BusinessDay 20 Jun 2019 by BusinessDay

Insurgency: Buratai’s comments on soldiers’ commitment unfortunate, demoralising – experts Harrison Edeh & Stella Enenche, Abuja

he comment made by Nigeria’s Chief of Army Staff (COAS), Lieutenant General Yusuf Bu-

…soldiers lament poor treatment ratai, on Tuesday that front-line soldiers in the war against Boko Haram lack the required commitment to further push and

finally defeat the insurgents amounts to admission that he and his men are tired and may have totally lost charge.

This view was expressed by a cross-section of security experts and other Nigerians who spoke to BusinessDay on the matter,

Wednesday. They said this could account for the recent renewed attacks on citizens, especially in the last week on at least four Nigerian Army bases by Boko HaContinues on page 38

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news you can trust I **thursDAY 20 june 2019 I vol. 15, no 336 I N300

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igeria’s economy is not growing fast enough to absorb its expanding population,

neither is government spending making a significant dent in the lives of the majority of the country’s poor people, according to global ratings agency, Moody’s. The government’s rev-

enue weakness is scuttling efforts to deliver a stronger economy, one that is less dependent on oil and growing closer to 6 percent annually, Moody’s said. Nigeria doesn’t make as much cash as it used

I&E FX Window CBN Official Rate Currency Futures

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to when oil prices were as high as $100 per barrel, neither is economic growth as robust as it used to be. Worse still, the country Continues on page 38

Spot ($/N)

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Cash-strapped Nigeria trapped in low growth path – Moody’s N

LOLADE AKINMURELE

Market

MARKETS

Lafarge Africa sells South African subsidiary to LafargeHolcim for $316m …to boost Nigerian operations, share price BALA AUGIE

L-R: Ifeoma Esiri, non-executive director; Yinka Sanni, chief executive; Basil Omiyi, chairman, board of directors, and Chidi Okezie, company secretary, all of Stanbic IBTC Holdings plc, at the 7th annual general meeting of the bank in Lagos, yesterday.

fgn bonds

Treasury bills

afarge Africa plc has reached an agreement to sell the 100 percent equity interest held by the company in Lafarge South Africa Holdings (Pty) Limited (LSAH) to Caricement B.V. (“Caricement”), an indirect subsidiary of LafargeHolcim Limited for $316 million. The sale is expected to extinguish the company’s foreign currency debt, bolster cashflow, and underContinues on page 38

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APAPA GRIDLOCK BusinessDay has suspended the countdown to Lagos State Governor Babajide SanwoOlu’s plan to rid Apapa of intractable gridlock in the first 60 days of his administration. This follows the governor’s clarification, Tuesday, of his May 18, 2019 comment on the issue. The countdown was our way of bolstering the new administration’s effort to sanitise the port city. We will not relent in our duty to help the state government keep track of its promises.

Inside Otedola exits Forte Oil shares in N64.3bn off-market P. 2 deals

Thursday 20 June 2019

BUSINESS DAY

news Otedola exits Forte Oil shares in N64.3bn off-market deals … total value far more than that – sources … stock surges 10% on NSE Iheanyi Nwachukwu & Dipo Oladehinde

he share price of Forte Oil plc reached a new high on Wednesday, June 19, 2019 driven by record off-market trading as Nigeria’s billionaire businessman, Femi Otedola, completed the sale of his stake in the oil and gas company. A total of 970,166,694 units of Forte Oil plc were done as offmarket trades at N66.25 in five deals for a value of N64.3 billion. These deals were negotiated deals between Stanbic IBTC Stockbrokers as buyer while APT Securities and Funds Limited, WSTC Securities Limited andQuantum Zenith Securities Limited were sellers. Authentic market sources tell BusinessDay that the value involved is far more than just the value of the cross deals. Otedola, in a message he posted on Wednesday on his verified social media handle, said the process has been completed and that he is now prepared to focus on his investment in the power sector. “A few years ago, my team and I embarked on an arduous task of transforming a moribund petroleum marketing business, African Petroleum plc (formerly British Petroleum) into Forte Oil plc; a leading integrated solutions provider

with solid footprints in downstream petroleum marketing, Upstream Services and Power Generation and one in which we built intrinsic value to the benefits of our shareholders,” the billionaire businessman further wrote on Wednesday. Forte Oil rallied most on the Nigerian bourse, from N31.5 to N34.65, after gaining N3.15 or 10 percent maximum limit, as investors anticipate further rally in next trading sessions. Doyin Ogun, head of corporate services at Forte Oil, confirmed that the final transaction and shares transfer have been completed. “There is going to be a closing board meeting, after which there is going to be some internal discussions; essentially the new majority shareholders will make a formal statement for the business going forward,” Ogun told BusinessDay. Forte Oil plc said the decision to divest from upstream services and power-generating businesses will boost its distributable earnings for the benefit of shareholders. Last year, Otedola, who was chairman of the oil firm, announced the plan to sell off his 75 percent stake in the company to “maximise the opportunities in refining”.

•Continues online at www.businessday.ng

Buhari orders security forces to end Taraba killings Tony Ailemen, Abuja

resident Muhammadu Buhari on Wednesday directed security forces to put an end to the Taraba killings. The President, who also condemned the current spate of attacks on the people of Kona in Taraba State, warned that attacks on innocent people in the name of revenge or whatever motives would not be tolerated by the government. In a statement by Garba Shehu, Senior Special Assistant to the President on Media and Publicity, President Buhari said, “No group of people has the right to surround innocent people and unleash murderous violence on them.” He said resorting to selfhelp is an invitation to anarchy which in turn will make everyone unsafe. President Buhari noted that in a cycle of violence characterised by revenge and counter-revenge, there are no winners. The President decried the

state of permanent hostilities, adding that “people undermine not only law and order, but also their own ability to conduct their everyday businesses in peace”. “I always wonder how people can conduct their businesses in the absence of peace and tranquillity because violence ruins everything and leaves the people worse off,” he stressed. “It is difficult to build a virile nation where hate and intolerance dominate the people’s minds. It’s easier to destroy than to build. People should count the economic costs of this violence to their own lives,” he added. The President warned that a situation where community leaders abandon their responsibilities and allow thugs to set the agenda is dangerous for peace and security in the country. He criticised leaders who publicly preach the virtues of peace, but privately promote hate and intolerance which ultimately culminate in violent destruction of life and property.

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L-R: Kobby Bentsi-Enchill, executive director, Stanbic IBTC Capital; Oscar Onyema, CEO, The Nigerian Stock Exchange (NSE); Patience Oniha, director-general, Debt Management Office (DMO); Hamda Ambah, MD, FSDH Merchant Bank Limited, and Funmi Ogunlesi, head, treasury and trade solutions public sector, Africa, Citibank Nigeria, at the listing of the Triple-Tranche $2.868 billion Eurobond at the NSE headquarters.

Nigeria among top 15 countries with greatest electricity utilisation rate losses – World Bank

… 3.5% productivity losses for every 1% increase in power outage … $4.2trn can be saved by investing in more resilient infrastructure HOPE MOSES-ASHIKE

igeria is among the top 15 countries with greatest electricity infrastructure disruption utilisation rate losses globally, according to a World Bank report released on Wednesday. In the most affected countries, utilisation rate losses are a significant share of GDP. The report indicated that Nigeria recorded 2 percent electricity infrastructure dis-

ruption utilisation rate loss, which was slightly higher than Rwanda’s 1.8 percent and The Gambia’s 1.8 percent. Ayodele Akinwunmi, head of research, FSDH Merchant Bank Limited, said the poor state of electricity infrastructure and the lack of new investments to upgrade the electricity equipment across different segments of the industry are responsible for this. “FSDH Research has recommended an adjustment to the electricity tariff so that the industry can access the

required cashflows to upgrade the infrastructure and also deliver electricity for the power sector in order to accelerate the growth of the economy,” Akinwunmi added. In Nigeria, there is a record of 13 percent sales loss by firms due to 230 hours power outage. Ghana recorded 14 percent sales loss due to 54 hours power outage, while firms in Angola are losing about 12 percent sales to 50 hours of power outage. Quality infrastructure does not have to be reserved for

rich countries, the World Bank report said. At low income levels, the difference is particularly large. For example, the reliability of electricity in Bhutan, whose gross domestic product (GDP) per capita is $2,500, is comparable to that of many middle- and high-income economies, whereas Nigeria, with GDP per capita of $2,476, has some of the most frequent power outages of all countries.

•Continues online at www.businessday.ng

CBN responds to BusinessDay’s report, says TSA covers FG’s overdraft HOPE MOSES-ASHIKE & MICHAEL ANI

he Central Bank of Nigeria (CBN) on Wednesday reacted to the BusinessDay report on Monday, saying the Treasury Single Account (TSA) balances covers the overdraft to the Federal Government. BusinessDay on Monday, June 17, 2019, published a report with the headline “CBN’s life support to FG rises 780 percent to N8.12trn in 4yrs”. But the CBN, in a statement signed by Isaac Okorafor, its director of corporate communications, said BusinessDay had restricted its report only to CBN’s claims on the Federal Government while ignoring other numerous deposits of the Federal Government, including those of the Treasury Single Account (TSA), with the CBN. According to the statement, when the claims of the FG on CBN are netted against

the claims of the CBN on the FG, the resulting net positions indicate that the FG was actually the net creditor to CBN in 2014, 2015 and 2017 to the tune of N2.14 trillion, N1.65 trillion and N0.36 trillion, respectively. On the other hand, CBN was the net creditor to the FG in 2016 and 2018 to the tune of N0.11 trillion and N0.34 trillion, respectively. The CBN said it was clearly inappropriate to compare the position as at end-2018 with the position as at end-2014, ignoring the movements within the period. “We wish therefore to reassure the investing community and the general public that the CBN remains faithful to its statutory mandate as banker and financial adviser to the Federal Government,” the statement said. Notwithstanding the CBN’s clarification, however, it is worthy of note that the surge in net credit – that is, the difference between the

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amount the CBN lent to the Federal Government and the amount which the FG has as deposit with the bank – to N342.2 billion was as a result of a sporadic increase in the bank’s claim to the Federal Government. Data from the CBN showed that the amount of money borrowed by FG from the bank between 2014 and 2018 rose by 780 percent while the amount deposited in the CBN’s custody by the Federal Government rose by 154 percent. The data further explained that since the year 2009 through 2015, the net deposit of the Federal Government – that is, the difference between the money the FG deposits with the CBN and the amount borrowed by the FG from the bank – averaged about N2.8 trillion. What this implies is that during this period, the amount the Federal Government had with the CBN was far in excess of what it bor-

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rowed from the bank. The tide, however, turned in 2016 in the thick of the economic recession, pushing claims on the Federal Government by 107.5 percent to N5.22 trillion, from N2.51 trillion the previous, year while its deposit with the CBN only grew by 22.57 percent from N4.17 trillion in 2015 to N5.11 trillion in 2016. With this, net credit from the CBN to the government for the first time came to N109.6 billion. The figure reversed in 2017, with an excess of N353.56 billion after the government’s deposit with the CBN increased to N6.23 trillion compared to the N5.88 trillion it borrowed. Fast-forward to 2018, the Federal Government finances with the CBN went into an overdraft of N342.21 billion. In 2018, the amount borrowed by the FG from the CBN stood at N8.12 trillion compared to the N7.78 trillion it had with the bank.

Thursday 20 June 2019

BUSINESS DAY

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Thursday 20 June 2019

BUSINESS DAY

NEWS

We invited Obasanjo to inauguration, Democracy Day celebration - Presidency Tony Ailemen, Abuja

resident on Wednesday declared that former President O lusegun Obasanjo, owes an answer to Nigerians on his absence from the 2019 Presidential inauguration and Democracy Day celebration, adding that he was duly invited The events which took place on May 29th and Ju n e 1 2 re s p e c t i v e l y , were however not attended by the former Presidents Olusegun Obasanjo, G oodluck Jonathan and former Military Head of state, Abdusalami Abubakar Only the former Military leader, Yakubu Gowon attended the May 29th inauguration ceremony to witness the swearing in of President Muhammadu Buhari for the second tenure. A statement by the

Senior Special Assistant to the President on Media and Publicity, Garba Sh e hu , s a i d t h e c l a i m that he was not invited o r h e d i d n o t re c e i v e an invitation cannot be sustained. Presidency, while noting that Since the claim was first made, elements in the polity that have deliberately and consistently been trying to lead the country toward polarization have cashed in on it, said they have been “throwing all manner of r u b b i s h at t h e Bu ha r i Presidency. “The fact remains that the Secretary to the Government, Boss Mustapha wrote on May 16th, 2019 to: “His Excellency, Chief O lus egun O basanjo, GCFR, Former President, Federal Republic of Nigeria, Agbe L’Oba House, Quarry Road, Ibara, P.O.Box 2286, Abeokuta, Ogun State.” Presidenc y said the

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i nv i t at i o n w a s s e nt t o Chief Obasanjo’s known forwarding address, detailing out all the major events, and the invitation cards were delivered by a reputable courier company as confirmed. “ T h e re c e i p t o f t h e letter and invitation cards as delivered by the courier company was confirmed by Mr. Taiwo Ojo, the long standing Personal Secretary to the former President. “If, in the circumstance, Chief Obasanjo d i d n o t s e e o r re c e i ve the letter and invitation c a rd s a s p u b l i s h e d by Va n g u a r d n e w s p a p e r (Page 16, June 16, 2019) and several other news platforms, then the former President needs to find out what is happening with his own secretariat. According to the statement “The government office did its job diligently and should not be blemished for no reason.

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Thursday 20 June 2019

BUSINESS DAY

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Thursday 20 June 2019

BUSINESS DAY

NEWS Winners emerge in Zenith Bank-sponsored MOS World Championship qualification …to represent Nigeria at the world championship in New York

TEMITAYO AYETOTO

ix national winners have emerged in the 2019 Microsoft Office Specialist (MOS) World Championship sponsored by Zenith Bank. They are Ayomide Abiodun of Aduvie International School, Abuja (PowerPoint 2013), Mbah Arinzechukwu Nnamdi of Faith Academy, Ota, Ogun State (Word 2016), Pwahatado Vawe of Aduvie International School, Abuja (Excel 2013), Iyke-Osuji Victor Chibuzor of Faith Academy, Ota, Ogun State (Excel 2016), Laah Asat Shawn of Regent Secondary School, Abuja (Word 2013), and Udonsak Ubongabasi John of Faith Academy, Ota, Ogun State (PowerPoint 2016). The winners will represent Nigeria at the World Championship taking place in New York, USA, from July 28-31, 2019. They will be accompaniedbytwoICTteachers –TimothyOsaigbovoofAduvieInternational School, Abuja, whose student had the highest score in the 2019 MOS Nigeria Competition,andVictoriaAdebayoofFaith Academy, Ota, Ogun State, whose school has the largest number

of certified students in the Junior Competition (2019 ReadManna Under 13 Computing Fundamentals National Competition for ages 8 -13). Zenith Bank plc, one of the biggest banks in the country by tier-1 capital and the most profitable bank in the country, has partnered with ReadManna, organisers of the competition in Nigeria, since 2007 and sponsored Nigerian winners’ participation in the World Championship. The championship is organised annually in Nigeria by ReadManna Empowerment Initiative, a not-for-profit company led by Edna Augusto and focused on empowering students and youths in Nigeria with practical and relevant basic computer skills aligned to global standards. ReadManna is authorised by CertiportInc, a Pearson VUE company, the initiator of Certiport Microsoft Office Specialist World Championship for Students, to conduct this international annual championship in Nigeria. The MOS World Championship challenges students to demonstrate their proficiency in the use of Microsoft Word,

PowerPoint and Excel versions 2013 and 2016 and is open to all students aged between 13 and 22 years that are enrolled in an academic institution. This year’s competition, which was held over a period of seven months, between October 1, 2018 and April 30, 2019, received about 1,200 entries from 21 secondary schools in Lagos, Abia, Kaduna, Ogun, Rivers, Kwara States and the FCT. ReadManna boasts a remarkable record in the World Championship since it began to present teams to represent Nigeria in 2014, having produced world winners in various categories in the past. Olubunmi Agusto of Day Waterman College, Abeokuta, Ogun State, 2nd Place in Word 2007 and First African Champion (2014); Atafo Abure, Childville School, Ogudu, Lagos State, 10th Place in Excel 2010 (2015); Katherine Eta, Childville School, Ogudu, Lagos State, 10th Place in PowerPoint 2013 (2016) and Katherine Eta, Childville School, Ogudu, Lagos State, 3rd Place in Word 2016 (2017) have all done Nigerian proud at the global stage.

CBN says FDIs into Nigeria haven’t dropped Cynthia Egboboh, Abuja

he Central Bank of Nigeria (CBN) has affirmed that the Foreign Direct Investments (FDIs) into Nigeria have not dropped as reported, disclosing on Wednesday that inflows into the economy from January to May 2019 stood at $14.2 billion of which FDIs accounted for $2.87billion. The bank in a statement signed by its Director, Corporate Communications, Isaac Okorafor, was responding to a report (not by BusinessDAY) which alleged a decrease of over 40 percent in FDI inflows

to Nigeria in 2018. It rather insisted that the country continues to enjoy steady capital flows due to the prevailing stable macroeconomic environment and sustained investors’ confidence in the economy. “While the CBN is not privy to the methodology used in arriving at the figures, we wish to state that available records show a significant increase in FDI in Nigeria during the period 2018, contrary to the Reuters’ report”. According to the statement, the total capital flows to Nigeria, from January to May 2019 stood at $14.2 billion of which FDI

accounted for $2.87 billion, representing a 20.18% of the total amount, while in 2018, the total capital inflows to the country stood at $19.07 billion out of which FDI accounted for $7.78 billion. The bank stressed that the country continues to enjoy steady capital flows due to the prevailing stable macroeconomic environment and sustained investors’ confidence in the economy and we wish to urge the public to take advantage of several publications by the CBN and the National Bureau of Statistics (NBS), which give adequate and accurate statistics on the subject matter.

AFCFTA: Nigeria lacks capacity to prevent dumping of goods, says Buhari Tony Ailemen, Abuja

resident Muhammadu Buhari, again on Wednesday, gaveinsightintowhyNigeria is yet to sign the Africa Continental Free Trade Agreements AFCFTA, sayingthecountrylackscapacityto prevent dumping of goods on the country by her neighbours In a statement by the Special Adviser to the President on Media and Publicity, Femi Adesina, President Buhari, while meeting with the National Council of the Manufacturers Association of Nigeria, MAN, said, “I don’t think Nigeria has the capacity to effectively supervise and to ensure that our colleagues in AU don’t allow their countries to be used to dump goods on us to the detriment of our young industries and our capacity to utilize foreign exchange for imported goods,’’ African countries had in June 2015, agreed to the creation of a continental free trade area by 2017 at an African Union Summit in South Africa.

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Thursday 20 June 2019

BUSINESS DAY

news 2023: INEC not yet decided on electoral reform mode Iniobong Iwok

he Independent National Electoral Commission (INEC) has said it was not yet sure of the mode of electoral reforms it would embark upon ahead of the 2023 general elections. The commission has continued to receive knocks from local and international observers over lapses which characterised the conduct of the 2019 general election across the country. In its final report on the conduct of the polls, which it submitted recently, the European Union (EU) revealed that the 2019 election was marred by systemic failure, violence and intimidation of voters. The report also stated that the low level of voters’ participation called for fundamental electoral reforms, and gave 30 recommendations on how to improve future

electoral processes. Severalcandidatesfromopposition parties said the general electionwasflawedacrossthecountry and disputed the results released by INEC. The main opposition, the People’s Democratic Party (PDP) anditscandidate,AtikuAbubakar, have equally disputed the result of February presidential election, wonbyincumbentMuhammadu Buhari, and are seeking an upturn of the result at the tribunal. However, speaking in an interview with BusinessDay, Wednesday, Festus Okoye, INEC National Commissioner and chairman of the commission’s committee on information and voter education, said the commission did not know the mode of electoral reforms to carry out, but would rather wait till it completed its ongoing review of the election and interaction with stakeholders.

KPMG, Open Technology Foundation collaborate for improved financial services

PMG, the professional services company and one of the Big Four auditors on the globe, has signed a MemorandumofUnderstandingwithOpen TechnologyFoundation(OTF),to promote a standard Application Programming Interface (API) for the financial services sector in Nigeria,withtheprimaryobjectiveof consistentlyprovidingconsumers of financial services with access to qualitative services and solutions they require real-time. As a result of the agreement, the two organisations would activelycollaboratetoeducatestakeholders within the ecosystem, engender the growth of new revenue streams for industry players and develop a sustainable service model for underserved markets. They would achieve these through advocacy for the development and adoption of an API standardforbankingandfinancial services industries. The adoption of an API standard is, more so, imperative as data-sharing accomplished through such means is an intelligent conduit for data flow between systems in a controlled yet seamless manner. The agreement is in line with the commitment of Open Technology Foundation, the not-forprofit organisation driving the development and adoption of Open API standard in Nigeria, to promote the adoption of Open Bankingstandardwithstakeholders across Nigeria and enable

further innovation in the financial services industry. Boye Ademola, a partner at KPMG,said“Wehaveundertaken this collaboration with Open Technology Foundation Nigeria in continuation of our desire to contribute meaningfully to the development of new banking business models in the country; founded on digital capabilities, agile ways of working and resilient platforms.” With the understanding that Open Banking has the ability to transform the market for banking providers and consumers across the value chain, Ope Adeoye, a trustee of Open Banking Nigeria, noted that KPMG, through the collaboration for the launch of the firststandardandnon-proprietary Open Banking standard in Africa, have again reinforced their positions as leading lights for digital financial transformation in Africa. “We are indeed delighted to haveKPMGonboardthisjourney that is set to completely redefine the future of financial services on the continent,” said Adeoye. Open Technology Foundation works with banks, regulators, Fintech,andotherstakeholdersto define an open and non-partisan set of APIs for financial services in Nigeria. OTF had previously collaborated with other industry stakeholders including Fidelity Bank, Flutterwave, Global Accelerex, Paystack, TeamApt, PwC, and Sterling Bank.

EDHA: Edo govt warns against acts capable of disrupting peace

he Edo State government has sent a stern warning to individuals and groups with intent to disrupt peace in the state by re-enacting the era of thuggery and civil disturbances to desist from any such actions, as Governor Godwin Obaseki-led administration will not tolerate any form of violence in the state. In a statement, Commissioner for Communication and Orientation, Paul Ohonbamu, said that the state government would deploy all apparatus of state to ensure that peace was maintained in the state and that well-meaning, law-abiding citizens are assured of a free space to go about their businesses without any hinderance. He said the warning is coming in the wake of the emergence of a

new leadership of the 7th Edo State House of Assembly, and to ensure that unscrupulous elements do not take matters into their hands to ferment trouble in the state. According to Hon. Ohonbamu, “The Edo State Government is by this notice sending a strong warning to individuals and groups with the intention to cause violence in the state to do away with any such thought. Any attempt to re-enact the era of violence will be met with the requisite response from the relevant apparatus of the state. “Acts capable of disrupting public peace will be quelled and the necessary legal actions taken to ensure that peace is maintained and law-abiding citizens go about their normal activities without let.” www.businessday.ng

Business community in focus as mediation confab amplifies enterprise advantage CHUKA UROKO

he business community, legal practitioners and other stakeholders will be the focus of discussion at the Alternative Dispute Resolution (ADR) conference that will be holding in Lagos Tuesday next week. The conference, already in its 4th edition, is organized by Oakwell Partners, a leading commercial law firm in Nigeria that was recognized and given Best Dispute Resolution Firm Award 2018 by Acquisition International. The firm believes that the place of mediation as a major tool for ADR in Nigeria should continue to be amplified because of its obvious advantages, especially in resolving disputes in business relationships where time and money

are of essence. This year’s edition of the conference which has ‘Mediation: Adding Value, Improving Deals’ as theme, expects Andrew Goodman, Master of the Bench of Inner Temple, as guest speaker while Abubakar Danlami Sule, the Acting Managing Director of Keystone Bank and Alex Okoh, the Director General of the Bureau of Public Enterprises (BPE) are expected as Keynote Speaker and Guest of Honour respectively. “ The conference w ill focus on ways by which mediation can be used as an effective tool for adding value to business relationships and improving commercial deals,” noted Osarieme Ezekiel, the Managing Partner at Oakwell, in a statement obtained by BusinessDay in Lagos on Wednesday.

Ezekiel believes that businesses typically are concerned with growth and earnings which is why anything that impedes these should be discouraged. “Therefore, resolving commercial disputes in an adversarial, long drawn manner is not the most effective way,” she pointed out. As a firm, Oakwell Partners has passion for mediation and its continued development in Nigeria and, according to Ezekiel, that passion has been amply demonstrated in their annual mediation conference which is today in its 4th edition. “To us, ADR is not just Alternative Dispute Resolution but Accelerated Dispute Resolution. As a Commercial law firm, we understand the value of time when it comes to commercial transactions. Sometimes, otherwise profitable transactions that started

with so much promise are derailed due to mismanagement of disputes,” she said. Because this is a human society, there will always be disputes, but the important thing is how it is managed or handled. Exponents of mediation like Oakwell do not see why parties to a dispute should be embroiled in court in a process that damages relationships. Court process is where only one side wins, when there is a process (ADR) that supports business in terms of timeliness and ensures win-win solutions to old or bitter fights and also ensures a mutually beneficial outcome. “When the question should be, what is the best way of resolving the dispute that still preserves the intended business objectives. This is where mediation comes in,” Ezekiel posited.

L-R: Daniel Braie, managing director; Joshua Fumudoh, chairman; Moses Omorogbe, company secretary; Bernard Griesel, non-executive director, and Funkazi Koroye-Crooks, non-executive director, all of Linkage Assurance plc, at the 25th annual general meeting of the company in Lagos. Pic by Pius Okeosisi

Nigeria’s capacity to tap demographic dividend hangs on quality education, strong policy - experts Josephine Okojie

or Nigeria to reap the benefits of demographic dividend, population experts say that the country mustprovidequalityeducationfor itsyoungpeople,strongpolicyand ensure reduction in its maternal and infant mortality rates. The experts spoke at the United Nations Population Fund (UNFPA) at 50 High Impact Private Sector Summit held in Lagos, Tuesday. “For Nigeria to benefit from demographic dividend, we need to have a significant reduction in maternal and infant mortality, improvement in the quality of education for our young people to have the skills to deliver and provide good policies to promote the growth of the private sector,” Eugene Kongnyuy, acting resident representative, UNFPA Nigeria, said. “We need to have more working age people, and when this happens, the country will begin to reap demography dividend,” Kongnyuy said.

He defined demographic dividend as a long-term economic and population policy that ensured that the population of any nation was structured and in line with policies that create more working age people in its society. He noted that since Nigeria launched its demographic dividend in 2017, the country was yet to record any benefit from it, saying the move had shifted government’s focus on young people and also created interventions in health and education. He urged the government to do more in health and education so that the country could begin to experience the benefits of demographic dividend. Speaking also, Isaiah Owolabi, director of Hacey Health Initiatives, called on the government to see demographic dividend as a major opportunity for the country owing to its large youth population size, while urging them to take advantage of it by investing in young people for a life-time economic returns.

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Lagos, Ogun collaborating on security to attract investors- Abiodun Tony Ailemen, Abuja

gun State governor, Dapo Abiodun, on Wednesday said Ogun and Lagos states were collaborating to enhance security as Nigeria’s gate way to attract investors. The Governor while briefing State House Correspondents after meeting with President Muhammmadu Buhari, hinted that security remains a major factor in his first term agenda, in the gateway state. “Ogun state is called gateway for a reason, we are gateway to Lagos, Oyo, Ondo, Cotonou, to so many other places. So it is important that for us to create an enabling environment for investment we must have a secured state. “Myself and the governor of Lagos state we have discussed, we are going to ensure we have a robust security trust fund so that we can have patrol vehicles along the connecting roads, tracking devices, communications @Businessdayng

equipment. “This is because we want to take advantage of what we call the pull factor. Today, Ogun state has the largest industrial hub in the country but there are there because Ogun is close to Lagos. So all these I shared with Mr. President. He however listed agriculture, as top on his agenda adding that “ we are placing premium on agriculture. We see it as opportunity to directly impact on people’s lives and so we are tapping into CBN’s anchor borrowers programme.” On the honours giventoMoshood Abiola by President Muhammadu Buhari, he declared that it was a clearl indication that President Buhari is a believer in the victorious mandate given by Nigerians to late politician, Moshood Kashimawo Abiola, in the June 12,1993 election. The governor said that this explained the recognition Buhari has so far given to the memory of Abiola, an indigene of Ogun, without being promoted to do so.

Thursday 20 June 2019

BUSINESS DAY

NEWS

NEPC targets Shoprite’s 75 retail outlets to enhance export drive HARRISON EDEH, Abuja

ith 75 stores expected to be opened in Nigeria within the next four years, Olusegun Awolowo, the Executive Director of Nigerian Export Promotion Council (NEPC) says the Council’s partnership with Africa’s retail giant, Shoprite, will boost exports of Nigerian products in Africa and beyond. Awolowo who disclosed this on WednesdayinAbuja,whilereceiving a delegation from Shoprite in his office, said he was optimistic that the NEPCworkingwithNigerianexporting companies would leverage on theShopriteplatformtoincreasethe basket of exportable products from Nigeria into African markets. Henotedthatpartnershipwould help meet the Council’s quest to bring Made-in-Nigeria products to over15millionNigeriansinDiaspora

withaviewtoincreasingthevolume and value of the country’s non-oil exports. AccordingtotheAwolowo“This development is commendable and would help our exporting companies improve the quality of their products as well as build strong brands for Nigerian goods in the international market”. He also stated that a Memorandum of Understanding (MoU) will be considered and signed by both parties in the nearest future, to actualize the objectives of the trade partnership. On distribution of Nigerian goods in the international market, Carl Erickson General Manager of ShopriteGroup,Nigeria,saidthatthe Group is looking to expand outside of the African continent, as part of strategic initiative to increase their operations and generally promote goods of African origin.

He pointed out that with the partnership initiative, Nigerians products would be in good stead to competewithotherbrandsintheinternationalmarketasShopritewould provide a platform for promoting and marketing Made-in-Nigeria products beyond the shores of the country. On logistical support, the Technical Consultant to Shoprite, Kabir Shagaya MD of Zippy Logistics, noted that there was the need to ensure seamless transportation of chosen products to be sold in Shoprite outlets across Africa, given the infrastructural challenges currently being witnessed in the sector. Shoprite currently operates about 2, 689 outlets in 15 African countries including Nigeria and Indian Ocean Islands. In Nigeria alone Shopriteispresentlyemployingover 6,000Nigeriansinher35salespoints across 15 States of the Federation.

Five days after resumption from strike, TSU matriculates 3,914 Students Nathaniel Gbaoron, Jalingo

he Taraba State University (TSU), on Wednesday, matriculated 3,914 students for the 2018/2019 academic session of the institution. The ASUU chapter of the University embarked on an indefinite striketwomonthsagotopresshome their demands including earned allowances inclusion in the pension scheme, building of a perimeter fence, among others, called off the strike last Friday. VincentAdoTenabe,ViceChancellor of the institution, told the

newly admitted students to keep to the rules and regulations of the institution. He said they should consider themselves lucky to have gained admission to the university because outofmanycandidatesthatapplied, only a little over three thousand of them were admitted. “You should therefore, consider the admission as a special privilege. The matriculation oath which has just been conducted today is a ceremony that formally initiates you into the body of university community. “By this process, you have been

formally accepted into Taraba state university rules and regulations,” Tenabe stated. He advised them to shun examination malpractice, cultism, drug abuse, indecent dressing and all forms of anti-social behaviour. He alsoassuredthemthattheinstitution had experienced and dedicated lecturersandsupportingstafftotrain them to achieve their future career ambitions. “As fresh students, you should note that academic programmes in the university have maximum time frames within which must be completed,” he reminded them.

Buhari approves N30.8bn to clear salary arrears in Kogi …as Kogi traditional rulers approve Bello for 2nd term .....seek the post of Finance Minister Tony Ailemen, Abuja

resident Muhammadu Buhari on Wednesday approved the release of N30.8b to Kogi State to clear salary arrears, as he met behind closed doors with traditional rulers from the State, led by the Attah of Igala land, Michael A. Oboni. Speaking on behalf of the Kogi Council of Traditional rulers, Solomon Owoniyin, the Obaro of Kabba, Chairman of the Okun Council of Obas, declared that the team presented three requests, including an upgrade in the status of the Minister representing the state, as well as presentation of Yahaya Bello for endorsement as the state Governor for a second term The traditional rulers announced that the President approved the last tranche of the bailout funds to clear salary arrears in the state. “We are happy to announce too because our governor announced it here, that the last tranche of bailout fund of about N30.8 billion has been approved. So the issue of salary arrears, allowances and pensions will be put to rest by His grace before the elections,” Owoniyin said. “So we are confident that, this federal government, we are going

to have a good deal with it and by the grace of God since we are supporting Mr President, it is natural and normal for him to pay us back in the right coins,” he added. Traditional rulers said they were at the Presidential Villa to congratulate President Buhari as well as reconfirm their endorsement of Yahaya Bello for a second term in office “Some people in the social media say we are playing politics. We are being realistic. Our people at home had already endorsed Yahaya Bello, ours is to reconfirm that endorsement,” Owoniyin said. He said the State’s status in the Federal Executive Council had to change. “We need the position of a full Minister, including giving us the position of Minister of Finance and not Minister of State,” Owoniyin declared. “Sowearehappytoannounce to our people at home that Mr President has promised to treat us very well. Like the chairman of our traditional council said, we are not comfortable with minister of state, so our status in the federal cabinet must be upgraded to a full-fledged minister and by the grace of God Minister of finance.” Owoniyin said the delegation was at the State House to pray for the president because his second

term, according to hi, “is very critical in the chequered history of Nigeria,” noting that the team wished the president success in all his aspirations. He added that they were also at the seat of power to upgrade what the president called their shopping list. He disclosed that the group was at the Presidential Villa to reintroduce Governor Bello to the President and demanded for normal support since they belong to the same party. According to the spokesman, “the issue of endorsement is here; the people at home have already endorsed Yahaya Bello for second term. So we don’t need to re-endorse him in Abuja here. All we needed to do was to represent him to the President and Commander in Chief of the armed forces of Nigeria.” The group expressed satisfaction with the reception accorded it by the president, and declared that the traditional rulers had reconfirmed their support for both the federal and state governments. Governor of Kogi, Yahaya Bello, in his remarks, said the leader of the delegation was the Attah Igala, His Royal Majesty, Michael Idakwo Ameh Oboni, the President of Kogi State Council of Chiefs.

Obaseki’s agric reforms: Edo farmers get seedlings, fertilizers, for 320ha maize, rice cultivation ahead of planting season

he Edo State Government through its Agriprenuer programme has distributed seedlings, fertilizers and other farm inputs to farmers in Edo Central and Edo North Senatorial districts, in commencement of mechanized farming for the new planting season. The programme is being run with technical input from Nigeria IncentiveBased Risk-Sharing System for Agricultural Lending (NIRSAL) in support of the Governor Godwin Obaseki-led administration’s plan to drive agricultural development in the state. Speaking during the official flagoff of distribution of inputs in Irrua, Esan-Central Local Government and in Weppa, Etsako East LGA, the Special Adviser to the Governor on Agriculture, Forestry and Food Security Programme, Prince Joe Okojie, who was represented by Churchill Oboh, said the distribution marks the commencement of the mechanized farming in the areas. He noted, “The farmers can now hitthegroundrunning.Sincetheentire processismechanized,thefarmerscan nowtaketheirseedstotheplanterswho would administer them immediately.” Okojie urged the farmers “to be diligent and adhere to instructions of the technical partners and extension workersduring and after planting,and to remain positive.”

Members of the Usugbenu Farmers Association in Irrua, Esan-Central LGA, were given 25kg per hectare of maize seedlings to cultivate 180 hectares with each farmer expected to cultivate five hectares of land. At Weppa in Etsako East LGA, farmers selected for the first phase of the exercise got rice seedlings and are expected to cultivate 140 hectares of land with each farmer expected to cultivate five hectares. The farmers who were visibly excited, promised to utilise the opportunity to boost food security in the state. ThechairmanofUsugbenuFarmers Association, Mr. Bello Austin, hailedtheGovernorGodwinObasekiled administration for demonstrating commitment to the initiative. According to him, “In the past, it used to be paperwork, but thank God the state government has shown enough commitment by bringing these inputs.” Vice chairman of the Farmers Association in Irrua, Akhiwu Ehidiamhen, said, “We are happy the seedlings are here. We are also happy that the state government has fulfilled its promise to us.” Other farm inputs the state government distributed to the farmers include fertilizers, herbicides and fungicides.

Airport encroachment: FAAN, Enugu government partner to address menace IFEOMA OKEKE

he Managing Director of the Federal Airports Authority of Nigeria(FAAN)saystheauthority is collaborating with Enugu State government to address the menace of airport encroachment at the Akanu Ibiam International Airport, Enugu. YadududisclosedthisonWednesday following a joint facilities inspection visit to the airport by the manage-

ment of FAAN and Ifeanyi Ugwuanyi, the governor of the state. Expressing his gratitude to Governor Ugwuanyi for his swift response to this issue by directing that all illegal structuresattheairportbedemolished after a week’s notice of evacuation, he noted that human habitation within the airport’s airfield was a safety concern to the Authority because of the heavy equipment that moves within the environment. www.businessday.ng

L-R:Urum Eke, group managing director, First Bank of Nigeria Holdings; Babajide Sanwo-Olu, governor, Lagos State; Ben Akabueze, representative of the Vice president and director-general, Budget; Jim Ovia, founder, Zenith Bank plc, and Uyi Akpata, country senior partner, PwC Nigeria, at the cutting of the tape to launch the PwC Experience Centre at Victoria Island, Lagos, yesterday.

