ABiT Network.

“The platform allows you farm and you get returns for up to 40 years without even going to the farm. The farms are listed on www.abitfarm. com.”

Chibueze said the apps are one of a kind in the tech and crypto industry to create money making opportunity in the real estate market as well, and would help newbies and professionals in the cryptocurrency industry to get signals to profit from the crypto market.

He also went further to explain that people can now use their ABiT wallet on ABiT Trader and all their platforms to pay for the company’s products.

After the apps are downloaded users can send naira to their wallet and buy cryptocurrency or pay directly www.businessday.ng

for any product on the platform following a recent payment integration.

All of these would allow users easily send naira to each of the platforms existing in the ABiT Chain and allow users buy cryptocurrency Tatcoin not just on ABiTrader, a platform that

allows people learn how to trade Crypto Currencies like Bitcoin and Ethereum, but also on subsidiaries like ABiT Farm, ABiT Go. Speaking to BusinessDay, the Chief Technology Officer Raymond Idu said with the app users now have direct access to ABiT Farms

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and ABiTrader and with one click when downloaded, can just login and invest in ABiT Farms if they have an account with ABiT Network product.

“By the Grace of God the apps ABiT Farm and ABiTrader are officially launched and they use the

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underlying technology we initially launched which is the central system that controls every information peculiar to the user, so you can now log-in to any of our product if you are already an existing user,” he said.

Idu also added that there is also a peculiar account number created for all the users and they can send their Bitcoin address to anyone as well as use Bitcoin for making payments on the app.

The ABiT apps comes at a time where there is increasing interest in cryptocurrency as an alternative investment in Africa. The launch on Friday serves to encourage the full exploration of the continent’s potentials in digital currencies, blockchains, and related applications as right now over 1.5 million out of over 1.2 billion people in Africa are starting to use crypto products.

Monday 20 July 2020

BUSINESS DAY

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23

24

Monday 20 July 2020

BUSINESS DAY

abujacitybusiness Comprehensive coverage of Nation’s capital

Troops rescue 34 kidnap victims in Benue, recover arms Godsgift Onyedinefu, Abuja

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he Nigerian Military said it’s troops of Operation Whirl Stroke have rescued 32 kidnapped victims from a notorious kidnap syndicate operating in Logo Local Government Area of Benue State, some of whom have been in captivity for over a month.

John Enenche, Coordinator Defence Media Operations (DMO) who made this known in Abuja said the rescue followed credible intelligence on the activities of the syndicate operating in Igbom village in Nenzev Council ward of Logo.

He said troops of Sector 2 and 4, on 16 July carried out a raid operation on a suspected kidnappers den location at Tomayin village in Logo and had contact with the bandits leading to exchange of fire as troops closed in on the hideout .

“The gallant troops responded with superior fire forcing the armed bandits to fled in disarray into the bushes. The determined troops engaged the criminal elements in hot pursuit leading to the killing of one Zwa Ikyegh identified as

the ring leader and others escaped with various degrees of gun shots wounds.

“Troops also recovered one AK 47 rifle, one AK 47 magazine, 6 locally made rifle, one locally made pistol and a magazine.

Others include 22 rounds of 7.62mm Special ammunition, 2 cartridges, 2 motorcycles and some Charms. The hideout has been equally destroyed”, he said.

The Coordinator disclosed that all the rescued kidnapped victims have been reunited with their families in different communities in Logo LGA. Similarly, Enenche said troops of Sector 2 deployed at Gbise in Katsina Ala LGA and Zaki Biam in Ukum Local Government Area of Benue State responded to a distress call on another kidnapping incident at Austoma.

He said the troops promptly mobilized to the scene leading to the arrest of two suspects; Sealemun and Orduem both of whom are linked to late Terugwa Igbagwa also known as Orjondu are currently undergoing investigation after which will be handed over to the Nigeria Police for further necessary action.

FCT Minister charges Council Chairmen to focus on human capital development James Kwen, Abuja

T

he Minister of the Federal Capital Territory (FCT), Muhammad Bello has charged the six Area Council Chairmen of the Territory to focus on human capital Development in the developmental agenda of their areas.

Bello who gave this charge when the six Council Chairmen paid him a working visit in his office reminded them that governance at the Local Government level being closest to the people is very critical for the overall development of the FCT. He commended the

Council Chairmen for doing well in their various domain but asked them to do more and focus a more on human capital development through three main components of primary education, environmental sanitation and public health which were the bedrock of development in any community.

“All of us will finish our tenures and we will still live within the communities. This is the time to upgrade your communities and focus on human capital development. “ No t h i n g p re v e n t s you from supervising the cleaning of the streets yourselves. You all have markets and market

unions, yet there is refuse everywhere. These are areas where you can show leadership by ensuring they are clean.”

“If your communities are clean, it will encourage people to develop properties there because there will be no difference between your community and the city center. And as it develops the standard of living will increase, and encourage revenue generation.

But the initial efforts has to come from you”, Bello said.

The Minister called on the Chairmen to return to the fundamentals of governance and not expend scarce resources on the construction of massive structures while also urging

L-R, Azeez Idowu, assistant superintendent of Police; Attach Ikharo, chairman, FCT Taskforce, and Peter Olujimi, field coordinator, FCT Taskforce, during the seal off of Agape Hotel for violating covid-19 order in Abuja. Picture by Tunde Adeniyi

Benue Tax Boss warns against illegal tax activities

... As BIRS conducts COVID-19 test for staff

Benjamin Agesan, Makurdi

T

he Chairman, Benue Internal Revenue Service (BIRS), Andrew Ayabam has warned against illegal tax activities, just as the agency enforcement team arrested five persons for illegal tax activities.

The Chairman who gave the warning in Makurdi said the culprits have been handed over the to Police for prosecution.

The culprits include Kumave Thadeus, Bem Ikyoche and Sughter Azua at Akumba Village near Abinsi of Makurdi-Gboko Road who were operating an illegal check point in Guma Local Government Area.

Also, Aondoaseer Ikpenger and Ahangba Mishe were arrested at Igbesue Village, Gboko- Aliade Road, Gboko Local Government Area for extorting unsuspecting travellers at an illegal tax point.

BIRS in conjunction with the Benue State Ministry of Agriculture, made it public

that the state has only ten (10) officially gazetted produce inspection points in the state.

The Board futher informs the public that any tax inspection piont outside Zaki Biam, Katsina-Ala, Branch Atser, North Bank, Achoho, Ade-Igwu, Adoka, Ogobia, Tyogbenda Msa, and Naka are illegal.

Meanwhile, BIRS with the collaboration of Benue State Action Committee on COVID-19 and the Nigerian Centre for Disease Control (NCDC) is conducting free COVID-19 test for its staff.

According to the Chairman, Ayabam, the test is in furtherance of the safety measures embarked upon by BIRS to curtail the spread of the pandemic.

He noted that the exercise is not borne out of any suspicion but a further assurance of the safety of staff and tax payers and encouraged all tax payers to adhere to the laid down protocols so as to prevent further spread of the virus. www.businessday.ng

them to follow all extant financial regulations, including all procurement laws.

Bello also assured that the Administration was stepping up security across the FCT as additional police formations are being opened across the Territory and urged the Council Chairmen to support the efforts of the security men posted to their areas.

Earlier, the Chairman of FCT ALGON and Chairman of Gwagwalada Area Council, Adamu Danze, said the Council Chairmen were on a working visit to the FCT Minister and pledged their support to the Administration for all its developmental efforts in the Territory.

Aliyu tasks youths on beautification of Abuja as FCTA flags off tree planting

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he Federal Capital Territory (FCT) Minister of State, Ramatu Aliyu, has tasked youth in the nation’s capital to ensure the beautification of the Territory through planting of trees to achieve improved and sustainable environment.

This she said is in line with President Muhammadu Buhari’s agenda in mobilizing youths to plant 25 million trees in Nigeria.

Aliyu who made the call at the flag-off of tree planting project by Nigerian youths in commemoration of the World Youth Skills Day organised by the FCT Social Development Secretariat, also called on the youths to key into skills development as a panacea to reducing unemployment and poverty in the country.

According to the Minister, Sustainable Development Goals No13 emphasized the need for urgent action to combat climate change and its impact, noting that all nations of the world are committed to focus attention of the huge population of youths to tree planting to promote greening and aesthetics of the environment by adoring it with ornamental plants, shrubs, and trees for a sustainable environment.

“The role of youth in environmental protection cannot be over emphasized.

The youth constitute a larger part of the world’s population and young people will have to live longer with the consequences of current environmental decisions than the elders.

“Future generation will also be affected by these

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decisions and the extent to which they have addressed concerns such as the depletion of resources, biodiversity loss, and long-lived radioactive waste. It is therefore very significant that we ensure the beautification of the FCT through planting of trees, to rid the FCT of waste to achieve an improved and sustainable environment.

“The president has therefore charged every Nigerian youth to be committed to the protection of the environment by getting involved in such unique activities like tree planting to propel the green economy and increase citizens’ health,” Aliyu stated.

The Minister therefore urged all youths to imbibe the right attitude that would support government to promote policies on youth @Businessdayng

development and mainstreaming of youth in all the sectors of development for the actualization of the Sustainable Development Goals (SDGs).

In her remarks, the Acting Secretary of Social Development Secretariat, Dili Onyedinma noted that engaging youths in environmental protection would not only create direct impact on their behaviours, but also influence their immediate communities, since they have the potential to change the society with their courageous behaviours.

She called for adequate funding to develop a more robust action plan to expand the scope of the nation’s sovereign green bonds in line with global commitment to achieving a better future for all.

Monday 20 July 2020

BUSINESS DAY

Start-Up Digest

25

In association with

Nwadike adjusts business model to tap $111bn photography market Josephine Okojie

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s businesses of all sizes, from small to large enterprises, continue to take a hit from COVID-19 pandemic, some entrepreneurs have begun to adjust their models to survive the difficult moment and tap new opportunities.

Among these entrepreneurs is Steven Nwadike, cofounder, Peexoo Technologies, who is on a mission to change the African narrative through photography. He is eyeing a chunk from the $110.8 billion photography market.

Nwadike has adopted the Peexoo Lookalike strategy to survive the difficult moment of the pandemic despite operating in an industry that is one of the hardest hit by the pandemic outbreak.

“The pandemic put us on our toes to start thinking of other ways we can generate revenue as a company, engage our users, and churn out great contents to photographers on our platform,” he says.

“We launched some cool

features like Peexoo lookalike -a facial recognition web app that enables you to find your famous African celebrity lookalike,” he explains.

The strategy made a success as lots of Nigerians who were bored during the initial lockdown visited the website and participated in the Peexoo lookalike initiative.

“We had no idea that Peexoo Lookalike would spread like wildfire because within a week we gained 12,000 users,” he says.

Similarly, Nwadike launched the Peexoo Learn which was dedicated solely for online courses for photography and targeted at amateur and professionals in the industry looking at redefining their skills.

