Businessday 20 jun 2018 by BusinessDay

news you can trust I * *WEDNESDAY 20 JUNE 2018 I vol. 15, no 79 I N300

Abraaj bankruptcy hits stake in 8 Nigerian companies

Institutional investors seen growing cold feet towards Africa

LOLADE AKINMURELE

frica focused Private Equity (P.E) firm Abraaj’s imminent liquidation means its shareholding in eight Nigerian companies are hanging in the balance. These companies include

Indorama Eleme Fertilizers and Mouka Foam Ltd, where it invested an undisclosed amount under its Sub-Saharan Africa fund III in October 2016 and April 2015 respectively. The others are Bridge Clinic, which it invested an undisclosed amount in five years ago in 2013; Therapia Health Ltd, another

recipient of Abraaj funds to the tune of $5 million in April 2012; and C & I Leasing PLC, which got $10 million in September 2010. C&I Leasing first attracted Abraaj funding in June 2006, after securing a $4 million investment from the P.E firm. Computer Warehouse Group (in August 2009), Custodian &

Allied Insurance (in August 2008) and AOS Orwell Ltd (in December 2006) make up the 8-man list of Nigerian companies exposed to Abraaj. “They may have to sell their holdings to pay off their clients depending on the strategy of the new fund manager,” one

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APC convention faces crisis over ‘Unity List’

DIPO OLADEHINDE

igeria, Africa largest oil producing country needs to develop other ways of generating revenue apart from oil or face a wide range of challenges in the coming years, Global Credit rating agency,

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Oil marketers’ earnings slow as halt to PMS imports damp outlook

arnings of dominant downstream oil and gas companies operating in the country are slowing to the lowest levels since 2013 after a jump in 2016 as these firms are adjusting to

James Kwen, Abuja

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Nigeria’s oil-based revenue generation still a major flaw - Moody’s

BALA AUGIE

…As stakeholders shut out NWC his Saturday’s National convention of the ruling All Progressives Congress, APC is likely to be crisis ridden, BusinessDay has learnt. This is as critical stakeholders of APC have concluded plans

See commodities on page 2

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World Cup Result L-R: Chidi Okezie, company secretary; Basil Omiyi, chairman, and Yinka Sanni, chief executive, all of Stanbic IBTC Holdings plc, at the 6th annual general meeting of the company in Lagos, yesterday. Pic by Pius Okeosisi

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he Minister of Finance, Kemi Adeosun said on Tuesday that a total of N1,580,270,755,084.44(One trillion, five hundred and eighty billion, two hundred and seventy million, seven hundred and fiftyfive thousand, eighty-four naira, forty-four kobo) capital cost/budget was released to Ministries, Departments and Agencies for the 2017 federal budget. The 2017 releases is higher than the N1,219,471,747,443 total capital releases for 2016. Giving a breakdown in a statement, the minister said out of the amount, Power, Works and Housing received the highest allocation of N523,011,701,723.25 or 33.10 percent of the total capital releases. The sector equally received the highest releases in the 2016 capital budget, which was a total of N307,411,749,682 or 25.21 percent of the 2016 capital budget. Defence and Security received the second highest capital releases of N197,596,016,072.02, some 12.50 percent of the total in 2017, as against N77,532,885,729.00 or 6.36 percent of total releases the sector received in 2016. Agriculture and Water Re-

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sources received a total of N149,485,276,897.37 (9.46%) in 2017. The sector had received N143,121,925,241.00 (11.74%) of the capital releases in 2016. Transportation received a total of N126,253,042,607.50 (7.99%) of the 2017 capital releases as against the N171,900,597,013.00 (14.10%) received in 2016. Health and Education tog e t h e r re c e i v e d a t o t a l o f N98,190,277,285.69 (6.21%) for 2017 as against N56,270,030,992.00 (4.61%) the sectors received in 2016. Other sectors combined received a total of N485,734,440,498.61, which was 30.74 percent of the 2017 capital releases. In 2016, a total of N463,234,558,786.00 (37.99%) was disbursed to these sectors. Adeosun said despite the economic challenges in 2017, the Federal Government was able to fully cash-back the capital releases. She further stressed that the sustained high allocations to key sectors was a reflection of the Federal Government’s commitment to infrastructure development in the country. The Minister said the Federal Government was working assiduously to attract private capital to complement government spending in these key areas.

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Adeosun says N1.58trn capital budget released to MDAs for 2017 ONYINYE NWACHUKWU

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Wednesday 20 June 2018

Insight

Does Conoil need a makeover? DIPO OLADEHINDE

ne of Nigeria’s oldest company, Conoil Plc is looking like a company in need of a game changer as its lubricants sector seems to be playing second fiddle in a closely contested battle among companies in the downstream sector. The company which was incorporated in 1960 converted to a public limited company on the 29th of August, 1991 is gradually being squeezed out of the downstream sector in what seems to be a tight race in 2018. At first glance, Conoil’s 2017 financial performance looks good, revenue increased by 35percent from N85 billion in 2016 to N115 billion in 2017; the company also announced it is rewarding shareholders with N1.40 billion (N2.00 on every 50 kobo ordinary share), beating analysts’ expectation as they had envisioned that federal government protracted delay in

the payment of subsidy monies could undermine petroleum oil marketers’ financial potency. However comparison with major marketers such as TOTAL, Forte oil, 11plc, Eternal and MRS listed on the Nigerian Stock Exchange (NSE) shows that the company may be lagging. A further investigation into the 2017 financial books of Conoil Nigeria showed its Lubricants subsidiary contributes just 4 percent or N5 billion while its white products contributes N110 billion its total revenue of N115 billion. Earnings from lubricants subsidiary for TOTAL increased from N38.8 billion in 2016 to N47.5 billion in 2017 contributing 16 percent to the total revenue of N288 billion. Closely on its trail was Forte Oil with a revenue increase in its lubricant subsidiary from N11.4 billion to N12.1 billion in 2017 contributing 9.58 percent to the total revenue of N129.4, while Mobil Oil did not provide a breakdown of white product

(regular petroleum products) and lubricant revenue. “The other competitors are doing something right in terms of advertising, investments and value added Services which Conoil is obviously not doing,” Luqman Agboola, head of energy and infrastructure at Sofidam Capital Limited said. Ayodeji Ebo, managing director of Afri-invest securities limited said the downstream industry is very competitive and everybody is coming with new products to expand profits while Conoil has refused to act. “They need to expand their retail products and also improve branding as most of their filling stations are not properly branded,” Ebo added. Other firms playing second fiddle are MRS and Eternal oil; MRS lubricants subsidiary contributed 3.7 percent or N4 billion to its N107 billion revenue in full year 2017 while Eternal oil lubricants subsidiary contributes 3.4 percent

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Contradicting PMI reports confuse analysts David Ibidapo, Emeka Ucheaga & Jonathan Aderoju

cifically, the differences lie in the components weightings and their sample size. While FBNQuest assigns equal weightings to all 5 components in the PMI, CBN and Stanbic IBTC assign unequal weightings to the different components in the index to account for their uneven importance to output production. For CBN, the composite PMI for the manufacturing sector is computed as the weighted average of five diffusion indices, namely: production level (25%), level of new orders (30%), suppliers’ delivery time (15%), employment level (10%) and raw materials inventory/ work in progress (20%). Stanbic IBTC methodology show that the PMI is a composite index based on five of the individual indexes with the following weights: New Orders (30%), Output (25%), Employment (20%), Suppliers’ Delivery Times (15%), and Stock of Items Purchased (10%), with the Delivery Times index inverted so that it moves in a comparable direction. FBNQuest did not disclose the sample size for their analysis. FBNQuest indicated that their PMI reports cover a representative sample of the sector with large, mediumsized and small firms. They also included a disclaimer that any broad economic conclusions on the basis of their reports need to be tentative because they are operating in a near statistical void.

n May, three different institutions published different Purchasing Manager’s Index (PMI) for Nigeria’s manufacturing industry. The Central Bank of Nigeria reported May PMI as 56.5, FBNQuest reported May PMI as 49.5 and StanbicIBTC reported the PMI to be 59.1. The conflicting PMI creates a big headache for economists, manufacturers, policymakers and other parties who rely on the PMI data to make strategic business and policy decisions as well as for economic forecasting. According to the Central Bank of Nigeria (CBN), The Manufacturing PMI Report on businesses is based on survey responses, indicating the changes in the level of business activities in the current month compared with the preceding month. A composite PMI above 50 points indicates that the manufacturing/non-manufacturing economy is generally expanding, 50 points indicates no change and any reading below 50 points indicates that it is generally contracting. The key factor that caused the variation in the PMI published by these institutions was the difference in their methodologies. While the general understanding of the concept of PMI is the same among these institutions, how it is calculated differs. Spe- Continues on wwwbusinessday online

Atiku Abubakar (m), former vice president and presidential hopeful of the Peoples Democratic Party (PDP); Gbenga Daniel, former governor, Ogun State/director general of the Atiku Presidential Campaign Organisation (l), and Seriake Dickson, governor of Bayelsa State (r), during Atiku’s visit to Yenagoa on Tuesday in continuation of his nationwide consultation with PDP stakeholders ahead of his 2019 presidential election bid.

Low tax collection in Nigeria reflects revenue administration weakness - IMF …reflects high level of systemic noncompliance Endurance Okafor

espite successful initiatives to bring in a significant number of new corporate and self-employed individuals as Nigeria’s tax payers, these efforts have not delivered expected revenue. Of 1.5 million registered corporations, only 522,000 could be matched (as of May 2016) to any type of data available within the Federal Inland Revenue Service (FIRS), and only 77,000 filed Value Added Tax (VAT) returns in 2016, suggesting an active taxpayers’ population of only 5 percent. According to the International

Monetary Fund (IMF), comparing Nigeria’s tax structure with those of a selected sample of advanced, emerging, and developing economies, showed that none of its domestic tax collection indicated a promising performance, as Africa’s largest economy raised the least revenue of all comparators and at 5.3 percent of Gross Domestic Product (GDP) revenue in 2016 was significantly below the 22 percent of GDP average. “The very low tax collection rates in Nigeria are a direct reflection of weaknesses in revenue administration systems and a high level of systemic noncompliance,” IMF said in a statement.

Nigeria’s tax to Gross Domestic Product (GDP) ratio at 6 percent, is significantly lower than Ghana and Egypt at 16 percent, Morocco at 22 percent and South Africa at 27 percent. “For me it’s not the rate of tax that is important, in an economy like this, increasing the rate of tax is not even the issue and we have argued this a lot of times and you see what the federal government is trying to do, there is a bill now to reduce the tax levied on the small scale businesses to 15 percent, and corporate tax to 25 percent. Continues on wwwbusinessday online

Wednesday 20 June 2018

BUSINESS DAY

Wednesday 20 June 2018

BUSINESS DAY

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Wednesday 20 June 2018

NEWS Lagos goes tough on drug abuse, plans 1,000-man walk JOSHUA BASSEY

L-R: Rose Hamis, company secretary, CAP plc; Larry Ettah, chairman, and Oluwakemi Ogunnubi, managing director/CEO, during the 53rd annual general meeting of the company in Lagos, yesterday.

12th Media Nite-Out award holds September IFEOMA OKEKE

ll is set for the 12th edition of the Nigerian Media NiteOut Award. The event, holding at Lagos Airport Hotel, on September 23, 2018, at 2pm, has the theme: Role of Media in Ensuring Credible Elections and Maintenance of Good Governance. The event is gradually gathering momentum and attracting attention from the socio-economic aspects of the country. The all-embracing media practitioners’ event that debuted 12 years ago to recognise excellence and achievements by media practitioners (print, electronic/social media) is the brainchild of Solkem Entertainment. The Nigerian Media NiteOut Award, which specifically celebrates media excellence in Nigeria, was conceived with a view to carrying media practitioners along as an appreciation of their hitherto unrecognised contribution to the development and emancipation of the Nigerian nation. Now in its 12th year, this edition promises to be a grander outing than the previous ones and nominations and nominees are already rolling in. Dignitaries from all walks of life, captains of industry, politicians, top government functionaries, socialites and media groups are, as usual, expected to grace the event. According to the chairman, organising committee, it is yet another opportunity for media practitioners to come under one umbrella to celebrate their own colleagues in an atmosphere of conviviality and jollity where entertainment and intellectual bantering will be at their best.

FRC new national code aims to make Nigeria more competitive ENDURANCE OKAFOR

he Financial Reporting Council of Nigeria (FRC) has drafted a new Nigerian corporate governance code to help private sector businesses achieve its goal, while building sustainable institutions that will make the nation competitive among its peers. This was made known to BusinessDay recently in an exposure for public comment of the 60-page draft of the Nigerian code of corporate governance 2018 in Lagos. “As part of strategy to achieve widespread acceptance of the exposure draft, the council has laid it plans to embark on an effective awareness campaign, particularly targeted at the public interest entities to whom the code will apply, as well as the general public,” Nelson Anumaka, director of governance, FRC said. The need for a new and better corporate governance code for Africa’s largest economy was born out of the suspension placed on the previous code in October 28, 2016 by the Federal Government. A fifteen-man technical committee was therefore set up in January 18, 2018, comprising representatives from regulatory agencies, industry professionals and experienced individuals constituted by the board of the FRC to review and come up with new code such

as the proposed. The new code aims to standardise the practise of good corporate governance and induce voluntary compliance with the highest ethical standards across the Nigerian market. In line with this, it applies to a wide range of companies, specifically to the following interest entities, which are required to adopt the code: all public companies (whether listed or not), all private companies that are holding companies of public companies and other regulated entities, concessioned and or privatised companies, and regulated private companies. On the difference of the new drafted national code from the old suspended one, Daniel Asapokhai, executive secretary/CEO of FRC, said one of the fundamentals of this new national code was the philosophy. “That is what we call code philosophy. The suspended code is called a rule based mandatory code, which says, thou shall do this, thou shall do that. So, the current code is a principle-based code and it adopts the ‘apply’ and ‘explain’ philosophy,” Asapokhai said. These, he said, are the principles of good corporate governance, “which says it is ‘good to do this,’ it is ‘good to do that.’ “In that context, a company can look at its principles

and also look at its practices and look at it own circumstances and then introduce judgment to some extent in how they apply those practices. They are then required to report to their stakeholders, shareholders as to how they have implemented those practices, what they have done and why they believe what they have done achieves what is desired by the principles,” he told BusinessDay. The primary mechanism for rewards or punishment by this code is a market-based incentive; investors and other stakeholders will reward companies that do things right. Regulators are also stakeholders; companies that do not do things properly will of course compel regulatory scrutiny. According to the CEO, we do not think our first instincts should be that Nigerians do not like to do things, and as such you need to compel them. “People set up businesses and investment because they want success. I do not know of a lot of people that enter businesses to fail, and the corporate governance code is only saying this is how you will run a business to succeed,” he said. The CEO was however optimistic about the success of the new code, believing if things were put in place in the next couple of years there should be about 90 percent success rate.

agos State government is stepping up campaign against drug abuse as it plans to stage a 1,000-man walk in what will further raise awareness on the danger of the scourge on youths. The state commissioner for youth and social development, Agboola Dabiri, disclosed this at a media conference, Tuesday, ahead of the launch of Lagos State Kicks Against Drug Abuse (LASKADA), a renewed campaign against drug abuse in the state. Dabiri said the government was leaving no stone unturned in the effort to dissuade youths who were the major victims of the scourge. According to Dabiri, the campaign will adopt a tripod approach including events, engagements with stakeholders and awareness campaign, as the event would be flagged off by a 1000-man symbolic walk against drug abuse in the state. He said the walk, holding on June 21, would commence from Ikeja Bus Stop - under the bridge - to terminate at the Blue Roof, LTV, Agidingbi, where the official launch of LASKADA would take place.

The commissioner said participants at the walk would include students, members of voluntary organisations, sports men and women, members of non-governmental organisations, local government and youth representatives, local youth council representatives, faith based organisations, government functionaries, among others. “What we want to do on Thursday is to launch this campaign and show that we are ready for war against all forms of drug abuse. Once we launch out, we are going to have series of activities on various platforms and we will employ every avenue to ensure that the campaign gets to the nook and cranny in the state,” he said. Dabiri added that the campaign would also involve a stakeholders’ sensitisation session to deliberate on the menace and proffer likely intervention to tackle the issue holistically. “The stakeholders will include parents, youths, professional bodies include Pharmacists, NDLEA, psychiatrists, traditional medicine board, patent medicine sellers, NURTW, tricycle and Okada riders unions and a communiqué will be issued at the end of the session.

Sickle Cell Day: Edo harps on sensitisation, speedy deployment of improved disease management options

do State governor, Godwin Obaseki, has called for increased sensitisation on the choices that lead to the increased cases of sickle cell incidence in society. He notes that his government will continue to support sufferers of the health condition by creating the right environment for management of the genetic disease. The governor said this in commemoration of the World Sickle Cell Day, noting that advancement in science has brought hope to sufferers of the diseases even as efforts need to be harmonised in deploying new techniques of treatments. He said the state government is revamping the primary healthcare sector to address challenges in the sector. According to Obaseki, “On this day, we stand with sufferers of the disease and urge them to keep on the good fight against whatever limitations the disease may have foisted on them. “The commemoration gives opportunity for reflection on incidences of sickle cell, and reminds us of the work to be done to ensure that more people are not exposed to the trauma that parents or children go through in managing the disease.” He maintained that there was need for increased sensitisation to stem the rise in cases

of sickle cell, “It is pertinent to stress that the incidence of sickle cell disease can be checked if more people are aware of the implications of marrying people with genetic make-up that can cause their offsprings to become carriers of the sickle cell genes. Much as it is a matter of the heart, intending couples should be properly guided.” He added that while advances in science may have made management of the disease less cumbersome, with increased prospects of sufferers for longer, healthier lives, civil society groups and other stakeholders need to work together to curb the increased cases of the illness, and provide support for sufferers. According to the United Nations, “Sickle Cell Disease (SCD) is the most frequent genetic disease worldwide. It is present on four continents: in sub-Saharan Africa and in the Maghreb, in Asia (Middle-East, Arabic peninsula, India), in the Americas, on the North (USA), centre (Guatemala, Caribbean islands), and on the South (Brazil, Surinam, Guiana), in Southern Europe (Southern Italy and Sicily, Greece, Turkey). It is estimated that 500.000 people are born every year with this severe and invalidating condition and that 50 per cent of them will die before the age of five.”

Wednesday 20 June 2018

BUSINESS DAY

8 BUSINESS DAY NEWS

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Positive economic outlook in Edo increases investor traffic, pushes airfares by 1.04% … trails Lagos in states with highest airfares – NBS

he prevailing investment-friendly environment in Edo State, resulting from a series of reforms embarked upon by the Godwin Obaseki administration, to open up the state to private sector investment is impacting on air transportation, stretching airlines to their limit. Figures obtained from a publication by the National Bureau of Statistics (NBS), entitled ‘Transport Fare Watch May 2018,’ showed that ‘’average fare paid by air passengers for specified routes single journey increased by 1.04 percent year-on-year to N31,659.82 in May, 2018, from N31,833.46, in April 2018, but decreased by 0.40 per cent month-on-month.’’ The statistics bureau listed Edo State as the state with the second highest air fare, at N39,950, after Lagos State,

N40,500.00; while the Federal Capital Territory, Abuja was listed third at N39,592.59. The states with the lowest air fares, according to the NBS, are Katsina N24,300; Osun N24,950.48, and Nasarawa N25,700.18. The May 2018 figures released by the National Bureau of Statistics validate reports by operators of hotels and guest houses, tour operators and other practitioners in the tourism and hospitality industry who have attributed the boost in hotel subscription to the wide range of economic activities such as the development of Benin Industrial Park, the Gelegele Seaport project, the 450 EdoAzura Independent Power Project and the various road construction work across the state. New and prospective investors are unperturbed by the high airfares, and investor

confidence is at all-time high. Recall that the chairman, Golden Tulip Essential Hotel, Benin City, Edobor Ozakpolor, explained recently that “the current frenzy in the sector can be traced to the emerging socio-economic opportunities being created by the governor of the state. “Hotel accommodation before now was driven by seasonal activities like cultural and political events. But what we have now is a surge and it started since the governor’s inauguration. We thought activities would nose-dive after the inauguration but the tempo has been sustained by visitors and contractors who are seeking jobs and businesses.” On air travels, he noted, “Bookings have increased to 99 per cent as all the airlines that operate the Lagos-Benin route come into Benin City fully booked. This was not

the trend before this administration. “We have moved from weekend to daily business. When we ask some of our guests what they are doing in the state, they always tell us that they are here to see the state governor. Some guests are impressed by the ease with which they can see the governor and seal business deals, because of the reforms in the system.” Ozakpolor said, “The improvement in security is also boosting the confidence of our people who now come to town often. People feel safer in the city now and we are aware that the security architecture of the state has been interrogated and improved upon. The impact of the improvement is being felt in the sector as there is a direct relationship between the hospitality industry and security.”

NCNT to link budding entrepreneurs to Vienna for tech transfer

… set to train over 100 Niger Delta youths in entrepreneurship for job creation IGNATIUS CHUKWU

Nigerian firm with strong networks in Vienna, Austria, says it is set to create a global network for Nigeria’s budding entrepreneurs. It would begin by training Nigerian youths in their hundreds and empowering them to compete in the global arena. The firm, Incubation Centre for New Technologists Nigeria Limited (NCNT), run by Austriatrained Chinwe Ukuku, says it is set to join the fight for the eradication of youth idleness, restiveness and poverty as well as waste in the Niger Delta by incubating over 100 youths into the next generation of employers and wealth creators. The training would expose the youths and interested workers the various skills needed to make multiple income and also take the best to waiting centres and firms around the world that would easily absorb them. Top experts have been lined up to

mentor the trainees into globally sought after entrepreneurs. The training would run for two weeks. NCNT told BusinessDay in an exclusive interview in Port Harcourt that transfer of technology was the focus in the training scheme because Vienna, regarded as the City of Ideas, is eager to begin the transfer of ideas and technology to other nations. Ukuku said the five-year-old firm would soon turn the Niger Delta landscape into a canvas for innovation and budding entrepreneurship as well as a home of new ideas. She said the five-year-old firm chose to anchor in Lagos when she came in from Austria because Lagos was still regarded everywhere in the world as Nigeria’s commercial hub. “Vienna in Austria is undoubtedly the city of ideas. The people in it are keen on transferring some of the knowledge to other cities especially the lessendowed ones.” She stated that NCNT is thus

keen on importing new technologies from Austria to Nigeria. She said the world believes that Nigeria is a new technological frontier waiting to happen. “The world is watching Nigeria right now. So, it is not about talking but there is the need to start doing things in Nigeria.” NCNT, the CEO noted, is to be a platform to display what Nigerians in the Diaspora have learnt in the City of Ideas. She regretted that while advanced countries were into analyzing and processing children into areas of strength, Nigerian schools were still graduating certificate holders. “In Austria, there is a process of tracing the talents of citizens right from primary school level so that by the time a pupil gets to the secondary school level, his/ her area of strength would be known and targeted.” She noted that NCNT had carried out trainings in Nigeria in the past two years, and is now set to undertake the third year session in Port Harcourt. She went

on: “Year One was on renewable energy; Year two was on Business Innovation, all in Lagos. Now, Year three is to be held in Port Harcourt and it would be a mix of all relevant skills a young adult needs to explode in Nigeria at the moment. She explained the choice Port Harcourt, saying, “Port Harcourt is chosen because it is naturally the capital city of the Niger Delta. “Besides, we have found keenness in the city and we want to close the skills gap.” Those who would graduate from NCNT would obtain viable networks and partners around the world. The world is waiting for Nigeria. “Those graduating from NCNT would not walk alone.” Ukuku said after many years in Austria, she has now started to learn new lessons in Nigeria. “Lesson learnt: Never give cash to trainees but items needed to start up.” Her expectation is to create an army of entrepreneurs towards massive job opportunities.

Wednesday 20 June 2018

ENGIE moves to provide off-grid energy in Africa MIKE OCHONMA

lobal utility ENGIE says it wants to focus on providing off-grid energy in Africa, with plans to expand its solar home system (SHS) and mini-grid activities. For over 50 years, ENGIE has been active in many African countries through its energy engineering business, its natural gas purchase agreements with Algeria, Egypt and Nigeria, and more recently as an independent power producer in South Africa and Morocco with a total capacity of 3,000mw, either in operation or under construction. ENGIE, which is participating in the Africa Energy Forum beginning in Mauritius, is launching new mini-grid projects in Zambia and starting commercial sales of SHS in Ivory Coast with its subsidiary Fenix, part of its goal to provide 20 million people around the world with access to decarbonised, decentralised energy provision by 2020. A c c o r d i n g t o Yo v e n

Moorooven, ENGIE Africa CEO, “Advances in decentralised energy put universal access within reaching distance, but the scale of the challenge is significant. As governments work hard to improve electrification rates, decentralised solutions must be part of the mix. “Demand for clean and safe energy across Africa is continuing to increase, and the supply needs to rise in both speed and quantity.” Moorooven said a number of African governments and regulators were putting renewable energy at the core of their energy policies and ENGIE would work with them to expand energy access faster and sustainably. In 2015, ENGIE launched PowerCorner, an innovation that provides electricity to rural areas via sustainable mini-grids, and will launch the construction of its first mini-grid in Zambia after the success of the model in Tanzania, where it has 8 mini-grids currently in operation or in final construction stage.

Yar’Adua Foundation, Ford Foundation hold retreat … to promote national cohesion, build platforms to counter divisive behaviour

he Yar’Adua Foundation, with support from the Ford Foundation, will hold a three-day retreat to ‘Promote National Cohesion and Build Platforms to Counter Divisive Behaviour’ at the Olusegun Obasanjo Presidential Library, Abeokuta. The event is scheduled for June 21 - 23, 2018. Chaired by Obasanjo, the retreat will serve as a platform for community youth groups and influencers to develop a comprehensive strategy to address sources of rising ethnic and religious tension in Nigeria. Since the struggle for independence, Nigeria has experienced tensions and divisions between and among various ethnic identities. Efforts to manage and resolve conflicts have been deployed, but latent acrimonies and mutual suspicions remain evident due to a combination

of socio-economic and political factors, compounded by perceived and existent injustice. The retreat will feature two sessions: ‘Challenges of a Multi-Ethnic Society: Identifying Historical Impediments to National Unity’; ‘Current Manifestations of Divisive Behaviour: Countering Contemporary Threats to a United and Prosperous Nigeria.’ The opening plenary will feature performance poetry by Dike Chukwumerije ‘No Culture is Older Than Being Human and Drawing Blood’ by Atilola Moronfolu. The Yar’Adua Foundation’s mission is to promote national unity, good governance and social justice by creating platforms to engage citizens, policy makers and stakeholders in national conversations that foster an inclusive and prosperous Nigeria.

Wednesday 20 June 2018

BUSINESS DAY

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COMMENT SMALL BUSINESS HANDBOOK

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

he idea of small credit for small people (microloans) is age old, even though microfinance as currently practiced is relatively new. Different forms of informal credit schemes have been in existence since the 15th century when Catholic monks introduced the pawn shops in Europe to help the poor. However, what we call microfinance today is the result of the opportunity created in the 90s by the reluctance of deposit money banks to lend to those who had no collateral. Microfinance institutions (MFIs) were quick to fill the gap and there began the new world of microfinancing. Although the gap was never really filled, operators of microfinance institutions in the world such as 51Give (China), Bank Rakyat Indonesia (BRI), BRAC (Bangladesh), Grameen (Bangladesh) and such have done a lot. Back home here players led by LAPO, Grooming Centre, ASA and others have been doing their bit to tackle poverty. They have inspired many across the world to get involved with the provision of credit and related services for the poor.

Wednesday 20 June 2018

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Forecasting the future of MFBs as DMBs deepen microfinancing (1) An important development in the industry is that the banks that created the financing gap, which microfinance institutions exploited to become important are returning to microfinance, with even greater force and focus. A number of them had their own subsidiaries carrying out microfinancing before the Central Bank came out with the Holding Company structure for banks. This forced the banks that didn’t want to go the Holding Company rout to hive off their microfinance institutions. But some still have considerable interest in formal microfinance. With what is trending in that sector the return of deposit money banks to classical microfinance is a possibility. And when that happens, that will spell tough time for the present crop of microfinance banks that are trying to wear the image of banks. There is real danger that microfinance institutions in Nigeria may be greatly challenged if not endangered anytime the banks, which gave them the window of opportunity to thrive, get their acts together and really pursue microfinancing. That will bring them into direct competition with the banks and we need not predict who will win in such a contest. Microfinance has not achieved the aim for which it was heralded into the finance space with much pomp and pageantry – poverty reduction. This failure is not entirely the fault of operators. Poverty has continued to rise and even worsen in certain countries, especially those in Africa involved in the rampant wars and insecurity

There is real danger that microfinance institutions in Nigeria may be greatly challenged if not endangered anytime the banks, which gave them the window of opportunity to thrive, get their acts together and really pursue microfinancing. That will bring them into direct competition with the banks and we need not predict who will win in such a contest caused by poor and failed governance in the continent. But some degree of the failure may be attributed to the operators. The arrival of purely commercial microfinancing brought with it certain changes in the features of the operators that have affected their effectiveness in delivering on their poverty reduction mandate. Truly, commercial microfinance is devoid of its social element, which is a vital component of the nature of a real microfinance institution. Although there are still many operators in the mould of non-governmental or not-for-profit organizations (NGO), it does appear that the introduction of the profit motive took considerable steam off them. The existing NGO-type microfinance institutions were quick to convert to commercial

microfinancing, which had a dampening or downsizing effect on their operations. It also changed the fundamental character of the business as operators jumped at the idea of being called banks. This has made it difficult for them to get at poverty where it is rooted – the rural areas. The result is that microfinance banks have failed to distinguish themselves both in terms of their image and character, as well as in their services. Except for their small size, most operators are like commercial banks, repeating the mistakes made by commercial banks that gave rise to the niche they exploited. They have commercial bank structures and have overheads that mirror those of commercial banks. Their lending philosophy has become similar to that of commercial banks thereby changing the character of their clients. By booking large, rather than small ticket loans, they violet their established criteria on size and direction of credit. This has also distorted the structure of their loan portfolios, which tends to lean more towards large individual loans rather than groups and cooperatives. In this manner, microfinance banks have failed to democratize microloans among the very poor. Instead of having the bulk of their clients coming from the rural poor, they mostly come from among urban dwellers. This has come about because they prefer to locate in the urban centres and there may be any number of reasons to justify this. Fund gap and fund gap ratio Owing to their inability to attract significant deposits, microfinance banks rely on funds purchased

from the open market. Their deposit bases are therefore very shallow. This is partly due to their faulty business models that fail to recognize the critical place of savings, voluntary and compulsory, in their scheme of things. In microfinance, assets such as loans and deposits, are usually of the short term variety, while liabilities such as compulsory savings are usually long term. This often gives rise to what is called FundGap. By definition, fund gap is simply assets less liabilities, at a given time bracket. A fund gap ratio is assets divided by liabilities. When the funds gap or fund gap ratio is zero (which is a rarity because of the structure of the funds of MFBs), it means that its assets are exactly and properly matched with liabilities at the given time bracket. A fund gap greater than zero means that there are more interest rate sensitive assets than liabilities for the given period. This is a positive development if the MFB expects interest rates to rise. It creates a chance for it to renegotiate rates at a higher rate on its favour. So when expecting interest rates to rise an MFB would maintain a positive short term fund gap. If the fund gap or ratio is less than one or negative, the MFB faces a liability sensitive position The kind of investors who were attracted to the industry is also one of the challenges the players face. The focus on profit puts pressure on operators and affects their conduct.

Moslem ticket, which ordinarily would have automatically ruined the prospect of any presidential ticket in Nigeria, Christians still voted for him en-masse. The annulment of the June 12th election by that megalomaniac, despotic intriguer, Ibrahim Babangida, was a shameless display of raw, arrogant, brute power, and mindless ethnic chauvinism. It was a repudiation of the collective will of the people. It smacked squarely in the face of justice, equity and merit. In honoring Abiola and designating June 12 as Nigeria Democracy Day, President Buhari acknowledged and addressed a monumental historical wrong. He validated the struggle by Nigerians for the restoration of the June 12 mandate. He invariably recognized and paid tribute to the dead, maimed and scarred in that struggle for democracy. He made significant strides in reconciling all Nigerians and in healing wounds from the past. Some Nigerians are opposed to the honoring of Abiola and have thus are criticizing Buhari for it. Some argue that Abiola was a flawed character that got what he deserved; that the annulment of the June 12th election was therefore not totally unwarranted. Others contend that the president’s gesture has a political undertone; that it was done to curry Yoruba electoral support for the upcoming 2019 presidential election. Well, we all have

flaws, and like all men, Abiola had his frailties. Moreover, great historical figures sometimes come in “tortuously complicated forms”, but that does not mar the splendor of such great figures or diminish the import of their contributions to history. Secondly, June 12 goes beyond ethnicity. It is about justice, principles and morality. To give a tribal connotation to the president’s gesture is tantamount to hollowing June 12, a historical milestone that should be hallowed. It was not just the Yoruba that voted for Abiola and stood up to defend the June 12 mandate but the majority of all Nigerians. The president did something that many Nigerians found most refreshing, and there is nothing wrong with it, even, if it is political ploy to win Yoruba votes in the upcoming 2019 presidential election. Just as there is nothing wrong with business moves being motivated by profit, there is nothing wrong with a political move being motivated by votes. Interestingly, Presidents Olusegun Obasanjo, Umaru Yar’Adua and Goodluck Jonathan had the opportunity to honour Abiola, and harvest whatever political bonanza that was to attend it, but they choose not to. So, to President Buhari that honoured Abiola and immortalized June 12, I say thank you.

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Thank you, Mr. President

TOCHUKWU EZUKANMA Tochukwu Ezukanma writes from Lagos via maciln18@yahoo.com

s his death in the hands of a military dictator became imminent, the onetime Pakistani prime minister, Ali Bhutto, said, “I am not afraid to die. I am not afraid to see God. I will tell God that I raised Pakistan from the ashes to the throne.” At death, as Moshood Abiola saw God, he must have told God that with his life of rags to riches, he exemplified the boundless capabilities of the human will and spirit. That he transcended the primitive tendencies of ethnic bigotry and religious intolerance, and embraced all Nigerians. That he dealt a blow on that foremost social injustice - Hausa/ Fulani monopoly grip of political power - in Nigeria, and established a precedence that any Nigerian, irrespective of ethnicity, can aspire to and be elected to the highest office in the land. And that he heightened the political consciousness of an entire country, and won a victory for the

hitherto impotent masses that can now, in their new found confidence, walk head-high, knowing that the people are the repository of power, and that the terror of the gun cannot extinguish the awakened aspirations of the people. It was most magnificent that President Mohammadu Buhari posthumously recognized the political legacy of Moshood Abiola and his contributions to Nigerian unity and democracy. He conferred the highest national honour, GCFR, on Abiola and changed the date for the nation’s Democracy Day from May 29 to June 12th because “June 12 was far more symbolic of democracy in the Nigerian context than May 29”. For these wonderful gestures, like so many other Nigerians, I am very grateful to President Mohammadu Buhari. With the desperate poverty that marked his earlier life contrasted with the exalted position he attained in his lifetime, the life story of Moshood Abiola is the stuff for a legend. For it is only in legends and fables that such stupendous change in one’s fortune is a platitude. Levitating from such raw-dirt poverty to prodigious affluence and great renown inevitably demanded suffering, struggle and sacrifice. Struggle and suffering build character and inner strength, and edify the mind. They teach the individual to be still in the

face of the most daunting challenges of life, to be cool under heat, and to be calm even in the eye of the storm. They teach patience, tolerance and sensitivity to the needs and feelings of others, and that every man, even the dispossessed, discarded destitute deserves to be treated with respect. No wonder, he shunned the elitism and arrogance of the rich and famous, and identified with the aspirations of the dispossessed. No wonder, he was the most generous Nigerian philanthropist of all times. His openhandedness was legendary. With his capacious-hearted generosity, he crisscrossed the country touching lives and meeting the needs of people. His benevolence knew no bounds; it was totally indifferent to tribal, religious and sectional divides. He bestrode all national divides; he was a national figure - a quintessential presidential material. It is important to note that the Nigerian constitution was painstakingly crafted to facilitate the election of national figures - unifying forces – to the Nigerian presidency. With a political appeal that spilled across religious and tribal confines, he won a decisive victory in the most transparent and credible presidential election in the history of Nigeria. Inherent in that electoral triumph was his ability to unify what was for long a fissiparous electorate given to voting along tribal, religious and regional lines. Even, with his Moslem/

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Contributing to a knowledge economy – The MTN example

ESTHER AKINNUKAWE Akinnukawe is a HR executive at MTN Nigeria.

ike many business p r o f e s s i o n a l s, I ’v e watch e d w i t h ke e n interest as the global economy has evolved into a model where knowledge, technology and data take the front seat. Today, a fundamental requirement of a sustainable and competitive economy is a robust knowledge base. Of particular in-

CHARLES ONUNAIJU Onunaiju is Research director, Centre for China Studies, (CCS) Abuja.