Ethiopian Airlines beefs up security across airports to curtail drug cartel IFEOMA OKEKE

thiopian Airlines has disclosed measures it is putting in place to prevent illicit drugs from being planted in passengers’ baggage. This was disclosed by Esayas WoldeMariam Hailu, managing director of Ethiopian International Services- Ethiopian Airline to journalists at Addis Ababa. This development is coming at a time when airlines have been accused of conniving with baggage handlers at the airport to plant illegal items (illicit drugs) into pas-

sengers’ baggage. According to Hailu, Ethiopian Airlines is very serious about the security of its operations and customers and has discussed with all the authorities on how the process of baggage screening should be done in a way that ensures safety is at the peak. “We, together with other airlines, ground handling company and the security company, raised the need for scanning machines, sniffing dogs at the airport which should be arranged by the authorities. We have also placed strict control on the ground handling

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company and the security company as well. “The check lists we are using includessensitizingallhandlingstaff to strictly follow the standard passenger check-in procedure, interviewing all passengers in regards to their baggage and asking questions relating to who packed the luggage and details at point of check-in, ensuringpassengerappearthemselves for check-in of baggage, ensuring security company searches all bags, proper supervision and control are in place at the baggage area and tightening the security check and Additional security check at transit @Businessdayng

(ADD),” he said. On the utilisation of Radio Frequency Identification Device (RFID) for baggage tracking, Hailu said “Ethiopian Airlines is one of the founding members of IATA and Tewolde GebreMariam, the CEO of Ethiopian Airline, sits on its board of governance and he has just been re-elected. “So any IATA initiative is also part of our initiative because IATA is a consortium of airlines. Whenever there is a migration from paper ticket to E-tickets, or any other development, we are always up to the tune and we comply.”

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Stop Driving Capital Away: A Lesson from South Africa

David Hundeyin

couple of weeks ago, the news broke that Africa’s largest company – worth several times the size of the entire Nigerian Stock Exchange and on paper as much as 35 percent of its home country’s GDP – would carry out a $100 billion listing in the Netherlands. Against a backdrop of palpable outrage in South Africa, Naspers the parent company of Multichoice, which holds a massive 31 percent stake in Chinese internet giant Tencent revealed that it would list its foreign assets on the Euronext exchange in Amsterdam, leaving relative scraps like its cable TV division for a secondary listing in Johannesburg. A few days later, a UN report revealed that while foreign investment into subSaharan Africa rose 13 percent last year, it fell a massive 43 percent in Nigeria. In what comes as a surprise to no one outside of Abuja’s government district, investors voted with their feet in the face of increasingly antagonistic regulatory posturing toward big foreign businesses like MTN. In both absolute and proportional terms, Nigeria now ranks behind Ghana in FDI inflows. This obviously looks bad, but at least we didn’t just get $100 billion taken out of our economy and parked in Europe like South Africa right? Well actually, while Nigeria has no corporate entity close to the size of Naspers that it risks losing, it is losing capital worth far more than Naspers’ balance sheet billions in the long term. Capital Isn’t Always Money If you studied economics at a Nigerian secondary school, you were likely taught (erroneously) that there

are three factors of production namely land, labour and capital. In fact, there is a fourth element widely recognised outside of our insular West African space as the most important factor of production – entrepreneurship, which is also sometimes known as intellectual capital. Without the knowledge and the human capacity element to power an economy, it does not matter how much land and labour is available. As the world evolves further into a knowledgebased economy, this will only become more pronounced, and here is where Nigeria faces big trouble. There is currently a significant population of highly skilled, internationally competitive Nigerians living in Nigeria, some of whom are even working remotely for foreign employers and clients. They are not geographically restricted to being in Nigeria, but they remain here for largely sentimental reasons, while supporting the local economy and paying taxes to local authorities. Some of these people include highly paid programmers, doctors, management professionals, pilots, international freelancers and academics. Losing such intellectual capital to emigration will be especially damaging in the long term because we would also be losing the capacity to train their replacements. Much is often made for example, of the fact that we are losing healthcare professionals at an alarming rate, while having about four times less than the WHO-recommended doctor to patient ratio. While that is bad enough, the creeping and unspoken disaster in that story is that the consultants and professors who will train the next generation of these professionals are now either permanently absent or getting closer to retirement. I have spoken to a senior staff member at a teaching hospital about this issue, and when I asked how the government sees the unfolding brain drain crisis in the medical sector, his reply went something along the lines of “As they graduate and leave the country, more are writing JAMB and entering medical school to replace them.” The government genuinely believes that

Nigeria has an everlasting conveyor belt of talent that will keep the country just about managing to get by, as it is currently doing. The problem is that the intellectual capital that powers the conveyor belt is disappearing, and there is no plan to deal with this. An official ‘soldier come, soldier go, barracks no dey empty’ policy is unsustainable. Due to emigration and retirement, Nigeria’s teaching hospitals will soon lose those who have trained most of the country’s doctors over the past three to four decades. In all likelihood, their replacements will be those who were not good enough to make the cut for an international placement, which has unavoidable implications for the general quality of the next generation of Nigerian healthcare professionals. A similar phenomenon is taking place across the country’s higher institutions, which does not bode well for the future of Nigeria going into the fourth industrial revolution. At a time when technology is already making national borders superfluous, only people who can compete globally will have the chance to live meaningful lives in the future. Without the intellectual capacity to drag Nigeria into the 21st century, coupled with accelerating population growth and sinking oil values, we risk becoming the first disrupted civilization of the modern era – a country of 200 million+ economically displaced people. Enough of the Populism and ‘Okrika’ Socialism A constant feature of the conversation in South Africa around the Naspers listing was the inference that the company was somehow stealing something from Africa and taking it to Europe. As a legacy of the apartheid economy and a visible symbol of continued domination of Afrikaners over the country’s economy, it is not hard to see why it elicited such reactions. There is a continued (and in some cases, perhaps justified) perception that white-dominated business spaces in South Africa deliberately try to exclude black natives and keep all the action “in the family.” The country’s political lexicon even has a term for it – “White Monopoly Capital.”

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Without the intellectual capacity to drag Nigeria into the 21st century, coupled with accelerating population growth and sinking oil values, we risk becoming the first disrupted civilization of the modern era – a country of 200 million+ economically displaced people

While it may be emotionally satisfying and politically expedient to bash companies like Naspers for being White Monopoly Capital, that cannot substitute for good economic policy and support for innovation. In fact, Naspers did not list in Amsterdam because of some White Brotherhood chimera, which politicians like Julius Malema successfully sell. The Euronext simply offers greater liquidity and accessibility to global markets. The Johannesburg Stock Exchange – like its cousin in Lagos – is largely inflexible and limited. These are the boring and unimpressive facts that generally inform business decisions. Instead of railing against White Monopoly Capital and using the memory of apartheid to threaten businesses with tax increases, South Africa’s politicians would have been better served creating regulation to ease doing business and increase their population’s access to education, That is the only way to compete in this borderless economic world. Similarly, Nigerian politicians should create regulations to make it easier for Nigerian businesses to produce palm oil, instead of imposing a simple-minded ban on palm oil imports that is guaranteed to have no effect other than raising palm oil prices. In a world where $100 billion can be moved from Johannesburg to Amsterdam with a stroke of a pen outside of government control, waving a big stick alone does not work anymore. We need more carrot, less stick. Easing licensing requirements, elimination of multiple taxation, provision of adequate security and power, removal of export licensing fees; these are just some of the steps that a Nigerian government that wants to increase the country’s productivity should take. Using a stick to intimidate capital is yet another cold-war era legacy that really needs to be left behind where it belongs in the 20th century. As the example of Naspers shows us, capital has no borders. If we drive it away, it will leave. David Hundeyin is a writer, travel addict and journalist majoring in politics, tech and finance. He tweets @DavidHundeyin.

SEC: A biased regulator on the Oando case

ando finally responded to the Securities and Exchange Commission’s (SEC) Sunday, June 9, 2019 press release in which the Commission said it had given Oando sufficient opportunity of being heard and to rebut the issues revealed by its investigation. The SEC, in its press statement claimed that “Oando PLC was given sufficient opportunity of being heard and accorded several opportunities to rebut the issues revealed by the investigation.” The Commission further attested that those opportunities were via engagement with Deloitte & Touche in the course of its audit into the company’s business. Oando’s response was extremely comprehensive, defining what fair hearing is, meticulously detailing all the instances it engaged with both SEC and the independent auditor Deloitte, Nigeria and explaining that day to day engagement in the course of an investigation is not the same as a fair hearing. In Oando’s press statement published on June 17, 2019, it vigorously debunked SECs claims, stating, “Oando was not accorded a fair hearing because we simply co-operated with the process and responded to questions posed by the auditors in the course of their fieldwork for findings in a report that the Company has still not seen.” The company implied that “a hearing can be said to be fair when all the parties to a dispute are given an opportunity to present their respective

cases, and each side is entitled to know the details of the case/findings being made against it and is given an opportunity to reply thereto.” The company goes on to highlight that it was not given the same opportunity to meet with the SEC as afforded the petitioner, despite multiple requests. One of this was the request addressed to the SEC by the Chairman, HRM Oba Michael Adedotun Gbadebo CFR, on August 24 2017, who wrote asking for a meeting to table concerns, before the commencement of the forensic audit. In defense of Oando Plc, the Pragmatic Shareholders Association of Nigeria, an association of Oando minority shareholders had run a series of advertorials comparing SEC’s handling of Ecobank Transnational International to Oando and there were significant differences. The differences included SEC inviting Ecobank Board Members to defend the findings of the forensic audit by KPMG but the same courtesy of defending or rebutting the findings of Deloitte, Nigeria was never granted to Oando PLC. The advertorial also highlights that till date, Oando has not seen the forensic audit report despite repeated requests, while in Ecobank’s case, the audit report was delivered to ETI’s head office and its defence was incorporated in the final forensic report. Further faulting the SEC’s processes, the advertorial showed that an Administrative Proceedings Committee (APC) was not convened in the case of Ecobank, and therefore the regulator could not issue sanctions under its procedures

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while for Oando, the SEC did not have a functional Board and therefore was unable to convene an APC, nevertheless the SEC still issued sanctions. In the light of the foregoing and the ETI case study, it would not be far-fetched to claim that the SEC has meted unfair treatment on Oando PLC and shown an unfair bias in its decisions and actions. Further reinforcing the issue of bias, in the case of BGL, it took the SEC three years and 32 complaints between 2012 and 2015 against the company over misconducts relating to operations of their Guaranteed Consolidated Notes (GCN) and Guaranteed Premium Notes (GPN) before SEC finally took a decision to investigate BGL. In the case of Oando, it took just one complaint before the SEC swung into action. Oando has consistently reiterated its concerns that the SEC even took up this complaint as it was a petition from an indirect Oando shareholder. Still on the BGL case SEC had stated that in order to ensure investors obtained justice while also granting all parties a fair hearing, all parties were invited before the SEC APC. In the popular 2006 Cadbury case SEC wrote to Cadbury expressing its concern on the issue of its 2005 financial report review after which it constituted an in-house committee, which investigated the matter of confirmed misstatements of approximately N13 billion. SEC then invited the company executives to appear before the APC to explain why sanctions should not be imposed on them before it took action from the APC’s findings.

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Bisi AshiruOlabanjo Using the two cases as examples, Oando asserts in its press statement that, the “APC forum was rightly adopted by the SEC in the case of Mr. Olubunmi Oladapo Oni vs. Administrative Proceeding Committee & Securities and Exchange Commission (2014) N.W.L.R. (part 1424) 334 “The Cadbury Case”, the case of Afolabi Gabriel Oluwaseyi & 9 others vs. BGL Securities Limited & 22 others as well as in the case of the investigation of a certain financial institution”. Therefore, it sees no reason not to be accorded the same hearing since other aforementioned parties were afforded opportunities to be heard before the panel prescribed appropriate punishments. Weighing the actions of the SEC against Oando to the above listed companies, it is irrevocably clear that the regulatory body has shown bias against Oando. Despite clamorous from all sides for SEC to readdress the situation and act as a fair and impartial regulator SEC continues to turn a blind eye and not address some of the disturbing issues such as bias that are coming to light. Instead the Commission seems happy to go to court with Oando’s principals for the judiciary to decide on this matter. Bisi Ashiru-Olabanjo writes from Lagos.

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The dangerous seductiveness of collective narcissism Remi Adekoya

t is nice to feel good about yourself. Obviously. And while in the modern world, our selfesteem is very often tied to our sense of personal achievement, the condition of the collectives we identify with are not without impact either. Our group identities provide us with more or fewer reasons to feel good about ourselves. With varying individual intensity, a positive image of self is thus linked to a positive image of in-group. Most Americans want to believe Americans are great, most Chinese want to believe the same thing about their nation, and so on. This is all very human, but what is important is that we make sure there is not too much of a discrepancy between our self-perceptions and reality, both at group and individual level. There is a difference between positive thinking and wishful thinking. Nigeria has the largest number of extremely poor citizens and out-ofschool children in the world. Insecurity is rife, running water a luxury, steady electricity a dream. The country ranks 157th in the United Nations Human Development Index, behind the likes of Angola, Bangladesh, Cambodia, Gabon, Ghana, Kenya, Pakistan, Tanzania, Uzbekistan and Zambia. Yet the average Nigerian will likely insist Nigeria is a greater nation than those bettering us developmentally. How does one explain this selfperception in such a reality? Like most deep-rooted societal beliefs, the story goes back a while. All colonialisms involved an of-

fensive on the self-esteem of the colonized. So it was with British rule in Nigeria. Many pre-colonial beliefs and values underwent systematic rubbishing, well-illustrated in Chinua Achebe’s Things Fall Apart. The added humiliations of extended foreign subjugation, racism, and the reality of European technological superiority, all but guaranteed an inferiority complex. Educated Nigerians who wanted to mobilize against colonialism knew they needed to tackle this complex. Their preferred response to external vilification became unequivocal self-glorification, a stance criticized by the likes of Awolowo in the late 1940s, but nevertheless very popular. Nigerians were not just no worse than others, they were exceptional, a great nation in the waiting. No one articulated this vision more eloquently than Nnamdi Azikiwe who likely picked up the ‘exceptionalism’ trope from his student days in 1920s America which is when the ideology of US exceptionalism gained prominence. By 1960, Nigeria was the ‘African power’ that would not just ‘revive the stature of man in Africa’, but ‘restore the dignity of man in the world,’ according to Azikiwe. Unfortunately, grand ambitions don’t always translate into grand realities. Seven years later, Nigeria was in a bloody civil war. But even this tragedy failed to bring much-needed humility and soul-searching. Buoyed by the oil-cash of the 1970s, the national posturing continued under successive military governments. Achebe commented this harshly in his 1983 book The Trouble with Nigeria: ‘One of the commonest manifestations of under-development is a tendency among the ruling elite to live in a world of make-believe and unrealistic expectations. This is the cargo cult mentality…. a belief by backward people that someday without any exertion whatsoever on their own part, a fairy ship will dock in their harbour laden with every goody they

have always dreamed of possessing. Listen to Nigerian leaders and you will frequently hear the phrase ‘this great country of ours.’ Nigeria is not a great country. It is one of the most disorderly nations in the world. It is one of the most corrupt, insensitive, inefficient places under the sun. It is one of the most expensive countries and one of those that give least value for money. It is dirty, callous, noisy, ostentatious, dishonest and vulgar. In short, it is among the most unpleasant places on earth!’ Unfortunately, years of the ‘we are great’ narrative has helped fuel a collective narcissism. At the individual level, Narcissistic Personality Disorder (NPD) is defined as a behavioural pattern of grandiosity, fixation on fantasies of power and status, a self-perception of uniqueness and superiority, need for endless admiration, a sense of entitlement to special treatment, a tendency to demean others and belief that others envy you. All elements of a protective shell to safeguard what in reality is a fragile ego and fear of inadequacy. At the group level, collective narcissism is ‘an in-group identification tied to an emotional investment in an unrealistic belief about the unparalleled greatness of an in-group,’ according to psychologist Agnieszka de Zavala. The in-group could be a nation, race or any other human collective. While it is rare for all members of any group to share this belief, as long as most do, it will shape collective behaviour. Narcissistic sentiments are discernible in popular Nigerian sayings. ‘We are the Giant of Africa’ (grandiosity). ‘If not for Nigerian support, apartheid would never have ended’ (exaggerating achievements). ‘Nigeria is a great nation’ (Fixation on fantasies of power and status). ‘Naija no dey carry last’ (self-perception of being unique and superior). Meanwhile, external criticism, especially by other African nations, is often chalked up to ‘envy.’ Collective narcissism fosters coun-

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Nations who don’t claim to be great have left Nigeria far behind, yet we are still here, insisting we are special. The success of nations is not determined by any sort of inherent greatness, but by well thought-out and realistic planning

ter-productive behaviour such as conspiratorial thinking. When things are not going as the group expects (which should be very well since we are exceptional), it is quick to blame other groups or ‘bad apples’ within the in-group for plotting against it. Who have we not blamed for holding Nigeria back? IMF, World Bank, the British, the West, Illuminati, Satan, Nigerian ‘cabals’, ‘ritualists’ and evil ‘elites.’ Any explanation that does not look too broadly and deeply inwards to contradict the comforting selfimage will do. Another problem, as Achebe pointed out, is that Nigerian grandiosity has led to various governments postulating unrealistic policies with unrealistic goals amidst unrealistic expectations. Yes, leaders must set goals for their nations to have something to aspire to. But there is a fine line between aspiration and delusion. If a 20-year old believes he will play for Barcelona in the future, that is ambition; if a 40-year old believes the same thing, that is foolishness. Nigerians are no more (or less) exceptional than Malians, Pakistanis or Germans. It is nice to think we are, but we are not. Nations who don’t claim to be great have left Nigeria far behind, yet we are still here, insisting we are special. The success of nations is not determined by any sort of inherent greatness, but by well thought-out and realistic planning, collective hard work and a disciplined governing class. The good news is that there is an increasing number of Nigerians, especially of the younger generation, who see that this grandiose national self-image is completely divorced from reality. But it will take a while before humility and realism creep into the Nigerian psyche. Hopefully, not too much longer. Dr Adekoya is a journalist and political scientist. He has written for the UK Guardian, Foreign Policy, Foreign Affairs,Washington Post and Politico among others. He tweets @ RemiAdekoya1

Court of Law Vs Court of Conscience

ince Nigeria gained independence on October 1st 1960, till this very moment, thousands of cases have been heard in the courts of law. Some cases have been won on merit, some won on legal technicalities, some won on bias and political prejudice. In fact, several Nigerian politicians and public servants have been tried in the Court of Law and several of them still have their heads up, shoulders high, flaunting their post-prison political powers, being welcomed with much fanfare, gaining more political points and getting more feathers to their caps even after being convicted or still facing long trials in the court. Court, in a non-technical way can simply be said to be a gathering where judgments are made. For the purpose of this piece, I shall categorise court to exist in the following forms: Material and Idea. The material court is the court that exists in the physical and perceptible to sensory. It can be called the court of law. The court of Law can be said to be any perceptible individual or government institution with the exclusive right and authority to judge or adjudicate, legal disputes between conflicting parties. This could be in the form

of adjudicating just desserts in criminal, civil and any other matter (Case) as it may arise in accordance with the law. While, the idea-court exist only in our thoughts and aids decisions; in other words, it can be said to exist in the mind as conscience. It can be called the court of conscience. In the court of conscience, there are no physical lawyers. The court is situated in the mind and it is a production of thoughts. The court of conscience includes the advocate of the plaintiff, the advocate of the defendant and the judge being the mind (brain action of thoughts) in use all existing as actions of the brain: the mind. The masses must as a matter of urgency arise to the clarion call of trying public servants and politicians in the court of conscience. However, before any public servant or politician can be tried there is need to firstly, in the words of Chief Olusegun Obasanjo: “need for restructuring of the mind”. This will be done by first examining ones’ past actions, future intentions, its consequences and how it affects others in our community. Secondly, we should be unbiased umpires in examining the alleged politicians and public servants

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irrespective of our religious, social or ethnic inclinations. Thirdly, try the public servants/ politicians in the court of conscience. The trial of public servants in our respective court of conscience should be based on the yard stick of ethical utilitarian moral theory. Ethical Utilitarian moral theory states that whatever is good, should be any action which gives the greatest number of joy to the higher number of people i.e. the masses in this context. So, the yard-stick of assessment in the mind is premised on: whatever action that gives/does-not-give joy and long term pragmatic pleasure to the masses. Or whichever public servant’s policies and administration brings/does not bring pragmatic joy through execution of beneficial projects, implementation of advantageous policies, formulation of positive laws/law making and fair adjudication should be declared wanted and pronounced convicted in the court of conscience. Any convicted sleazy politician found guilty in the court of conscience should be jailed in the conscience and be denied opportunity to hold any other public post. The conviction of erring and suspected

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Emmanuel K. Adebiyi public servants in the country by the masses in their various consciences will go a long way to ensure wanted public servants and politicians are denied access to public, political & non-political posts. It will also stop vote buying, election malpractice, election violence and blind-voting (voting based on political sentiments). On this note, we will flush out and give the old-cargo-politicians (the old-farts) and all the erring politicians, both young and old, compulsory retirement. Hence, making them politically irrelevant even paving the way for “Not-Too-Young-Run”, in order for the young knowledgeable ones to rule. Finally, I strongly believe that this is a major way we can eradicate corruption in our society. It is also a right step of showing patriotism. Emmanuel K. Adebiyi is an anti-corruption writer and he is presently a serving NYSC member of the Lagos State Ministry of Information & Strategy

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Thursday 20 June 2019

BUSINESS DAY

Editorial Publisher/CEO

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

Bashir Ibrahim Hassan

Brain Drain 3.0: The exodus that’s not being televised

growing number of young, educated and employed Nigerians plan to leave the country; are in the process of migrating or are either researching their options (Canada is favourite destination) or saving money towards it. Ask any young Nigerian doctor these days who among her colleagues is still in the country and she’ll most likely say she’s leaving next week. In a recent survey almost half of the Nigerian adults (45 percent) interviewed said they planned to move to another country within the next five years, according to Pew Research Centre, a polling and research organisation based in the US. Not only were Nigerians the highest among nationals of 12 countries from over four continents, the proportion of Nigerians planning to relocate has increased by 7% since the last survey in 2017. Most plan to move to the United States. And the three most popular reasons for moving are “to

find better educational opportunities”, “to find better job opportunities” and “to escape violence”. Education, jobs and security are three interrelated challenges facing Nigeria. A bulging uneducated and unemployed youth population is a dangerous concoction and one of the major reasons for unrest across the country. Bright young Nigerians in search of better education, jobs, and peace, because they don’t see any immediate nor remote solution to these problems are checking out. Call it Brain Drain or Exodus 3.0. No advert, reality T V show or viral video will broadcast this trend. To rephrase the song of Gil Scott-Heron, the American poet, musician and author: This exodus will not be televised; it’s live and happening every day. No TV commercial like the Andrew Don’t Check Out in the 1980s can stop this exodus. Even if government attempted a campaign blitz to discourage migration it can neither outspend nor drown out the multiple sources of in-

formation about greener pastures awaiting intending migrants. Stories like that of Tanitoluwa Adewunmi, the eight year-old chess prodigy, will probably see more wives pestering their husbands to quit their wellpaid job with a multinational company in Nigeria in order to give their children a similar opportunity. Even if they have to sacrifice the middle-class lifestyle they enjoyed in Nigeria. Each passing day people are finding more reasons to leave the country. Both the available human and financial capital required to turn the tide of migration are impatient amid the slow and uncertain pace of the economy. The present state of the economy and doubts about whether the next four years will be any different from the last is quenching the hopes of many and discouraging new investments. Without a clear signal on the economy’s direction, companies and individuals don’t have the time to waitand-see anymore. As a result, the incurably aspirational Nigerian has concluded to take his

dreams elsewhere –whether legally or illegally. Once intrepid and optimistic investors are either reducing their stakes in the country or have shutdown. Three quick things can be done to dampen the increasing eagerness to migrate. Accelerating the transition of the economy to a progrowth phase will jumpstart economic growth. Ending the multiple foreign exchange regimes will signal willingness for reform and attract more patient capital to revamp power, transport and other infrastructure. And finally, a committed plan to phase out the petrol subsidy that has cost Nigeria 7 trillion naira in the past four years will gradually free funds sorely needed for human capital development: education and health. Economic growth matters but it must be broad, even and consistent. In the survey Pew Research Centre conducted in 2017, more Ghanaians than Nigerians wanted to leave their country for greener pastures even though Ghana was one the fastest-growing economies that year.

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Thursday 20 June 2019

BUSINESS DAY

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South-East 2023: Applying the SDGs The Public Sphere

CHIDO NWAKANMA

he prescriptions behind the SDGs drew from a global body of knowledge and the lessons of the Millennium Development Goals. All the 191 member states of the UN system agreed to achieve the eight goals by 2015. As with the SDGs, the MDGs dealt more with the challenges of the Third World, yet countries therein failed to attain the targets due to lack of diligent application by governments and absence of citizen awareness and engagement. Those eight goals were the eradication of extreme poverty and hunger; achievement of universal primary education; promotion of gender equality and empowerment of women and reduction of child mortality. Others were to improve maternal health; to combat HIV/AIDS, malaria, and other diseases; to ensure environmental sustainability, and to develop a global partnership for development. Nigeria failed with the MDGs. However, we have the testimony of one of our former governors of the application of the MDGS in the development template and the results it yielded. Applying the SDGs, now 17 targets instead of eight, should enable the South East states and region fast track development. One advantage is global benchmarking rather than local standards.

The SDGs are interdependent. One influences the other and leads to improvements in each area in a mutually reinforcing circle of virtuousness. SDG 11: Make cities and human settlements inclusive, safe, resilient and sustainable Citizens of the South East must wake up to the changing dynamics of our habitations. The romantic notion of our villages is changing. They are not pristine; many are now unsafe and unsustainable. We are falling into the pattern of the rest of Africa. Non-agricultural activities such as manufacturing and industrialisation are the basis for the organisation of urban centres. Unfortunately, with de-industrialisation, our urban centres are hermaphrodites. Urbanisation is catching up with our settlements. With it comes many challenges. They include unemployment, inadequate health facilities, poor sanitation and the growth of slums. There is environmental degradation. The South East should worry about the statistics on urban degradation that indicts our poster cities of Onitsha and Aba. We must compel LGs and the State Governments to wake up to their responsibilities. Towns unions must also do more and better. Structure the care of our settlements and no longer leave it to vacations or mass return periods. It will simply not suffice. SDG 12: Ensure sustainable consumption and production patterns We are increasingly eating what we do not produce. There is a link between nutrition and health. The incidence of diseases and ailments of diet is growing in our land. But sustainable consumption practices should compel a return to agriculture or the development of alternatives that will ensure our citizens have enough resources for such consumption. Best we produce. Embrace

modern agro-processing. SDG 13: Take urgent action to combat climate change and its impacts There is so much literature on climate change already. We can only emphasise that it is real and regional bodies should commission studies that would show what to do. Then get on with implementation. SDG 14: Conserve and sustainably use the oceans, seas and marine resources for sustainable development Seas and marine resources are not our robust suite. Effective utilisation of the rivers and lakes in our land is the call. SDG 15: Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification and halt and reverse land degradation and biodiversity loss. Degradation of our lands is a significant challenge manifested in erosion, silting and others. The region should view the erosion menace as a common challenge. What have our soil scientists and others trained in cognate disciplines discovered? With the lead of such researchers, what should the region do, state by state and LG by LG? What would it cost? We need a SMART plan. SDG16: Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels Of concern here are issues around women and children. Nnebuihe is our collective nod to the importance of the fairer sex. Cultural practices that work against them should not follow us up to 2023. Education remains central and contributory to building sustainable and inclusive societies. According to Stears Business, evidence exists that in addi-

‘

The romantic notion of our villages is changing. They are not pristine; many are now unsafe and unsustainable. We are falling into the pattern of the rest of Africa

tion to low enrolment numbers, even those in schools do not learn much. “The latest evidence comes from the recently launched World Bank Human Capital Index (HCI), which measures the amount of human capital that a child born today can expect to attain by age 18. According to the Index, a child born in Nigeria today will acquire, on average, 8.2 years of school by the age of 18. However, when the years of school are adjusted by the quality of learning, we find that Nigerians are learning the equivalent of only 4.3 years of school. “Put in more practical terms; this implies that the average child who completes JSS 2 (second grade of Junior Secondary School) would have learned only what a primary four student is supposed to learn. What’s more, the index shows that children in Nigerian schools lag behind other African children in terms of learning.” The South East must move the needle on datasets such as this and truly stand out. SDG 17: Strengthen the means of implementation and revitalise the Global Partnership for Sustainable Development States and LGs should develop SDG goals. Share them with citizens. Involve citizens in the implementation of the SDGs. Link to national and international frameworks and partnerships. The many platforms of citizens working on contributing to the development of the region can do so more effectively by taking on specific areas, forming local and international partnerships and getting on with it. 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.

Discos, signs & wonders, and citizens furry

e are all made in the image and likeness of God (Genesis 1:26-27) and as such, we all have some God-like elements in us. Thus while God is omnipresent, (present everywhere) I have taken a part of Him by being tri-present (present in three places). Check the National Bureau of Statistics residential database and you will surely see me as resident in Lagos (Okota), Ijebu-Ode (Molipa) and Igboukwu (Ezeamaluchi Avenue). And to prove this my tri-presence beyond all reasonable doubts, I start my intervention today with three stories from these three domains. 1) Ihuowele, Igboukwu bulk-metering and disconnection as an instrument of blackmail. In January 2019, a meter serving the Ihuowele village in Igboukwu, a rural community in which 90% of the houses are owned by people in the local diaspora (absentee landlords), received a bill of N10m+! Even Dangote cement Company would be shocked by this kind of bill! The people protested and the EEDC officials, specifically the Network Manager (at Ekwulobia) and Feeder Manager for Nneni Axis (named ChukwuChukwu) admitted that the meter was faulty and promised to effect the necessary repairs. However, since then, they have been playing Ping-Pong with the matter. It is either the officers were busy or their car spoilt on the road or it was too late to come to the town or it rained or any other reason that suited them. Just before Easter, they presented another humongous bill (based on a faulty meter) together with a demand notice and disconnected the light to the whole community and we had no light throughout the Easter season. At the background to this was the demand for a ‘mobilization fee’ of N20,000, which the committee member could not afford, as he was a mere messenger for the community. It was pure blackmail with disconnection and

threat of disconnection as the key instruments. We decided to write a protest letter and as at 10/6/19, more than two months later, we have not had light. And you can be sure that any day they reconnect the light, they will come with bills for the period they were deliberately inactive. 2) Ijebuode: Billing magic and miracle When I moved into the quiet neighbourhood almost 10 years ago, the whole block of 4-flats received a single bill, given the level of power supply and the domestic nature of the abode, the monthly bill has been around N1500-N2500. About three months ago, the IBEDC decided to issue four bills for the four flats and based on the estimated billing model. That was despite the fact that there was (and is) an operational meter in the building. They just discountenanced the meter because it paid them to do so. The first bill under the new arrangement was 300 per cent higher because each flat received what the whole compound used to receive. The following month, it was 100 per cent higher, with each flat paying almost a double of what the whole building used to receive. The alarmed landlord protested to the IBEDC in person and with a letter. In May (and after the protest), we received a bill of N12,000 for a building that three months ago, received an average of 1500-N2000! What happened? That is magic and miracle combined! 3) Okota - Samuel Ekunola: The more you look… At Samuel-Ekunola street, Okota, we have been having electricity related challenges (as usual with almost all parts of the country) but in April-May, it got so bad. We collected the telephone numbers of the marketing officials and started bombarding them with calls, messages and even emails. Within a week, we received the following explanations or justifications from the Okota Business office of IKEDC

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Act1: ‘Dear customer, the current supply interruption is as a result of a fault on Amuwo industrial 11kv feeder supplying your vicinity. Our technicians are currently working to resolve this. Please be assured that supply will be restored as soon as the maintenance is completed. Thanks for allowing us serve you’. Good Act 2 (a few days later) ‘Dear customer, the supply interruption in your vicinity is as a result of low power allocation from TCN. The Transmission company of Nigeria (TCN) is currently working to ensure that power supply is restored to your vicinity. Thank you for your patience’ So, what do we believe? In the first one, they accepted responsibility while in the second one they outsourced the responsibility and both statements within a week! It is only in Nigeria and its reformed power sector that a customer would buy the wire, poles and meter, join others to buy and maintain the transformer and another person just comes to collect the money for power not supplied. And the government which has ‘privatized’ the sector keeps on pampering and making excuses for the operators who went into the business with their eyes wide open. It is only in Nigeria’s reformed power sector that an organization would freely estimate its bills, disconnect customers without the required notice and use the army and police to enforce this roguery! What model of business is this? Well, the people are angry and while people like me just write (and nobody reads) others have decided to ACT! (Next week) Other matters: Nwagbara, justice and the common man Our people say that it is bad to call somebody a thief at the Nkwo-IgboUkwu market and then go to his house later in the day to admit it was a mistake and apologise. Our people also say that it is better to walk on your legs that have

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ik MUO somebody ‘backing’ you while your legs are on the ground. I remembered these two sayings following the recent news report (10/6/19) that a court has freed our ex Senate President, Chief Wabara, of charges of corruption, 14 years after the charge was made. The presiding Judge, S.E Aladetoyinbo, discharged the defendants under section 355 of the Administration of Criminal Justice Act 2015 because there were no witnesses to prosecute the charge. Wabara, Prof Osuji (then Minister of Education) and others were charged by ICPC over the N55m bribe for budget scandal 14 years ago (2005). The charges were front-page news then but today they have been quietly discharged. And then, what is the value of justice as the hope of the common man and even uncommon ones when it took 14 years to discharge the accused? What kind of compensation can the state pay for the material, social and psychological costs? Should we not tidy up our acts before celebrating anti-corruption cases in the media. Questions, questions and more questions! Ik Muo, PhD. Department of Business Administration, OOU, Ago-Iwoye, Ogun State muoigbo@ yahoo.com ;muo.ik@oouagoiwoye.edu.ng ; 08033026625

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Thursday 20 June 2019

BUSINESS DAY

BUSINESS TRAVEL Ethiopian Academy: Training hub for aviation professionals Stories by IFEOMA OKEKE

amuel Arthur (Not real name) has flown for twenty years and still counting without any record of accident or incident. He has earned the trust of local and international carriers and has been ‘poached’ three times by renowned carriers to fly their planes. On several interviews with Arthur on why he has risen to become admired by his colleagues and seniors on the job, he has always linked his success to the training he acquired at the world-class training hub, the Ethiopian Academy. Arthur is definitely not the only one who has a success story to tell. There are several other pilots, cabin crew, engineers, maintenance personnel, cargo operators, Ground handlers, Airline Accounting professionals, Sales and Marketing professionals amongst others that have acquired skills from the multipurpose hub and are standing out at what they do. Apart of training its nationals, Ethiopian Airline has over

the years also extended a helping hand to other airlines in training and retraining its staff through its academy, thereby reiterating its belief in healthy competitive environment. Ethiopian Aviation Academy The Ethiopian Aviation Academy (EAA) was established in 1956, and is a member of the International Civil Aviation Organisation (ICAO) TRAINAIR Plus and International Air Transport Association (IATA) authorized global training center. No doubt, the academy remains the largest Aviation Academy in Africa with full capabilities in all aviation

professions and with the capacity to train 4,000 students a year. Thousands of overseas trainees are carried out in the academy and pilots from around 50 countries have attended trainings at the Academy. Until the latest graduation on March 9, 2019, EAA has trained and graduated a total of 17,509 Aviation Professionals in different Aviation fields, of which 1585 are foreign nationals from different African countries and elsewhere. Today the Academy is increasing its scale and scope is better positioned to cater to the growing needs and demands of Aviation Industry

in Africa and the Middle East. The academy encompasses five independently running aviation training schools, catering to both local and international aviation training needs. Schools under Ethiopian Aviation Academy There are several schools under the academy providing comprehensive aviation related training in the area of pilot, aircraft maintenance, cabin crew, Airline sales & marketing and ground operations on basic and recurrent basis. The Pilot Training School provides Commercial Pilot License training program, Multi-crew Pilot License

(MPL) training and licensing program that is adopted by the International Civil Aviation Organization (ICAO). The Cabin Crew Training School provides basic and recurrent courses for Ethiopian Airlines recruits, other customer airlines, and individual trainees. The Commercial Training School provides basic and recurrent trainings in Reservation, Fares, Ticketing, Airport and Cargo Operations, Ground operations, Airline Accounting, Sales and Marketing trainings to new recruits and Ethiopian employees. In addition, Aviation Maintenance Technician School provides basic and recurrent training programs for Aircraft Maintenance Technicians, Power Plant Technicians, Aircraft Structure and Avionics Technicians. The academy’s Leadership and Career Development Training School offers a wide range of courses for supervisory and managerial personnel with the aim of developing the leadership and managerial skills of Ethiopian and other organizations’ personnel. The Ethiopian Airlines Aviation Academy (EAA) is an

IATA Regional Training Partner, ICAO designated Regional Training Center of Excellence, European Aviation Safety Agency (EASA) approved Maintenance Training Organization, Authorized Training Center (ATC) and Accredited Training School (ATS) by the International Air Transport Association (IATA) and Approved Training Organization (ATO) by the Ethiopian Civil Aviation Authority. The academy is approved by the Ethiopian Civil Aviation Authority (ECAA), African Airlines Association (AFRAA), Federal Aviation Administration (FAA), the IATA Operational Safety Audit (IOSA), European Aviation Safety Agency (EASA), amongst others. The impact of the academy in the company’s bottom line trickles down from its relentless strive to build knowledgeable staff, which in turn provide safe and reliable service, which impact on passengers that, will prefer to fly the airline as a result of its safety record. This has made the airline grow in leaps and bounds as its profits are invested back into the airline. This in turn has helped the airline its vision of being a pan African airline.