The business is generating revenue from the newly adopted strategy and has been successfully paying its 10 employees their wages when other similar businesses operating in the same industry are struggling to survive or shutting down.

Established in 2018, Peexoo Technology is a SAAS and online photography marketplace powered

Steven Nwadike

by Artificial Intelligence to provide impactful images of the African continent and opportunities for other photographers on the continent to thrive.

The computer scientist, who started his entrepreneurship journey while an undergraduate in university,

was inspired by the ‘Entrepreneur Creed’ by Thomas Paine and is now building a platform that showcases beautiful imagery of the continent.

“My dream is to empower the creativity of black men brave enough to lift a camera while declaring to the world

that Peexoo is the gateway to changing the perception of how the outside world sees Africa,” he says.

“Photographers can single-handedly change the Africa perception but first, they need to change their mentality and start thinking as revolutionaries using just the power of images,” he adds.

The young entrepreneur says the business plans to expand to 10 major cities in the country and five across the West African region in the short run.

Also, the business plans to raise more funds to onboard 5,000 professional photographers before the end of 2020.

It also wants to invest in research and development of AI to create new and unique services – to achieve this. It is currently seeking partnerships and collaborations.

Evaluating the photography industry in the country and Africa at large, he says the sector is an untapped goldmine. He adds that this offers Peexoo Technology the opportunity to have the first-mover advantage in the photography business

in Africa.

According to him, the global photography market size is valued at $110.8 billion, with Africa raking only 10 percent ($11billion) of the total value annually.

He states that Lagos – the country’s commercial center— has over 20,000 registered professional photographers.

“There is still a need for photographers to be respected because not only do they create memories, they are priests at the altar of perception,” he says.

“Hollywood or Nollywood cannot be what it is today without still and motion photographers who have been able to alter and shape reality to their liking in the content they produce,” he further says.

He urges the government to leverage the Peexoo platform as a gateway to reach out to the creative industry while also empowering players in the industry who are mostly youths.

On his advice to other entrepreneurs, he says, “Stay hungry, execute tactically, focus on the big picture even if no one else sees it, and never be afraid to take risks.

stakeholders in the sector needed to accelerate growth in power generation capacity and improve utilisation while expanding the power transmission network and driving better efficiencies.

They also need to establish and scale up efficient power distribution capabilities, the consulting firm noted.

Also in terms of taxes, 28 percent of respondents said they found local government taxes most difficult to comply with, while 26 percent tapped company income tax. Twenty-five percent cited value added tax while as 17 percent said personal income tax.

“Reasons for the difficulty in compliance comprised: the multiplicity of taxies and levies; lack of coordination between federal & state tax agencies; absence of technology platform(s) for ease of payment of all taxes and levies, as well as lack of fully functional tax refunds schemes at the state & federal level,” PwC explained.

“Others included the absence of comprehensive tax payment schedule notification or calendar, and physical

harassment/intimidation by local tax collectors,” the organisation stated.

Forty-nine percent of the MSMEs said taxes and levies took 20 to 40 percent of their profits, while 42 percent revealed that they ate less than 20 percent of their profits.

PwC said the average income tax rate for companies was about 32 percent and 19.2 percent for non-incorporated entities.

This, according to PwC, could mean that the local government actually accounts for the remaining 10 to 20 percent of tax contribution from SMEs. “The percentages are significant when compared to actual contributions by LGAs to tax collection in 2019. Unlike data on federal and state tax revenues, local government tax revenues are relatively difficult to ascertain or obtain.”

The organisation said there was a need for consensus and collaborative dialogue from all public and private sector stakeholders in dealing with the data gaps, issues and challenges at the local government level.

PwC puts annual financing gap for Nigerian SMEs at N617bn Odinaka Anudu

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wC Nigeria has estimated yearly financial gap for Nigerian micro, small and medium (MSMEs) enterprises at N617.3 billion.

In a new report entitled ‘PwC’s MSME Report 2020,’ the consulting firm surveyed over 1,600 MSMEs, out of which 22 percent said that obtaining finance was their biggest challenge.

“Obtaining finance is the most pressing problem MSMEs face,” PwC said. ”Access to finance, in particular credit, is a critical enabler for the growth and development of small and medium enterprises. The SME credit market, however, is notoriously characterised by market failures and imperfections. Hence, in emerging markets and developing economies, 55 percent to 68 percent of formal SMEs are either un-served or underserved by financial institutions, leading to a total credit gap estimated to be $5.1 trillion,” the report said.

PwC, however, said the number was a pre-coronavirus estimate.

In the report conducted between August and December 2019, 16 percent of respondents said finding customers was their biggest challenge, while 15 percent tapped infrastructure such as electricity and transportation as their main issue.

While 14 percent said their biggest challenge was insufficient cash flow, 7 percent fingered multiple taxation.

Furthermore, 31 percent of MSMEs said they had experienced positive growth in excess of 20 percent over the last three years, while 48 percent said they experienced delayed payment due to the terms of trade policies of larger corporates.

In terms of tax payment, 57 percent of the MSMEs surveyed cited multiple taxes and levies, lack of coordination of federal and state agencies, and the absence of technology platforms as big challenges.

Also, 48 percent said family and friends were the most popular financing sources www.businessday.ng

(vs 15 percent who obtained credit facilities). However, 46 percent said they preferred private equity over debt financing (33 percent) to fund business growth.

More so, 21 percent said electricity was their biggest cost; 17 percent cited rent, while 15 percent tapped cost of capital. However, 14 percent fingered employees cost, as 12 percent cited taxes.

“Electricity accounts for the biggest costs to daily operations. Nigeria’s power sector is overwhelmed by myriad

of challenges ranging from operational inefficiencies to infrastructure deficiencies. These challenges have culminated in inadequate electricity supply that has had adverse impact on the business environment in Nigeria.

They consequently contribute to significant economic costs to SME and economic growth,” PwC said.

PwC recommended that for the power sector to achieve about 6.5 times increase in annual per capita consumption by 2025, the

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news

Productivity pivotal in push for remote work post Coronavirus - Experts KELECHI EWUZIE

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he coronavirus pandemic has thrown up the concept of remote working which managers in public, corporate organisations and small/ medium enterprises have to embrace to achieve productivity in the face of current realities.

Human resource professionals during a webinar with the theme “the future of work, remote work, lessons from the lockdown,” have stressed the need to focus on employees’ productivity in remote work as the coronavirus (Covid-19) pandemic continues to take toll on organisations.

The webinar organised by BusinessDay in collaboration with Danne Institute of Research last Thursday, acknowledged that remote working has become a critical factor which employers should adopt and implement if they want to achieve workforce creativity

and productivity.

The recent lockdown in Abuja, Lagos, Ogun and other cities to contain the spread of the virus, took a lot of businesses by surprise and forced organisations that were initially reluctant to adopt remote working to buy into it.

Speakers during the webinar agreed that human resources managers have to rise to the occasion at this period to help organisations respond effectively to the situation that Covid-19 has created. The webinar was moderated by Esther Akinnukawe, chief human resource, MTN Nigeria communication.

The reason most organisations refuse to imbibe remote working before the lockdown was because of the mindset, said Gbemiga Owolabi, organisation and human resources director, Lafarge Africa who spoke as one of the panellists.

Owolabi, however, observed that before remote learning can be effective, or-

ganisations need to ensure that the infrastructure to support the employees is put in place. “Employers cannot ask workers to sit at home without providing the tool to work,” he stressed.

According to Owolabi, “remote working will essentially reduce the number of vehicles on the roads. In the public service, if they practice remote working, we will experience a reduction in the volume of traffic on the Lagos roads”.

He called on organisations to consider the option of adopting office hubs located at a place where the majority of workers commute from to ensure closeness to the workspace. Also adding that with time flexibility, managers will essentially ensure that employees deliver a productive output.

A survey conducted by Danne Institute during the lockdown period in Lagos showed that 70 percent of respondents were open to working from home.

According to the survey,

some of the advantages of working from home include saving in commute time and respite from Lagos terror of traffic, flexible schedules, work-family balance was interesting which enabled the family to bond and increased productivity.

Commenting on how SMEs can benefit from the work from home plans, Franca Ovadje, founder and executive director, Danne Institute of Research said the concept of working from home was about productivity.

According to her, “the cost of working from home has to be weighed against the benefits. If organisations look too closely at the cost, they may forget the benefits.

“It may be a little shortsighted for SMEs to allow their workers to spend valuable man-hours in Lagos traffic and are tired of doing the same routine work without creativity rather than work from home and be more productive,” Ovadje said.

Govt endorses Dangote Cement millionaire promo

…says it’ll reduce COVID-19 impact on Nigerians

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he Dangote “Bag of Goodies 2” consumer promo has been described as a vital private sector intervention capable of reducing the adverse economic impact of the Covid-19 pandemic on the consumers of Dangote Cement and Nigerians in general.

The CEO of Lagos State Lotteries Board, Abiola Bashir Are, stated this at the recent the media unveiling of the Dangote Bag of Goodies Season 2 in Lagos, where he commended the manufacturing giant for investing in the lives of its consumers.

According to him, the decision by the company to make 1,000 consumers millionaires is a testament that it has the interest of the consumers at heart.

“A million naira is a big deal to most people in Nigeria now. We are here to validate the promo. It was done before during Season 1 and I believe that Dangote is doing it again.

The promo is important especially in this time of global Covid-19 pandemic. Psychologically, these are things that give people hope. We are here

to support the promotion. The purpose of the Lagos State Lottery Board is to support businesses, especially when it comes to the promotion of products and services. I wish all the prospective winners good luck.”

Also speaking at the event, a representative of the Federal Competition and Consumer Protection Commission (FCCPC), Susie Onwuka, said that the company has followed due process in its Season 1 of the Bag of Goodies Consumer promotion.

“We are here today to ensure that the interests of the consumers are protected. The company has followed due process by registering the promo. We will also ensure that the company is able to deliver what it promised the consumers. So, we thank the company for always investing in the consumers of Dangote Cement.

We have always witnessed the previous promo and they have always been carried out according to laid- down rules and regulations.”

Family planning will reduce maternal, infant deaths in Nigeria by 30% - Experts Anthonia Obokoh

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xperts in maternal and reproductive health have said adequate and consistence use of family planning would reduce maternal and newborn deaths in Nigeria by 30 percent.

According to the experts, Nigeria has a high maternal mortality ratio of 512 per 100,000 live births, implementing family planning service and integrating Reproductive, Maternal, Newborn, Child and Adolescent Health (RMNCAH) service delivery in the country’s health system would reduce deaths among women and newborns.

They made the submission during the just concluded oneweek webinar training for health reporters and feature writers organised by Rotary Action Group for Reproductive, Maternal, and Child Health in partnership with the Society Of Gynaecology and Obstetrics of Nigeria (SOGON) and the federal ministry of health.