No subject or issue has gained sustained attention in contemporary public discourse in Nigeria as re-structuring. Mostly considered by proponents as a re-configuring of existing political units to reflect ethno-geographical contiguity as basis to attain what they call “true federalism or devolution of powers from the central government to existing state governments and invest them with the quasicoordinating units of a balanced federation. All these, according to proponents have the magic power to arrest the habitual supplications of marginalization, restiveness and violent confrontations among different communities and even religious faiths. Opponents of re-structuring including the current government insists that nothing is worth compromising the hard won and earned national unity, seeing in the campaign for a restructuring, a sinister agenda to balkanize the country and carve it up as fiefdoms to ambitious ethnic syndicates. Re-structuring to attain true or balanced federalism through elaborate political re-configurations, clearly assume that Nigeria’s social dysfunction, and economic lethargy are consequences of dis-articulated political structure, especially which does not prioritize the categories of ethnic and religious formations as the core imperatives for engagement. However, the distinctive recognition and accommodation of nationality groups as the key

terest to me is a knowledge base that consistently looks to the future, ensuring that organizations, industries and business sectors are able to equip themselves with the skills needed for tomorrow, at relevant employment levels. For our nation to be globally competitive, we need the right people with the right skills to do the job at hand. This is an obvious and relatively simple idea but putting it in place requires a concerted and deliberate approach, and significant investment, especially in new industries and sectors with identified knowledge gaps. The telecoms sector is perhaps one of the greatest examples of this. Since 16 May, 2001, when the first call was made on the MTN network, the telecoms sector in our country has transformed life as we know it. Once upon a time, we relied on encyclopaedias and phone booths, made blind visits and waited for vendors to pass

For our nation to be globally competitive, we need the right people with the right skills to do the job at hand. This is an obvious and relatively simple idea but putting it in place requires a concerted and deliberate approach, and significant investment, especially in new industries and sectors with identified knowledge gaps by. Mobile technology appeared and seemed to change things overnight, often leaving us wondering if that was ever our reality. However, the new technology brought with it a need for new skills to build and sustain the sector. Such gaps in the skills market compel employers to look outside for the expertise needed to operate.

As such, when MTN Nigeria began operating 17 years ago, it started with over 300 expatriates, as a matter of necessity. The company also sought out Nigerian professionals in the diaspora who had already worked with the then new technologies. These pioneer employees would go on to play a critical role in the development of one of Africa’s largest networks, and more importantly, share their knowledge and experience with others in Nigeria and across the world. This transfer of knowledge was focused, methodical and structured over the years – a robust and multi-faceted skills acquisition program comprising job shadowing and other skills transfer initiatives. This facilitated the rapid upskilling of local capacity to a level of expertise and enabled a seamless handover. On this foundation rests a framework for the development and growth of existing employees. This includes mentoring, person-

al development plans (outlining skills gaps) and bespoke training programs, using a 70-20-10 method of learning and development (70 percent on the job; 20 percent targeted solutions; and 10 percent instructor led, e.g., acting assignments and e-learning). This development framework has also facilitated learning interventions for our ecosystem – partners, suppliers, etc. who support us every day. Today, MTN has over 1,600 highly skilled employees and about 15 expatriates whose commitment to company objectives continually reflect in our ability to contribute in meaningful ways to nation-building. We also have a vast and thriving network of indigenous partners. This knowledge bank is at the heart of our long-term growth strategy and establishes the basis for the next wave of growth in the industry. Send reactions to: comment@businessdayonline.com

Re-interpreting re-structuring and its imperatives structure of political engagement and even their constitutionalization forthwith, as in the case of pure federalization of Ethiopia’s ethnic nationality groups have not resolved the restiveness of the federating units. Even for Ethiopia’s renowned strong and developmental state, the restiveness of its largest Oromia region which boiled over recently and resulted in the resignation of the former effective Prime minster, did not recommend elegantly that restructuring must proceed from coalescing of ethnic units into basic political structures as the essential guarantor of equity and stability. Understanding the inadequacy to which her generous federalism that even provided for constitutional secession of any of the federating units, the Ethiopia’s developmental state exerts itself more energetically on the question meaningful economic restructuring, throwing up broad opportunities for all Ethiopians to participate in a transformative socio-economic life of the country. Despite the emotional appeal and high sounding rhetoric of restructuring as mainly a political re-configuring of Nigeria to attain true federalism, the critical issues that can address low value, Nigeria offers to numerous citizens are hardly and seriously engaged by the elites that drive the hay wire discourse of restructuring. The key word of restructuring is strategically germane to resolving Nigeria’s main conundrum. First and foremost, the institution

of the state is too unwieldy and consequently weak and dysfunctional. A practical step is to initiate constitutional reform of executive arm of government by abolishing unnecessary constitutional provision of having every state to have a minister in the federal cabinet and additionally reduce the number of ministries to at most 15, with the inclusion of the ministry of Ethnic nationalities, Religious and Diaspora Affairs. Living in denials of our differences does not eliminate it and therefore, to acknowledge and leverage it as a resource, will optimize its value to the national project. Proliferation of commissions and agencies have proved a durable burden, not only as a drain on the national treasury but have sapped the vitality of the state and distracted its focus from key essentials. The report of the Mr. Orosanya committee to streamline federal agencies and parastatals should be revisited with a view to further restructure the agencies in order to reduce the numbers and cut down their sizes. The freebie of bicameral legislature comprising currently the Senate and the House of Representatives is simply a self-asphyxiating exercise imposed to accommodate elite greed and not any national need. The institutional re-restructuring that is key imperative to the future of the country must discharge the burden of the existing hollow constitution, encumbered broadly and fundamentally, with a serious divergence of existential national needs and popular aspirations. A constitution is not a mere document of rules, even of the

“ground norm” but a regulatory mechanism of a broad social order in which collective aspirations for a common good is integrated to the mechanics of the state and its key agency of government for the purpose of the delivery of the greatest good to the greatest numbers. Electoral process, especially free, fair, credible and transparent elections are vital to building popular confidence in the institutions of state and making those institutions accountable and responsible. However, the management of the process does not have to impose a huge burden. The current electoral umpire; the independent electoral Commission is an unsustainable behemoth. Key elements of its functions which is why it is a statutory body can be effectively discharged by other bodies. A successful national data bank to be managed by national Population Commission can review and update electoral registers, while ad-hoc election commission of Independent persons drawn from the Judiciary, academic, civil societies, labour movement etc can conduct periodic elections, with specific time lines for addressing infractions and then, disband. The massive bureaucrac y of election management bodies has made elections look like an end in itself, instead of a means to an end. More importantly for the subject of restructuring is the strategic arm of the state, the security sector or its wing of organized violence. The main item of its restruc-

turing is to refine and improve its quality, through exposures to training, hi-tech equipment and package of material incentives. Through a broad and wide range of institutional reforms, that establishes the integrity and credibility of the state, a concomitant economic restructuring focusing on widening the net of productive activities for inclusive and sustainable development would engage citizens activism. The restructuring of the economy which must aim to resolve the contradiction of citizen’s growing needs and shrinking resources and opportunities should aim at value creation and multiplications. The various ethnic and inter-communal and farmer/herdsmen clashes are manifestations of the contradiction of growing population with growing needs but shrinking resources and opportunities. An economy that constantly and consistently creates and multiplies values has already the impeccable mechanism to manage and contain conflicts. A large family with many growing children, but with little opportunities to address the growing needs for food and other essentials will experience commotions and crisis despite that all the children are of the same parent. Nigeria actually and desperately need to be restructured but the tiresome sloganeering for a true or balanced federalism, whatever that means is way beyond the urgent imperative of institutional and economic restructuring. Send reactions to: comment@businessdayonline.com

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Wednesday 20 June 2018

EDITORIAL PUBLISHER/CEO

Frank Aigbogun

EDITOR-IN-CHIEF Prof. Onwuchekwa Jemie EDITOR Anthony Osae-Brown DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Patrick Atuanya EXECUTIVE DIRECTOR, SALES AND MARKETING Kola Garuba EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, DIGITAL SERVICES Oghenevwoke Ighure ADVERT MANAGER Adeola Ajewole MANAGER, SYSTEMS & CONTROL Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso SUBSCRIPTIONS MANAGER Patrick Ijegbai CIRCULATION MANAGER John Okpaire GM, BUSINESS DEVELOPMENT (North)

Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu HEAD, HUMAN RESOURCES Adeola Obisesan

Clarity and goodwill on off-grid power

fforts at resolving the perennial power challenge facing Nigerians have seen the distribution companies, the regulator and alternative providers locked in a tango. Eko Disco warned a third party against infringing on its territorial rights while Enugu Disco has gone to court to stop the Nigerian Electricity Regulatory Commission from implementing its decision to grant power generation and distribution licenses to two special purpose vehicles set up for Ariaria Market, in Aba, Abia State . We believe this is a test case of the sincerity of all parties on the goal of providing power to Nigerians. We call for good faith and a negotiated settlement that ensures win-win for all parties but primarily for the consumer. Two power distribution companies took up arms recently against what they deemed violation of their territorial rights. They are the Enugu Electricity Distribution Company (EEDC) and the Eko Electricity Distribution Company. Sector regulator the Nigerian Electric Power Regulatory Commission announced on June 12 the grant of a license to operate an independent power plant in Ariaria market in the overall public interest. The license went to a special purpose vehicle of the Ariaria market traders called the Ariaria Market Independent Power Plant Limited. It would generate 9.5 megawatts em-

bedded power for the market. NERC also granted a distribution license to Ariaria Independent Energy Distribution Network Limited to distribute the generated power in the market. The NERC stated: “The licences, issued in line with Section 71(6) of the Electric Power Sector Reform (EPSR) Act 2005 were granted after careful consideration of the applications in public interest to promote access to common goods and to promote commercialisation and industrialisation for which Ariaria, a leading commercial hub in the country, is reputed”. It added, “Both licences granted to Ariariawere affirmation of the Commission’s commitment and response to the long-time yearnings of the market for a stable, reliable and sustainable electricity supply to improve quality of goods and services by Nigerian enterprises and entrepreneurs.” The story and conflict over power generation for Ariaria market goes back at least ten years and involves many parties. Geometrics Power initiated moves to directly provide power for Ariaria Market and Aba. In the beginning, Geometrics Power, floated by former Power Minister Prof Bart Nnaji, held a license to “ring-fence” Aba and Ariaria from the operational control of any other provider. However, NERC granted a license for the states including Aba and Ariaria to EEDC. The matter went to court. Vice President Prof Yemi Osinbajo urged the parties to settle out of court. Abia State Governor Dr Okezie Ikpeazu

has also been very involved in seeking a negotiated settlement. While these efforts were on, the Federal Government included Ariaria in a national scheme to empower specific markets to boost productivity and commerce. The Rural Electrification Agency proposed a power solution for Ariaria and three other markets. These are Sabon Gari Market in Kano, Kano State, Somolu Printing Community and Sura Shopping Complex, both in Lagos and Ariaria Market in Aba, Abia State. The Off-Grid Electrification Strategy proposed the deployment of Compressed Natural Gas in three markets and solar in Kano. Its survey captured 50, 900 shops and power demand of 32.27MW. Ariaria’s 11 sections accounted for 31, 100 shops. REA surveyed an estimated power demand of 6.62MW in Ariaria; it proposed a 5MW compressed natural gas plant with a 2MW back up. Even so, Enugu Disco was against the REA solution. NERC has now deployed its regulatory power ostensibly to break the stalemate. How far would this go? There are many legal, business, corporate social responsibility and public policy issues involved. The legal is already in court courtesy of the Enugu Disco. We note only that by its MiniGrid Regulation 2016 government through NERC provided for mini-grids. They are defined as “any electricity supply system with its own power Generation Capacity, supplying electricity to more than one customer and which can operate in isolation from or be

connected to a Distribution Licensee’s network. Within this Regulation, the term Mini-Grid is used for any Isolated or Interconnected Mini-Grid generating between 0kW and 1MW of Generation Capacity”. The solution of the Rural Electrification Agency in most cases goes beyond the mini-grid specification. It then lies to the policy direction of Government as articulated by key officials. The objectives are exceptional and in the public interest. More than all these, the protesting Discos must also confront reality. Our lived experience is that they have failed spectacularly to offer citizens and consumers the service for which they earned licences. Their failure has created a vacuum. As nature abhors a vacuum, both Government and citizens actively seek alternative solutions. It would therefore not suffice to argue, as EEDC has done, that the proposed Ariaria power solutions breaches its territorial rights. Power is a critical and indispensable enabler in the modern world. Citizens must find power one way or the other. Provision of power is a basic obligation of government. BusinessDay calls for a negotiated settlement. All parties must go to the roundtable with one view: ensuring that the markets get the power they deserve. There is within the MiniGrid Regulation of NERC elbow room for a win-win for all parties.

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Wednesday 20 June 2018

BUSINESS

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NMRC, Kohath pact raises home buyers’ hope on LoH’s 20,000 housing units

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Nigerian flagged vessels grow 17.03% in three years - Report AMAKA ANAGOR-EWUZIE

he number of vessels acquired and registered by Nigeria’s indigenous ship owners to fly the country’s flag has grown by 17.03 percent in the last three years to 307 vessels, up from 262 vessels in 2015, Nigeria’s Maritime Industry Forecast 2018 – 2019 has revealed. These were vessels registered in Nigeria by the Nigerian Maritime Administration and Safety Agency (NIMASA), the Federal Government agency saddled with the responsibility of shipping development, to operate under the provisions of the Coastal and Inland Shipping Act (Cabotage). In 2016, the volume of Nigerian flagged vessels almost doubled as a total of 370 vessels with a total tonnage of almost 420,000 metric tons were recorded while in 2017, with a total tonnage of 415,638.03 were registered as Nigerian flagged vessels under the Cabotage regime. According to the report, Nigerian flagged vessels under the Cabotage regime are

indigenous shipping development capacity initiative, meant to increase indigenous capacity in tonnage, manning, building and flag registration. “To ensure compliance with the provisions of Cabotage regime in Nigeria, as enshrined in section 30 (1) of the Cabotage Act, the enforcement team of NIMASA monitors vessels, enforce compliance and penalise defaulters. The report further stated that during the period under review, gaps were identified in indigenous capacity with regards to the four pillars of the Cabotage act including ship building; ship manning, ship ownership and ship registration by Nigerians, and this necessitated the granting of waivers to foreign players. The report however expressed hope that the Cabotage vessel financing fund (CVFF), when disbursed would boost indigenous capacity and accelerate development in the sector. The CVFF fund, which was created by the Federal Government and contributed by ship owners paying 2 percent of the volume of cargo per a Cabotage trade, was expected

to be used as cheap fund for vessel acquisition. In 2017, the report stated, that NIMASA introduced the new Cabotage Compliance Strategy (CCS) for a successful Coastal and Inland trade regime thereby halting con-

ioMerieux Diagnostics Solutions, a world leader in microbiology and player in infectious diseases diagnostics has been launched in Nigeria. The company which has been in existence for over 50 years with operations in 160 countries across the world thought it fit to bring its innovations to the Nigerian market. Although Nigeria is not the first African country to host BioMerieux as a business, the company’s mission and ambition states clearly that it aimed at pioneering diagnostics to improve public health especially in the fight against infectious diseases. Biomerieux is a diagnostics company which specializes in

three specific fields: microbiology, molecular biology and immune assays. The company which has been working on improving public health by focusing and targeting specific health care issues and trends such as sepsis and Anti-Microbial Resistance had come up with solutions that has been able to help reduce death in these areas. The company disclosed that the target market for these facilities are the clinicians who they help by removing the guess work and giving them the assurance of having the right data, to help simplify operations as well as optimize cost for laboratories and ultimately to improve the health care system. Speaking at the event, Sinde Chekete, vice president - Africa cluster stated that the company have been fighting

an interview in Lagos that the new Cabotage Compliance Strategy has seen NIMASA ensuring that over 200 seafarers are on board different Cabotage vessels. He further disclosed that the agency is working with the

L-R: Ben Iroha, former Nigerian Association football defender Former Super Eagles goal keeper, Ike Shorunmu, sports editor, Pulse NG, Steve Dede, former Super Eagles Central defender Uche Alozie Okechukwu and former Super Eagles winger Tijani Babangida discussing match analysis at the Super Eagles Dome yesterday courtesy of Star Lager.

BioMerieux debuts in Nigeria, to fight infectious diseases MICHEAL ANI

sideration of applications for granting of waivers on manning especially foreigners for prescribed category of officers on vessels engaged on cabotage trade. Dakuku Peterside, director general of NIMASA, said in

infectious diseases for more than 50 years and has currently adopted a Syndromic approach in carrying out some of its diagnoses. Chekete hinted that although some of their solutions are recent; their presence in Africa has been limited to Northern Africa, South Africa and some Franco phone African countries in the sub Saharan region. “The company’s objective is to fight infectious diseases, increase knowledge to a higher number of people which brings up a need for their services to be affordable,” He urged the government and stakeholders to make this possible as they do not sell these solutions directly to the end users but rather as middle men who get affected by slot of factors that ultimately determine the affordability of these facilities.

Nigerian Content Development and Monitoring Board (NCDMB) and talks are at advanced state to ensure the engagement of over 100 brand new Cabotage vessels in the oil and gas industry. Despite this perceived growth in the number of Nigerian flagged vessels, Nigerian ship owners have argued that their companies are struggling to survive due to lack of affordable funding to acquire new vessels. Margret Orakwusi, former president of Nigerian Fishing Trawlers Association said recently in a stakeholders’ forum held in Lagos that Nigerian ship owners were struggling to compete with their foreign counterparts, who get funding from banks from their countries of origin, at single digit while Nigerians get fund at double digit, as high as 28 percent. “We generate cargoes locally but our indigenous ship owners struggle to participate in the transportation of those locally generated cargoes due to their inability to buy quality vessels. Ship owners are losing jobs to their foreign counterparts while Nigerian seafarers are also losing job opportunities to foreign crew,” said Orakwusi.

Dangote refinery to address Nigeria’s crude oil refining challenge –IPMAN

he Independent Petroleum Marketers Association of Nigeria (IPMAN) has said that the Dangote Refinery, Petrochemical and Fertilizer projects would solve the country’s crude oil refining and exporting challenges, when completed. Debo Ahmed, the Chairman, Western Zone of IPMAN told the News Agency of Nigeria in Lagos that the refinery would address the lingering crisis of importing refined products into the country. Ahmed said that the $16 billion investment project would revamp the oil and gas industry when it finally kickstarts its operations. He, however, appealed to all stakeholders to support the actualisation of the huge investments to address the challenges confronting the

nation’s downstream sector. Ahmed said that the Dangote refinery would impact positively on the downstream investments and significantly boost the country’s economic growth. According to him, its 650, 000 barrels per day refining capacity projects would have a great multiplier effect on the nation’s economy when completed. “The refinery is expected to solve the country’s crude oil refining and exporting challenges when completed. It will also be able to supply 95 per cent of local daily consumption. “It is also expected that half of Nigeria’s crude would then be refined and exported, rather than just exporting crude, to create jobs elsewhere,” he said. The IPMAN boss, therefore, urged government to

harness the potentials of the private sector to make the national economy recover speedily. “The Dangote Refinery, Petrochemicals and Fertilizer Project, which is reputed to be the biggest in Africa, when completed, will offer a lot of relief in the quest for the diversification of Nigeria’s economy from a total dependence on oil to other areas like agriculture and solid minerals. “We have been assured that when the project fully takes off, it would save the country over 12 billion dollars now being spent on the importation of oil into the country. “It has also been said that it would as well save for Nigeria about three billion dollars per annum on forex from exports,” he added.

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Wednesday 20 June 2018

COMPANIES & MARKETS

NMRC, Kohath pact raises home buyers’ hope on LoH’s 20,000 housing units CHUKA UROKO

he pact which the Nigeria Mortgage Refinance Company (NMRC) P l c , N i g e r i a’s secondary mortgage market institution and leading mortgage underwriter, has sealed with Kohath Housing Corporation has raised hope for home buyers on Kohath’s Land of Honey (LoH) estate development. The multi-billion naira LoH is a joint venture development Kohath is doing with the Federal Capital Territory Administration (FCTA) to deliver a city that will provide for commerce and community living. On completion, LoH will deliver between 15,000 and 20,000 housing units in different phases over a 5-year period. This partnership, according to officials of NMRC, is in pursuit of its mandate to not only increase access to housing, but also make it affordable to a good number of low income and home seeking Nigerians. NMRC is not new to partnerships and has, in the last four to five years, entered into quite a number of strategic and collaborative agreements and partnerships with both public and private sector operators in the housing industry, as part of its efforts at ensuring housing accessibility and affordability.

Kohath Housing Corporation is a member of the Kohath Investment Group, It is a leading player in the municipality development space in Sub-Saharan Africa. The group is a wholly owned Nigerian company with business activities in real estate development, mining, agriculture, energy and trading, with the aim of positively contributing to the gross domestic product of the countries where it carries out its business and derives maximum value for shareholders. The new par tnership agreement, which was executed on April 25, 2018, will see NMRC and Kohath collaborate for the provision of project structuring and mortgage advisory for the delivery of a first of its kind city in the Gude District of Abuja. Kohath’s transaction structuring include off-take arrangements for up to 10,000 affordable housing units with the Federal Integrated Staff Housing Scheme (FISH) through the Office of the Head of Service of the Federation and Federal Government Staff Housing Loans Board. The collaboration between these two major stakeholders in the housing sector (Kohath and NMRC) presents a huge opportunity which Kehinde Ogundimu, the acting CEO of NMRC, hopes will make a difference in home ownership in Abuja due to challenges that

L-R: Bola Olajomi-Otubu, (human resource director – GN Plc); Peter Ndegwa (managing director, GN Plc); Mr Real musician; Viola Graham-Douglas corporate relations director, GN Plc; and Olaitan Aremu Oke commercial finance director, GN Plc during the #ShakushakuforNaija internal engagement at Guinness Nigeria Plc in support of the nation’s football team.

the LoH development will help to resolve. Abuja as Nigeria’s federal capital city has enormous housing challenges, especially in the low income segment of the market. These challenges include proliferation of houses that are ‘dead assets’ due to titling constraints, low access to mortgage loans and lack of sustainable, planned, qualitative and affordable housing. The LoH development and Kohath’s partnership with NMRC can best be described

FarePay recognised as most utility payment cards

frica’s first ever contactless payment cards for bus transit has won the award for ‘card with the most utility relevance for the cardholder’ at the Digital Pay Expo Awards which held recently in Lagos. The smart payment solution introduced by Nigeria’s leading commercial bank, Sterling Bank Plc eliminates challenges associated with Bus Rapid Transit (BRT) such as facing long queues to purchase a ticket or handling exact cash fares for a trip. Out of seven award categories at the event, two cards were nominated for the most utility relevant card category with Sterling Bank’s FarePay card emerging as winner in the category. FarePay cards are built on a contactless payment technology, with a connected bus validator system linked to the users’ bank account allowing passengers to ‘tap in and tap out’ of BRT buses with ease.

Commenting on the award, Yemi Odubiyi, Executive Director, Corporate and Investment Banking at Sterling Bank said FarePay card was designed to ease the hassle associated with mass transit across Africa. “Barely a month after launch, we have facilitated over 30,000 trips within Lagos with the FarePay card and we are looking to replicate this system across the continent.” He thanked DigitalPay Expo for creating a platform that recognized and rewarded innovation in the Nigerian tech space, adding that the two-day exhibition gave the Farepay team an opportunity to meet with some of the people the first-of-its kind solution was designed for whilst also offering technical support and educating users at the same time. FarePay cards are prepaid and reloadable through the user’s bank accounts and can be activated through an ATM

or USSD. Card holders are no longer burdened with facing long queues for tickets or having to carry the exact fare for trips. “FarePay is all about offering a convenient and flexible lifestyle for the user”, said Gbenga Adams, Group Head, E-Business at Sterling Bank. “Before FarePay, there was nothing like it across Africa where card owners can load as little as N500 to as much N5 million on a card and the exact value of the trip is deducted each time a rider taps in or taps out of a bus. It simplifies the users’ commute eliminating the need to carry cash or wait on long queues for tickets.” Adams added that FarePay is also a data gathering tool, “each time a rider taps in or out of a bus, we are able to see routes and services that are more in demand, where we can deploy additional resources and how we can improve our services as a bank.”

as a value-adding innovation that has been in incubation since 2011. Teni Eleoramo, the executive chairman of Kohath Housing Corporation, disclosed that the project had successfully weathered the storm of title and legal challenges and has also survived the hash business environment in Nigeria. “We are now ready to deliver its mandate of providing qualitative and affordable housing to Nigerians”, he assured, saying that LoH will deliver such house types as a

few single-family homes and a large majority of affordable housing development portfolios. The development will also features multi-family apartment homes for midincome families with support services that will cater to lifestyle, transform lives and strengthen communities. The LoH development currently has an asset portfolio of over 900 hectares covered by a bankable certificate of occupancy that is conservatively valued at $180million, making Kohath one of Nigeria’s largest

developers of quality and affordable housing. It is expected that Kohath’s development strategy will, in the long run, involve the deployment of the World Bank and International Finance Corporation’s sponsored Excellence in Design for Greater Efficiencies Certification process in building innovative, sustainable, green communities as part of Kohath’s Green Development Strategy for improved health, long-term economic and environmental benefits for residents.

NIPOST sees increased business in technology advancement

echnology has multiplied the chances of Nigeria Postal Service (NIPOST) for doing business, and increased its revenue generation capacity, an official has said. The General Manager of the NIPOST Courier Regulatory Department (CRD), Ishaya Diwa, gave the assurance in an interview with the News Agency of Nigeria (NAN) in Lagos. “There is need to disabuse the minds of the public, as many times when one talks of NIPOST delivering mails, one asks if NIPOST is still in existence. “With the advent of GSM phones, e-mail, internet and others, it looks on the surface as if NIPOST has nothing to offer

but it has keyed into adopting technology in doing business,” he said. According to him, the changes going on in NIPOST will move it from analogue to digital as most operations are now electronic, re-positioning NIPOST to give best services, Diwa told NAN. He said that NIPOST had established an electronic-oriented business unit for robust activities. “Advent of technology has made business bigger, easier and quicker. “Communications are done online but the actual movement of goods is done by human beings and by logistics,” he told NAN. According to the official, post office boxes and private

mail bags are still existing as many companies and organisations still maintain their private mail bags. Diwa said that a condusive environment and viable collaborations had made NIPOST to have an edge and remain relevant. “The memorandum of understanding signed with Lagos State Transport sector has lessened courier operators’ expenses on tax. “Even with an economy that is not too robust, a conducive environment has made business to thrive. “The introduction of Stamp Proceeds which will come both manually and electronically, would boost NIPOST’s revenue generation and keep the agency relevant to the society,” he said.

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BUSINESS DAY

COMPANIES & MARKETS As Federal Government agencies scramble for relevance at ports AMAKA ANAGOR-EWUZIE

ay back in 2011, the Federal Government’s Economic Management Team led by Ngozi Okonjo-Iweala, then Minister of Finance, pruned down the number of Federal Government agencies that were participating in cargo clearance at the seaports, from 14 to seven. The action of government at that time, was largely due to the difficulties faced by shippers (importers and exporters), while clearing their cargoes from the ports. Then, it was discovered that importers spend as long as 30 days and above to clear their consignments from the ports, following the cumbersome port processes and the delays that come with the presence of multiple agencies at the ports. Also, the situation created huge cost implications for shippers as many pay hundreds of billions of naira annually to shipping companies and terminal operators as demurrage and storage rents, for not taking delivery of their consignments as and when due. Okonjo-Iweala’s directive listed seven agencies permitted to operate within the ports to include the Nigerian Ports Authority (NPA); Nigerian Maritime Administration and Safety Agency (NIMASA); the Ports Health; the Nigeria Customs Service (NCS); Nigerian Immigration Service (NIS); Nigeria Police Force (NPF) and the Department of State Security (DSS). While the others not on the list including the Nigerian Drug Law Enforcement Agency (NDLEA); the Standards Organisation of Nigeria (SON); Nigerian Quarantine Service; National Agency for Food and Drug Administration and Control (NAFDAC) and others were asked to vacate the ports, only to be at the ports on invitation of Customs, when necessary. After the directive was put in place, some of the sacked agencies started lobbying from the National Assembly to be restored in the ports. The agencies that were accused of lobbying at that time were SON, NAFDAC and NDLEA. After the lobbying, some of them were restored at the ports until in mid-2017 when the Vice President Yemi Osinbajo came up with an Execu-

tive Order on Ease of Doing Business at the ports. In the new Order, the Federal Government mandated the NPA under the administration of Hadiza Bala-Usman, to cut down the number of agencies at the ports. As a result of the mandate, the NPA in June 2017 released a list, which reiterated that it was only seven agencies that were approved to be at the ports and they were the seven authorised initially by Okonjo-Iweala in 2011. Two days after the NPA re-introduced the Federal Government directive that streamlined the number of government agencies at the ports, NDLEA issued an alternative directive, claiming it had the mandate of the government to operate at the ports. Ofoyeju Mitchell, who was the head of Public Affairs of NDLEA at that time, said in a statement that the Federal Government through the NPA listed eight agencies to operate at the seaports. “The Federal Government has endorsed the operations of the NDLEA at the seaports. This clarification was openly made by Bala Usman at a stakeholders’ meeting held in Lagos sequel to the implementation of the executive order issued by the acting President, Yemi Osinbajo on the Ease of Doing Business at the ports,” Mitchell said in the statement. “NDLEA has been cleared by the presidency to work at the seaports. This official position must be respected by all port agencies and stakeholders. Attempt to violate this directive shall be considered as a conspiracy to advance the nefarious activities of drug cartels to the detriment of our national security.” In February this year, NPA issued another statement that reiterated that only eight Federal Government agencies with NDLEA inclusive were allowed to operate and have physical representation at all port locations. Abdullahi Goje, general manager, corporate and strategic communications of NPA, who stated this in a statement, said that other agencies not mentioned in the list above should remain outside the port premises as Customs, which is the lead agency for inspection of cargoes, has developed standard operating procedures (SOP) to facilitate their seamless operation especially during examination of cargo as it

concerns an agency. Surprisingly in May (last month), the NPA released another statement that again confirmed that eight agencies were allowed to operate at the port but this time, instead of the NDLEA being among the eight, NAFDAC was chosen in place of NDELA. This has brought fresh concern among industry stakeholders, who believed that the scramble for presence at the ports by government agencies was due to their ‘selfish interest’, which is largely driven by the desire to enrich themselves than facilitate trade. Paul Usoro, guest speaker, who presented a paper on ‘Federal Government Policies on Ease of Doing Business in Nigeria’ during a business luncheon organised by Manufacturers Association of Nigeria (MAN) in Lagos recently, confirmed that the multiplicity of government agencies at the ports, not only delay cargo clearance but has huge cost implication on businesses. Therefore, he advised, the government to see to the pruning down of the number of agencies at the ports to facilitate trade and cut down cost for shippers. In his view, Emma Nwabunwanne, a Lagosbased importer, who believed that the different regulatory roles played by NAFDAC, NDLEA and SON at the nation’s seaports, are critical to healthy economic development, pointed out that the three agencies do not need to station in the ports and participate in all cargo examinations, just like Customs men, in order to play those roles. According to him, those roles can effectively be played through occasional visit to the port, on the invitation of Customs, when the cargo under examination relates to their areas of coverage. This was aside from the fact that Customs on several occasions has proven to have the eagle-eye to detect offensive imports like substandard goods, hard drugs or prohibited items without the agency responsible being around. Therefore, the government needs to take a firm decision on the place of these agencies at the port, if the aim of improving Nigeria’s ranking in the World Bank Ease of Doing Business table and making our seaports a friendly business environment, would be achieved.

Business Event

L-R: Titi Aikhomu, brand and event manager, Taofi Basanya, business manager shomolu business unit and Waidi Gbadamosi, head audit, all of Ikeja Electric distributing stationery pack to pupils at GRA Nursery and Primary School, Ogudu Lagos recently .

L-R: Ayodele Antonio, general manager, Lagos State Environmental Protection Agency, (LASEPA); public affairs manager, Lagos & West, Nigerian Bottling Company Limited (NBC), Ifeoma Okoye, and national environmental manager, NBC Ltd. Chigozie Ejimogu during the presentation of award and certificate to NBC as the best multinational company for environment at an event recently.

From Left to Right: Ngozi Osarenren, key note speaker and head of department, educational foundations, University of Lagos; Felix Udochukwu Ariguzo, 2017 maltina teacher of the year; Kufre Ekanem, corporate affairs adviser, Nigerian Breweries Plc; Saadatu Saidu, permanent secretary, Kano State Ministry of Education, Science, Technology and Innovation and Barrister Okechukwu Okoroafor, Assistant General Secretary, Nigerian Union of Teachers, at the flag-off of 2018 Maltina Teacher of the Year in Lagos recently

Yusha’u Shuaib, MD/ CEO, Image Marchants Promotion Ltd (l), with Isa Abubakar, president, Northern Youth Council of Nigeria (NYCN), during the presentation of award of excellence on Humanitarian Services and Youth Development to Yusha’u Shuaib in Abuja. Pic by Tunde Adeniyi

BUSINESS DAY

Wednesday 20 June 2018

Politics & Policy

APC convention: My vision is to transform APC into a model for others - Osunbor 19

Wednesday 20 June 2018

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BUSINESS DAY

My EFCC case against Oshiomhole not politically motivated - Human Rights activist IDRIS UMAR MOMOH, Benin

sadolor Ochei Anthony, a Beninbased human rights activist, who instituted a legal action against the Economic and Financial Crime Commission (EFCC) over its delay to investigate his petition against, the immediate past governor of Edo State. Adams Oshiomhole weekend said his action was not politically-motivated. Osasolor, who gave the hint while addressing a press conference in Benin-City said he was exercising his constitutional fundamental rights as enriched in the constitution of the Federal Republic of Nigeria. Recall that, the clergy-cum human right activists had last week instituted a legal action against the anti-graft agency at the Federal High Court, Abuja seeking an exparte motion compelling the agency to investigate his petition against the former governor

Oshiomhole

“I am not a member of any political party. Those who are politicians should go and look at their register. If they can find either Osadolor Anthony Ochei or Bishop (Dr) Osadolor Anthony Ochei or

Anthony Ochei whichever one it means I am fighting a political cause. I am a human rights activist that is committed to sincerity and integrity that this country need to be redeemed from corruption

We’ll shutdown Aso Villa if Obasanjo is touched, ADC insists INNOCENT ODOH, Abuja

he African Democratic Congress (ADC) has insisted that no amount of pressure, intimidation or blackmail will compel the party to recant the threat it issued recently to shutdown Aso Rock Presidential Villa, if former President Olusegun Obasanjo is touched by President Muhammadu Buhari and the ruling All Progressives Congress (APC). The National Chairman of the party, Ralph Okey Nwosu, reiterated this in a statement issued to BusinessDay, stressing that since his interview on the matter was published on some national newspapers on June 8, he has been inundated with calls and visitations from concerned family members, friends, colleagues, and numerous others some of who have requested a disclaimer or retraction of the story. “I have also received threats. I do not intend to offend anyone, but as a patriot, I still stand by all I said concerning the threat to former President Obasanjo,” he said, urging all Nigerians to be more “emboldened to speak truth to power and take action against undemocratic and draconian

tendencies of elected officials, including President Buhari.” Last week, former President Obasanjo raised alarm over alleged threats by the President Buhari government to level trumped up charges against him and use the Economic and Financial Crimes Commission (EFCC ) to clamp him into detention indefinitely, following his persistent criticisms of the Buhari government. Nwosu noted that the APC reelection agenda has zoomed on the former President Obasanjo as an albatross. “This time they plan not to woo him for support, but to mow him down. The reasons are simple, Obasanjo put their horrible report card in the public space, and in addition, he has built a national stakeholders community of patriotic elders and youths,” he said. Obasanjo is seen as the brain behind the ADC following the recent fusion of his Coalition of Nigeria Movement (CNM) into the ADC, which has become one of the political parties touted to form a grand coalition to unseat President Buhari in the 2019 election. The ADC chair lamented that Buhari and the APC have failed to provide good governance they

because corruption has destroyed the future if our youths. “Today millions of our youths are into crimes not because that is what they ask God that they want to do but because somebody has shortchanged them and took their opportunities. What I am doing is sincerely to protect the future of our children. “A lot of our children are roaming the streets, everyday they are being arrested for one crime or the other, and as a human rights activist Police stations have almost become my second home, that every day people call me that they have been arrested or their relatives have been arrested. I have to ensure that the rights of citizen are properly protected. That is my aim. “And looking at the scenario, where the authorities of EFCC are shedding the former Governor of Edo State, Adams Oshiomhole from investigation, I think we must all join hands with the president of the country, President Muhammadu Buhari to fight corruption.

“As a result I felt that I should not just rest like that, more so, when I have concrete evidences that the former Governor mismanaged the funds of Edo state, privatised the state as his personal estates. What do I do as a human rights activist, I have to brainstorm with my colleagues and we decided that the best thing is for me to go to court,” he said. Osadolor, who said corruption in any guise whether financial crimes, inability to follow due process in employment or appointment or contract all bothers on crimes and criminality noted that the EFCC Act 2004 gives the agency the mandate to receive, investigate petitions as well as prosecute. He said the case was geared towards redeeming the soul of the state for the good of his people. The activist accused the former governor of mismanaged billions of Naira belonging to the state during his eight years of governor of the state.