Turkish Airlines again emerge country’s most valuable brand in all sectors Topbrass boss, Iyayi delivers major

urkish Airlines has emerged as one of the world’s leading independent organizations in brand valuation and strategy consulting. This was made known by Brand Finance during the 2019 result announcement evaluation. According to the results, Turkish Airlines was declared as the most valuable brand of Turkey in all sectors. The national flag carrier, who repeatedly assumed this title before, reinforces its leading position in Turkey with recent results. Commenting on the results, İlker Aycı, Turkish Air-

lines Chairman of the Board and the Executive Committee, said, “We are proud of our achievements which have

been crowned with our strategy to become the best airline company in the world. Continuing the last years’ suc-

cess indicates that our performance is sustainable. It shows that we are on the right track. We know the value of being the flag carrier of Turkey as we keep our flag flying in 124 countries.” Brand Finance, which evaluates thousands of brands on a global scale through the researches centred on finance and marketing variables, annually announces its ranking results, which are shaped according to the brand power and value criteria to the attention of world public opinion and sectors every year since 1996.

Asky, Ethiopian Airlines flags off flight to Johannesburg

thiopian Airlines introduced its code share flight with ASKY to Johannesburg, South Africa making it the only non-South African Airline on the route between Nigeria and South Africa. It was welcomed with Water Canon Salute and received by Staff of ASKY and Ethiopian Airlines. The Airport Community also joined in the reception. The Flight was operated with an ASKY B737-700 commanded by Dawit Muluneh, the captain of the

flight. It left Lagos for Johannesburg by 1645pm. Firihiewot Mekonnen, the general manager of Ethiopian Airlines in Nigeria at the inaugural ceremony told the media at the Murtala Mohammed International Airport that ASKY is the Operating Airline while Ethiopian Airlines is the Marketing Airline.” Mekonnen said Ethiopian Airlines and Asky are partners and this flight is a code share flight as Asky will be the operating carrier and Ethiopian Airlines will be the www.businessday.ng

marketing carrier. “It is just one stop-over. We already have a promotional fare. Nigeria is one of our biggest markets where we bring the best of our aircraft and we always strive to give our best to Nigerians. As part of this motive we found out a lot of Nigerians travel to South Africa so we decided to help improve the connectivity for the passengers. “We have also availed many promotional fares so we invite Nigerians to use the best deals to Johannes-

burg. “The inaugural flight had a 70 percent load factor. The flights are daily from Lagos to Johannesburg. Some days the flights go through Libreville on other days it will go through Douala,” she added. She said the decision to stop over at Libreville or Duala is entirely a commercial decision. Muluneh Dawit, the captain of the flight said he and his were very glad to be part of the flight, as the destination and expansion were entirely new.

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paper at LAAC 23rd Conference

oland Iyayi, the Chief Executive Officer of TopBrass Aviation Limited, is among the two top aviation personalities that would deliver papers at the forthcoming 23rd annual conference and awards of the League of Airports and Aviation Correspondents (LAAC). The theme of the conference, which has been scheduled to hold at the Radisson Blu, Ikeja is: ‘Boosting Aviation Investment through Policy,’ while Iyayi would deliver a paper on ‘Boosting Aviation Investment Thorugh Policy: An Airline Perspective.’ The conference is scheduled to hold on Wednesday, July 17, 2019. The event, which is expected to attract a large poll of aviation stakeholders, would be chaired by Muneer Bankole, the Chief Executive Officer (CEO) of Med-View Airline. Also, Harold Demuren, the former Director-General of the Nigerian Civil Aviation Authority (NCAA), who is the lead speaker would deliver a paper on: ‘Boosting Aviation Investment Through Policy: Government Perspective.’ Demuren is expected to share his wealth of experience after years of serving in both public and private sectors of the aviation industry. Demuren is currently the Presi@Businessdayng

dent of Flight Safety Foundation (FSF) West Africa. Prior to setting up Topbrass, Iyayi had many years ago built Aeroleasing and Consultancy limited, an aviation consulting firm based in Nigeria charged with Research and Development and Strategic Planning, following which he held the position of Managing Director of the same company until his appointment to the position of Technical Advisor to the Honourable Minister of Aviation in Nigeria. Roland later assumed the office of the Managing Director of the Nigerian Airspace Management Agency (NAMA), after being a member of the Presidential Task Force on Aviation in Nigeria. Following this, he was appointed to the position of Acting Managing Director/ Chief Operating Officer, Aero Contractors and charged with Corporate Development and Strategic Planning of the airline. A qualified pilot and Air Safety Investigator with over 25 years industry experience, Iyayi also earned an MSc degree in Air safety Management from the City University of London and is a member of the Aircraft Owners and Pilots Association (AOPA) and National Business Aircraft Association (NBAA).

Thursday 20 June 2019

Innovation

BUSINESS DAY

Apps

Fin-Tech

Start-up

Gadgets

Ecommerce

IOTs

TECHTALK

Broadband Infrastructure

Bank IT Security

Agenda for Shittu’s successor: Focus on comprehensive broadband strategy FRANK ELEANYA

igeria’s president Muhammadu Buhari will soon announce who will be replacing Adebayo Shittu as Minister of Information and Communication Technology (ICT). Whoever the mantle falls on needs to focus on a comprehensive broadband strategy, experts have said. Broadband technology refers to high-speed, higher bandwidth connection to the internet than is offered by a standard telephone. The speeds vary according to the type and level of services offered, broadband services deployed for residential consumers provide faster downstream speeds than upstream speeds. The two main categories of broadband technology are fixed-line broadband and wireless technologies. Fixedline solutions communicate through physical networks that provide direct wired connection from customer to service provider. Wireless solutions, on the other hand, use radio or microwave frequencies to provide connections between operator and customer networks.

It is also important to note that just as satellite orbiting the earth provides necessary links for telephone and television, they can also provide links for broadband. Satellite broadband is another form of wireless broadband, and is useful for serving rural or sparsely populated areas. The Nigerian National Broadband Plan drafted in 2013 which timeline ended in 2018, recognised the critical role and transformative benefits of providing an elaborate broadband infrastructure. “Because of the diverse nature of the country in terms of class and geography, different technologies must be deployed, including terrestrial wireless networks, optic fibre transmission networks, fibre to the home/premises, DSL systems, satellite systems and fibre/broadband over power lines. This will ensure the provision of solutions tailored to the needs of individual groups or communities,” the plan stated. The growth and development of digitalisation in Nigeria and the impact it will bring to the national economy depends on the extent of investment and rollout of critical infrastructure.

Adebayo Shittu

South Africa’s broadband outcomes were improved only after enabling infrastructure operators such as Dark Fibre Africa and FiberCo, which fostered growth for mobile network operators including Vodacom and Cell C. The South African government also took deliberate steps by investing billions of rand to expand the country’s fibre network. Kenya also built over 6400km cables under its National Optic Fibre Backbone Infrastructure (NOFBI) project and supported operators to build another 5000km. Although Nigeria managed to attain and exceed the 30 per cent penetration target specified in the plan, much of the promises have not been

fulfilled. For instance, the plan promised that the federal government would promote the rapid establishment of recovery agreements and the delivery of additional cable landing points to other coastal states such as Delta, Rivers, Bayelsa and Ondo as soon as possible. It also promised to promote a seamless interconnectivity regime and an Open Access Infrastructure sharing agreement among fibre optics operators in the country. Under the administration of the previous Minister of ICT, Adebayo Shittu, many experts believe the ministry lost direction, thus the many controversies and challenges that operators within the telecommunication sector, par-

YouTube recognises, empowers local content producers during weeklong activities CALEB OJEWALE

s Nigerian content creators find more ways to get creative and monetize their presence on YouTube, the video streaming service has kicked off a whole week of activities to recognize creators who are performing well, and providing support for their improvement through a boot camp. In BusinessDay interactions with some creators, it was revealed that many have found content creation as a way to beat unemployment, earning a living while also doing things they enjoy. In the course of the week, Gold Play Buttons will be awarded to channels that have reached the one million-subscriber mark, and Silver to those which have garnered 100,000 subscribers. On Monday, Nigerian music artiste, D’banj, picked up a Silver Play Button in recognition of achieving 100,000 subscriptions to his YouTube channel, while Neptune3 Studios, 2Baba Idibia, Teni and Adekunle Gold are to re-

ceive similar awards. Flavour, whose channel has crossed the one million-subscriber mark, will be picking up a Gold Play Button. The YouTube platform, for many content creators, started as a platform where they could find expressions with their hobbies. However, as previously reported by BusinessDay, it has become a platform where they are paid for their creative efforts, and beyond this, one that has showcased them to a clientele base, sponsors and brands they never would have secured on their own.

In supporting the ecosystem of content creators to grow, a week-long bootcamp for YouTube Creators started on Monday and will culminate in a graduation ceremony and wrap party on Friday, 21 June. The Bootcamp covers topics like channel & content strategy, working with brands, creator responsibility, production, and accelerating growth on YouTube. A public YouTube Masterclass will be held on Saturday, for registered participants. “Nigeria has a culture that is steeped in sharing and storytelling, and Nigerians are

Addy Awofisayo, YouTube partnerships manager, presenting a Silver Play Button Award to Dbanj in recognition of achieving 100,000 subscriptions to his YouTube channel at the YouTube Week Event that held in Lagos recently.

passionate about music, entertainment and education,” said Addy Awofisayo, YouTube partnerships manager. “Since its launch in Nigeria in 2011, we’ve provided a platform for Nigerians to share the country’s unique and diverse culture on a global stage, and also offer Nigerian users more relevant content. Over 5000 hours of content are uploaded to YouTube every minute, noted Awofisayo. According to her, what happens on YouTube is a reflection of what is important and relevant to the world. YouTube has a large and passionate community where people gather and express themselves, share experiences, and reflect on what they think about and care about moment to moment. In the course of the week, YouTube Nigeria premiered new original series including the D’Banj’s ‘Adventures KokoMaster’ series, on Monday, the ‘Brotherhood’ series premiere from Accelerate TV on Tuesday, the SceneOne ‘Ayetoro’ series premiere on Wednesday and today, it will host an evening with Tuface Idibia (2Baba).

ticularly, faced. For the new minister of ICT, Temitope Osunrinde, Manager, Marketing and Communications at Verraki, said the national broadband plan has to be revisited and Nigeria must work towards speedy implementation. He identified three legs the focus could take for the new minister. “Discussions around openaccess infrastructure, new last mile access networks to connect more people, protection of these infrastructure and smartcity initiatives form the infrastructure leg,” Osunrinde said. “Harmonizing the different telecoms taxes across government levels and scrapping Right of Way costs, fast-tracking use by homes, enterprises, government and its MDAs, research and healthcare institutions plus interventions to support new players form the policy requirement. Content deals with human capacity and other actual outcomes of internet.” He also recommended exploring ownership of fibre ducts by federating units and Private sector in a PPP mode to accelerate laying of fibre. “It is critical to explore incentives to accelerate renewable energy to reduce energy cost and partner with creative

Visa launches cross-border payments for businesses globally CALEB OJEWALE

isa Inc. has announced the commercial launch of its B2B Connect network, which it says will give financial institutions an ability to quickly and securely process high-value corporate cross-border payments globally. Described as a first of its kind, the cross-border B2B payments network streamlines payments and delivers rich set of data for financial institutions and their corporate clients. The Visa B2B Connect launch will cover 30 global trade corridors, with an aim to expand to as many as 90 markets by end of 2019. “Launching Visa B2B Connect marks an important industry milestone which will accelerate the evolution of how commercial payments move around the world,” said Kevin Phalen, SVP, global head of Visa Business Solutions. “By creating a solution that facilitates direct, bank to bank transactions, we are eliminating friction associated with key industry pain points. With Visa

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sector to drive rich relevant local contents for broadband,” he said. Adedeji Olowe, CEO of Trium Networks and a trustee of Open Banking Nigeria said the new minister must work with Internet service providers (ISPs) and GSM providers to crash the cost of data and improve the speed of internet. “We should be targeting the same price in India (or even lower) where 1 gigabyte cost about N108 only,” he said. “Government should also see how the cost of cheap smartphones can be reduced – waive the custom duties on phones whose cost is below N10,000 and also see how local smartphones can be assembled in Nigeria.” He also sees opportunities in leveraging 5G technology which has the potential to perform as well as fixed for fraction of the cost. However, the policy the minister should pursue has to support the rollout of a nationwide optical fibre backbone to ensure that cell-sites and remote outposts can easily be deployed. “Our young population and high digital adaptation skills puts Nigeria ahead to take advantage of broadband proliferation and create sustainable impact,” Osunrinde said.

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B2B Connect, we are making payments quicker and simpler, while enhancing transparency and consistency of data.” Visa B2B Connect removes friction and time spent on cross-border corporate transactions by facilitating transactions from the bank of origin directly to the beneficiary bank. The network’s unique digital identity feature tokenizes an organization’s sensitive business information, such as banking details and account numbers, giving them a unique identifier that can be used to facilitate transactions on the network. Partners, including Bottomline, FIS and IBM are integral parts of the future scale of Visa B2B Connect. Bottomline and FIS are bringing Visa B2B Connect platform access to its participating bank clients. Along with Visa’s core assets, Visa B2B Connect utilizes open source Hyperledger Fabric framework from the Linux Foundation, in partnership with IBM. This helps provide an improved process to facilitate financial transactions on a scalable, permissioned network.

Thursday 20 June 2019

BUSINESS DAY

RESEARCH&INSIGHT

In association with

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

briu@businessday.ng

08098710024

Nigeria, still the largest rice importing country in Africa ADEMOLA ASUNLOYE

ndia is the largest exporter of rice in the world in 2018, exporting 12.5 million metric tons of rice, which accounted for almost 25.3 per cent of the total global rice exports of 49.5 million metric tons. India is also the leading exporter of the basmati rice in the global market. Between the period of 2017 and 2018, India exported 4.05 metric tons of basmati rice to the world worth of $4.2 billion. The major countries importing rice from India are Saudi Arabia, UAE, and Iraq accounting for 9.3 per cent, 9.2 per cent and 7 per cent of the total rice export shares from India respectively. Thailand and Vietnam had 0.98 per cent and 4.48 per cent increase respectively in the quantity of rice exported from 2017 to 10.3 million metric tons and 7 million metric tons respectively in 2018 while Pakistan had with 11.8 per cent increase to 4.25 million metric tons within the same period. Although, the United States’ rice export was down by 3.03 per cent in 2018, it jumped to the 5th position from the 6th position it was in 2017 to 3.2 million metric tons, while Myanmar dropped further by 9.09 per cent to 3 million metric tons as the 6th world exporter of rice in 2018. China, Cambodia and Brazil exported 1.9 million metric tons, 1.3 million metric tons and 850 thousand metric tons of rice respectively while Uruguay stood as the 10th rice exporting countries worldwide with 0.81 million metric tons within the same period. The top five rice exporters in the world: India, Thailand, Vietnam, Pakistan and the US alone represent 77 per cent of the overall world trade in rice in 2018. China—the largest importer of Rice China is the largest importer of rice again in 2018, importing 4.5 million metric tons with 18.18 per cent decrease in importation from

Source: Statista, BRIU

2017. Although China is the world’s largest rice producing country in the world, it still has to import rice due to the high consumption rate by her citizens. Vietnam, Thailand, and Pakistan are the major exporters to China with 45.8 per cent, 26.3 per cent, and 19.9 per cent shares out of the total rice imports in the country. Philippines with 2.3 million metric tons overtook Nigeria as the 2nd largest rice importing country as the quantity it imported increased by 76.9 per cent from 1.3 million metric tons in 2017. With rice importation amounting to 2.2 million metric tons, Nigeria is currently the 3rd largest importer of rice worldwide. The 15.38 per cent decrease in the importation of rice in Nigeria from 2017 to 2018 is an indication that local paddy production as well as milled is on the increase. Nonetheless, Nigeria remains the largest rice importing African country which is

indicative of the necessity of the staple and the under-performance of the rice industry to meet the constant-growing population in the country. Bangladesh as well as Cote d’Ivoire, another West African country, both remain as the 5th rice importing country as each imported 1.6 million metric tons albeit Cote d’Ivoire has 6.67

tons, 156.39 million metric tons and 122.30 million metric tons of rice respectively in 2018. Of the 3 Asian regions, only Eastern Asia experienced decline in production by 2.37 per cent from 160.2 million metric tons in 2017, whereas consumption increased by 0.63 per cent to 160.1 million metric tons in 2018. In the same year, consumption was up in the Southern Asia by 0.97 per cent to 145.1 million metric tons but was down by 0.19 per cent to 103.4 million metric tons in the South-Eastern Asian. Also, total exports in these regions alone accumulated to 84.1 per cent of the total quantities of rice exported worldwide, albeit, Eastern Asian has relatively low percentage contribution of 3.84 per cent. Sub-Saharan Africa and Southern America performed well in milled rice production in 2018. Unlike Sub-Saharan Africa with 4.30 per cent, 3.80 per cent and 16.13 per cent increase in production, consumption and export quantities respectively, Southern America had production, consumption and export decline by 1.80 per cent, 0.66 per cent and 6.88 per cent respectively. Regional exportation of rice was also on the increase in 2018 except in the Southern America where rice export declined by 7.02 per cent. In other regions, Northern Africa took the lead in milled rice production, followed by Middle East and the European Union (28). The

Source: IRRI,USDA, BRIU

per cent increase from 2017. Senegal with 1.25 million metric tons is the 10th rice importing country in 2018. World regional rice trade 2018 While countries in Africa, America, and the Middle East have shown considerable increase in rice milled production and consumption; among the major regions of the world, Asia remained the leading producers of rice with Southern Asia, Eastern Asian and SouthEastern Asian producing 157.39 million metric

region with the least milled rice production quantity is Oceania with 580 thousand metric tons. High consumption of rice at 9.09 million metric tons and the Northern Africa and European Union (28) had a consumption quantity of 4.89 million metric tons and 3.70 million metric tons respectively in the same year. Despite Oceania’s very low milled rice production quantity/capacity, the highest quantity of rice of about 330 thousand metric tons of exported rice was recorded in 2018 among other regions.

12734BDN

Source: Statista, BRIU

WIDE OPEN MINDED RMB Nigeria. Solutionist Thinking.

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Thursday 20 June 2019

BUSINESS DAY

COMPANIES & MARKETS

Taf Africa leads business delegation to explore opportunities in Gambia Pg. 18

COMPANY NEWS ANALYSIS INSIGHT

Banking

Wema Bank sustains heavy trade volume amid market’s bearish sentiment OLUWASEGUN OLAKOYENIKAN

ier-two lender, Wema Bank plc, recorded a heavy volume of trade for the second trading session this week on the Nigerian Stock Exchange (NSE), making it to lead the pack of most active stocks for the two days in a market which has shed over 5 percent of its value since the start of the year. More 2.3 million units of the bank’s shares valued at N1.48 billion were traded at the local bourse on Tuesday, this represents a shortfall from a turnover of over 2.69 million units of Wema Bank’s shares worth N1.71 billion which exchanged investors’ hands in the previous session. “It is not a regular market trade,” said Paul Uzum, a stockbroker who trades at the Lagos bourse, told BusinessDay in a telephone interview. “The person selling should be a big shareholder of the company.” Checks by BusinessDay show the stock has not recorded such a significant volume of trade in the last three years. In spite of this, the share price, which gained 3.23 percent to 62 kobo on Monday, lost 4.69 percent to close at 61 kobo on Tuesday to join 20 other equities which recorded declines

Source: International Institute of Finance (IIF)

in share value. This worsened its year-to-date loss to 3.17 percent. The muted investor sentiment towards stocks listed on the NSE, which continued on Tuesday, is a reflection of the absence of a market catalyst to shore up their falling share prices which are already trading at their multi-year

lows, even as President Muhammadu Buhari is yet to nominate members of cabinet for his second term in office. “We expect investors to cautiously take positions in fundamentally sound stocks trading at attractive prices and offering high dividend yield as we approach

H1:2019 earnings seasons,” analysts at Afrinvest Securities Limited said in a note to clients. Wema Bank’s volume of trade on Monday accounted for 94 percent of a total of 2.86 billion shares transacted on the NSE, the proportion fell to 82 percent on Tuesday as the market recorded

2.91 billion turnover valued at N11.23 billion. The mid-tier lender grew its profit-after-tax by 50 percent to N1.14 billion in the first three months of 2019 on the back of higher interest income as against N764 million achieved in the corresponding period of 2018. In 2018 financial year, it posted a N3.32 billion profit, this represents a 47.6 percent surge from N2.25 billion garnered as net income in the previous year. Out of this amount, the bank recently paid a final dividend of 3 kobo per ordinary share for its shareholders, translating to a total sum of N1.16 billion. An analysis of the bank’s balance sheet shows that retained earnings of the firm improved by 13 percent to N6.77 billion up from N5.99 billion recorded a year earlier, bringing its shareholders’ funds to N52 billion at end-March 2019 from N50 billion accrued to its owners in the same period last year. Wema Bank Plc provides commercial banking services. It offers retail and corporate banking services, trade finance, treasury as well as foreign exchange operations. The bank was incorporated on May 2, 1945, and listed on the Nigerian Stock Exchange on February 13, 1991

TECHNOLOGY

120 million internet users in Africa use Opera browsers in Q1 DIPO OLADEHINDE

new report on State of Mobile Web 2019 has revealed the applications of the world’s major browser developers Opera, was used by nearly 120 million internet users in Africa and by more than 350 million people globally. According to the report which gives a detailed look at the digital landscape of the African region, Opera browsers and standalone news app were used by nearly 120 million internet users in Africa and by more than 350 million people globally which illustrates Opera’s growing leadership in the digital transformation of Africa. “We are thrilled to see that our mobile browsers

and news app has grown by 25 million monthly users in the last year in Africa,” Jørgen Arnesen, Head of Marketing and Distribution at Operas said. The State of Mobile Web 2019 report showed that mobile browsing is one of the most popular activities among African internet users. For example, in South Africa, nine out of ten people use their mobile browser every day, an activity they prefer over the use of other applications. “The new Opera News app has led this positive growth, as well as the introduction of new features to our mobile browsers such as a built-in VPN and crypto wallet. The successful partnerships Opera has with major

smartphone manufacturers in Africa have also contributed to the massive growth,” Arnesen said. The State of Mobile Web 2019 also indicated that on average, Africans using Opera spend more than 30 minutes browsing on a daily basis. Moreover, the report showed that 31percent of browsing sessions of people who use Opera Mini in Africa in Q1-2019, are to social media platform domains like Facebook, YouTube and Instagram, followed by search engine websites like Google and entertainment and sport websites. According to the report, Opera compared the average prices of mobile data in twenty countries in Africa which revealed

that the data compression mode in Opera Mini saved users nearly $100 million of data cost in 2018. In the analysis, Opera also compared the cost of data in some African countries with the cost of mobile data in India and G er many which showed South Africans pay six times more per gigabyte of mobile data than Indians. The report takes a look at the trends of news and video consumption across Africa. This includes analyzing the usage of its standalone Opera News app, which grew from launch to over 20 million users in a period of one year. Categories like breaking news, local news, and entertainment were the favourites of the

users in the first quarter of the year. The report indicates that people spend 50percent of in-app time in Opera News watching videos on Instaclips, the recently added video feature on the news app as Video content is also becoming more popular among people who use the Opera News app. In Q1-2019, Instaclips registered a total of 122 thousand videos uploaded in different languages such as English, Portuguese, French, Arabic and Swahili. Expanding beyond browsing to fuel the digital transformation Opera’s commitment to the African digital transformation has already started. Beyond the development of its mobile browsers and standalone news app,

Opera has made major investments in the African region expanding its services to other technology areas such as FinTech and digital advertising. In 2018, Opera announced the launch of OKash, a Fintech solution for micro-lending that quickly got traction among mobile internet users in Kenya. Today, OKash ranks among the most downloaded micro-lending applications among Kenyans and its user base keeps on growing. In May 2019, Opera announced the introduction of Opera Ads, a new advertising platform that allows media agencies and publishers to run more targeted marketing campaigns across the Opera platforms.

Editor: LOLADE AKINMURELE (lolade.akinmurele@businessdayonline.com) Graphics: David Ogar

Thursday 20 June 2019

BUSINESS DAY

COMPANIES&MARKETS

Business Event

Real Estate

Taf Africa leads business delegation to explore opportunities in Gambia CHUKA UROKO

af Africa Global, a frontline Pan African real estate development company with presence in about eight, African countries including Nigeria and The Gambia, would be leading a delegation of prominent Nigerian business men to The Gambia next month in its bid to deepen strategic economic cooperation between both countries. Mustapha Njie, chief executive officer of TAF, revealed in a statement that The Gambia presents a veritable investment destination for highly discerning Nigerian investors, especially in the nascent but increasingly lucrative sectors like Tourism, Hospitality, Telecommunications and Real Estate that define the burgeoning Gambian Economy. According to him, the

country has real GDP growth increasing from 4.6 percent in 2017 to 6.6 percent in 2018, reflecting a strong recovery in tourism, trade, construction and electricity. The growth rate was slightly above the estimated at 6.2 percent driven by the number of tourists rebounding by 36.6 percent in the first 8 months of 2018 relative to the same period in 2017. Joseph Edgar, co-Founder of Hamilton and George, local financial advisers to TAF, noted that the relative stability witnessed by the enthronement of democracy has seen government policy focused on the development of a strong and competitive private sector that will move The Gambian economy towards higher value-added activities in key sectors, thereby transforming the country into a financial center, a tourist paradise and a trading cum manufacturing outpost for

the keen investor looking at broadening its scope. The construction sector in The Gambia, according to Gbenga Olaniyan, CEO, Estate Links, accounts for 6.1 percent of GDP. Construction sector comprises infrastructure, residential and business structures and, given the small size of the manufacturing sector, most of the equipment needed are imported thereby giving Nigerian investors a lucrative opportunity. Olaniyan added that capital appreciation for Gambia real estate was 10 percent year-on-year. It is for these reasons and the very wide prospect of closer economic ties between both countries that its president, Adama Barrow, is expected to meet with the delegation upon their arrival, while its vice president, Isatou Touray, is also expected to play host to dinner with cabinet ministers in attendance.

Consumer Goods

Malta Guinness takes its goodness to four Northern states ENDURANCE OKAFOR

s part of its mission to fuel the greatness of every Nigerian irrespective of their location, occupation and religion, Malta Guinness visited Muslims in the cities of Abuja, Kaduna, Kano, and Bauchi, to share the goodness and vitality of the nonalcoholic malt drink. The team of Malta Guinness Company, Nigeria’s premium beverage drink paid a visit to three Mosques in northern Nigeria region- Abuja, Kaduna, Kano and Bauchi. According to Ife Odedere, Assistant Brand Manager, Malta Guinness, “By visiting Muslim faithful across the country, Malta Guinness is reaffirming its position as the premium nonalcoholic Malt drink that fuels the greatness of Nigerians everywhere, no matter where they are

or what they do.” Odedere further added that the visit to Muslim faithful in Abuja, Kaduna, Kano and Bauchi “has provided Malta Guinness with a platform to showcase the energy-giving attributes of Malt non-alcoholic drink- Vitamins B1, B2, B3, B5 and B6 which revitalizes the body.” In Abuja, the visits held in National Mosque, Shehu Shagari Mosque and Kubwa Village Central Mosque. This was followed by visits to Al Manar Mosque Ungwa Rimi, Nawair-Ud-Deen Mosque, and Sabo Central Mosque, Kaduna. The team also visited Alfurqan Mosque, Alibaba Mosque, and Fegge Central Mosque, in Kano. T h e Ma l t a G u i n n e s s team also donated ablution Kettles to the Mosques they visited. In addition to these Mosque visits, Malta Guinness is also sup-

porting a good number of Muslim religious programs on TV and Radio stations, to educate and inform Muslims. Malta Guinness is Africa’s leading non-alcoholic, adult, premium soft drink, produced by Diageo. It was launched in Cameroon in 1984. Malta Guinness is a successful and profitable brand available in 11 Countries - Cameroon, Nigeria, Ghana, Ethiopia, Mauritius, Benin, Burkina Faso, Ivory Coast, Liberia, Gabon, Togo. Malta Guinness Classic is a favourite malt drink among households in Nigeria. The “bustling” brand which is filled with Goodness, Energy, and Vitalty is positioned to fuel the CAN-DO spirit of Nigerians. Both Malta Guinness Classic and Malta Guinness Herbs lite variants are premium malt offerings

L-R: Isaiah Owolabi, project director, HACEY Health Initiative; Stephanie Linus, ambassador of the United Nations Population Fund (UNFPA); Omobolanle Victor-Laniyan, head, sustainability, Access Bank plc, and Eugene Kongnyuy, country representative, UNFPA, at a one-day private sector summit, with the theme “Sustainable Population Growth, Demographic Divided and the Future of Nigeria: The Role of the Private Sector” in Lagos. Pic by Olawale Amoo

L-R: Gbenga Totoyi, head, membership and marketing development, Chartered Institute of Personnel Management of Nigeria; Akinwande Ademosu, managing director/chief executive officer, Credit Direct Limited; Maryam Uwais, special adviser to the president on social investment/keynote speaker; Ituah Ighodalo, chairman, Theseabilities Foundation, and Abiola Awosika, president, Olawoyin Awosika School of Innovative Studies, at the 2019 disability summit and career fair, with the theme “Realities of the Nigeria Disability Law: Implications for Workplaces, Business, and other Stakeholders” in Lagos. Pic by Olawale Amoo

L-R: Belinda Aderonke Odeneye, director environmental services, Lagos State ministry of environment; Rachael Ezembakwe, safety health and environment manager, Unilever Ghana and Nigeria, and Ajibade Shekoni, former permanent secretary, Lagos State ministry of environment, at the Lagos State Green Award 2019 to Unilever Nigeria.

Telecom

Airtel Africa expects London listing to be priced between 80-100pence

irtel Africa Ltd a unit of India’s Bharti Airtel Ltd, on Monday set a price range of 80 to 100 pence per share for its planned initial public offering on the London Stock Exchange. The IPO is expected to raise 595 million pounds ($749.05 million) from the issuance of about 595.2 million to 744 million new shares. The company said the price range values it between 3.01 billion pounds and 3.62 billion pounds at the price range. Airtel Africa also said

it intends to list its shares on the Nigerian Stock Exchange at the same time as the London listing. The company said conditional dealings in its shares are expected to begin on or around June 28 and the final pricing will be announced the same day. ($1 = 0.7943 pounds). The company, which operates a telecoms and mobile money business across 14 countries, revealed that it was planning to press ahead with a listing to cut debt levels.

“We have built Airtel Africa into the second-largest mobile operator in Africa and our clear strategy and efficient business model make us well positioned to capture the growth opportunities across our markets, in voice, data and mobile money” said Raghunath Mandava, Airtel Africa chief executive. At least 25 percent of the stock is expected to be floated immediately after the IPO. Shares are expected to start trading Friday, June 28.

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L-R: Chigozie Ekeocha, regional sales director , Lagos Mainland, Access Bank Plc; Bolanle Alabi, CEO, Easy flight Travels and hair Place; Adeyemi Adedayo, digital marketing expert/trainer, Sheleads Africa/Facebook, and Ogo Agu, regional head, Festac 1, Access Bank plc, at the Access Bank/Facebook SME Digital training in Lagos

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Thursday 20 June 2019

BUSINESS DAY

cityfile Gunmen kill 3 persons in Kaduna

he police in Kaduna have confirmed the killing of three persons by gunmen at Unguwan Rimi village in Chawai District of Kauru local government area of the state. Spokesperson of the police in Kaduna, Yakubu Sabo, who confirmed the incident, said available information indicated that on Monday, June 17 at about 2:25p.m., the Divisional Police Officer (DPO), Kauri, received a distress call “that armed men entered Unguwan Rimi village in Chawai District of Kauru local government area and started shooting sporadically, and in the process, gunned

Some suspected political thugs, at the front of the Edo State House of Assembly.

Pic by Idris Umar Momoh

Residents want Sanwo-Olu to tackle flooding in Eti-Osa

Security operatives burst fake R currency syndicate in Bauchi …arrest suspects

peratives of the Nigerian Security and Civil Defence Corps (NSCDC) have smashed a syndicate said to specialise in the production of fake currency, in Bauchi. The state commandant of NSCDC Haliru Adamu, said two suspected members of the syndicate have been arrested. The suspects include Yaya Abaji, 35, and Abubakar Usman, alias ‘Alaramma’, 33, residing in Bauchi town. Adamu, who paraded the suspects before newsmen in Bauchi, Tuesday, said that operatives of the Kirfi division of the command arrested the duo on

June 12, following intelligence reports. He alleged that the suspects specialised in defrauding unsuspecting members of the public under false pretences of doubling their investments. The commandant further explained that the suspects conspired and collected N380, 000 from their victims: Kingsley Izuchukwu and Abubakar Dahiru, both residents of Dukku Town, Gombe. He noted that the suspects had promised their victims they would produce N500, 000 using a local bulb called Bakin Gadali.” “When the voodoo failed, the suspects allegedly attempted to murder

the victims and in the process injured Izuchukwu,” the security chief said. One of the suspects Abaji, who however, claimed to be a traditional healer, showed journalists a certificate issued to him by the Nigerian Traditional Medicine Practitioners, Bauchi State chapter. He claimed he was the liaison between prospective customers and Abubakar, who did the incantations. Abubakar, who confessed to committing the crime, said it was not his wish to produce fake currency, but was pushed to do so because he was unemployed and needed to survive. “Our customers are

from Bauchi, Gombe and Plateau where the trade in fake currency flourishes,” he said. In a related development, the command also said it arrested one Aminu Adamu, 33, of Yelwa and Salisu Umar, 33, of Wintin Dada in Bauchi metropolis for alleged theft of a motorcycle. He said that the suspects, who posed as military and police officers, were arrested on June 12, after they allegedly snatched a motorcycle with registration number MSA335WS from one Ishaka Abubakar, 20, of Bauchi town. The suspects are to be charged to court after investigations.

down dead one Monday Yahaya (8 years old), Samson David (17 years old), and Ashimile Danladi (9 years old) respectively.” According to him, a team of policemen drafted to the area, evacuated the dead bodies to a hospital. Sabo said that efforts were ongoing to apprehend the perpetrators while surveillance has been beefed up to forestall further breach of the peace in the area. Also confirming the incident, Yahaya Mohammed, a traditional ruler of the community, said that the killers invaded the village around 2:30 am and shot sporadically, killing three children in the process.

esidents of EtiOsa, in Lagos, have appealed to Governor Babajide Sanwo-Olu to address perennial cases of flood in the area. The residents spoke in separate interviews at a reception organised by Gbolahan Yishawu, member representing Eti-Osa constituency II at the Lagos State House of Assembly. Wasiu Buhari, one of the residents, said the state government needed to more to end flooding and its devastating effect in the area. According to Buhari, flooding remains a major challenge in Eti-Osa, affecting both residents and commercial activities in the area. They also urged the governor to focus on road infrastructure. Olusegun Adeyemi, another resident, described

flooding as a perennial problem in the area, urging the government to redouble efforts at ensuring free flow of drains. “Lagos is below sea level, but Sanwo-Olu can provide palliative measures to control the flooding. Anytime it rains, our hearts are up,” he lamented. According to him, many of the residents also contribute to the recurrent flooding, and as such, there is the need to reorientate the people about activities leading to blockage of drains. Ibrahim Abdullahi, another resident, said “our challenge here is flooding, and indiscriminate dumping of refuse has aggravated it. “We want the government to help us end flooding in Eti-Osa area. It is affecting us.” Abdullahi also decried lack of potable water in the area.

Group raises safety concerns in Bayelsa communities SAMUEL ESE, Yenagoa

group, Ifalbobou Re vo l u t i o na r y Movement (IRM) has raised concerns over the operations of First Exploration and Petroleum Development Company (First E&P) within the host communities in Bayelsa, known as KEFFES.

KEFFES is an acronym for the eight Chevron host communities in Bayelsa, comprising Koluama 1 and 2, Ezetu 1 and 2, Foropa, Fish Town, Ekeni and Sangana, located on the Atlantic coastline within Bayelsa. First E&P in 2015 acquired the two oil blocks (OML 85 and 86) from Chevron Nigeria Limited. www.businessday.ng

The group said they had safety concerns on the rig deployed at the operational area by First E&P and later withdrew an ultimatum on the grounds that stakeholders had intervened to resolve the concerns it expressed. It will be recalled that a rig explosion at an oilfield operated by Chevron in the area in January 2012

ignited a fire that burnt down the ill-fated KS-Eandeavor rig and destroyed the ecosystem. The group had alleged that First E&P entered the host communities and began drill operations without conducting the mandatory Environmental Impact Assessment (EIA) to determine the health impact of its activities on

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the communities. However, reacting to the allegation, Matthew Sele-Epri, chairman of KEFFES Regional Development Foundation (KRDF), set up to interface with oil firms, dismissed the group as self-serving. Sele-Epri said that the foundation was a creation of the KEFFES communities to liaise with First E&P @Businessdayng

and other oil firms operating in the area. He therefore described the allegation of shielding the company as baseless. According to him, the community leadership has a written Memorandum of Understanding (MoU), which came into effect shortly after the acquisition of the oil firm.