“Increasing public sector investments in family planning will enable Nigeria meet her family planning blueprint goal of 36 percent Contraceptive Prevalence Rate (CPR) by 2020, which will save additional 22, 000 mothers and 101, 00 children from dying,” said Hadiza Galadanci, director Africa Center of Excellence for Population Health and Policy, Aminu Kano Teaching Hospital/Bayero University Kano, Nigeria.

She said that that increasing family planning birth spacing methods to at least two years would have significantly saved about 94, 000 infant lives in 2017 and more in subsequent years.

“The effect of family plan-

ning on maternal health would ensure reduction in pregnancy related and infant morbidity and mortality; improve birth outcome, reduce prematurity and low birth weight babies, as well as better healthy babies,” she said Galadanci further said that use of contraceptives reduces the risk of endometrial cancer and ovarian tumours in women by 40 percent, as well as reduces risk of ectopic pregnancy and Sexual Transmitted Infections including Human Immunodeficiency Virus (HIV).

Also speaking, Samuel Oyeniyi, national desk officer, Maternal and Perinatal Death Surveillance and Response (MPDSR), federal ministry of health, said federal and state governments should integrate and implement reproductive health policies to improve quality of care of women of child bearing age, monitor maternal and infant delivery process, determine cause of mortalities and institute corrective interventions at facilities in community and private levels.

“The policy implementation would ensure more women are captured in the family planning data in order to eradicate maternal and infant death in the country,” he said.

Emmanuel Lufadeju, national coordinator, Rotary Action Group for Reproductive, Maternal, and Child Health, said there was a need for the government to give priority to family planning service to save more Nigerian women and new born from dying in their numbers.

He called for the speedy passage of the Maternal and Perinatal Death Surveillance and Response (MPDSR)Bill by the National Assembly. www.businessday.ng

L-R: Stephen Falomo, director, Lagos zonal office, Securities and Exchange Commission (SEC); Ariyo Olushekun, chairman, Capital Market Support Committee for COVID-19 (CMSCC); Haruna Jalo-Waziri, MD/CEO, Central Securities Clearing System (CSCS) plc, and Onome Komolafe, divisional head, shared services, CSCS plc, at CSCS’ official presentation of fully equipped ambulance with a cash donation to the Committee towards curbing the spread of COVID-19 in Lagos.

Political restructuring, meritocracy key reforms needed in Nigeria - Sanusi BUNMI BAILEY

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olitical restructuring, respect for merit and patience are the three fundamental catalysts that could catapult Nigeria to more desirable heights within the next seven to ten years, according to Muhammad Sanusi, former governor of the Central Bank of Nigeria (CBN)and immediate past emir of Kano.

Speaking at a webinar last week Friday, themed, “The sustainability of society” organised by the Emmanuel Chapel, Sanusi who was amongst the panel noted that political restructuring, especially the amendment of the constitution, to reduce the cost of governance is very important.

“The second thing which is important to me is that we

must respect merit,” Sanusi said.

“People need to be taught that wherever they are they can get a job based on merit not from where you are from.”

The erstwhile CBN governor said so long as Nigeria doesn’t appoint its best to the job and hold them accountable, the country will not see the progress it desires.

He further said: “The third important thing is patience, especially for those outside the government to understand what the challenges are and try to put in contributions that will help them to manage those challenges but we also need a long-term fuel.”

Meanwhile, Amina Mohammed, the deputy secretary-general of the United Nations, also a panellist at the webinar, emphasised the need to strengthen the Nigerian healthcare system and build its human capacity.

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Dangote fertiliser plant will provide millions of jobs for Nigerians - Zakhem James Kwen, Abuja

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akhem Construction Nigeria Limited (ZCNL), has said that the Dangote Fertilizer Plant, Lagos which is now undergoing a test run ahead of commencement of full operations from February 2021 would provide jobs for millions of Nigerians.

Accordingtothecompany,the completion of the fertiliser plant, a multi-billion dollars project, has once again demonstrated to the world that the Dangote Group is determined to grow its fortunes.

Uba Saidu-Malami, managing director of Zakhem, the company that constructed and commissioned the gas pipeline and metering station to Dangote Fertiliser Limited, in a statement in Abuja congratulated the Dangote Group for the successful @Businessdayng

completion of the plant in Lagos.

Saidu-Malami said as a worthy partner, Zakhem is proud to contribute its quota to the multibillion dollars fertiliser plant, adding that it is a source of pride for all Nigerians to have the second largest fertiliser plant in the world situated in their country.

He explained that Nigeria is expected to save about $500 million from import substitution and provide $400 million from exports of products from the fertiliser plant by the time it becomes fully operational.

“Zakhemhasbuiltover23.3km of pipeline with 250mmsfd gas plant to power the Dangote fertiliser. This is in addition to the over 3,800km pipeline and gas infrastructureexperiencethecompany hasinNigeria.Thecompanyhadin the past constructed the Obajana andIbesegaspipelinesforDangote group,” he said.

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BUSINESS DAY

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BUSINESS DAY

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Monday 20 July 2020

BUSINESS DAY

Global Economy In China, the economy expanded by 3.2% year-on-year in Q2'20, rebounding from a record 6.8% contraction in the previous three-month period as revealed by the National Bureau of Statistics of China. The country became the first major economy to report growth following the coronavirus pandemic, as factories and stores reopened following months of coronavirus-induced restrictions. However, a continuing fall in retail trade underlined weakness in consumer spending and the need for more support from Beijing to accelerate the economic recovery. In a separate development, the European Central Bank left i ts monetary policy unchanged during its July meeting, as policymakers took a wait-and-see approach to assess the effectiveness of a series of unprecedented measures taken over the past four months to support the bloc's economy amid the coronavirus crisis. The ECB kept its key benchmark rate steady at 0% while the deposit rate remained at a record low -0.5%. In addition, the central bank pledged to buy up to €1.35 trillion worth of debt through June 2021 under its Pandemic Emergency Purchase Programme. Elsewhere the annual inflation rate in the US edged up to 0.6% in June 2020 from May's four-and-a-half-year low of 0.1% according to the U.S Bureau of Labour Statistics. It is the highest reading in three months as businesses reopened after the co r o n av i r u s l o c kd ow n . Fo od i n fl a t i o n expanded to 4.5% (vs 4% in May), the strongest since December of 2011, with food at home prices jumping 5.6% (vs 4.8%). Prices also increased faster for medical care services (6% vs 5.9%). Annual core inflation which excludes food and energy was unchanged at 1.2% and the monthly rate increased to 0.2%.

Domestic Economy The Federal Executive Council (FEC) recently approved the 2021-2023 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) with N12.66 trillion budget projection for each of the three fiscal years.

Briefing State House correspondents at the end of the FEC meeting presided by the President of Nigeria, the Minister of State for Finance, Budget and National Planning, listed other projections in the budget. These included $40 per barrel oil benchmark, oil production volume of 1.6 million barrel per day, inflation rate of 11.9%, projected gross domestic growth rate of 3% and revenue t a r g e t o f N 7 . 5 t r i l l i o n . I n a s e p a r a te development, Data from the Nigeria Bureau of Statistics revealed that annual inflation rate rose for a tenth straight month to 12.56% in June 2020 from 12.4% in the previous month.

It was the highest rate since March 2018 as food prices spiked 15.18%, the most in over two years, amid disruptions in the supply of products as farming activities are yet to recover from the impact of the nationwide lockdown and movements restrictions, which blocked food producers from access to the farms. Additional upward pressure came from health (11.09% vs 10.66%); transport (10.41% vs 10.09%); miscellaneous goods & services (10.20% vs 10.03%) and housing & utilities (7.86% vs 7.77%). The ''All items less farm produce'' or Core inflation, which excludes the prices of volatile agricultural produce stood at 10.13% percent in June 2020, up by 0.01% percent when compared with 10.12% recorded in May 2020.

Stock Market Indicators at the domestic stock market remained bearish for the third consecutive week as investors' sentiments remained negative due to increasing number of coronavirus. Shares in the financial services and consumer goods were majorly affected.

Consequently, the All Share Index (ASI) and market capitalization closed at 24,287.66 points and N12.67 trillion from 24,306.36 points and N12.68 trillion respectively the preceding week. We expect that the market will remain troubled by investor apathy and lack of positive economic indicators in the country.

following the CRR debit that was passed into t h e s y s te m a n d t h e b i - w e e k l y r e t a i l Secondary Market Intervention Sales (SMIS) auction. Short term rates such as the Open Buy Back (OBB) and Overnight (O/N) jumped to 20.33% and 21.75% from 13.8% and 14.1%, respectively from the prior week.

Longer tenored rates such as the 30- and 90day Nigerian Interbank Offered Rate (NIBOR) settled at 5.21% and 5.51% from 5.35% and 5.73%, respectively. This week rates are expected to remain at double digit levels in the absence of any significant funding activity.

Foreign Exchange Market The naira depreciated against the greenback across major markets last week. The Nigerian Autonomous Foreign Exchange Rate (NAFEX) and parallel rates fell compared to previous week figures while the official rate remained steady. The illiquidity of funds persisted at the Investors' and Exporters' (I&E) window with counterparties showing interest in clearing their matured obligations. The NAFEX rate closed at N388.50/US$ from N387.50/US$ and the parallel market lost N5 to settle at N470/US$. The official rate remained unchanged at N381/US$. We expect the naira to continue to trend around current levels especially at the I&E window given CBN constant interventions in the forex market.

Bond Market The Bond market witnessed bullish sentiments last week following the coupon payment that hit the system. Accordingly, there was demand for most maturities across the curve particularly for the 2034, 2049 and 2050 securities. Average yields for 5-, 7-, 10-, 15- and 20-year papers decreased to 3.57%, 5.67%, 9.8%, 9.16% and 10.57% from 3.74%, 5.92%, 10.11%, 9.35% and 10.93%, respectively. Consequently, the Access Bank Nigerian Government Bond Index improved by 38.34 points to 4,419.77 points. The bond calendar was released last week and it proposed a borrowing range of N110bn N150bn for the month of July, August and September respectively by the DMO. As a result, we expect cautious trading from market counterparties this week while they interpret the possible impact of the proposed borrowing on the market yields.

Commodities Crude oil prices rebounded last week after Gilead sciences, the drug maker behind Remdesivir, said its drug improved clinical recovery and reduced the risk of death in patients infected with COVID-19. In addition, the International Energy Agency raised its 2020 oil demand forecast. Bonny light, Nigeria's benchmark crude climbed 2.76% to close at $43.86 per barrel. In a similar vein, precious metal price rose due to weaker dollar and concerns over mounting coronavirus cases worldwide and rising tensions between the US and China. Covid-19 cases continued to spike in some hot spots around the globe, especially in the US. Consequently, gold prices edged up 1.8% or $31.87 to finish at $1,810.09 per ounce from $1,806.92 per ounce, its fourth straight week of gains. Silver settled at $19.73 per ounce, a 5.34% rise. This week, we anticipate that oil prices will fall after OPEC and other producers including Russia agreed to ease record supply curbs from August. OPEC also said in its July report that global oil demand would fall by 8.95 million barrels per day in 2020, less than in last month's report. We expect that bullion demand will remain strong as geopolitical tensions and a continuous rise in coronavirus cases in India and the United States underpin safe haven assets. .