2019: Nwankwo charges police on professionalism promised Nigerians and instead resorted to draconian measures characterized by deaths, detention without trial, hardship and intimidation. “They chronicled myriad of things to do within a given time for Nigerians. Unfortunately, they have delivered none. Rather, they have made things worse. For a government intent on Change, they spent the first six months of the administration doing nothing. They isolated and denigrated people. “Benchmarked against all his predecessors since Nigeria’s independence, the APC leader has underperformed. Nigeria has gone from an emerging economy in the global space to an irrelevant state under President Buhari’s watch,” he said. The AD C chair also condemned the anti-corruption fight of the Buhari government, stressing that it is selective and exposes the country to mockery even as he lamented the insecurity characterized by mass deaths and mass burials in Benue state, Adamawa, Zamfara, and Kaduna, which prompted the former Chief of Army Staff, T.Y Danjuma to lose his patience and accused the government of complicity in the killings.

OWEDE AGBAJILEKE, Abuja

s the 2019 general elections draw near, the Nigeria Police Force has been charged to refrain from acts of intimidation and harassment of perceived political opponents. The convener of Situation Room, Clement Nwankwo, made the call in Abuja at a dialogue session with the Independent National Electoral Commission (INEC). He described police’s continued harassment of perceived political enemies of the present administration as embarrassing. Serving senators who are currently being tried or investigated by the police include: Senate President Bukola Saraki for his alleged role in Offa banks robbery which claimed over 30 lives; the Chairman, Senate Committee on Federal Capital Territory, Dino Melaye for alleged gun running and his counterpart for Local and Foreign Debts, Shehu Sani for alleged murder. Nwankwo who doubles as the Executive Director, Policy and Legal Advocacy Centre (PLAC), stressed the need for professionalism among police officers. His words: “The country is very divided at the moment and the policies and programmes of the government have worsened the

situation. The division between the arms of government has escalated to an incredible proportion. “Security services must know that they must be non-partisan. We urge the security services and the police to restrict their duty to their professional duty. We urge the police to go back to the drawing board and understand the impartiality of its role in democracy”. According to him, the police must not be seen as pursuing political vendetta against opponents of the Buhari administration. “We have seen that with Shehu Sani who is obviously estranged from the APC, we have seen that with Dino Melaye, we have seen that with Saraki. We have seen that pattern emerge of opposing political tendencies being invited by the police on criminal charges that seem to be based on unsubstantiated evidence, which is quite worrying and that is why we are raising the concern that the police needs to be very careful about how it conducts itself, especially in the buildup to the 2019 general elections. “It must not be perceived as pursuing a political vendetta against opponents of the central government because that will completely discredit elections that we hope INEC is planning to conduct in a credible manner,” he said.

BUSINESS DAY

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Wednesday 20 June 2018

Politics & Policy

2019: The June 12 dilemma for President Buhari in South West INNOCENT ODOH, Abuja

resident Muhammadu Buhari on June 6 awoken the consciousness of many Nigerians to the ugly trajectory of Nigeria’s democratic history when he announced in a statement he personally signed declaring the annulled June 12, 1993 presidential election as Democracy Day. He also expressed his intention to honour the presumed winner of the election, Moshood Kashimawo Olawale (MKO) Abiola with the title of Grand Commander of the Federal Republic (GCFR) meant only for the President of Nigeria. Instantly, copious encomiums poured in for the President and his supporters especially from the South West, the bastion of the June 12 struggle. Buhari was bolstered up and his supporters in ecstasy boasted that Buhari’s political ‘masterstroke’ to hounour Abiola and other June 12 fighters, has assured a second term of office for the President, who hitherto had his rating plunging down helplessly, following economic hardship and insecurity pervading the country. Then on June 12, 2018 within the precinct the elegant Aso Rock Presidential Villa, Buhari honoured the late MKO Abiola with the posthumous award as well as an award of the Grand Commander of the Niger (GCON) to late Lagos lawyer, Gani Faweihmi, among others with glitz and glamour to mark the 25th anniversary of the annulment of the June 12 Presidential election. Buhari also “pleasantly surprised” many when he rendered an apology for the June 12 atrocities. But no sooner had the excitement died down than the realities of the June 12 began to dawn on the Nigerian leader that June 12 may not enhance his political fortunes in the South West and indeed many parts of the country ahead of the 2019 presidential election. A source inside Aso Rock told BusinessDay on condition of anonymity that the President, who was initially energised by the outpouring of accolades, is feeling rather uncomfortable at the moment, as the political elite in the South West of the country, who are presumably dominant in their quest to recognize June 12 as a public holiday, are not carried away by Buhari’s June 12 declaration. “Yes, the people of the South West are glad that at last the June12 issue has come to the national limelight and honour is now given to whom it is due. But the people are wise enough to separate the main issue from the unnecessary heavy tone of politics the president seems to have brought to it because of the 2019 elections,” he said. The issue could not have been more challenging for the President when Nobel Laureate Wole Soyinka criticized Buhari for what appeared as hypocrisy of recognizing Abiola and at the same time praising late Head of State, Sani Abacha, who jailed Abiola and was unarguably among those that scuttled the June 12 mandate. Abacha’s government is today seen as the flagship of corruption in Nigeria as the nation’s money he looted and stashed abroad is still be-

Buhari

ing repatriated among other human rights abuses the late Nigerian army General was said to have committed against Nigerians. Speaking at an event, organized to mark the 25 anniversary of the June 12, Soyinka asked the president to stop “creating confusion” in the minds of Nigerians. “It is not possible to honour MKO Abiola in one breath and then admire his tormentor (Abacha) in another breath. “Loyalty is all very well but loyalty can become perverse if that loyalty is retained to an individual who if he were alive today would be before the International Court of Crimes against humanity. The one who broke the laws of Nigeria, International laws, pauperized this nation, it is confusing if professional loyalty is carried so far as to be accorded such an individual. “We had a private conversation some time ago and l remember one of the things which l mentioned to you was this. l said you are fighting corruption. How cometh that a notorious dictator, corrupt ruler, is honored by one of the most important avenues in the capital of Abuja, whereas, individuals like the martyrs of the struggle, philanthropists have not been honored. The answer you gave to me was not too satisfactory,” Soyinka said. He suggested a hall-of-shame for past Nigerian leaders who were infamous for their brutality “to sound as a warning note to would-be bad leaders”. The literary icon has been an advocate of the restructuring of the federation to true federalism, a phenomenon that President Buhari has remained defiantly and passionately against. The President is however, going to face a serious political dilemma because the dominant forces in the South West have met severally and adopted restructuring as the only factor that will warrant them mobilizing the acclaimed politically sophisticated South West to give any presidential aspirant vote in 2019. A chieftain of Afenifere, a panYoruba socio- cultural organization, Ayo Adebanjo, added his voice to June 12 when he said in an interview with one of Nigerian national dailies that the declaration of the June 12 by Buhari is a gimmick meant to woo the South West for the coming election. He however, warned President Buhari that the Yoruba people of the

South West are not fools and cannot be deceived by such Greek gift. He added that only restructuring will make the South West give Buhari their votes again. “Don’t deceive yourself! Do you think Yoruba people are that stupid? We are not that stupid. Quote me; if Buhari thinks he can bamboozle the Yoruba people with that, he has failed. Go and ask (Asiwaju Bola) Tinubu; Tinubu himself knows that he has burnt his boat if he continues to support Buhari on the question of restructuring. “For anybody to think that he is going to do anything for us in Yorubaland now, he should restructure the country. And not that we will continue with a constitution imposed on us and you begin to harass us, keep all the security people in your hand, and use this (June 12 declaration) to bamboozle us and yet, you say you are a democrat. That time is gone. As some people have said, he can change Christmas Day to June 12, that doesn’t mean that they won’t get rid of him in 2019. “He should restructure the country before the elections to show his genuineness and not just be playing to the gallery. This is because all that June 12 stands for is democracy and good governance. It is not about people being killed right, left and centre and pretending that you don’t know what is happening. It is not people being killed every day and after three months, you now wake up and say you are beefing up security. People have been complaining about the awkwardness of the lopsided appointments of heads of security agencies since you came into office, but it was not until now that the vice president (Prof. Yemi Osinbajo) said, “Oh yes, we are going to review it” – because election is approaching. “We are no fools in this country. He should know that many of us have not got cattle brain, we are well educated and we know what we want. Nobody can come and bamboozle us because elections are coming. It is just like he said in 2015 that he was a born-again democrat. Now, he has shown us that he is a dictator. We are not moved by it. It is a welcome idea and yes, it is a thing that ought to have been done. But that he is now doing it because elections are coming, I am not excited by that at all,” Adebanjo said. A public affairs analyst, and a

member of the People’s Democratic Party (PDP), Katch Ononuju, told BusinessDay in a chat that Buhari’s declaration of the June 12 will not translate into votes for him in 2019 because it was born out of political desperation which has demeaned the importance of June 12. He noted that the issue was wrongly headed because Buhari declared public holiday without recourse to the amendment of the public holiday act saying “so he cannot do it until he brings government bill to the National Assembly for amendment to the public holiday act, which he has not done. So May 29 remains Democracy Day and public holiday. “What he (Buhari) just did is a pronouncement but the furtherance of it is to tell INEC to declare the man (Abiola) winner and that means he will need to declare the results. He just honoured Abiola and nothing more, which in essence is a strategy to emotionally buy the friendship of the south West. “But the holistic progression of that business means if he really wants to make it true, he should declare the man winner by telling INEC to declare the results, then recognize him as President, which I think he is very afraid of going further to do because of the implications. “So if June will not remain national public holiday then what did he (Buhari) achieve? Already south West states have made June 12 public holiday in their own recognition. So it is a political game that Buhari is playing. “So no matter who wins you cannot handover power on June 12, it is on May 29 that is handover day because decree 24 made it so. So you see how tricky it is. It is not an easy game at all. So he just made that announcement to curry favour. Buhari did not score any political points with June 12” he said. Ononuju was irked that the main beneficiary of the June 12 pronouncement was Abiola’s running mate in the June 12 saga, Babagana Kingibe, who is the only person alive to be honoured. “When Gani was alive he rejected national honours. Even Abiola’s wife Kudirat that died did not get an honour, it is Kingibe, who dumped the mandate. That was an insult to those who stood and died for June 12,” he noted. Ononuju lamented that President Buhari has done nothing spectacular to change the deplorable economic condition of Nigerians since he became president. He said “nothing has changed the suffering of Nigerians as a consequence of Buhari’s ineptitude in managing the economy. “I don t see anything changing as a consequence of him praising Abacha, who jailed Abiola and Abiola died. I don’t see anything changing as far as the killings continue to occur in the way that everybody accuses Buhari of being complicit of the killing by the Fulani militia. So we need to understand that the most important thing to us is not Abiola, the most important thing is the threat to our national security, the instability caused by the sustained killing of Nigerians across the Middle Belt by the Fulani militia. Buhari has not even arrested any single killer herdsman. “June 12 will not buy Buhari anything. Don’t forget that what the

South West wants is restructuring and Buhari is not committed to restructuring. So what is the essence of making mention of the past without caring about the future? The South West wants restructuring that will be inclusive of everybody’s aspirations. What they want is a government action that will lead to the stoppage of the Fulani militia. Buhari is not willing to make most of these things. So we cannot take him seriously,” he said. President Buhari was a beneficiary of the All Progressives Congress (APC), a coalition of parties formed from the defunct All Nigerian People’s Party (ANPP), the Congress for Progressive Change (CPC), the Action Congress of Nigeria (A.C.N), a faction of the People’s Democratic Party, (PDP) and a faction of the All Progressives Grand Alliance (APGA). The coalition was so successful to have mobilized Nigerians to defeat then incumbent President Goodluck Jonathan of the PDP in the 2015 presidential election and won most seats in the National Assembly. The strategy that produced victory for the party was the brain of the South West. The region led by Bola Tinubu, tilted the election victory to Buhari, whohitherto had no such electoral value in the southern part of the country. However, the APC is in quandary today and an unending crisis seems have enveloped the party over President Buhari’s alleged poor handling of the economic and the persistent killing going on across the country. Part of the crisis also has to do with Buhari’s ambition to seek reelection, which some party faithful are said not to be comfortable with. Internal explosion is also threatening the party as aggrieved members especially the new PDP (nPDP) faction are threatening to pull their members out of the coalition citing marginalization and intimidation of their members. Tinubu is said to have received warning from his South west brothers to abandon the Buhari project which theyalleged has fostered divisionamong Nigerians with his clannishness. A source with the APC said “Buhari is not popular in the South east dominated by the Igbo people, who he has allegedly marginalized in his administration by excluding them from sensitive appointments. In the South- south region, the President is not sure of any substantial votes in 2019 just like they denied him in 2015. The North Central, which gave him votes in 2015 appears distraught and disappointed over his inability to curtail the killings allegedly perpetrated by Buhari’s kinsmen, the Fulani. “And the South West is about to turn their back against himover his opposition to restructuring. So the President is in a serious predicament because he is left with his traditional political base of the north east and north west. Even at that many people in the two regions are disappointed that Buhari, who showed so much promise and garnered much trust inexplicably failed to impress the people.” So it appears President Buhari’s June 12 gambit did not create the desired effect and he would require many other political ‘masterstrokes’ to salvage his fast sinking political boat.

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Politics & Policy

APC convention: My vision is to transform APC into a model for others - Osunbor Ahead of the June 23 National Convention of the All Progressives Congress (APC), former Governor of Edo State, Senator Osereimhen Aigberaodion Osunbor, who is an aspirant of the chairmanship position of the ruling party, is optimistic that he will transform the party and make it a model for others if he is elected chairman. Osunbor, Professor of law, also former Chairman of the Nigerian Law Reform Commission (NLRC), in this chat with select journalists, counts on his educational qualification and cognate experience to clinch the coveted position. KEHINDE AKINTOLA was there. Excerpts: We heard there is a dark horse in this race for chairmanship of your party. Are you the dark horse? et me tell you about the dark horse story first before the issue at stake. The dark horse you refer to is the horse that emerges from nowhere to win the coveted price while many people must have staked their monies on other horses. And the funniest part of it all is that the winner horse must always be a dark horse. Well if you say so I may just be the person to emerge.

So why do you think you are the most suitable candidate for the position? Our democracy and the political process in Nigeria since 1999 has been characterised by weak political party administration. If our democratic culture is to be firmly established and good governance entrenched, it will require well managed political parties. This is because democracy thrives best under an effective and efficient multiparty system. The weaknesses in our system manifest in many ways, such as indiscipline among elected and appointed political office holders and unnecessary bickering and distractions. These impediments stunt our growth and prevent Nigeria from

Osunbor

attaining her full potentials. The All Progressives Congress (APC) as the governing party in Nigeria has a huge responsibility to provide leadership in inculcating and building a culture of a vibrant political party system from the national level through the other levels down to the grassroots. As National Chairman of APC, I shall strive to build on the efforts by the founding fathers of the party and

reposition it to help focus government’s attention in order to impact on the well-being and security of Nigerians. I am absolutely convinced that I have the competence and ability to provide the needed leadership at this point in time for the following reasons. I have the educational and professional competence to give the required leadership as a professor

of law and an administrator. I have the legislative experience as a two-term Senator to establish and engender a cordial relationship between the party and the National Assembly. My former colleagues at the National Assembly and other political associates across the country are invaluable assets. As a former Governor, I have the Executive experience to foster good working relationship between the Party and the President at the national level and governors at the state level. Through collaboration, the Party, the Legislature and the Executive will not be bugged down by unnecessary rifts and conflicts which, as we have seen, are unhealthy to good governance and the realisation of the happiness and prosperity of our people. As National Chairman, I will ensure that the various organs and officials of the party function effectively and harness their energies to work as a team. Good team work produces best results. I shall strive to win friends for the party and grow its membership from among increasingly enlightened Nigerians, especially young persons, through reasoning and persuasion rather than crude force. The pursuit of unity among party members is urgent and critical as we approach general elections. I have a

vision of an APC that will be a model for other political parties in Nigeria and even beyond to emulate. We must as a party support and complement the efforts of President Muhammadu Buhari in his African Union mandate to provide leadership in good governance in Africa. We must elect a party leadership with unquestionable commitment to the realisation of these ideals through the re-election of President Muhammadu Buhari which he has earned by his leadership style and unwavering commitment to total national reconciliation and the sustenance of democratic tenets in Nigeria and the world is watching us. I have a vision of an APC that will be a model for other political parties in Nigeria and even beyond. Did you at any time step down because the rumour is all over that you may step down? You said the rumour mill and what we heard was that I bought the form but failed to submit it and now you are saying I stepped down but I never did. I was the fourth person to submit the form and I have not changed my mind about running because I do have a vision of what I can do to re-engineer our great party. Do you believe in a consensus candidate? Oh yes, I do if it’s the party’s position.

PTF: Obasanjo should have sent Buhari to jail - PDP chieftain INNOCENT ODOH, Abuja

ollowing the increasing feud between President Muhammadu Buhari and former President Olusegun Obasanjo, a chieftain of the People’s Democratic Party (PDP) Katch Ononuju, has blamed Obasanjo for not sending President Buhari to jail over the massive fraud allegedly perpetrated under him while he was the chairman of the defunct Petroleum Trust Fund (PTF). The public affairs analyst told BusinessDay in a chat that the decision to spare Buhari by Obasanjo has come back to haunt the former president who appears to be regretting his action now that he has fallen out with his former comrade in the army and allegedly being threatened with arrest on corruption charges by the Buhari government. “If Obasanjo was honest, he would have had Buhari sent to prison for his malfeasance in regards to the probe of the PTF. He personally called Buhari to look at the mess. Buhari begged and asked him to forgive, he

then let him go. So, this is to tell that Obasanjo’s pick and choose in is fight against corruption was the reason he overlooked Buhari’s corruption in the PTF. “Buhari was shown billions that were frittered away through the PTF that he ran. All he did was to apologise and Obasanjo allowed him to walk away. That also shows you how the soldiers allow the espirit de corps arrangement to undermine Nigeria’s progress. They forgive each other their sins yet these sins are committed against the progress of the Nigerian enterprise,” he said. He added that Buhari was also wrong to say that there is nothing to show for $16 billion spent on power during Obasanjo’s eight-year tenure, stressing that a lot was achieved with the construction of power turbines among other investments in the power sector. Obasanjo has lately been having a running battle with President Buhari over the state of affairs in the country. The former president has been vitriolic in his criticisms of the Buhari government. Obasanjo in

recent statement also raised alarm accusing President Buhari of plotting to arrest and detain him indefinitely because of his anti- government stance on national issues. Parts of Obasanjo’s statement read: “Impeccable security sources have alleged Chief Obasanjo’s name is on their Watch List and that the security of his life cannot be guaranteed. According to these informants, many of who are in the top echelon of the Nation’s security management and close to the corridors of power, the operatives are daily perfecting how to curtail the personal liberties of the former President and hang a crime on him.’’ Obasanjo also drew attention to the consistent pattern of the Buhari administration to allegedly instigate ‘war’ against those who are perceived to be his opponents for fear that they might upstage him in the 2019 elections citing the travails of President of the Senate, Bukola Saraki, and the alleged plot against the Speaker of the House of Representatives Yakubu Dogara among others. “We are currently in a nation

where the Number Three citizen is currently being harangued and the Number Four citizen is facing similar threat within the same Government they serve. There is a groundswell of our nationals that live in fear that they could be hounded, harassed, maimed or even killed as the battle for 2019 takes this worrisome dimension,” he said. Obasanjo added that “the content of the alleged beastly designs, it was learnt are two-fold for now. One, to seize his International Passport and clamp him into detention indefinitely, in order to prevent him from further expressing angst on the pervasive mediocrity in the quality of governance, economic management and in the protection of lives and property by the Government. “But, since that could expose the Government to a swath of international condemnation, embarrassment and outrage, it is said that another plot being hatched is to cause the Economic and Financial Crimes Commission (EFCC) to re-open investigation into the activities of Chief Obasanjo’s administration using

false witnesses and documents. This will be a re-enactment of the Abacha era in which Chief Obasanjo was one of the principal victims.” Obasanjo reiterated in the statement that he has taken a principled position to ensure that the ship of the Nigerian State does not capsize and he remains steadfast in his resolve to turn the tide of maladministration, poor economic management and rudderless governance model that has torn Nigerians apart on account of religion and ethnicity, which is a great threat to our democracy. “We would like the Government and its supporters to understand that no amount of campaign of calumny, no matter how well contrived, orchestrated or marketed would deter Chief Obasanjo from calling a spade by its name. Chief Obasanjo is a patriot whose sole agenda is to ensure that the country’s unity, progress and democracy are not negotiated on the altar of incompetence and provincialism and mediocrity, the statement added.

BUSINESS DAY

Wednesday 20 June 2018

BUSINESS DAY

Wednesday 20 June 2018

CityFile

Lagos CP redeploys anti-cultism squad

he Commissioner of Police (CP) in charge of Lagos command, Imohimi Edgal had redeployed the officer and men in charge of the Anti-Cultism Squad over alleged unprofessional conducts and corruption. Police spokesman the command, Chike Oti, said the move was to reposition and reinvigorate the command’s anti-cultism squad. According to Oti, reorganisation of the squad was necessitated by the unprofessional conducts of its personnel and corruption in the unit. He said that the unit was very crucial in the fight against cultists and cultism in the state. “The CP has redeployed the officerin-charge of the squad, Godwin Agbegbe, while Akaninyene Etuk has been posted to take over from him. “Similarly, all memb ers of the squad were relieved of their duty posts and have been directed to report to the Lagos State Police Headquarters for debriefing. The CP warns that the same treatment awaits any other unit in the command that is working at cross purposes with the fundamental objectives of the Nigeria Police Force,” he said. Oti added that all area commanders, divisional police officers and head of departments have been charged to increase supervision of their men in order to ensure non-violation of the police Standard Operating Procedure (SOP). He also urged members of the public with useful information about the activities of cultists in any part of the state to reach a chief superintendent of police, Etuk on 08034448617. It would be recalled that Edgal on September 3, 2017, sacked, Adejobi Akinade, the officer in-charge of the Anti-Kidnapping and Cultism Unit of the command over alleged corruption.

Air Force deploys helicopters to combat terrorism

he Nigeria Air Force has deployed two helicopters to 207 Quick Response Group Air Force Base in Zamfara state to combat terrorism and beef up security. The deployment was made to support personnel operation in the fight against army bandits and terrorism in the state. The air force recently commissioned two helipads at the 207 Quick Response Air Force Base in Gusau. More personnel were also deployed from the army, air force, police and Department of State Security Service (DSS). The development came when the state governor expressed concern with the activities of security agencies in the state. Speaking while receiving the helicopters, the commander of the 207 Quick Response Group, Caleb Olayera expressed assurance that the state would witness change. Olayera said with the helicopters in the Command, criminals would be trace and dealt with. (NAN)

Members of Ireakari residents and landlords association, Soka area of Ibadan during a protest against activities of land grabbers at the palace of Olubadan of Ibadanland. NAN

Bayelsa community raises alarm over pollution…accuses of water by oil spill Shell Petroleum of neglect

SAMUEL ESE, Yenagoa

esidents of Agoro community in Ekeremor local government area of Bayelsa State have raised the alarm over the poor and slow response to an oil spill from shell’s oilfield in the area. They appealed to the Federal and Bayelsa Governments to compel Shell Petroleum Development Company (SPDC) to be alive to its responsibility in spill response. Spillage is a regular occurrence in oil rich Niger Delta region of Nigeria where exploration activities by major oil companies take place daily. It comes with some environmental hazards that often leave the locals devastated. The community alleged that several weeks after the spill that destroyed and polluted their farmlands and water early in May 2018, Shell had yet to commence clean-up in the impacted areas. Justin Gbagbiri, the secretary of Agoro Community Development Committee, said that they were still counting the losses incurred as a result of the incident. “The river supports our fishing vocation,

and it is one of our major sources of drinking. If we want to cook we use water from the river. But since the crude oil polluted our river, we can no longer use water from the river anymore, we have been in distress. “We cannot use it to bath anymore, just as we cannot use it to clean up after using the toilet. So, the spill has affected most of our activities here. Fishing which is our major occupation has been adversely affected, as we cannot go to the river again to fish as we used to. “What the company has done so far is that they have come around to do some recovery of spilled crude oil but no other major thing has been done. They have not even sent us relief materials. “What they said was that, it is when the ruptured spots have been brought out and cause of spill identified, they would know if Shell will take responsibility. Shell also said they would do the needful only if the cause of spill is identified as equipment failure and not third party interference. “So, we are waiting for them to come and expose the pipe for observation but

nothing has been done to that effect.’’ he said. The community accused SPDC of deliberately delaying the Joint Investigation (JIV) which would ascertain the cause of the oil leak. Reacting, however, Alice Aje, manager, stakeholder relations at SPDC said the oil firm was responding to the spill incident and sought the understanding of the community. “We regret the spill because it has adversely affected our operations and business, we have shut operations and stopped the spill and we are in talks with our relevant stakeholders. “It is our responsibility to clean up the spill and if it was found to be case by equipment failure, we shall pay compensation to those affected, that is our process,” Aje said. She described the spill as `regrettable and unfortunate’ adding that efforts were underway to convene a joint investigative visit with community representatives to probe the cause of the spill.

Oyo allays fears of butchers over relocation of abattoir REMI FEYISIPO with agency report

yo State government has allayed the fears of butchers in Ibadan on the relocation directive to the new central abattoir at Amosun village in Akinyele local government area of the state. Yinka Fatoki, the executive secretary of Oyo State Bureau of Investment Promotions, assured that adequate security and transportation system were in place to sustain operations at the abattoir. Some butchers had refused to relocate to the abattoir which officially commenced operation on June 4. Fatoki explained that the decision to relocate to the new central abattoir was reached after a series of consultative meetings and deliberations. He said the meetings and deliberations had led to the signing of a Memorandum of Understand-

ing between the government and the National Butchers Union of Nigeria (NUBN). According to him, the state governor, Abiola Ajimobi had addressed issues raised before the signing of the MoU, adding that the petition written by a few members of the union on insecurity was uncalled for. “Government was surprised by the actions of a few disgruntled and recalcitrant members of the butchers union to government’s directives to relocate to the central abattoir after the series of meetings with the governor. “Government will not be deterred with the fabricated security challenges to reverse its decision,” he said. He said that the interest of the general public superseded that of a few members of the union, stressing that the decision to relocate them was hinged on sanitary and health considerations of the people.

Fatoki disclosed that the the ministry of agriculture had unlicensed all slabs and abattoirs in Ibadan since 2014 on account of unsanitary circumstances of such outlets at Bodija, Aleshinloye and Gege area. “It was on this premise that the state government met several times with the butchers and the chairmen of the 11 Local Government Areas in Ibadanland to discuss the relocation to central abattoir and address issues raised. “After the discussions, all parties agreed to sign a Memorandum of Understanding that butchers in 11 LGAs of Ibadan should relocate to the central abattoir on June 4. “Majority of the butchers had relocated amid and a prayer session was held to commemorate the commencement of operations at the central abattoir,” he said.

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Nigeria fails to address logistics weaknesses in export drive JOSEPHINE OKOJIE

n spite of the recent export campaign by the Federal Government, Nigeria has failed to address the issue of logistics weaknesses in the supply value chain of agricultural commodities, which is vital for the successful operations of any export initiative. According to experts, Nigeria can only realise its export potential and diversify its revenue through agriculture when agro commodity that are bulky can be easily transported at cheaper rates to reduce cost of production. “Infrastructure impacts export competitiveness. If we do not do anything about our infrastructural gaps we would not get anywhere economically,” said Madu Obiora, former chairman, export group, Lagos Chamber of Commerce and Industry (LCCI) told BusinessDay in a telephone response to questions. Obiora said that the country do not have an effective cold chain infrastructure, stating that the government export drive can only be successful with adequate infrastructural facilities such as storage, good road networks amongst others. “We need to activate various means of transportation to facilitate trade and competitiveness,” he said. One of the greatest problems confronting rural farmers and communities in Nigeria is the absence of critical infrastructure such as

L-R: Joe Tohme, co-founder, GCP21; Malachy Akoroda, director designate, GCP21; Alfred Dixon, scientist, IITA; Hernan Ceballos, scientist, CIAT and Claude Fauquet, director of GCP21, during the Golden Cassava Award price to Dixon and Ceballos in Benin Republic recently.

‘motorable’ roads. This is hindering market access for farmers in such communities who work assiduously to eke out a living from farming. After few days of heavy rainfalls most farming areas and markets becomes totally impassable and this has continued to impact negatively on the prices of food items across the country. “The roads are bad; it takes me two to three days to transport my yam produce from Benue (located

in middle belt, of Nigeria) to Lagos (located in Southwest). I lost more than 300 tubers of yam on my last trip to Mile Twelve market in Lagos because the trailer got spoilt on the road and my yam produce was stolen since the trailer slept on the road for a night,” Godwin Apak a yam farmer in Benue state told BusinessDay. This is the challenge most farmers in the rural communities face. Before the produce is transported out of the farm lands to places they can access

roads to the market, most off their crops are lost in the process especially the perishable crops. According to the International Fund for Agricultural Development (IFAD), high transport costs arising from the combination of scarce resources and poor road networks in rural Africa make parts of the rural economy only semi-open. S i m i l a r l y , N i g e r i a’s r a i l infrastructures have remained poor despite efforts of past and present

administrations to improve the rail infrastructures across the country. “The rail infrastructures in Nigeria are poor. The logistics to facilitate export are lacking in the country and this is what has driven export growth in most economies of the world,” AfricanFarmer Mogaji, chief executive officer, X-Ray Farms Consulting, said. “We need to revive our rail infrastructures for easy movement of bulky agricultural commodities from the farms to the nearest seaports or airport facilities,” Mogaji said. Also, cargo facilities for export are at a poor state despite billions invested by the Federal Government to drive export of agro-allied products. A recent visit by BusinessDay to five designated airports in the country, which include Lagos, Uyo, Akure, Port Harcourt and Owerri shows that only Lagos and Port Harcourt currently import and export cargoes to various countries, while others barely function as passenger airports and this is because there are no infrastructure on ground to facilitate cargo export in these airports. The provision of good road network, rail infrastructures and cargo facility are pre-requisites for enabling Nigeria stimulate economic growth and to reach the targets for economic diversification and poverty alleviation by 2020 as well as promoting domestic market activity and market integration, and facilitating and developing access to these markets.

Lagos applauds Dizengoff capacity-building initiative for farmers’

he Lagos state government has applauded Dizegoff Nigeria on its capacity building initiative for farmers across the country and for the state in particular. The government also hailed Dizengoff for the steps it has continued to take in addressing farmers challenges thereby boosting agro production to ensure food security for Nigeria’s fast growing population. The commendation came recently during the presentation of product exhibition on ‘Mechanising Community Agriculture’ organised by the Lagos state’s Ministry of Local Government and Community Affairs in collaboration with Dizengoff Nigeria. In his key note address at the event, Akeem Sulaimon, special adviser to the state governor on Communities and Communication, while commending Dizengoff, disclosed that the state government believes that educating and empowering of farmers in communities and rural areas in mechanized farming is vital to Nigeria’s economic growth and development.

“Global agricultural development is driven by mechanisation. The best global mechanisation management practices are important in ensuring optimal agricultural production, better living standards, poverty reduction, rural – urban drift, tackling unemployment and youth

restiveness in our communities,” Sulaimon said in a statement. “One of the policy thrust of the state government which recognizes that food security is important to the survival of the citizenry,” he added. The capacity building programme was a collaborative effort between

Toyin Adegoke, agronomist, Dizengoff Nigeria; Antti Ritvonen, CEO, Dizengoff Nigeria; Fola Padonu, PS, Ministry of Local Government and Community Affairs, Lagos State; Tajudeen Adeniyi Quadri, SSA to the Lagos State Governor on Community Affairs and Akeem Omoyele Suleimon, special adviser to the Lagos State Governor on Communities & Communications, Ministry of Local Government and Community Affairs, during a capacity building program for rural farmers in Lagos State.

the state and Dizengoff. It involves the training of farmers on good agricultural practices to improve their yield per hectare as well as on technical know-how of modern farming techniques. The program covered four areas of agriculture solutions where participants were enlightened on the use of modern agricultural machineries and implements, Greenhouse technology, irrigation s o l u t i o n , ag ro ch e m i ca l s a n d consumables. Speaking during the event, Folu Padonu, permanent secretary, Ministry of Local Government and Community Affairs while commending Dizengoff said that the partnership with the organization marks a revolution for community agriculture in the state. Tajudeen Quadri, senior special assistant to the Governor, said “I want to appreciate Dizengoff Nigeria for this collaboration and the passion for empowering farmers coupled with the introduction of new technologies which would lead to good agricultural delivery in the state in no distant future.” Speaking on behalf of Dizengoff,

Antti Ritvonen, Dizengoff Nigeria CEO expressed delight at the opportunity to collaborate with the Lagos state government on the program. “As a company, we are excited to be able to share our technical knowhow and quality service delivery, coupled with our many years of experience in providing agricultural solutions to the Nigerian farmer” Ritvonen said. He expressed strong optimism about the future of agriculture in the country which he said has very huge opportunity and strong potential to easily become self-sufficient in food production within a short time. H e p l e d g e d D i z e n g o f f ’s readiness to work with the Lagos state government on how to rapidly transform the state’s agriculture and achieve food sufficiency. Participants in the program which was organized as a “train-the trainer” programme, were drawn from HODs of Agric and social Services, Agricultural Desk Officers in all the state’s 57 LGA/LCDAs. Other relevant stakeholders involved in mechanized based agricultural development also attended.

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Nigeria’s agric export rises 24% in 3months …sesame seed tops export JOSEPHINE OKOJIE

igeria has seen its 2018 first quarter agricultural export risen by 24 percent as the country explore opportunities to earn substantial dollars through the non-oil export. The value of the countr y’s agricultural export increased by N14.6 billion or 24 per cent from N56.1 billion in q1 20117 to N73.7 billion in q1 2018 on a year on year basis, data from the National Bureau of Statistics (NBS) shows. On a quarter on quarter basis, the value of Nigeria’s agric export increased by N29 billion or 63.8 per cent from N44.7 billion in q4 2017 to N73.7 billion in q1 2018. The sector accounted for 1.6 percent of Nigeria’s total export for the one year period. According to the NBS data, sesame seed led the list of agricultural commodities exported for the period, followed by cocoa and cashew nuts. The foreign trade report shows that sesame seeds worth N26.6 billion in q1 2018 from N13.03 billion in q1

2017, representing 105 percent yearon-year increase. Stakeholders say the export numbers are an indication that the sesame seed production has the capacity to grow and earn the country huge foreign exchange and create hundreds of jobs in the country as long as the government draws a master plan for the sub-sector, as it has done in rice.

NBMA signs training agreement with ICGEB JOSEPHINE OKOJIE

he National Biosafety Ma n a g e m e n t A g e n c y (NBMA) has signed a training agreement with Italy based International Centre for Genetic Engineering and Biotechnology (ICGEB) to increase its staff capacity to properly regulate the use of biotechnology in Nigeria. The agreement, which took effect immediately with a training session, aims to enhance the partnership between both organisations and grant NBMA access to the centre’s e-learning platform to train its employees. Speaking at the maiden e-learning training, Rufus Ebegba, director general and CEO, NBMA, said that it was important that the capacity of staff that regulates the use of biotechnology in the country be constantly upgraded due to the controversies that trail the technology. “NBMA was not established to frustrate biotechnology but ensure that Nigerians and the environment

are protected against any harmful effect of modern biotechnology,” Ebegba said. The director general noted that science remained the driver of change globally due to its universality and verifiable nature hence modern biotechnology should not be treated differently. He acknowledged that every technology has its ups and down but stressed that the biosafety system was introduced to ensure that related uncertainties are either completely eliminated or reduced to the barest minimum. The CEO was confident that the staff would benefit immensely from the training as it would build the capacity of the staff to holistically understand the biosafety system. Dennis Ndolo, lead trainer from ICGEB, said that Nigeria remained the leading light in the area of biosafety on the African continent. Ndolo said that the employees would be introduced to the centre’s e-learning platform where they can use it over time to enhance their knowledge and performances.

“Sesame has a lot of potentials. It has both commercial and medicinal value and oil extracted from the seeds is better than every other seed oil,” Mutairu Mamudu, national president, S e s a m e Fa r m e r s A s s o c i a t i o n of Nigeria told BusinessDay in a telephone response to questions. “It is 100 percent free of cholesterol and that is why the demand for it is very huge both locally and

internationally,” said Mamudu. He noted that the country is still not exploiting the full potentials of sesame, urging the government to encourage more investments in the value chain of the crop. Nigeria’s sesame production is put at 200,000 metric tonnes with an average of 0.8 metric tonnes per hectare, according to data obtained from the Federal Ministry of

Agriculture and Rural Development (FMARD). Sesame seed is Nigeria’s biggest agricultural produce exported to Japan. It is considered as one of the world’s oldest oilseed crop that has the highest oil content than any other seed. The oil extracted from the seed is used in making vegetable oil and for medicinal purposes for treatment of ulcers and burnt. The stem as well as the oil is used by cosmetic industry in the production of soaps and other beauty products. Mamudu stated that a kilo of sesame is sold for N350 while a metric ton is sold for N350, 000 at the farm gate. Sesame is mainly grown in the northern region of the country. On the import side, Nigeria’s agricultural import declined by 5.8 per cent from N196 billion in q1 2017 to N184.5 billion in q1 2018 on a year on year basis. Quarterly, the import declined by 18.9 per cent from N227.4 billion in q4 2017 to N184.5 billion in q1 2018. Major agricultural products imported agro export for the period includes wheat, mackerel, herrings and crude palm oil.