Thursday 20 June 2019

BUSINESS DAY

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Thursday 20 June 2019

BUSINESS DAY

LegalBusiness BD Business Law Industry Report Practice Intelligence Partnerships

Understanding “Access” in professional relationships

ore often than not, Young Professionals (YPs) are not prepared for the opportunities they seek, and as the saying goes, a lack of understanding of the purpose and use of (and I will add, preparation for) a thing results in abuse. We are usually taken aback when we meet the person we have “always wanted to meet” or the task we have “always wanted to do” presents itself. This is even worse when considering relationships with More Senior Professionals (MSPs) and mentors. A lot of senior professionals have been forced to prematurely set boundaries or even build walls to protect themselves because in many cases, they have been scarred when trying to help or guide younger professionals because of the abuse that is inherent in the approach of YPs to their interaction. It goes without saying that a mentor, sponsor or senior professional is neither a meal ticket, ATM nor a virtual assistant but if we did a census on how many MSPs have felt this way when dealing with YPs, we would find that it would be almost 80:20 in favour of the abuse of MSPs. Largely, the defects in the relationship between YPs and MSPs is attributed to a sense of entitlement which one could arguably accede to and pictured in the customary “they are supposed to do this for me” phrases that accompany every demand to show up or deliver on life. In my opinion, while the sense of entitlement is definitely a wrong view, the loss that results from lack of understanding of the gift of access is even worse. If access was better understood, I believe that the relationships between YPs and MSPs would be more profitable and the gap in capacity that seems to be the case

any MSP who they have access to and I share some tips below:

across several professions and of particular concern in the legal services sector would be obviated. Access is typically defined as the right or ability to connect with, use or observe a person or thing. I would rather adopt the definition that describes it as an OPPORTUNITY to connect with people or things. When seen as a right, then there is a propensity for inordinate demands but when seen as an opportunity, there is some reverence and respect attached to the interaction with the subject. While access is an open door, it is

also a boundary and especially in professional relationships, access has limits and caveats. Certain things are naturally unethical and are clear don’ts, but there are grey areas, which YPs struggle with even with the best intentions. For instance, within the context of a relationship, showing up at the office of a mentor or MSP without invitation may be acceptable but doing so repeatedly just because you have been granted access, is not expedient. As such, it is important that YPs hone intuition and learn to manage

Mind your business: professional relationships are tricky and if you do not stay mindful of the purpose for which they exist, things get muddled up. The primary purpose for professional relationships is professional development, simply put. If a personal relationship is developed, it is icing on the cake. The expectation is that by interacting with the MSP, you build both interpersonal, professional and life skills which help you succeed at work or life as such, do not be distracted by the occasional invitation for a private party or effusive expressions of pleasure and informal engagements. It is still a work relationship and must be maintained as such. Avoid premature personal engagement: in interacting with a mentor or MSP, the easiest way to shut the door on your opportunities is to personalise the relationship prematurely. Asking for funding for personal needs, that is a major faux pas, uninvited interaction with family or relations, posting pictures on social media without due permission are other actions which conflate things. The best emotion to trigger in your mentor or MSP is respect and that respect comes through naturally when the MSP feels that their personal space is respected and there is no breach of their privacy. You will know when the relationship evolves and when it is right to be personal. Gauge the value add: relationships between YPs and MSPs are symbiotic. Each side must derive a benefit from the relationship. Like with all social interactions, it is defective if both parties cannot attribute personal value to such relationships. Understand the interests of the person and search for

valuable information and opportunities. Always aim to give rather than receive and lose every sense of entitlement. Prioritise the personal engagements with the MSP where necessary. Earlier on in my career, I lost a very viable personal relationship with an MSP simply because I failed to attend a personal engagement to which I was invited. It may be inconvenient and not count for much in your opinion but your attendance at the party may be the ticket to a life changing fellowship or job opportunity because you have provided value, even when it is merely emotional. Boundaries matter more: the abuse pervading relationships with MSPs could be vice-versa so it is important to protect your own space. Again, the critical emotion to be triggered is respect on both sides. If the MSP traverses the boundaries, it is important to respectfully communicate displeasure and take steps to prevent subsequent intrusion. In this zone, things are a little dicey and you must be very careful not to interpret well-meaning gestures. Seeking guidance from other experiences is very useful in such situations. I trust that these few points are useful and look forward to receiving your feedback.

OYEYEMI ADERIBIGBE is a Senior Associate at Templars. She is also the current Vice-Chairman of the Young Lawyers’ Forum of the Nigerian Bar Association -Section on Business Law and the Young Lawyers’ Committee Liaison Officer of the African Regional Forum of the International Bar Association. Feedback – Oyeyemi.aderibigbe@ templars-law.com; yemiimmanuel@yahoo.com.

ALP headlines sponsorship for ILFA general counsel summit ...As over 40 GCs across Africa gather in Lagos rican in-house legal community through discussion, cooperation, and network building. There will be a crosspollination of ideas between in-house and external counsel at the summit, with conversations touching on topics such as, workplace practices within established and respected in house teams; challenges and best practice approaches; what the future holds for Africa based in-house counsel. Senior in-house lawyers from a variety of organisations across a broad spectrum of industries are expected to talk about how their roles have evolved and will

THEODORA KIO-LAWSON

ocal Law Firm sponsor of the General Council (GCs) Summit, Africa Law Practice (ALP) is set to play host to GCs from across Africa, at the event, organised by the Nigerian Bar Association Section on Business Law (NBA-SBL) in collaboration with International Lawyers for Africa (ILFA) which will take place on Tuesday June 25th, 2019 at the Eko Hotel & Suites, Victoria Island, Lagos. The one-day summit is aimed at uniting and elevating the Afwww.businessday.ng

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touch on the key contributors to achieving success as a GC. Panellists will discuss the role mentors, technology and industry knowledge played in their career as well as the key lessons they’ve learned along the way. The session tagged ‘Lessons on Leadership’ would feature distinguished speakers as, Cecilia Akintomide, Independent NonExecutive, Director at FBN Holdings Plc &amp; Former Vice President/Secretary General AfDB; Oluwatowun Candide-Johnson, Founder GAIA Women Club; John Ludden - EVP and General Counsel at GE Capital; Adeola @Businessdayng

Adebonojo, Business Mentor: Cherie Blair; Foundation, Former General Counsel &amp; company secretary, Helios Towers and Yakubu Belgore, General Counsel, Total Nigeria Others participants and speakers at this event include, Ifeoma Utah of MTN, Dapo Otunla of IHS, Fola Akande of Cadbury, Luvky Nengite of Chevron, Uaboi Agbebaku of Nigerian Breweries, Seye Kosoko of FBN holdings, amongst others. There would also be several opportunities to meet, discuss and network with premium audience of peers and senior in house counsel.

Thursday 20 June 2019

BUSINESS DAY

INTERVIEW

LegalBusiness

NBA-SBL conference to perform a “TRIAGE” It’s a few days to the largest gathering of corporate and commercial lawyers in Africa – the 13th Annual Business Law Conference, which is scheduled to hold on Wednesday June 26 to Friday June 28, 2019 at the Eko Hotel & Suites, Victoria Island, Lagos. This year, the conference which will focus on ‘GROWTH, INVESTMENT & EMPLOYMENT: BEYOND RHETORIC will have a faculty of distinguished speakers and panelists proffer practical and pragmatic solutions to achieving inclusive economic growth, maintaining, attracting and retaining investment and increasing employment options for the youth within the Nigerian Economy. In this edition, the NBA-SBL chairman, Seni Adio, SAN; the conference chair, Dr Adeoye Adefulu; the vice chair of the conference, Ozofu Ogemudia and fundraising chair, Baba Alokolaro all speak about the forthcoming coming event and how it would impact economy. EXCERPTS:

Seni Adio, SAN

DR ADEOYE ADEFULU

he SBL has always had as part of its focus attracting foreign investors to Nigeria. But given the parlous state of our security nationwide, does this Conference have a segment to discuss insecurity and its attendant impact on investment? Indeed, we do. I don’t want to give too much away. However, the issue of security is a conversation that we all have on a daily basis and dare I say even repeatedly during the course of the day, whether at lunch, dinner, commuting to and from work, at watering holes – the list is endless. Specifically, we have a session with the acronym “HSE”, and I don’t mean Health, Safety and Environment, as the acronym is used in the oil and gas industry. Relating to the Conference, it means “Health, Security and Economy”. Thus, the issue of security (more like the lack thereof ) will be incisively examined.

o what extent is the Nigerian legal system taking advantage of technology to enhance justice delivery? Do you think sufficient investment is being put in place in this area? The Nigerian legal system cannot be divorced from the wider economy. It is competing for investment with health, education, infrastructure amongst other areas. Having said that, I do not believe that enough is being done to exploit technologies that are available. Technology has the potential to reduce some of the efficiency challenges faced by litigants. The use of something as inexpensive as email/calendars for communicating scheduling challenges will save waste and costs. We should also be considering collaboration with our burgeoning tech community to help design innovative products to help solve our peculiar problems.

How do you think the conference theme, “Growth, Investment & Employment: Beyond Rhetoric can be harnessed to bring about practical and pragmatic solutions towards investments and economic growth? That is not just implicit in the theme. it is explicit! We are going beyond Rhetoric! To illustrate, a substantial portion of the Conference is intended to perform a “TRIAGE” on the Nigerian economy. Triage is typically used in a medical context and essentially means providing treatment in order of priority after diagnoses. The first plenary session will comprise of very senior business leaders and economists who will perform the triage by, amongst other things, assessing key elements and areas of the Nigerian economy, and proffer interventions and solutions in order of priorities on the immediate term, as well as medium to long-term. Is the Nigerian Bar Association - Section on Business Law (NBASBL) actively involved in the engagements to amend some of these business-related laws? If so, to what extent? Indeed, with every sense of humility, the NBA-SBL has been privileged to be working collaboratively with the Office of The Presidency through the Presidential Enabling Business Environment Council (PEBEC). In similar vein, the SBL has also been collaborating with the National Assembly, and the Nigerian Economic Summit Group (NESG) on various aspects of law reform concerning easing doing business in Nigeria and making our economy more competitive. Notably, the tripartite collaboration culminated in

the establishment of a special purpose vehicle called the National Assembly Business Environment Round Table (NASSBER), which is a landmark innovation evincing the unique cooperation and coordination between the Bar, Business Community, and Legislative arm of our National Government. Some of the law reforms initiatives, include the CAM Bill previously discussed, amendments to the Investments and Securities Act, and Omnibus Bill. I must at this juncture highlight the fact that the NBA-SBL is able to provide the expertise and resources required for these collaborations based on the sacrifice of the member law firms which provide personnel, finance and various other resources, pro bono, to the Section to implement these initiatives. There are high hopes that the Companies And Allied Matters (CAM) Bill will make Nigeria’s business environment as competitive as its counterparts around the world and create a new form of legal identity for Nigerian businesses; given its potential, shouldn’t this law be expeditiously passed? To answer the second part of your question, the law has already been passed by the National Assembly. It is awaiting the assent of our President, and we are very hopeful that, His Excellency, President Muhammadu Buhari, GCFR, will assent to it. Regarding the first part of your

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question, the signing of the CAM Bill into law will not only ease doing business in Nigeria, it portends making our business environment one of the most competitive worldwide. I am particularly passionate about this Bill because, amongst other things, it overwhelmingly favors Medium, Small and Micro Enterprises (MSMEs) by removing various unnecessary bottlenecks such the requirements of filing annual returns together with financial statement of affairs, providing for partnerships to have limited liability, incorporation of limited liability companies by single shareholders and directors specifically providing for holding of meetings through multimedia and, generally, attracting operators in the informal sector to take advantage of the benefits of incorporation/registration. Importantly, for large businesses, amongst other advantages, it provides for and encourages business rescue and reorganizations unlike the commonplace practice of receiverships and liquidations, as wells as containing robust provisions on mergers and acquisitions. So, for the foregoing reasons and others too many to be mentioned, I wholeheartedly endorse the Bill and, pray that Mr. President assents to it. By the way, I would be remiss if I fail to quickly add that I make the foregoing statements not just personally, but also in my capacity as Chairman of the Nigerian Bar Association Section on Business Law (NBA-SBL).

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How do you think the NBA-SBL conferences have driven and impacted policy changes in the last few years? Our conferences are designed for impact. One immediate example was last year’s conference, which focused on the African Continental Free Trade Area Agreement. The conference was focused on examining the challenges and benefits of the AfCFTA for Nigeria. As a consequence of our deliberations, the Chair of the NBA-SBL was invited to co-chair the Nigerian Coalition of Services, which is a lobby group to support trade in services. Further, we are also members of the Presidential Steering Committee on the AfCFTA, where we have continued to advocate for Nigeria to sign the ‘Agreement’ as we believe its benefits far outweighs any potential detriments. Simply put, our conferences are structured to bring value to everyone from the Public Sector, the Private Sector and even those from the informal sector of the economy. There’s a large offering for a wide range of participants within and outside Nigeria; be it individuals or corporate organisations. Are there business-related laws in Nigeria the NBA-SBL have proposed for amendment and how much has the body been involved in previous amendment of such legislation? Kindly name the relevant legislation where necessary. The NBA-SBL has been at the forefront of legislative reforms. First we are a member of the National Assembly Business Environment Roundtable (NASSBER), which is a collaboration between the National Assembly, the NESG and the NBA-SBL. One of the first tasks of NASSBER was to conduct a holistic review of federal legislation, which impact businesses and to propose areas of reform. The NBA-SBL was an integral part of this project. We also worked very closely with the Presidential Enabling Business Environ-

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Thursday 20 June 2019

BUSINESS DAY

INTERVIEW

LegalBusiness

on the Nigerian economy OZOFU OGIEMUDIA

dinner would be the Executive Governor of Lagos State, His Excellency, Babajide Sanwoolu and the Speaker of the House of Representatives, Rt. Hon. Femi Gbajabiamila. Other speakers include Bimbo Ogunbanjo, President of the Nigerian Stock Exchange, Kingsley Moghalu, Cecelia Akintomide, OON, ED, First Bank, Babatunde Irukera, Chief Executive Officer, Federal Competition and Consumer Protection Commission (FCCPC), and several others. More information on the conference, sessions and speakers can be found on our conference website.

hat sort of impact do you hope the theme for this year would have on the legal profession, as well as the economy? We chose the theme, “Growth, Investment and Employment: Beyond Rhetoric” for specific reasons. We indeed want to go beyond rhetoric and identify what needs to be done to stem the tide of declining foreign direct investments in Nigeria, growing unemployment and impaired development. As I indicated earlier, the keynote speakers and panelists for this year’s conference have been carefully selected to ensure, not just that the issues are discussed extensively at the conference but that, after the conference, active steps are taken to drive the agenda of the conference.

ment Council in a number of projects including drafting the “Omnibus Bill”. The Omnibus Bill adopted a unique approach to law reform by identifying various impediments to business in different legislation and fixing these issues in one legislation. Our members have also been involved in drafting the various petroleum industry reform bills. How does the NBA-SBL develop the outcomes from its conference towards real impact and development in the affected sectors and industries? We want to make sure that our conference is not just another “talk shop”, therefore our discussions will be steered at drawing out ideas that can be implemented by government and other stakeholders. We will collate these ideas and share our communiqué with Federal and State governments. Please tell us about your plan to sponsor 100 young lawyers to this year’s conference? What modalities did you adopt in selecting the beneficiaries? Young lawyers play an important role in the profession. Since the 2017 conference, we started a tradition of sponsoring young lawyers to attend our conferences. This involves covering the conference fees, accommodation (where relevant) and transfer costs. This year we tried something unique with the introduction of the #GIE challenge, where young lawyers were invited to share their views on what the theme of the conference – Growth, Investment & Employment: Beyond Rhetoric means to them. We had a number of interesting entries and the winner of the challenge has been invited to participate in our debate session this year!

We’ve seen the NBA-SBL in recent times, forming very strategic partnerships with government, regulators, policy and law makers, such as the National Assembly; the Nigerian Stock Exchange (NSE); the Presidential Enabling Business Environment Council (PEBEC) which is part of the presidency; the Nigerian Economic Summit Group (NESG), etc. What are the objectives behind some of these collaborations? The NBA-SBL is very deliberate in its objective of working collaboratively with stakeholders and regulatory agencies in order for capacity building. As a result of these

collaborations, we are able to contribute to framing the policies and laws that affect the Nigerian business environment. We know that we have a major role to play in shaping the commercial sector in Nigeria and, by bringing thought leaders and policy makers together to contemplate and discuss pertinent commercial issues, we learn what direction the Nigerian commercial space is moving towards, as well as offer our own opinions in order to promote the common interest of business law practitioners locally and internationally. Tell us more about the speakers, panellists, guests and session chairs at the forthcoming conference? This year’s conference will have an impressive line-up of speakers, panelists and guests. Guest Speakers at the opening

BABA ALOKOLARO

ow do you think Nigeria’s administration of justice system affects local businesses and foreign investments today and how in your opinion can we get the best out of the system? I doubt anyone will contest the fact that the pace of our administration of justice system is sub-optimal. We are far from where we should be or where we’d all like it to be. You see, no business, whether foreign or home-grown wants to be involved in commercial disputes. When this happens, the last thing business owners and drivers want is a “go-slow” process or a system that fails or refuses to understand time is money. Business people want commercial disputes resolved as quickly as possible. It is common sense. To be honest, the speed of our administration of justice is driving investments away from Nigeria. Investment agreements increasingly resort to foreign dispute resolution mechanisms, not even local arbitration in Nigeria – this is losing our economy a lot of money. You can only imagine the impact localising dispute resolution could have on our economy, but the bulk of it is going to London. I think the best (not the easiest) way to improve our system is the constant training and retooling of the judiciary, a complete but systemic system reset, entrenching effective and efficient case management in our commercial courts and promoting the use of local arbitration by limiting the right of appeal against decisions enforcing arbitral awards. These will ultimately aid

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in decongesting our courts, improve the understanding of the judiciary and practitioners and show the world we are truly open for business. As chairman of the fund raising committee for the 13th annual business law conference, what sort of partnerships are you looking to form, to ensure the right stakeholders are in the room? Going by the theme of this year’s conference, we are looking to chrystalise our ongoing partnerships with various regulators that affect the spheres within which we all operate. We are also looking to do the same with the new government in Lagos State and its governor, Mr. Babajide Sanwoolu. Can you tell us how you engage your partners in both public and private sectors after the conference to ensure that the conversations

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With all of the work bodies like the NBA-SBL are doing to develop the legal profession and enhance the capacity of young lawyers, where do you see the profession in another 10 years? The legal profession is timeless. Law as a concept was made to provide proper guidelines for the behaviour of all citizens and to sustain equity within society and the government. It is an essential part of our society and evolves as the Nigerian society evolves. The Nigerian legal system is undergoing a number of changes and new laws are being considered and enacted to meet the needs of this generation of Nigerians. I am hopeful that in ten years, the legal profession would have evolved to a point where it would be comparable to other leading jurisdictions in the world. With the continued guidance of our older learned colleagues, coupled with and the tenacity and drive of today’s bright young lawyers, we can rest assured that the future of the legal profession is in good hands.

held at the conference lead to policy changes? Our partner engagements with all stakeholders in the private and public sectors is crucial to ensuring commercial activity thrives in Nigeria. Our role as catalysts to business requires our constant engagement with regulators who affect our respective clients’ businesses. This is with a view to sharing industry knowledge and skills, and engendering international best practices towards attracting investment into the country. For example, we met with the new Lagos State Governor last month (when he was still governor-elect) and beyond asking and seeking what the business community can gain from his government, we offered to share our knowledge and expertise with Lagos State public servants in the different ministries, departments and agencies who have a say and impact on commercial activity in Lagos, Nigeria’s commercial nerve centre. We are open to doing this across all the commercial zones in the country, to aid growth, investment and employment. What in your opinion is the future of the legal profession? And what is your ultimate desire for this profession in Nigeria? This profession will continue to guide business and with innovation, the outlook cannot be brighter. My ultimate desire is to have a more efficient administration of justice system in Nigeria, leveraging on technology to provide fit for purpose legal services essential to life and business in the 21st century.

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Thursday 20 June 2019

BUSINESS DAY

INDUSTRYFILE

TNP advices Ellah Lakes on reverse takeover

omercial Law Firm, the new practic (TNP) recently advised Ellah Lakes Plc on the reverse takeover between Telluria Limited and Ellah Lakes Plc.,

which resulted in Ellah Lakes Plc. listing an additional 1.8 billion ordinary shares of 50 Kobo each on the Nigerian Stock Exchange. The listing was marked by the sounding of the closing gong at the

Nigerian Stock Exchange (NSE) by Ellah Lakes new CEO Chuka Mordi. TNP partner, Babajimi Ayorinde and Associate Oladimeji Akindele advised on the deal and were on the floor of the NSE during the ceremony.

LegalBusiness

GLOBALREPORT Law society of England and Wales speaks up against Hong Kong’s new extradition laws

he Law Society of England and Wales has added its voice to a campaign which brought hundreds of thousands of people out on the streets of Hong Kong in protest against new extradition laws. The Society is one of some 70 international bodies to sign an open letter raising concerns about the amendments, which could lead to Hong Kong residents facing trial in Beijing courts. Hong Kong’s Basic Law, which underpined the 1997 return of sovereignty to China, guaranteed judicial separation for 50 years. Hong Kong has no extradition agreement with mainland China (or with the Republic of China, Taiwan). However two new Hong Kong measures, the Fugitive Offenders’ Ordinance and the Mutual Legal Assistance in Criminal Matters Ordinance would enable suspects to be handed over on the basis of prima facie evidence. The measures were drafted after a murder in Taiwan last year, allegedly by a Hong Kong man. The Hong Kong authorities say they contain adequate

safeguards for human rights. However this claim is vigorously contested by human rights groups, including Amnesty International, Hong Kong Human Rights Monitor and Human Rights Watch. In an open letter, the organisations say they are ‘especially concerned’ that new law makes anyone accused of ‘aiding, abetting, counselling or procuring the commission of’ an offence being liable to extradition. This could ‘put at risk anyone in the territory of Hong Kong who has carried out work related to the mainland, including human rights defenders, journalists, NGO workers and social workers’. It notes that China’s justice system has ‘a record of arbitrary detention, torture and other ill-treatment’ and that the mainland judiciary lacks independence from the government and the Chinese Communist Party. Among the bodies to join the Law Society in signing the letter are the International Association of People’s Lawyers, Lawyers Rights Watch Canada and Reporters without Borders.

Oluwadare, said: “Freedom of information is a fundamental right. The contents of asset declarations by successive presidents and state governors do not amount to private information, as presidents and governors are public officers under Part II, Fifth Schedule to the 1999 Constitution.” According to SERAP: “Declarations of assets are constitutional commitments imposed only on public officers, and made by virtue of occupying entrusted public positions and offices. Therefore, details provided in any such asset declaration forms are public information, and not private information. “Also, the National Assembly, having been constitutionally vested with power by paragraph 3[c], Third Schedule to the 1999 Nigerian Constitution, to make laws on this subject matter, has since prescribed the mode for inspection of asset declarations by passage of Freedom of Information Act in 2011.” “That’s why we’re going to court to challenge the decision by the CCB denying our FOI request, and refusing to provide details of asset declarations by presidents and state governors since the return of democracy in 1999. Make no mistake: The CCB’s refusal to disclose these details is a breach of settled constitutional and international principles, plain and simple.” It would be recalled that SERAP had in its FOI stated that: “While we

welcome the judgment by the Code of Conduct Tribunal on Justice Walter Onnoghen, we now urge the CCB to extend its mandates to enforce constitutional provisions on asset declarations by public officers to cover elected officers and to vigorously pursue the prosecution of any such officers who use their powers either as presidents or state governors over public funds to enrich themselves.” The FOI request read in part: “While judicial corruption is bad, the level of corruption involving many politicians since 1999 and the entrenched culture of impunity of perpetrators is equally appalling. Publishing the asset declarations of elected public officers would improve public trust in the ability of the Bureau to effectively discharge its mandates. This would in turn put pressure on public officers like presidents and state governors to make voluntary public declaration of their assets.” “SERAP is concerned that many politicians hide behind the fact that members of the public do not have access to their asset declarations to make false declarations, and to cover up assets illegally acquired in corruption or abuse of office. The CCB can use the opportunity presented by the Onnoghen judgment to increase the accountability of politicians through the asset declaration provisions if it is not to be accused of witch-hunting the judiciary.”

RIGHTSWATCH Code of Conduct Bureau denies FoI request

he Code of Conduct Bureau (CCB) has denied a Freedom of Information request demanding specific details of asset declarations submitted to it by successive presidents and state governors since 1999, arguing that: “producing such information would amount to an invasion of privacy of presidents and state governors. Asset declaration form is private information.” CCB’s response followed FOI request by Socio-Economic Rights and Accountability Project (SERAP) in April addressed to Dr. Muhammed Isah, Chairman, CCB, urging him to: “provide information on asset declarations by successive presidents and state governors between 1999 and 2019, including details of declarations made immediately after taking offices and thereafter, and for those who have left public offices, at the end of their term of office.” SERAP also sought “information on the number of asset declarations so far verified by the CCB and the number of those declarations found to be false and deemed to be in breach of the Code of Conduct for Public Officers, by the Bureau.” However, the CCB in a letter by its Chairman, which SERAP said it just received, stated: “Paragraph 3(c) of the 3rd Schedule to the 1999 Nigerian Constitution (as amended) empowers the Bureau to retain custody of asset declaration and make them available for inspection by any citizen on such

terms and conditions to be prescribed by the National Assembly. These terms and conditions are yet to be prescribed.” The CCB also said: “Assuming the Freedom of Information Act is the term and condition, Sections 12(1)(v) and 14(1)(b) of the Act makes information in the asset declaration form private and producing such information would be an invasion of privacy of presidents and governors. Section 14(2)(3) of the same Act stipulate conditions for granting requests for private information but these have not been met by SERAP’s application.” The letter with reference number CCB/HQ/LU/047/59 and signed on behalf of CCB Chairman by Musa Ibrahim Usman, read in part: “Section 12(1)(a)(4)(a)(b) exempt production of information relating to investigation for the purposes of law enforcewww.businessday.ng

ment and such investigation must have been carried out pursuant to an Act or regulation. Verification is investigation carried out pursuant to Code of Conduct Bureau and Tribunal Act for the purposes of law enforcement.” “Referring breaches of the Code of Conduct for public officers to the Code of Conduct Tribunal for prosecution is a matter of discretion of the Bureau and not a matter of FOI.” “Consequently, I am further directed to convey to you that the request in SERAP’s application for information on details of asset declarations by presidents and state governors since the return of democracy in 1999 is hereby denied on the grounds that it falls short of the requirement of the law. Please accept the assurances of the highest esteem of the Chairman CCB.” SERAP deputy director Kolawole

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Thursday 20 June 2019

BUSINESS DAY

Investor

In association with

Helping you to build wealth & make wise decisions Market capitalisation

NSE All Share Index

NSE Premium Index

N11.721 trillion

Week open 07 – 06–19)

31,924.51 30,432.13

N13.402trillion

30,432.13

Week close (14 – 06–19)

30,046.70

N13.233trillion

30,046.70

Year Open

2,241.37

The NSE-Main Board

1,456.29 1,247.55 1,236.14

NSE ASeM Index

NSE 30 Index

NSE Banking Index

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

130.95

723.46

NSE Lotus II

NSE Ind. Goods Index

NSE Pension Index

291.84

2,272.45

1,254.54

1,212.79

801.09

1,438.19

426.64

782.29

1,257.60 1,242.32

356.93

114.99

623.30

249.07

2,038.01

1,100.50

1,055.62

356.98

115.98

612.95

249.76

1,984.02

1,054.80

1,043.96

782.29

Percentage change (WoW)

-1.27

-1.52

-0.91

0.00

Percentage change (YTD)

-4.40

10.65

-14.15

-1.45

-1.22 -12.34

0.01 -10.52

0.86 -8.30

-1.66 -18.15

0.28 -17.36

-2.65 -11.19

-4.15

-1.10

-14.79

-13.54

Ellah Lakes: Charting new course for profitability Iheanyi Nwachukwu

llah Lakes Plc, one of N i g e r i a’s f o r e m o s t agriculture businesses specialising in Fish Farming has been in the news lately, though for good. The company which was incorporated on July 2, 1980 and listed on the Nigerian Stock Exchange on January 14, 1993 recently acquired 100percent equity stake in Telluria Limited in a bold move to diversify its product offerings in the AgriBusiness sector. The primary objective of its acquisition of Telluria Limited was to strengthen Ellah Lakes’ balance sheet, restore customer confidence, provide access to new markets, improve operations and create organisational efficiencies that will drive profitability and increase shareholders’ value. The Board and Management saw the acquisition which became effective on May 7, 2019 to be in the best interest of the Company and expect the transaction to revitalise management, create access to diversified expertise and financial strength, improve administrative and operational and efficiencies of the Company and strengthen the Company’s market position by aiding access to new products and markets. Through the acquisition of Telluria, Ellah Lakes has successfully made a strategic shift to diversify into oil palm cultivation and processing business. To achieve this objective, Ellah Lakes Plc appointed Chuka Mordi as Managing Director with effect from June 12, 2019. Mordi took over from Frank Ellah, who moves on to new pursuits. Prior to this appointment by Ellah Lakes Plc, Mordi was a Director in Telluria and the Managing Partner

L–R: Jude Chiemeka, divisional head, Trading Business, The Nigerian Stock Exchange (NSE); Jamie Rixton, chief Agronomist, Ella Lakes Plc; Wole Onasanya, chief financial officer, Ella Lakes Plc; Chuka Mordi, chief executive officer, Ella Lakes Plc; Olumide Bolumole, divisional head, Listing Business, NSE; Enot Ogbebor, non-executive director, Ella Lakes Plc; Frank Ellah, non-executive director, Ella Lakes Plc and Kolo Majekodunmi, managing director, MBC Capital Limited during the Listing of Ella Lakes Plc at the Exchange.

of CBO Investment Management. Earlier this week, precisely on Monday, June 17, Ellah Lakes Plc listed on the Nigerian Stock Exchange (NSE) additional 1.88billion Ordinary Shares of 50 Kobo each issued to shareholders of Telluria Limited as consideration for the acquisition of Telluria Limited by Ellah Lakes Plc. A notice to Dealing Members of the Nigerian Stock Exchange signed by Elizabeth Ekpo, for head, Listings Regulation Department indicated that with the listing of the additional 1.88billion ordinary shares the total issued and fully paid up shares of Ellah Lakes increased from 120million to 2billion ordinary shares, with market capitalisation of about N8.520billion, at N4.26 per share. MBC Capital Limited, MBC Securities Limited and The New Practice (TNP) are the professional parties to the transaction.

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Ellah Lakes’ listing of these shares on the NSE creates options for investors in the agri-business segment of the Exchange. The additional shares listing provides increased liquidity to existing shareholders. “We are certain that today’s listing has marked the beginning of a new era for the company post the previous shut down of its operations due to militant activities and vandalisation of the company’s assets. The new management team has however successfully revived the company’s operations and turned around its listing status at the NSE”, said Oscar Onyema, Chief Executive Officer of NSE. “The Exchange recognises the role played by the board, management and other parties in the Telluria Limited acquisition transaction. We also commend ongoing efforts to restructure and

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diversify the company’s operations from fish farming to a more competitive business in oil palm cultivation and processing. “We believe that this new business strategy will position the company as a major player in the Agriculture sector. Accordingly, we encourage the company to consider leveraging on the NSE platform to raise capital to fund future business expansion”, Onyema said. “I am very excited to be taking up the position of Ellah Lakes Managing Director. The combination of Ellah Lakes and Telluria establishes a platform with a significant existing land portfolio, access to finance and investments in the domestic production of oil palm, and a variety of cash crops. I look forward to an exciting future as we put Ellah Lakes back on a path to growth,” Mordi said. While speaking on Monday June

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17 at the company Fact Behind the Listing on NSE, Mordi, said, “We are pleased to be embarking on this new phase in the journey of Ellah Lakes. With the business combination of the assets of Telluria, Ellah Lakes is in a great position to deliver value to all shareholders.” “The enlarged Ellah Lakes is built on a foundation of growth to meet the needs of Nigerians for agricultural products, both as retail consumers and as industrial partners. We believe and expect to partake in Nigeria’s growth story as we continue to support the communities we operate in and all our stakeholders”. In the same vein, Frank Ellah, immediate past CEO and NonExecutive Director of Ellah Lakes said at the Facts Behind the Listing event that, “Today (that is last Monday) marks a milestone in the history of our company.”

Thursday 20 June 2019

BUSINESS DAY

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United Capital Investment Views

Investor’s Square

Equities disregarded June 12 speech… NSEASI fell by 1.3% week-on-week

he equities market closed bearish in the prior week as the market disregarded the June 12 presidential speech which failed to provide the badly needed catalyst required to bolster sentiment. Overall, the Nigerian Stock Exchange (NSE) All Share Index (ASI) dipped 1.3percent to close the review week at 30,046.7 points. Consequently, market capitalisation plunged N169.8billion to end at N13.2billion while year-todate (ytd) return worsened to -4.4percent. Performance across sectors was mixed as three (3) of the sectors under our watch closed in the red territory. The Industrial Goods (-4.2percent), Consumer Goods (-1.7percent) and Agricultural (-2.3percent) sectors were the week’s laggards owing to price declines in DANGCEM (-2.7percent), CCNN (-10percent), NESTLE (-1.4percent), INTBREW

undervalued stocks Money Market: Stop rates on 91-day, 182-day T-bills auction stay flat System liquidity increased significantly in the prior week as the Apex bank hold back on OMO sales. Compared to N119.6bn opening balance on Monday, liquidity balance with banks and discount houses surged to N292.2bn on Friday buoyed by an OMO bill maturity worth of N125.76bn on Friday. At the Nigerian Treasury Bill (NBT) primary market auction (PMA) held during the week, maturing bills worth N129billion was rolled over on Thursday. Thus, OBB and O/N rate moderated by over 5.0percent to 5.3percent and 5.7percent respectively. In the same vein, interbank activities at CBN’s SLF/SDF window tilt in favour of SDF which to N135.5bn (vs. SLF at N51.0bn). At the PMA, spot rate for the 91-day and 182-day bills firmed at 10percent and 11.95percent respectively while stop rates for

(-7.3percent) and PRESCO (-5.2percent). On the flip side, the Insurance (+0.9percent), Oil & Gas (+0.3percent) and Banking (+1bps) trended northwards, largely buoyed by increased buying interest in WAPIC (+5.1percent), NEM (+2.4percent), FO (+1.2percent), FCMB (+1.2percent) and GUARANTY (+2percent). Investors’ sentiment as gauged by market breadth was underwhelming at 0.6percent as only 16 stocks advanced against 29 decliners for the week. We e x p e c t ma rke t performance to remain tepid in the absence of a positive catalyst that could buoy sentiment. However, we do not rule out the possibility intermittent gain predicated on investors positioning for

the 364-day bill cleared higher when compared to previous level (364-day (12.34percent versus 12.20percent at the last auction). As such, interest was strongest on the 364-Day bill with a Bid-to-Allotment ratio of 2.5x compared to 1.0x and 1.3x respectively for the 91-day and 182-day bills. In the secondary market, average yield on Nigerian T-bills fell 1percent week-on-week (w/w) as bullish sentiment prevailed in the absence of OMO sales. Thus, average yields settled at 12.3percent. This week, we expect the Apex Bank to sell OMO in a bid to check liquidity. This will drive OBB and O/N rates higher and thus a bearish outing for the discount rate on T-bills. Bond Market: Bearish sentiment across segments Naira bond market stayed bearish despite increased

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system liquidity as average bond yield rose 0.1percent w/w. Save for the 3-year note which enjoyed a sizable i nt e re s t, re s u l t i ng i n a 0.1eprcent decline in yield, interest was broadly bearish on the long-dated notes. We imagine that this may be linked to the positioning for NTB auction held during the week which would have necessitated deployment funds for the PMA. Nigerian sovereign Eurobond market also witnessed a bearish close in the previous week, as pressure on oil prices persisted. The average yield on FGN Eurobonds rose 5basis points (bps) w/w to 7.08percent amid sell pressure observed across the curve save for the 2022 dollar note. Interest on Corporate Eurobonds also remained largely bearish as the yields on all but ACCESS dollar notes rose w/w. However, the average yield for the segment fell by 1bp, thanks to the 21bps reduction in ACCESS June 2021. This is unsurprising given the expected redemption of the ACCESS dollar note in the coming week. Consequently, average yield dipped marginally by 1bp w/w to close at circa 7.4percent. This week, we expect activities in the secondary naira bond market to remain broadly bearish guided by overall behaviour of liquidity in the system. In the Eurobond space, save for the ACCESS bank dollar notes, we expect sentiments for sovereign and corporate Eurobonds to be muted due to recent pressure on oil prices. FX Market: Apex bank debunks speculated floating of the naira FX rates stayed calm across the three windows, despite some confusion in the media as to whether the CBN is floating the naira or otherwise. This necessitated the press statement from the Apex Bank to debunk and clarify the position of the bank on the issue. As it stands, the CBN policy on exchange rate remains the same, with rates trading at multiple exchange rate windows. For the week, official market firmed at N307.0/$1while rate at the I&E window appreciated 1bp to N360.8/1$. At the parallel market, rates fell 3bps w/w settling at N360/1$.