Money Market Borrowing cost surged at the end of last week

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news How FG can quickly displace petrol with...

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commercial fleet, removal

of duties on conversion kits, and a long-term repayment plan for the cost of conversion, are ways to quickly displace petrol with cheaper CNG cars, experts say.

While Nigeria is awash with gas, it spends billions of dollars yearly to import Premium Motor Spirit - petrol, whose sulphur content pollutes the atmosphere. The government seeks to change this situation by displacing petrol with gaspowered vehicles.

Experts say the government should start with its own commercial fleet. “I think what would be useful is to focus on mass transportation. In states like Lagos where some buses have been acquired, they should be converted to run on CNG, starting off in a closed ecosystem wherein the buses can fill up at their terminals and along important routes,” Clement Isong, chairman, Major Oil Marketers Association of Nigeria (MOMAN), says.

The next phase should be to see commercial vehicles including minibuses and gradually scale up, but government needs to consult with private sector operators for it to succeed, Isong states.

The Nigerian government first proposed CNG for automotive fuel in the 1990s as part of efforts to harness natural gas resources. The move has gained some traction in Benin City, the Edo State capital.

In January 2010, the management of NIPCO plc, a downstream energy company, commissioned its first CNG plant and filing station in Benin City. Ten years later, there are over 6,000 natural gas vehicles (NGVs) in the state used for both public transport and private use.

Other corporates including Dangote Group is seeking to power all its trucks with gas, Sahara Energy and some other companies also have vehicles in their fleet powered by gas. This shows the potential for growth if backed by forward-looking policies.

Nimi Amachree of Ener-Gas International Investments and Excalibur Power and Gas Limited, whose company designed and built a CNG-Mother station in Lagos, for Oando Gas and Power (now Axxela), says the Federal Government needs to waive duties for CNG conversion kits for automobiles.

“Currently, gas equipment intended for gas-to-power projects are duty exempt but this policyshouldbeextendedtothe auto sector too,” Amachree says.

Experts say the cost of conversion kit ranges from €1,000 to €1,500, depending on the vehicle and the techniques employed. An additional duty and VAT charges will significantly raise the cost.

Experts say that unlike petrol subsidy, which is recurring, a duty waiver for a limited

period can be a capital cost that can be re-paid over the lifetime of the asset.

BusinessDay spoke with some drivers who use CNG vehicles in Benin City about their experience. Osamwonyi Orobosa, taxi driver, notes: “I have been using CNG vehicle since the past 10 years.

When I converted my car 2014, I deposited N10,000 and started paying little by little. To convert is N200,000. As you are buying (gas) they will be deducting the balance.”

Another taxi driver, Godstime Osagie, says: “I started using gas four months ago.

When I was using fuel, I do buy N4,000 fuel daily but since I started using gas I do not use half of that amount. If I want to fill, N1,250 will take me for more than four hours, as I make about N7,000.”

This model adopted in Benin City, where taxi drivers pay a limited fee over a long time for the cost of conversion when they refuel, can be replicated elsewhere.

According to the 2017 National Gas Policy, the Federal Governmentisseekingtoreplace petrol with cleaner-burning gaspowered vehicles as a measure to reduce the country’s carbon emission and exit a costly fuel subsidy programme haemorrhaging over N1 trillion yearly.

The benefits of switching to gas are enormous. Olufola Wusu, commercial lawyer, oil & gas/intellectual property consultant, states, “The use of natural gas as a fuel for transportation can help reduce greenhouse gas emissions by 20 - 30 percent when compared to petrol and diesel.

“There are also additional benefits to the economy including that it is cheaper, leads to job creation ranging from CNG technicians to CNG safety experts.”

On safety, Amachree says the cylinders installed in vehicles are seamless and almost like core solid metal and are designed to withstand extremely high impact.

Sarki Auwalu, director, Department of Petroleum Resources (DPR), last year told BusinessDay that the agency was ready to drive a transition from PMS to CNG, and called for free conversion and the cost recovered as a token on the cost of CNG. According to taxi drivers interviewed, this is what currently obtains in Benin City.

“I started paying little by little. In the finance package, the amountisN120perkgwhilethey will deduct about N25 in each kg tillyouareabletofinishpayment,” notes Innocent Imoisili, a commercial bus driver.

With over 202 Trillion Cubic Feet (TCF) of gas reserves, Nigeria has in abundance the critical feedstock required to drive gas-powered vehicles.

Analysts say good policies will drive private sector investment into conversion and building filling stations. www.businessday.ng

L-R: Rabiu Abdullahi Umar, group chief commercial officer, Dangote Industries Limited; Michel Puchercos, GMD/CEO, Dangote Cement plc; Funmi Sanni, marketing director, Dangote Cement plc, and Adeyemi Fajobi, national sales director, Dangote Cement plc, during the Dangote Cement Bag of Goodies 2 National Consumer Promotion press launch in Lagos.

In search of yields, investors drive three-fold...

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and stocks.

In the case of bond funds, the fund manager only invests in bonds while an equity fund invests solely in equities/ stocks of listed companies, and a money market fund invests in shortterm debt instruments like Treasury Bills.

The Net Asset Value (NAV) of Bond funds, a measure of the level of investment in the asset, has grown by a record 264 percent year-to-date to N1.6 billion as at July 3, from N454 million at the beginning of the year, according to data from the Securities Exchange Commission (SEC).

That i s n i n e t i m e s more than the 30 percent growth in the net asset value of the entire mutual funds market in Nigeria.

The relative attractiveness of bond funds this year stem from the higher yields they offer compared to other types of mutual funds. While a one-year Treasury Bill is yielding 3.5 percent, the 10-year bond is at 8.5 percent.

Nigerian equities on the other hand are down by 9.52% since the start of the year, and that has upended equity funds.

Although the 10-year bond fund is below inflation rate, which quickened to a 26-month high of 12.56 percent in June, but it still offers higher yields than any other mutual fund and that has

caught the eye of investors.

Bond funds are also less risky than other mutual funds and as such the increased appetite could well be a reflection of the lack of

investor confidence in the economy.

“Money is flowing to bond funds and away from some money market funds that can barely outperform the 3.75 percent paid on savings accounts,” notes Egie Akpata, a director at UCML Capital.

“Mark to market gains are massive on bonds due to the drop in interest rates,” Akpata added.

Eurobond funds outperform local bonds Of the nine bond funds in Nigeria, the best performers in terms of yearto-date returns are the dollar funds, which mainly invest in Eurobonds as against the local bond fund that invests in local bonds.

The dollar funds, excluding the First Bank Nigeria Eurobond USD Fund (Institutional), which is down 89 percent year-todate, have returned 11 percent compared to 6 percent for the local bonds.

The best performing bond fund year-to-date is the Legacy USD Bond Fund, which is managed

by First City Asset Management Limited. The Fund’s unit price is up 17 percent from N306.5 at the beginning of the year to N360.5 as at July 3.

In second place is the United Capital Eurobond Fund, managed by United Capital Asset management, the unit price of the fund has gained 9 percent year-to-date to N44,660 from N40,746 in the period under review.

The PACAM Eurobond fund, managed by PAC Asset Management Limited is in third place with a 8.9 percent increase in its unit price to N41,506 from N38,101.

The Nigeria International Debt Fund, managed by Afrinvest Asset

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Management is in fourth place and has seen an 8.2 percent rise in its unit price to N218 from N210.

The United Capital Bond fund is the only local bond fund in the top five best performers in the year-to-date period.

The fund’s unit price is up 8 percent to N1.83 from N1.69.

“The rally in Eurobond funds is driven by investors seeking high yields in a market marred by low returns, but more importantly, it is also becoming popular among investors seeking a hedge against the naira,” states Wale Okunrinboye, head of investment research at Lagos-based pension fund managers, Sigma Pensions Limited.

“While equity-based funds have been punished

by Nigeria’s weak economic fundamentals, bond funds offer a safer option for investors,” Okunrinboye says.

Asked for his outlook for bond funds this year, Okunrinboye says the asset class is expected to perform better than other mutual funds as uptake continues to increase.

Equities defy logic amid falling rates Bonds are rallying because of the sheer amount of liquidity in the market and that has seen interest rates collapse aggressively.

Ideally, there should be an inverse relationship between interest rates and the equity market, as lower interest rates mean lower funding costs for companies and lower yields for portfolio investors.

Hence, in an environment of low interest rates there is typically an increase in equity valuations.

“In conventional markets, we should see equity doing very well but Nigeria is a peculiar market. Money managers would rather @Businessdayng

hold negative real return fixed income instruments versus equity,” a fixed income trader at a tier-one bank notes.

“For equities - given the weak macro-economic backdrop, COVID-19 and low oil price environment - the earnings outlook of some companies are also in doubt so I can understand the hesitation of investors,” the trader says.

What mutual funds say about economy Investors rotating out of equity funds into bond funds show the level of risk in the economy tipped to contract by 5 percent by the International Monetary Fund (IMF) in 2020.

Equities tend to reflect the level of investor sentiments towards the economy.

Investors rush into fixed income instruments when risks are heightened and safe haven assets are in demand.

The trend of investors piling into bond funds is also due to the country’s steep yield curve, which means longer-term rates far outweigh short-term rates.

“Nigeria’s yield curve is very steep, as there’s a huge gap between short and long-term rates,” according to Akpata.

A yield curve, in economics and finance, is a cur ve that shows the interest rate associated with different contract lengths for a particular debt instrument. Asked whether Nigeria’s steep yield curve is unique and how it compares to peers, Akpata states, “It is unusually steep in nominal and relative terms. Tbills got to under 4 percent per annum several months ago while bonds were still well over 10 percent. So, bond yields are dropping to meet T-bills and reduce the steepness of the curve.”

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BUSINESS DAY

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How GEEP loan repayment scratch cards work odinaka Anudu

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he GEEP team successfully launched the TraderMoni rep a y m e n t s c ra t c h c a rd s i n Ja n u a r y

2019.

Roll-out of the scratch cards started in 2019 across the country.

According to the Bank of Industry, the scratch cards were developed because most beneficiaries of the scheme did not have access to banks. The nearest bank to some of the markets was sometimes 20 kilometres or more away. As such, collection channels with wide coverage were required to drive collection.

The new method of repayment leverages vouchers or scratch cards sold at key cluster/ market locations with high numbers of petty traders. The cards are loaded the same way Telco recharge cards are loaded.

Loading the card automatically credits the beneficiary’s loan account and updates their loan position.

Also, beneficiaries can pay back their loans at any commercial bank in the country through the PayDirect platform. The BOI explains that all a beneficiary has to do is walk into any bank and tell the Teller they want to pay their BOIGEEP loan.

The beneficiary should then give the Teller their phone number and the repayment amount.