Kogi provides farmers with seedlings to boost cash crop production VICTORIA NNAKIAIKE, Lokoja

he Kogi state government has provided farmers in the state with 20,000 cashew seedling and 45,000 oil palm seedlings for the 2018 farming season at a subsidised rate. Jer r y O nugbu, dire ctor of Agricultural Service disclosed this recently during the Agriculture Core Delivery Team (CDT) meeting under the aegis of the State Partnership of Agriculture facilitated by Synergos Nigeria in the state. He said the ministry delved into raising the seedling to give incentives to farmers in the state to scale up their production in cash crop production.

Kunle Agbunu , state director of Produce and Pest Control , also revealed that the state government has address the issue of illegal tariff and double taxation on farm produce, to tackle some of the challenges confronting farmers in the state. He urged stakeholders in the sector to take advantage in cashew and oil palm production, saying that farmers can take advantage of the government export initiative to export their products to make more money. Agbunu equally harped on the need to export palm kernel to boost the country’s export earnings and contribute to Nigeria’s economic development and growth through the agricultural sector.

Lydia Oyewole, PPP in the state FADAMA project, in her contribution, said that boosting oil palm production in the state will also help fish and livestock farmers easily get feeds for their livestock, noting that oil palm marsh contains high nutritional component vital for fish and livestock development. Also speaking Recheal Tolula, director, Home Economic in the Ministry of Agriculture, stressed the need for farmers and exporters to work in together with the Standard Organisation of Nigeria (SON) and National Agency for Food Drugs Administration and Control (NAFDAC) for standardisation of agric products.

Ondo set to revolutionise cocoa production – Akeredolu YOMI AYELESO, Akure

overnor O luwarotimi Akeredolu of Ondo state has reiterated its commitment to make the state the hub of cocoa production in West – Africa. Governor Akeredolu, who sought to partner the African Development

Bank, (AFDB) to accelerate the development of cocoa production in the state, made the remarks while addressing the management of the bank in his office in Akure recently. The governor said that the state needed interventions in some critical sectors to enable it make direct impacts in the lives and well-being of the citizenry. He appealed to the AFDB for assistance to resuscitate the abundant agricultural potentials of the state which, he said made it the leader in cocoa production in the country. While highlighting the agricultural potentials of the state, Governor Akeredolu stated that the cocoa production capacity of the state has informed the forthcoming visit of President Muhammadu Buhari to Ondo in July to flag-off the Cocoa Revolution Initiative of the Federal Government. “The President will be here in July for the Cocoa Revolution Project, during which seedlings will be

distributed to cocoa farmers. The cocoa revolution in the country starts with Ondo state,” the governor said. “We already have a lot of seedlings for which we have cleared several hectares of land. As we speak, we have about 24,000 hectares of land ready for this,” he further said. The governor regretted that Nigeria had fallen short of its cocoa production capacity, thereby allowing countries like Ghana and Ivory Coast overtake the country in the production of cocoa. Akeredolu also pleaded with the AFDB to assist the state to complete other projects, including water, electricity and entrepreneurship. Earlier, the leader of the team, Ebrima Faal, senior director of AFDP, acknowledged the visit of Governor Akeredolu to the country field office in Abuja last year and explained that the team was in the state to engage officials of government in order to see completed and ongoing projects for areas of effective collaboration.

BUSINESS DAY

Wednesday 20 June 2018

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Banks look to finance working capital for loan growth Stories by HOPE MOSES-ASHIKE

oan growth of 10 percent remains the consensus guidance of deposit money banks this year, with none of them expecting significant capital projects to get under way. Instead they expect loan growth from financing working capital requirements for international oil companies (IOCs), manufacturing and trade finance customers. This was the outcome of Renaissance Capital’s meeting with nine banks at the 9th Annual Pan-Africa 1:1 Investor Conference held recently in Lagos. According to the National Bureau of Statistics (NBS), total value of credit allocated by the banking sector to private sector stood at N15.60 trillion as at the first quarter of 2018 (Q1 2018). Oil & Gas and Manufacturing sectors got credit allocation of N3.42 trillion and N2.07 trillion to record the highest credit allocation as at the period under review. GTBank said that 85

percent of its expected loan growth in 2018 will be driven by corporate and commercial clients. The balance will be to the retail segment (salar y-based lending). The bank will not focus on specific sectors but would rather look at the top-tier names in its corporate book; 72 percent of the loan book is to large corporates. UBA believes that its loan growth will primarily be driven by working capital financing. The bank observed significant pay downs of its oil & gas loans in 1Q18; one customer that paid down was Seplat. Zenith expects loan growth to be driven by corporate lending in sectors such as manufacturing, agriculture and oil & gas. The bank finds the retail space risky and has taken a conservative stance on lending to this sector. FCMB still cautious on lending as customer demand for loans has been strong in sectors, such as retail, agriculture and general commerce. The bank has successfully sold some of its oil & gas assets. It mentioned that there has been an in-

creasing interest from oil trading companies in some upstream oil & gas assets. Banking sector credit to the private sector is expected to grow to N16.7 trillion in 2018, representing a growth of 6.34 percent from N15.7 trillion recorded in 2017 according to FSDH

Research. The improvement in the macroeconomic and business environment; improved consumers’ confidence; and the drop in the yields on the Nigerian Treasury Bills (NTBs) are the main drivers of the expected credit growth.

The provisional figure that the NBS released for the fourth quarter of 2017 shows that the banking sector credit to the private sector dropped from N16.1trillion in Q4, 2016 to N15.7trillion in Q4 2017. Although the total credit as at the end of 2017 was

higher than the figure of N13.1trilion in Q4 2015, the impact of the devaluation of the local currency may be responsible for the growth in 2017 over 2015. The sector with the highest credit allocation as at Q4 2017 was mining and quarrying, and petroleum marketing, which accounted for 28 percent of the total banking sector credit to the private sector. This was followed by manufacturing 14 percent ; general services 18 percent ; and trade 7 percent . FSDH Research notes that Agriculture, which contributed about 29 percent of the Gross Domestic Product (GDP) in Nigeria in Q3 2017, attracted 3% of the total credit. “Our findings show that the Agriculture sector in Nigeria is faced with many problems. Thus the sector is unable to attract the required credit”, analysts at FSDH Research said. Some of the problems are: inadequate storage facilities; poor transport network ; inadequate research to develop improved seedlings; and weak integration between the sector and the manufacturing sector in providing manufacturing inputs.

Risk Managers elect Magnus Nnoka as new president

he mountain of leadership has fallen on Magnus Nnoka emerged as the new President of Risk Managers Association of Nigeria (RIMAN). Nnoka has over two decades experience in the banking sector that cut across banks and core areas of Treasury, Branch Management/ Operations, and En-

terprise Risk Management where he has spent over 16 years and developed expertise in different areas of risk management. Magnus has worked and held Senior Management positions at Banks like Equitorial Trust Bank, Diamond Bank Plc, Standard Chartered Bank of Nigeria, Union Bank of Nigeria Plc and currently in Coronation

Merchant Bank where he is the Chief Risk Officer. He brings to bear his professional and leadership skills to pilot the affairs of RIMAN for 2018 / 2020 executive council tenure. Other officers were also elected into the executive council in various capacities. 1st Vice-President Kolawole Ajimoko, (Chief Risk Officer Subsidiaries,

Access Bank); 2nd VicePresident - Dr. Ezekiel Oseni, (Chief Risk Officer, Bank of Industry); General Secretary position - Adesoji Olasoko, (Head of Risk Management, Corporate and Investment Banking Division, Access Bank); Publicity Secretary - Laurine Ubanozie, (Managing Director of SageView Petroleum Ltd). Others are Grace Ad-

emola, (Head Retail Credit in Standard Chartered Bank) who was voted in as the Treasurer while the position of the Deputy General Secretary was won by Aderemi Kuju, (Group Head Credit Review and Loan Monitoring Department of Keystone bank). The elected executive members will serve the Association for the 2018/2020 Executive Council tenure.

In his acceptance speech on behalf of the newly elected officials, Nnoka assured all that the new executive will make concerted efforts to sustain the progress of the past executive and take the Association to the next level, extending risk advocacy, capacity building and best practices in risk management to the public sector and other sectors of the economy.

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Pension Today

BUSINESS DAY

In Association with

Are you preparing to retire soon, here are steps to take

re you a contributor in the nations Contributory Pension Scheme (CPS) and about to retire, either before the end of the year or next year, here are steps you should take to have a smooth process of retirement. Note that having access to your documents or getting assistance from fellow employees on trying to assemble your documents is usually much easier while you are still in the system. The moment you are out of the employment, you might need to fill forms to see your former colleagues and that you may not like. It is better you start this process six months to retirement. Upon Retirement or attaining 50 years of age (whichever is later), the balance on Retirement Savings Account (RSA) can be utilized for lump sum payment provided the balance on the RSA afterwards is sufficient to procure a Programmed Withdrawal or Annuity for life in line with National Pension Commission (PenCom) guidelines. (a)Programmed monthly or quarterly withdrawal

from PFA or (b)Annuity for life from Life Insurance Company (2)If the terms and conditions of employment allow retirement before 50 years, the Contributor can access 25 percent of the balance on RSA (3)Upon disengagement or resignation before the age of 50 and does not secure another job within 4 months, you can also access 25 percent of the balance on the RSA Public Sector Employ-

Notwithstanding the provision of subsection (2) of this section, employee of organization with less than three employees as well as self-employed persons shall be entitled to participate under the scheme in accordance with guidelines issued by the commission

ees are to attend the PenCom verification and enrollment exercise, the year before the retiring year. This ensures the remittance of accrued benefits and rights. The following are documents require for the exercise: *Certified copy of first appointment letter; *Record of service by the MDA/Ministry; *Last Promotion Letter; *Certified Copy of June 2004 Pay slip; *Passport Picture; and *Birth Certificate/Age declaration *PFAs are to notify public and private sector customers within 6 months to retirement. Requirements for Accessing Retirement Benefits Public sector * Copy of official notice of retirement from employer. * Payslip for any of the

RC634453

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

last three months before retirement month. * Copy of the PenCom Retirement Benefit Registration Slip. * One passport photograph. Private Sector *Official notice of retirement from employer. * Pay slip for any of the last three months before retirement month or evidence of annual remuneration. *Letter from ex-employer confirming status of outstanding remittance (Accrued Pension Right). *One passport photograph. *Age Declaration/Birth Certificate. Medical Grounds · Certified true copy of a medical certificate issued by a properly constituted Medical Board or a suitably qualified physician; · The letter of notification of retirement is-

sued by the employer also authenticating the medical certificate; and · All other requirement, based on the category of application (i.e. public or private). Deceased benefits |*The PFA shall establish the identity of the Next-ofKin and shall demand for: * Certified True Copies of Letter of Administration or Will admitted to Probate. * Certificate of registration of Death or other evidence * Payment is made to the beneficiary named in the Will or persons named in the Letter of Administration or other Court documentation. Missing Person · The processing of benefit in case of missing person, the employer and/ or Next-of Kin shall notify the PFA of the disappearance of the employee/retiree after a minimum period of 12 months following the disappearance of the missing person. · The Next-of-Kin shall provide a satisfactory means of identification and · A Police report confirming that the person has been missing with effect from the reported date, the circumstance of the disappearance and that the person has not been found after 12 months. · Letter of confirmation of disappearance from the employer (if inactive employment at the time of disappearance) also bearing the passport photograph of the missing person. The objectives of the Pension Reform 2014 is to establish a uniform set of

rules, regulations and standards for the administration and payments of retirement benefits for the public service of the Federation, the Public Service of the Federal Capital Territory, the Public Service of the State Government, the Public Service of the Local Government Councils and the private Sector; Make provision for the smooth operations of the contributory pension scheme; Ensure that every person who worked in either the public Service of the Federation, Federal Capital Territory, States and Local government or the Private Sector receives his retirement benefits as and when due ; and Assist improvident individuals by ensuring that they save in order to cater for their livelihood during old age. The provisions of this Act shall apply to any employment in the public service of the Federation, the public Service of the Federal Capital Territory, the Public Service of the state, the public service of the local governments and the private sector. In the case of the Private Sector, the Scheme shall apply to employees who are in the employment of an organization in which there are 15 or more employees. Notwithstanding the provision of subsection (2) of this section, employee of organization with less than three employees as well as self-employed persons shall be entitled to participate under the scheme in accordance with guidelines issued by the commission.

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

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Wednesday 20 June 2018

E-mail: insurancetoday@businessdayonline.com

Micro insurance: NAICOM may reconsider June 2018 deadline for non-life companies unbundle directive …as only two stand alone licenses are sure …don’t want to create vacuum …may engage operators for dialogue Stories by Modestus Anaesoronye

he June 2018 deadline given to non-life insurance companies to unbundle microinsurance products for standalone license may be reconsidered by the National Insurance Commission (NAICOM). The commission is avoiding creating a vacuum, since conventional insurance companies have been reluctant to take fresh license, and want to remain as micro insurance windows. At the moment, only two stand alone application looks close to getting approval , which will not be sufficient to achieve the strategic intent of the micro insurance project, which is to reach the mass uninsured and increase penetration. An industry source said, NAICOM may have to engage operators again, because operating as micro insurance window is not working and not serving the purpose of the project. We have so many local governments that have no sign of insurance companies at all, and this is what micro insurance scheme was meant to address. NAICOM had on release of the Revised Microinsurance Guidelines which became effective 1st January, 2018 stated that non-life

conventional insurers operating Microinsurance as a window operation are given till June 2018 to wind up this operation, while the life operators has December 2018 as the deadline to do same. The Revised Microinsurance Guidelines which becomes effective from 1st January, 2018 further stated that, “No person shall commence or carry on any class of Microinsurance business without being registered or authorized by the Commission. According to the Commission, efforts to make existing insurance companies key into micro insurance products and reach the grassroot was not successful, so the new direction was strategically decided to drive penetration and increase access to insurance services. Section 10, sub section 1 and 2 of the revised Microinsurance guidelines released recently to the public said “Existing Conventional microinsurers shall wind down their window operations for non-life classes within 18 months from the effective date of this Guidelines and in not later than 24 months transfer the life classes to a dedicated microinsurance company.” It added that, ‘no policy shall be renewed or new one issued with an expiry date beyond the date stated above.’ According to the guideline, the following capital requirement shall

obtain for the different business structures: Unit Microinsurer: The Company’s Minimum Capital Base is N40 million (General: N2S million & Life: NIS million). It is to operate only in anyone (1) location within a local community and the Company shall prove to the Commis-

sion through their business plan that they are going to access the low income earners spread across the location within a reasonable time frame. The Commission shall grant a state microinsurer licence to a unit microinsurer upon application following 36 months of successful

business operation and approval by the Commission. State Microinsurer: The Company’s Minimum Capital Base is NI00 million (General: N60 million & Life: N40 million). It is to operate only in anyone (1) State of the federation (for this purpose Abuja is regarded as a State) with at least 3 branches or office locations, each in a different Local Government Area. The Company shall prove to the Commission through their business plan that they are going to access the low income earners spread across the state within a reasonable time frame. The Commission shall grant a national microinsurer licence to a state microinsurer upon application following 60 months of successful business operation and approval by the Commission. National Microinsurer: The Company Minimum Capital Base is N600 million (General: N400 million & Life: N200 million). Its operation is nationwide with presence in at least 6 states within 3 geopolitical zones of the federation. The Company shall prove to the Commission through their business plan that they are going to access the low income earners spread across the country within a reasonable time frame. Registered Insurance Companies shall be granted national microinsurer licence upon application.

Babington-Ashaye to chair Women Ignite Power seminar

L-R: Sarbeswar Sahoo, executive director, Prestige Assurance Plc; Oluwadare Emmanuel, chief Financial Officer; Sidharth Pradhan, non-executive director; Balla Swamy, managing director; Funmi Oyetunji; Hassan Usman, chairman; Doyin Salami; Eunice Aina, AGM, Audit& Internal Control and Mufatau Oyegunle, non-executive director jointly cutting the cake to commemorate the official opening of the new outlook of Prestige Assurance orporate head office in Lagos recently.

unmi Babington-Ashaye, the 48th President of the Chartered Insurance Institute of Nigeria (CIIN) and also the Chief Executive Officer (CEO) of Risk Analyst Insurance Brokers will chair ‘Women Ignite Power’ seminar organised by EtiNardConsulting Ltd (ECL) The main objective of this seminar is to ‘Enhance awareness and create a more informed understanding on the opportunities, issues and approaches of Women Empowerment with resultant attention and resources directed towards supporting women entrepreneurs’. Maureen Ada-Leonard, managing partner, EtiNardConsulting Ltd said the event tagged Women Ignite the Power is one that is set to stir up the great strength in today woman so that they are differentiated for their great exploit. “The theme Stand- Out-Tall so chosen to depict the excellent Woman and that is Confident and

humane about her drive. Studies have shown that the intentional strategies of training, mentoring, learning through case studies are renewed way of on-boarding and encouraging women both in the Csuite and becoming world business leaders.” According to her, this seminar is set to achieve consistent growth of today’s woman through carefully selected network of upwardly.” Ada-Leonard said the seminar slated for 26th June 2018 at the Tech Zone, Gbagada Lagos will have Owen Omogiafo, chief operating officer Tony Elumelu Foundation as special guest; Mojisola Bakare, general manager, Wealth Management Sterling Bank Plc as guest of honour and Toyin. F Sanni, group MD, United Capital as guest speaker. EtiNard Consulting Ltd is a training firm set to serve, work, motivate and train individuals and organization to move from their point of potential to goal actualization.

Wednesday 20 June 2018

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BUSINESS DAY

E-mail: insurancetoday@businessdayonline.com

Making insurance a financial tool for planning Modestus Anaesoronye

nsurance industry will achieve increased penetration if majority of Nigerians can embrace insurance and make it a part of their financial planning tool. Insurance can help individuals plan their life from childhood to death, but has not been achieved as result of lack of awareness on the benefits of insurance by the larger population of Nigerian’s. The level of ignorance about the benefits of insurance and its role in the economic development of the society in this part of the world is no doubt very high. This accounts for why majority of the populace, even among the educated elite still do not find need for insurance or use insurance

to protect their dependants or assets, despite the age of the industry in Nigeria. While this is a different situation in most advanced economies including South Africa, the case for Nigeria which has made the country one of the least insurance conscious countries in the continent in terms of penetration given its population, has continued to engage the thought of players. The challenge therefore has been on how best to build insurance culture such that right from childhood citizens would begin to understand and appreciate the importance of having protection through insurance. Today, the journey has started with a lot of efforts geared towards catching them young at school age, where it is expected that creating platform for insur-

ance education and career choice among students of secondary and tertiary institutions would form the needed foundation towards

this journey. The chartered Insurance Institute of Nigeria (CIIN) through its distribution of books among second-

ary schools in Nigeria has achieved some progress in deepening awareness. Funmi Babington-Ashaye, 48th President of the CIIN commenting on the book distribution said my personal assessment is that it is well received in the sense that in some states, they now offer insurance as a subject in secondary schools. According to her, the extent the institute wants to get to is to ensure that the government makes it compulsory in schools, so that we will have a situation where insurance is compulsory in secondary schools. “If we can get to that level, I can tell you that the level of education and awareness will increase tremendously.” Richard Borokini, director general, CIIN said the distribution of insurance

textbooks is an awareness project and it takes time to mature. “Our desired impact for distributing textbooks to the young ones is for them to take insurance as a profession. I know that student’s enrollment in the Nigerian institutions to study insurance has increased. Some institutions have also established insurance Department, and the latest universities that have insurance departments are the Niger Delta University and the University of Jos.” “In the secondary schools, a lot of students have taken insurance as a subject. Some secondary schools have started taking insurance as a subject in WAEC and teachers have also been trained. For our examination, we have a 12 per cent growth in enrollment in the last two to three years.”

Rates under pressure over heightened competitive environment

Russia 2018 World Cup: Insurance to gulp $1.5bn

re p o r t by S & P Global Ratings indicates Bermudian re/insurers are contending with a build-up of pressure on rates following a challenging 2017 which saw soft reinsurance pricing, heightened competitive environment, record influx of alternative capital and catastrophes totalling $138 billion in insured losses globally. Declining reinsurance profits furthermore, given the supply-demand imbalance and the resulting pressures on reinsurance

pricing, recent momentum on rate increases could reverse and dissipate leading into 2019. The report states that 2017 saw underwriting profitability slip into the red with reported $511.8 million net losses to shareholders’ equity, down from $5.3 billion of net income in 2016. This was principally due to the historic level of catastrophe losses and lower favourable reserve development, partially offset by improved expense ratio and an increase in the net invest-

ment income. For Bermudian re/insurers, the reported 2017 catastrophe losses from Hurricanes Harvey, Irma and, Maria, Mexico earthquakes, and California wildfires totaled $8.9 billion, contributing 19.9 percent to the combined ratio – a huge surge from $2.1 billion or 5.1 percent on the combined ratio in 2016. Losses, the report says, were a reminder that a few benign years of weatherrelated losses don’t represent a long-term trend. As a result,

Bermudian re/insurers reported a combined ratio, in aggregate, of 109.9 percent in 2017, up by 16.3 percent from 93.6 percent in 2016. In addition, favourable reserve developments contributed only 4.3 percent to the combined ratio in 2017 compared with 6.8 percent in 2016. Commentary all points to the reversal of the slowing pace of rate increases if the hurricane season is benign in 2018 and the reinsurance market remains free of major losses throughout the rest of the year.

L-R: Temidayo Ibrahim, Titilola Okunlola, Yeside Abiodun (Rector, CIFM), Abiola Adegbesan, Abimbola Shobanjo and Oluwatosin Ogunnubi all of AIICO Insurance Plc during the recently concluded Advanced Bancassurance Training Programme organized by College of Insurance & Financial Management (CIFM).

or an event like the 2018 World Cup, nothing is left to chance: stadiums, International Football Federation (FIFA), sponsors, players, national teams, television channels and the various other players have insurance covered against the various hazards that may arise. For Russia World Cup, cyber attacks and terrorism are the biggest risks. The cancellation coverage of the event following any loss: boycott, attack, cyber attack, is estimated at $1.5 billion, including TV rights, sponsorship, advertising and ticket refunds. In terms of cyber-risk, the ticketing companies and the organizers of the sports event run a considerable risk. They hold the personal and financial data of several hundreds of thousands of supporters. According to Beazley, a Lloyd’s syndicate underwriting agency specializing in this type of risk, the insured sums under the single ticketing is estimated at $200 million. For TV channels, data piracy can cause loss of revenue and lawsuits. For a global broadcaster, the insured amount is over 100 million USD. Terrorism also raises

concerns of the World Cup organizers . For this type of risk the subscribed capital is about 250 million USD. The risk coverage for lone wolf shooters is 100 million USD. Kidnapping is also a risk to consider in Russia. Footballers, their families and loved ones are at risk. The sums insured per team to cover kidnapping is $25 million, or $800 million for the 32 qualified teams together. With more than four billion fans, football is by far the most popular sport. The budget dedicated to the World Cup organized by Russia testifies to the importance of this event. Initially set at $10.23 billion, the budget has been revised upwards twice. Two additional fund injections totaling $549 million were made in 2015 and 2017. Today, this budget has reached $10.78 billion. This record will not last long. It will be largely beaten by Qatar, the host country of the football 2022 world cup estimated at $15.7 billion that is, an increase of 46 percent. In Brazil, where the 2014 World Cup took place, the final budget was $9.4 billion. The one dedicated to the 2010 World Cup in South Africa did not exceed $5 billion.

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Israel plans first tramtrain line Page 31

‘African rail operators must embrace digital networks’

Uber ‘seeks’ to enhance driver-partners, passenger safety

AHIF confab set to explore paths to success Page 30

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Cherokee, Explorer earn poor crash test rating Stories by MIKE OCHONMA

wo of the top-selling midsize and large SUV/crossovers namely the 2018 Jeep Grand Cherokee and 2018 Ford Explorer rated poor in the latest passenger-side small overlap front crash tests, while the new Kia Sorento, Volkswagen Atlas and GMC Acadia received good ratings including the Toyota Highlander, Nissan Pathfinder and 2018 Honda Pilot received acceptable ratings. A small overlap crash occurs when the front corner of a vehicle strikes another vehicle or fixed object, such as a tree or utility pole. The IIHS passenger-side small overlap test is conducted at 40 mph with 25 percent overlap between the front end of the vehicle and a barrier. In 2016, there were 1,606 U.S. fatalities from right-front passengers in frontal crashes, and 8,400 driver fatalities in frontal crashes, IIHS says. In the IIH’s 2009 study of 116 crashes with a fatal or serious injury in a frontal crash, 19 percent were near-side small overlap and 5 percent were far-side small overlap. The agency estimates there are roughly 725 annual U.S. fatalities in passenger-side small overlap crashes and 1,675 in driver-side small overlap crashes. IIHS began rating vehicles for driver-side small overlap crash protection in 2012 and automakers have since made engineering

changes to better protect drivers in such crashes. But passengers aren’t always equally protected, IIHS says, prompting the group to begin rating vehicles with the passenger-side test in 2017. “These are vehicles that we hadn’t rated on the passenger side before, and as we add more tests to our battery of evaluations, we try to keep up current ratings for the vehicles that people are the most interested in buying,” IIHS Chief Research Officer David Zuby said. On the other hand, the Ford Explorer is rated poor because the structure collapsed during the test. The passenger-side small overlap crash test indicated right hip and left lower leg injuries could occur in a crash, while the Grand Cherokee’s passenger-side small overlap crash test indicated right leg injuries and a possible head injury

could occur in a crash. Ford Explorer also received poor structural performance and an overall marginal rating for driver-side small overlap protection in the driver-side test. It will be redesigned for 2020 and Ford expects the crossover to “perform well” on future SORB tests and other tests. Ford said in a statement that; “Customer safety continues to be one of our highest priorities when we design any of our vehicles and we continually make improvements to our vehicles to help our customers stay safe on the road’’. Previously, the Explorer is a safe vehicle and has earned the highest 5-star overall NCAP ratings in the U.S. as well as ‘good’ ratings in front and side IIHS crash test modes.” The Acadia received one acceptable rating, in passenger re-

straints and kinematics, with a maximum intrusion of just two inches on the right side of the toepan but a passenger dummy’s head slid off the right side of the front airbag. The vehicle otherwise rated good in each rating. Furthermore, the Highlander, Pathfinder and Pilot rated good in chest, hip and thigh passenger injury measures, while the Highlander and Pathfinder rated marginal in structure, and Pilot rated marginal in passenger restraints and kinematics. The test of the Pilot indicated the possibility of head injuries, as the test dummy slid off the front airbag and moved far enough forward to hit the dashboard. The Sorento is the only vehicle tested to earn the institute’s Top Safety Pick+ award and was modified for the 2019 model year to improve protection in a passenger-side small overlap crash.

President Buhari congratulates Michael Ade-Ojo @ 80

ichael Ade Ojo, chairman of Elizade Motors Nigeria Limited, fondly referred at ‘Mr Toyota’ has been congratulated by President Muhammadu on the celebration of his 80 years birthday on June 14, 2018. Malam Garba Shehu, the President’s Senior Special Assistant on Media and Publicity, in a statement in Abuja on Wednesday said the president’s congratulatory message was contained in a letter addressed to Chief Ade-Ojo by the president. In a letter read during the church service to mark the 80 years of Michael Ade Ojo, the Nigerian president joined the business community, family and friends in felicitating with the “highly resourceful entrepreneur referred to automotive business circle as Mr Toyota. He said Ade-Ojo’s interest in investing in people over many

Public holiday FRSC patrol operations satisfactory - COMACE

Mike Ade.Ojo (OON) ‘Mr Toyota’, Founder, Elizabeth conglomerate at the centre with his wife Taiwo, children, grand children, inlaws and other family members during a special church service to mark his 80th birthday celebration at Archbishop Vinning Memorial Anglican Church, Ikeja, Lagos on June 14, 2018.

years had extended his influence beyond the business environment to the larger society, especially with the founding of a university. The President’s letter read: “On behalf of my family, the Federal

Executive Council and all Nigerians, I write to heartily congratulate you on this landmark occasion of celebrating your 80th birthday. “We are particularly delighted to share this auspicious moment

with you and your family knowing that almost all the preceding years of diligence and sacrifice were spent in service of God, our country and humanity. Indeed, your visionary and entrepreneuri-

oboye Oyeyemi, the Corps Marshal (COMACE) of the Federal Roads Safety Commission (FRSC) , says he is satisfied with the conduct of the Corps operatives assigned for Eid el Fitri Special Patrol I Operations as well as the disciplined conduct of most road users. Bisi Kazeem, FRSC Spokesman said that the Corp Marshal urges sustained vigilance by the operatives and continuous good conduct by road users to consolidate on gains already achieved in road crash reduction and preservation of lives and property. Oyeyemi directed all assigned operatives to continue to be exemplary in conduct, efficient in service delivery and above board in integrity while the special operations lasts and warned recalcitrant traffic offenders to have a change of attitude in order to avert arrest and prosecution as there would be no compromise on the good work already started by the Corps.

Boboye Oyeyemi, Corps Marshal FRSC

al lifestyle has influenced our lives in immeasurable ways’’. “As a nation, we remain grateful for your contributions to Nigeria’s economic and social growth, especially the investments in people. Your remarkable interest in inspiring and supporting young people has been reflected in scholarships, grants and the eventual establishment of a university’’. “Evidently it has been a worthwhile journey, and as you celebrate this milestone of turning an octogenarian, be assured that we are eagerly waiting to be regaled with the memoirs of your long walk to success with the Elizade brand, and the lessons on entrepreneurship that will permeate generations.’’ He said. President Buhari in the letter personally signed by him prayed that the almighty God would grant Ade-Ojo longer life, good health and strength to continue serving humanity.

30 BUSINESS DAY

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Wednesday 20 June 2018

odern

Uber ‘seeks’ to enhance driver-partners, passenger safety

T AHIF confab set to explore paths to success …Provides opportunities for networking among CEO’s MIKE OCHONMA

frica’s premier hotel conference, the Africa Hotel Investment Forum, has unveiled a much-anticipated, packed agenda with leading figures from across the sector ready to reveal their personal paths to success. This year’s AHIF being staged in Nairobi, Kenya scheduled to hold October 2-4, will cover every aspect of the hotel and hospitality business from the impact of macroeconomics to the hard detail of building a thriving business, plus unique networking opportunities with leading chief executives. AHIF, which is supported by Kenya’s ministry of tourism and its Tourism Finance Corporation (TFC), is attended by international hotel investors, business leaders and politicians. In the first week of October, Kenya will show itself off

to the world with an unprecedented week of tourism promotion. As well as hosting AHIF, it will stage a range of events, including the Magical Kenya Tourism Expo, the largest travel trade show in east Africa, and it will announce a package of measures to incentivise investment. Matthew Weihs, managing director of Bench Events, AHIF’s organiser, said: “There could not be a better time to be in Nairobi. All the key industry players will be there as it will provide a platform for business talks, striking of deals, and network like never before. The gathering will witness presentation of papers by leading industry experts from across the African continent and beyond. The conference tone will be struck by a welcome from Fatuma Hirsi Mohamed, principal secretary in the Kenyan ministry of tourism and Jonah Orumoi, managing director, Tourism Finance Corporation. They

will highlight a range of new government initiatives to incentivise investment. Daniel Silke, director of the Political Futures Consultancy, will give the macroeconomic overview, explaining the main geopolitical and demographic trends shaping the future of various African countries. He will be followed by Tom Mundy, head of advisory, sub-Saharan Africa, JLL, on the real estate cycle and its effect on investment. An update on hotel performance in Africa will follow from Thomas Emanuel, director of business development, STR with shedding of more insights into hotel room rates and levels of occupancy in different cities across Africa. Other highlights will include an in-depth look at an exciting new project and a one-on-one interview with James Hogan, executive chairman, Knighthood Capital, now an investor, who was previously president of Etihad Aviation Group.

axi company; Uber has announced that it will be introducing a new hours policy for driver-partners across Sub-Saharan Africa, including Nigeria to help enhance driver and passenger safety. Drowsy driving is an issue for all who share the road and Uber is committed to doing its part to help prevent drowsy driving, starting from this week Monday. With this new feature, Uber will be taking another step forward by launching a feature across the country that prompts drivers to go offline for six straight hours after a total of 12 hours of driving time. Drivers who do not take a long enough break will not be able to log into the app and

spend on Uber trips and will be reminded when they have reached their maximum time on the Uber app. It provides periodic notifications when drivers are approaching the 12-hour driving time limit and then will automatically go offline for six straight hours when their max has been reached, but drivers will be able to finish any trip they’re currently on. After the six hours, driving time resets and drivers can go online again to receive trip requests. This will be a phased roll out and not all driver-partners will see this right away. To ensure drivers understand the rationale and the

Qatar’s project bonds travellers on single digital hub

iscover Qatar (DQ), the destination management subsidiary arm of Qatar Airways, has announced that it has launched a digital transformation project. The company hopes to implement innovative digital technology to enable Qatar’s growing inventory of hotel rooms and services to connect with global tour operators and travel providers on one digital platform. The system, provided by technology company Illusions, will allow global tour operators and passengers to have an enhanced and seamless journey when searching for and booking their perfect Discover Qatar experience. Additionally, as an inclusive project, it will empower all relevant and regulated suppliers and service providers in the Qatari market to offer their products globally via the DQ system.

Discover Qatar is the first destination management company to use this unique exchange technology platform in the region, marking another milestone for Qatar Airways. One of the major benefits of the new technology is that it offers the destination of Qatar immediate connectivity to more than 140 global travel partners already connected to the Illusions IWTX exchange platform. Reacting on the new service, Akbar Al Baker, Qatar Airways Group chief executive, said: “At Qatar Airways, we continue to raise the bar and innovate across all areas of our business as part of our five-star product offering. “Discover Qatar’s technology is one of the finest destination management company digital solutions in the world, and will provide our travel partners and our passengers with not only a

flexible, reliable and scalable platform, but also access to the full range of services, experiences and accommodation that our beautiful country holds, in a seamless digital experience. “As the national carrier of the state of Qatar, we are very proud to be playing a key role in the growth of the country’s tourism industry. “Qatar Airways is connected to more than 30,000 travel companies globally, and this new technology will make every process easier for those global travel operators wishing to offer Qatar as a destination of choice to their customers. “Through this initiative, we are looking forward to welcoming more tourists to the country, to experience our unique culture, warm hospitality and spectacular landscapes.”. He concluded.

take trips before that period expires. Uber already has features like an in-app notification that reminds drivers to take a break when feeling tired on the road and advises drivers with their community guidelines to take breaks if they are feeling tired. The new driving hours policy is an additional feature that will help improve safety on the roads for all. Lola Kassim, general manager for Uber West Africa, explains, “We want to promote safe and responsible use of the Uber app and this feature has tremendous potential to protect not only Uber driver-partners, but also their passengers and, ultimately, all road users’’. According to her, driverpartners in Nigeria are already driving responsibly but safety is one of Uber’s key pillars and the company believes this new feature will be adding one more safety layer. Driver-partners will be able to track the time they

functionality of the feature, Uber has held various focus groups across their Greenlight Hubs (support centres) and has announced the feature through podcasts which can be accessed through the app. From this, drivers have expressed the need for information and education sessions which Uber has implemented, these include sessions which provide advice and examples such as how this will impact their businesses and how they can put together a responsible schedule for their small business. Last month, Uber rolled out this feature across South Africa. Based on drivers’ feedback, the new feature is working well and has helped enhance driver and passenger safety. ‘’We are excited to roll this out across the rest of the region as this move will strengthen Uber’s approach to help keep riders and drivers safe on the road while preserving the flexibility drivers tell us they love, ” adds Kassim.