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

Economy & markets

Connecting the capital market to infrastructure Osaro Eghobamien,

h e P r e s i d e n t ’s Democracy Day speech, focused on three pronged areas of security, the economy and the fight against corruption, admitting in the same speech that these were same issues of concern when he assumed office in 2015. The nation had being highly expectant of this speech, and required a prognosis on how this administration intends to tackle snail speed development, and in particular the innovation to confront the widening infrastructural gap which is now estimated conservatively at a deficit of $350 billion. The President committed to close the gap and set a further benchmark to remove 100 million people from poverty by 2030. The sincerity of the President in this regard is not in doubt. The pertinent question, however, is whether we, as a nation have the tools necessary to make any significant impact in infrastructural deficit. It will take a fastidious commitment, know-how and political will to successfully make a significant impact in a $350 billion deficit. The President and the Vice President’s good speeches, good intentions, sincerity and perceive d abs ence of corruption cannot be converted to infrastructure. More fundamental tools must be adopted to achieve the desired results in infrastructural development. This opens yet again, the discussion on the concept of securitization. Securitization is a mechanism that connects pension funds to infrastructure, without unduly risking such funds. It connects private equity with the bond market, banking with insurance, deploys funds to electricity, oil & gas, hospitals, roads, all this being superintended over by the Securities and Exchange Commission (SEC) as well as Trustees representing sophisticated investors’ mutual funds. Infrastructure presents peculiar challenges in that it requires huge capital and such capital must be submerged for a long period of time. The methodology by which that capital is unlocked and yet

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The budget being a one-year infrastructure continues to be deployed, is in a very loose cycle, monies are allocated in term the concept of structured bits and drops and a project that would normally take 3-4 finance or securitization. The current method of years to complete, in Nigeria funding infrastructure directly will take close to 26 years to from the budget is grossly complete. This is aside from inefficient and insufficient. the bureaucratic inefficiencies I hasten to add that this that accompany the budget, administration has done including allegations of budget extremely well in allocating padding. The consequence of all this, substantially more of its budget to capital development; is to in effect crowd out the moving away from the practice private sector and indirectly turn of previous administrations in away from the capital market, deploying a substantial part which ironically is fundamental of the nation’s resources to to building any nation and its infrastructure. The government recurrent expenditure. T h i s c o m m e n d a t i o n will have to pay attention to must be perceived only in these macro-economic indices relative terms. Budgets of the to enable the mechanism of past administration focused securitization (capital market substantially on recurrent and private sector incursion) expenditure; giving a false intervene in closing the sense of prosperity. Today’s infrastructure gap of $350 billion. Securitization in its problem goes beyond simply restructuring the budget. It simplest form is a mechanism is that the resources are for converting a financial insufficient to begin to deal relationship into a transaction. For every infrastructure build with our infrastructural gap. We m u s t a c c e s s t h e (for example, a railway), the domestic and international originator (federal agency) of capital markets if there is to the projects, creates a financial be any significant impact. asset; the right of the federal Regrettably, this government agency to demand a fare from does not appear to appreciate the passenger who intends to the importance of the capital board the train. The agency may market, with the Securities and wait for a considerable length Exchange Commission not of time to recoup its investment having a Board constituted for through the collection of daily fares. However, through asset close to 2 years as at date. It also took close to 24 securitization, the agency may months to constitute a choose to convert some of panel for resolving capital the asset (receivables) into a market disputes. Criteria capital market security so as for appointments to these to raise money from the capital positions appear more focused market. Any such money raised, on politics than expertise. The government of the day is used to pay off the loan continues to focus on its budget undertaken by the originator to stimulate the economy, to develop the project. If the notwithstanding the proven project was undertaken through extreme limitations of this the budget, there may be no loan to be repaid. tactic. The dual complication of insufficient resources and the limitation of a yearly budget Continued next week circle compel the government to borrow at a very high rate to Osaro Eghobamien, SAN sustain the budget, and some Managing Partner argue, the Naira. Perchstone & Graeys @Businessdayng

Thursday 20 June 2019

BUSINESS DAY

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Investor Analysis

NASCON: Strongly focused on capacity growth, market penetration …pays N2.65bn total dividend Stories by Iheanyi Nwachukwu

espite the challenging environment in 2018, NASCON Allied Industries Plc demonstrated its resilience and is optimistic in its outlook

for this year. The company, which remains strongly focused on capacity growth and increased market penetration would be leveraging on a range of synergies including improved output in terms of quality, quantity, and business efficiency through regular and objective selfassessment. Board and management position When the company’s shareholders assembled last week at the annual general meeting (AGM), they were made to know that the company’s future holds huge potentials that will drive higher returns. Fatima Aliko-Dangote, Executive Director, Commercial of NASCON said the company which added three new products in 2018 would be introducing more products this year as part of strategies to meet the needs of its varied customer base. Fatima Aliko-Dangote, who spoke at the annual general meeting of the Dangote Industries Limited subsidiary held in Lagos recently said NASCON products are widely accepted in the market. The Managing Director, Paul Farrer that NASCON Allied Industries Plc investment focus in this year 2019 will be dedicated to offering its customers with premium products in all segments. On the new products introduced in 2018, he said, “We launched the Dangote Stew Mix, Dangote Curry and Dangote Classic seasoning. These three products are part of a wider product enrichment plan to diversify our product portfolio. “The products were specifically developed to meet and surpass the needs of our consumers across the country. Each of these products has been tailored to suit the local taste and cooking habits of the different regions in Nigeria. We would continue to differentiate ourselves in our product category by consistently delivering high quality, nutritious products,” Farrer said. Shareholders laud the board and management Shareholders at the AGM took turns to laud the board and management of NASCON for a good outing in 2018 and counseled the latter to do better in the present year. Yemisi Ayeni, chairperson, NASCON Allied Industries Plc said the company will retain its focus on implementing a sustainable expansion strategy across its business lines while constantly engaging all its stakeholders. “We delivered on our commitment for continuous value creation and retention of our position as market leader in our core

business,” she said. A shareholder, O lagoke O lusegun commended the quality of the board of directors, which he said consists of vibrant and experienced members who oversee and influence the activities of the management team. According to him, the good synergy between the board and management is seen in the performance of the company despite the harsh operating environment manufacturing companies faced in the year 2018. Olusegun also tasked the management to pay more attention to the welfare of staff who are key to the performance of the company. He said, management should adhere to the best operating guidelines in order not to run afoul of regulatory agencies’ requirements. A leading shareholders’ rights’ activist, Sunny Nwosu, in his remarks, lauded the board and management of NASCON for their ability to declare and pay dividends despite the harsh operating environment which resulted from the Apapa Wharf gridlock and the downturn in the national economy. He said while other companies are lamenting and cutting down on production, the company is paying dividend which is commendable. Another shareholder, Funke Godswill, also commended the performance of the company but lamented the impact of Apapa Wharf traffic which she said hinders optimal performance of companies within the axis. Sunday Apu, a concerned shareholder, bemoaned the issue of smuggling of salt products through the borders which erodes the market share of NASCON. He called on the management to collaborate with the Nigeria

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Customs Service in order to curb the spate of smuggling which stifles domestic production. Bi s i Ba k a re, i n h e r c o nt r i b u t i o n , commended the quality of the product mix from NASCON which she says compares with the best in the market. She also lauded the board and management for the company’s dividend policy, and paying of dividends consistently for the past eleven years. Another shareholders’ rights’ activist, Murktar Murktar said NASCON is garnering more market share through the introduction of three new products in 2018. Stock trading information The company’s stock trading information on the Nigerian Stock Exchange shows that at N15 per share, NASCON stock price has lost 16.7percent of its year-open value. It had reached a 52-week high of N22.80 and a 52-week low of N14.75. NASCON’s shares outstanding of 2,649,438,378 units are valued at N39.741billion as at June 18, 2019. Effect of Apapa gridlock The Apapa gridlock, refined production and seasoning cubing capacity were the key risks in the company’s business and its management was able to mitigate against these effects. Apapa gridlock affected the company’s movement of raw materials to Oregun, timely delivery of finished goods to customers and increased turn-around time of its trucks. NASCON Allied Industries Plc relocated 60percent of its Apapa Plant production capacity to its Oregun and Port Harcourt Plants to reduce the effects of the gridlock. The company also engaged third-party transporters to ensure timely delivery of its finished goods.

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Financial review In the financial year ended December 31, 2018, NASCON Allied Industries Plc recorded a turnover of N25.77billion representing a 5 percent decline from the previous year. Profit After Tax (PAT) fell by 17percent, from N5.34billion in the previous year, to N4.42billion in 2018. The disproportionately higher fall in profitability was as a result of significant cost pressure, including 5 percent increase in direct manufacturing costs related to crude transfer, freight costs and foreign exchange forwards; and a 15 percent increase in depreciation charges related to trucks, new machines, for the seasoning plant and 6MT salt refining machines. Earnings per share also reduced from N2.02 in 2017 to N1.67 in 2018. The company paid dividend of N1 per share against N1.50 per share it paid in 2017 financial year, totaling N2.65billion against N3.97billion in 2017. “In a bid to deliver on our commitment for continuous value creation and retention of our position as market leader in our core business, we regularly reviewed our strategy during the year (2018) to ensure alignment with market realities. These strategy reviews also provided avenues for constant feedbacks to the business, resulting in the implementation of appropriate value-adding measures along the value of the business. An example of such initiative was the integration of our logisticstracking module to our enterprise resource planning application, to safeguard our assets (trucks, stock and diesel) and to guarantee proper monitoring of cost of goods solds,” Ayeni said.

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Thursday 20 June 2019

BUSINESS DAY

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Thursday 20 June 2019

BUSINESS DAY

Become a publisher 32

US-China trade imbroglio may mean delayed aid, suspension of mega projects for Nigeria – Busty Okundaye

Lagos Chamber discuss issues impacting on Nigeria’s business environment 31

The Global Economy: Heightened tensions, subdued growth 32

Nigeria and the US-China trade mess The ongoing US-China trade war is a top trending story globally. American and Chinese economies are world giant economies whose state of health has a bearing on economies across the globe. What possible impact would the trending US-China trade imbroglio have on Nigerian economy? SIAKA MOMOH spoke to a cross section of Nigerian business space stake holders and reports.

hina is on the rise. It has unquestionably come to occupy the Number 2 position in the global economy. From the look of things, this Asian behemoth is gunning for the prestigious Number 1 position which the United States currently occupies. The US is disturbed by this and so would not let it happen. Donald Trump’s ‘America First’ philosophy stems from this. Frightening news of doom We have since it all started been fed with frightening news of doom that is coming with the trade duel between US and China. We have been told that the US-China trade war threatens to be a drawn-out affair, pulling down the global economy. We have been told the IMF has put the cost of the conflict at 0.5 per cent of world GDP, but there might be more serious consequences ahead. Reports have it that an all-out trade war could cost the US economy almost 0.5 per cent of gross domestic product once the domestic and international feedback effects are considered and that a nasty financial market reaction could cause more damage to the US economy, raising the cost to almost 1 per cent of GDP over the next 24 months. This is not all. Take a look at this according to Aidan Yao, a senior emerging Asia economist at AXA Investment Managers: ‘Bloomberg economists Dan Hanson and Tom Orlik have mapped out the main scenarios. Their headline conclusion: If tariffs expand to cover all U.S.China trade, and markets slump in response, global GDP will take a $600 billion hit in 2021, the year of peak impact. ‘On May 10, the U.S. took tariff rates on $250 billion of Chinese exports to 25%. Retaliation was swift, with China raising tariffs on certain U.S. goods in a range from 5% to 25%. Two years out, Bloomberg Economics’ modeling suggests that output in China and U.S. would be lower by 0.5% and 0.2% respectively, relative to a notrade-war scenario. Global output would also come down a notch.’ Where does Nigeria stand in all these? According to Olajumoke Familoni, Professor

of Management and Entrepreneurship and Founder and Founder/Chairman ICLED Business School Ibeju-Lekki, Lagos, “The fastest growing markets for the best items China produces, like laptop computers and cell phones, are in developing regions such as India, Latin America, and Africa. In contrast, China itself is a market that the U.S. can hardly ignore.” She explained, “China was dramatically underdeveloped, and it wanted access to Western technology and manufacturing techniques. China has most of what it needs now, and what it doesn’t have it can easily obtain from vendors outside the U.S. While the American market looked enticing a few decades ago, it is relatively mature, and today the newer emerging market countries have become much more interesting to Beijing.” What she means in effect is that when one door closes another one will open – a natural law of nature.

Fall in growth/recession Shuaibu Idris, Lagos-based management consultant and former deputy managing director Dangote Flour Mills Plc argued that following the actions of US and China, Chinese products in the US market would be expensive and thus would discourage Americans from buying such goods and services thereby making the Chinese to lose market and by implication revenues. He said loss of such revenues could mean reduction in foreign exchange earnings by China and slow down in production leading to economic growth which is badly needed by Chinese government. Shuaibu Idris said the consequences of the ongoing dispute, if not managed properly could affect other economies of the world Nigeria inclusive. Said he: “World economic growth could be affected and thus could lead to recession with its attendant negative impact.

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There is a popular saying that reads: ‘When two elephants fight it’s the grass that suffers’. Developing countries such as Nigeria could have both negative and or positive impact of this dispute depending on our level of preparedness. We can offer some limited market for the products from China. We can take advantage of this development by obtaining better terms of trade between us and China or even the US.” Speaking in his personal capacity, Prakash Kanth a high ranking manager with Olam Nigeria said if we look at the trade inflows between China and US, the commodities and items which are prominently there are not part of Nigeria’s trade portfolio mix with either of these countries. For Kanth, at this junction, Nigeria is not positioned to capitalize on shift of businesses/investments away from China due to

Continues on page 30

Thursday 20 June 2019

BUSINESS DAY

Business Chieftain

US-China trade imbroglio may mean delayed aid, suspension of mega projects for Nigeria – Busty Okundaye Busty Okundaye, Group CEO of UGC Technologies as well as the President of UGC Automotive Company Limited, a Global Technology and Management Expert on National Industrialization with a critical focus on Strategic Management, Technology /Transfer and Products Domestication or Localization, is highly qualified to speak on the trending US-China trade war story since he is one person who shares Nigeria, US and China personalities. How? He is a Nigerian trained in the prestigious American Ivory Tower – MIT; married to a Chinese, and does business in America and China. He spoke exclusively in Lagos with SIAKA MOMOH.

or Busty Okundaye, the impact the prevailing trade or economic war between the USA and Peoples Republic of China (PRC) may have on Nigeria is mainly economic. He categorized this into four period levels as follows: Real Time: He said due solely to the fact that the trade volume between Nigeria and PRC is relatively small or negligible, when compared to the trade volume between the latter and the rest of the world, “there is no apparent or visible real time impact of the war on Nigeria, at least for now”. Short Term Impact For him, hopefully, the trade war between the USA and PRC would be amicably resolved soon before it escalates to the level that it starts dragging the global economy down. Said he:”The first casualties of the war impact on Nigeria in this case would be NO additional economic aid from China, to Nigeria. Since continuation of the war would mean a continued reduction in trade volume between the USA and PRC, most likely in favour of the former. This would, accordingly, mean a significant reduction in the GDP or revenue for China. This reduction would bring about a new economic order or new priorities for the country, China. Thus, any planned or future new economic aid for Nigeria, indeed the rest of Africa and other developing countries globally, may be shelved or delayed. Chinese Government aid to Nigeria comes typically in the form of loans on infrastructural development. “Similarly, on the other hand, as in the above-noted aid from China, planned aid from the USA for Nigeria could very easily also be delayed or totally scraped. US aid

Busty Okundaye’s profile U.S.-trained engineer and general manager, Busty Okundaye, is the Group CEO of UGC Technologies as well as the President of UGC Automotive Company Limited. He is a Global Technology and Management Expert on National Industrialization with a critical focus on Strategic Management, Technology /Transfer and Products Domestication or Localization. He began his career as a young engineer at General Motors (GM), North American Operations, based in Michigan, U.S.A. He has over 25 year’s global experience in automotive, manufacturing, technology transfer, general and strategic management and management consulting (finance, IT, telecom, governmental operations, etc.). Mr. Okundaye’s professional experience is from the USA, China, Canada, Mexico, etc. He was a Managing Director and Principal Managing Partner on Technology /transfer and product domestication or localization for GM Worldwide Operations. Heco-led Technology / Transfer and Products Domestication / Localization in China from the USA, UK, Germany, France, Italy, Japan, South Korea, Brazil, etc. for over 11 years, while based in the USA and China, on the Shanghai GM (SGM) and SAIC-GM-Wuling Automobile Assembling Plants planning, establishment, development and operations. Both of these plants are located in China and have been extremely very well. to Nigeria comes typically in many forms, from capacity development via training in several areas to intelligence gathering and sharing on national / regional (ECOWAS / Africa) security. Mid-term Impact He said the mid-term impact of the war on Nigeria could be a suspension of all or part of the on-going

mega-projects in the country, mainly financed by and being executed by the Chinese. “These projects include construction of major infrastructure that are virtually located in major cities and across the country, especially in transportation, electric power, etc. This would come up as a resultant effect of a reduction in trade volume due to war and as such, a reduction in

revenue or economy of China He explained: “Unlike from China, however, the impact on Nigeria regarding aid from the USA may not be apparent for the short-term. This is mainly because most of the US aid for Nigeria is intangible. The scale of the US aid for Nigeria is also relatively insignificant relative to size of the US economy. So, a reduction in aid would not be a priority for the donor country, regardless of any short-term result from a continuation of the economic war between it and PRC.” Long-term Impact On this Busty Okundaye said a prolonged trade war between the USA and PRC would definitely have a huge drag on the global economy. He added that hopefully, before it gets to this point, the EU, OECD, WTO, etc. would have significantly stepped up their intervention efforts on preventing a recession of great magnitude on the global economy as result of the war. He believes that they would make all necessary effort to ensure that the two countries continue to talk, perhaps more frequently, longer and in-depth to finally resolve the war. In summary, he said, for the long-term, the impact on Nigeria economically, would NOT be much greater than those of the short- and mid- terms noted above. “This,” he said, “is because considerable bulk of Nigeria trade is with the two countries that are now at economic war, the USA and China”. Busty Okundaye argued that on all of the above four levels or periods of the trade war impact on Nigeria, the country would survive. He said it is just that the major impact may be delay or even scrap of some developmental mega projects in the country, especially those controlled or managed by China. This, he said,

would particularly be so in the areas of infrastructure development / construction, energy, etc. For him, “There are no other possible fallout on Nigeria other than on its economy, as listed above. This is currently and strictly an economic war between the USA and China. It is not and may not become a military one between the two countries, at least for now. It would not hurt Nigeria militarily, diplomatically between the countries and either the USA or China, etc. “Based on the above, Nigeria needs to focus on check mating any negative spin-off from the possible noted impacts. The most competitive way to achieve this is for the country to constitute a think-tank that would constantly monitor the war to develop and implement competitive strategies to address any spin-off. Members of the think-tank should be critically selected on a merit basis. The individual members should be those that are HIGHLY versed in the socio-economic and political systems of the warring countries, US and China. and that of Nigeria. Similarly, they should also be very versed in the current world order, political and global economy.” He explained:”The strategy/ (ies) to be developed and adopted in this situation should be such that can also be implemented to the benefit of Nigeria. It should be a strategy that Nigeria cannot afford not be proactive on maximizing the benefits that may result from China and its mega companies expanding old and/ or developing new markets, due to a possible considerable reduction from its trade with the US. So, any strategy developed and adopted by Nigeria in this case should be one that addresses any possible native spin-off and capture possible benefits for the country resulting from the trade war.”

the benefit of Nigeria. “It should be a strategy that Nigeria cannot afford not be pro-active on maximizing the benefits that may result from China and its mega companies expanding old and/or developing new markets, due to a possible considerable reduction from its trade with the US. So, any strategy developed and adopted by Nigeria in this case should be one that addresses any possible native spin-off and capture possible benefits for the country resulting from the trade war.” Fatai Afolabi, Executive Secretary of Plantation Owners Forum of Nigeria (POFON) argued our relationship with China is largely linked with development projects for which we need loans and grants from China. “Therefore if there is trade and eco-

nomic depression in China, China’s largesse to Nigeria will reduce. Whatever affects Chinese economy will indirectly affect Nigeria.” He said currently, China has trade deficit with Nigeria. He explained, “Trade deficit with Nigeria will go up since China’s financial muscle will become weak with economic depression in China. It therefore would not be able to buy our exports like it is doing now. This means our export trade with China will slide and this will translate to fewer earnings by us.” For him, with a weak financial muscle, Chinese investment here in terms of manufacturing, will fall and by extension there will be a fall in local production, employment, and earnings.

Nigeria and the US-China trade mess Continued from page 29 the ongoing trade war between these two behemoths. He argued “Nigeria is therefore unlikely to feel any material impact in terms of the mix of its trade flows from this trade war. There could be a strengthening of US dollar as investors take refuge in US dollar and that could pose some challenge for Nigeria’s current account deficit”. Busty Okundaye, Chief Executive Officer, UGC Technologies Group, as well as the President of UGC Automotive Company Limited, Nigeria can survive four levels or periods of the trade war impact on Nigeria( the four levels are spelt out in the interview with him published above). “It is just that the major impact may

be delay or even scrap of some developmental mega projects in the country, especially those controlled or managed by China. This would particularly be so in the areas of infrastructure development / construction, energy, etc.” He explained there are no other possible fallouts on Nigeria other than on its economy. “This is currently and strictly an economic war between the USA and China. It is not and may not become a military one between the two countries, at least for now. It would not hurt Nigeria militarily, diplomatically between the countries and either the USA or China, etc. “Based on the above, Nigeria needs to focus on check mating any negative spin-off from the possible

noted impacts. The most competitive way to achieve this is for the country to constitute a think-tank that would constantly monitor the war to develop and implement competitive strategies to address any spin-off. Members of the think-tank should be critically selected on a merit basis. The individual members should be those that are highly versed in the socio-economic and political systems of the warring countries, US and China and that of Nigeria. Similarly, they should also be very versed in the current world order, political and global economy. The strategy/ (ies) to be developed and adopted in this situation, according to him, should be such that can also be implemented to

Thursday 20 June 2019

BUSINESS DAY

Global Matters

Consequences of US-China trade combat Developing regions such as India, Latin America, and Africa are winners; China is a winner too OLAJUMOKE FAMILONI

Some Facts h e s o c i a l i s t ma rk e t economy of the People’s Republic of China is the world’s second largest economy by nominal GDP and the world’s largest economy by purchasing power parity. Until 2015, China was the world’s fastest-growing major economy, with growth rates averaging 6% over 30 years.12.24 trillion USD (2017)China is currently our largest goods trading partner with $659.8 billion in total (two way) goods trade during 2018. Goods exports totaled $120.3 billion; goods imports totaled $539.5 billion. The U.S. goods trade deficit with China was $419.2 billion in 2018. A decrease in domestic demand in China can adversely impact the world economy and slow down global economic growth. China was dramatically underdeveloped, and it wanted access to Western technology and manufacturing techniques. China has most of what it needs now, and what it doesn’t have it can easily obtain from vendors outside the U.S. While the American market looked enticing a few decades ago, it is relatively mature, and today the newer emerging market countries have become much more interesting to Beijing Impact of fallout The United States is one of the countries that are likely to be affected by a slowdown in the Chinese economy because of the expected decrease in the export of goods and services to China.

United States and China will bear burdens because of the two nations’ presidents’ latest trade war escalation. It has already begun, as China has raised tariffs on $60 billion worth of American goods, and Mr. Trump is asking for an additional $15 billion in subsidies for farmers and others who will be most harmed by the new Chinese tariffs. High rate of inflation would be expected and stores like best buy Walmart will have no choices but to increase the prices, which I am afraid will affect the purchasing power of the people. The U.S. goods trade deficit with China was $419.2 billion in 2018.President Trump’s tariffs can actually improve economic growth and move supply chains out of China to neighbouring countries considered friendly to the United States. The tariffs are forcing companies to re-establish supply chains. This might result on USA opening up new manufacturing plants, which will be good for the economy in terms of provision of jobs and reduction in unemployment. It will also cause the current manufacturing plants to expand

operations. It will result in a shift in paradigm in economic models, the African nations, India are ones that are right now benefiting more from Chinese products because they are price accessible. (Authur Mann) The fastest growing markets for the best items China produces, like laptop computers and cell phones, are in developing regions such as India, Latin America, and Africa. In contrast, China itself is a market that the U.S. can hardly ignore. By the end of 2015, Chinese consumers had bought 131 million iPhones. The total sales to U.S. customers during the same period stood at only 110 million. And iPhones are only a small part of U.S. exports. Boeing, which employs 150,000 workers in the U.S., estimates that China will buy some 6,810 airplanes over the next 20 years, and that market alone will be worth more than $1 trillion. This is a huge market. President Trump should note that the most immediate effects would probably be felt by companies like Walmart, which import billions of dollars of cheap goods that

Editor’s Note

he ongoing US-China trade war is a top trending global story. We have since it all started been fed with frightening news of doom that is coming with the trade duel between the two world economic giants . We have been told that the US-China trade war threatens to be a drawn-out affair, pulling down the global economy. We have been told the IMF has put the cost of the conflict at 0.5 per cent of world GDP, but there might be more serious consequences ahead. How is this duel involving the two giant global economies going to impact on Nigeria? See our cover for an in depth story on this number one global issue. The Lagos Chamber of Commerce and Industry (LCCI) council met and deliberated on several issues impacting on the business environment first week of June. The Council called for, among other things, a concessionary tax rate for Small and Medium Sized Enterprises (SMEs) in order to promote the objectives of job creation and

are bought mostly by the people who voted Trump into office. The prices on almost all of these items would quickly skyrocket beyond the reach of the lower economic brackets—not because of manufacturing costs, but because of the tariffs. The result would be an economic war of attrition that China is infinitely

Siaka Momoh

inclusive growth as enshrined in the Economic Recovery and Growth Plan (ERGP). Do you want to become a publisher? Enterprise Strokes stuff for this edition tells you all you need to achieve your dream. Read all above and more in your scintillating magazine. For advert placements, sponsorship, reactions, editorial contributions, please contact SIAKA through siakamomoh@yahoo. com; 2348061396410; 23408023033988.

better positioned to win. (Professor Winter Nie).

Olajumoke Familoni is Professor of Management/ Entrepreneurship and Founder/Chairman ICLED Business School IbejuLekki, Lagos.

Lagos Chamber discuss issues impacting on Nigeria’s business environment SIAKA MOMOH

he LCCI council met and deliberated on several issues impacting on the business environment first week of June. The highlights of the outcomes of the deliberations are as follows: The meeting called for a concessionary tax rate for Small and Medium Sized Enterprises (SMEs) in order to promote the objectives of job creation and inclusive growth as enshrined in the Economic Recovery and Growth Plan (ERGP). Small businesses are more vulnerable to the current challenges in the economy, hence the high mortality rate. This group of businesses, therefore, deserves every support that the government can give.

Meeting expressed concern about the persistent delays in the issuance of the Pre-Arrival Assessment Report (PAAR) to importers by the Nigeria Customs Service. This situation is contributing to cost escalation for many businesses; cargoes are delayed

unduly leading to the payment of avoidable demurrage and high interest cost on borrowed funds by importers. The meeting expressed concern about the investigating activities of anti-graft agencies and regulatory institutions regarding alleged

infractions by corporate organisations. The Chamber admonishes that such investigation, as much as possible, be conducted in a discreet manner devoid of any form of media hype. This is necessary to avoid unwarranted reputational damage and erosion of investors’ confidence. This position does not diminish the significance of compliance by corporate organisations with extant laws and the imperative of proportional sanctions for proven cases of infringements of the law. The meeting expressed concern over reports of interception of containers on the highways by the Standards Organisation of Nigeria (SON). The LCCI is of the view that where there are outstanding charges to be paid to SON, or where there are issues about SONCAP compliance, such matters should be dealt with be-

fore the container leaves the port. It is unprofessional for the operatives of SON to be intercepting containers on the highways on account of some fees or charges that have not been settled by importers. The meeting expressed worry over the practice by the Federal Inland Revenue Service (FIRS) instructing the banks to put a lien on the accounts of alleged tax defaulters. The Chamber stresses the need for FIRS to adhere strictly to due process in dealing with issues of alleged tax defaults. There should be a proper communication and engagement with taxpayers to properly ascertain a tax liability before such extreme actions of invocation of a lien on the accounts of companies are taken. This practice is very disruptive and has caused grave embarrassment to many corporate organisations.

Thursday 20 June 2019

BUSINESS DAY

Global Matters

The Global Economy: Heightened tensions, subdued growth

‘

o a c h i e v e s t ro n g e r growth among low-income countries, policymakers, citizens, and the international community look to both external and internal drivers of growth as well as steps to mitigate risk.’ The global economy has slowed to its lowest pace in three years. It is on track to stabilize, but its momentum is fragile and subject to substantial risks. International trade and investment have been weaker than expected at the start of the year, and economic activity in major advanced economies, particularly the Euro Area, and some large emerging market and developing economies has been softer than previously anticipated. Growth in the emerging and developing world is expected to pick up next year as the turbulence and uncertainty that afflicted a number of countries late last year and this year recedes, the World Bank’s June 2019 Global Economic Prospects: Heightened Tensions, Subdued Investment reports.

Become a publisher

oogle can make you one. I stumbled into the success story of Upper Access and feel I should share it with those that may be interested in this line of business.

Cover of the growth forecast of the Global Prospects Report 2019 A number of risks could disrupt that delicate momentum: a further escalation of trade disputes between the world’s largest economies, renewed financial turmoil in emerging and developing economies, or a more abrupt deceleration of economic growth among major economies than is currently envisioned. Of particular concern is a slowdown in global trade growth to the lowest level since the financial crisis ten years ago and a tumble in business confidence.

In extreme cases, elevated debt can lead to defaults and bailouts. So how much debt is too much? Every government has to strike the right balance. Those with sound balance sheets may find that borrowing to boost growth is appropriate. Economies in shakier fiscal shape may need be more cautious and find ways to enhance revenues first. Those that do borrow would benefit from better debt management and greater debt transparency. Debt should be contracted with a view to maintaining stability and preserving resilience. “It is urgent that countries make significant structural reforms that improve the business climate and attract investment. They also need to make debt management and transparency a high priority so that new debt adds to growth and investment.”

Cover of Government Debt results of the Global Economic Prospects report Debt accumulation can be justified because of the need for growthenhancing projects, such as investments in infrastructure, health and education. And indeed, the needs are massive: World Bank analysis finds that low- and middle-income countries will need in the range of $640 billion to $2.7 trillion in investment a year to meet development goals by 2030. In addition, prudent government spending can help a country ride out an economic downturn. But excessive debt carries serious risks. Even in an environment of low interest rates, debt can accumulate to unsustainable levels. A government spending large amounts to service debt is allocating less on other important activities. High debt also raises the possibility in the minds of investors and consumers that governments may eventually raise taxes to rein in deficits, chilling business and consumer spending.

Investment Deceleration Linked to worries about sluggish global growth, weak investment growth raises concerns about the long-term economic prospects of emerging market and developing economies. Despite a recent modest pickup, investment growth is expected to be below long-term averages in coming years. This means that the progress emerging and developing economies had made in catching up to advanced economies is slowing. Slower capital deepening also exerts a drag on the productivity of a country. This too stirs worry about filling gaping development needs over the next decade. Reallocating resources from unproductive areas and increasing spending efficiency are ways to boost public investment. Removing business constraints, addressing market inefficiencies and weak corporate governance are strategies to promote private investment. Authorities can provide greater clarity about the direction of policy

and seek enhanced integration into global value chains. Commodity exporting economies can seek greater diversification as a means of reducing vulnerability to the volatility of natural resource markets. Falling Behind A further troubling aspect of the tepid economic pace is what it means for the poorest economies. Rapid economic growth in some low-income countries since the turn of the century reduced poverty, and many climbed to middle-income status. But what are the prospects for those countries that are still classified as low-income, based on having a per capita income of $995 or less in 2017? The number of low-income countries has declined since 2001 from 64 to 34 in 2019, driven by the end of conflicts in several countries, debt relief, and trade integration with larger, economically more vibrant countries. However, the challenges to the remaining low-income countries are steeper than for those that have moved up. Many of today’s low-income countries are starting from particularly weak income positions. Also, more than half of today’s lowincome countries are affected by fragility, conflict and violence. And most of them are geographically disadvantaged by being isolated or landlocked, making trade integration tougher. Add to this that many are heavily reliant on agriculture, putting them at greater vulnerability to extreme weather and less able to join global value chains; that prospects for commodity demand are softening as growth in major economies slows; and that debt vulnerabilities have climbed sharply. All of this makes the prospects for progress appear daunting. Source: World Bank.Story abridged.

About Upper Access, Inc. Located in Hinesburg, Vermont, Upper Access, Inc. is a small, independent publisher of non-fiction books, focusing specifically on books designed to improve the quality of life. So far, it has published 30 titles, covering topics ranging from herbal remedies to dealing with personal loss. A supporter of independent publishing, Upper Access also provides consulting services and business software for other publishers. Challenge As a small publisher with limited funds for marketing, Upper Access, Inc.’s biggest challenge is spreading the word about its books. “The more people know about my books, the more likely they are to buy them,” says Steve Carlson, Publisher of Upper Access. “Like many independent publishers, Upper Access is basically a one-person operation. I do everything I can to increase the amount of information people have.” Since Upper Access typically publishes one to three new titles per year, a second critical challenge is spurring interest in its older titles. “For a small press our size, it’s wonderful just to make a living publishing books that help people. We take the time to be sure that each title is the best in its field or subject area,” says Carlson. “But when you publish only a few books a year, most of your revenue comes from the backlist. A topic that was hot when a book was first published may no longer have the same broad appeal, so it’s essential to keep these books visible to people who are interested.” Solution Carlson heard about Google Book Search in 2004 through a marketing newsletter for authors and publishers, and joined the Partner Program to increase exposure and jumpstart sales. Carlson closely tracks how customers discover Upper Access books, and after analyzing customer feedback, website visits and sales figures over a 10-month period, he

was able to identify a pattern. “I can trace sales of 244 books directly to Google, all sold from our site in the last 10 months,” reports Carlson. “So far, we’ve seen 53 unique customers who say they found us through Google, so we’re averaging 5.3 new customers a month. While these numbers may seem small, for a small publisher they’re significant, especially since many of these orders come from organizations that buy multiple copies of a particular book. They represent continuing sales for the backlist. “For instance, we have a book to help doctors notify people about the death of a patient. It was published back in â€˜94, but a medical conference organizer found it this year, and every few months we see another order for 12-24 copies. Another example is a local history museum in Massachusetts that’s been buying one of our books – it was never one of our bestsellers, but the information it contains fits perfectly for them. And we have a customer who’s very interested in memory recovery – a hot topic in the mid-â€˜90s – who found a book we published on the subject and now buys 10 copies at a time for her friends. “My sense is that these are people who are looking for the best information on a topic, not for books necessarily – otherwise, they’d probably go to Amazon or their local bookstore. They may have just been searching on Google and happened upon a book. That’s the value Google brings.” Upper Access has benefited not only from increased exposure and sales, but also a better return on investment. “For all practical purposes, I consider it free publicity,” says Carlson. “And the best part is that a significant percentage of the sales are through my website, so they’re at full retail price. With Amazon Advantage, you get less than 55 percent; with distributors, it’s an even smaller cut. And with bookstore sales, you’ll often see a 10-30 percent return rate. But when people order directly, they don’t return books. So these are ideal sales.” Upper Access has included its entire active catalog in Google Book Search, and plans to expand the partnership by submitting each new title upon publication. You can replicate Upper Access. You can even do better.

Thursday 20 June 2019

Retail &

BUSINESS DAY

consumer business Luxury

Malls

Companies

Deals

Spending Trends

Economic woes force car dealers to slash prices BALA AUGIE

igeria’s harsh economic environment is forcing dealers to resort to generous discounts on second hand and fairly used cars, as soaring prices largely due to a weaker currency continues to undermine consumer wallets. Incentives and reductions equivalents to more than 10 percent of the sticker price are now common place as dealership struggle to bring buyers back to the showrooms. But analysts fret that the heavy discounts could strain companies’ finances while hurting profit as sales could nosedive. Mercedes Benz E350 2010 model now costs N3.60

million, from N4.06 million old price, representing an 11.33 percent discount. KIA Rio 2014 model that used be sold for N1.78 million now goes for N1.40 million, representing a 21.34 percent discount. Nissan Pathfinder 2007 (Grade B, Tokunbo), now costs N2.05 million, from N2.43 million, representing a discount of 15.63 percent. Range Rover Sport 2006 (Grade B, Tokunbo) now costs N2 million from N2.26 million previous piece, representing an 11.50 percent discount. Toyota Venza 2010 model (Grade B, Nigeria used) now costs N5 million from N6.35 million, representing a 21.35 percent. Hyundai Elentra 2016 model (Nigeria used) can now sales for N1.85 million from N2.05 million, representing a 10 percent

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discount. I f e d ayo, c o n su m e r goods research analyst at Vetiva asset Management Ltd said she doesn’t have money to buy a brand new car and that the one she has was a gift from her mother. Olowoporoku said she

opted for a second hand vehicle, Hyundai Accent 2014 model, which she bought in 2017 for N2 million. “I could buy a new one next year but it probably is a new one,” said Olowoporoku. Economists and experts

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say the automobile industry is cyclical in nature and that demand is high when consumers are doing well, vice versa. When purchasing power reduces, people tend to postponed big ticket items such as vehicles and electronics. “Car sales move in line with the economy, but it demand for luxury items slows even when the economy pick up,” said Olowoporoku. Ni g e r i a’s e c o n o m i c growth slowed in the first quarter after the oil sector, the country’s biggest foreign-exchange earner, contracted. Gross domestic product in Africa’s largest oil producer expanded by 2.01 percent in the three months through March from a year earlier, according the Abuja-based National Bureau of Statistics. That compares with 2.4 percent expansion in the fourth quarter. Nigerians are getting poorer as over 50 percent of its people are living below $1.98 a day while unemployment rate is 23.10 percent, which makes owing a car the least of the problem of most people. Rising inflation and high transportation costs brought on by hike in fuel price has eroded the purchasing power of the working class. Inflation form the month of May stood at 11.40 percent, from 11.37 percent the previous year. Vehicle prices, especially the fairly used ones could come down as Federal Government may relax the ban on importation of vehicles through the land @Businessdayng

border following a successful implementation of a new initiative by the Nigeria Customs Service and the Customs Service of the Republic of Benin to automate and network all electronic information about incoming cargoes through the border. The Nigerian Customs Service (NCS) placed a ban on the importation of vehicles through land borders effective January 1, 2017 following calls from stakeholders in the automotive industry for strict regulation of the importation of vehicles as influx of vehicles, particularly used vehicles were affecting sales. The Nigerian automotive policy was introduced in November 2013 to resuscitate Nigeria’s moribund automobile industry. The policy allows local assembly plants to import completely-knockeddown vehicles at 0% duty, and semi-knocked-down vehicles at 5% duty, while importers pay a 70% duty on new and previouslyowned vehicles. About 54 licens es have be en granted. However, the recession of 2016 brought on by a sudden drop in crude oil price of mid 2014 undermined the growth of the industry. A weak currency made the price of cars inaccessible to most Nigerian middle class. Exchange rate was between$197/N and N235/ when the policy was formulated, but it is $367/N and $305/ “A recent report on the automobile industry noted that the over 40 existing automobile plants in the country have an installed capacity of 500,000 cars annually, but the firms currently only utilise less than 3 percent of installed capacity owing to low patronage,” said analysts at CSL Stocl Brokers Ltd. “Reversing this policy implies that the government has come to a realisation of what has always been our view- the ban on the importation of vehicles through land borders would neither increase government revenue nor increase patronage of locally made cars,” said analysts at CSL Stock Brokers Ltd.