With this, beneficiaries now have options for repaying their loans.

In addition, based on the success of the scratch card pilot, BOI has rolled out similar voucher/ scratch cards for MarketMoni loan repayments. MarketMoni loans start at N50,000 and are for traders with significantly more inventory size than their drive repayments.

Some of the beneficiaries of GEEP loan

The attraction is that whereas the loan starts at N10,000, beneficiaries who pay back automatically qualify for N15,000. Those who pay back their N15,000 qualify for N20,000 and those who pay their N20,000 qualify for N25,000. Ultimately, beneficiaries who pay back the N25,000 get migrated into the N50,000 MarketMoni programme. Over the course of this journey, successful beneficiaries would have received up to N195,000 in affordable credit hitherto unavailable to them and their businesses. BOI recognises that there is a higher risk of default as a beneficiary climbs up the ladder.

However, to mitigate this risk, the GEEP team has introduced a new requirement for accessing

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the N20,000 TraderMoni loan: a bank account and BVN. This helps the programme to achieve two broad goals: Financial Inclusion and repayment compliance. While financial inclusion is easily understood – seeing as a significant portion of the 36 million financially excluded Nigerian adults are petty traders and artisans—the new concept of using the BVN as digital collateral to drive repayment compliance, if well implemented, is expected to have a positive effect on repayment.

Also, the criteria for MarketMoni loans include having a bank account (and BVN) and belonging to a market association or cooperative society.

TraderMoni and MarketMoni

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are two of the three interest free, collateral free products under the Government Enterprise and Empowerment Programme (GEEP) executed by the Bank of Industry. The third interest free loan program, FarmerMoni, is targeted at farmers within farming clusters. Each FarmerMoni loan goes from N100,000 to N300,000 depending on the crop being cultivated. TraderMoni loans, which range from N10,000 to N25,000, do not require any collateral for beneficiaries to participate. However, TraderMoni beneficiaries are required to have a mobile phone and must be active petty traders in a designated cluster/ market location. This collateralfree approach goes against

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conventional ‘loan wisdom’. As such, critics of the TraderMoni programme often base their arguments on the feasibility of repayments and the sustainability of the program. BOI, in its responses, has often cited the government’s preference for a carrot approach to achieve high repayment.

GEEP is one of the social intervention programmes, comprising TraderMoni, MarketMoni and FarmerMoni. It is executed by the BOI, and is a completely digitised programme where all eligible traders are captured into a database, verified via phone and facial recognition technology. They thereafter receive disbursements in mobile wallets.

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CACOL writes Buhari over collapsed federal roads …says FERMA has gone to sleep JOSHUA BASSEY

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entre for Anti-Corruption and Open Leadership (CACOL), a coalition of civil society organisations, has written to President Muhammadu Buhari, drawing the attention of the Presidency to the deplorable state of federal roads in Lagos and Ogun States.

CACOL attributed the road collapse to what it termed outright neglect by the Federal Roads Maintenance Agency (FERMA).

The anti-corruption coalition, also accused the Governor Babajide of Lagos State of failing to honour the promises he made to rehabilitate all the roads within the state.

In a three-page letter addressed to President Buhari, the executive chairman of CACOL, Debo Adeniran described as horrible what commuters and other road users are going through on federal roads in the two states.

The coalition in the letter observed that “FERMA has not lived up to expectation going by the present state of roads in the country. Most of the federal roads that dotted the length and breadth of the country are crying for attention.”

It faulted the claims of by the minister of finance, budget and national planning, Zainab Ahmed that most of the bad roads in Nigeria belong to the states, just as it also criticised a statement linked to the minister of works and

housing, Babatunde Fashola that Nigerian roads “are not as bad as people think.”

The works and housing minister’s comment, the coalition said is “an indication that some people occupying public offices are not in tune with the terrible realities of their fellow citizens’ daily experience.”

The group further posited that the roads apart turning death traps, are factors increased incidences of crimes such as kidnapping and armed robberies, in addition to loss of lives and productive man-hours.

It said the current state of the Lagos-Sango Ota-Abeokuta Expressway that links Lagos and Ogun “is appalling and an eyesore as virtually all sections of the road had completely broken down.

“Major bus stops like Obadeyi, Kola, Salolo, Moshalashi, Alakuko, Toll-Gate, Joju among others are characterised by crater-sized potholes and gullies resulting in commuters and motorists spending long hours in traffic.

“The road conditions have resulted in accidents and damage to health and vehicles which are immeasurable in monetary terms.

Sometimes, petrol tankers and container trucks have fallen at bad portions of the road, causing havoc to people,” the letter said.

“More annoying is the fact that the ministry of works and housing which happens to be the supervising ministry of FERMA is maintaining an unholy silence.”

Investment pledges to Nigeria dipped 67% to N10bn in H1 ENDURANCE OKAFOR & HARRISON EDEH

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ledges by domestic and foreign investors to projects in Nigeria declined by 67 percent in the first half of 2020, the Nigerian Investment Promotion Council (NIPC) has said.

Proposed investments by the investors dipped to $5.06 billion from $15.15 billion reported in the comparable period of 2019, NIPC said in a report released over the weekend.

According to the investment tracking agency, the decline in Nigeria’s investment announcement is consistent with the expected downward pressure on investment flows, given the negative global economic impact of Covid-19.

“This is not surprising, given the risk-off sentiment in the global investment landscape.

…as COVID-19 dampens investors’ appetite New investors and investment announcements are expected to be at bay given the risk-off sentiments across the globe as well as peculiar issues that frontier markets like Nigeria face in turbulent times,” Shakirat Anifowoshe, a Lagos-based investment analyst said.

Anifowoshe explained that she won’t be “surprised if the announcements were from investors that already have some sort of footprint in the country.”

Analysis of the report by NIPC showed that domestic investors’ pledge amongst 10 other countries accounted for 16 percent of the value. This is compared to the 43 percent by investors from the US and 31 percent from South Africa and 8 percent from the United Kingdom.

According to the report, the

fund was to be deployed into 34 projects across 16 states including the Federal Capital Territory (FCT). This is compared to the 43 projects announced across 12 states in the first six months of 2019.

Breakdown of the H1 2020 report shows that Kaduna State was the biggest beneficiary with 51 percent of total value at $2.61 billion; Lagos, Nigeria’s commercial capital got four percent of the proposals, worth $221million, while Nasarawa State, $56 million; and Ekiti State, $50 million, one percent each.

Distribution of the recipient sectors of the investments shows that transportation & storage and information & communication gained more investors’ interest accounting for 39 percent of the total value and

32 percent respectively. Mining & quarrying, and agriculture also made the list of top five investment destinations with 20 percent, and five percent respectively.

While the NIPC report that was tracked from January to June 2020 may not contain exhaustive information on all investment announcements in Nigeria during the period, the agency explained that its data “gives a sense of investors’ interest in the Nigerian economy.”

More than two months after the Federal Government began to re-open the Nigerian economy on May 4, 2020, following the five-week Covid-19 lockdown in FCT, Lagos and Ogun State, analysts say businesses are nowhere close to recovery from the impact of the pandemic.

Lagos to partner private sector on vocational, technical education KELECHI EWUZIE

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agos State government says it is leveraging partnership with the private sector to scale up vocational and technical education with a view to encouraging skill development among the youth population.

The governor, Babajide Sanwo-Olu stated this on Wednesday during webinar event hosted by the Lagos State Technical and Vocational Education Board (LASTVEB) as part of activities to mark the World Youth Skills Day. According to Sanwo-Olu, in recognition that data will be the new normal in a post Covid-19 world, his administration through the Lagos State Residents Registration Agency, is making efforts to remedy the present dearth of data through the issuance of identity cards to at least ten million Lagosians by 2021.

Nd i d i Nw u n e l i , c o founder, AACE Food Processing and Distribution Company, and lead speaker at the webinar, posited that the outbreak of the coronavirus will fast-track a paradigm shift to a fourth industrial revolution with a transparent government, dynamic entrepreneurs and

skilled workforce as key drivers in the emerging ecosystem.

Nwuneli, who spoke on the theme: “The new normal: Implications of the pandemic on jobs & future skills development,” said Covid-19 has accelerated our challenges as a nation, and a change of mindset is critical to addressing these challenges.

Ronke Azeez, executive secretary, Lagos State Technical and Vocational Education Board (LASTVEB), harped on changing the negative perceptions of technical and vocational studies, stating that technical education is one of the paths to achieving learning and helping young people achieve their dreams.

Azeez said that modalities were in place to enroll 8,000 students in the technical colleges, adding that state governor has ensured that 1,500 students are online to learn since the advent of the coronavirus pandemic.

Panelists drawn from various sectors suggested that relevant skills in navigating the new normal will include emotional intelligence, creative and critical thinking, ability to utilise digital skills as well as ability to adapt to a changing work climate. www.businessday.ng

L-R: Christine Sijuwade, chair,Venue/Accommodation; Adeola Ajayi, secretary, Conference Planning Committee (CPC); Seni Adio, chairman, Nigerian Bar Association-Section on Business Law (NBA-SBL); Theodora Kio-Lawson, chair, media/ publicity, NBA-SBL, and Ozofu Ogiemudia, chair, CPC, at the 14th annual business law e-conference in Lagos, at the weekend.

Experts say Credit Guarantee key to deepening MSMEs access to finance Cynthia Egboboh, Abuja

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ndustry experts have identified the Credit Guarantees Schemes (CGS) as popular policy instruments that would help alleviate the credit constraints faced by the Micro Small and Medium Enterprise (MSMEs).

The experts who spoke at the Development Bank of Nigeria webinar session raised concerns that current realities of financial constraints faced by MSMEs, particularly on the back of the Covid-19 pandemic, and harped on the need for additional support in alleviating the growing funding crisis.

The main thrust of the discussion by industry experts at the virtual conference was “Risk sharing: A key driver for increased financial access and economic development for MSMEs”, a virtual knowledge sharing series.

The DBN webinar series is

aimed at providing capacity building for MSMEs through digital platforms to ensure they are empowered to remain in business through this unprecedented period.

The experts alluded to the fact there is a need to increase awareness by key industry stakeholders in ensuring that the much-needed stimulus and alternative means of facilitating financing are discovered to stem the shock to Nigeria’s economic and financial system.

Ayodele Olojode, group head emerging business, Access Bank Plc, explained that MSMEs do not have regular and sustained access to finance at high interest rates, coupled with lack of tangible collateral and economic conditions which have hampered their access to finance.

“Risk sharing facilities will help increase access to finance which helps MSMEs grow, increases employment and output in the economy,” Olojode noted.

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W/Africa accounts for 90% of maritime kidnappings as attacks on ships surge – Report AMAKA ANAGOR-EWUZIE

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iolent attacks against ships and their crews have risen in 2020, with 77 seafarers taken hostage or kidnapped for ransom since January, reveals the ICC International Maritime Bureau’s (IMB) 2020 second quarter piracy report.