Wednesday 20 June 2018

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BUSINESS DAY

Local and global rail news as it breaks

‘African rail operators must embrace digital networks’ Global driverless metros top 1000km, says UITP

…As stakeholders call for public-private sector tie-up Stories by MIKE OCHONMA

imilar to large parts of Africa jumping to mobile/ phone-based Internet instead of using fixed-line access first, African railway operators should have been called upon to build systems that make use of the recent advances in technology from the onset, , so says Henning Seeschaaf, senior venture architect, Deutsche Bahn (DB). Henning Seeschaaf was speaking at the just concluded Africa’s largest Rail Conference & Exhibition event held from June 12-13 at the Sandton Convention Centre, Johannesburg, South Africa. He said that African railways could avoid the mistakes of the past and invest in the new areas, not the old ones. In increasing the capacity of the network, trains can, for example, send themselves for maintenance should it be required. In increasing the capacity of the network, the system can rearrange itself should a train be delayed, in an attempt to work around the problem. Seeschaaf who joined DB this year will in his new role be setting up new digital businesses in the fields of smart mobility, smart logistics and smart city and thereby also signalling the move for DB from a traditional German railway firm to one providing mobility solutions to rail operators in Africa and other parts of the world across the value chain. Vera Songwe, executive secretary, United Nations Economic Commission for Africa, while speaking during the conference,

said the continent needed to bring in the private sector “in a bolder way” to finance railways on the continent. She added that listing, or corporatisation, could also serve to increase the efficiency of rail companies, enhancing their competitiveness and ensuring better governance. The backbone of rail investment in railways in Africa would, however, still be public sector finance, she noted. This year’s exhibition sees more than 150 exhibitors from across the globe bringing cutting edge products and solutions from energy & power, engineering & consulting, enterprise management systems, equipment, maintenance, freight & logistics, IOT and analytics and much more. For 2018, Africa Rail hosted the leading railway operators from

across the continent in order to facilitate meetings and business connections. It is the only event bringing together the continent’s railway operators, government, end users and multimodal sector to enable collaboration and business meetings. With the explosion of new and innovative transport companies over the past 12 months, Africa Rail presented one of the biggest opportunities in the continent as those who attended had the opportunity to visit the start-up zone to meet ground breaking start-ups in African transport. From humble beginnings as a small conference with a handful of participants and for two decades, Africa Rail has become the undisputed platform to share project updates and international case studies

from world leading operators in the rail sector. Meanwhile, October 2-3, 2018 has been fixed for the Africa Rail Evolution conference. The event will emphasise the benefit of rail upgrade and maintenance projects by highlighting new technology, projects finance and localisation to drive commercial success. The forum is geared toward an African audience, with the goal of accessibility to trade corridors and to enhancing cross border trade among African countries and connecting the continent through a rail system that is reliable, efficient and safe. Industry experts and participants will have the opportunity to be beam searchlight into the future capabilities of railways in Africa and touching on ways to amplify your service offering.

Israel plans first tram-train line

srael’s transport minister has revived plans to build a new line from Rosh-Ha-Ayin via Petakh-Tikva in the center of Israel east to Ariel, but rather than constructing it as a heavy-rail line, it will now be built as a tramtrain. The line was originally included in Israel Railways’ master plan for the 21st century published in 1997. However, the project has only started to make progress after the concept was changed to a tram-train and the involvement of Katz, who has put Israel Rail in detailed design. The population of Ariel, located 22km east of Kessem interchange east of Rosh-Ha-Ayin, is forecast to reach 25,000 people by 2030. The city has a university with 16,000 students, which is expected to rise 21,600 by 2030, many of whom live along the proposed alignment. Roads in the area are already heavily congested. The line will have a maximum gradient of 3 percent and a mini-

mum curve radius of 400m. Three options are being considered for the alignment. However, there are a number of options to consider. Option A

will be to have a direct 29km link between Rosh-Ha-Avin North and Ariel along Highway 5, option B to plan a 35.5km line via Kafr-Kassem, Southern Sharon,

and Petakh-Tikv, while option C will be a possibility of a 34km line along a different alignment from Option B but serving the same areas.

he total length of fullyautomated driverless metro lines globally has topped 1000 kilometers for the first time. The milestone was reached at the end of March with the opening of the Pujiang Line in Shanghai. This is according to the International Association of Public Transport’s (UITP) Observatory of Automated Metros. The UITP says there are currently 63 metro lines operating at Grade of Automation 4 (GoA4) in 42 cities in 19 countries, making a total of 1003km. The world’s first GoA4 line opened in 1981 in Kobe, Ja-

pan, while it took another 29 years to reach 500km, it took only a further eight years to double that figure. “Fully automated metro operation is a proven solution which offers many benefits including safety, flexibility of operations, larger capacity, cost efficiency and more fulfilling jobs for staff, which lead to an enhanced customer service,” says Ramón Malla, who is chairman the Observatory of Automated Metros and director of strategic projects with Barcelona Metropolitan Transport (TMB). “Significantly, no city that has built an automated metro line has ever reverted to conventional mode afterwards. It is expected that conversions of conventional lines to fully automated operations will also multiply.” The UITP expects expansion to continue at a faster rate in the next decade. The UITP says fully-automated driverless metros have a proven track-record for safety. “With adequate redundancy built-in, fully-automated metros are generally safer as human factors in safety-critical decisions are reduced,” the UITP says.

32 BUSINESS DAY Financial Inclusion

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Wednesday 20 June 2018

Supported by:

How illiteracy is affecting financial inclusion BALA AUGIE

ala, a town in Gombe, North East Nigeria has a population of less than 100,00o people, mainly poor farmers and petty traders who take their harvest to the market to sell. One of these farmers is 53 year old Musa Garba, also a trader, and father to nine children. Sitting on a mat in front of his hut, he watches as his children play in the sand, while the cold harmattan breeze blows calmly,

and the leaves rustle. Birds flap their wings while getting ready to take a flight to hit the skies. Garba, with the help of an interpreter, says he doesn’t have a bank account and he has no intention of opening one because he can neither read nor write and that he is comfortable keeping his money at home. “Moreover there are no banks in this village and the closest to this place is at Dukku, which is several kilometres away from this place,” said Garba while he poured cow milk from what looked like a flagon into a wooden cup. He belches

after a gulp and the smile on his face shows he derived some satisfaction. Illiteracy is one of the barriers to financial inclusion in Africa’s most populous nation and largest oil producer as nearly half of the people have no formal education. According to the United Nations Educational, Scientific and Cultural Organization (UNESCO), 65 million Nigerians are illiterate while 35 million out the total figure are adults. According to a recent data from the National Bureau of Statistics (NBS|), the states where majority

of people can neither read nor write are those in the Northeast, Northwest, and North-central. Policy makers are urged to increase literacy level in the country because there is a relationship between ability of people to read and write and financial inclusion. Educated people are likely to have the urge and enthusiasm to open a bank account because they can digest information given to them by financial institutions. Also, it is easy to sensitize an educated person on the benefits of financial inclusion than an illiterate person.

Nigeria lags other Sub Saharan African countries in providing financial services to the unbanked. According to a 2016 Annual Report and Survey Data by Financial Inclusion Insights (FII), Financial inclusion in Nigeria dropped slightly from 37 percent in 2015 to 35 percent in 2016 (Figure 1), lagging behind the three other African countries surveyed as part of the FII program. In 2016, FII data showed 69 percent of Kenyans, 54 percent of Tanzanians, and 40 percent of Ugandans were financially included. In what may perhaps

seem as a way of improving literacy rates in the north, the Nigerian government is intensifying efforts to reduce the number of out of school children, by establishing Almajeri schools in the north. Garba says you cannot teach an old dog new tricks, but his children are in school and his dream is to see them have the best education. “I feel it is too late for me to go to school and acquire western education. I want my children to have the best of education. I don’t want them to be a stark illiterate like me” said Garba.

Regulatory enablers of financial inclusion IBUKUN TAIWO & OLAYINKA DAVID-WEST

ike most innovations, the existence or absence of an enabling regulatory framework determines the success for digital financial services (DFS) and its inherent possibilities and advantages. In fact, the regulation of DFS can break or make the delivery of digital financial services to excluded populations. In a CGAP report titled Basic Regulatory Enablers for Digital Financial Services, four regulatory enablers of DFS were highlighted. These enablers constitute the foundation of every thriving DFS market without which financial inclusion campaigns would gain little to negligible success. In this article, we explore these four enablers and just how effective Nigeria has been in deploying them. Enabler 1. Nonbank E-Money Issuance. In most developing countries, high financial exclusion figures are usually a reflection of the dearth of financial service points. This insufficiency stems from the reliance on the traditional bank model which is expensive and unsustainable. In order to enable greater financial inclusion, the regulator of the financial service industry needs to create a window for non-banks to also provide DFS to customers. So says the report. In markets where e-money issuance has been restricted to the banking industry, financial inclusion efforts usually struggled. Most regulators realised this which led to them opening up the ecosystem by licensing more providers outside the banking sector. Examples include India’s Payment banks solution. Thankfully, in Nigeria, the

licensing model for DFS providers is open to non-banks. In fact, between 2011 and 2017, more than 20 mobile money licenses have been issued. However, the licensing model specifically excludes mobile network operators from leading such services. Enabler 2. Use of Agents. The CGAP report states that by permitting DFS providers— both banks and nonbanks—to use third-party agents, such as micro and small entrepreneurs, to distribute and deliver financial services, the ecosystem is well underway to greater levels of inclusion. We have written extensively about the use of agents and building out a strong and extensive agent network as a means to bolster our financial inclusion efforts. In 2013, the Central Bank opened a window for financial institutions to use third-party agents when it introduced the agent banking guidelines as well as the Super Agent framework. However, in spite of this

window, Nigeria’s agent network remains underdeveloped. With just under 50,000 agents serving a population of about 95 million adults, it’s easy to easy where the difficulty lies. Thankfully, a plan to rollout a 500,000 strong agent network known as the Shared Agent Network Expansion Facilities (SANEF) was announced earlier this year and the ecosystem eagerly awaits the implementation of such an ambitious project and the attendant benefits. Enabler 3. Risk-Based Due Diligence (CDD). The report states that an enabling regulatory environment adopts a proportionate anti-money laundering framework which allows simplified version of CDD for lower-risk accounts and transactions. The Central Bank has translated this into a tiered KYC system / regime whereby customer accounts are graded on a 3-tier basis, permitting specific transaction limits and thresholds for the

respective tiers. Since the inability to produce the appropriate documentation has been an often identified inhibitor to formal inclusion, the relaxed requirements has empowered financial institutions to venture out and onboard even more customers notwithstanding their limited documentation. There are also several developments in the area of identity management which would reduce friction and aid due diligence procedures. Firstly, a nationwide mandate by the CBN saw the issuing of a bank verification number (BVN) to every banking customer. This number was verifiable across the banking sector and helps to reduce the risks of identity theft, unauthorised access to accounts among a host of other benefits. Secondly, the Nigerian Identity Management Commission (NIMC) has begun building a national identity database with the aim of capturing every Nigerian citizen and is-

suing them a national identity number (NIN). Enabler 4. Consumer Protection. The report identifies adequate checks and balances (consumer protection) as the fourth regulatory enabler which ensures a responsible provision of financial services while engendering trust in the formal system. As a priority, the integrity of the financial services sector needs to be preserved through excellent fraud detection and mitigation measures. Consumer protection seeks to level the playing field between providers of financial services and consumers. The unbanked are usually subjected to excessively high interest rates on debts and loans, have a limited understanding about financial options and insufficient avenues for redress. Perhaps the biggest development in consumer protection so far in the ecosystem is the establishment of a consumer protection department

within the CBN. In a bid to foster consumer confidence in financial services, this unit is responsible for consumer education as well as customer complaints management. Also, over the years, Nigeria’s banking regulator has released diverse regulatory mechanisms such as guidelines and frameworks with the purpose of guiding the use and operation of different technologies and innovations including USSD, agent banking and super agents among a host of others. As Ros Grady, Senior Financial Sector Expert at the World Bank, once wrote: Financial consumer protection frameworks, properly designed, implemented and supervised instills trust in consumer products and services of the financial sector. Such frameworks can thus be important enablers for the uptake of financial products and services.” Based on these enablers, Nigeria and the CBN seem to be on the right track with regards to establishing the necessary environment for DFS to thrive. Nonetheless, we are yet to witness the impact with respect to financial inclusion. Beyond these, we need more positive and impacting strategies and solutions that holistically address financial inclusion. Could one such strategy include telco participation like in other markets? In addition to adding these actors as solutions providers, this could also expand the agent banking network. In what other ways can these enablers be explored and engaged to further drive financial inclusion? Share your ideas with us on Twitter @SustainableDFS or email: sustainabledfs@lbs.edu.ng

Olayinka David-West and Ibukun Taiwo are members of the Sustainable and Inclusive Digital Financial Services initiative of the Lagos Business School

Wednesday 20 June 2018

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Financial Inclusion

& INNOVATION

BUSINESS DAY

Supported by:

BusinessDay Radio programme; Financial Inclusion Today aired yesterday by 11:30am on Rhythm 93.7 FM

Themed: Non interest banking/insurance as a tool for deepening financial inclusion. ith spec i a l guest; Raji Adekunle from Jaiz Takaful Insurance, BusinessDay analysts ; Patrick Atuanya, Bala Augie, Lolade Akinmurele and Endurance Okafor. Anchored by Lehle Balde Speaking on how non interest banking and insurance deepens financial inclusion in Nigeria, Raji Adekunle, the Lagos branch Manager of Jaiz Takaful Insurance said Islamic insurance which his company operates is trying to fill the gap of excluded Muslims from the financial cycle, but however stressed that Takaful or Islamic Insurance was not only for Muslim alone. Although the Islamic Insurance which is also called Takaful is new to Nigeria and prior to its existence, only the convectional insurance was practiced in Nigeria and this was not contributing much to bringing in more Muslims into the financial cycle as the financial exclusion gap among Muslims was widening by the day “We discovered that many people wanted to come into the financial cycle or get involve in insurance, and our research showed that the religion and the believe of Muslims were the reasons why they could not get involved in conventional insurance, based on this, Islamic insurance came up. We are here as an alternative to conventional insurance,” Adekunle explained. On some of the issues the Islamic Insurance is out to address which the conventional insurance companies are not looking at include; to address the issue of uncertainty, the issue of gambling, and interest. “Those things are not in existence in Islamic sharia law, by this, we are now saying in Islamic insurance, one does not need to worry, either you have a claim or you do not have a claim because you have two ways to benefit. If you have a claim,

they will pay you your claim, they will settle you, if you do not have a claim, whatever you contr ibute, when they declare surplus, whatever that is left in the pool, you will also be compensated,” the guest cited. He said their clients’ benefit in two ways in Islamic insurance unlike other conventional insurance. The guest on the radio show explained Islamic insurance to be a pool where everyone come together and mutually assist each other and share the risk among themselves, and at the end of the year, whatever is left in the pool after paying claim to those that suffered loss, the remaining amount is shared to those who did not offer claim. “Before we share the money, there is an amount that is normally deducted, 0.25 percent of that amount goes to the less privileged, those people are not doing anything, and they are not doing insurance. For example, you can go to the hospitals and buy detergent, buy all those necessary materials for those in the hospital from that amount and give it to them. Or we can go to the prison and buy food items for them. Those people are not in insurance but are part of the people that will enjoy

the benefit of Takaful that is why we say Takaful is for all” Adekunle stressed. He however said the program does not target only Muslims, although it was initially designed for them alone, but as at today, everyone is benefiting regardless if they are Muslim or not. “Benefits cut across all religion; Jews, Christians and Muslims, be caus e most of them believe that we cannot give loan or take loan, the benefit in Takaful is more than you belonging to a particular religion. You will get money whether or not you suffer claim that is the question policy holder are asking,” Adekunle said on the show He said it has gone beyond Islamic and religion, as it has been accepted in all the Christian countries like U.K , the chartered insurance institute of London have also introduced Takaful in their syllabus and it is also accepted in many other African countries like Kenya, Zambia. According to the guest, t o a d y , Ta k a f u l h a s a growth rate of 40 percent in the world and conventional insurance is still growing less than 5 percent or 3 percent. When Adekunle was asked what the uptake has been like for the product and how they are educating the potential custom-

ers about the product so as to get more people into the financial service he said; “This Takaful came on board in Nigeria; the plan is to penetrate all low income earners, people in the villages, rural areas. We designed a program that will go as low as 5000 naira for anybody no matter what your income is, you will be able to afford it. We have also tried to do major sensitization, we are not focused on cities that have developed .we have been going to cities like kebbi state, Jigawa, Nassarawa, to sensitize them to know the benefit of Takaful. We have discussed medical Takaful, family Takaful,” On the constraints encountered by the insurance company and the measures put in place to surmount them, Adekunle

Some of the issues the Islamic Insurance is out to address which the conventional insurance companies are not looking at include; to address the issue of uncertainty, the issue of gambling, and interest

explained that; “The challenge we have been getting from rural areas is that most of them do not believe that such package exist. Once we explain to them, they always ask if we are sure of what we are saying. At the end of the day, we let them know that we are not here for fun, we are here to tell them what other countries have been enjoying. So, Takaful maybe new in Nigeria, but it is not new in the world and we also communicate with them with the language they can understand. Our jingles are in different languages, in Hausa, Yoruba and once it is played to them, they will understand better what they are opting for. we also try to come down to their level so they will understand that Takaful is not coming here to collect their money and at the end of the day, go with their money,” he said. One of BusienssDay’s analysts asked the guest how the y are g oing to make people especially the northern women buy into the non interest banking. The branch manager replied by saying; “We all know that interest has not been good thing to anybody either to an individual, corporate organization and to a country as a whole. We are not taking any interest but we can help you

finance what you want to do. Non interest banking aims to help those poor people especially women struggling with their businesses, so they can finance them,” he explained. He went further to give an example with Indomie business “if you are into Indomie and you do not have capital, what they can do is buy that Indomie for you and they will become the owner of that Indomie and sell it for you. So, you are paying back the money they sell it for you and not the interest. Before they will sell it to you, they must have looked at factors like profit margin. If you buy something of N1 million, it can be sold back to you for N1.2million. what the person will pay back is N1million in return , we are just trying to remove them from the level they are to another level”. The manager of the Islamic Insurance company was optimistic while speaking on the radio progam; “We have a very good potential and there is no doubt in me about it. Actually, if you look at the world in terms of insurance today, especially in Nigeria, many people are tired of paying their premium every year and they are not getting anything back. Some people will line up before they can get their claim. “Some people will even have to go to the court before they can get their claim. But this Islamic insurance which is transparent and fair to the society. What we are saying, by the time we do like 2-5 years and by the time we declare surplus to the members of the public, we just tell you that, sir, this is your surplus for this year and you will just discover that, all the years you have been doing insurance, this is what you have been losing,” he added. In his final remarks, Adekunle of Jaiz Takaful Insurance urged the entire public to choose any of the Islamic insurance because that is the fairest way of doing insurance. There is no fair method today of doing insurance. The media partner of this radio show remains Bell Naija

BUSINESS DAY

SHIPPING

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LOGISTICS

Wednesday 20 June 2018

MARITIME e-COMMERCE

Why stakeholders insist govt needs to disburse over N100bn Cabotage Fund Stories by UZOAMAKA ANAGOR-EWUZIE

ighteen years into the existence of the Cabotage Vessel Financing Fund (CVFF), stakeholders have insisted that the Federal Government needs to disburse the fund to ship owners in order to enable them acquire vessels. The fund, which has accumulated over $100 million, was generated by indigenous ship owners, who were mandated by law, to pay about 2 percent of every cargo carried with their ships into the fund as Cabotage levy, specifically for the development of local shipping business in Nigeria. CVFF was set-up with the sole aim of achieving the objectives of the Coastal and Inland Shipping Act (Cabotage), by making available, cheap funds for Nigerian ship owners to acquire vessels and carried out shipping related investments. For proper management of the fund, the law makers through the Act setting up the fund also appointed the

L-R: Gambo Ahmed, executive director, Maritime Labour & Cabotage, Nigerian Maritime Administration and Safety Agency (NIMASA); Kunle Folarin, chairman Ports Consultative Council and Ibrahim Jibril, director, Maritime Labour Services, NIMASA during the National Joint Industrial Council (NJIC) meeting in Lagos.

Nigerian Maritime Administration and Safety Agency (NIMASA), to be the custodian of the fund. The Act also appointed commercial banks including Diamond Bank, Fidelity Bank, Skye Bank and Sterling Bank as Primary Lending Institutions (PLIs) to be responsible for managing the funds on behalf of NIMASA

and the Federal Ministry of Transportation (FMOT), the supervisory ministry of NIMASA. Regrettably, the fund is currently idling away at the bank without NIMASA, the custodian of the fund, making concrete plans to disburse it to deserving ship owners. This was after about six Nigerian owned shipping

companies were selected and certified eligible to access a percentage of the fund for the purpose of buying new ships to grow their businesses. As a result, the estimated annual N2 trillion Nigerian shipping business is currently dominated by foreigners, who have the needed facilities especially quality vessels

to participate in the carriage of Nigerian seaborne trade. In many other countries, ship owners get as low as 1 to 3 percent lending rate for ship acquisition, making it difficult for local ship owners, who get same facility at 25 percent to compete with their foreign counterparts. Margret Orakwusi, former president of Nigerian Fishing Trawlers Association said recently in a stakeholders’ forum held in Lagos that Nigerian ship owners were struggling to compete with their foreign counterparts, who get funding from banks from their countries of origin, at single digit while Nigerians get fund at double digit. “We generate cargoes locally but our indigenous ship owners struggle to participate in the transportation of those locally generated cargoes due to their inability to buy quality vessels. Ship owners are losing jobs to their foreign counterparts while Nigerian seafarers are also losing job opportunities to foreign crew,” said Orakwusi. She suggested that the

Djibouti’s multiple investment in port devt set pace for economic emergence

NIMASA seeks better work conditions for dock labour

…Adopts Nigeria’s concession model

he Nigerian Maritime Administration and Safety Agency (NIMASA), has reaffirmed its commitment to ensuring that dock workers in Nigeria’s maritime industry have better welfare at their work places. Speaking at a meeting of employers and labour unions in the maritime sector under the aegis of the National Joint Industrial Council (NJIC) held in Lagosrecently, Ahmed Gambo, chairman of the NJIC said that constant engagement would be used to ensure that dock workers’ get better work conditions in line with the provisionsof International Labour laws. Gambo, who doubles as the executive director, Maritime Labour and Cabotage Services of NIMASA, said that the welfare of dock workers impacts on the port industry and the

he Republic of Djibouti in partnership with private sector players has rolled out several port related investment projects, geared toward awakening its economy and taking it to the new level. The projects include Djibouti-Addis-Ababa railway line; Tadjourah mineral port; Goubet port; Doraleh multipurpose port; new Djibouti mega free zone in Khor Ambado and the launch of the Damerjog industrial development free zone, etc. Also, it has an energy sector project, which first phase provides for the commissioning of a gas pipeline between Ethiopia’s Ogaden Basin natural gas fields and the coast of Djibouti. The second phase concerns the construction and operation of a natural gas liquefaction plant and a gas terminal in the Damerjog area, all privately financed by the mega project’s developer, China’s POLY-GCL Petroleum Group Holdings Limited, to

the tune of $4 billion. The country has also terminated the Doraleh Container Terminal (DCT) concession, with DP World following the unsuccessful attempts to get DP World to renegotiate its contract with Djibouti government. The termination was instigated by unfair and unbalanced contract clauses that imposed unacceptable limits on Djibouti’s development policy. A statement distributed by APO Group on behalf of Présidence de la République de Djibouti, said that the decree terminating the concession, as well as the law governing it, provide for a compensation procedure in accordance with commonly accepted international rules and practices. “The termination of the contract has in no way stopped port operators from expressing their confidence and interest in the new public structure that has taken over its management – SGTD (Doraleh Container

Terminal Management Company). However, Singaporean ship-owner, PIL signed an agreement in March to triple transshipment traffic handled by the terminal. The statement further said that Djibouti’s ambition goes way beyond the success of Doraleh port as major investments are ongoing and the amounts committed attest to the confidence of international partners. These major projects are being undertaken within a particularly attractive macroeconomic and regulatory framework. This is as economic growth is expected to remain at high levels – around 7 percent for 2018 and 2019 – making Djibouti one of Africa’s top 10 economies in terms of growth. The Djiboutian Franc is a stable currency, pegged to the US dollar, freely convertible (without restriction) and its exchange rate has remained unchanged since 1973.

economy. “When the welfare of the dockworkers is put into proper perspective, we will have a healthy maritime sector that will enable the actualisation of a robust economy,” Gambo added. Ibrahim Jibril, director, Maritime Labour Services of NIMASA, said that the new agreement will demonstrate the agency’s commitment, which is in line with the theme of the 107th International Conference held in Geneva viz; “A future with Decent Work and also Building a Future for the Dock Labour Industry”. He also assured that the Agency has put in place all necessary machineries towards ensuring a successful exercise in line with the provisions of the existing agreement and the demand for its review. KunleFolarin, chairman, Ports Consultative Council (PCC), who rep-

money that accumulated in the Cabotage fund can be used to set up a Maritime Development Bank that would understand the intricacies of shipping business. Raymond Omatseye, a former director-general of NIMASA, said that Cabotage Act of 2003, states that CVFF should be establish specifically for the development of local shipping business. He stated that the fund, according to law, must be disbursed to ship owners in line with the established guideline, meaning that government can go ahead to disburse the fund in line with the guideline listed in the Act. However, the present management of NIMASA, led by Dakuku Peterside as the director general, who affirmed that the high lending rates of banks to ship owners for vessel acquisition, has been one of the problems of ship financing in Nigeria, promised NIMASA’s determination to disbursing CVFF, which has been in the agency’s custody since inception in 2003.

resented the Seaports Terminal Operators Association of Nigeria (STOAN), commended NIMASA for its role in maintaining the already existing peace in the port industry. He expressed optimism that the negotiation with dock workers will yield positive results as all parties involved will work as a team and ensure that no dock worker is shortchanged. NJIC is the body responsible for negotiating and reviewing minimum work standards for dock labour, which reviewed the last Collective Bargaining Agreement (CBA) that lapsed on 31st May, 2018. The CBA is subject to review every two years. The regulation of dock labour minimum standards is the statutory responsibility of the NIMASA as enshrined in the Act, Section 27 (1) sub-sect (b) of the NIMASA Act.

Wednesday 20 June 2018

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BUSINESS DAY

Tax Issues

Storms of tax reforms: 2018 fails to be quiet port IHEANYI NWACHUKWU

any might h a v e thought that 2018 would be the quiet harbour in the global storms of tax reforms, but recent developments and outlook show the global tax environment looks to be as dynamic and challenging as before, with activity across almost all depths. Taxation performs a key function in enabling both domestic and global development. It also underpins cross-border economic activity as well as domestic resource mobilisation and good financial governance. Across the globe, there is currently a wave of tax competition which is fundamentally driven by governments wanting to attract economic activity to their jurisdiction. This development sits at the very heart of much of the change(s) occurring in today’s taxation landscape. As many countries look intensely at their own regimes, and tax reform — either Base Erosion and Profit Shifting (BEPS) driven or more fundamental, other issues such as the continuing desire for European tax harmonisation, the ongoing debate on digital taxation and the desire for tax certainty have all continued to support the need for companies and their advisors to view the world though a multilateral lens. The world has turned strongly against tax evasion and aggressive tax planning. Thanks to ground-breaking international agreements which make it impossible to hide assets by simply placing them in offshore accounts or structures. On April 19, 2016, the International Monetary Fund (IMF), the Organisation for Economic Co-operation and Development (OECD), the United Nations (UN) and the World Bank Group (WBG) announced the details of their joint effort to intensify their cooperation on tax issues: the Platform for Collaboration on Tax. The Platform not only formalies regular discussions between the four international organisations on the design and implementation of standards for international tax matters, it also strengthens their

capacity-building support, delivers jointly developed guidance, and shares information on operational and knowledge activities. Aside many countries specific efforts to enhance their revenue from tax; it is noteworthy that BEPS implementation reaches its peak in 2018. BEPS refers to corporate tax planning strategies used by multinational companies that artificially “shift” profits from higher-tax locations, to lower-tax locations, thus “eroding” the tax-base of the higher-tax locations. Addressing base erosion and profit shifting is a key priority of governments around the globe. There are 15 actions developed in the context of the OECD/G20 BEPS Project which equip governments with domestic and international instruments to address tax avoidance which ensures that profits are taxed where economic activities generating the profits are performed and where value is created. The latest in the pressure line is that many governments of resource-rich developing countries are under pressure to offer tax incentives in order to attract mining investors. But the Organisation for Economic Co-operation and Development (OECD) has reservation to this saying that these incentives may significantly reduce government revenue, “especially when investors use them in ways that exceed the tax benefit initially intended by government.” Following peer review of the BEPS minimum standards by the Organisation for Economic Co-operation and Development (OECD), it is also expected that a tsunami of changes to domestic legislation of many

countries and to the international network of bilateral tax treaties will take place. Digitisation is another key issue in taxation globally. The international community has taken an important step towards resolving the tax challenges posed by the digitalisation of the economy. For instance, in the first-quarter (Q1) of 2018, more than 110 countries and jurisdictions agreed to review two key concepts of the international tax system, responding to a mandate from the G20 Finance Ministers to work on the implications of digitalisation for taxation. There are clear indications that the Forum on Tax Administration’s (FTA) Joint International Task Force on Shared Intelligence and Cooperation (JITSIC) already works collaboratively on issues raised by the so-called “Paradise Papers” leaks. “Banking secrecy has been quickly disappearing and cooperation between tax administrations is rapidly improving. The FTA’s Joint International Task Force on Shared Intelligence and Cooperation was well prepared for this leak,” said Hans Christian Holte, Director G eneral of the Norwegian Tax Administration and the new Chair of the Forum on Tax Administration at the Tax and Crime Forum 2017 in London. Drawing on the insights and experience of jurisdictions around the world, the OECD essential principles for effectively fighting tax crimes cover the legal, institutional, administrative, and operational aspects necessar y for putting in place an efficient system for fighting tax crimes and other financial crimes.

In the first-phase of peer review report on CountryBy-Country (CbC) reporting, OECD confirmed Nigeria has rules (primary law) that impose and enforce Countr y-by-Countr y requirements on Multinational Enterprise (MNE) Groups whose Ultimate Parent Entity (UPE) is resident for tax purposes in Nigeria. “ The first filing obligation for a CbC report in Nigeria commenced in respect of fiscal years commencing on or after January 1, 2018. Based on final primary law not yet published, Nigeria meets all the terms of reference relating to the domestic legal and administrative framework,” it noted. Nigeria is a signatory to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters: Amended by the 2010 Protocol (OECD/Council of Europe, 2011), which came into force on September 1, 2015. Nigeria is also a signatory to the CbC Multilateral Competent Authority Agreement (MCAA) and it intends to submit its notifications under section 8 of the CbC MCAA soon. It is recommended that Nigeria continue to take steps to have Qualifying Competent Authority agreements in effect with jurisdictions of the Inclusive Framework that meet the confidentiality, consistency and appropriate use conditions. It is however noted that Nigeria will not be exchanging reports in 2018. “We have underlined the complexity of the issues, and highlighted the importance of reaching international agreement, both for our economies and the future of the rules-based system. The OECD stands ready to accompany coun-

tries as they seek to build a common understanding of the issues related to the digital economy and taxation, as well as the long-term solutions,” according to an interim report presented by OECD Secretary-General Angel Gurría to the G20 Finance Ministers at their meeting on March 19-20 in Buenos Aires, Argentina. Countries continue to look to stimulate economic activity and attract foreign direct investment (FDI) by maintaining or lowering their corporate tax rates. According to EY outlook for global tax policy in 2018, six countries look to drive competition by reducing corporate tax rates; 37percent forecast higher tax burdens as a result of digitally focused law changes; while long-term trend for a lowrate, broad-base tax system is set to reach tipping point. “The long-term trend of having a low-rate, broadbase tax system that has been playing out for many years continues in 2018. Six of the 41 jurisdictions (15percent) sur veyed in our latest outlook have lower headline corporate income tax rates in 2018 – that is roughly the same as the 16percent in our 2017 Outlook and the 18percent in our 2016 Outlook, when like-for-like countries are compared,” said Chris Sanger, EY Global Tax Policy Leader. Sanger and Rob Thomas, Director, Tax Policy identified issues that have the potential to change many aspects of how domestic and cross-border activity is

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taxed in 2018 and beyond. They experts are probably fair to say that the taxation of digitised business is now receiving far more attention than in 2013, when the BEPS Action Plan (incorporating Action 1 on digital) was being developed. In the words of the OECD’s tax leader in 2017, “A big thing which has not been dealt with adequately by the BEPS project is the digital economy.” Fifteen of the 41 jurisdictions (37percent) are already forecasting higher tax burdens as a result of digitally focused changes in 2018. They noted in essence that 2018 is a year of delivery, “with the move from concept discussion at the multilateral level to the reality of policy change at the country level” These issues accord ing to them include: BEPS implementation, both via new national legislation and through the choices made with the OECD’s Multilateral Instrument ; the implementation of Europe’s Anti-Tax Avoidance Directive (ATAD-I) and ATAD II across the (currently) 28 EU Member States, ahead of 2019 and 2020 deadlines; and responses to US tax reform, an issue of great magnitude in its own right.

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BUSINESS DAY

Wednesday 20 June 2018

Leadership SHAPING PEOPLE INTO A TEAM

How vineyard vines uses analytics to win over customers (Dave Sutton is president and CEO of TopRight, an Atlanta-based strategic marketing firm, and the author of “Marketing Interrupted.”)

hen brothers Shep and Ian Murray cut their ties with corporate America to start a little company on Martha’s Vineyard in 1998, their motivation was clear: “We’re making neck ties so we don’t have to wear them.” Little did they know that the business they founded, Vineyard Vines, would become a darling of the fashion industry and a household brand in the U.S. Today, the company best known for its smiling pink whale logo offers much more than its signature neckwear. Vineyard Vines manufacturers a full line of “exclusive, yet attainable” clothing and accessories for men, women and children. That “little” privately held business has grown tremendously since its launch and currently has more than 90 physical retail locations and a highly successful e-commerce business. I met the team at Vineyard Vines while doing research about datadriven marketing technologies for my book, “Marketing, Interrupted,” and was able to learn the secret to the company’s success. From the very beginning, the Murray brothers believed first and foremost in connecting with and understanding the unique needs of their customers. As the current vice president of Marketing, Lindsey Worster, told me: “We are all about getting the right message, about the right product, at the right time to our customer — targeted, relevant and authentic communication is our primary goal.” Of course, this type of real-time, one-to-one marketing is easier said than done. As Vineyard Vines has rapidly grown its customer base, so too has the size of its customer database. Terabytes of data have been captured. Hundreds of attributes, encompassing customer profiles, preferences and

buying behaviors must be parsed into actionable insights in order to deliver a highly personalized experience. Like many competitors in the apparel industry, Vineyard Vines has kept its operations lean in order to preserve operating margins. This means that the retailer simply doesn’t have the human resources to perform the onerous data analysis and behavioral segmentation needed to inform true one-to-one marketing. So, over the years, Vineyard Vines has fallen into the trap of relying on traditional “batch-andblast” communications to reach its customers, promote its products and make offers. Though this strategy was inconsistent with the guiding principles of the company’s founders, batch-and-blast was thought to be the only way to keep the cash register ringing. But as Worster acknowledges, “With the batch-andblast campaigns, we were sending the exact same message and static images to millions of people, and that just isn’t the best way to communicate with customers.” In July 2016, the e-commerce team at Vineyard Vines set out to find a better way to keep pace with its dy-

namic customer base while staying true to the company’s principles of authentic, relevant and personalized communications. The team was looking for a retailer-agnostic platform that would integrate Vineyard Vines’ online customer and products data to enable true one-to-one messaging. As we all know, Amazon.com has the technology to do this, but it’s proprietary and not available to other retailers. Enter Fayez Mohamood and his team at Bluecore, a retail marketing automation platform. The solution that Mohamood and his team developed correlates customers’ ehaviors and their interactions with the retailer’s online product catalog. Based on these analytics, Bluecore builds intelligent, triggered campaigns that can be run across email and social media channels, or be used to optimize search engine marketing. At the heart of the solution sits a decision engine driven by artificial intelligence that determines the timing and content of the best campaign to send to individual shoppers. The decision engine understands which customers have price sensitivities (and therefore are

motivated by discounts), what items an individual customer has viewed, what those items have in common with other items the customer has engaged with, which products are replenishable and at what cadence a specific customer replenishes them, which activities predict a next sell, the right timing to contact a specific customer, a customers’ lifetime value, and so on. Initially, Vineyard Vines deployed the technology to tackle obvious challenges like triggering emails for abandoned online shopping carts, abandoned searches and abandoned browses. But after seeing the increases in revenue per email from those initial messaging efforts, the marketing team decided to expand its use of the dynamic decision capabilities of the platform — what Bluecore refers to as “predictive audiences.” This part of the platform enables Vineyard Vines to send personalized messages based on a customer’s online behaviors, purchase transactions and level of personal engagement with the brand. Next, the marketing team quickly set about using the platform to automate campaigns for specific use cases where personalization and

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relevancy had always been a challenge, including: — Notifying customers when highdemand products were back in stock. — Communicating last-chance offers on stock-out items. — Running holiday-specific and special event campaigns. — Predicting when a customer may be in danger of unsubscribing. The days of batch-and-blast campaigns for Vineyards Vines may soon be over, as the results from the campaigns using the new decision engine have exceeded expectations. What can other companies learn from Vineyard Vines’ success? A few best practices stand out: — Engage with customers on a one-to-one level. Such direct communication is no longer a “nice-tohave” — customers expect it. — Overhaul your batch-and-blast approach to email marketing by integrating behavioral data and predictive algorithms to create highvolume campaigns that are unique to each recipient. — Provide your loyal customers with the best experience at every touchpoint. — Target customers in a personalized manner across more than just email, and determine the best channel mix for each one. — Gain a deeper understanding of customer engagement with your products. Without tools like Bluecore, retailers don’t have a clear understanding of which products customers are interacting with, or the commonalities across products that a single customer has engaged with. They also don’t know when a product’s status changes. The moments when a product decreases in value, goes out of stock or returns to stock should each trigger a response from the retailer. Most retailers struggle to understand how and why customers engage with particular products unless they buy them or abandon their shopping carts. Today, there’s so much more that can be done to better serve customers, and to ultimately make your company more successful.