Thursday 20 June 2019

BUSINESS DAY

Retail &

consumer business Consumer Spending

Consumer firms current debt level doesn’t call for deleveraging BALA AUGIE

otal debts in the balance sheet of Fast Moving Consumer Goods Firms (FMCGs) in Africa’s largest economy have inched up slightly, but the current levels may not call for another round of deleveraging exercise. Deleveraging is when a company or individual attempts to decrease its total financial leverage. In other words, it is the reduction of debt. The most direct way for an entity to deleverage is to immediately pay off any existing debts and obligations on its balance sheet. Consumer goods firms saw huge debt in their books after a devaluation of the currency of 2014 and 2016 balloon dollar denominated debt their capital structure. However, the introduction of the a new foreign exchange policy by the central bank in 2017 gave firms the leeway to tap the equity market and raise capital inform of Rights issue to reduce the debt obligations to both short and long term creditors. For the first three months through March

2019, the largest firms incurred total debt (long and short) of N269.89 billion, this represents a 1.97 percent increase from N264.67 recorded the previous year. That compares with a 20.57 percent increase recorded in the period corresponding period of 2017 and 2016. The average industry debt to equity ratio increased to 32.15 percent in the period under review from 29.12 percent as at March 2017. A debt to equity ratio0 shows in the proportion of debt to equity in the balance sheet of

CONSUMER SPENDING

a firm. Companies finance their operations with a combination of money they borrow from financial institutions, which is called by debt, or raise money from owners, which is called equity. It is generally prudent for a company to curtail the debt in its books because too much obligation could expose it to financial risk, the risk that interest payment could erode earnings. Put in another way, a company with protracted huge obligations is susceptible to bankruptcy.

The combined total finance cost or interest expense of these firms dipped by 39.53 percent to N21.56 billion in the period under review from N36.65 billion the previous year. Obligations to short term suppliers have reduced as total payables reduced by 19.31 percent to N381.94 billion in the period under from N 473.37 billion the previous year. A breadown of the figures show 50 percent of companies have not debt in their capital structure, which means they can tap into the bond market to fund future expansion plans with a view to increasing their share of the market. Firms that fall into the above catergories are Dangote Sugar, Nascon Allied Industries, Cadbury, and Unilever. However, Dangote Flour Mills has a debt to equity ratio of 171 percent as at March 2019, as against 130.15 percent recorded the previous year. Flour Mills Nigeria’s debt to equity ratio fell to 98.15 percent in the period under review from 100.15 percent the previous year. But the improvement in leverage has no impact on profit margins as decrepit infrastructure, low consumer purchasing power, and double taxation continues to undermine growth of the industry.

CONSUMER SPENDING

Demand for lightening beauty products Seasonality, security concerns trigger food surge as more Nigerians seek beauty routine prices to 13-month high in May OLUFIKAYO OWOEYE

he late Afro-beat maestro, Fela Anikulapo Kuti, in his album “Yellow Fever”, made scathing criticism of post-colonial Nigerians who cannot shake their “colonial mentality.” Fela criticized women who bleach their skin as an act of beauty, contemptuously adding that, despite what they think, it only makes them less attractive. Precious, 23, is an undergraduate of a tertiary institution in Lagos, she vigorously rubs the cream over her body. She does this carefully and makes sure the pink-colored creamy product gets to all part of her body. Precious said she is not bleaching but she wants to make her skin fairer. She believes fairer skin could be her ticket to a better life, so she spends her cash on cheap blackmarket concoctions that promise to lighten her pigment. According to Precious, this has been a daily routine for the past2 years. Now several shades lighter she says her new skin makes her feel more beautiful and confident. Skin lightening products are popular in Nigeria, according to a report by the World Health Organisation, 77percent of Nigerian women use skin lightening products regularly, compared with 59percent in Togo, 35percent in South Africa, and 27percent in Senegal. In fact, bleaching products are reportedly one of the most soughtafter household items by African women, alongside essentials like soap, milk, and tea. Visit to major stores by BusinessDay shows that the skin lightening products come in different forms, including soaps and creams, pills, injectables and so on. The soap is often sold as “antiseptic soap” that is applied to the skin to dry overnight or used to wash the hair, arms or face or the entire body, while the creams are generally packaged in tubes or jars, the pills come in

a tiny capsule. In major stores across cities in the country, skin lightening products have found a permanent home with new brands making an entry into the market almost daily, while offering a different value proposition for its customers. The beauty products also come in different prices ranging for as low as N2,500 to as high as 200,000. The use of lightening products cut across all ages and social status. While the older generation used creams and soaps, the new generation uses pills and injectables. The rich tend to opt for pricier registered products which are available in standard doses, others are likely to buy creams and soaps. Last year, American model and entrepreneur, Blac Cyna launched her whitening product, Whitenicious in Lagos. The cream which comes in a crystal jar, promises to hydrate, restore and lighten skin tone “without bleaching it out” and over time users are expected to notice a “marked reduction” in age spots and a lightened appearance. Madam Mercy owns a cosmetics shop on the popular Toyin Street, in Ikeja according to her 90 percent of her clients demand skin whitening products. According to Mercy, most of her customers are in a haste to lighten their skin. “I sell it to them and give advice on what product is best for them and how to use them,” she said. Akin Oderinu, a dermatologist said there are several health implications attached to using whitening products. According to him,skin-lightening products are not effectively regulated in Nigeria as they are available everywhere in various forms, from roadside vendors to high-end stores. The Nigerian government should look to push public awareness campaigns and educate Nigerians on the adverse effects of skin-bleaching. “If people were adequately informed about the repercussions of their actions, they might reconsider them,” he said.

...inflationary pressure on food to continue in near-term BUNMI BAILEY

ade Akintoye, a businesswoman and mother of two kids went on her monthly food shopping for the family. But when she tried to purchase some few items like Fish, Milk, cheese eggs, etc. she discovered that the prices had increased than what it was earlier. The reasons are not far-fetched as analysts have attributed the increase in food prices to the planting season coupled with elevated security threats in the food producing states which resulted in a decline in food supply, thereby leading to increase in prices and increased seasonal demand, especially during the Ramadan celebrations pushed up commodity prices BusinessDay analysis of the Monthly food inflation report by the National Bureau of Statistics showed that food prices rose to a 13 months high to 13.79 percent in May 2019 from 14.80 percent in April 2018. Ayo Akinwunmi, head of research, FSDH Merchant Bank said, “When you look at historical tread, usually in the time of May, food index always go up on the account of the commencement of the raining season and planting season,” “And we have also noticed that in the last few weeks there have been insecurity challenges in the country that has also led to escalated food prices,” Akinwunmi said. Ayorinde Akinloye, a consumer goods analyst at Lagos-based CSL Stockbrokers in his own opinion said that flooding has increased significantly in the middle belt and Ramadan exacerbated food price pressures last month.

The climate change which the country is experiencing affected the normal timing of planting season which usually starts between March-April but due to the delay in rainfall, it started in May. On the part of insecurity, For example, while the herdsmen attack is on-going in many parts of the country, the Boko Haram is terrorising people in the North-East and banditry is ravaging states in the North-West. “Most of the harvest of last year has reduced in quantity and we are just planting new ones for the season,” Emmanuel Ijewere, vice president of the Nigerian AgriBusiness Group (NABG) said. On a state level, on a year-on-year basis, Kaduna, Kebbi Gombe had the highest food prices in Nigeria while Kogi, Rivers and Abia recorded the slowest rise in inflation. On month on month basis however, May 2019, states with the highest was Kano, Gombe and Kaduna , while Kogi and Benue recorded the slowest rise with Kwara recording food price deflation or negative inflation (general decrease in the general price level of goods and services or a negative inflation rate)

Team Lead: Bala Augie, Olufikayo Owoeye; Analyst: Bunmi Bailey; Graphics: Fifen Eyemisanre Famous www.businessday.ng

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Thursday 20 June 2019

BUSINESS DAY

ENERGYREPORT Oil & Gas

Power

Renewables

Environment

NNPC/Shell joint venture loses $240m to crude oil theft Stories by Olusola Bello

he NNPC/Shell joint venture lost about $240 million to crude oil vandalisation in the fiscal year 2018. About 11,000 barrels of crude oil was stolen in the year under review. This translates to 4,015,000 barrels. This figure is multiplied by the average price of crude oil for the period which was put at $73 per barrels. According to Shell security remains a high priority due to continued crude oil theft and criminality in parts of Niger Delta, adding that Illegal third party interference are the main source of pollution as at today. The third Party interference caused close to 90 per cent of the number of spills more than 100 kilograms from the Shell Petroleum Development Company of Nigeria Limited and n operated pipelines. It has therefore called for stakeholders’ concerted efforts to curb the inces-

L-R: Chris Okunowo, 1st vice president, IoD Nigeria; Ahmed Rufai Mohammed, chairman, IoD; Ije Jidenma, 2nd vice president, handing out membership certificate to newly inducted member, Ransom Owan, group managing director, Aiteo Power and Gas during induction of new members in Lagos, Nigeria.

sant vandalism of crude oil-bearing pipelines. Highlighting the danger of continuous sabotage to people and environment, Igo Weli general manager, External Relations, Shell Petroleum Development Company (SPDC) said such efforts to curb pipeline sabotage will save lives secure communities and protect the environment. He said: “Shell is concerned the repeated sabotage of recently repaired pipelines exposes the en-

vironment and people to renewed and worsening pollution. Oil theft is focused on short term fiscal benefits, ignoring the long-term effects of environmental degradation.” Since 2017, sabotage spill rate has risen steeply and crude oil theft from SPDC JV’s pipeline network averaged 11, 000 barrels per day in 2018, an increase of about 20% over previous year. The number of sabotage-related spills increased in 2018 to

OPEC yet to decide on meeting date two weeks before production cut expires

Olusola Bello, Team lead,

them I can do later than that, not July 3-4.” Any date change for the OPEC meeting would require unanimous approval by its 14 members. Several OPEC delegates said news reports of Zanganeh’s suggested date were the first they had heard of the proposal. Novak, who had lobbied for the July 3-4 date to avoid a conflict with the G20 Summit June 28-29 in Tokyo, did not speak to reporters after leaving Tehran for Isfahan, where he will participate in a RussiaIran bilateral meeting hosted by Iran’s power ministry on Tuesday. Zanganeh said that unless there is a unanimous agreement, the original OPEC meeting date of June 25-26 should be maintained. “If they want and insist to change the date, I can in two weeks afterwards,” he said. Earlier Monday, Saudi energy minister Khalid al-Falih said that one country, which he did not name, was holding up the date change to July 3-4. “We hope that they will come along and we will have a date confirmed in the next couple of days,” Falih told re-

Graphics: Joel Samson.

...gives Eko DisCo thump up over service to customers

porters after the Saudi-Japan Vision 2030 Business Forum in Tokyo. “But I am personally committed to making sure that we do meet and that we have a consensus, which has already been informally developing.” OPEC and its 10 non-OPEC allies in December agreed to cut 1.2 million b/d for the first half of 2019 to prop up prices and induce draws of oil from storage. With prices still slumping, many analysts expect the group to extend the cuts, even with Russia suggesting that some quotas should be eased to account for the expected impact of US sanctions on Iran and Venezuela. Brent crude futures were traded around $61 per barrel, having recovered from briefly dipping to a four-month low below $60/b last week on concerns over the resilience of the global economy to escalating US trade disputes. Falih has pushed hard for a cut extension and told reporters in Tokyo that he was “absolutely” confident the coalition would reach an agreement, following “very constructive discussions” with Novak earlier this month.

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Fund as stipulated in the Hydrocarbon Pollution Remediation Project (HYPREP) gazette and the agreed governance framework.” “The SPDC JV has completed its first-year contribution of $180 million (N54.54 billion). Early 2017, the SPDC JV made available $10 million to help set up HYPREP office and in July 2018, joint venture deposited additional $170 million (N51.52 billion) into an escrow account to fund HYPREP’s activities.” The company said it is also collaborating with communities to effectively patrol pipelines’ rights-of-way through direct surveillance and GMoU surveillance, proactively engaging government security agencies to prevent crude theft and vandalism and carrying out awareness campaigns to educate community members, surveillance contractors and general public of the requirements of the 1990 Pipeline Act which prohibits any third-party activities 100ft from existing oil and gas right-of-way.

NERC says MAP has come to stay as new price regime will be out soon

...may extend cut

espite demanddampening trade disputes combining with expected robust non-OPEC supply growth to hinder the producer bloc’s oil market rebalancing efforts, OPEC acknowledged that it faces a challenging second half of 2019. With less than two weeks before OPEC’s production cuts are set to expire, the producer group and its allies appear no closer to choosing when their next meeting will be. A rollover of the 1.2 million b/d production cut deal is widely expected -- if OPEC, Russia and nine other partners can agree on a date to decide. Iran, which had been the lone remaining holdout on moving the meeting from next week, when it was originally scheduled, to July 3-4, surprised many OPEC officials Monday in offering a new proposal: July 10-12. “I have no problem with July 10-12 if they insist, but I can’t do it [from] July 3-7. I have other appointments, plans and obligations,” Zanganeh told reporters after talking with Russian energy minister Alexander Novak in Tehran. “I told

111 compared to 62 in 2017 and, since 2012, SPDC has removed more than 1,160 illegal theft points.” Facilities operated by both indigenous and international oil and gas companies continues to be affected by attacks and other illegal activities such as crude oil theft. This led to disruptions to oil and gas production in 2018 particularly for indigenous producers and incident of environmental contamination.

Also speaking at the workshop, Shell’s General Manager, Safety and Environment, Chidube NneneAnochie, said irrespective of the cause, SPDC cleans and remediates areas impacted by spills from its facilities.” According to NneneAnochie, “SPDC implements work programmes to appraise condition of, maintain and replace key sections of pipelines and flowlines. In 2018, for example, we installed 70 kilometres of pipelines and 188 kilometres of flowlines. Over the last seven years, SPDC has replaced approximately 1,300 kilometres distance of flow lines and pipelines.” She said, “In line with industry regulations, SPDC only pays compensation if the spill is operational.” Towards the UNEP Report-guided Ogoni Clean Up, Weli said, “SPDC actively supports the clean-up process along with other stakeholders. SPDC remains fully committed to providing its share of $900 million (N283.73 billion) over five years to the Ogoni Trust

he Chairman of the Nigerian Electricity Regulator y Commission (NERC ), Prof. James Momoh, has said the Meter Assess Provider (MAP) programme has come to stay because all DisCos had signed an agreement with the meter providers within their operation to kick start the rollout of metering but it’s not free. He said this even as he gave Eko Electricity Distribution Company thump up for it services to customers at the company’s graduating ceremony of 100 young graduates which it has also employed. According professor James Momoh meter distribution is going to be on monthly basis to customers as DisCos are committed to MAP services. MAP is not a problem; Nigerians will get meter but they have to follow the procedure to get the meters. “Cost-reflective tariff will be effective when there are no more losses in the system. When meters are installed and issues of customers enumeration is put in place and that will address most lingering issues in the sector. Very soon he said, the

price regime on cost reflective tariff will be out which electricity customers will also partake in the discussion to put the power sector in the right direction,” he said Momoh gave the commendation at the completion of training programme for the 100 newly employed graduates by the company in Lagos. He said Eko DisCo has performed credibly well in discharging its statutory obligations towards effective electricity distribution to customers within its operational area. The company has stated has attained 100 per cent customer complaint resolution, adding that part of the NERC scorecard indices used for the rating include Aggregate Technical, Commercial and Collection (ATC&C) loss reduction, revenue collection and metering. Others are High Voltage fault clearance index, remittance to Market Operator and remittance to Nigerian Bulk Electricity Trading Company (NBET). T h e N E RC c h a i r m a n tasked the newly employed graduates to be more committed, dedicated and focused in the course of their

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duties. He said that achieving incremental, stable and uninterrupted power in a safe and affordable manner is required of distribution companies which need not to be compromised. Momoh said to achieve optimal energy generation, transmission and distribution, there is need for capacity building to design, construct, build and test the new grid that is sustainable. “Need new curriculum for Universities that would be revised for every electrical engineering student to take economic courses, finance and vice-versa; the general course in apps design and communication, data analytics should be taught. In his remarks, Charles Momoh, the Chairman of EKEDC, advised the newly employed graduates to take the job very seriously and be more focused on achieving their goals, adding that the system will also reward quality, dedication and commitment to service delivery. Momoh said: “You are the growth that will control the economy. We want you to be free and relate very well and avoid partaking in politics, gossip and disobedience.

Thursday 20 June 2019

BUSINESS DAY

ENERGYREPORT

Why Eterna plc is embarking on a five year corporate plan Olusola Bello

espite a plethora of challenges bedevilling the industry, Eterna Plc, is aiming to embark on a five-year plan which will reposition the company and scale up its presence in Nigeria’s downstream oil and gas sector. Just like the last three years which have seen International Oil Companies (IOCs) and independent operators in Nigeria’s oil industry divest their assets either party or fully in the downstream sector; 2018 was another challenging year for listed companies in Nigeria’s downstream oil and gas sector. In view of these challenges, Eterna’s chairman Shehu Dikko, announced to shareholders that the company is on course for a five-year strategic plan designed to take the company to higher levels of success. “As part of executing the plan, we acquired 14 additional retail outlets in 2018. We are consistently measuring our performance against set targets and the board is providing the oversight to ensure that management delivers on the plans,” Dikko told shareholders at the last Annual General Meeting in Lagos.

L-R: Ibrahim Boyi, non-executive director, Eterna Oil Plc; Muhmud Tukur, MD/CEO, and Lamis Shehu Dikko, chairman, at the 26th annual general meeting of the company in Lagos

The chairman noted that the company remains committed to making sure its operations positively impact communities which is why it keeps maintaining cordial relationships with all host communities including youth groups, women groups’ community development groups and paramount rulers of the communities. Despite challenges, Eterna was able to pay a dividend of 25 kobo per ordinary share while the company also recorded a 45.57 per cent increase in revenue of N251.8

million in 2018 compared to N173 billion in 2017. Also, due to high cost of doing business in Nigeria, unprecedented high cost of landing petroleum products and thinning margins on our product lines, gross profit declined by 27 per cent while Profit before Tax declined by 29 per cent to N1.9 million from N2.8 million reflective of the reduced margins and increased cost of operations. Mahmud Tukur , Managing Director of Eterna Plc said the company is expanding its downstream operations

Ogun Govt exploits renewable energy on water supply to 24 communities RAZAQ AYINLA, Abeokuta

s part of effort to take advantage of natural resources abound in some areas across the state, the Ogun state government has completed plan to exploit the abundant sunlight under its renewable energy programme to power solar pump boreholes in 24 rural communities in both Odeda and Yewa North local government areas of the state. The renewable energy scheme centred on solarpowered water supply to some rural areas in the state, according to information gathered by BusinessDay in Abeokuta, the state government, will be undertaken a joint partnership arrangement with the Federal with some Bilateral and Multilateral Agencies as well as the Private Sector involvement. Speaking on the renewable energy project centred on water supply to 24 rural communities during Coordination and prioritisation

tour of the benefiting communities on Tuesday, Gbele Olugbebi, Permanent Secretary, Ministry of Rural Development, declared Ogun state government had released a counterpart fund meant for the drilling and energizing of the 24 boreholes in the rural communities for the first phase of the counterpart Project for Expanded Water Supply, Sanitation and Hygiene (PEWASH). The Permanent Secretary, represented by the Programme Manager, Ogun State Rural Water and Sanitation Agency, Oluwaseun Sonde, noted that the release of Ogun state government’s counterpart fund serves a guarantee of its resolve for the continuation of the projects, explaining that the PEWASH partners comprise Federal Government, Bilaterial and Multilateral Agencies, and Private Sector, while at the state level is made up of partners like State Government, Non-Governmental Organisations (NG Os), Civil Society Organizations (CSOs), Philanthropists www.businessday.ng

despite Nigeria’s “challenging operating environment.” Making a case for the company’s downstream business, the company boss said Eterna’s growth plan is based on a “longer-term vision” with the knowledge that actual profit margins are at the pumps or at the point of sale. He said the company operates at high standards at par with the IOCs coupled with local knowledge of the operating environment, thereby giving it a competitive edge in its downstream operations. “On this, let us first look

at the rise of the super independents who have now become majors. We’ve seen new majors beyond the traditional Mobil, Total etc. Now the divestment is the fact that the operating environment is challenging but as a local operator, we know how to operate in this environment,” he said. On deregulation, the Eterna Plc MD said market forces should determine the pump price of petrol as subsidy payments currently borne by government is not “sustainable”. He said the incoming administration should announce full deregulation of the downstream sector when it comes into power on May 29. The average net profit margin for the whole downstream sector declined industry average from 4.90percent in 2017 to 2.95percent in 2018, thanks to old perennial environmental, operational and regulatory challenges. These include poor governance and management of refining assets, huge debts/receivables on account of unpaid accumulated subsidy and unpaid interest, and foreign exchange differentials on product importation. Stakeholders blame this negative performance on old perennial environmental, operational and regulatory

challenges. These include poor governance and management of refining assets, low operating margin for operators leading to low Return On Equity (ROE), huge debts/receivables on account of unpaid accumulated subsidy and unpaid interest, and foreign exchange differentials on product importation. The partial removal of subsidy by government dealt a blow on earnings as many oil marketers couldn’t adjust to the new template of the regulator. To correct this situation, oil marketers have urged the Federal Government to fully deregulate the downstream sub-sector of the oil and gas industry to preserve the country’s dwindling foreign reserves and enhance economic growth. NNPC imports petrol at a landing cost of N171 per litre and sells at N145 per litre at filling stations. Importation of diesel was deregulated and this has created avenues for marketers to import and sell at competitive prices. The marketers said the immediate removal of the fuel subsidy remained the best option to grow the oil sector; saying over N1.3 trillion was paid on subsidy with little or no benefits to the most vulnerable members of society.

Power generation continues to drop by 1,700mw Olusola Bello

and Communities. He added that PEWASH Programme’s priority is to achieve access to water supply and improved sanitation and hygiene in rural areas by the Year 2030 and eliminate open defecation by the Year 2025, saying the programme is currently limited to Water Supply, Sanitation & Hygiene (WASH) in selected public places. While promising of prompt delivery of the 24 solar pump boreholes project, State’s Head of the Unit, Rural Water Supply Agency, Olusola Ogunbo, said that all hands were already on deck, to ensure that delivery takes place within the given period as part of condition to enable the Federal Government commence work on the next two Local Government Areas of Ijebu North and Ogun Waterside. Ogunbo stressed that the implementation of PEWASH in the state would bring huge opportunities that would boost economic growth and promote good health of young and old ones within the state.

he Nigerian power sector has been e x p e r i e n c i ng a shortfall in generation owing to lack of gas supply. For some days the generation level has been hovering around 3,500 megawatts as against 4000mw where the level has been for a long time, leaving a shortfall of about 1, 700 megawatts. For instance the generation level between June 14 and16 2019 averaged 3,500 megawatts. This has been the scenario since the past few weeks. Occasionally generation it gets to 4000mw but reverses itself almost immediately to a little above 3500mw. The average daily loss due to lack of gas supply was put at 1,897 MW while an average of 1,707 megawatts were not generated because of high frequency resulting from unavailability of distribution infrastructure. For those days also an estimated N1,672,000,000

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was lost on the average. Meanwhile the Nigerian Electricity Regulatory Commission in furtherance of its mandate to ensure adequate, safe, reliable power supply is finalizing a capping regime aimed at incentivising metering of electricity customers while discouraging estimated billings by the electricity distribution companies. The Commission is therefore, conducting public consultations on the proposed capping regime and a Regulation on Distribution Franchising. The proposed capping regime will be a transitional measure that would herald the massive deployment of meters to all unmetered electricity customers in Nigeria under the Meter Asset Providers (MAP) Regulation. It is expected that the public consultations will afford the opportunity of input by the general public on the Distribution Franchising, and the proposed regime of capping of estimated billing. Despite the fact the Commission directed that @Businessdayng

the rollout of meters shall commence no later than the 1st of May 2019, those concerned have just started doing so because they were ill prepared for the earlier date fixed. For instance Ikeja Disco commenced the exercise while a good number of the Discos have not started. When the meter roll out starts it is expected that customers should not wait more than 10 working days after making payment to the operators of MAP before their premises are metered. According to NERC MAP shall charge an upfront amount of N36,991.50 for single phase meters and N67,055.85 for three-phase meters respectively. These costs of meters are inclusive of supply, installation, maintenance and replacement of meters over its technical life. The Commission shall monitor closely the rollout plan of distribution licensees and overall compliance with the regulation and various service agreements by the MAP and electricity distribution licensees.

Thursday 20 June 2019

BUSINESS DAY

INSIGHT

Bridging Nigeria’s infrastructure deficit; how to get pension and other private capital to work IFEANYI JOHN

A land of honey, tasting bitter! frica is undoubtedly a “snoring giant” or put in a different way, the “last frontier”, replete with innumerable resources. The continent is perhaps the most blessed, in natural resources, ranging from oil to gold, iron ore to bauxite. The arable land has been widely debated as one of the most fertile for major staple foods and cash crops. Whilst education standards and productivity are relatively low, the youthful demographics portend exciting opportunities for higher productivity over the medium to long term. No gainsaying that the literature is replete with outstanding potentials of the African continent. Standing tall in Africa is Nigeria, the most populous country on the continent, and arguably the largest economy, with intimidating prospects. Albeit, GDP growth has been weak over the past half-decade, unemployment is rising, particularly amongst youths. Existing infrastructure is decaying and new ones remain elusive, especially as population growth continues to outpace public capital expenditure, owing to apparent fiscal constraints. Fiscal deficit as well debt service burden is growing fast, thus reinforcing the limitations of the government in addressing these chronic challenges. How long can Nigeria continue this track? Having an inclusive growth and more importantly sustainable development is contingent on building critical infrastructure that enhances productivity. The country needs a viable transport system that supports efficient movement of goods and human capital as well as connect producers to market. It requires access to energy to power homes and businesses. Whilst there has been dramatic investment in the telecommunication sector, there is still notable gaps in the last miles. The ports, sea and air, are congested and inefficient, thus increasing the cost of doing business and limiting domestic and foreign direct investment. Nigeria lacks basic utilities; water and sewage amongst others. Ranked 132 out of 138 countries surveyed by the World Economic Forum, Nigeria’s infrastructure condition is apparently appalling. The high infant mortality rate, arising from avoidable road accidents and curable illness are products of the infrastructure deficits. More importantly, the youthful demographics of Nigeria, which is supposedly an asset to the country may become a social menace and “resource curse”, if the trend of infrastructure decay is not reversed. Infrastructure is the fulcrum for industrialization and innovation, as it enhances productivity and empowers businesses and individuals. It is central to inclusive growth and shared prosperity for every country. Hence, building basic infrastructure is not a choice for Nigeria, rather a fundamental necessity that must be met now. Indeed, infrastructure is synonymous to development. …but where will the funding come? The Federal Government estimates infrastructure deficit at about USD3trillion and seeks 48% or USD1.3trillion funding

from the private sector. Whilst foreign direct investment would be a good source of financing for Nigeria’s infrastructure, domestic private capital may perhaps be the “low hanging fruit” that can catalyse sustainable funding for critical infrastructure in the country. However, the plain vanilla Private-Public-Partnerships may not be efficient for Nigeria, given the structural realities of the country and the inherent macro risks. For instance, the country’s pension fund, which stood at N8.6trillion or USD24billion as at December 2018 can be a veritable source of financing for infrastructure. Interestingly, the profile of fund beneficiaries aligns with the typical long duration and predictable cashflow pattern of infrastructure projects. Notably, regulation permits up to 25% of the Fund I, 20% of Fund II and 10% each of Fund III and Fund IV of Nigeria’s pension fund assets to be invested in infrastructure projects, translating to potential N1.04 trillion investable funds in infrastructure. However, barely N26billion of these investable funds were allocated to infrastructure fund and bonds as at December 2018, due mainly to paucity of investable assets. Demonstrating the enthusiasm of pension fund administrators (PFAs) to support infrastructure development through sustainable financing, the debut corporate green bond in Nigeria, issued by North South Power (NSP) for its hydro power project was successful, with >85% subscription from the PFAs. Banks, insurance companies, traditional asset management firms, corporates and HNIs are also potential private investors in infrastructure projects. So, let the funding begin! Infrastructure projects are often economically and financially viable, thus can attract private capital. However, the inherent risks of most infrastructure projects limit the appetite of private investors, particularly pension fund managers, with “safety first” strategy. The fiduciary responsibility of PFAs over retirement funds, places a high burden of prudence and care on the investment managers, who must balance their appetite for high returns with the primary investment policy of capital preservation. Thus, there is need for an innovative way to enhance infrastructure projects to meet the risk

appetite of this class of investors. A case in point is the novel approach of InfraCredit Guarantee, which provides credit enhancement to infrastructure project. Being a private entity, with core capital from Nigerian Sovereign Investment Authority and Africa Finance Corporation as well as callable capital from GuarantCo and subordinated capital from KfW Development Bank, InfraCredit brings to the market global best practice in project appraisal, governance and monitoring, thus de-risking project financing for private capital. The NSP 15-Year Green Bond was guaranteed by InfraCredit, giving comfort to PFAs and other investors in the Notes. Being a triple-AAA rated entity, InfraCredit provides access to the capital market and a “seal of quality” for infrastructure projects that would otherwise not be able to attract long term private capital. More importantly, InfraCredit helps to lower borrowing cost for infrastructure firms, leveraging its Guarantee programme to preserve the economic viability of infrastructure projects and aligning cashflows to project economics and stakeholder expectations. But, let’s look before we leap! Section 5.2.3 (ii) of the Regulation on Investment of Pension Fund Assets (Feb 2019) which defines eligible infrastructure bonds, provides that “The bond or sukuk issued to finance the infrastructure project shall in addition to the requirements of Section 5.2.2 above: a) have credit enhancements e.g. guarantees by the Federal Government of Nigeria or eligible MDFOs and any agency backed by a Sovereign or Development Finance Institution; Therefore, because ‘infrastructure” is considered a special asset class by PENCOM, only Federal Government of Nigeria or eligible Multilateral Development Finance Organisations (MDFOs) and any agency backed by a Sovereign or Development Finance Institution are eligible to guarantee infrastructure bonds, to ensure market integrity and investor protection, particularly as these eligible entities traditionally have the highest financial strength (i.e. “AAA” investment grade credit ratings) and capacity. The value of credit enhancement beyond the guarantee on debt service

Credit guarantee can be a sustainable approach to developing infrastructure in Nigeria and perhaps broader Africa. Beyond the confidence that guarantors give to private sector investors, guarantees help to develop domestic capital and money markets, whilst providing stable infrastructure finance. As a primary obligation of the guarantor, investors are assured of timey repayment of principal and interest, in line with the terms of the financial instruments or loan. This risk underwriting role of the guarantor ensures strict professionalism and due diligence in project evaluation. Guarantors such as InfraCredit and GuarantCo conduct extensive legal, financial and commercial due diligence, working with teams of experts across various disciplines to identify and mitigate the inherent risk elements in every transaction they underwrite since they are obligated to indemnify investors in the event of default from the primary obligor. In addition, Guarantors enforce strict governance principles, conducts integrity tests and mitigate operational risks that may arise from macro, industry, political and people factors, thus improving the overall viability of infrastructure projects. Perhaps the most important benefits of guarantors are the post-transaction surveillance, monitoring and remediation approaches to project financing. Guarantors can be a pseudo watch-dog for institutionalizing discipline and efficiency in African infrastructure companies, as Guarantors have right of enforcing agreed principles, including strict adherence to environmental, social and governance best practices, as may be defined by the terms of the financing. In the event of default, the Guarantor steps in to ensure continuous service of the obligation to investors, whilst taking adequate measures to orderly resolve the challenges that may have led to the default by the primary obligor. This approach ensures that infrastructure companies are rather restructured and repositioned for growth rather than the abrupt liquidation that often arise from collateralized project finance transactions, with naked recourse to the company or project’s assets.

Ifeanyi John is a finance profesional writes from Lagos

Thursday 20 June 2019

BUSINESS DAY

news Cash-strapped Nigeria trapped in... Continued from page 1

has borrowed huge sums of money that have failed

to boost economic growth; rather they have become a burden on public finances and limited the government’s ability to invest in critical infrastructure. “Nigeria is just paying bills and has no cash left to invest in priority areas like education and health,” said Aurelien Mali, vice president and sovereign analyst at the Moody’s Investors service. Mali, who spoke at Moody’s annual Nigeria summit, also said the Federal Government spent less than any other gov-

ernment in the world on health and education. In 2018, Nigeria’s health spend amounted to 0.6 percent of GDP while its education spend was 1.7 percent, much less than the sub-Saharan Africa average of 4.7 percent. Moody’s says the 5.4 percent quarter-on-quarter decline in Nigeria’s gross federally collected revenues in the first quarter of 2019 underscores the challenges the government faces in implementing the reform agenda to lower the dependence on oil. Under-performing revenues put the government in a precarious situation where debt is growing faster than

earnings. While the country’s debt burden has ballooned from 2 percent of GDP in 2010 to 22 percent in 2019, government revenue has been shrinking. Revenue as a percentage of GDP has gone from 5.4 percent in 2010 to 2 percent in 2019, according to data compiled by BusinessDay and sourced from the Central Bank’s economic reports. Abuja’s rising debt service to revenue which went from 14 percent in 2010 to 62 percent in 2018 tells the story of how public debt has grown faster than revenues over the last decade. Faced with revenue challenges that resulted from the slump in oil revenue, the government has gone on a bor-

rowing spree, having pushed its debt stock from under N6 trillion in 2010 to N25 trillion nearly a decade later. Yet, most of that borrowing has had little impact on economic growth. GDP reports by state-funded data agency, the National Bureau of Statistics (NBS), show that the economy hasn’t expanded up to 6 percent since 2014. When it has not contracted, the economy has expanded below 2 percent annually since 2016. That’s less than the population growth rate, meaning Nigerians have grown poorer for the last three years, a trend the International Monetary Fund (IMF) has projected to last eight years. The IMF and Moody’s ex-

pect the economy to grow 2.3 percent in 2019. That poorly compares to the projected growth rate of other African countries from Ethiopia, tipped to grow 7 percent, to Egypt which will probably expand 5.9 percent. The bulk of Nigeria’s youthful population are main casualties of the struggling economy, as they idle away with no jobs to do. Unemployment rate hit a six-year high of 23 percent in 2018, according to the NBS, with underemployment taking the tally to 40 percent. The government’s borrowing spree hasn’t significantly impacted economic growth because most of the spending has been misplaced, some

critics say. The critics, most of whom are economists, say not much is left for the government to spend on critical physical and human infrastructure when so much of the little cash earned is expended on costly subsidies and debt servicing. To grow the economy at a rate sufficient to create jobs for the 2 million Nigerians entering the job market yearly, spending more on critical infrastructure may not even be enough if the government’s revenue doesn’t improve. Other than tapping private capital to increase investment in infrastructure, the government has very little solutions to boosting economic growth and creating jobs.