According to the report, Gulf of Guinea off West Africa has become increasingly dangerous for commercial shipping, and it accounted for over 90 percent of maritime kidnappings worldwide.

The IMB report further revealed that 98 incidents of piracy and armed robbery at sea were recorded in the first half of 2020, up from 78 in the second quarter of 2019.

This, it stated, has increased the hardships already faced by hundreds of thousands of seafarers working beyond their contractual periods due to Covid-19 restrictions on crew rotations and international travel.

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a growing risk in a workforce already under immense pressure,” Michael Howlett, IMB Director said.

In the Gulf of Guinea, he said, attackers armed with knives and guns now target crews on every type of vessel, making everyone vulnerable.

“We need to change the risk-to-reward ratio for pirates operating within the Gulf of Guinea. Without an appropriate and proportionate deterrent, pirates and robbers will get more ruthless and more ambitious, increasing the risk to seafarers,” Howlett noted.

IMB stated that about 49 crew have been kidnapped for ransom in the Gulf of Guinea and held captive on land for up to six weeks.

“Rates are accelerating, with 32 crew kidnapped in the past three months alone.

And they are happening further out to sea: two-thirds of the vessels were attacked on the high seas from around 20 to 130 nautical miles off the Gulf of Guinea coastline,” the report stated.

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news

ActionAid tasks FG on protection of women, children amid rising violent cases VICTORIA NNAKAIKE, Lokoja

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mid increasing reported cases of rape and child abuse, ActionAid Nigeria (AAN), a non-governmental organisation has called for the immediate implementation of the domesticated National Action Plan on peace and security of women/children across states in Nigeria.

Manager humanitarian and resilience unit of ActionAid Nigeria, David Habba made the call at the recent opening of a three-day mid-year review of the Action Plan document and training of stakeholders in Okene, Kogi State.

The three-day training was to equip the Action Plan committee members with the capacity to fast-track the implementation of the plan amid increased spate of crimes against women and children.

Habba said that the domestication of the National Action Plan by the states was in consonance with United Nations Resolution 1325 which addresses issues of peace and security of women and girls.

He stressed that the programme of domestication of the action plan was initiated in Kogi under the System and Structural Strengthening Approach Against Radicalisation to Violent Extremism (SARVE II) project in 2018 supported by Global Community Engagement and Resilience Fund (GCERF).

Halima Sadiq, the executive director, Participation Initiative For Behavioural Change and Development (PIBCID), ActionAid rights partners in Kogi noted that the second edition of the action plan was developed in 2017, after the expiration of the first in 2016.

“The second edition of the action plan was developed by 2017 and that gave birth to the domestication of the state action plan which we now have Kogi Action Plan for peace and security of women and children.

“ActionAid in partnership with PIBCID supported the ministry of women affairs and social development to come up with a framework in which women played a vital role in peace and security and also help in preventing violence extremism,” she said.

Edo sets to switch on CCETC-Ossiomo 55MW power plant

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ll is set for the testing and certification of the Governor Godwin Obaseki-backed CCETCOssiomo Independent Power Plant (IPP) by the Nigeria Electricity Services Agency (NEMSA), as the agency energises the 33KV Transmission line, today.

In a statement issued on Friday, the Edo State ministry of energy and electricity, said the transmission line will be energised from 10am12noon.

“We wish to bring to the attention of the Benin Electricity Distribution Company (BEDC), the Nigeria Electricity Regulatory Commis-

sion (NERC) and the general public that as part of the testing and certification of the CCETC-Ossiomo IPP by the Nigeria Electricity Services Agency (NEMSA), the 33KV Transmission line will be energised from 10.00am12noon on Monday July 20, 2020.

According to the statement, the milestone is the product of Governor Godwin Obaseki’s resolve to fix the energy crisis in the state through the provision of an alternative source of electricity supply to support the state’s industrialisation drive and create a competitive energy market.

Fear of COVID-19 hits FHC Abuja as CJ goes on isolation Felix Omohomhion, Abuja

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he fear of the coronavirus has hit the Federal High Court (FHC) complex, Abuja.

This is as the chief judge (CJ) of the Federal High Court, John Tsoho, has gone on self- isolation spurred by a confirmed case of Covid -19 among his official aides.

It was learnt that Tsoho in the bid to prevent possible spread of the virus on Friday ordered some key staff in his office to also self-isolate, pending the results of tests carried out on him, members of his immediate family and close aides.

The acting information officer of the court, Catherine Oby Nwandu confirmed the development to BusinessDay. She said the FHC recog-

nises that health and safety of staff are paramount in the sphere of justice delivery.

“The court is thus following medical protocols and all precautionary measures for the Covid-19 prescribed by global and national health authorities.

“His lordship has further encouraged strict compliance with the precautionary medical protocols issued by national and international health authorities to curb the spread of Covid- 19.

“He urged the staff of the court to go about their lawful duties, while ensuring that they are well protected.

She added that CJ was deeply moved by the prayers and well wishes of colleagues, staff, extended family and friends and appreciates them for keeping faith at this moment. www.businessday.ng

L-R: Amuda Yusuf, Ashoju Oba of Ijora land; HRM, Oba Abdulfatai Aromire, Oba of Ijora and Iganmu Kingdom; Ziad Maalouf, managing director, Seven-Up Bottling Company Limited (SBC), and Segun Ogunleye, national marketing manager, SBC at the donation of 2Sure Sanitiser to Ijora Community and Sensitisation on Hygiene.

IMF warns Nigeria against raising taxes, harps on efficient revenue collection Odinaka Anudu

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he International Monetary Fund (IMF) has warned Nigeria against raising taxes, saying that it is inappropriate at this time when COVID-19 is ravaging economies.

“We do not think it is the right time to raise taxes due to the impact of the pandemic,” Jesmin Rahman, IMF mission chief for Nigeria, said in a virtual fireside chat organised by Citi and American Business Council (ABC) on Thursday.

Rahman, however, acknowledged that Nigeria’s revenue to GDP was low at below 10 percent, considering that emerging economies such as Angola and Saudi Arabia had over 20 percent and 30 percent respectively.

But she stressed that Nigeria must ensure efficiency in tax collection, while establishing a

…as Citi urges infrastructure renewal new fiscal framework after the pandemic.

Businesses complain of multiple taxes in Nigeria. Also, Nigerian states and the Federal Government recorded a total debt stock of N28.63 trillion in the first quarter of 2020, representing a 4.44 percent increase from N27.40 trillion in Q4 of 2019, according to data from the National Bureau of Statistics (NBS).

The cash-strapped Federal Government has secured $3.4 billion and $288.5 million from the International Monetary Fund (IMF) and African Development Bank (AfDB) respectively, and it could secure another $1.5 billion from the World Bank.

But the IMF chief said the country’s debt level was still sustainable but pointed out the debt servicing (of 99 percent in the first quarter of 2020) was not.

Education is tool for economic emancipation- Lagos commissioner MARK MAYAH

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agos State commissioner for education, Folashade Adefisayo has said education is a vital tool for economic emancipation and therefore should be taken seriously by all stakeholders and the government.

She commended all stakeholders in the education sector for their cooperation and commitment in helping to scale up service delivery in terms of giving quality education to school children in Lagos State.

Adefisayo in an exclusive interview with BusinessDay, maintained that several initiatives have been implemented by Governor Sanwo-Olu-led administration to reposition the education sector for efficiency and top-notch service delivery, stressing that the teachers and other stakeholders have been active participants in actualising the vision of the government for the sector.

According to her, the govern-

ment has invested much in providing infrastructure in the past 12 months and still on-going, adding that “for us as a government, the governor’s theme agenda is education, education.’’

“The need for quality and affordable education for all, necessitated our going in hands with private partners towards achieving the state’s quest for quality education system”, Adefisayo said.

While assuring teachers that the state government will ensure the provision of a conducive atmosphere in terms of physical infrastructure and welfare of teachers as well as supporting staff, Adefisayo urged teachers to invest their time in exposing students to the best education that will impact positively and help them live a fulfilled life.

She disclosed that Governor Babajide Sanwo-Olu already approved the rehabilitation, renovation and reconstruction of schools to guarantee a conducive environment for teaching and learning.

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“Nigeria’s public debt was at 29 percent of GDP in 2019-in our definition of all known liabilities like the CBN financing of the budget, financing of the power sector, AMCON debt and everything. We project this debt to increase to 36.5 percent this year, which is a jump, and then stay around 38 percent of GDP in the medium term,” she said.

“We think the debt is sustainable for few reasons. Firstly, the debt levels have increased but the debt level itself is below the average for emerging and developing countries which is around 50 percent of GDP. Another reason would be the composition of debt. The debt is heavy on the medium- and long-term side as well as domestic currency.

This is a comforting sector that is not so much short-term based and is not so much FX borrowing, and also half of its external borrowing or debt is concessional.

“Domestic financial conditions are very favorable. So all in all, if you take into account all these, we would say the public debt is sustainable. However, it requires close watching because it has gone up quickly and this year it is going to be even more,” she explained.

David Cowan, Citi’s Africa economist, concurred that Nigeria’s debt servicing was very high, but added that it was important for Nigerians and Africans to begin to discuss the suitable taxes to be paid that would ensure good hospitals and education system.

Cowan further said the country must seek innovative ways of building infrastructure that would take care of its rising population.

He stressed the need to move existing multiple foreign exchange to Nafex rate (a polled rate based on the submissions of 10 banks), but reminded Nigerians that much of what would happen in the Nafex this year would be determined by oil price.

Sahara Energy Resource debunks reports linking it to illegal shared funds

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ahara Energy Resource Limited (SERL) at the weekend debunked rumours in various media platforms, linking its firm to an alleged $200 million it illegally benefitted from the office of the late chief of staff of the federation, Abba Kyari.

In a statement, the firm noted that its attention has been draw to what it called “a false and misleading” media report initially published by an online new portal on July 15, 2020, under the headline: “How Late Abba Kyari Illegally Shared $200 million from $1.099 billion oil Bloc money To Sahara Energy”, which has also been re-hashed in other online media publications.

According to Sahara Energy, the said report makes unfounded allegations and cites apparent falsehoods from unnamed sources in what the firm said could be best described as a sponsored smear campaign. @Businessdayng

It cited several false claims including a statement to the effect that an executive director of SERL- Tope Shonubi has an amount of approximately $400 million kept in trust for late Kyari, The report also falsely reports a statement that “in May 2016, officials of the EFCC raided the Lagos and Abuja offices of Sahara Energy carting away several computers and documentary evidence of the deals.

For the avoidance of doubt, Sahara Energy explained that the allegations in the report were baseless, unfounded and a deliberate attempt to mislead the public. “We categorically deny any illegal alliance with Mamman Daura or the late Abba Kyari or indeed any other political appointees as alleged and the above-listed individuals do not have or have never had and have never been promised any inducements or interests whatsoever by or us or any of our affiliates,”

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FINANCIAL TIMES

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EU leaders deadlocked on recovery fund in marathon summit Meeting enters third day as bloc haggles over size and conditions of €750bn recovery plan Sam Fleming, Mehreen Khan and Jim Brunsden

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ivide d EU leaders headed for their third day locked in talks over Europe’s proposed €750bn response to the coronavirus pandemic, as they battled to overcome differences that have split north and south, and east and west.