Wednesday 20 June 2018

BUSINESS DAY

Wednesday 20 June 2018

Oil marketers’ earnings slow as... Continued from page 1

the new reality of the new template by regulators. Operators in the sector lost revenue as the Nigeria National Petroleum Corporation (NNPC) began an almost 100 percent importation petrol due to rising crude oil prices. For the year ended December 2017, after tax profits for the 6 major players in the industry that have reported results increased by a mere 3.73 percent to N32.73 billion from N31.53 billion the previous year. This compares with a 67.84 percent increase in profits they recorded in the 2016 period. The firms are; Total Nigeria Plc, Mobil Oil Nigeria Plc, Conoil Nigeria Plc, MRS Nigeria Plc, Forte Oil Nigeria Plc and Eterna Oil Nigeria Plc. The downstream oil and gas business has been very tough as these firms operate on a very tight margin. Premium Motor Spirit (PMS), a major source of revenue has been regulated, according to Olalekan Olabode, head of research at Vetiva Capital Management. “The drivers of 2016 figures were due to the devaluation of the currency. In May that same year we saw the liberalization of the sector which saw pump price move to N145 per litre from N87 per litre. That decision also helps underpin sales based on the volume they had then,” said Olabode. Continues on wwwbusinessday online

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APC convention faces crisis over... Continued from page 1

to remove the names of all the outgoing National working committee, NWC members seeking re-election at the National Convention from the ‘unity list’. The current APC NWC members seeking re-election are Mai Buni, National Secretary, Lawan Shuaibu, Deputy National chairman (North), Hilard Etta, National vice chairman (south- south), Osita Izunaso, National organising Secretary and George Muoghalu (National Auditor). It is however, gathered that only the outgoing National Secretary, Mai Buni, has been pencilled down to make the said unity list. Already some aspirants who are alleging bias in the said consensus list are threatening to cause disruption and stage a walkout from the convention if a level playing ground is not provided for all aspirants. BusinessDay learnt that President Muhammadu Buhari had told the party leaders of his interest in three positions of National Chairman, National Secretary and that of National Organising Secretary. Buhari, according to a reliable source, had asked one of his aides to advice the outgoing National Chairman, John Oyegun, National Organising Secretary, Ozita Izunazo, not to seek re-election but the incumbent organising secretary, Izunazo rejected the advice. An aspirant, who anonymously raised alarm over what he de-

scribed as a plot by some members of the outgoing executive to get themselves re-elected, who is also one of the prominent contenders, said: “We have just been informed that the current NWC has already prepared a unity list of themselves, which they will forward to the APC governors forum on Wednesday (today) for adoption and they will forward same to Mr President for approval.” “This further confirms our position and resolve that impunity is in the pipeline and it will be challenged to the later.” When contacted to know whether some of the aspirants were part of the zonal consultations ahead of the convention, an aspirant for the office of the National Vice Chairman North-east, Umar Duhu, said no one has either convened a meeting in his zone nor was he invited for any meeting to discuss anything consensus. According to him, “it will be laughable to suggest among others that, the meeting of APC Governors slated for Wednesday will produce the so-called unity list without recourse to the aspirants who are the most critical stakeholders.” “Therefore, if some contestants feel humiliated and would be expressing their dissatisfaction by venting their anger at any undemocratic actions, they will be doing so within their rights as those that genuinely bought forms, screened and have spent resources campaigning.”

L-R: Oluranti Adebule, deputy governor of Lagos State; Bolanle Ambode, wife of the governor and convener, Lagos Women Forum; Abimbola Jakande, wife of first civilian governor of Lagos State; Adejoke Orelope-Adefulire, senior special assistant to the president on sustainable development goals, and Folasade Adesoye, head of service, Lagos State, holding placards with the inscription ‘Be the Voice for Healthy living…, Against Domestic Violence, Rape, Child Abuse & Teenage Pregnancy” during the Lagos Women Forum with the theme Women...Your Health...Your Social Environment at Police College Ground, GRA, Ikeja, Lagos, yesterday.

Continued from page 1

Moody’s Investors Service said. The New York based firm noted that although Nigeria’s economy, external positions, and public finances were expected to stabilise, its continual dependence on Oil and Gas meant it would face daunting obstacles in the years ahead. Moody’s Vice President and Senior Credit Officer, Aurélien Mali noted that both Nigeria and Angola have seen their credit profiles come under pressure following the oil price shock in 2014. “The rise in hydrocarbon production will support growth in both countries and will help stabilise their deficits, but revenue generation remains a key weakness for Nigeria, while Angola will find it hard

Nigeria’s oil-based revenue generation still... to cut its already sizeable debt load as its kwanza currency continues to depreciate,” Aurélien Mali who is also a co-author of the report said. Nigeria and Angola are two of Sub-Saharan Africa’s largest economies, accounting for close to 40 percent of the nominal GDP of the sovereigns that Moody’s rates in the region. While increased oil production will support a pick-up in growth in both countries in 2018, they face challenges in attracting more investment in a low oil price environment. “Nigeria has struggled to reform its oil sector, improve the regulatory environment and increase transparency,” Moody said. Despite expecting increase in Nigeria oil production, Moody’s also

expects renewed attacks on pipelines and key infrastructure in the Niger Delta, which could decrease oil production under the joint ventures (JVs). The rating agency also believes implementation of the new fiscal framework will support oil production increase under the production sharing contracts (PSCs). Compared to Nigeria and other regional peers, the Angolan authorities have created a predictable and transparent environment for the oil sector. Since its independence, production has been maintained despite a protracted civil warand contracts have been respected by its national oil company, Sonangol. For, Angola, its main production challenge is higher costs which are

39 NEWS

BUSINESS DAY

Abraaj liquidation casts shadow over... Continued from page 1

source with knowledge of the matter said. “The older investments are challenged, in that they have struggled to sell them off for some time now but my guess is that Mouka and Indorama could make good buys,” the source said. “They are however likely to be sold below stock due to the naira devaluation.” Of the eight, C&I Leasing, Custodian and CWG are the only companies to be listed on the Nigerian Stock Exchange (NSE), and their stocks have returned 34 percent, 35 percent and 0 percent year to date respectively, according to NSE data. C & I gained 5.2 percent on Tuesday, outperforming an industry average of -1.98 percent, according to Bloomberg data. CWG, provider of IT services and computer networking solutions to businesses, was flat at N2.50 while Custodian and Allied Insurance also traded flat at N5.27, is up 4.9 percent from June 12 when Abraaj first filed plans for liquidation. C& I and CWG are also trading higher than their June 12 share prices, in defiance to Abraaj’s downfall. Abraaj Holdings, once one of the developing world’s most influential investors which holds investments worth over $2bn in sub-Saharan Africa alone, plans to file for provisional liquidation in the Cayman Islands as it battles allegations of misused funds. The Dubai-based investment firm plans to file before June 29 when a court hearing of a petition to liquidate Abraaj Holdings by Kuwait’s Public Institution for Social Security is scheduled, the people said, asking not to be identified because the matter is private. No final decisions have been taken on the timing for the filing, according to news reports. “The implication is longer term and more subtle,” Andrew Alli, Chief Executive Officer (CEO) at Africa Finance Corporation, said in response to BusinessDay questions. “Abraaj was a champion emerging markets investor and its downfall will lead to a possible minor reassessment of investing in such markets by institutional investors and will affect Africa PE funds,” Alli said in a tweet Monday. crucial to unlocking future investment. As a result, Moody expects the new administration to offer incentives to attract more investment to at least maintain production levels and avoid significant declines. Moody said that the higher oil price and fiscal consolidation efforts will shrink deficits to around 2.6 percent of GDP in Nigeria and 2 percent for Angola in 2018. Nevertheless, muchneeded budgeted capex will continue to be under-realised and revenue raising measures are likely to continue to falter, especially in Nigeria. “Increasing non-oil tax intake remains one of the biggest challenges both countries face in the coming years however the Nigerian authorities’ efforts to increase nonoil revenue since late 2015 have been largely unsuccessful,” Moody said in

A court-supervised provisional liquidation would allow Abraaj to restructure debt, negotiate with creditors and sell assets, according to a Bloomberg report Tuesday. It would also allow a moratorium on the holding company’s unsecured claims. The filing would also enable Abraaj to continue talks with Cerberus Capital Management LP for a deal to acquire its fund management operations, excluding the $1 billion healthcare fund, the people said. Cerberus would prefer Abraaj to file for Chapter 11 bankruptcy in the U.S. to facilitate the deal. The interest of investors, creditors and broader stakeholders “is paramount and we keep these constituents front of mind as we responsibly explore effective options to maintain the stability and continuity of the firm,” Abraaj said in an emailed statement. The company is “continuing to work intensively and collaboratively with all of its stakeholders to resolve outstanding obligations.” Abraaj once managed almost $14 billion for institutions and supranational agencies from the U.S., U.K. and other countries. The company had been under pressure since February when some of its investors commissioned an audit to investigate the alleged mismanagement of money in its healthcare fund, which led to its decision to return $3 billion to investors and put a new $6 billion fund on hold. Kuwait’s PIFSS said last week it filed a petition for the liquidation and winding up of Abraaj Holdings after it defaulted on a $100 million loan that was due on June 3. The fund holds a stake in Abraaj Holdings and had provided $731.8 million in loans and investments by 2013, it said. Since then, it has got back $346.2 million. A review of Abraaj’s finances found that there was commingling of Abraaj’s own money in the health-care fund and its fourth private equity fund, according to a summary of a report by Deloitte. Abraaj still owes $94.6 million to its so-called Private Equity Fund IV, but all the money has been accounted for and there’s no evidence of embezzlement or misappropriation, according to the report. the report released 18 June. Meanwhile, Angola’s new administration has plans to improve non-oil revenues which will kick off in 2019 with a new property tax and a planned Value Added Tax (VAT). Nevertheless, Moody’s expects revenues to remain at similar or only slightly higher levels in 2018 to 2019, averaging 7.7 percent of GDP for Nigeria and 19.9 percent for Angola. Angola’s largest credit challenges are its sizeable borrowing requirements and liquidity risks. The country’s general government gross borrowing requirements will be 20 percent of GDP in 2018, a significantly higher level than previously thought while Nigeria’s gross borrowing requirements are lower, estimated at 6.2 percent of GDP in 2018, of which 4 percent of GDP will be funded in the domestic market.

Wednesday 20 June 2018

BUSINESS DAY

Inside hampering Not Too

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World Cup Result

in association Super Eagles ready to soar – Akinwunmi

Sweden 1 Belgium 3

ANTHONY NLEBEM, Reporting from St. Petersburg

- expected S/ Korea 0 with a match –winning from the three – - performance Panama 0 time African champions against

England 2Cup - Tunisia Result1 FWorld Sweden 1 - S/ Korea 0

ollowing a terrific defeat to Croatia in their opening game of the 2018 FIFA World Cup, the Super Eagles have recovered from the defeat and now ready for the game against Iceland on Friday, in Volgograd. Speaking with journalists on Tuesday at Saint Petersburg, Seyi Akinwunmi, first vice president of Nigeria Football Federation, said the Super Eagles have put behind them the disappointment of defeat by Croatia and now ready to go for the maximum points in their remaining encounters with Iceland and Argentina in Group D. Akinwunmi, also chairman of the NFF Organising Committee and chairman of the Lagos State Football Association, told a gathering of Nigeria’s media representatives that the NFF

Belgium 3

Adesola Adeduntan, MD/CEO, First Bank of Nigeria Limited and Subsidiaries (m), Mrs. Ugorji, principal, Yaba College of Technology Secondary School (4th l); Chinwe Bode-Akinwande, head, brand quality assurance, FirstBank (l); Mr. Arowolo, vice-principal, Admin, Yaba College of Technology Secondary School (3rd r), with students of the school during the Career Counselling Session held in commemoration of the 2018 FirstBank Corporate Responsibility and Sustainability Week.

Gas supply to power generating plants improves to ameliorate blackout - TCN OLUSOLA BELLO

ransmission Company of Nigeria (TCN) says there is significant improvement in gas supply to power generating plants across the country to ameliorate the current blackout being experienced. According to the TCN, the Nigerian National Petroleum Corporation (NNPC) has restored the ruptured pipeline and gas is gradually building up in most generating stations, and in a day or two it is expected that gas and power supply would be back to normal. “An indication that gas supply has improved is the increase in power generation into the National Grid, as reported by the NCC, has risen to 3,876.9MW as at 17.00hrs on Monday, 18th June, 2018,” Ndidi Mbah, general manager, public affairs of TCN, said. According to Mbah, TCN wishes to use this opportunity to commend NNPC, especially NGC, for the quick intervention and also appreciates the Min-

istry of Power, Gencos, Discos and electricity customers for their cooperation during the crisis period. As soon as the gas build up is completed, affected generating stations will resume normal generation into the grid, she said. The statement further noted that through the implementation of Transmission Rehabilitation and Expansion Programme, TCN is building new substations as well as upgrading existing ones and transmission lines all over the country. This is expected to further stabilise the Grid and also put necessary flexibility and redundancy in line with N-1 capacity. TCN will continue to count on all Nigerians for support and understanding as it continues to expand the nations’ grid. The TCN had stated that as a result of gas pipeline rupture on the June 15, as well as technical issues at the Shell gas wells on June 16, there had been a sharp drop in generation into the grid by a total of 1,087.6mw, resulting in load-shedding nationwide, necessary to maintain

stability of the grid. Due to the NGC pipeline incident, TCN had said that six thermal power generating stations are currently unable to generate electricity and have therefore been shut down. The affected power stations include the Ihovbor, Azura, Omotosho gas, Geregu gas, Olorunsogo gas, Sapele and the Egbin Power Station which has managed to generate 60MW only on each of its units, losing a total of 211MW. Also, Afam VI power station was shut down so that Shell Oil Company can resolve its gas well issues to enable it commence gas supply to Afam VI power station. According to Mbah, with a total loss of 1,087.6MW into the grid, the transmission system has become quite fragile and that TCN is working hard to avert a collapse of the system, by engaging in load shedding. Load-shedding, she explained, is to ensure that available generation is commensurate with what is allocated to discos nationwide, to create a balance and avert grid instability.

‘Inefficient gas transportation responsible for high electricity generating cost’ OLUSOLA BELLO & STEPHEN ONYEKWELU

xperts in the oil and gas industry say the challenges of managing gas transportation networks have been responsible for Nigeria‘s inability to generate and distribute power to its over 190 million people efficiently. The experts have however suggested a number of solutions to deal with this gas transportation challenge. For instance, one solution is to find alternative transport systems in addition to existing pipeline networks. “We can take the gas offshore and bring it onshore, re-gasification makes this possible. If you can take gas from wherever it is, freeze and reconvert wherever it is needed, then we would have

solved most of these problems,” Ebi Omatsola, an international petroleum explorationist, said at an event in Lagos, recently. “Europe has about 35 regasification terminals. In terms of population, Europe is 192 million people; Nigeria is 195 million, yet we have none. So, we need build clusters, this involves huge capital expenditure. In this context, shuttle tankers come in handy. This requires a re-gasification plant onshore. Every city with more than one million people should have a power plant, according the International Energy Agency’s guidelines,” Omatsola said. The re-gasification terminals can run on the plans to develop port infrastructure in Badagry, the free trade zone in Lekki and Olokola EPZ in Ondo State, and these points can serve as

terminals. Also speaking, Austin Avuru said if the gas pipelines were well ran it would reduce the cost of gas and by extension the cost of generating electricity. He said it was because of the inefficiencies in gas transportation in Nigeria, which led to higher energy cost in Ghana, that forced the country to recently signed a memorandum of understanding with Russia for gas supply. “The gas that will come from Russia to Ghana’s regasification plant will cost $12 per standard cubic feet (SCF). I can put gas at $3 per SCf into the West African Gas Pipeline if it were efficiently managed and with an extra cost of $2 per SCF for transportation cost I can deliver gas to Ghana at $5 per SCF, less than half of what the Russian gas will cost.

Atiku says Nigeria cannot escape restructuring SAMUEL ESE, Yenagoa

ormer Vice President Atiku Abubakar said on Tuesday in Yenagoa, the Bayelsa State capital, that for Nigeria to attain its desired unity and development, it cannot escape from restructuring. Ajubilantcrowdwelcomedthe Waziri Adamawa to Bayelsa State and the roads from Government House to the People’s Democratic Party (PDP) secretariat experienced gridlock due to human and vehicular traffic. Atiku, who is in the state to visit Governor Henry Seriake Dickson as part of a nationwide consultation, asserted, “As you know, I have beenanadvocateofrestructuring.” Calling on Governor Dickson to join forces with him to work towards a restructured Nigeria in 2019, he assured that if he was given the opportunity to become president,hewouldensurethatthe country was restructured. He said he had been drumming on restructuring since 2004, admitted that Dickson was on the same page with him on the issue of restructuring and that he would create jobs for the youth as opportunitiesforbusinessestothrive. In his words: “I’m definitely going to open up the economy for foreign investment as well as local investment. I will encourage the privet sector to create as many jobs as possible because our number one problem in this country today is lack of jobs for our young men and women.” Saying he was not new to the state, he expressed appreciation to the people for giving him a grandreceptionandcommended Dickson for his infrastructural development projects in spite of the peculiar terrain of the state. Atiku attributed part of Dickson’s success to continuity saying, “coming to specific performance, I will like to congratulate Governor Dickson for his achievement in land mark development projects in this state. There has been no single governor who has recorded the achievements he has made.” Governor Dickson, in his response, commended Atiku for finding time to visit the state, saying, “I want to thank you for the position you have taken in the issue of restructuring. You have been very consistent and you are one of the most consistent political persons in support of a new Nigeria.”

Iceland on Friday. “We cannot fully express our appreciation to the Sports Minister, who has called on Nigerians to keep supporting the team and personally expressed belief in the team’s ability to reach the knockout rounds. We still have him with us here in Russia and he will lead the delegation to the match against Iceland in Volgograd. “The Sports Minister led a Federal Government to Russia and led the delegation to Kaliningrad for the first match. Alongside, the Nigeria Ambassador, Professor Steve Davies Ugbah, he called President Muhammadu Buhari to talk to the team before the match. Government support is total for the team, and motivation is huge, so they have no reason not to go all out on Friday.”

- Panama England 2 - Tunisia

0 1

Thieves rob Columbia singer jewellery worth $787,000 in Moscow

nknown thieves have stolen 50 million rubles ($787,000) worth of jewellery and luxury items at a Four Seasons Hotel suite in Moscow, where famous Colombian singer Juan Luis Londono, better known under his stage name Maluma, was staying during the FIFA World Cup, a Russian police source confirmed. “Colombian citizen Juan Luis Londono filed a police report in relation to a robbery that took place in his suite at the Four Seasons Hotel in Moscow. Among the stolen items are Cartier brace-

lets and necklaces, several Rolex, Hublot, Patek Philippe and Audemars Piguet watches, as well as a Louis Vuitton backpack and handbag. The stolen items have been evaluated at 50 million rubles,” the source said. According to the source, an unknown person has introduced himself as a guest of the singer and received a duplicate of the electronic key. After the robbery, the perpetrator escaped. The Russian police have initiated criminal proceedings under the article “Theft” of the Russian Criminal Code.

World Cup blow for Brazil as Neymar limps out of training

razil fans will be sweating over their star player Neymar, after the 25 year-old forward limped out of training on Tuesday. The former Barcelona man felt discomfort in his right foot during the Selecao’s training session and after briefly trying to continue the session was led away by team physio Bruno Mazziotti. There had already been rumblings over the PSG star’s fitness following his team’s 1-1 draw to Switzerland in the opening game of Group E, the 26-year-old suffering a knock to his ankle against the Swiss. The 25-year-old had missed an outdoor training session on Monday after feeling ongoing pain from Brazil’s opening match against Switzerland. Neymar picked up a knock in the match after being repeatedly fouled on 10 separate occasions. “He was feeling pain due to the large number of fouls he suffered in the Switzerland game,” a Brazil spokesman said on Tuesday. Neymar was fouled 10 times against in his first competitive match since returning from in-

jury - the highest number of fouls suffered by a player in a World Cup fixture since 1998. Despite this stat, Switzerland manager Vladimir Petkovic denied that his team had unfairly singled out PSG’s world record signing. “Most of the duels were perfectly clean and very often we had one-on-ones with Neymar. I didn’t see any bad fouls. My team played it very cleverly. We did some good things and I’m pleased.” Swiss captain and new Arsenal signing Stephan Lichtsteiner also chastised the forward for going down too easily. “It’s very difficult playing him. He is fast and technical; you need to keep up with him all the time because he is dangerous. It’s a big challenge. And I was a little bit worried about the referee. Every time he fell down it was a whistle, a foul, so that was a bit of a challenge.” Neymar missed a large spell of the French season after breaking a bone in his foot back in February, and returned just in time for the World Cup.

Wednesday 20 June 2018

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FINANCIAL TIMES

World Business Newspaper

Kim Jong Un visits Beijing after Trump summit Third China trip this year as North Korean leader pushes for relaxation of sanctions LUCY HORNBY, CHARLES CLOVER AND JUNG-A SONG

orth Korean leader Kim Jong Un has visited China for the third time this year, seeking a relaxation of sanctions in the latest flurry of diplomacy following this month’s historic summit with US President Donald Trump. A police-escorted motorcade carried the reclusive Mr Kim along Beijing’s central artery, Chang’an Avenue, on Tuesday to kick off a visit that China’s official Xinhua news agency said would last for two days. The announcement was a departure from protocol, as Beijing usually waits until after North Korean leaders have left to acknowledge their visits. The trip is viewed as a chance for Mr Kim to brief Chinese leaders on the Singapore summit on June 12, which was the first such meeting between sitting leaders of the US and North Korea. The summit’s commitments for North Korea to denuclearise in return for a reduction in joint military exercises by the US and South Korea are in line with a proposal first floated a year ago as a Sino-Russian blueprint to defuse growing tensions on the Korean peninsula. The Pentagon on Monday said it had suspended planning for “Freedom Guardian”, a large-scale war exercise with South Korea that had been scheduled for August. Pentagon spokesperson Dana White said the US had made no decision about subsequent military exercises with South Korean forces. North Korea has long considered such exercises as a provocation. The meeting also offers Mr Kim the chance to press for resumed trade with his isolated country’s top economic partner. “North Korea

surely hopes for a quick resolution in lifting sanctions,” said regional expert Jin Canrong of Renmin University in Beijing. The Chinese foreign ministry said last week that the United Nations should consider lifting sanctions imposed to dissuade North Korea from its programme of nuclear weapons development, calling the sanctions “a means, not an end”. In the town of Hunchun, where the Chinese, Russian and North Korean borders meet, locals were optimistic that trade would soon revive. “After the summit, everything changed. Business is much better and there are more traders from foreign countries coming here,” said Lyuba, a businesswoman who provides translators for Russian and Korean visitors. She declined to give her last name. About two dozen trucks were lined up on the Chinese side of the border. Drivers said many more would have attempted the crossing before the sanctions were imposed. “The most urgent thing for North Korea is to shake the current sanctions framework. Mr Kim will ask [Chinese President Xi Jinping] to relax its participation in international sanctions against Pyongyang,” said Kim Hyun-wook, professor at Korea National Diplomatic Academy. “Mr Xi is likely to accept Mr Kim’s demand, given the ongoing trade war between Beijing and Washington.” Nicolas Bonner, a British resident of Beijing whose travel agency specialises in bringing tourists to North Korea, said he had seen a fall in purchases of luxury goods in North Korea this winter, as Chinese efforts affected both the stateowned and private economies. “This time I am sure he is looking for some kind of investment because Kim Jong Un needs that,” he said.

Mario Draghi reinforces dovish message on interest rate rises Euro falls 0.8 per cent against the dollar following ECB chief’s Sintra speech CLAIRE JONES

ario Draghi reinforced his dovish message on the European Central Bank’s retreat from ultra-loose monetary policy, saying interest rates would only rise at a slow pace from September next year. As it called time on three years of quantitative easing during which it bought €2.4tn of bonds to prop up the economy, the ECB last week shifted its focus to a more conventional tool — interest rates. The bank said last Thursday that it expected rates to remain at record lows “at least through the summer” of 2019, leading most investors to bet on early autumn for the first rate increase. In a speech about that change in the message on rates at the bank’s annual Sintra conference on Tues-

day, Mr Draghi said: “This enhanced forward guidance clearly signals that we will remain patient in determining the timing of the first rate rise and will take a gradual approach to adjusting policy thereafter.” He signalled that markets had interpreted its message correctly, saying: “The path of very short-term interest rates that is implicit in the term structure of today’s money market interest rates broadly reflects these principles.” The euro, already down on the day on the back of rising US-China trade tensions, fell further in response to Mr Draghi’s remarks, trading 0.8 per cent lower. Demand for government bonds increased, while the spread in 10-year US Treasury-Bund yields widened. The single currency fell last week Continues on page A4

Wilbur Ross sale of Putin-linked shipping group shares revealed US commerce secretary shorted Navigator Holdings before a critical article appeared SHAWN DONNAN

S secretary of commerce Wilbur Ross sold shares he owned in a New York-listed shipping company just days before the publication of an article that revealed the company’s ties to Vladimir Putin’s inner circle. Documents released by the US Office of Government Ethics on Monday show Mr Ross took a “short” position worth between $100,001 and $250,000 in Navigator Holdings on October 31. The move came just days before the November 5 publication of a New York Times article linking Mr Ross and Navigator to Gennady Timchenko, a Russian oligarch and judo partner of Mr Putin who is the subject of US sanctions. The article was part of the Paradise Papers investigation conducted by the Times with the International Consortium of Investigative Journalists. Also linked to Navigator was Mr Putin’s son-in-law, Kirrill Shamalov, who is married to the Russian president’s youngest daughter. Mr Ross closed the short position on November 7, 2017, after the article was published, according to his filings. Navigator’s shares fell only marginally during the period he held the short position. In a statement sent to the Finan-

cial Times, Mr Ross said the short position was unrelated to the article. Rather, it was part of the broader divestment of the Navigator stake he began after being appointed commerce secretary. After beginning to sell Navigator shares in May last year, he discovered some he did not previously know he owned, which were in an account the company had opened for him “in electronic form”, he said. The short sale was the technical mechanism he used to sell out as soon as he realised he had them. “I decided to continue selling those shares, but since I did not have physical possession of them in order to make delivery in the required time period, I technically sold them short and, when the shares were delivered by the agent on November 16, I delivered those shares to the broker to close out the transaction,” Mr Ross said. “Therefore, it made no economic difference to me whether the shares went up or down between the sale date and the date I delivered them.” One of the journalists involved in the Times article said on Monday that the reporting team had approached Mr Ross with a list of questions for comment on Thursday, October 26, 2017, indicating the commerce secretary and his staff knew that the article was just days away from publication.

The short position and other questions about the former Wall Street turnround artist’s personal wealth were reported on Monday by Forbes Magazine. Last year, the magazine knocked Mr Ross off its annual billionaires’ list after accusing him of misleading statements about his net worth. In a statement, the commerce department said Mr Ross continued to follow the guidance of its ethics officials “to ensure compliance with federal laws and regulations”. It said the new financial disclosure documents released on Monday had been certified by both commerce department ethics officials and the Office of Government Ethics, evidence that Mr Ross had not broken any laws or regulations. The documents were first filed by Mr Ross in November and December of last year and certified by a department official on January 18, 2018. They were not given certification by the Office of Government Ethics until Monday, however, just hours before they were released following the publication of the Forbes report. A spokeswoman for the Office of Government Ethics declined to comment on why the documents’ certification and release had been delayed, though one document showed that some of the data contained in it had been revised only on Friday last week.

IBM computer holds its own against human debaters AI-enabled system comes up only slightly short in making persuasive arguments

RICHARD WATERS

n artificial intelligence system built by IBM has taken on two humans in a formal debating competition and came up only slightly short in conjuring arguments that a human audience would find more persuasive. The demonstration of Big Blue’s latest AI lacked the clear drama — and the result — of its previous “man versus machine” stunts, including the Watson system that beat the top human champions at question-andanswer television game Jeopardy in 2011, and Deep Blue, which conquered world chess champion Garry Kasparov in 1997. But it was a graphic demonstration of how a set of technologies at the frontier of AI could be combined to challenge humans in a realm where they might have thought they still had a big lead over machines. It was also a sign that computers are venturing deep into subjective human territory where there are no straightforward

answers or clear winners. Unlike Watson, which IBM took years to develop into a commercial system, its latest AI — called Debater — could also have a far more immediate impact on the company’s fortunes. “We’re interested in enterprises and governments; our goal is to help humans in decision-making,” said Arvind Krishna, IBM’s director of research. By assembling arguments out of large bodies of information, the system could help people address important choices, he added. “Should we drill for oil in west Africa? Should we let our food supply have antibiotics in it? There are no right or wrong answers, but we want there to be an informed debate.” Monday’s debate was the culmination of six years of work by IBM researchers in Tel Aviv, a process that was launched in the wake of the Jeopardy victory. “Argumentation is one of the defining features of what it means to be human,” said Chris Reed, a professor of computer science and philosophy at the University of Dundee, who was in

the audience. “To see so many pieces of the puzzle coming together here is really impressive.” In two debates, the IBM system was matched against an experienced human debater and then judged by an invited audience. IBM said the system had not been given foreknowledge or trained on the topics — whether government support of space exploration and telemedicine are good things — but instead assembled its arguments essentially in real time, searching a body of “hundreds of millions” of newspaper articles for evidence. The computer was represented on stage by a smooth female voice spoken by a slim black slab, like a mini obelisk from the movie 2001: A Space Odyssey. It also drew on jokes that were programmed in advance and tactics that included suggesting its adversary was lying — techniques IBM said were used to make its presentation more accessible to human listeners and, at times, distract from the fact that it did not have a strong argument to draw on, just as a human would.

BUSINESS DAY

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NATIONAL

Audi CEO temporarily steps aside after arrest Board granted Rupert Stadler’s request to be released as it probes reason behind arrest PATRICK MCGEE

upert Stadler has stepped down as chief executive of Audi, pending clarification from authorities following his arrest on Monday.

Mr Stadler was held in custody for his alleged role in the Volkswagen diesel scandal one week after his home was raided. The arrest, described by two people close to Audi as a “huge surprise” and “completely unexpected by everybody,” made Mr Stadler the

highest-ranking executive to be held in custody since the diesel scandal was exposed nearly three years ago. Volkswagen’s supervisory board did not suspend Mr Stadler, as was expected during a six-hour meeting on Monday. Rather, they accepted

his offer to temporarily step down until the allegations against him are clarified. Prosecutors have not filed charges against Mr Stadler. Audi boardmember and sales chief Abraham Schot was named

Amazon teams with Marriott to put Alexa in hotels

Mario Draghi reinforces dovish message... Continued from page A3 on the back of the bank’s dovish signal on interest rates, which came less than 24 hours after the Federal Reserve raised US borrowing costs. A weaker euro boosts trade by making exports more competitive and lifts consumption as imports become more expensive. The ECB’s message on rates highlights the contrast between monetary policy in the US and the eurozone, and means borrowing costs are set to remain on hold longer than many investors had expected in the run-up to last week’s decision. Most investors had been betting on a June 2019 rise following strong signals from some ECB policymakers. The bank’s benchmark main refinancing rate is zero and it continues to impose a rate of minus 0.4 per cent on a portion of bank’s deposits parked at the ECB. Borrowing costs are higher in the US, with the benchmark range for the federal funds rate now between 1.75 per cent and 2 per cent. US borrowing costs are set to rise by another percentage point before the ECB raises rates. The ECB marked the end of an era when it decided to phase out net asset purchases by the end of the year. The programme is credited with reviving the euro area’s economy but is disliked by hawkish policymakers from northern member states such as Germany and the Netherlands. However, the bank has emphasised that monetary policy in Europe will remain loose for some time. Along with keeping rates at record lows, the ECB is expected to reinvest the proceeds of maturing QE bonds throughout 2019. The Fed, in contrast, is now shrinking its balance sheet. The QE programme began in March 2015 to stamp out the threat of a vicious bout of deflation. Mr Draghi has said the ECB pressed ahead with plans to announce the end of its programme despite signs of a slowdown in growth, as there was “substantial” progress towards policymakers hitting their inflation target. The bank announced last week that it would cut the size of its purchases from €30bn a month to €15bn in October, before an anticipated end to the programme in December. Mr Draghi said it was “undeniable” that “uncertainty surrounding the outlook has increased”. However, there was “substantial” evidence to suggest that the “convergence” towards the bank’s projected path for inflation to hit its goal of below but close to 2 per cent had “held firm”. Mr Draghi said the geopolitical risks from a trade war, higher oil prices and a greater threat of market turmoil all weighed on the outlook for growth. But wages across Europe were beginning to pick up at a faster pace, not only in Germany but in France too. A pick-up in wages would boost consumption and lead to higher inflation in the years ahead.

interim CEO, according to a statement from Volkswagen. Mr Schot, who joined the VW Group from Mercedes-Benz Italia in 2011, was appointed an Audi board member last September and is considered untainted by the scandal.

Move is part of push to expand voicepowered devices beyond the home

SHANNON BOND

For Donald Trump and his alt-right allies in Europe, the fall of Angela Merkel would be a kind of vindication of their migration policies © EPA

Why Donald Trump has it in for Angela Merkel

The German chancellor and the US president represent different positions on migration GIDEON RACHMAN

n the midst of an escalating trade war with China and fresh from a nuclear summit with North Korea, Donald Trump took time out to attack Angela Merkel. “The people of Germany are turning against their leadership,” tweeted the US president, adding that “migration is rocking the already tenuous Berlin coalition”. The US president’s direct attempt to undermine the German chancellor is remarkable. It is also very telling. For the two leaders have taken radically different approaches to the explosive questions of refugees and illegal migration. For Mr Trump and his alt-right allies in Europe, the fall of Ms Merkel would be a kind of vindication — proof that her decision to allow more than 1m migrants into Germany in 2015 has been decisively rejected by the electorate. This matters to Mr Trump because taking a harsh line on migrants and refugees has become his signature policy. His administration is embroiled in a bitter controversy about its policy of interning the children of would-be migrants. Mr Trump and his supporters want

to use Europe as an example of the alleged folly of taking a more tolerant and humane approach to refugees. The president latches on to any incidents of unrest or violence in Europe, real and imagined, to hammer home his arguments that Merkel-style migration policies represent the route to perdition. In the same tweet, Mr Trump proclaimed: “Big mistake made all over Europe in allowing millions of people who have so strongly and violently changed their culture!” Steve Bannon, Mr Trump’s erstwhile campaign manager and chief strategist, has been particularly assiduous in building up links with Europe’s nationalist right. Mr Bannon has taken a particular interest in the rise of the anti-migration League party in Italy and has also hailed Viktor Orban, the prime minister of Hungary who built a steel fence to stop flows of refugees, as “a real hero”. For ideologues such as Mr Bannon and Stephen Miller, a White House policy adviser, Europe and the US are part of a single struggle to save the west from being overwhelmed by mass migration. The Trump camp clearly feel that events in Europe are moving their way.

The League’s Matteo Salvini is now Italy’s interior minister and has immediately set about preventing boatloads of migrants from landing in Italy. And Ms Merkel herself is under immense political pressure in Germany, as her political allies in the CSU threaten to collapse her government unless Germany moves to a policy of turning away migrants at the borders. The broader trends in Germany also provide some evidence for the altright’s view that public opinion is sympathetic to their views. A recent poll showed that 86 per cent of Germans favour more forcible repatriation of migrants and 69 per cent support replacing cash transfers to refugees with in-kind benefits. By contrast, Mr Trump — although hardly popular — has just seen his approval rating hit a new high for his presidency of 45 per cent. Nonetheless, the crisis over child migration is a severe test for the US president. The images of anguished parents and weeping children have prompted protests from unusual quarters — including Laura Bush, the wife of former president George W Bush and even (implicitly) Mr Trump’s own wife, Melania.

Argentina’s market rout leaves investors split on outlook

Not all funds willing to buy the dip as 100-year bond trades well below 80 cents JONATHAN WHEATLEY

n the rout that has hit Argentine markets since the end of April, the peso has shed a quarter of its dollar value and the country’s long-dated, dollardenominated sovereign bonds, snapped up by investors when they were sold as recently as January, have slumped. Is it now a good time to buy? The $2.75bn landmark century bond, issued a year ago on Tuesday, was trading at 79.4 cents to the dollar on its first birthday. The country’s $3bn bond maturing in 2048, issued on January

11, was trading at 78.1 cents, delivering investors a negative total return this year of 18.8 per cent, according to Bloomberg. Uday Patnaik, head of EM debt at Legal & General Investment Management, bought the 2048 bond on Monday at 78.43. “There is definitely value being created in emerging markets,” he said. “It’s been a while since I could say that.” With Monday’s purchase he has about a third of his target position in the 2048 issue. “We have been waiting for it to be sub-80,” he said. “If it gets to the high 76s we will buy a bit more.”