Insurgency: Buratai’s comments on... Continued from page 1

ram backed by the Islamic State West African Province. Buratai had on Tuesday said the front-line soldiers were not sufficiently committed to the war against insurgency, insisting there were proven cases of soldiers’ unwillingness to carry out assignments given to them. Mike Ejiofor, a security expert, said that by his comment, the COAS appears to be taking a defeatist position which does not mean well for the nation’s fragile security. Ejiofor regretted that the army chief, who had been seen as a source of encouragement to the troops, could be making such demoralising comments at a time when tact and confidence are needed. “As far as I am concerned, such statement coming from the leader can be demoralising to people on the field. Maybe he has his reasons, but I think the best way he would have addressed the issues was to treat it administratively instead of coming openly to admit because that is admittance of failure on his part that the troops are no more loyal to him,” Ejiofor told BusinessDay in a phone conversation. “Again, it shows lack of control and he has indirectly

admitted that he is no longer in control. So again, somebody appointed him. It is only the person that appointed him that can remove him or of his own, he will resign. “It is a great blow on the fight against insurgency because the people in the field will be demoralised. Don’t also forget that the military, the troops, the officers have been under attack. Some have been killed. I don’t think that statement was encouraging,” Ejiofor, who also served as a Director of State Security Services (SSS), further said. Some of the soldiers who confided in BusinessDay said they were demoralised by the Army Chief’s comments and wished that government would also understand their plight. One of the soldiers who spoke on the condition of anonymity asked what the Chief of Army Staff wants from the soldiers, alleging that the soldiers are not been paid their full allowance as and when due. “Our living condition in the forest is not good, we don’t have enough arms to tackle these Boko boys and instead of the man on top to look for ways to correct the wrongs, he is there trading

Lafarge Africa sells South African... Continued from page 1

pin profitability. It should also boost the company’s

lagging share price, which is down 75 percent in the past year. Lafarge Africa shares closed trading at N9.55, down 4 percent. There was no immediate impact as the news broke after the close of trading on Wednesday. “Following the conclusion of the Proposed Sale, Lafarge Africa’s shareholder loan of $293 million as at July 31, 2019 (“Shareholder Loan”), which represents the only existing foreign currency loan in the books of the company will be completely extinguished,” Lafarge Africa said in a statement released to the Nigerian Stock Exchange (NSE). The transaction is subject to the NSE Related Party

Rules. The completion of the transaction is expected to boost Lafarge Africa’s cashflow and net income, given the reduction in debt service outflows; cut annual interest expense by N9.1 billion on account of the full repayment of the foreign currency inter-company loan; enable Lafarge Africa to reinvest in (and expand) operations in existing plants; enable the management of Lafarge Africa to devote attention to Lafarge Africa’s operations with higher profitability and prospects; strengthen Lafarge Africa’s balance sheet and position the company to improve overall profitability; and enable the re-rating of the company’s share price. “It materially reduces the debt burden of the company because Lafarge South Afwww.businessday.ng

L-R: Esaie Diei, CEO, Enhancing Financial Innovation and Access (EFInA); Lehle Balde, senior associate, strategy, innovation and partnerships, BusinessDay; Patrick Atuanya, editor, BusinessDay, and Temi Otumara, communication specialist, EFInA, during the courtesy visit of EFInA to BusinessDay office in Lagos, yesterday. Pic by David Apara

blames,” the soldier queried. “Is it not when you motivate your troops that you will get their full commitment and support? Some of us have been in this place fighting these terrorists putting our lives on the line and he sits in an air-conditioned hall and says we are not committed?” Another soldier who wished to remain anonymous said while soldiers die in the

line of duty, their wives and next of kin pass through difficulty in getting their benefits. “How do you expect soldiers to keep dying for nothing? Every time we watch our brothers die in the hands of these ruthless terrorists and then our commanders will come to the media and say another thing. “You don’t expect a soldier to carry arms that are

substandard against Boko Haram boys who carry modernday arms. The service chiefs should leave. They have run out of ideas and we in the battlefield are the ones suffering it. “Our allowances are not being paid on time, we don’t have enough ammunition. Even when you fall sick there is no adequate medical attention, even when a soldier dies

the military does not treat the families right and the COAS is talking about not been committed,” he said. Eze Onyekpere, lead partner, Centre for Social Justice, said the Army Chief did not capture the situation on ground, stating that “tactical command challenge is the concern, not commitment from officers in the battlefield”.

rica Holdings (LSAH) has been a drag on Group’s performance,” said Tajudeen Ibrahim, head of research at Chapel Hill Denham Limited. LSAH’s operations have been subject to shrinking demand in South Africa – an aggressively competitive market; between 2000 and 2007, demand was fuelled by increasing infrastructure spend which tapered off and eventually declined quite sharply. Meanwhile, low growth indicators, growing budget deficits, declining infrastructure spend and reduced consumer discretionary income continue to constrain industry volumes and characterise the downward trend in South Africa’s building materials sector. Lafarge Africa will present the terms of the transaction to the shareholders for consideration at the 60th Annual General Meeting of the company,

as Special Business, which will be voted on by way of an ordinary resolution in accordance with the Companies and Allied Matters Act (CAMA). Lafarge Africa’s cost control has helped the company return to profit whilst strengthening earnings before interest taxation depreciation and taxation (EBITDA), according to its first quarter (Q1) 2019 financial statement. The cement maker posted a profit after tax of N3.14 billion in March 2019 from a loss of N2 billion it recorded in the corresponding period of 2018 despite a 2.64 percent reduction in sales. Operating profit, otherwise known as EBITDA, increased by 34.72 percent to N8.24 billion in March 2019 from N6.25 billion the previous year. Cost of sales reduced by 3.73 percent to N60.34 billion

in the period under review as against N62.64 billion the previous year, while total operating expenses reduced by 12.88 percent to N9.80 billion in the period under review. Cost of sales ratio fell to 76.83 percent in March 2019 as against 77.67 percent the previous year, which means the company has spent less on input cost to produce each unit of product. Total debt in the balance of Lafarge Africa was N284.22 billion as at March 2019, which represents a 12.69 percent increase from N252.90 billion incurred in 2018, but the debt amount could shrink after the debt structuring exercise. Debt to equity ratio (D/E) ratio fell to 126.30 percent in the period under review from 188.0 percent the previous year; this means the cement marker’s debt are 1.26 times

equity in 2019 as against 1.88 times shareholders fund in 2018. D/E ratio means the proportion of debt in the capital structure of a company. A firm finances its operations through the use of equity, which is money raised from owners, and debt, capital borrowed from either parent company or financial institution. A very high D/E ratio could result in financial risk, which is a state where a company is unable to meet its obligation. Michel Puchercos, Chief Executive Officer of Lafarge Africa, said that the recent Rights Issue together with the divestment of the South African Operations will deleverage the cement maker by N246 billion ,enabling it to fully repay U.S denominated Shareholder Loans and short-term naira overdraft.

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Thursday 20 June 2019

BUSINESS DAY

news

Rise in investment to improve housing situation in Nigeria hinged on population growth CHUKA UROKO

he required investment to improve housing quality and availability in Nigeria will only rise as the population of thecountrygrows and more of the population moves to urban areas, a McKinsey report has said. ThereportnotesthatmanyNigerians live on land to which they do not have rights. As a country, Nigeria has a rigid traditional land tenuresystemcoupledwithaland titling system which is onerous and excludes many people from formal land ownership, and also hampers full scale economic activities. The country has both qualitative and quantitative housing deficit estimated officially at 17 million units, but which is feared

to be more than that as population has continued to increase in the country. At the moment, the country’s home ownership level is still very low at a little above 10 percent. Homeownershiptodayislimited by a weak mortgage industry, with only 20,000 mortgages in the entire country. It is estimated that only 5 percent of the country’s housing stock is in formal mortgage, meaning that 95 percent of thesehousesaredeadassets.They areneithertradablenorbankable. Government’s setting up of the Nigeria Mortgage Refinance Company (NMRC), which is private sector-led, is part of efforts at improving the housing situation in the country. Apart from increasing liquidity in the mortgage system, NMRC is also

expected to increase the number of mortgages in the country from the present 20,000 to 200,000. It is also part of the mission of themortgagecompanytoprovide longtermloans,lowerinterestrate and increase tenors on mortgage loans by refinancing the loans presented by primary mortgage banks. An earlier effort at improving the housing stock in the countrywastheNationalHousing Policy of 2006. But the shortage of housing hasnotbeenreducedsignificantly. The reasons are not far-fetched. Though NMRC has had a little impact on the mortgage market, interest rates still need to come down significantly. A mortgage operator, who did notwanttobenamed,pointedout however in an email response to

our question that “there is nothing NMRC can do about this, as rates are market-driven, and they can’t giveoutmoneybelowtheratethey are raising funds from the market, or below the rates government is raising fund from the market.” Continuing, the mortgage operator said, “we have a culture in this country where most people are not interested in obtaining mortgage loans, either because they do not understand how it worksordon’twanttobeindebted to loans at high interest rates. The fewthatareinterestedinmortgage loans may not necessarily qualify for the loans”. These and more explain why, in a country of nearly 200 million people, there is just an estimated 200 million square metres of real estate, of which 160 million are

residential, 30 million are commercial space, and 10 million are industrial. On a per capita basis, these levels are one-third to one-sixth the levels in Indonesia. Much of the housing stock is dilapidated, with widespread unsanitary conditions. Indonesia has some lessons for Nigeria on affordable housing development that can help the country to improve its housing situation. Recently, Indonesia approvedNationalAffordableHousing Programme Project (NAHP) which aims to innovate the affordable housing market by addressing bottlenecks and actively engaging the private sector in deliveringforunservedsegments. Part of the lessons is for Nigeria to prioritize subsidies for

those who need them most, while crowding in the private sector. Subsidy design in Indonesia has led to programmes that benefit middle-income, salaried households, while crowding out the private sector, rendering the government fully accountable and keeping the mortgage market small. Anotherlessonforthecountry is to present adequate housing alternatives for those without access to the formal housing market. Many families live in substandard housing but have no means to upgrade their homes. In Indonesia, the NAHP will be co-funding a government programme for home improvement and re-construction to address the qualitative housing deficit of 3.4 million.

NNPC optimistic of oil exploration in Chad Basin on back of Niger’s success …to resume oil search in Chad basin if it gets security clearance

HARRISON EDEH, Abuja

he Nigerian National Petroleum Corporation (NNPC) has expressed optimism that oil exploration in Chad Basin would become a huge success on the back of recorded progress by Niger Republic which share similar terrain structure to the basin. The Corporation also reaffirmed its commitment to resume oil search in the Chad Basin as soon as it receives security clearance. Maikanti Baru, the Group Managing Director of the Corporation, disclosed this when the governor of Bauchi State, Bala Mohammed, paid him a business visit on Wednesday in Abuja. “We will go back there as soon as we receive security clearance. There seems to be some prospects there because Niger Republic drilled over 600 wells and now they are producing while we have only drilled 23”, the GMD said. Oil search in the Chad Basin was suspended after a team of NNPC Frontier Exploration Services and their consultants from the University of

Maiduguri were attacked and some of them abducted on July 25, 2017. He commended the people of Bauchi and Gombe States, especially communities in the exploration area for their support and hospitality, while assuring them of NNPC’s support in the provision of infrastructure and amenities. On the proposed Institute of Petroleum Studies to be established in Bauchi State University, Baru pledged the support of NNPC and assured the governor of synergy between the institution and the Petroleum Training Institute, Warri, for exchange programs and manpower development. Speaking earlier, the Bauchi State Governor, Senator Bala Mohammed said his visit was to seek collaboration with the corporation on how to move the state forward. “We are happy that we have some hydrocarbon not only in Bauchi but also in Gombe both in the Gongola Basin, and we are totally committed to the exploration activities of the NNPC in the area”, the governor said.

Zulum appoints SSG, CoS and 7 others Ladi Jossy, Maiduguri.

he Borno State governor, Babagana Zulum, has re-appointed immediate past Secretary to the State government, Jidda Usman Shuwa, as the new Scribe. Zulum also appointed Babagana Wakil as his Chief of Staff and reappointed Shettima Spokenan Isa Umar Gusau as his Special Adviser on Public Relations and Media Strategy. The appointments were contained in a statement by the governor’s principal private secretary, Mustapha Ali Busuguma on Wednesday seen by our correspondent. Other appointments include Adamu Abbas, who was appointed as senior special

assistant on external relations, and Mairo Mandara, as special assistant/coordinator SDGs. Similarly, Zulum appointed the current council Chairman of Niferia Union of Journalists (NUJ) Borno State chapter, Baba Sheikh Haruna and Ahmed Sanda as senior special assistants on media and protocol, respectively. Zulum also appointed Tahiru A. Tahir and Abdulrahman Ahmed Bundi as special assistants on media and new media, respectively. The statement added that the appointees were chosen based on their credentials, proven capacity and selflessness. Mustapha noted that all appointments were with immediate effect. www.businessday.ng

Imade Efosa (3rd r) branch manager, Zenith Bank plc, flanked by from left, Angel Anikpe, Udonsak Ubongabasi, and Nwachukwu Daniel, all of Faith Academy, Canaanland, Ota; Edna Agusto, founder, ReadManna Empowerment Initiative; Shawn Laah of Regent Secondary School, Abuja; Ayomide Abiodun and Pwahatado Vawe, both of Aduvie International School, Abuja, at the public presentation of the winners of the Zenith Bank sponsored 2019 Microsoft Office Specialist World Championship.

Elumelu advises varsities to embrace technologies to build global finance graduates KELECHI EWUZIE

or Nigerian universities to continue to churn out graduates to meet the demands of the finance function of the future, they need to embrace modern technologies in the delivery of both technical and soft skills. Tony O. Elumelu, Chairman, United Bank for Africa Group has advised. Theuniversitiesshouldgobeyond churning out finance and accounting graduates on a yearly basis to building ready-to-market finance professionals thoroughly equipped for modern finance functions. Elumelu, who stated this while delivering the annual guest lecture of the Faculty of management services, Lagos State university, Ojo, Wednesday said academia needs to graduate from imparting traditional technical accounting and finance skills to imbibing ready-to-market soft skills likeleadership,communication,commercial acumen, flexibility/openness to change and strategic vision. Tony Elumelu who was represented by Ayoku Liadi, Executive Director, UnitedBankForAfrica(UBA) Plc opines that he is not certain if the finance and accounting graduates of today are familiar with modern financial software packages, including globalaccountingandfinancialreporting standards. According to him, “I will like to proposeanoverhaulofthecurriculum to accommodate these. As finance

graduates and professionals, we need to be aware that it is no longer business as usual and with the fast-changing landscape, it will never be business as usual”. “Technology is fast replacing the basics of finance. Financial reporting is increasingly being automated, just as data analytics is demystifying performance analysis. Tomorrow’s finance professionals must have capabilities for business intelligence and cognitive analysis. We must apprise ourselves of the most recent technology and continue to retool our skills to remain relevant today and into the future”,he said. Rotimi Oladele, Executive Secretary, Institute of Entrepreneurs, Nigeria and chairman of the lecture programme lauded that effort of Tony Elumelu as an ultrapreneur known all over for breeding entrepreneurs and start-ups in thousands and with millions of dollars ceaselessly in support for sustainability Oladele observes that Elumelu donates more ideas through his humble but infectious positive aura made accessible by his physical presence at fora and platforms created for poverty eradication. “Today will go down in history as thedayLASUasanenterprisebrought in a grand intrapreneur, veteran entrepreneurandseasonedultrapreneuras a testimony to prove our leadership and ingenuity in entrepreneurship education,” he said.

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Ariya Repete 2019 auditions heads to Ota, Abeokuta … as winners emerge from Lagos regional contest

inners have emerged from the first regional knock-out of Ariya Repete 2019, which kicked off on 12 June with two simultaneous regional auditions in Lagos, where hundreds of talents turned out en-masse to showcase their talent and earn a place in the regional knockouts held recently. After the auditions, 18 individuals were selected across two regional knockouts, which occurred concurrently at Stalad Hotels, Abule Egba, and Aso Rock Bar, Ikotun. Each of the regional knockouts featured nine talents, with three competing in each category of Fuji, Juju, and Afro-pop. After a night filled with thrills, a few spills and some electrifying performances, the judges, which featured the likes of veteran afro-pop music producer - ID Cabassa, renowned OAP Adebayo Faleke as well as Juju legend, Champion Opio, were faced with the hard task of picking the regional qualifiers from a pool of impressive talents on display. Olufunmilayo Ogunbodede, the brand manager, Goldberg Lager, thanked fans and lovers of Goldberg for the impressive turnout and support for the competition, while showering praises on every contestant who performed @Businessdayng

at the show. “We thank our loyal consumers for coming out and supporting this competition. Our consumers truly are the best and the performances by the contestants were quite memorable. We intend to continue to up the ante and deliver even more excellent nights like these as the competition progresses,” said Ogunbodede as he urge fans to visit Goldberg’s social media pages on @goldberg_ng for Instagram, @ goldberglagerng on Twitter and GoldbergLager on Facebook for more information. With the regional knock-outs in Lagos done, the next regional auditions will take place on 19 June at Maridom Palace Hotel, Ota and IBD International Hotel Abeokuta. The selection parties for both cities are slated for 21 June at the Tjs Hotel & Suites Ota and Rockzone Bar & Grill in Abeokuta. However, at the Ikotun selection party, Abiodun Oloto, Adeniyi Temitope and Abraham Effiong qualified in the Fuji, juju, and Afro-pop categories respectively while in Abule Egba, Olayemi Kehinde, Akinlabi Johnson, and Olajide Olayiwola qualified from the Fuji, juju, and Afro-pop categories.

Thursday 20 June 2019

BUSINESS DAY

POLITICS & POLICY

NASS will not be a rubber stamp under me - Lawan Tony Ailemen, Abuja

enate President, Ahmed Lawan Wednesday, reiterated that the National Assembly would not be a rubber stamp under his leadership. Lawan who led the newly leadership of the Senate to visit Vice President Yemi Osinbajo, said the visit provided both the Legislature and the Executive an opportunity to also discuss the type of Senate and of course, the National Assembly that should be expected in the Ninth National Assembly. He noted that the new National Assembly received a bi-partisan mandate from across the parties. “The PDP, the YPP voted for us and we believe that this is the time and oppor-

tunity for us to consolidate the kind of support that we received across the political parties that we received in the National Assembly. We believe that we must remain united in the National Assembly. He promised a focused Legislature, adding that “We must remain focused for us to be able to deliver those legislative interventions that would be necessary for good governance in the country.” The Senate President said the relationship with the Executive arm of government will be based on cooperation and collaboration. “It is our desire in the Ninth National Assembly to work seamlessly with the Executive arm of government because we believe that Nigerians did not make a mistake for voting for the

Ahmed Lawan

executive as presently constituted and the legislature as it is today. So, we are in it together with the executive arm of government to work in such a fashion to be able

Ihedioha appoints 12 new special advisers, charges LGA chairmen to reside in villages SABY ELEMBA, Owerri

overnor Emeka Ihedioha of Imo State has made new appointment

of aides. Jones Onyereri who lost to Rochas Okorocha for Imo West Senatorial seat has been appointed the special adviser (Political) to the governor; Jeff Ojinika, a former member Imo House of Assembly for Orsu and former member Federal House of Representatives will be advising Ihedioha on Inter Party affairs, and Chudi Uwazurike, a professor, spe-

cial adviser (Diaspora). Others are Sonny Ogulewe, senior special assistant (Admin), SSG’s Office; Richmond Osuji, former chairman Aboh Mbaise Local Government Area, is now senior special assistant (Rural Development); Anselm Okorie, senior special assistant (SDGs), and Uche Udozor, senior special assistant (Agricultural Development). Others are Abba Chimaraoke, senior special assistant (ICT and e-Governance); Estella Mbadiwe, senior special assistant (Health Services); Emeka Opara, senior special assistant (Legal Matters);

Adaora Onyechere, special assistant (Information and Advocacy), and Izuchukwu Akwarandu, special assistant (New Media). Ihedioha, who had yesterday sworn in 27 members of the local government interim management committees for the next six months, charged them to reside in their own villages. According to him, the directive was to stem the tide of rural-urban migration in the state. “If only government can truly be felt by the people at the grassroots there would be no point running to the cities,” the governor said.

AIG, Oyo CP, soldiers, storm Oyo farm to rescue abducted ex-minister’s son REMI FEYISIPO, Ibadan

enior police officers and other security agencies including the men of the Nigerian Army on Wednesday stormed the farm of the abducted son of the former Minister of Health, Dayo Adewole to strategise on how to rescue the victim. The Assistant Inspector General of Police (AIG) in charge of Zone XI, Leye Oyebade accompanied by the Commissioner of Police in Oyo State, Shina Olukolu, other senior officers of the police and Nigerian Army were at the farm at Iroko, near Fiditi in Afijio Local Government Area of Oyo State to assess the

situation, map out strategy to free the victim and arrest the abductors. Dayo, a graduate of Agricultural Economics, was abducted by four unknown gunmen on Tuesday evening on his farm at Iroko in the midst of his staff. Oyebade said the kidnappers have nowhere to hide, assuring the people of the area of adequate security of their lives and property. Olugbenga Fadeyi, Oyo State Police Public Relations Officer (PPRO) also said apart from the senior police officers, other security agencies including the men of the Nigerian Army were also on the farm to assess the situation and to assist in ensuring the release www.businessday.ng

of the captive. Fadeyi said there has been no communication from the abductors yet, but he said that all hands were on deck to effect Dayo’s release and arrest the abductors Oyo State Police Command had earlier revealed that four gunmen on Tuesday evening abducted Dayo, son of the immediate past Minister of Health “The man, Dayo Adewole was abducted by four gunmen around 6:30pm at Iroko,” he said. The command however, said the vehicle which was used to kidnap Dayo Adewole has since been recovered by police in conjunction with other security agencies.

to deliver those democracy dividends that Nigerians need today. “It is our desire also to ensure that whoever is appointed by the executive

arm of government performs his or her functions optimally. Also speaking against the backdrop of fears that the parliament under his leadership will be a rubber stamp, Lawan said the parliament is not a primary school or a secondary school where you gave a headmaster or principal that will dictate to his students. “Parliament is an aggregate or an assemblage of people that have equal status. Being elected as Senate President does not mean that I’m the boss of the other senators. I’m simply to coordinate and aggregate views and lead debates,” he said. He promised to respect the will of majority, adding that “there will be nothing like rubber stamp. So far, I have never seen a National

Assembly that had a rubber stamp leadership and I have been around for twenty years to that.” “But one thing I must tell you is that while the desire to remain sufficiently on our track, we will ensure that oversight function is properly carried out but we will cooperate fully and give total support to the administration to ensure that there is good governance,” he assured, adding that “There is no need for any fear that we will be a rubber stamp National Assembly. Perhaps, and probably with time Nigeria will come to see that what we desire and what will happen by the grace of God will be a working relationship that endears the entire administration and government to the people of Nigeria. So there is no cause for alarm.”

Kogi elders meet Buhari, endorse Bello for second term …seek the post of Finance Minister Tony Ailemen, Abuja

resident Muhamma d u Bu ha r i o n Wednesday met behind closed doors with Kogi traditional rulers led by the Attah of Igala land, Michael A. Oboni. Speaking on behalf of the Kogi Council of Traditional rulers, Solomon Owoniyin, the Obaru of Kaba, chairman of the Okun Council of Obas, declared that the team pre-

sented three requests, including an upgrade in the status of Minister representing the state, as well as presentation of Yahaya Bello for endorsement as the state governor for a second term. Traditional rulers said they were at the Presidential Villa to congratulate President Buhari as well as reconfirm their endorsement of Yahaya Bello for second term in office. “Some people in the social

media say we are playing politics; we are being realistic. Our people at home had already endorsed Yahaya Bello, ours is to reconfirm that endorsement,” the monarchs said. “Our status in the Federal Executive Council has to change. We need the position of a full minister, including giving us the position of Minister of Finance and not minister of state,” they further said.

2023: INEC not sure of mode of electoral reforms … Says, non-performing parties may not be delisted Iniobong Iwok

he Independent National Electoral Commission (INEC) has said it was not yet sure the mode of electoral reforms it would embark upon ahead of the 2023 general election. The Commission has continued to receive knocks from local and international observers over lapses which characterised the conduct of the exercise across the country. In its final report on the conduct of the 2019 election, submitted recently, the European Union (EU) revealed that the 2019 election was marred by systemic failure, violence and intimidation of voters. The report also stated that the low level of voters’ participation called for fundamental electoral reforms, while giving thirty recommendations how to improve future electoral processes. Several candidates from opposition parties said the general election was flawed

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across the country and disputed the result released by INEC. The main opposition, the People’s Democratic Party (PDP), and its candidate, Atiku Abubakar, have equally disputed the result of February’s presidential election, won by incumbent Muhammadu Buhari, seeking an upturn of the result at the tribunal. However, speaking in an interview with BusinessDay, Wednesday Festus Okoye, INEC National Commissioner and chairman of the Commission’s committee on information and voter education, said the commission did not know the mode of electoral reforms to carry out, but would rather wait till it finished its current review of the election and interaction with stakeholders. He however, admitted that the commission was aware of the need for holistic reform before the 2023 election and regain the confidence of Nigerians in the electoral process. According to him, “We have not decided what type of re@Businessdayng

forms we would have before the 2023 election, but we have started a review of the 2019 election, most of our national officers are in states speaking with our state officers on the way the election was conducted. “So that through, this we can harvest recommendations on areas to improve on. But no one would just tell us what to do. “We would hold meeting with the media, stakeholders, from there we can base the type of reforms that would aid the smooth conduct of the 2023 election,” Okoye said. On the clamour for delisting of non-performing political parties, Okoye noted that such parties may not be deregistered, stressing that the commission was working on a template for political parties. “There are positions we are considering either to set a template to meet before they get into the ballot paper or alter the number of political parties. But we are not sure yet, if any party would be delisted or not,” Okoye added.

Thursday 20 June 2019

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper ANDREW ENGLAND AND AHMED AL OMRAN

UN expert has concluded that there is “credible evidence” that demands further investigation regarding the responsibility of Saudi Crown Prince Mohammed bin Salman and other senior officials for the grisly killing of Jamal Khashoggi. Agnes Callamard, the UN special rapporteur on extrajudicial executions, said Khashoggi, a veteran journalist, was the “victim of a deliberate, premeditated execution, an extrajudicial killing for which the state of Saudi Arabia is responsible under international human rights law”. “Indeed, this human rights inquiry has shown that there is sufficient credible evidence regarding the responsibility of the crown prince demanding further investigation,” Ms Callamard said in a report, which was based on a six-month investigation. The 101-page report concludes with a dozen of recommendations, including a call on UN secretary-general António Guterres to initiate a “follow-up criminal investigation”. The killing of Khashoggi, whose body Turkish and Saudi officials said was dismembered after he was killed, triggered Saudi Arabia’s biggest diplomatic crisis since the September 2001 attacks on the US. Riyadh has been desperate to put the killing behind it and refocus attention on Prince Mohammed’s ambitious reform programme to overhaul the kingdom’s oil-depen-

UN expert finds ‘credible evidence’ of Saudi prince role in Khashoggi case Special rapporteur calls for follow-up criminal investigation into journalist’s death dent economy. Prince Mohammed has repeatedly denied any involvement in Khashoggi’s death in the Saudi consulate in Istanbul in October. Riyadh has blamed his killing on a rogue operation and has put 11 Saudi suspects on trial. Ms Callamard was granted access to some recordings of conversations inside the consulate, according to the report, but she was not allowed to obtain a copy of the recordings or a transcript. “The Turkish authorities undoubtedly have more information and intelligence about events in the Saudi Consulate than they were willing or able to share with the inquiry,” the report said. In her report, Ms Callamard noted the “extreme sensitivity” of considering the criminal responsibility of the crown prince and his top aide Saud al-Qahtani, a senior adviser to the Saudi royal court who has not been charged. “No conclusion is made as to guilt,” she wrote. “The only conclusion made is that there is credible evidence meriting further investigation, by a proper authority, as to whether the threshold of criminal responsibility has been met” for the two men. Mr Qahtani is among more than a dozen Saudi officials who were

Trump to meet Xi at G20 but says trade deal must be ‘fair’

onald Trump on Tuesday praised Chinese president Xi Jinping as a “terrific” leader, but said he would only agree to a trade agreement with Beijing if both sides reached a “fair deal”. Speaking at the launch of his 2020 re-election campaign in Florida, Mr Trump suggested he was not desperate to secure a deal to end the trade war as the two leaders prepared to hold talks at the G20 summit in Japan later this month. “I spoke to President Xi . . . this morning at length,” Mr Trump said. “We’ll see what happens. But we’re either going to have a good deal and a fair deal or we’re not going to have a deal at all and that’s OK too.” Earlier on Tuesday, Mr Trump tweeted that the two leaders had agreed to meet in Osaka at the end of June. A Chinese official confirmed to the Financial Times that Mr Xi had agreed to meet the US president. Mr Trump had previously suggested that the leaders would meet at the G20 but the White House had not clarified if they would hold a bilateral discussion. US and Chinese officials have

been holding trade negotiations over the past year. Both sides appeared to be heading towards a deal last month but the talks collapsed at the last minute. The US accused China of backsliding on parts of the deal that had already been agreed, while Beijing accused Washington of trying to change the deal. Since then the dispute has widened into a tech war, with the US placing Chinese telecom equipment maker Huawei on a commercial blacklist. Asia equities rallied on the confirmation of the meeting, with Hong Kong’s Hang Seng index gaining 2.2 per cent and the CSI 300 index of Shanghai and Shenzhen stocks up 1.7 per cent. Elsewhere, Japan’s Topix rose 1.5 per cent. This followed a rise in the S&P 500 on Tuesday that left the Wall Street benchmark within 1 per cent of its record closing high. Larry Kudlow, the top White House economic adviser, on Tuesday said he did not want to speculate about whether the two sides could reach a deal in Osaka. Ahead of the call between Mr Trump and Mr Xi, Wilbur Ross, the US commerce secretary, was lukewarm on the chances of an agreement being reached at the summit. www.businessday.ng

sanctioned by the US and several European countries in the aftermath of Khashoggi’s killing. Ms Callamard recommended that “such sanctions ought also to include the Crown Prince and his personal assets abroad” until and unless he can prove he has no responsibility. Mr Qathani, who was considered the crown prince’s enforcer, was dis-

missed in the wake of the journalist’s killing, but Saudi activists fear he is still close to the royal court. While Saudi Arabia’s European allies expressed concern in the months following the killing, the crown prince has continued to enjoy strong support from US president Donald Trump despite the CIA reportedly concluding that it was

authorised by the kingdom’s de facto leader. Foreign business executives and financiers who snubbed the kingdom’s top investment forum a few weeks after the killing returned to Riyadh in April for a financial conference organised by the government and pledged their commitment to continue working with Saudi Arabia.

Flood of debt instruments backed by property loans hits market

US president’s comments suggest no rush to secure an agreement with China DEMETRI SEVASTOPULO

Analysts fret about losses on collateralised loan obligations if sector stumbles JUDITH EVANS AND JOE RENNISON

ackages of real-estate loans are hitting the US market at the fastest rate in a decade as investors step up their search for higher returns. A total of $8.4bn of propertybased collateralised loan obligations — pools of loans backing debt and equity — have been issued in the US so far this year. That places 2019 on track to beat last year’s $13.9bn of issuance, which in turn was nearly double the previous year’s $7bn of new deals, according to figures from Trepp, a data provider. The boom in CLOs — riskier cousins of the more mainstream commercial mortgage-backed securities — comes as investors struggle to make decent returns from a real estate sector swollen by a vast influx of capital in recent years, and mimics the resurgence of more complex financial products across markets. But some analysts are concerned that it raises the potential for more severe losses, if the commercial property sector were to stumble. Joe McBride, director of research at Trepp, wrote in a recent report that strong returns from conven-

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tional CMBS are “almost extinct,” forcing lenders to “take a step or two out on the risk roadmap and write loans with some ‘hair’ on them.” He added that the relatively risky nature of the loans within the current crop of commercial real estate CLOs means that “they may be the first to experience pain if and when a larger downturn does actually happen”. CLOs provide a home for more esoteric loans excluded from the traditional — and much bigger — market for CMBS, which comes to about $550bn in total issuance. CMBS transactions package up loans on commercial buildings such as hotels or apartment buildings and are typically larger in size, with longer maturities. By contrast, CLOs have been backed by loans to retail properties undergoing renovations, or by building owners seeking interim financing while they find new tenants. “CLOs are more flexible in terms of what kind of assets you can put in them,” said Elizabeth Murphy, a partner at law firm Alston and Bird. “In retail we have a lot of shopping centers and units that need upfitting. They need an influx of capital to be converted into something @Businessdayng

more useful.” The rise in CLO investment comes as analysts say the property cycle has reached a late stage, and retail real estate, in particular, has already entered a downturn. Nonetheless, juicy yields continue to attract investors. The safest, triple-A chunk of CRE CLOs pay a higher return than CMBS of a similar quality, despite much shorter maturities. Despite the risks, Mr McBride said investors had become more comfortable with the CLO structure and believed it was “inherently safer” than the securitised mortgage bonds that helped bring the global economy to its knees in 2008. Before the crisis, a variety of loans and derivatives would be packaged into collateralised debt obligations, unlike the simpler CRE CLOs being issued today. Investors and analysts also said that issuers typically take on a larger chunk of the initial risk in the deals, providing investors with a shield against borrowers hitting trouble. “There is less collateral risk and investors are more protected from defaults,” said Tracy Chen, head of structured credit at Brandywine Global Investment Management.

Thursday 20 June 2019

BUSINESS DAY

NATIONAL NEWS

Dutch charge three Russian agents over downing of MH17 Ukrainian separatist commander is fourth man accused of murder of all 298 DAVID BOND

utch prosecutors have charged four military and intelligence officers from Russia and Ukraine with murder and involvement in the shooting down of Malaysia Airlines flight MH17 in 2014, ramping up international pressure on Moscow over the downing of the jet which killed all 298 people on board. At a press conference in The Hague on Wednesday, a Dutch-led joint international investigative team (JIT) said that while the four men did not “push the button” which fired the anti-aircraft missile which brought MH17 down, they played a significant role in the events which led to the catastrophe. MH17 was flying from Amsterdam to Kuala Lumpur, Malaysia, on July 17 2014 when it was shot down over eastern Ukraine, killing everyone on board and sparking international outrage. Last May the JIT, made up of Dutch police and prosecutors as well as investigators from Australia, Belgium, Malaysia and Ukraine, concluded that the missile which

shot down the aircraft came from a Buk missile launcher provided by a Russian military unit, the 53rd antiaircraft missile brigade. On Wednesday the JIT charged four men: Igor Girkin, a former colonel in the Russian intelligence service, the FSB, Sergey Dubinskiy and Oleg Pulatov, two former agents of the GRU, Russia’s military intelligence agency, and a Ukrainian national Leonid Kharchenko, who the JIT said served as a field commander for Russian-backed separatists forces fighting Ukraine in the Donbas region of the country. All four were charged with causing the crash and murder under Dutch law. A trial date was set for next March in the Netherlands although the JIT conceded it was unlikely the men would give themselves up to stand trial. The extradition of suspects from Russia and Ukraine is not allowed under the countries’ constitutions meaning they would be tried in their absence. “Through this chain of command the Buk could be transported to the field in Ukraine and fired with terrible consequences,” the Dutch prosecutor Fred Westerbeke said.

How Facebook raced to build Libra coin Social network quietly assembled a crypto team and courted partners for more than a year TIM BRADSHAW, MARTIN COULTER AND HANNAH MURPHY

ost people missed Mark Zuckerberg’s first hint that Facebook was preparing his boldest bet in years. Buried in the penultimate paragraph of his 2018 New Year missive, Mr Zuckerberg said he intended to “go deeper and study” encryption and cryptocurrency. Inside Facebook, Mr Zuckerberg had already begun quietly marshalling his troops to investigate what a new global currency might look like. Just 18 months later, the social network was ready to reveal the answer: Libra, a digital coin backed by hard assets and supported by 27 other partners, including Visa, Mastercard, PayPal, Uber and Spotify. The person who played a central role was David Marcus, the former PayPal president who pulled in engineers for the project from all over the Silicon Valley company. Even as Facebook’s crises intensified early last year with the Cambridge Analytica scandal, the crypto team moved quickly, trying to stay below the radar as it quietly tapped external blockchain experts to help shape its ideas. Cryptocurrency and fintech specialists such as Anchorage, a start-up backed by Andreessen Horowitz, and Ribbit Capital, an investor in digital wallets Coinbase and Xapo, say they were talking to Facebook even before Mr Marcus was officially appointed to lead its blockchain team in May 2018. All those firms are now signed up as “founding partners” of the Libra Association, the Swiss-based nonprofit that will launch the currency early next year. Those early partners say while Facebook’s project has gone through some iterations, the development of a new cryptocurrency was the clear

goal from the beginning. As Facebook searched for blockchain technology in the first half of last year, it approached start-ups including Algorand about potential acquisitions, according to two people familiar with the discussions. But the takeover talks fell through, in part because of disagreements about how much control Facebook would exert and how decentralised Libra would be. Within Facebook — where engineers and product managers are more familiar with optimising advertising algorithms or simplifying photo sharing — creating a new currency was seen as a daunting challenge. “I’ve been doing this for more than a year, like 20 hours a day, and I’m still wrapping my head around it,” said Kevin Weil, who moved from Instagram to become Facebook’s head of blockchain product in June 2018. Libra was “unlike anything I’ve ever worked on before”, he added in an interview last week at the San Francisco Mint. “The technology is basically brand new, and is evolving really quickly. No one has any experience with a global currency before. Any direction you look, it’s new — and that’s exciting.” Before too long, Facebook’s nascent efforts began to cause ripples outside of the social network. Mr Marcus quit the board of Coinbase, one of the best-known cryptocurrency wallets, in August last year after just nine months as a director. It would prove to be an early test for the coalition of 100 partners that Facebook ultimately hopes to build around Libra — of whom Coinbase is among the first. “I’m hoping it’s not going to be too messy,” said Jim Migdal, Coinbase’s head of business development and a former Facebook employee. “I’m confident things will get sorted out, but I don’t have some panacea that it’s all going to be puppies and roses.” www.businessday.ng

Donald Trump and his wife Melania at the launch of his re-election campaign in Florida. The president will battle against one of the 23 Democrats vying to run against him next year © Reuters

Donald Trump launches re-election campaign for the White House US president vows to maintain America First policy and focus on illegal immigration DEMETRI SEVASTOPULO AND COURTNEY WEAVER

o na l d T r u mp f o r ma l l y launched his 2020 re-election campaign in Florida where he said his victory three years ago was a “defining moment in American history” and vowed to maintain his America First policy “Exactly four years ago this week I announced my campaign for president . . . It turned out to be a great political movement,” Mr Trump said. Mr Trump has held dozens of political rallies since he assumed office in January 2017. But the Tuesday evening event in Florida, a key swing state, marked the formal start of a re-election campaign that will see him battle against one of the 23 Democrats vying to run against him next year. Underscoring the power of incumbency, roughly 20,000 Trump supporters wielding placards that read “Four More Years” and “Trump 2020” filled the arena in Orlando in central Florida. In a long speech reprising many of his usual themes, Mr Trump attacked the media and described Democrats as an “angry leftwing mob” trying to “erase” the 2016 votes of his supporters. Urging his supporters to turn

out to vote on November 3 2020, Mr Trump said: “This election is not merely a verdict on the amazing progress we’ve made. It’s a verdict on the un-American conduct of those who try to undermine our great democracy and undermine you.” While Mr Trump touted the strong US economy and his success installing conservative judges on federal courts, he returned to the issue of illegal immigration — a theme that while divisive during the 2016 campaign helped generate an enthusiasm among his supporters that propelled him to victory. “When it comes to border security, the Democratic agenda of open borders is morally reprehensible. It’s the greatest portrayal of the American middle class,” he said. “The legal mass migration brings in millions of low-wage workers to compete for jobs, wages and opportunities against the most vulnerable Americans, cutting off their path to the American dream. Thanks to Democrat policies, schoolchildren across the country are being threatened by the vicious gang MS-13.” Ahead of the rally, Mr Trump sparked more controversy about immigration by saying that the Immigration and Customs Enforcement agency would next week conduct raids aimed at finding and deporting

millions of people who live in the US without the proper documentation. “Next week ICE will begin the process of removing the millions of illegal aliens who have illicitly found their way into the United States. They will be removed as fast as they come in,” Mr Trump tweeted. The US has continued to see a sharp uptick of border apprehensions in recent months, although there have been signs of a slowdown in recent weeks. In May the US apprehended more than 144,000 individuals — the highest such monthly figure in more than a decade. During the 2016 campaign, Mr Trump stoked fears by warning about rapists and murderers entering the US from Mexico, and vowed to build a wall on the border. He adopted a similar approach before the 2018 midterm elections by warning voters that a “caravan” of people from Central America was winding its way through Mexico in the hope of reaching the US. His renewed focus on immigration sets the stage for a presidential race where Mr Trump stresses the need to reduce the number of illegal immigrants in the US, while the Democrats vying to win their party’s presidential nomination stress the need to take a more humane approach.