After two days of marathon summit negotiations in Brussels, European leaders on Saturday evening failed to bridge deep differences over the size, design, and conditions attached to a planned multibillion-euro package of loans and grants designed to revive Europe’s economy after months of hibernation.

The summit has laid bare divisions pitting a group of richer “frugal” member states — Austria, Sweden, Denmark and the Netherlands — against the biggest recipients of EU pandemic emergency funds.

Frugal capitals are demanding drastic cuts to a €750bn package as their price for signing up to a final compromise, while Spain, Italy and others have pushed back against substantial cuts, forcing talks to spill into Sunday.

At the start of Sunday’s talks, Germany’s Angela Merkel told reporters she was uncertain “whether a solution will be found”.

“There is a lot of goodwill but there are also a lot of different positions,” she said. “I will do my part in this. But it is also possible that there will be no result today.”

Non-frugal leaders emphasised their desire to reach a deal, but warned that it could not come at the expense of whittling down Europe’s

German chancellor Angela Merkel arrives on the third day of the European Council special summit © Alexandros Michailidis/European

economic response to Covid-19.

A deal “will not be built on sacrificing Europe’s ambition,” France’s Emmanuel Macron said. “Not out of principle, but because we are facing an unprecedented health, economic and social crisis, because our countries need it, and because the unity of Europe needs it.”

His stance was echoed by other leaders including Greek prime minister Kyriakos Mitsotakis, who said: “We simply cannot afford to either appear divided or weak.”

Sunday’s talks are set up to be a crunch moment for the EU’s ability to respond to the worst economic crisis to hit Europe in the postwar era.

The proposals on the summit table are the fruit of months of work by Brussels to craft an effective response, but they take the EU into the uncharted territory of

allowing the union to borrow massively on the financial markets. The talks are also tied up with negotiations on the bloc’s next long-term budget, forcing leaders to confront longstanding divisions over EU economic policy.

Diplomats said Charles Michel, European Council president, would need to table a fresh compromise addressing the outstanding issues on Sunday, or risk failure in the first face-to-face summit of EU leaders in five months. The splits cover everything from the volume of recovery aid to how to police countries’ respect for the rule of law, to how to make sure capitals honour commitments to economic reform.

A diplomat from Germany, which holds the rotating presidency of the EU, said the meeting entered a crucial phase overnight as leaders

from France, Germany, the Netherlands, Italy and others held bilateral talks late into the morning.

Hungary’s illiberal premier Viktor Orban also emerged as a roadblock to a deal after he entered the summit threatening to veto a compromise that tied distribution of aid to respect for the rule of law. During Saturday’s sessions, Budapest demanded that any potential sanctions to suspend cash payments could only be done with the unanimous support of all governments — in effect handing one country a veto.

Mr Orban’s stance was backed

by Poland and Slovenia. All three rejected a draft plan that that would require a qualified majority of member states to back potential cash sanctions. Western governments, including the frugals and

France, have called for a stringent system under which money would be withheld for governments who breach the EU’s fundamental rights.

One diplomat said Hungary and Poland’s stance was designed to extract more money as part of a final compromise.

Progress on multiple fronts stalled on Saturday despite Mr Michel tabling a compromise in the morning that trimmed €50bn off the total amount of grants to be doled out under the recovery plan.

By late afternoon, leaders from the frugals and Finland were pushing for substantial cuts to the level of grants in the €750bn package, creating a new deadlock in the talks.

Southern countries with the backing of France and Germany have insisted the grants element should be ringfenced at €400bn from a current €450bn, diplomats said. A Franco-German proposal from May called for at least €500bn in grants.

In a tense meeting with frugal leaders after the summit, Ms Merkel and Mr Macron were visibly frustrated by the demands for lower grants and prematurely left the talks. “They were not happy with the frugals’ demands on the size of cuts,” said one diplomat.

A demand from Mark Rutte, Dutch prime minister, to unilaterally veto grant payments to stricken countries if they do not meet reform demands also continued to spark resistance from Italy.

Italy’s prime minister Giuseppe Conte said his country was “sharply confronting” frugal capitals in order to rescue a sizeable recovery package. “[Our] tools must be proportionate to the crisis and effective.

Our answer must be prompt, solid, robust,” Mr Conte said during a break in the summit.

Brazil powerbrokers sense chance to kickstart economic reforms Politicians and officials unite around need for action as pandemic suspends infighting Bryan Harris and Andres Schipani

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ith Brazil’s coronavirus outbreak widening and the economy forecast to face its worst recession on record, politicians and officials have suspended the infighting that stalled the country’s ambitious reform agenda and are determined to seize the momentum to push the programme through.

“The next 18 months will go down in the history of the Brazilian economy as 18 months of economic reforms,” Adolfo Sachsida, Brazil’s secretary for political economy, told the Financial Times.

The sweeping plans, which include an overhaul of the byzantine tax system and dominated political debate last year, are aimed at slashing red tape to spur growth while promoting fiscal discipline to attract private investment. But progress was halted after President Jair Bolsonaro

pushed his government close to a constitutional crisis with Congress and the Supreme Court and by the arrival of Covid-19, which has so far killed some 75,000 in a country that is among the world’s worst hit.

Economists and policymakers see the agenda as a crucial step towards restoring investor confidence and kickstarting growth in Latin America’s largest economy, which last year expanded only 1.1 per cent. The programme — which also includes changes to the machinery of government and a proposal for central bank independence — has gained more urgency as a result of the pandemic, which is likely to trigger a contraction this year potentially as large as 8 per cent, according to the World Bank.

As political pressures subside, influential officials and Congress powerbrokers appear to be uniting around the need to pass the reforms. www.businessday.ng

Nobody [wants] to talk about the fiscal situation. The government wants to keep the reform rhetoric alive to show they are doing their best. In my opinion, they are in denial Andre Perfeito, chief economist at broker Necton Rodrigo Maia, speaker of the lower house, wants a tax overhaul completed before he finishes his term in February. “Our priority is tax reform. We don’t have time to waste,” he said on Twitter last week.

The push has also been endorsed by leaders of the powerful centrão political bloc, composed of 221 of the lower house’s 513 lawmakers, which has aligned itself in recent months with Mr Bolsonaro in exchange for a series of political appointments.

“Tax reform is necessary, everyone wants it, I believe it will be a priority after this pandemic period,” Arthur Lira, a senior centrão figure, told local media.

Reforming Brazil’s tax system has long been an objective of

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economic policymakers, who say simplifying tens of thousands of federal, state and local rules would create efficiencies and improve the business and investment environment.

But a series of efforts over the years have foundered under pressure from political lobbying and vested interests, while lack of trust has fuelled resistance by the nation’s 27 governors and thousands of mayors to any attempt to centralise tax collection.

“It is a very complex topic. To really agree on a common position is a big challenge, but I recognise that in parliament there is a political will to move forward,” said Efraim Morais Filho, leader of the centre-right Democratas party in the lower house.

Brazil’s economy ministry has yet to present a tax reform proposal, so attention is focused on a plan drafted by members of the lower house, which wants to create a general tax on goods and services by unifying five different levies. @Businessdayng

“I think it has the conditions for a solid majority. It seems to me the government has made a choice not to present its own proposal and only to contribute improvements,” said Mr Morais Filho.

But analysts are sceptical about how quickly reform can be achieved given the complex issues and vested interests involved.

Lawmakers have also insisted reform should not be used as an opportunity to increase taxes, including by introducing a financial transaction tax, an option that has gained traction because of the fiscal impact of the government’s coronavirus crisis programmes.

Brazil’s gross debt is likely to jump 19 percentage points to 95 per cent of GDP this year, according to Luciano Rostagno, chief strategist at Mizuho Bank.

The economy ministry’s R$1.2tn ($222bn) emergency support package for the pandemic has alone eclipsed projected savings from last year’s hard-won pension reform.

Monday 20 July 2020

BUSINESS DAY

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FINANCIAL TIMES

COMPANIES & MARKETS

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Wall St traders warn of slowdown after best quarter in a decade

Executives reflect on prime conditions created as coronavirus panic shook markets Laura Noonan and Joe Rennison

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all Street’s top five banks have posted their best quarter for trading in a decade after the coronavirus pandemic led to frenzied market conditions and radical interventions from central banks.

JPMorgan Chase, Goldman Sachs, Morgan Stanley, Bank of America and Citigroup posted combined trading revenues of $33.4bn in the second quarter, their highest tally since the $33.7bn they made in the first quarter of 2010. The gains cushioned the blow of more than $20bn of provisions for loan losses on the banks’ income statements.

But executives are already warning of a sharp drop-off.

Just hours after announcing his bank’s 80 per cent rise in trading revenues from a year earlier, JPMorgan Chase boss Jamie Dimon suggested analysts could “halve” that haul as a predictor for the rest of the year. Other executives agreed with the thrust of Mr Dimon’s argument: this was a blowout quarter and unlikely to be repeated.

“It was probably as good an environment as you could have,” said Carey Lathrop, co-head of global markets at Citi and a 32year trading veteran. He described two key factors: clients rapidly adjusting their portfolios to deal with fast-changing economic forecasts, and the huge bond-buying programmes launched by the US Federal Reserve and other central banks — which had also slashed

After a stellar quarter for Wall Street’s top five banks, JPMorgan Chase boss Jamie Dimon suggested analysts could ‘halve’ secondquarter revenues as a predictor for the rest of the year © FT montage; Bloomberg

interest rates.

The flurry of activity lifted trading volumes in the earlier part of the quarter, multiplying bankers’ fees as they put through higher numbers of buy and sell orders.

Bankers said daily volumes at some trading desks were three to five times normal levels.

Fast-moving prices in the March sell-off had widened the gap between the cost of buying an asset and selling it. “Volatility ticking up led to elevated client activity and wider bid/offer spreads,” Jim Esposito, Goldman’s co-head of global markets, told the Financial Times. “This increased client activity fell to the bottom line.”

Jon Pruzan, chief financial officer at Morgan Stanley, also identified wider bid/ask spreads as a significant contributor to the growth in revenues.

Traders said that the Fed’s

promise in March to buy sovereign bonds in unlimited amounts and to buy corporate bonds for the first time, followed by a pledge in early April to buy riskier credit, helped to stabilise the market.

Latest coronavirus news Follow FT’s live coverage and analysis of the global pandemic and the rapidly evolving economic crisis here.

The actions changed investors’ mindset from “‘how far can this go, how negative can it get?’ to ‘what assets should I be buying right now?’” said Troy Rohrbaugh, head of global markets at JPMorgan, which posted market-leading trading revenues of $9.7bn for the quarter.