While still concerned about the impact of rising US yields and the strong dollar, he thinks Argentina, which this month arranged financing worth $50bn over three years from the International Monetary Fund, is now on the right path and that prices are overshooting on the way down. Not so Paul Greer, EM debt portfolio manager at Fidelity International. “We have no interest at this level,” he said. “[President Mauricio] Macri’s grand plan has been postponed. The government is in crisis mode and will be until the election in October next year.”

lexa is checking in to your hotel room. Amazon’s digital assistant is elbowing ahead of Apple’s Siri in the race to bring voice-powered devices to hotel chains. The Seattle-based technology company is partnering with Marriott International, the world’s largest hotel operator, to launch Alexa for Hospitality, a suite of features that allow guests to order room service, request housekeeping, book spa treatments, play music and adjust the lighting and temperature in their rooms, all by talking to an Alexa-powered speaker. For Amazon, partnerships with hospitality groups present an opportunity to expand beyond Alexa’s stronghold in the home into enterprise services, while further entrenching it as the default voice platform in consumers’ minds. Marriott has been testing devices from Amazon and Apple as it looks to add voice controls to hotel rooms around the world, the hotel company told Bloomberg last year. In 2016, its Aloft chain announced voice-controlled rooms at two hotels using iPads and Siri. Now the hotelier will put Alexa devices with the new features in certain Marriott, Westin, St Regis, Aloft and Autograph Collection properties in the US. The service will also be used by holiday rental provider RedAwning and boutique hotel operator Two Roads Hospitality. “In this case, we recognised that voice-first experiences have become an increasingly important channel for our guests, and we think Amazon is leading the market in this technology,” said Tracey Schroeder, Marriott’s vice-president of global consumer public relations. The partnership with Amazon is not exclusive, she added. “This was not a direct comparison with Siri. We work with a number of partners in order to test emerging technology so we can learn and leverage what we believe will enhance the guest experience,” she said. Amazon has snapped up two-thirds of the consumer smart speaker market, according to eMarketer. Alexa-enabled devices such as the Echo and Dot speakers have proved popular in living rooms and kitchens, where people use them to listen to music, help them cook and control their internet-connected appliances, lights and door locks. Market researchers say Alphabet’s voice-enabled Google Home speaker has caught up with Amazon’s Echo in recent months, but Apple’s HomePod speaker is seen as making a slow start, given its higher price and Siri’s limitations. Amazon has also been working with Wynn Resorts, the casino and hotel operator, to customise Echo devices for their properties. The companies announced 18 months ago that Amazon would equip more than 4,000 rooms at the Wynn Las Vegas with the Echo, and high rollers can now use separate devices in the living room and the master bedroom of the casino’s suites.

Wednesday 20 June 2018

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BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Wall Street joins global sell-off as trade fears intensify Investors alarmed over escalating tariff spat between the US and China MICHAEL HUNTER, EDWARD WHITE AND HUDSON LOCKETT

all Street opened lower on Tuesday after a sharp sell-off in Asia as investors were shaken by Donald Trump’s threat to slap new tariffs on $200bn in Chinese imports, increasing fears tit-for-tat retaliatory duties was spinning into a full-scale trade war. Wall Street’s S&P 500 fell 0.9 per cent in opening trade, with the Dow Jones Industrial Average 1.3 per cent weaker, pulled down by big manufacturing exporters like Boeing and Caterpillar. The tech-heavy Nasdaq Composite is also down 0.9 per cent. The New York drop joined a global rout for equities which was particularly pronounced in China. The Shanghai Composite closed down 4 per cent, putting it below the 3,000-point mark for the first time in more than 20 months, while the Shenzhen Composite slumped almost 6 per cent. Investors have for weeks shrugged off the sabre-rattling between Washington and Beijing, but analysts said Mr Trump’s decision to pull the trigger on tariffs covering $50bn last week, and Beijing’s willingness to go toe-to-toe with the White House, was increasing anxiety. “We are starting to see signs of deepening market concern now that we can effectively confirm that a bilateral trade war is under way between the US and China,” said Sean Callow, a strategist at Westpac. Before the Wall Street open, the Asian sell-off helped drive European equities lower, with Germany’s Dax down 1.4 per cent. Large exporters were prominent among the biggest fallers, with carmaker Volkswagen down almost 3 per cent and sports brand Adidas weaker by just over 2 per cent. The Europe-wide Stoxx 600 was 0.8 per cent weaker, while the Stoxx index tracking carmakers fell 1.5 per cent and the equivalent benchmark for the indus-

trial metals sector dropped 2.5 per cent. Futures trade also pointed to a lower open on Wall Street, with the S&P 500 expected to fall 1 per cent. In Hong Kong the benchmark Hang Seng closed down 2.8 per cent while the Hang Seng China Enterprises index focused on large Chinese companies slid 2.8 per cent. How to stop a world trade war The losses came after Mr Trump said in a statement on Monday evening in the US that he had directed the US trade representative to identify $200bn of Chinese goods for additional tariffs at a rate of 10 per cent. That came after China responded at the weekend in equal measure to US plans, announced last week, for tariffs on $50bn of Chinese goods. But Beijing showed no sign of backing down, with China’s commerce ministry saying: “If the US suffers a loss of rationality and issues a [tariff] list, China will have to adopt strong countermeasures, which will be comprehensive measures combining quantity and quality.” Most other Asia equities benchmarks were down markedly as well with Tokyo’s Topix closing 1.6 per cent lower and the Kospi off 1.5 per cent in Seoul. Only the S&P/ASX 200 closed basically flat after earlier gains. “The fact the sell-off is relatively widespread across Asian assets reflects investors’ recognition that global supply chains mean tariffs on one product leaving a port in China for sale in the US likely involves the exports of several countries and components made by several companies,” said JPMorgan Asset Management strategist Hannah Anderson. The $200bn in additional tariffs come despite more than a year of negotiations and escalating threats between the world’s two biggest economies. The previously announced US tariffs were set to take effect in early July, as were those announced by China’s finance ministry.

New data show wider ‘magic circle’ pay gap with equity partners JANE CROFT

agic circle law firms have a worse gender pay gap when highly paid equity partners are included in their figures, according to new data. The elite law firms, which do the most lucrative City work, have been criticised for excluding partners, who are predominantly men, from their mandatory gender pay gap reporting so as to make their figures look better. However, new data compiled by the Business, Energy and Industrial Strategy (BEIS) parliamentary committee shows that Linklaters, Clifford Chance, Slaughter & May and Freshfields have a larger median pay gap when partners are included in the figures. Clifford Chance’s median pay gap including its partners stood at 43.6 per cent in April 2017, compared to 37.2 per cent when just its employees were included. At Slaughter and May, the figures stood at 41.6 per cent when partners were included compared to 38.5 per cent, and at Linklaters the gap was 44 per cent when partners were included, compared to 39 per cent when the figures just covered employees. The figures were more stark for Freshfields, which saw a median pay gap of 34 per cent when all employees were

included, compared to 13 per cent when partners were excluded. Allen & Overy has reported a median gender pay gap of 27.4 per cent excluding partners but has not yet published a figure covering partners and all staff. Law firms are partnerships in which senior lawyers own the business and share in the profits. They have come under pressure from clients to include partners in their data because the most highly paid lawyers are usually partners earning upwards of £1m. Around 80 per cent of partners at the top 50 law firms are men, according to a 2017 report by PwC, the consultancy. At the magic circle firms, the proportion of female partners ranges from 21 per cent at Clifford Chance to 24 per cent at Slaughter & May. The numbers of young male and female trainees entering law firms is broadly similar, but the long hours of City law firms — particularly in practice areas like mergers and acquisitions — mean that many women find it difficult such hours incompatible with family life and so do not to become partner. In letters to the BEIS select committee, the magic circle firms said they were committed to increasing the numbers of female partners and had strategies in place to improve gender diversity.

Visa’s European outage blamed on ‘very rare’ broken switch NICHOLAS MEGAW

“very rare” broken switch led to the failure of more than 5m attempted debit and credit card purchases during an outage across Visa’s European network earlier this month, according to a letter published on Tuesday. The failure affected 2.4m transactions in the UK over a 10-hour period, forcing many stores to stop accepting card payments and prompting consumers in some areas to empty local ATMs. Charlotte Hogg, Visa Europe chief executive, outlined the details of the outage in a letter to the UK parliament’s Treasury select committee. “A disruption to our processing that impacts consumers at any time is unacceptable, let alone during a busy

Friday afternoon”, Ms Hogg wrote. At its worst points, as many as 35 per cent of transactions across the continent were unable to complete, according to the letter. Ms Hogg, a former Bank of England official, said Visa would carry out a “rigorous internal review” in addition to hiring EY to produce an independent report. It also said it would move its European processing on to a new, more resilient system used by its global business. Nicky Morgan, chair of the Treasury committee, said the committee expected to see the findings of the independent review but was “satisfied” with Ms Hogg’s initial answers. Regulators and politicians have been paying particular attention to IT problems in the financial services sector after a string of recent

incidents. Earlier this month the Treasury committee took the unprecedented step of calling for the departure of TSB chief executive Paul Pester after an IT project at the bank ended with hundreds of thousands of customers locked out of their accounts. The London Stock Exchange also suffered its worst outage in seven years this month, while Tesco Bank’s online banking services failed for several hours the same week. Ms Morgan said: “The news that debit card payments have overtaken cash use for the first time shows that the reliability of IT systems is becoming ever-more important. The detriment caused to consumers by It failures is greater than ever, so the Committee will become less tolerant of them.”

Trump tariff threat lifts havens as stocks retreat Wall St joins sell-off after 3.8% slide for Shanghai Composite MICHAEL HUNTER AND EDWARD WHITE • Trump threatens tariffs on another $200bn of Chinese imports • S&P 500 down 1% as basic materials, industrials and techs slide • China stocks lead heavy losses for Asian equities • Haven assets in demand, led by brisk demand for the yen • Renminbi touches 5-month low • Euro hit as investors focus again on dovish elements of ECB remarks o far we are still on just the hinterlands of a fully fledged trade war but risks are clearly rising and financial markets do not like it,” said Chris Bailey, European strategist at Raymond James. “Is today the day when perception starts changing that this is still just for show, or does Trump actually really mean it?”

Hot topic Stock markets are under sustained pressure and haven assets are rising as investors track the darkening White House rhetoric on the global trade, with the heaviest selling on Chinese indices. Wall Street’s S&P 500 is down 1 per cent, with the technology-heavy Nasdaq Composite falling 1.2 per

cent. Overnight, the Shanghai Composite fell almost 4 per cent, with the CSI 300 of stocks from mainland China down 3.5 per cent, as markets reopened after a long weekend. Declines in Europe are shallower, with the region-wide Stoxx 600 down 1 per cent. Haven currencies, especially the yen, are in demand with the Japanese currency at a six-session high point — 0.8 per cent firmer on the session at ¥109.71 per dollar. The Swiss franc is 0.6 per cent stronger against the euro at SFr1.1492 for a unit of the shared currency. China’s renminbi has touched a five-month low, with the onshore renminbi exchange rate softening 0.5 per cent to Rmb6.4735 per dollar. Government bonds prized for their safety at times of uncertainty are in demand, pushing their yields lower. Benchmark 10-year US Treasury yields are down 5 basis points at 2.87 per cent. German Bund yields over the same maturity are down 4bp at 0.36 per cent. Equities Frankfurt’s Xetra Dax 30 is down 1.6 per cent, with steelmaker ThyssenKrupp among the biggest fallers,

down 2.2 per cent. Volkswagen is down 3.2 per cent. London’s FTSE 100 is losing 0.5 per cent, with the weaker pound giving it some shelter. The Hang Seng index fell 2.8 per cent in Hong Kong to its lowest point since February. Forex The euro is down 0.5 per cent at $1.1552 as investors accentuate the dovish tenets of remarks from Mario Draghi, president of the European Central Bank. While he repeated that the timing of the first eurozone rate rise was under discussion, market reaction once again emphasised references to a patient approach. The slip helped the dollar index rise as much as 0.5 per cent to 95.296, a new 2018 high. The pound is down 0.6 per cent at $1.3163. Commodities Oil prices are lower in a turbulent week for traders ahead of a highly anticipated Opec meeting in Vienna, where several of the world’s largest producers were expected to discuss unwinding supply curbs. Brent crude is down 0.2 per cent at $75.20 a barrel and West Texas Intermediate is weaker by 2.1 per cent at $64.46.

PRIVATEEQUITY & FUNDRAISING People & Perspectives Page A7

Wednesday 20 June 2018

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BUSINESS DAY

Abraaj liquidation casts shadow over stake in 8 Nigerian companies …Institutional investors seen growing cold feet towards Africa LOLADE AKINMURELE

braaj’s imminent liquidation means its shareholding in eight Nigerian companies are hanging in the balance. These companies include Indorama Eleme Fertilizers and Mouka Foam Ltd, where it invested an undisclosed amount under its Sub-Saharan Africa fund III in October 2016 and April 2015 respectively. The others are Bridge Clinic, which it invested an undisclosed amount in five years ago in 2013; Therapia Health Ltd, another recipient of Abraaj funds to the tune of $5 million

in April 2012; and C & I Leasing PLC, which got $10 million in September 2010. C&I Leasing first attracted Abraaj in June 2006, after securing a $4 million investment from the emerging-market hotshot. Computer Warehouse Group (in August 2009), Custodian & Allied Insurance (in August 2008) and AOS Orwell Ltd (in December 2006) make up the 8-man list of Nigerian companies exposed to Abraaj. “They may have to sell their holdings to pay off their clients depending on the strategy of the new fund manager,” one source with knowledge of the

matter said. “The older investments are challenged, in that they have struggled to sell them off for some time now but my guess is that Mouka and Indorama could make good buys,” the source said. “They are however likely to be sold below stock due to the naira devaluation.” Of the eight, C&I Leasing, Custodian and CWG are the only companies to be listed on the Nigerian Stock Exchange (NSE), and their stocks have returned 34 percent, 35 percent and 0 percent year to date respectively, according to NSE data. C & I gained 5.2 percent on

Tuesday, outperforming an industry average of -1.98 percent, according to Bloomberg data. CWG, provider of IT services and computer networking solutions to businesses, was flat at N2.50 while Custodian and Allied Insurance also traded flat at N5.27, is up 4.9 percent from June 12 when Abraaj first filed plans for liquidation. C& I and CWG are also trading higher than their June 12 share prices, in defiance to Abraaj’s downfall. Abraaj Holdings, once one of the developing world’s most influential investors which holds investments worth over $2bn in sub-Saharan Africa

PRIVATE EQUITY WORD FOR THE WEEK Secondary buyout A buyout that is sold on to another private equity firm usually because the second firm has different skills or a wider geographic presence which fit the aspirations of the investee company for further growth

alone, plans to file for provisional liquidation in the Cayman Islands as it battles allegations of misused funds. The Dubai-based investment firm plans to file before June 29 when a court hearing of a petition to liquidate Abraaj Holdings by Kuwait’s Public Institution for Social Security is scheduled, the people said, asking not to be identified because the matter is private. No final decisions have been taken on the timing for the filing, according to news reports. “The implication is longer term and more subtle,” Andrew Alli, Chief Executive Officer (CEO) at Africa Finance Corporation, said in response to

BusinessDay questions. “Abraaj was a champion emerging markets investor and its downfall will lead to a possible minor reassessment of investing in such markets by institutional investors and will affect Africa PE funds,” Alli said in a tweet Monday. A court-supervised provisional liquidation would allow Abraaj to restructure debt, negotiate with creditors and sell assets, according to a Bloomberg report Tuesday. It would also allow a moratorium on the holding company’s unsecured claims. The filing would also enable Abraaj to continue talks with Cerberus Capital Management

LP for a deal to acquire its fund management operations, excluding the $1 billion healthcare fund, the people said. Cerberus would prefer Abraaj to file for Chapter 11 bankruptcy in the U.S. to facilitate the deal. The interest of investors, creditors and broader stakeholders “is paramount and we keep these constituents front of mind as we responsibly explore effective options to maintain the stability and continuity of the firm,” Abraaj said in an emailed statement. The company is “continuing to work intensively and collaboratively with all of its stakeholders to resolve outstanding obligations.” Abraaj, which once man-

aged almost $14 billion for institutions and supranational agencies from the U.S., U.K. and other countries, faces growing concerns about its viability and impending loan repayments. The company has been under pressure since February when some of its investors commissioned an audit to investigate the alleged mismanagement of money in its healthcare fund, which led to its decision to return $3 billion to investors and put a new $6 billion fund on hold. Kuwait’s PIFSS said last week it filed a petition for the liquidation and winding up of Abraaj Holdings after it defaulted on a $100 million loan that was due on June 3. The fund holds a stake in Abraaj Holdings and had provided $731.8 million in loans and investments by 2013, it said. Since then, it has got back $346.2 million. A review of Abraaj’s finances found that there was commingling of Abraaj’s own money in the health-care fund and its fourth private equity fund, according to a summary of a report by Deloitte. Abraaj still owes $94.6 million to its so-called Private Equity Fund IV, but all the money has been accounted for and there’s no evidence of embezzlement or misappropriation, according to the report. Deloitte also said there was a lack of adequate governance at Abraaj and an overall weakness in its control framework. The firm faced a cash shortage when the sale of Pakistani utility K-Electric was delayed, the accounting company said. The Dubai Financial Services Authority said it’s “aware of various matters” involving Abraaj Group, according to a statement earlier this week. “Relevant matters are under our attention,” the regulator said in a statement. “The DFSA will act in the interest of all investors. No further comment can be made at this time.”

BusinessDay PRIVATE EQUITY & FUNDRAISING (Team lead: LOLADE AKINMURELE - Analysts: MICHEAL ANI, DIPO OLADEHINDE, ENDURANCE OKAFOR, DAVID IBEMERE ... Graphics: DAVID OGAR ) Businessday’s Private Equity and Fundraising section is a weekly publication that provides in-depth analysis on private equity trends and tracks deal activity in Nigeria.

Email the PE & F team loladeakinmurele@gmail.com

Continues on page 34

Wednesday 20 June 2018

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PRIVATEEQUITY & FUNDRAISING

People & Perspectives

Boom years ahead for Africa IPO The coming years could be the best for capital raising in Africa since the global financial crisis, according to WILDU DU PLESSIS, head of the Capital Markets Group at Baker McKenzie in Johannesburg. BusinessDay’s Lolade Akinmurele summarises his views.

omestic and crossborder Initial Public Offering (IPO) capital raising by African issuers in H1 2018 increased by 33% year-on-year to USD 396 million, while volume grew by 25% to 5 IPOs, according to Baker McKenzie’s CrossBorder Index. However, the Index also shows that when compared to the same period in the years before 2017, IPO activity in H1 2018 is low: compared with H1 2016, capital raising is lower by 35%; compared with H1 2015 and H1 2014, value is down by around 70%. Wildu du Plessis says that during the first half of 2018, the largest IPO deal in Africa was Libstar Holding Ltd’s launch on the Johannesburg Stock Exchange (JSE), raising USD 243.8 million in early May 2018. “And one of the most anticipated IPOs in the region is MTN Group’s Ghana offering, which could raise as much asUSD 500 million when it closes by 31 July 2018,” he notes. Du Plessis, notes that this year, one of most talked about IPOs, dual listed on the London Stock Exchange and the JSE, was Vivo Energy’s floatation, which raised over USD 740 million in May. This was the largest listing of an Africa-focused business since 2005. “We have noted an increase in enquiries from our clients around listings and IPOS on the Johannesburg Stock Exchange, as well as interest in listing in other jurisdictions in Africa. Cross border capital raising is seen as a good way for investors to raise money in Africa. “In South Africa, the mood has been mostly positive since Cyril Ramaphosa took over as president in February. He is seen as business friendly and we are hoping that urgent issues regarding policy and regulatory uncertainty will be addressed soon. Recent negative economic news regarding first quarter contractions notwithstanding, South Africa is regarded as a very desirable destination for capital raising. Du Plessis, who is also the Head of Africa at Baker

McKenzie in Johannesburg, notes further that a number of African companies are planning to list in the near future. “It looks like the coming years could be the best for capital raising in Africa since the global financial crisis,” he says. He says that Lagos, Nigeria, in particular has been identified as a must watch market for 2018. “More companies are lining up to list on the Lagos stock exchange, kick starting Nigeria’s IPO market after a long drought,” he explains Sources familiar with the matter said two companies – Skyway Aviation Handling Company (SAHCOL) and Nigerian Reinsurance Corporation – were preparing for initial public offerings this year, while Singapore-owned Indorama Eleme Petrochemicals Ltd planned a public float in Lagos next year. “IPOs dried up in Nigeria after a 2008 crash, aggravated by the global financial crisis, wiped more than 60 percent off the stock market’s capitalization. The benchmark share index has since recovered, gaining 42 percent last year but IPOs have yet to resume, apart from oil company Seplat’s dual listing in Lagos and London in 2014,” du Plessis says. “In general, investors are beginning to delve deeper into African markets than they have before, they are making sure they know and understand each specific tar-

get market. They are looking at a target country’s approach to governance and corruption; is there rule of law? They look at the GDP and how that impacts on population growth and economic growth and the interplay between them. They look at policy and regulation, location, infrastructure and pricing. They are aware that no two countries are the same in Africa, that each market is unique and that they have to be nimble and adaptable in their approach,” he adds. Global IPO activity Globally, political concerns and market volatility have dampened the IPO market in the first half of 2018, mainly as a result of lower capital raising in Asia Pacific and EMEA. A total of 676 listings have taken place so far in H1 2018, down 19% on the comparable period last year. The value of listings has also fallen 15% to USD 90 billion. Worries around geopolitics – in particular US President Trump’s protectionist policies, as well as a lack of progress around Brexit negotiations and prolonged political uncertainty in Italy – weighed on investors’ minds and dented the headline numbers. Market volatility peaked early in the year to levels not seen in 2017, adding to the challenge of finding the right time to launch an IPO. However, cross-border IPOs significantly outperformed. A surge in capital-

raising in North America’s deep capital markets led the charge, with foreign issuers seemingly perfectly happy to list in the US despite protectionist rhetoric and just under half of the billion-dollar IPOs successfully launched in the US. Issuers raised more than USD 16.6 billion, an increase of around 15% on the same time last year. The number of cross-border deals also climbed, up 18% to 85, with three of the top ten cross-border IPOs debuting on North America exchanges. While the US proved attractive to 13 Chinese cross-border issuers, Hong Kong continues to be favoured with 18 deals. This resulted in Baker McKenzie’s Cross-border Index value rising to 17.4 from 13.2 in H1 2017, just below the highest recorded of 18.7 in H1 2014. “While domestic issuers are adopting a ‘wait and see’ approach in light of various political issues, fears over globalisation going backwards and economic nationalism haven’t reached the crossborder market,” said Koen Vanhaerents, global head of capital markets at Baker McKenzie. “To see cross-border activity going up shows a good degree of health in global equity markets, despite quieter domestic markets.” The dip in Asia Pacific and EMEA is slightly offset by stronger cross-border capital raising in North America and higher domestic listings in Latin America. EMEA lost top spot for billion-dollar listings to North America, with only two recorded in the first half of the year. However, markets in EMEA remain active and the volume of cross-border deals remains consistent. The number of withdrawn IPOs in the first half of the year also more than halved to 11 compared to 23 in H1 2017 as potential issuers and their advisers have become more skilled in navigating uncertainty. Dealmakers will however be hoping for a less turbulent second half to get more deals away, as economic fundamentals remain reasonably strong with a decline in the global economy not forecast to impact until 2020.

COMPANIES & MARKETS

BUSINESS DAY

COMPANIES & MARKETS

Nigerian Stock Exchange taps AVCA to reverse 3yr IPO drought ...As PE firms seek higher valuation exit in capital market

MICHEAL ANI

he Nigerian Stock exchange will leverage its new membership of the African Venture Capital Association (AVCA) Africa, as part of wholistic plans to deepen the Nigerian capital market by providing liquidity. “We are proud to announce that the Nigerian Stock Exchange has joined AVCA Africa. Nigeria is seeing a rise in Initial Public Offering and NSE is championing the development of Africa’s financial markets through NSE’s services to Nigeria, the largest economy in Africa,” AVCA said Monday, through its official twitter account. What this means is that the Nigerian capital market in no time will see a rise in IPO activities as more companies will be listed on the Lagos bourse, as private equity firms are encouraged to look to the capital market as a viable exit route for their investments. Strategic buy outs have typically dominated the exit route of private equity firms in Nigeria as against IPOs like developed markets, and that contributed to a drought of new IPO listing for three straight years. The partnership between NSE and AVCA is in line with an earlier interview that was earlier reported by BusinessDay when the Executive Director of the Nigerian stock exchange (NSE),Tinuade Awe disclosed that the exchange is working hand in gloves with some private equity firms so as to expand the number of asset classes and the number of listed firms that will help give investors varieties of company to invest in. “We engage with PE firms because we see that private equity firms have an exit strategy. Thus, rather than selling to another private firm, you can exit through the market and get better price discovery, build a good product so that people can point to what they have done,” Awe said. Echoing the same line of thought was the Managing Director/ CEO Oscar Onyema affirming that the market will see new IPO’s flooding in as it is in talks with necessary stakeholders that will see this come to be. “With regards to our engagement, we are engaging with all forms of stakeholders not just private equity players as we have been in talks with the Pension industry, asset managers, government, and all stakeholders that it takes to create a much more deepen and robust market,” Onyema said at the Financial times summit held in Lagos. “The reality across sub Saharan Africa is that most private equity funds actually exit to other private equity funds or trade sales, so we are engaging with them to understand how we can make the market more attractive to private equity when they are looking to exit and for them it is mostly valuation so to the extent that they can command higher valuation in the public market, you will see them exiting through that space,” He added IPO’s dried up in Africa’s largest economy after a 2008 crash that was provoked by the global financial crisis that wiped more than 60 percent off the stock market’s capitalization. However, the market is awaiting the listing of MTN Nigeria that has shown interest in tapping the Nigerian capital market through an Initial Public offering. Last year, MTN group announced that its Nigerian unit will be listed on the Nigerian stock exchange following a compulsory fine of N1 billion that was slammed on the telecom giant. Awe noted that the exchange has made preparations on ground as the market expects the listing of the telecom giant. For example, the exchange is setting up an Electronic Initial public Offer Platform (EIPO) so that investors can transact using their mobile devices. The exchange is also working with the Nigerian Communication Commission to enable the use of Unstructured Supplementary Service Data (USSD) so as to make the platform a robust one. Analyst who also spoke to BusinessDay said apart from the fact that MTN share sale will go a long way in deepening the Nigerian financial market, it will also trigger the listing of other IPO’s, especially since the market has not recorded any initial public offers for over three years since the January 2015 listing that saw the birth of Transcorp. The NSE boss noted that apart from the market awaiting listing of MTN Nigeria, Skyway Aviation Handling Company (SAHCOL) and some Fintech firms are preparing for initial public offerings this year.

LeapFrog buys stake in ARM Pensions as Helios walks ENDURANCE OKAFOR

elios Investment Partners has exited ARM Pension Managers, with LeapFrog Investments snapping up stake in the Nigeria-based financial services portfolio company. The volume and value of the stake was not disclosed. Africa-focused Helios, in June 2014, reached an agreement with ARM Pensions to acquire a minority stake in ARM Pension, a subsidiary of ARM Group.

After Helios exited the pension firm, LeapFrog, a privateequity investor acquired a minority stake in ARM Pensions. Although the terms of the deal was not disclosed. LeapFrog’s acquisition in ARM Pensions also follows its exit from Ghana’s Petra Trust Co. Ltd. in February this year, which it turned around to become the West African country’s second-largest pensions provider, with average compound revenue growth of 76 percent. Helios bridges interna-

tional capital and know-how to African talent and enterprise. The firm has built a record that spans creating start-ups to providing established companies with growth capital and expertise. One of the few independent pan-African private equity investment firms founded and led by Africans, Helios manages funds totalling $2 billion. Investors include leading endowments and foundations, global fundsof-funds, sovereign wealth funds, family offices, develop-

ment finance institutions and high net worth individuals. Founded in 2004, Helios invests in new business formations, growth equity investments, leveraged acquisitions, and structured investments in listed companies, making investments of between US$30 million and US$200 million per transaction. The Helios team applies developed world investment tools to African business opportunities, taking a platform-building approach

to portfolio development. Helios’ portfolio companies operate in more than 30 countries in all regions of the continent, as compiled from the company’s website. ARM Pensions is reputed for its investment management track record. The pension firm has about $1.8 billion in funds under management reaching about 700,000 people through 57 locations across Nigeria, as compiled from the ARM Pensions’ website. Meanwhile, Nigerian pension fund assets grew by about

2 percent in the first quarter of 2018 to almost N8 trillion (($22 billion), according to data released by the Pension Commission of Nigeria, PENCOM. The value, which stood at N7.8 trillion by the end of February 2018, ended the month of March at N7.94 trillion, increasing by about N149 billion. At least 89 percent of employed Nigerians are still not registered for pensions, giving LeapFrog access to one of the fastest-growing areas in the country’s financial-services industry.

BUSINESS DAY

Wednesday 20 June 2018

Live @ The Stock Exchange Nigerian stock investors record N96bn loss Stories by Iheanyi Nwachukwu

he Nigerian Stock Exchange (NSE) All Share Index (ASI) slipped on Tuesday following equities decline led by large cap stocks. The Yearto-Date (YtD) returns currently stands at +1.10percent. Only 12 stocks gained as against 34 losers. Unilever Nigeria Plc recorded the biggest dip, from N55 to N53, down by N2 or 3.64percent. Forte Oil Pl followed after losing N1.8 or 4.87percent, from N36.95 to N35.15.

Flour Mills Nigeria Plc lost N1.6 or 4.89percent, N32.75 to N31.15. NASCON Plc declined from N23.95 to N22.8, down N1.15 or 4.80percent. Zenith Bank Plc also lost 90kobo or 3.41percent, from N26.4 to N25.5. The NSE ASI depreciated by 0.68percent to close at 38,664.15 points from 38,928.02 points the preceding trading week while market capitalisation declined from N14.102 trillion to N14.006tillion, a decline of N96billion. International Breweries Plc recorded biggest gain, from N41.3 to N44 , up by N2.7 or 6.54percent. Eterna Plc increased

from N6.3 to N6.61, up by 31kobo or 4.92percent. Ikeja Hotel Plc increased from N2.85 to N2.99, up by 14kobo or 4.91percent. Nigerian Breweries Plc rallied from N110 to N110.1, up by 10kobo or 0.09percent, while C&I Leasing Plc increased from N1.73to N1.82, up by 9kobo or 5.20percent. In 3,889 deals, stock traders exchanged 390,466,068 units valued at N6.115billion. United Bank for Africa Plc, Zenith Bank Plc, Access Bank Plc, Cement Company of Northern Nigeria Plc, and Guaranty Trust Bank Plc were actively traded stocks on Custom Street yesterday.

NSE hosts symposium to celebrate world agriculture day

he Nigerian Stock Exchange, in partnership with the Nigerian Stockbrokers Agribusiness Group (NSBAG), marked the 2018 World Agriculture Day (WAGD) with a symposium themed â&#x20AC;&#x153;Tapping into Investment Opportuni-

ties in Agribusiness Value Chainâ&#x20AC;? at The Nigerian Stock Exchange (NSE), Lagos. WAGD, which is celebrated on June 11, is an annual event aimed at highlighting the importance of agriculture to economic development as well as call for solutions to the challenges faced in

the sector. The Exchange has always played a crucial role in the Agricultural business sector and has five companies namely Ellah Lakes Plc; FTN Cocoa Processors Plc; Livestock Feeds Plc; Okomu Oil Palm Plc & Presco Plc.) listed in that sector.

BUSINESS DAY

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NEWS YOU CAN TRUST I WEDNESDAY 20 JUNE 2018

Opinion

Buhari’s June 12 tactic OPEYEMI AGBAJE opeyemiagbaje@rtcadvisory.com

propose to start this article with some lessons in strategy, first of all the difference between strategy and tactics! While strategy is comprehensive, integrated, synthesized, longterm and proactive; tactics are usually specific, isolated, involve decomposition rather than synthesis, is short-term and may usually be reactive. Once you understand the implications of these differences between strategy and tactics, you will appreciate why the title of this article is “Buhari’s June 12 TACTIC!” Another word for “tactic” is “Ploy” which is described in The New Websters Dictionary of the English Language as “a cunning tactic or gambit”; the same dictionary describes “gambit” as “an opening move or series of moves in chess, in which the player risks losing a pawn or a piece, to secure an advantageous position…”. A word should be enough for the intelligent and/or wise! Strategy practitioners know that strategy may be deliberate or emergent-a strategic actor may have a planned, deliberate or clearly

thought-out strategy but often strategy emerges as developments unfold through a process of interactions between an individual, firm, army and or and its environment… leading eventually (hopefully for the successful actor) to a pattern of actions or behavior that yields or promises to yield advantage, either transient or sustainable to the actor. It is because of this characteristic of strategy that one of my favourite though counter-intuitive definitions of strategy is that it is “the pattern that emerges from a stream of actions”. The morale of this is that strategic-minded people are better advised to discountenance the words of their adversaries or competitors (or for that matter their “friends” or supposed allies!) and concentrate instead on the pattern revealed by their behavior! President Buhari’s announcement on June 6, 2018 that he was granting Chief M.K.O Abiola, the winner of the annulled June 12 1993 presidential elections, the national award of Grand Commander of the Federal Republic (GCFR); his running-mate in the same election, Alhaji Babagana Kingibe the Grand Commander of the Order of the Niger (GCON); the irrepressible and truly great civil rights lawyer, Chief Gani Fawehinmi SAN the GCON

as well; and recognition of June 12 as Nigeria’s Democracy Day instead of May 29 threw the political system into dis-equilibrium for a while. Buhari’s opponents, in particular were for several hours thrown into some confusion, unsure of how to react! Abiola has become an iconic figure in Nigeria’s political history and indeed became, by virtue of his death in 1998 while in detention by the military, the martyr for our post-1999 democratic order. Buhari had never been in support of Abiola’s mandate, whether while alive seeking to realise the democratic mandate freely bestowed on him by Nigeria’s voters or dead in pursuit thereof. Buhari indeed was one of the few former military rulers who supported Abacha throughout his entire despotic and thieving tenure in office. While Abacha murdered late General Shehu Yar’adua, threw General Obasanjo into prison on contrived charges of coup plotting and almost killed his deputy General Oladipo Diya and other generals, Buhari served in the powerful and financially rewarding position of chair of Abacha’s Petroleum Trust Fund (PTF) through Abacha’s evil reign. There was no evidence Buhari had any compunctions with Abacha over the judicial assassination of Ken Saro-Wiwa; the

I voted MKO Abiola on June 12, 1993 and I honour him, but quite frankly, if Buhari’s June 12 trick works, and my people vote for him (again), we would be UNsophisticated morons!” I think our people are smarter than that! state-sponsored assassinations of Kudirat Abiola, Alfred Rewane, Yar’adua, Admiral Omotehinwa and others who fell victim of Abacha’s tyranny. Indeed ten years after Abacha’s death, Buhari payed homage to Abacha’s home and declared that he did no wrong! Buhari repeated his public exculpation of Abacha on May 22 (just as his government received another installment of hundreds of millions of dollars in funds looted from the treasury by Abacha) just 15 days before the dramatic turnaround and announcement of honours to MKO Abiola who was Abacha’s principal victim! In the circumstances, it was clearly understandable why genuine supporters of Abiola were in some initial quandary over how to react to Buhari’s evidently opportunistic ploy. In spite of my

personal reservations, I concluded that our strategic response could not be to oppose the well-deserved honours done to Abiola and Fawehinmi spurring me to send out a tweet on June 7, “#June12 I don’t oppose the things Buhari did in respect of June 12, MKO Abiola or GaniFawehinmi and I urge our people not to oppose them. But we will not yield any political capital to Buhari for doing them…he didn’t do them out of goodwill or principle, but political advantage.” Like the classical ploy, Buhari’s action has a specific objective (to procure votes from the Yoruba SouthWest in elections due a few months away); it is a shortterm tactic and very clearly an after-thought; honouring Abiola and even Fawehinmi do not form part of Buhari’s comprehensive worldview but rather are simply a reaction to his loss of popularity in the South-West and are an isolated action conjured for a single purpose! Moreover the action may not endure! A subsequent clarification informed us the June 12 holiday would take effect from next year-conveniently since the elections would have been completed by then! Many have questioned the constitutionality or legality of either or both the GCFR award to Abiola and the declaration of June

12 as democracy day. Already the regime through its own Attorney-General has reportedly walked back the holiday proclamation, asserting that Buhari’s announcement amounts only to a “statement of desire”! It is becoming probable that the holiday proclamation may require legislative affirmation from the National Assembly, and it is not quite certain such support would be forthcoming. One final point-only Babagana Kingibe, a Buhari regime insider is alive of all the persons honoured by his friend; and he alone derives tangible personal and political benefits from the gesture-I advise everyone to watch that space! I don’t blame Buhari and his advisers for seeking to exploit the unfortunate failure of ex-Presidents Obasanjo (in particular), Umaru Yar’adua and Goodluck Jonathan to acknowledge MKO Abiola’s election and martyrdom, but if the trick works, our intelligence and wisdom may be called to question! My tweet of June 13, 2018 reflects my final position, “…I voted MKO Abiola on June 12, 1993 and I honour him, but quite frankly, if Buhari’s June 12 trick works, and my people vote for him (again), we would be UNsophisticated morons!” I think our people are smarter than that!

this time in developing capacity in power generation. STEM is impossible without power. Focus on ICT is impossible without power. Communities and groups must mobilise to take advantage of the new policy environment to #PowertheSouthEast or #LightUpTheSouthEast. Technology is key. ICT is the engine of developments today and in the foreseeable future. Ndigboare invested in the ICT space, but mainly from the retail end. We have a large body of persons in the Computer Villages across Nigeria and West Africa. Can they be made more productive and innovative? Even so, Ndigbo always saw the imperative of ICT. UkpabiAsika’s government invested in computers in the salad days of the technology. Prof Mobisson dreamt with Jim Nwobodo about computerising processes in the East, hence the establishment of the Anambra State University of Science and Technology, now ESUT. What is in place to make Akulueno more than an emotional appeal? Those to whom Governors and leaders direct the call work with verifiable indices as entrepreneurs. They

want to be able to see policies and procedures that would make investment sense. There should now be closer collaboration between the merchant class and the educated class in the South East. When our firms, largely medium and small scale, collaborate with scientists, engineers, mathematicians and liberal arts scholars in the many universities in the East they would identify and solve significant problems. The synergy of the Big Corporates and SMEs with the academia could unleash Ogbunigwe Version2 or the reinvention of science and technology in Eastern Nigeria. Coordination and collaboration between the homeland and the Diaspora, both local and international. The South East has the situation of local Diaspora, being those within Nigeria, and global Diaspora. Who will play the role of the Igbo State Union of old, a non-government body with the moral and organisational capacity and credibility to craft all of these thoughts into hymns and produce hymn books from which the entire Igbo nation can sing in unison? Let the ideation continue.

Listening to the East-3 Exploring and activating The Awka Exposition CHIDO NWAKANMA Nwakanma is a Visiting Member of the BusinessDay Editorial Board and serves on the Adjunct Faculty at the School of Media and Communication, Pan Atlantic University, Lagos. Email chidonwakanma@gmail.com.

any challeng es confront the South East as Nigeria approaches the 20th year of its Fourth Republic. It is essential in the view of this column to tackle first the internal matters rather than the focus on the external that has characterised engagement on the Igbo challenge. For the Igbo today and into the foreseeable future, the charity must begin at home. We have noted that the Awka Declaration has within its prescriptions an opportunity for the South East to take its own medicine. Commence the process of registering persons who have spent a minimum of 10 years in states other than their ancestral roots within the South East as citizens of where

they reside. It strengthens the case for national adoption of the recommendation of citizenship by residency canvassed by Ohanaeze Ndigbo. Distinguished economist and thought leader Charles Soludo set a new benchmark with his characterisation of the Igbo as a global race. His 2017 Awka Exposition used the term race as a positive social and cultural construct for a people. Many possibilities arise from that descriptor and the mindset that it should engender. South East states should pursue regional economic integration. The South East should do all that is necessary to position and establish as the Start-Up Region of Nigeria, with Anambra as a lodestar. From Onitsha through Nnewi, to Awka and Aba, this can quickly happen if the Governors focus on providing enablers in policy, infrastructure, integration and linkages. As the National Competitiveness Council of Nigeria noted in its recent report, infrastructure is fundamental to enabling growth and development. How productive are the South East states with their

endowments and the factors of production they can provide or attract? It is about competitiveness, innovation and productivity. It is about managing the micro-economic factors that each state controls withinthebroadermacroeconomic environment of the country. States through their policies and actions influence the operations, innovativeness and expansive capacity of businesses in their domains. As it stands, the statistics are promising. Three of the five states of the region fall within the Top Ten in the sub-national competitiveness rankings released in November 2017 by the National Competitiveness Council of Nigeria.The key drivers of competitiveness are human capital, infrastructure, institutions and economy. Human capital looks at education, healthcare, and ability to attract external human capital. The scores see Enugu leading at number 3nationally. Anambra places 4th, Abia 8, Ebonyi 11 and Imo 21. The overall scores on the sub-national scale see Abia at 3, Enugu, 8; Ebonyi, 10; Anambra, 1 and 1mo, 28. Science, technology, engineering and mathematics

(STEM) are critical to enable the South Easttoovercome the disadvantages of policy and geography over the years. The states must develop and integrate a strategic map on developing capacities in science, technology, engineering and mathematics. Start with increasing the number of science and technology institutions at the secondary school level. Power is next. In this age, power is a critical enabler. The South East should be articulating a plan to pluck the low-hanging fruit in the new policy direction of the Nigeria Electricity Regulatory Commission on mini-grids that says groups can work on independent power projects up to !MW capacity (NERC Minigrid regulation2016). Power must be to the South East what acquisition of western education was in the 1920s through to independence. The region entered an uncommon race in pursuit of the golden fleece. Communities taxed and tasked themselves to build schools, grant scholarships and do whatever was needful to produce the educated workforce for the new economy. The need has arisen again,

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Ghana Office: Business Day Ghana Ltd; ABC Junction, near Guinness Ghana Limited, Achimota – Accra, Ghana. Tel: +233243226596: email: mail@businessdayonline.com Advert Hotline: 08116759801, 08082496194. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Anthony Osae-Brown. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.

WEST AFRICA

ENERGY intelligence oil

gas

power

Wednesday 20 June 2018

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BUSINESS DAY

Interview

There is no hurry to reform Nigeria’s weak PSC terms Page 5 finance people appointments

Debrief

Nigeria steadies oil production amidst favourable prices but there is a big problem Court rejects appeal to stymie Shell, Eni trial on alleged corruption in Nigeria Page 6 OPEC weekly basket price DAY

PRICE

15/6/18

73.85

8/6/18

73.45

1/6/18

74.02

25/5/18

76.26

18/5/18

75.2 Source: OPEC

FRANK UZUEGBUNAM

hough Nigeria is still struggling to hit the 2.3 million barrels per day (mbpd) benchmark proposed in the 2018 budget, the country’s crude oil production including condensate has remained fairly stable, averaging a little over 2mbpd this year after it dropped significantly to 1.4 million bpd in 2016 heralding Nigerian economy’s slide into recession. According to data from the Federal Ministry of Petroleum Resources, Nigeria’s crude production including condensates reached 2.11bpd in February, 2.02mbpd in March, and 2.07mbpd in April 2018.

Crude oil prices have remained favorable. At around $76 per barrel for Brent crude oil, the global benchmark, the price is more than 60 percent higher than it was at this time last year. Production disruptions of 2016 which stemmed from militant insurgencies has virtually disappeared after ceasefire agreement even though there are still fears of renewed attacks on oil facilities. The big problem, however, is that Nigerian crude oil has been slow to sell in recent times. Bidders for the country’s July loading have been absent from the market. Unsold Nigerian crude for July, according to market participants, is estimated at about 34 million barrels, roughly 75 percent of what is produced in a month.

Akpo and Agbami, Nigeria’s best grades in terms of sulfur and gravity, have fallen to a seventhmonth low as large quantities of oil from the June and July program remained unsold as traditional buyers sought alternatives. Akpo and Agbami were both last assessed at a 65 cents/b discount to Dated Brent, their lowest since November 13, 2017. Nigerian grades are having to compete increasingly fiercely against US and Latin American crudes for market share in Asia. This has created one of the largest surpluses. Chinese and Indian buyers are taking increasing amounts of US crude. Reuters trade flows data shows that 320,000bpd of US crude will travel to China this month, compared with 280,000 bpd in June last year,

which has directly undermined both Nigerian and Angolan flows east. In addition to the tally of unsold cargoes is a force majeure on Bonny Light and severe loading delays on Forcados. The force majeure on Bonny Light was due to pipeline issues at Nembe Creek, which feeds into the Bonny export terminal and the delays on Forcados stem from when repairs took place at the 48-inch Trans Forcados pipeline after a leak shut it on April 24, 2018. The idle cargoes could well be signs growing pains and pressures setting up for a possible sell-off with much of the glut ending up in the refining systems of major oil companies. Nigeria’s economy relies heavily on revenue from crude oil.

02 BUSINESS DAY WEST AFRICA Outlook Sierra Leone: Sierra Leone in fourth bid to launch oil sector with licensing round

eeking to capitalise on higher oil prices, Sierra Leone has extended the deadline of a fourth oil licensing round for five deep water offshore blocks until September 27,

2018. The five contract areas cover 31,653 square kilometres of deep and ultra-deep water off Sierra Leone’s coast. The original deadline was June 28. Interest in West African oil and gas has surged over the last decade, with big

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Brief

discoveries in Senegal and Mauritania over the past few years. However, Sierra Leone, even after a boom in exploration in 2012, has yet to see discoveries of either in commercial quantities. “We are still in the exploration phase, but all the right ingredients have been discovered here to suggest the existence of commercial quantities,” Raymond Kargbo, director general of Sierra Leone’s Petroleum Directorate, said. Sierra Leone suffered a 2014-2016 Ebola epidemic that killed thousands, during which time global oil prices plummeted from $110 to $40 per barrel. Within two years, all but one of the 11 companies awarded contracts in 2012 either relinquished their licenses or had them terminated for non-compliance. As oil prices once again rise, Sierra Leone hopes

to ride the wave of interest that has seen projects launched across West Africa from Mauritania to Ivory Coast and Ghana. Five of Sierra Leone’s eight offshore wells made small-scale oil and gas discoveries before they were abandoned during 2015 and 2016. Kargbo said that ExxonMobil has already prequalified as an operator, and that BP, Kosmos Energy, and 10 other companies visited Sierra Leone to evaluate existing data. Sierra Leone’s previous licensing round in 2012 saw offshore blocks awarded to 11 companies including Chevron, Noble Energy, and Lukoil, all of which chose not to renew their initial licenses during the slump in oil prices. Contracts with other companies were terminated for not meeting minimum activity standards over the same period.

strikes, local sources said. The LNA took control of Es Sider and Ras Lanuf along with other oil ports in Libya’s oil crescent in

2016, allowing them to reopen after a long blockade and significantly lifting Libya’s oil production. More than half the storage tanks at both terminals were badly damaged in previous fighting and have yet to be repaired, though there have been regular loadings from Es Sider. Libya’s National Oil Corporation (NOC) said it had evacuated all staff from the two terminals “as a precautionary measure.” The immediate production loss was around 240,000 bpd and the entry of a tanker due at Es Sider was postponed, it said.

Libya: Attack shuts major Libyan oil ports, slashing production

he major Libyan oil ports of Ras Lanuf and Es Sider were closed and evacuated after armed brigades opposed to the powerful eastern commander Khalifa Haftar stormed them, causing a production loss of 240,000 barrels per day (bpd). At least one storage tank at Ras Lanuf terminal was set alight following the early morning attack. Libya’s National Oil Corporation (NOC) declared force majeure on loadings from both terminals. The clashes between forces loyal to Haftar’s Lib-

yan National Army (LNA) and rival armed groups continued throughout the day south of Ras Lanuf, where the LNA was targeting its opponents with air

Wednesday 20 June 2018

Egypt: Results from drilling operation expected soon

esults from a drilling operation announced in the Gulf of Suez could dictate the next steps for oil exploitation, regionally-focused SDX Energy said. SDX announced the start of an appraisal well, designated SRM-3, at the South Ramadan basin in the Egyptian waters of the Gulf of Suez. Drilling should last up to 90 days. “The SRM-3 well is the last remaining commitment well on the South Ramadan concession,” the company stated. “Based upon the results of this well the company will decide how best to optimize its position in the license.” The company is well funded with zero debt and on pace to double its production from its North African portfolio by the end of the year. A relatively minor producer, SDX focuses primarily on Egypt and Morocco, both emerging basins in North Africa.

In a report last month, SDX said its portfolio in Egypt posted minor, but consistent, gains. Last year, it paid $28.1 million to take over the Egyptian and Moroccan businesses of Circle Oil, an Irelandbased explorer. The South Ramadan concession is located between the Ramadan field, with an estimated 550 million barrels of oil, and the Morgan field, with an estimated 1.5 million barrels of oil. SDX posted revenue to March 31 of $11 million, up 35 percent from the same period last year. It realized $59.34 per barrel for oil, up 33 percent yearon-year. Egyptian natural gas prospects improved in February when BP announced gas was being produced from its Atoll basin offshore Egypt, seven months ahead of schedule, less than two years after the initial discovery and 33 percent under the initial cost estimate.

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gas

BUSINESS DAY

WEST AFRICA

ENERGY intelligence

Morocco: Morocco, Nigeria agree on next steps for offshore/onshore gas pipeline

Brief

Qatar: Qatar to have operational LNG export capacity of 100 mil mt/year by 2024

he global LNG market is not currently oversupplied and is expected to tighten in the period beyond 2024, Qatar’s oil minister Mohammed al-Sada said, coinciding with Qatar’s additional 23 million mt/year of export capacity becoming fully operational. Sada said there could be a small LNG supply surplus in the early 2020s, but the market would remain effectively balanced until 2024. “There is no LNG supply glut,” Sada said. “There may be a surplus of only 10 million mt/year of LNG in the early 2020s but in a 350 million mt/year LNG market, this means that the market is practically in balance,” he said. A number of new LNG projects are due online in the coming years, especially from Australia and the US, and some market observers have predicted demand would struggle to keep up with the supply growth. But strong Asian demand for LNG, especially in China,

has seen LNG spot prices rise and the market remain tight in recent months. A lack of final investment decisions for new projects over the past few years has also meant there could be a supply crunch in the 2020s. “The global LNG market is expected to tighten up beyond 2024,” Sada said. This is the same time frame for Qatar to make its new 23 million mt/year of capacity fully operational. Qatar announced its plan to increase its LNG export capacity to 100 million mt/year from the current 77 million mt/year in July last year. Qatar, Sada said, currently supplies about a quarter of the world’s total LNG. “Qatar intends to remain the global leader in LNG supplies in the future as well,” he said, with the 30 percent increase to 100 million mt/year “to be fully operational by 2024.” Under the expansion plans, Qatar will add three new 7.8 million mt/year trains.

orocco and Nigeria has signed a joint declaration in Rabat laying out the next steps for the completion of a gas pipeline deal that will be built onshore and offshore. The two countries agreed to the pipeline in December 2016 and launched feasibility studies ending with a plan to build the pipeline onshore and offshore, it said. “For economic, political, legal and security reasons, the choice was made on a combined onshore and offshore route,” Morocco’s National Office of Hydrocarbons and Mines (ONHYM) and the Nigerian National Petroleum Corporation (NNPC), the two authorities supervising the project said in the joint declaration. “The pipeline will be

5,660 kilometres long and its CAPEX has been defined,” the declaration said, adding that construction will be in phases covering 25 years. As a next step, Morocco and Nigeria

will launch a front-end engineering design (Feed) to involve countries that will be crossed by the pipeline in the Economic Community of West African States (ECOWAS) and to deter-

mine the amount of gas available for export to European off-takers. This phase also provides for assessing the financial cost and seeking funding from development banks, the joint declaration said. The project is conducive to economic integration in the region and will help West African countries meet their energy needs as well as boost Nigeria’s export potential to Europe, ONHYM and NNPC said. The declaration was signed at a ceremony chaired by King Mohammed VI and visiting Nigerian President Muhammadu Buhari. During the same event, Morocco’s phosphates giant, OCP, signed an agreement with Nigerian’s Sovereign Investment Authority to build an industrial platform for the production of ammonia and derivatives.

Algeria: Total extends gas agreement in Algeria

rench energy company Total said it signed a contract that extends its partnership in a natural gas field in Algeria for the next quarter century. Total joined Spanish energy company Repsol, the Algerian agency for hydrocarbon resources and state-owned exploration and production company Sonatrach in signing a 25year extension to tap into the Tin Fouyé Tabankort natural gas and condensate field. “The partners will carry out the drilling and development investments required to develop addi-

tional reserves estimated at more than 250 million barrels of oil equivalent,” the French company’s statement read. “These investments will allow to maintain the production of the field, which is cur-

rently over 80,000 barrels of oil equivalent per day for six years.” The French supermajor last year produced 15,000 barrels of oil equivalent per day in Algeria, all of which came from TFT. In March, the company started production from the Timimoun gas field in southwestern Algeria, which could reach a production level of 176 million cubic feet, or 30,000 barrels of oil equivalent, per day. Algeria has the 10thlargest natural gas deposits in the world and is the third-largest supplier to

Europe. Its exports have been in decline, however, because of lagging foreign investments. The European Union last year offered $42.7 million in financial assistance to support energy reform in Algeria, which is a member of the Organization of Petroleum Exporting Countries. The EU has questioned Algeria’s role as a reliable supplier in the past, however. Four years ago, Algerian government officials said during a US visit that shale oil and natural gas could be a way to add diversity to its energy sector.

04 BUSINESS DAY WEST AFRICA Interview

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Wednesday 20 June 2018

‘My primary goal is to maintain a high level of engagement with government and its various agencies’ AUDREY JOE-EZIGBO is the 1st Vice President and the in-coming President of the Nigerian Gas Association (NGA). She is also the Co-Founder & Executive Director, Commercial Operations of Falcon Corporation. In this interview with FRANK UZUEGBUNAM, editor, Businessday West Africa Energy Intelligence, she talks about her plans and vision as the incoming president of NGA. Excerpts: What are your plans and agenda for the next 2 years you will be at the helm of affairs of NGA? have been privileged to be an integral part of the NGA over the past 13 years, 11 years out of which I have served as a member of the NGA Council in various capacities. It has been a highly rewarding and enriching journey watching the NGA come fully into its own over this period. I would be remiss if I did not first express my utmost respect and profound appreciation for the leadership and direction of those who have gone ahead; but more so in particular, the last two presidents of the NGA, Engr. Dada Thomas and before him Mr. Bolaji Osunsanya. Over the past four years, the Executive Council has worked diligently under the leadership of these fine gentlemen to ensure NGA remained the anchor for and non-partisan interface between the regulatory and legislative arms of government, and participants across all segments of the gas industry value chain. As an association, we have had many wins over the past two years as we doggedly and diligently engaged our members and government based on our four core pillars which include Advocacy - the anticipation and driving of policy and legislation; investment promotions - being the leading promoter of investment opportunities in the Nigerian Gas Industry to both local and international investors; building an industry resource center; and encouraging industry best practices/standards for safety and quality. In the face of the evolving nature of the gas industry, particularly in the face of evolving policy, other industry and geo-

Audrey Joe-Ezigbo

political developments on the local and global scene which have significant implications for the evolution of our gas industry, continuity on what is a clear trajectory of impact is key. My primary goal must be to maintain a high level of engagement with the government and its various agencies that interface with the industry on one hand, as well as maintain similar engagement with our members to drive the clear articulation of expectations and alignment of paths as we work together to engender a more robust industry. A clear intention of the gas policy is to elicit a higher level of private sector participation in the industry, with a focus on driving investments in gas infrastructure, and the delineation of a robust independent midstream sector.

There is, therefore, an undeniable imperative to ensure an increasingly investment-friendly clime within which many of the challenges plaguing the industry are being addressed in an expedient manner. Under my leadership, NGA will continue to sustain the momentum of our very critical advocacy role in this regard. I will also be working with my Council to ensure we are able to concretize the cross-border and regional linkages between NGA and other gas associations across the continent, as well as increasing our level of engagement with other country gas associations through the International Gas Union of which NGA is a chartered member. We consider this to be mission-critical to our investment promotions value

proposition to the industry. We will be working to establish synergies between our members and regional players and investors to further catalyze the exploration of viable investment opportunities within the Nigerian gas industry. I am confident that we will play a significant role that will enable the crystallization of such linkages and investments in the interest of our members and the nation as a whole. As the voice of Nigerian gas industry, how will you drive NGA’s core values to impact positively on government’s policy on gas? The overarching thrust of the National Gas Policy is to move the country from an oil-based export economy to a gas-based industrialized economy. For us as the NGA, the approval of the policy is a very laudable development, particularly in the face of what was a very extensive stakeholder engagement. NGA is proud of the role we played in articulating our reviews and inputs, and our very active role within those stakeholder engagements. We are also pleased to note that a significant portion of our inputs were carried forward into the final draft policy which has since been approved. That said, we still have some way to go from policy approval into the realm of legislation. One of the key challenges in this regard, and from an implementation perspective, would be how legacy contracts will be migrated into the evolving structure of the industry. The existing and emerging regulators and the structure of their own migration/realignment and interfaces with each other, as well as with sector participants, must necessarily be properly managed to avoid investment hiccups and distortions. My Council is clear on the fact

that we have a huge task ahead of us in terms of the level of engagement with all stakeholders that will engender a more stable relational clime between government and private sector investors, as anything less will serve as a disincentive to investors and hinder the nations diversification and industrialization aspirations. Within the NGA, we are clear that gas presents a critical lever based on which Nigeria will attain the much-needed uptick in our level of economic development and industrialization. We are clear that the gas-to-power sector is a major part of that reality. As I have said earlier, our advocacy role is key in this regard and we will therefore continue to put ourselves forward as a nonpartisan voice to smoothen and solidify what has traditionally not been the easiest of relationships between the government and industry participants. What do you want to be remembered for when your tenure expires? I intend to leave a legacy of having upped the ante for NGA in terms of delivery of our four cardinal value propositions to the industry, with very tangible wins for our members, our gas industry, government and the nation as a whole. My ultimate objective is to ensure NGA catalyzes the necessary synergies, regional and global handshakes and investment promotions that will add to capacity building, technology transfers, and the overall robustness of our gas industry. I want to be remembered as a president who provided highly strategic, effective and transparent leadership to the NGA and our members, and who thereby contributed significantly to elevating the profile of gas development and deployment in Nigeria.

Wednesday 20 June 2018

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POLICY

BUSINESS DAY

There is no hurry to reform Nigeria’s weak PSC terms ISAAC ANYAOGU

release by Ndu Ughamadu, group general manager, group public affairs division of the NNPC while responding to a question on why the PSC agreements had not been reviewed for a long time despite clauses in the agreements that stipulate periodic review, stated that a Presidential approval had been secured and that a committee would be set up soon to carry out the review. It is misleading to assume that the concern over Nigeria’s poor PSC terms was a recent one. No, it has been an ongoing issue for about two decades. Maikanti Baru, NNPC group GMD, gave members of the Senate Committee on Petroleum (Upstream) who were

at the corporate Headquarters of the corporation in Abuja on an oversight visit an impression that there was no cause for alarm. But there is. A comparative analysis of the oil fiscal terms of Organisation of Petroleum Exporting Countries (OPEC) reveals that Nigeria’s Production Sharing Contract (PSCs) gifts too generous concessions to oil firms in the country more than any OPEC country. Nigeria’s PSCs is the only oil fiscal term in the world that award zero royalty to government for drilling in deep offshore fields with depths of over 1,000km. While in most of the PSCs, changes in international oil prices or production rate affect the company’s share of production; Nigeria’s terms have remained constant. Countries like Saudi Arabia and United Arab

Emirates set their terms according to the capacity of the acreages and prevailing economic indicators such as oil price and output. Crafted in 1993 when scant knowledge about deep offshore production existed, Nigeria’s PSCs were based on less than $20 oil price with anticipated drilling depths of below 1,000metres. Two decades later, Nigeria’s biggest production is around depths of over 1,000metres and oil prices have risen above $100 per barrel within the period. Nigeria’s PSCs also inserted clauses that mandated a re-examination of the fiscal terms, if oil prices reach $20, a re-examination and re-negotiation of the fiscal terms, for more equity in favour of government, should there be discoveries above five hundred million barrels and an overall review of the contract, after fifteen years.

It is the alleged unwillingness of the IOCs to sit down and discuss these terms that has been blamed for the dispute between Nigeria and the IOCs. But the NNPC itself has not demonstrated enough commitment to see to resolve this issue. Experts say that not only are the royalty rates unfavourable, the petroleum tax payable under the PSC arrangement was fixed at 50 percent flat rate of chargeable profits for the duration of the production sharing contracts against the rate of 85 percent, prescribed by the Petroleum Profit Tax Act operable in the Joint Venture arrangement. The unfavourable PSC terms may get worse as the Nigeria Extractive Industries Transparency Initiative (NEITI) says that production from PSCs consistently outstripped production from Joint Ventures (JVs) between January 2015 and Sep-

tember 2016. “Production from PSCs has been relatively stable, between 25 million and 28.7 million barrels per month. On the other hand, production from JVs has fluctuated a great deal, between 14.4 million and 24.2 million barrels per month,” the report states. Nigeria’s crude oil exports in recent times are being sustained by huge production from prolific deep offshore fields such as Shell’s Bonga, ExxonMobil’s Erha, Total’s Akpo and Usan; and Chevron’s Agbami, which are all under PSCs with unfavourable terms. The latest push to revisit PSC terms ought to be sustained in view of rising oil prices and the consequence for the economy. Nigeria cannot continue to afford to short-change itself through antiquated fiscal terms that do little to benefit the country.

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WEST AFRICA

ENERGY intelligence Brief ‘Higher oil prices starting to sap global demand growth’

lobal oil demand has already started to show signs of weakening this year in response to higher oil prices, following another year of robust demand growth above the 10-year average, BP said. Global oil demand grew 1.7 million b/d last year, up 1.8 percent from 2016, keeping demand over the last five years at its highest since the peak of the last commodities “super-cycle” of 2006-7, BP said in its latest annual Statistical Review. But with Brent trading around $76/b, crude oil prices have risen by near-

ly 75 percent since mid2017, curbing demand for road fuels despite an underlying robust global economy. Oil demand in 2017 continued to be driven by oil consumers benefitting from the “windfall” of low prices, with both Europe and the US showing demand growth of 300,000 b/d and 200,000 b/d respectively, BP’s chief economist Spencer Dale said. The International Energy Agency last month trimmed its 2018 oil demand growth forecast by 100,000 b/d to 1.4 million b/d, citing an expected slowdown in the global economy due to higher oil prices which hit $80/b last month. “If we saw oil prices stay at these types of levels, I think that would eat into oil demand,” Dale

said. “One of the lessons we have learned over the last few years is that oil demand does respond to pricing laws.” BP said 2017 was a strong year for natural gas demand, with consumption up 3 percent and production up 4 percent, the fastest growth rates since immediately following the global financial crisis. The biggest single factor fueling global gas consumption was the surge in Chinese gas demand, where consumption increased by over 15 percent, driven by government environmental policies encouraging coalto-gas switching, BP said. On supply, BP said global oil production rose 600,000 b/d last year, below average for the second consecutive year as OPECled output cuts helped tighten the oil market. According to BP’s benchmark annual compendium of global energy data, global proven oil reserves slipped slightly last year to 1.696 trillion barrels from 1.697 trillion barrels in 2016. The change, which saw the original 2016 estimate revised down from 1.707 trillion barrels, largely reflects a 1.7 billion barrel fall in Canadian proven reserves offsetting a 1.4 billion barrel rise in Venezuelan reserves. Dale said part of the fall last year likely reflects low average oil prices which generally affects the volumes of oil a country considers recoverable. The 2017 reserves total would be sufficient to meet 50.2 years of production at 2017 levels, BP said. Overall, BP’s 2017 data shows a coal use increasing for the first time in four years, while carbon emissions from energy usage rose by 1.6 percent, after three years of little or no growth.

Wednesday 20 June 2018

finance people appointments

Court rejects appeal to stymie Shell, Eni trial on alleged corruption in Nigeria

taly’s Supreme Court threw out an appeal from Shell and four former Shell managers to stymie a corruption trial that has also involved Eni’s chief executive, legal sources said. The long-running graft case on alleged corruption in Nigeria, revolves around the 2011 purchase by Eni and Shell of Nigeria’s OPL245 offshore oilfield for about $1.3 billion. The trial began last month, with the next hearing set for June 20. The appeal was aimed at reversing the trial to the preliminary hearing stage due to what it said were procedural errors, but the court decided the appeal was inadmissible. Nine current and former executives or contractors, including Eni Chief Executive Claudio Descalzi, have been accused by Italian prosecutors of paying bribes

to secure the licence to explore OPL-245. The field holds an estimated 9 billion barrels of oil but has never entered production. All have denied wrong-

doing. An Eni spokesman reiterated that Eni denied any wrongdoing. If found guilty, those on trial could face jail. A Shell spokeswoman said: “Based on our re-

view of the Prosecutor of Milan’s file and all of the information and facts available to us, we do not believe that there is a basis to convict Shell or any of its former employees.”

Ghana to buy contracts to protect it from high oil prices

hana will buy contracts to protect it from higher oil-product prices in the third quarter as the West African nation seeks to curb volatility in what consumers pay at the pump amid rising costs of the fuel

in international markets. The government is putting together a risk-management program to go to the market “in a month or two” for options on crude, with the strike price yet to be determined, Charles Adu Boahen, Deputy Finance

Minister said. The government plans to buy crude at lower prices and then sell it when they rise, using the balance to subsidize imports of refined fuel, he said. Ghana became an oil producer in 2010, when Tullow Plc started the Jubilee field, but it still needs to import refined products. While higher prices will bolster the nation’s revenue, they stand to distort macroeconomic targets such as inflation, Ken Ofori-Atta, Finance Minister said in February. Crude exceeded $70 a barrel at the start of last month for the first time since November 2014. The inflation rate dropped to 9.6 percent in April, entering the central bank’s target band for the first time since

2013. Ghana is limiting spending through a bailout plan agreed with the International Monetary Fund in April 2015 to help to achieve inflation targets. “Any time crude oil prices rise, the impact is felt six times more on the importation side than on the exportation side,” Boahen said. “After we hedge if crude prices go past the strike price you would not feel the effect at the pumps because it would have been capped.” Bulk oil-distribution companies that import finished products and sell to oil-marketing companies supply most of Ghana’s fuel needs. The nation consumed 3.5 million metric tons of petroleum products in 2017, according to data from the National Petroleum Authority.

07 WEST AFRICA ENERGY intelligence

Wednesday 13 June 2018

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marketinsight Oil slumps 3 percent on OPEC supply, China’s tariffs

il prices fell more than $2 a barrel after two of the world’s biggest producers indicated they might increase output at next OPEC meeting, while US exports were threatened by potential Chinese tariffs on crude oil and refined products. Oil investors have been nervous ahead of the coming OPEC summit in Vienna. Saudi Arabia and Russia have already boosted production modestly, and have indicated they were prepared to increase output at that meeting. Brent crude oil fell $2.50, or 3.29 percent to settle at $73.44 a barrel. US crude settled $1.83 lower at $65.06 a barrel. In post-settlement trading, US crude retreated further, falling 2.25, or 3.4 percent, to $64.64 a

barrel. Brent crude was on track to end the week down more than 4 percent, while US crude was heading to fall 1.7 percent. After settlement, China announced $50 billion in retaliatory tariffs, in response to a series of levies by US President Donald Trump earlier.

Some investors were surprised when crude oil and other energy products were included for tariffs at a later date, the official Xinhua news agency reported, citing the Tariff Commission of the State Council. Over the past six months, the United States

has exported an average 363,000 bpd of crude oil to China, which along with Canada is the biggest buyer of US crude. “They were a big outlet, and we’re going to notice it,” said John Kilduff, a partner at Again Capital in New York. “It’ll take time for other buyers to absorb that crude.” Russian Energy Minister Alexander Novak said after talks with Saudi Energy Minister Khalid alFalih in Moscow that both nations “in principle” supported a gradual increase in production after restricting output for 18 months. Novak said one option would involve gradually raising output by 1.5 million barrels per day (bpd), possibly starting July 1. Falih said “I think we will come to an agreement that satisfies, most importantly, the market.”

‘Extra crude oil production needed to fill Iran, Venezuela gap’

he International Energy Agency (IEA) described the oil market as “finely balanced” and vulnerable to disruption and

said OPEC swing producers and others might need to raise their production, even as it noted some factors on the demand side likely to have a moderating

influence. In its monthly oil market report, issued ahead of OPEC’s next regular meeting on June 22, the IEA predicted that Venezuela’s oil output could fall to just 800,000 b/d or even lower next year, from 1.36 million b/d in May and following a 1 million b/d fall over the last two years. It estimated OPEC production had risen by 50,000 b/d in May to 31.69 million b/d. Venezuela’s crisis and the likely impact of the US decision to reinstate sanctions against Iran “would require higher production from those producers with spare capacity,” it said, referring to countries party to the 2016 production cut agreement, such as Russia and a number of Gulf

States. “If the other 12 OPEC members were to continue pumping at the same rate as May, a potential supply gap could emerge and lead to a draw on stocks of more than 1.6 million b/d in Q4 2019,” it added. “Even if the Iran/ Venezuela supply gap is plugged, the market will be finely balanced next year, and vulnerable to prices rising higher in the event of further disruption. It is possible that the very small number of countries with spare capacity beyond what can be activated quickly will have to go the extra mile,” the IEA said. It added that commercial oil stocks in OECD countries had fallen to a three-year low of 2.809 billion barrels in April.

BUSINESS DAY

OPEC Flakes OPEC sees demand for its crude oil in H2 2018 at 33.34 mil b/d

emand for OPEC crude in the second half of 2018 will exceed the bloc’s May production level by 1.47 million b/d, its analysts forecast, as ministers prepare to meet in Vienna this week to debate an output increase favored by some members. In its closely watched monthly oil market report, OPEC’s analytics arm pegged the so-called call on OPEC crude for the second half of 2018 at

33.34 million b/d. Meanwhile, independent secondary sources used by the organization to track production estimated OPEC’s May output at 31.87 million b/d. But OPEC said there was “pronounced uncertainty” in the market’s outlook, with global economic activity slowing in the first quarter, expected monetary tightening and the risk of escalating trade wars. As such, it noted that some outside estimates of the call on OPEC crude are as much as 1.7 million b/d lower than the most bullish forecasts. “This outlook for 2H18 warrants close monitoring of the factors impacting both world oil demand and non-OPEC supply that will shape the outlook of the oil market going forward,” OPEC said in its report.

Russia, Saudi Arabia agree OPEC format should be extended

ussia and Saudi Arabia have a general consensus that the OPEC format should be “institutionalised” and extended until 2019 and beyond for oil market monitoring and joint action in case of need, Russia’s energy ministry said in a statement. Citing Russian Minister Alexander Novak, the ministry added that the two major oil producers planned to sign a mutual agreement which will draw their cooperation in the energy arena to a new level. Russia, the world’s top crude oil producer, and Saudi Arabia, the driver of OPEC policy and the third-largest crude producer behind the United States, agreed with OPEC and non-OPEC nations

to cut supply by 1.8 million barrels per day since 2017. Inventories have since dwindled the deal, taking global benchmark Brent crude futures to $80 a barrel in late May, near a fouryear high. In recent weeks, both Russia and Saudi Arabia have started to raise production, in part after complaints from US President Donald Trump about high prices.

08 BUSINESS DAY WEST AFRICA ENERGY intelligence

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Wednesday 20 June 2018

talking points

In association with

Regional power trade offers advantages as global consumption grows by 3.1 percent …elusive access in West Africa offers investment opportunities STEPHEN ONYEKWELU

espite the importance and contributions of electricity to every facet of human endeavour such as health, education, agriculture and households, access to it in many Economic Community of West African States (ECOWAS) remains elusive amid rising global demand. Access to electricity in West Africa is at 52 percent, with shortages of up to 80 hours per month, and electricity remains among the costliest in the world, at $0.25 per kilowatthour, more than twice the global average according to a World Bank report. World electricity demand increased by 3.1 percent, significantly higher than the overall increase in energy demand. Together, China and India accounted for 70 percent of this growth. Output from nuclear plants rose by 26 Terra Watts hour (TWh) in 2017, as a significant amount of new nuclear capacity saw its first full year of operation; the International Energy Agency tweeted June 15, 2018. In both Asia and Africa, electrification rates are lowest in rural areas although, in sub-Saharan Africa in particular, urban areas also contain a considerable number of those without electricity. Access to energy remains a challenge in West Africa where many countries are dependent on expensive fossil fuels. The countries with the largest populations currently without electricity are India, Nigeria, Ethiopia, Côte d’Ivoire, Democratic Republic of Congo and Bangladesh. In the developing countries of Asia, there are an estimated 526 million people without electricity. Opportunities for investment The World Bank estimates that integrated power trade in the West African region could lead to cost savings of $5-8 billion per year by

enabling countries to import cheaper sources of electricity; it will increase access to affordable, reliable and modern energy, and reduce CO2 emission intensity.

The World Bank dedicated $750 million in International Development Association (IDA) funding to support the West Africa Power Pool (WAPP) and intends to further

step-up its support. Domestic demand in West African countries is often too low to attract investments in large projects that benefit from economies of scale. Instead, these countries rely on small-scale, expensive oil-fired power generation. Lack of planning has led to reliance on emergency rental plants, which further inflates costs. The IEA estimates that for the large rural population that is distant from power grids, mini-grid or off-grid systems provide the most viable means of access to electricity. It anticipates, in its ‘new policies’ energy outlook, that 315 million people in rural areas will gain access to electricity by 2040, with most of this new electricity access coming from the development of mini-grids (140 million people) and off-grid systems (80 million). This is an investment opportunity. To improve access to affordable and reliable electricity in West Africa requires close collaboration among neighbouring countries. The West Africa Power Pool (WAPP) is a regional model that holds opportunity for shared comparative advantages. It is a cooperation of 14 countries–Benin, Burkina Faso, Cote d’Ivoire, the Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone, and Togo, which taps into 27 national electricity utilities, working towards an integrated regional power market. Currently, WAPP is completing the physical interconnections to send power across borders. About 7 percent of the region’s electricity is already traded among the 10 already connected countries. It is anticipated that by early 2020s the most critical cross-border links will be in place, making it possible for electricity to flow throughout West Africa from countries with cheaper, cleaner and more abundant energy resources to those lacking them.