The result was more investors buying and selling stocks and bonds, helping to offset the effects of shrinking bid/ask spreads, as uncertainty faded. At the same time, fears of recession and a cash

crunch prompted big companies to raise record amounts of debt, which generated follow-on trading in secondary markets. One final tailwind was an increase in the value of bonds and derivatives held by the banks, which had been marked down at the end of the first quarter.

Fixed income markets were the best performing in the second quarter, with revenues across the five US banks almost doubling. Executives said the standout segment was rates, which includes sovereign bonds, financing and related derivatives, but noted that trading of commodities, currencies and corporate bonds was also very lively.

Analysts expect that the US banks’ rivals across the Atlantic should get a similar, if smaller, boost in their results. Kian Abouhossein, an analyst at JPMorgan, said European banks

would likely post a 40 per cent increase in their fixed-income trading revenues for the second quarter, led by a 69 per cent increase at Barclays and a 45 per cent rise at BNP Paribas. Deutsche Bank is expected to report a smaller rise of about a fifth. On average, European banks make about half the fixed-income trading revenue of their US peers.

With the second half well under way, Wall Street is already seeing trading activity taper.

“June was a transition month and now in July volumes are back to somewhere very similar to what we have seen in recent years,” said Hans Mikkelsen, a credit strategist at Bank of America.

The volume of daily trading in top-rated bonds has fallen about a third from its peak to $20bn, BofA’s research shows.

At Citi, Mr Lathrop described a “slowdown” in July which he expected to continue into August, contributing to a second-half performance that was similar to that of the past few years.

Amrit Shahani, research director at industry monitor Coalition, said that trading revenues in the third and fourth quarter would probably be at least 20 to 30 per cent lower than the second quarter, across big US and European banks.

Potential sources of volatility remain, including the US presidential election in November, tensions between Beijing and Washington and the surge in Covid-19 cases in the US. But Mr Rohrbaugh said he “wouldn’t expect anywhere near the same level of volatility that we saw earlier in the year. The markets were reacting to a much higher level of uncertainty then.”

Wall Street cuts forecasts for Fed balance sheet growth Modest expansion over past week reflects lack of demand for emergency facilities Colby Smith and Brooke Fox

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n expansion of the Federal Reserve’s balance sheet has stalled, prompting strategists to pare their predictions for the scale of the US central bank’s interventions in financial markets this year.

For the week ending July 15, its balance sheet steadied at $7tn, a small uptick from the week before but roughly $210bn lower than the peak reached on June 10.

The incremental rise — which comes after a 71 per cent expansion of the balance sheet since the start of year — follows a period of modest or declining usage for the emergency programmes the Fed had put in place since March to shore up markets affected by the coronavirus outbreak.

Another element of the Fed’s stimulus involves unlimited purchases of government debt, which have also been moderated. Declining appetite for the Fed’s dollar swap lines from foreign central banks has also been a factor, while last week the volume of the Fed’s operations in the repo market wound down to zero.

According to Financial Times calculations based on Fed data published on Thursday, just $104bn of the central bank’s firepower has been deployed through 11 emergency facilities that operate under powers that allow it to make purchases in “unusual and exigent circumstances”.

That is just 4 per cent of the minimum $2.6tn the central bank said it would make available through those facilities — an amount eswww.businessday.ng

sentially unchanged over the past seven weeks.

Usage of the Primary Dealer Credit Facility, which provides loans of up to 90 days to approved dealers of government debt, has continued to fall, as has demand for a programme aimed at supporting money market mutual funds.

Marginal increases in usage for facilities targeting corporate credit markets and small to mediumsized businesses, among others, have done little to offset these contractions.

Given the minimal take-up of emergency facilities, as well as the robust recovery in financial markets the Fed engineered through its pledges to act, strategists have revised lower their forecasts for the size of the Fed’s balance sheet

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by year-end.

An updated consensus of analyst forecasts compiled by the FT showed that the balance sheet was expected to rise to $8.5tn by the end of 2020, roughly $1tn lower than the year-end level assumed in May. According to Krishna Guha, vice-chairman at Evercore ISI, the primary driver of the Fed’s balance sheet expansion is likely to be the central bank’s regular purchases of Treasury bonds and agency mortgage-backed securities. It has committed to buying at a pace of at least $120bn a month.

Some investors have flagged concerns that terms and conditions of the emergency facilities were deterring potential users.

But Praveen Korapaty, chief global @Businessdayng

rates strategist at Goldman Sachs, said the low take-up was a positive development, emphasising the current health of financial markets.

John Williams, New York Fed president, described the relatively low usage as a “measure of success” in a speech on Thursday.

Robert Tipp, head of global bonds for PGIM Fixed Income, was among those to brush aside any concerns about a contracting Fed balance sheet, noting that the central bank’s support remains not only significant but also flexible.

“They are now down from an unsustainable and spectacular level of liquidity injections to what is simply seen as an incredible level,” he said.

Company IN FOCUS

BUSINESS DAY Monday 20 July 2020 www.businessday.ng

May & Baker plc: The drug maker prospering amid pandemic OLUFIKAYO OWOEYE

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n our last coverage of drug maker, May & Baker plc, “Sustaining the path of profitability amid economic headwinds, cashstrapped consumers” we highlighted some challenges facing healthcare manufacturers and projected that 2020 would be a year of recovery for most players in the sector as the country’s economy gains stability slowly.

Surprisingly, against the run of play, the outbreak of the COVID-19 pandemic introduced a new narrative, crashing our projections and plunging the world into a global health crisis.

No doubt, the last few years have been a challenging period for healthcare manufacturers in Nigeria. Some have shut down their operations, others lucky to be alive are still struggling to stay afloat in a challenging macroeconomic environment and cash strapped consumers.

The outbreak of COVID-19 in Afrcia, the last to be ensnared by the ravaging pandemic, raised a health crisis exposing the vulnerable countries with an ageing population and a large number of citizens with underlying ailments, putting pressure on the already dilapidated and in most situation a non-existent health infrastructure in many African countries such as Nigeria.

While the pandemic slowed down activities in several sectors of the economy, major winners have been domestic healthcare manufacturing companies such as May & Baker plc. The huge deficit of local medical supplies and pharmaceutical products created investment opportunities for the sector players. Also, a substantial amount of intervention by the Central Bank of Nigeria to healthcare companies as part of stimulus package to manage the health crisis, which included access to a N100.0bn fund, as well as lower borrowing rates, came as a boost to most companies in that sector thereby raising investor’s appetite in their stocks.

Stocks of May & Baker gained 48.70percent in the first six months of the year while other healthcare companies also posted double-digit gain during that period.

The May-2020 MPC meeting communique indicated that the CBN has already disbursed N10.15bn under the N100.0bn Healthcare Sector Intervention Fund although names of beneficiaries were not disclosed. Also, recent policy measures by the Federal Government, including fund flows from the private sector to healthcare could well mean that no crisis is a waste as the nation’s healthcare is now getting the attention it had long-craved.

Financials mirror industry headwinds The drug-maker was not shielded from the wave of economic contraction that swept the country in 2016 as it plunged the company into a loss of N41.09million. The company however emerged from its loss path in 2017 and maintained it in 2018 recording a net profit of N336.61million and N585.20million.

May & Baker turned the corner in the fourth quarter of 2019 to push its annual profit after tax up by 84 percent, even though sales in the year disappointed.

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May & Baker turned the corner in the fourth quarter of 2019 to push its annual profit after tax up by 84 percent, even though sales in the year disappointed

Audited financial report for the fourth quarter for the period ended 31December shows the company made a profit of N155.3m in the last three months of 2019 compared to a loss of N72.07m in the same period of 2018.

As a result, total profit for the year almost doubled to N628.9m compared to N342.69m from continuing operations in 2018 (total comprehensive income in 2018 was N585.2m following the disposal of food business in the year.)

The improvement in bottomline was, however, not owing to improved sales of the drug and beverage maker; full- year revenue declined by 5.52 percent year-on-year to N8.08bn May & Baker noted a decline in its main business segment (the production and sale of human pharmaceuticals and human vaccines) which offset gains from the beverages segment.

The slowdown in revenue weighed on May & Baker’s gross profit which fell by 7.17 percent to N2.94bn notwithstanding a 4.5 percent decline in cost of goods sold.

Consequently, May & Baker made N36.34 from every N100 sales in 2019, slightly lower than N36.99 in the prior year.

Administrative expenses fell almost 25 percent but it was not enough to grow operating income (N1bn vs N1.2bn) as higher selling and general expenses combined with lower ‘other operating income’ worsened the effect of a lower gross profit.

However, the company saw an astronomical increase of

over 10,000 percent in interest income on fixed deposits with commercial banks (N36.98m in 2019). Profit on disposal of property, plant and equipment rose four-folds to N7m in the period.

Finance cost trended lower by 45 percent to N185.69m.

“We successfully concluded recapitalisation exercise in 2018 through a Rights Issue that injected N1.87 billion into the company helping us pay off expensive short-term debts, boost working capital, fund marketing plans and finance equity investment in Biovaccines and a new paracetamol plant,” said Okafor.

May & Baker’s subsidiary company Biovaccines Nigeria Limited has re-started operations and plans to commence construction of a planned vaccines production plant in 2020, it said.

The pharmaceutical company in December last year announced a contract manufacturing agreement to produce four brands of French pharmaceuticals Sanofi.

The deal which was signed with Sanofi Nigeria, the local outlet for the global drug company, would see May & Baker use its World Health Organisation (WHO) certified manufacturing facility to produce four products brands of Sanofi for sales in Nigeria and West. The company’s facility can produce 6billion tablets and 37.5million 60ml liquid medicines annually Reinventing the wheel to meet pandemic challenges The drug maker has re- activated its hand sanitizer production line within 72 hours of announcement of the COVID -19 index case in Nigeria. Also,

the National Agency for Food and Drug Administration and Control, (NAFDAC) contacted May & Baker to mass produce emergency stock of chloroquine for possible clinical trials.

Speaking during the presentation of healthcare products to some security agencies in Lagos and Ogun, Nnamdi Okafor, Managing Director/ CEO, May & Baker said the company has already produced large stock of chloroquine in response to the NAFDAC request. This has already been made available to some health institutions in Nigeria and countries in the Economic Community of West African States (ECOWAS).

Chloroquine has long been used for the treatment of malaria. It was a flagship product of May & Baker until some years back when the federal government stopped the use of the drug in treatment of malaria in Nigeria.

May & Baker manufactures and distributes pharmaceutical products, such as vaccines, antibiotics, and sera. The Company also sells diagnostics, medical equipment and bottled water.

The company said it has reposition for sustained growth with ongoing investments in additional production capacity and investment in marketing and promotions among other strategic initiatives would provide impetus for growth in the years ahead. It has also continued to explore opportunities to broaden its products base and top-line including recent investments in vaccine production, new pharmaceutical products, nutraceuticals and herbal products that are expected to further diversify revenue base overtime.

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