Cryptocurrency enthusiasts hate, and love, Libra coin Purists hope Facebook plan will push digital currencies into mainstream CAMILLA HODGSON, HANNAH MURPHY AND MARTIN COULTER

ryptocurrency purists said that Facebook’s plans to launch a new digital coin on Tuesday would not create a true cryptocurrency, though they held out hope that the effort might nonetheless bring digital money into the mainstream. Critics said the plans for Libra, backed by a consortium of 28 groups including Uber, Spotify, Visa and Mastercard, did not represent a genuinely decentralised digital currency. While Facebook intends for Libra to eventually become decentralised, transactions will initially be vali-

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dated by the founding consortium. This structure allows the currency to operate and scale up faster, but is anathema to those who see cryptocurrencies as an anonymous alternative to the central banking system. “This project is the antithesis of bitcoin and is another step towards total control of data and users,” said Phil Chen, decentralised chief officer at phonemaker HTC’s blockchain-driven Exodus project. “This global coin is the most invasive and dangerous form of surveillance they have devised thus far.” On the online forum Reddit, one commenter described Libra as a “Silicon Valley surveillance paradise” but acknowledged that it was still a “pretty significant develop@Businessdayng

ment in crypto”. The price of bitcoin, which has been volatile over the past 12 months and passed $9,000 at the weekend for the first time in more than a year, has been flat since the announcement. Other major cryptocurrencies were also unmoved or only slightly down on the news. “Instead of a monopoly it’s an oligopoly,” said Gavin Brown, associate professor in financial economics at Manchester Metropolitan University and director of cryptocurrency hedge fund Blockchain Capital. But the structure might be sensible, he added: “There needs to be some level of institutionalisation in order for adoption to happen and regulators to get comfortable.”

Thursday 20 June 2019

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Britain must act to save banking from decline

A new body is needed to co-ordinate regulation and foster midsized institutions

BOB WIGLEY

he UK has been a global leader in finance since the dawn of modern banking in the 17th century. It benefits from the use of English, a convenient timezone, heritage, a widely-respected legal system and regulatory framework, and a strong base of professional services and research skills. Brexit, whenever it happens, will not change those fundamentals. But the UK should never take its position for granted. In a globalised world, international businesses and the talent they attract are not interested in the UK’s rich history. Rather, they look at its potential. With the departure from the EU, the UK’s finance sector will lose its right to “passport” into the bloc and do business with customers there. That means Britain will need to reframe its international competitiveness if it is to continue to retain and attract financial service businesses. Since the 2008 financial crisis and during three years of Brexit negotiations, the banking and finance sector has not seen the same kind of strategic support and attention from the UK government that has been directed towards goods and technology. As we move towards the next phase of Brexit, it is time to set out a bold vision for the sector and an approach to financial regulation that seeks to maintain and promote the UK as a global leader, while also focusing on the importance of financial stability. The UK should establish a new, formal body, chaired by the chancellor and including all the relevant regulators, departments and the governor of the Bank of England, which works closely with the industry to create and implement this vision. At the top of its agenda should be three priorities. First is regulatory air traffic control. UK-based banks are facing a multi-

tude of interventions from different regulators with at best insufficient coordination and at worst conflict. These often require significant IT overhauls and without better co-ordination they could threaten the operational resilience which the industry, its customers and the wider economy rely on. This is not a call for a return to light regulation or a race to the bottom. Strong, internationally respected regulation and high standards are central to a robust and competitive banking and finance industry. But we need to ensure that regulatory initiatives are formulated and implemented in a co-ordinated and prioritised manner. Second, we need a regulatory approach which promotes competition. It should spur on not just smaller challenger banks and fintech companies but also foster the growth of a middle tier. The current structure of British retail and commercial banking is relatively concentrated, and there is only one mid-tier bank, CYBG, with assets of more than £50bn. Currently, smaller companies carry a disproportionately high regulatory burden requiring them to hold more capital against assets than their larger competitors. The new chancellorchaired body should consider how regulation could be proportionate to the size and business model of these banks, given that they do not pose systemic risks, and help promote a broader range of banks, more like the US. Third, the new body should review whether existing banking regulation appropriately captures the new and exciting business models that are emerging due to digital innovation. Tech firms are moving rapidly into banking and into positions of dominance in particular niches, such as payments, clearing and settlement. But they are not subject to the same level of scrutiny as banks with regard to their conduct, prudential capital, data use and conflicts of interest.

Barnes & Noble results underscore Elliott’s turnround challenge

Bob Wigley: the new body must have a mantra that the UK will be the safest and most transparent place to conduct financial services business in the world © Anna Gordon/FT

Lloyds defends Antonio Horta-Osorio’s pension deal ‘Winner’ bank chief deserves it, MPs are told NICHOLAS MEGAW

loyds Banking Group has hit back at parliamentary criticism of its executive pensions policy when a board member told MPs that the lender’s boss was a “winner” who deserved his high pay after rescuing the institution from the brink of bankruptcy. Stuart Sinclair, the head of Lloyds’ remuneration committee, told the Commons work and pensions select committee on Wednesday that chief executive António Horta-Osório — who will receive a guaranteed pay of £2.85m plus bonuses this year — “works incredibly hard and he deserves that”. Mr Sinclair and Mr HortaOsório were called before the committee after months of criticism over its policy, which gives Mr Horta-Osório a significantly larger pension contribution than the majority of his employees. Executive pensions have been in the spotlight this year after new governance guidelines came into force which recommended that employer contributions for senior staff should be brought in line with the majority of employees —

which in Lloyds’ case is an average of 13 per cent of base salary. Mr Horta-Osório will receive an allowance worth 33 per cent of base salary this year. However, the Portuguese executive, who was appointed in 2011 while Lloyds was still controlled by the government, rejected accusations that he was greedy, arguing that his overall pay package was “absolutely in line with every major bank chief executive”. Lloyds’ policy was contrasted with rival HSBC, which became the first major bank to slash contributions for its top executives earlier this year, from 30 per cent to 10 per cent. Pauline van der Meer Mohr, chair of HSBC’s remuneration committee, said it was a “balancing act” to keep contracts fair while competing for top talent. She said HSBC’s executives volunteered to take a cut because “we care about good governance, shareholder support and doing the right thing”. However, Mr Sinclair insisted that Lloyds was not “behind the curve” because Mr Horta-Osório had already taken a partial cut to his pension ahead of an entirely new pay policy that will be voted

on next year. Mr Sinclair said he would not pre-empt the decision of the bank’s remuneration committee, but said: “We will almost inevitably be very conscious of the [call for] convergence” between staff and executive contributions”. Frank Field MP, chair of the committee, disputed Lloyds’ claim that staff were happy with the bank’s policies, saying he had been contacted by several angry employees. He also suggested he would call the bank back for further questioning if he was not satisfied with its next pay policy. Although the hearing focused on pensions, MPs also used the opportunity to criticise the executives over issues including their responsibility for bank branch closures and the broader pay gap between high and low-paid workers. From next year companies will be forced to report the gap between the salary of their executives and average UK employees. Mr Horta-Osório’s total pay last year was 169 times higher than the median Lloyds employee, while HSBC chief John Flint was 118 times higher.

BoE governor says Libra would have to meet the ‘highest standards’

Stocks cool as attention turns to Fed rate call

PETER WELLS

MICHAEL HUNTER AND DANIEL SHANE

he challenge facing Elliott Management to turn around Barnes & Noble was on display, with the bookstore chain reporting weaker revenue and a steeper net loss in its most recent quarter than the market had forecast. Elliott struck a deal in early June to buy the struggling retailer for $683m, including debt, a little more than a year after the activist hedge fund took over UK bookseller Waterstones. Barnes & Noble on Wednesday reported total sales of $755m in the fourth quarter ended April 27. That was down 3.9 per cent from a year ago, and nearly $10m short of the median forecast among analysts in a Refinitiv survey. Comparable store sales, which

track revenue from stores open more than a year and a closely watched metric among retailers, were down 2.3 per cent in the fourth quarter. That trickled down to a net loss of $18.7m, or 26 cents a share. While that was an improvement from a loss of 29 cents a share a year earlier, it was wider than the loss of 22 cents a share Wall Street forecast. Thanks to a rapid expansion in the 1980s and 1990s, Barnes & Noble’s big-box bookstores once dominated the industry and made life tough for independent sellers. The company then similarly received a taste of its own medicine amid the take-off of ecommerce, and in particular Amazon, in the new millennium, which has caused huge disruption in the sector. www.businessday.ng

tocks cooled on Wednesday as attention turned toward the Federal Reserve’s stance on monetary policy, just a day after one of the strongest rallies of the year following a signal of more potential stimulus from the European Central Bank. The tone of the Fed’s statement, issued alongside its decision on rates and subsequent remarks from its chairman, Jay Powell, is expected to dominate sentiment in the US. Wall Street’s S&P 500 ticked up 0.1 per cent, enough for it to continue to rise toward its record closing high touched in May, after a gain of almost 1 per cent over the previous session. The dollar held steady, with the index tracking it at just under 98 points, leaving it up 1.6 per cent for

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the year. The yield on benchmark 10-year US Treasuries was steady at 2.0785 per cent. The Europe-wide Stoxx 600 held near the six-week high it hit during the previous session, while the euro ticked up 0.1 per cent to $1.1200, bouncing up off its lowest reading for 11 trading days. Mario Draghi, the ECB president, set the tone for the trading pattern on Tuesday when he said that the eurozone’s €2.6tn quantitative easing programme could be restarted if currency bloc’s inflation outlook does not improve. Eurozone government bond yields also moved up off record lows, that were touched during strong demand for the debt in the immediate aftermath of the ECB’s increasingly dovish rhetoric, which stoked haven demand for debt amid concern about growth. @Businessdayng

Frankfurt’s Xetra Dax 30 ticked down 0.1 per cent after rising 2 per cent on Tuesday after Mr Draghi’s words, in what was its biggest one-day advance since January 18. London’s FTSE 100 fell 0.3 per cent. Confirmation from US President Donald Trump that he would hold a meeting with his Chinese counterpart Xi Jinping at the G20 summit in Osaka this month also helped the mood. Hopes were high that such a high-level meeting could produce a breakthrough in the long-running dispute. Hong Kong’s Hang Seng rose almost 3 per cent in one of its strongest days of the calendar year. Mainland China’s CSI 300 added 1.5 per cent. Australia’s S&P ASX 200 ended at its highest level since the financial crisis, up over 1 per cent.

Thursday 20 June 2019

BUSINESS DAY

ANALYSIS

Elysee lunch with Sarkozy at heart of Platini corruption probe

Qatar was awarded right to host 2022 World Cup 9 days after meeting MURAD AHMED AND DAVID KEOHANE

n November 23 2010, French football icon Michel Platini arrived at the Elysée Palace for lunch with then president Nicolas Sarkozy and found he was not the only one invited. Other guests included officials from Qatar, among them crown prince Sheikh Tamim Bin Hamad Al Thani. Nine days later, the gas-rich Gulf state where temperatures exceed 40C in the summer, was awarded the right to host the 2022 World Cup. The sequence of events has placed the Elysée meeting at the heart of a global corruption investigation — and triggered the downfall of Mr Platini, from football legend on the cusp of becoming the most powerful man in the sport to pariah left to grapple

cast his vote instead for Qatar — disregarding the blistering heat that players would have to endure and the desert country’s lack of stadiums. In an interview with the Financial Times five years later, Fifa president Sepp Blatter alleged that shortly after the Elysée lunch, Mr Platini informed him he would break a “gentleman’s agreement” between Fifa’s top leaders to award the competition to the USA. “Just one week before the election, I got a telephone call from Michel Platini and he said: ‘I am no longer in your picture because I have been told by the head of state that we should consider the situation of France’,” Mr Blatter, himself ensnared in the affair, told the FT. Mr Platini, however, denied having received any direct in-

with legal problems. On Tuesday, French police held Mr Platini for questioning partly to shed light on the discussion that occurred in the French presidential palace. As head of Europe’s football governing body Uefa at the time, he was involved in the decision to award the biggest sporting event after the Olympic Games to Doha. Investigators are seeking to verify whether Mr Platini received bribes in exchange for his vote for Qatar, according to a person close to Mr Platini, confirming reports by Mediapart and Le Monde. They also detained Sophie Dion, then Mr Sarkozy’s sports adviser, and questioned Claude Guéant, a close adviser to the French president. If investigators have strong suspicion of wrongdoing, they could place Mr Platini under formal investigation, one step short of an indictment. Charges can still be dropped at a later stage. Mr Platini, who was released in the early hours of Wednesday, Ms Dion and Mr Guéant have denied wrongdoing. As a player, Mr Platini was an elegant midfielder, captaining the French national team when it won the 1984 European Championships. He became the president of Uefa in 2007, a position from which he was also made a vice-president of Fifa, the international football body. On December 2 2010, Mr Platini and 21 other members of the Fifa executive committee met in the bowels of the organisation’s headquarters in Zurich to select a host for the 2022 World Cup. Mr Platini, who had been leaning towards a bid from the USA,

structions from Mr Sarkozy. “Sarkozy never asked me to vote for Qatar, but I knew what would be good,” he said in 2015. On Tuesday, a spokesperson for Mr Platini said: “He was not happy [about the lunch at the Elysée]. He thought at that moment some unspoken pressure was about to be applied.” The former Uefa president has insisted he made the decision to vote for Qatar before the lunch with Mr Sarkozy. Mr Platini was the one who requested the meeting to inform the president of that decision, his spokesperson said. Fifa’s 2022 World Cup decision, however, triggered investigations into alleged corruption. Authorities in the USA, Switzerland and France launched probes into its affairs, leading to the arrest and imprisonment of dozens of Fifa officials around the world. While leading Uefa, Mr Platini had planned an attempt to run for the Fifa’s presidency, vying for the most influential position in the sport. Those plans ran aground after he received a multiyear ban from football for ethics violations in 2015. The ban related to a SFr2m ($2m at today’s rate) payment from Fifa to Mr Platini in February 2011. He has maintained that the payment was related to work for Fifa between 1998 and 2002, but there was no written contract and no record of the payment in Fifa’s accounts. After Mr Platini resigned as the head of European football, Gianni Infantino, once his subordinate at Uefa, rose to be elected Fifa president in 2015. Mr Platini said recently that the pair were no longer on speaking terms. www.businessday.ng

How Hong Kong defied Xi Jinping

The Chinese leader has been given a ‘bloody nose’ by protesters. How will he react? TOM MITCHELL, SUE-LIN WONG AND NICOLLE LIU

or Communist party officials, it was an embarrassing rebuke: as many as 2m residents of a major Chinese city marching to demand the resignation of its Beijing-appointed leader. And because it was happening in Hong Kong they could do nothing about it. Worse still the protest — broadcast globally — was being widely viewed as a celebration of the biggest climbdown in the political career of their boss, President Xi Jinping. Sunday’s mass demonstration in Hong Kong was the third in a week called in protest over a legal amendment that would allow, for the first time, the city’s residents to be extradited to the Chinese mainland. Organisers say about 30 per cent of Hong Kong’s population of 7.4m took to the streets even though Carrie Lam, the territory’s chief executive whose decision to propose the law changes initially triggered the unrest, had shelved the extradition plans 24 hours earlier. Ms Lam’s concession — a move forced upon her by Beijing, say those briefed on the decision — was not enough to satisfy the crowd, which used the rally to call for her resignation. Her U-turn on Saturday and the massive outpouring on Sunday has electrified a new generation of protesters, many of whom had been despondent after a similar pro-democracy campaign, the socalled umbrella movement, failed to secure any concessions from Beijing in 2014. And while Hong Kong remains the only city in China where civil freedoms are protected under the so-called “one country, two systems” arrangement, a majority of seats in its legislature are effectively reserved for pro-Beijing figures. Ms Lam was selected by a similarly skewed election committee. “Since the umbrella movement, a lot of people have felt a sense of desperation, helplessness and powerlessness,” says Derek Yuen, a politics lecturer at the University of Hong Kong. “But suddenly they see some light at the end of the tunnel because Beijing has backed down. “The [protesters] have realised they can stand up to the Communists,” he adds. “This will give them a lot of confidence that they are going to change the situation. [There is] new hope, new spirit and strong confidence.” The protesters’ gains have been Mr Xi’s loss. Even though his proxy in the territory, Ms Lam, has accepted responsibility for the debacle, it is a stunning setback for a man

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regarded as China’s most powerful leader since Mao Zedong. Chinese officials publicly backed Ms Lam’s proposed changes to the extradition bill — even though they later said it was her idea — after they were introduced in February. This put Beijing’s credibility on the line as the crisis escalated. In the coming days and weeks Mr Xi faces two difficult decisions. Should he allow Ms Lam to yield to the protesters’ calls to formally withdraw the bill or just let it lapse when Hong Kong’s current legislative term expires next year? And should she be forced to resign or allowed to serve out the remainder of her term, albeit as a lame duck? It seems inconceivable that Ms Lam, two years into a five-year term, could serve the maximum two full terms that Hong Kong chief executives are legally allowed. If that is the case, she will become the third of four Beijing-appointed chief executives forced from office prematurely. This pattern of failure poses a greater dilemma for Mr Xi. Does his administration abandon the heavyhanded treatment it has meted out to Hong Kong since he came to power in 2012, or does the party — at the risk of further alienating the city’s youth — double down on its hardball tactics that have included disqualifications of pro-democracy legislators and convictions or prison terms for leaders of the umbrella revolution. Many people are betting that Mr Xi will adopt the latter approach as the party escalates its rhetoric about foreign plots allegedly hatched to “destabilise” Hong Kong. Neither “street violence nor the ill-intentioned interventions of foreign governments” could shake Beijing’s support for Hong Kong’s chief executive, the official China Daily newspaper said in an editorial on Monday. But for Beijing it is still a highstakes gamble. At least 60 per cent of overseas direct investment into China flows through the city — and it remains the primary offshore market for the renminbi, which the People’s Bank of China one day hopes to make a truly international currency. “Hong Kong still serves as China’s most important international financial centre,” says Peter Cheung, professor of politics at the University of Hong Kong. “Any capital flight, [the] leaving of major business or concerns about Hong Kong’s stability as an international financial centre would be of concern to the mainland.” In the eyes of pro-Beijing figures in Hong Kong and officials and scholars on the mainland, the @Businessdayng

protests have turned the city into another frontline in what they see as US President Donald Trump’s efforts to “contain” China. His punitive approach includes trade tariffs and restrictions on technology exports for some of the country’s biggest corporate champions, most notably Huawei. Such hawkish views were reinforced when Mike Pompeo, US secretary of state, said on Sunday that Mr Trump would raise the protests with Mr Xi when he meets him on the sidelines of a G20 leaders summit in Japan later this month. Beijing’s allies in Hong Kong argue that if Mr Xi’s administration were to allow Ms Lam to formally withdraw the bill — or force her to resign — it would undermine some of its more important objectives in the territory. These include the passage of long-delayed national security legislation better known as Article 23 — designed to prevent any move to independence — that would impose penalties for secession, sedition and other securityrelated offences. The legislation has lain dormant since a mass rally in 2003 forced Hong Kong’s first chief executive to abandon it. “Beijing sees things [in Hong Kong] from a broader strategic and international perspective,” says Lau Siu-kai, vice-president of a Chinese government-backed think-tank focused on Hong Kong. “This has now become a national issue, it is no longer something Carrie Lam can decide by herself.” The extradition bill contains the possibility that anyone — even those just passing through Hong Kong’s airport — could potentially be detained at Beijing’s request. This sparked fears that it would lead to an exodus of companies and capital from what is still China’s most important financial centre. David Webb, a shareholder activist and staunch critic of Ms Lam, says Beijing mainly values Hong Kong as “a portal for international capital to flow into mainland companies” listed on the city’s stock exchange. Beijing also appreciates its role as an important arbitration and adjudication centre for Chinese commercial interests. But he adds that if Beijing has to choose between economic and political prerogatives, it will always prioritise the latter: “Beijing cares less than ever before about Hong Kong’s international recognition as a separate customs, tax, immigration and legal jurisdiction from the mainland. The [Chinese] leadership are far more obsessed with national unity, sovereignty and party control.”

Thursday 20 June 2019

BUSINESS DAY

GARDEN CITYBUSINESS DIGEST

NDDC, NGOs, strive to uplift Niger Delta women

....international Women’s Day provides platform IGNATIUS CHUKWU, SAMUEL ESE (Yenagoa), SABY ELEMBA (Owerri) & MIKE ABANG (Calabar)

he Niger Delta Development Commission (NDDC) and some Non-Governmental Organisations (NGOs) have teamed up to liberate women in the oil states from several forces believed to be holding them down. Experts discovered that the women needed to liberate themselves from beliefs and misconceptions that seem to hold them down, even further than the chains created by society. The activate the self-liberation mechanism, the NDDC worked with some NGOs to put together some experts coordinated by Ifeoma Egbuonu, an event consultant, event planner and even management consultant based in Port Harcourt to leverage on the International Women’s Day celebration to mount conferences around the oil region. Ogbuonu and her team identified key problems of women in Nigeria before advancing solutions. She told BusinessDay in an exclusive interview: “The key problems of women vary from individual to individual but they could be summed up in the following points: wrong or low mindset,

lack of appropriate information, financial constraints, lack of good contacts, negative religious influence, bad association, and marital problems.” She said most women especially in the rural areas have wrong mindsets while others have a very low or poor thinking capacity. “Probably, they were taught to depend on their husbands for everything. Some don’t even believe in themselves. They believed that the man is the bread winner while the woman is a weaker vessel. Off course everyone is a product of her thoughts.” She went on to state that most of the women are not exposed to atmosphere where they can gather meaningful and useful information. They don’t access and process valuable information. Detailing the factors, she said; “Financial constraints: Some of the women have certain degree of working knowledge but remain in the cage of a full housewife due to lack of necessary funds.” She went on: “Lack of good contacts: The contact you have determines what you will contact. Most women have worthless contacts. This has kept them at a point for decades. Negative Religious Influence: Over spiritualization is an indisputable problem with women of nowadays. They blame demons, wicked neighbours and uncles

PORT HARCOURT BY BOAT

IGNATIUS CHUKWU

isdom Lanre Nwachukwu, now known as VOW, the ‘Voice of Wisdom’, read English/History in the UNN before picking up a Post Graduate Diploma in Journalism at the International Institute of Journalism (Abuja; affiliated to the University of Maiduguri). She did internship in a radio station and now works with Nig Info in Port Harcourt where she aspires to beak into the airwaves as an On-AirPersonality (AOP). From childhood, she had been inclined to voice and was the newscaster of her school. She loves drawings and designing, all total arts. VOW is one of the gospel artistes to be star at the Mega Unveiling event this Sunday at The Hub on Peter Odili Road in Port Harcourt. About the event, VOW, who hails from Mbutu in Aboh Mbaise LGA (Ihedioha’s hometown, hahaha) said: “I am based in Port Harcourt, Rivers State presently. I am a gospel singer and minister, and also a journalist. I love singing and in the gospel way. I was linked to JC Records through the pastor of Eleutherial Ministries, King-

Nelson Brambaifa, managing director, NDDC

for every failure and for every mistake. They tend to replace work with prayer. The God of miracle is also the God of principles and due process. Bad Association: It is difficult for one to grow beyond the company she keeps. The company you keep determines what will accompany you. Marital problems: Most setbacks in life start in the family. Wrong marriages, marital crisis and such family rancour have left indelible and painful marks in the lives of some women, and

this has dwarfed their progress and made them not rise up.” On what can be done, Ogbuonu dropped it on the doorsteps of governments and multinationals, first. “In my own opinion, I urge governments and multinationals to consider proffering solutions in the following angles: mental empowerment, financial empowerment and provision of marriage and business seminars.” The NDDC is an organization funded by both the Govern-

ment and oil multinationals, thus, it seems to stand in the position to do what Ogbuonu suggested. The Commission has started this through annual conferences where women are lectured on the right way to think and where to go for help. The Commission has several intervention schemes that can help the women but knowing the rights steps seems to be what Ogbuonu and her team from the NGOs are doing. In Yenagoa, women in the oil region were pushed to climb to the top and take commanding heights in leadership and economy. About 500 women participated in the Bayelsa conference which took place on Thursday, June 13 with the theme, #Balanceforbetter and facilitated in Bayelsa State by a non-governmental organisation, Father’s Heart Foundation. The theme was: “Remaining Relevant; Breaking the glass ceiling as a new generation woman”. It focused on the role of learning, unlearning, relearning and using technology for women’s development. Speaking on the topic, ‘Remaining Relevant’, a financial expert, Tobore Olumoye, taught the women on the meaning of relevance, tips for remaining relevant, consequences of not remaining relevant and the important issue of personal finance and relevance. It was

powered by the NDDC and organized by Fathers’ Heart Foundation. In Imo State, the women were repositioned to take the lead in economic emancipation. To achieve this, the NDDC, working with Kaodili Cares Foundation, launched the conference scheme to liberate the women. Egbuonu said women, especially in the rural areas. She admonished women to eschew wrong mindsets and jettison low or poor thinking capacity. Valuable information was pumped to them at Owerri on Friday, 14, 2019, at Rockview Hotel with top resource persons including Tobore Olumoye who said women everywhere have the potential to conquer the world but the ability cannot manifest if they decided to remain where they were. She said they must make themselves relevant so they can do better with what they have. Another speaker, Ibelema Green, a legal practitioner who specialises as a teen coach lectured the women on the topic, ‘Upgrade: The Role of Learning, Unlearning, Relearning.’ Green gave practical steps on how women can upgrade themselves in an ever-changing world through learning new things, unlearning and relearning so that they can discover what they offer the world.

Unveiling VOW, the ‘Voice of Wisdom’ sley Nwachukwu. I am ever grateful, humbled and touched for the honour and privilege. “So far however, my song is almost done in the kitchen (studio) where I cook my lines in the steaming tunes of my voice. Now, everything is set. I kept working on it. I also know, by His grace, that the world is about to experience one of rare wonders of God when they hear the song ‘Great and Mighty God’. “Now, we are at that stage where we’re asking everyone at home and abroad to come and witness our unveiling where my song will be rendered for the first time and definitely not the last time. The media campaigns are out and the ticket sales are still on. My song ‘Great and Mighty God’ is a testimony of God’s awesome powers which He uses for our preservation, healing g and restoration. “The song teaches me never to fear or tremble before any situation, because my God is mighty and loving, hence I am victorious. There is peace of mind and rest I experience in deep worship of God, and I am sure that everyone who comes in contact with the song in true worship will testify. “I still have other songs I am putting together to bless the people of God all to His glory. “So, right now I am expecting a great turnout for my ‘Mega Unveiling Concert’ that will properly announce and introduce me formally into the gospel music scene, where I expect to www.businessday.ng

play the lead for as long as I shall live, by God’s grace. I also hope to touch lives round the world, if God breathes on my songs and ministry; that way I know I

‘‘

The song teaches me never to fear or tremble before any situation, because my God is mighty and loving, hence I am victorious

Wisdom Lanre Nwachukwu

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@Businessdayng

will not fail or fall. I hope to always usher people unto true worship to be filled with the Holy Spirit more than I entertain them. This is because the moment people can only be entertained by my songs but no longer be connected with God through them, then I would have failed, and God forbid that I should fail. And to all my wonderful fans out there I want you to expect beautiful and wonderful songs from me always, because I owe you that. You mean everything to me. You are beautiful people, wonderful and deserving of the best. I also hope to see all of you at ‘The Hub Event Centre’ on Peter Odili Road in Port Harcourt this Sunday, June 23, 2019. It is coming on the platform of JC Records where God is waiting to touch you through my song ministration. Remain blessed.” JC Records is a label that has hit the Garden City in search of true gospel singers who push from the heart and aim for salvation. They have picked out those they regard as the best and would unveil them on Sunday to the world. According to Emmanuel Steve, the PH representative, the aim is to encourage young singers to realize their dreams and help in building a body of voices that can disarm Satan any day. This is the objective and the model which seem to attract budding gospel singers from the city that gave the world Mercy Chinwo and many others. More seems to come.

Thursday 20 June 2019

BUSINESS DAY

Investing in Rivers State NLNG denies ruining indigenous contractor, rejects N1.147bn liability • Macobarb: You ruined me, look at your contract papers again Ignatius Chukwu

he Nigeria Liquefied Natural Gas (NLNG) in Bonny Island in Rivers State has denied ruining an indigenous contractor, Macobarb International, and has also rejected claims of about N1.147Bn by the contractor. CEO of Macobarb, Shedrack Ogboru, had cried out at a press briefing in Port Harcourt over one month ago that the NLNG has ruined his business by holding payment for jobs duly done and delivered leading to protracted bank loans and delisting by the Central Bank of Nigeria (CBN) since 2015. He says the liability accrued from trapping equipment and workers for over 600 days. Reacting, however, the Corporate Communications and Public Affairs manager, Andy Odeh, said claims by Macobarb International Limited (Macobarb) regarding its dealings with NLNG were false and ludicrous. He stated in a mail: “Macobarb was awarded the contract for Access Control to the Central Control Room, Laboratory, Shutdown Village and Gas Plant Area Improvement Project in 2014 after a competitive tender process, based on the company’s technical and commercial submissions as well as possession of financial capability and standing to execute the contract within the stipulated timeframe to the expected standards and stipulations. “A contract was signed between NLNG and Macobarb and valued N95,479,057.86 (N95.47m) with 18 months delivery schedule commencing in January 2014. It was never contemplated, neither was it written into the Contract Documents, that the contractor would take a loan to execute this project. The decision for any contractor to take a loan is purely on its own account and for its independent purposes. In this case, that delineation was prominent as NLNG was not privy to any loan transaction by Macobarb. He went on: “Macobarb was unable to execute the project, thereby incurring protracted delays, despite several interventions by NLNG to help the company overcome its inability to finance the project in line with its obligations. “It should be stated clearly that it was on this ground of non-performance, not on any act or omission attributable to NLNG or any of its personnel, that the contract was terminated in November 2015, after the date stipulated for its completion. Upon termination, Macobarb was paid N41,261,155.91 (N41.26m) for work it was able to accomplish and the materials it elected to handover to NLNG during the close-out process. “Therefore, there is no truth in Macobarb’ s claims that it was denied any payment. Furthermore, NLNG is not liable to Macobarb in the sum of N950 million, or any other sum that

Tony Attah, MD/CEO, NLNG

Shedrack Ogboru, CEO of Macobarb

MACOBARB has claimed or will claim in different quarters, on the footing of bank charges for a purported loan which NLNG did not authorise, request, or guarantee.” The controversy has however provoked the issue of relationship between multinationals and indigenous firms but insiders said it may rather be a matter of how Nigerians operating in multinationals have used the canopy of big business to suppress growing entrepreneurs. On this, the CEO of Macobarb wondered if the NLNG would do what it did to any foreign company that did not do anything wrong. His surprise is that no government agency he cried to has been able to go beyond preliminary responses, only to go silent after interacting with those he called NLNG demigods. He said the failure of the NLNG to honour payment schedules without any reason led to his firm being blacklisted by the Central Bank of Nigeria (CBN) for bad debt all because of contract liability of N1.147Bn that the multinational corporation (NLNG) has refused to redress to this moment. He further explained how his firm, Macobarb, got a job on January 9, 2014, to fabricate and install the access entry system (Integrated Turnstiles and Vehicle Barriers System) that must be fabricated in Europe for security and seamless entry into the world class facilities of the NLNG. Ogboru said the contract term insisted that there would be no mobilization fee or upfront payment but that each milestone executed and certified by the supervision team that included expatriates would not be delayed in payment so as to move to the next phase. He said the bitterest part of the agony was that the contract terms insisted that the staff and equipment procured for the project must never be removed from site nor be used to do any other job until completion of project, except with express approval in writing by the NLNG. Trouble came, he said, when he www.businessday.ng

fabricated the turnstiles in Europe and met the first payment milestone, only for request of about N30m payment be rejected despite endorsement by all the four engineers supervising the project in Bonny, just because a Nigerian that did not want him on the job declined assent without pointing out justification. He said NLNG nominated foreign experts that must inspect the fabricated equipment abroad and confirm before payment would be made, and that the experts inspected and issued approval letter of correctness, yet, only one man in the NLNG stopped payment. Reacting to NLNG’s reaction, Ogboru wondered why the multinational corporation was denying obvious facts in clauses such as section Pg 31 of 48, Article 13, subsection 13.2 Says : “The Contractor shall be responsible for taking due account of the site conditions, climate and incidence of inclement weather on the Site, which may include periods of very heavy rainfall and a high of ground water. The Company shall not make any additional payments, or pay for any standing time for personnel and equipment if the contractor encounters such conditions UNLESS such site conditions are considered as being exceptional and unforeseeable by an experienced Contractor. He noted thus: “NLNG say they will pay for standing time for contractor personnel and equipment if an exceptional and unforeseeable condition occurs not the fault of a contractor - even if it is exceptional and unforeseeable RAINFALL. Then, can you imagine them now turning round to say they will not pay for a deliberate repeated payment denials? “Same Section 7, Article 5.0 (Representatives); Subsection 5.11; page 28 of 48 Says: If, by reason of any failure or inability of the engineer, the Company’s Representative and/or the Company to issue within a time reasonable in all the circumstances any drawing, instruction, approval ( such as failure to approve payments as

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in this case) or the like for which notice has been given by the Contractor, the Contractor suffers delay and/or incurs costs, then the time for the execution of the Works shall be extended accordingly and the amount of such costs shall be added to the Contract Sum. “The conditions above are mandatory.... It shall be added not may be added. These are conditions NLNG enshrined in their contract by themselves as the basis for execution of contract. These conditions were not put into the contract by Macobarb. “Another demand Macobarb met in warning NLNG of the cost implications of delay on the contract is found in Section Ii, page 5 of 23 of GCC (Gen. Conditions of Contract For NLNG -15 October 2012). Programme: “Article 3, subsection (vi) Says: “Immediately the Contractor determines that there is a likelihood of a delay to the programme the Contractor shall notify the Contract Holder in writing of the circumstances that have led or will lead to the likelihood of delay and the actual or estimated duration of the delay and what remedial actions the contractor has taken or will take to avoid or minimise the delay. “We did this notification as demanded by the contract on 30th July 2014, which NLNG ignored till 10th February 2016 (559day). So, why would NLNG not want to obey these mandatory clauses in the contract terms?” Critical questions Ogboru raised what he called critical questions, saying he knew NLNG is a big corporation that can easily crush an ant like Macobarb but that he wanted the world to hear the noise of the crushing. He wondered how Macobarb went wrong in the Contract B.130142PPI to warrant termination of Contract; adding; “Who is the NLNG Representative on Contract & What are his Roles in Contract? NLNG to show anywhere he held Macobarb guilty on contract. “Did the NLNG contract say anybody and all NLNG staff members can @Businessdayng

write or give instructions to Macobarb on Contract? Did the Contract also say anybody or everybody in Macobarb can also write or give instructions to NLNG regarding Contract? “What is the complain against Macobarb by the NLNG Representative (Dweller Francis), who NLNG assigned to manage all aspects of the Contract on behalf of Company? When did NLNG notice the alleged defaults in its Notice of default and Termination on Contract? How did NLNG address the repeated payment denials Macobarb documented since 30th July 2014? “Did Contract say NLNG should support Contractor financially on Contract with Advance Payment? Why is NLNG suggesting giving Macobarb Advance Payment on 2nd June 2016 (One & half years into Contract to avoid the Standby Claim) after Macobarb had complained of persistent payment denials since June 2014? In over 10 years of Macobarb Contract HISTORY of over 62 meritoriously executed Contracts for NLNG, has NLNG ever assisted Contractor financially other than paying Contractor as stipulated in a contract? But the NLNG Contract says there shall be no Advance Payment on page 39 of 48, clause 4.3 or is it the usual practice in NLNG to change Contract terms it crafted any time it liked to suit its purposes and at the expense of Contractors? “When Macobarb notified the NLNG on the 30th of July 2014 that it was no longer able to fund Contract as a result of Mr. xxx refusal to sign his portion of payment Certificate to facilitate Macobarb payment, signaling Downtime/Standing time of its Equipment and Personnel on contract, what did NLNG do? Why didn’t NLNG suggest Advance Payment to Macobarb then or at the beginning of contract? “Where in the Contract is Mr. xxx empowered to supervise Contract and in What Capacity? If NLNG claims he is Contract Owner as they did in a mail to Senator Akpan, Senate committee chairman on Gas, where is it stated in Contract and if not, by what mail did they introduce or nominate xxx to Macobarb as stipulated in Contract? Then who is Mr. Schouten Jan the Contract introduced on page 25 0f 48 as Contract Owner?” Conclusion: This may be a prolonged dispute except some oversight organizations such as the NNPC or arbitrators intervene. Ogboru things NLNG is comfortable with prolonged court case whereas Macobarb does not have such staying power but seeks instant justice. He says justice delayed is justice denied. NLNG sources however hint that Ogboru is not saying all the truth, saying he did not disclose documents showing he went to court long ago. Ogboru claims that NLNG has not been served any summons and should not talk about court proceedings yet.

Thursday 20 June 2019

BUSINESS DAY

Corporate Social Impact

Onuwa Lucky Joseph (08023314782) Editor.

Good to know that banks are getting some competition in the loan business ONUWA LUCKY JOSEPH

u i t e a nu mb e r o f banks are pulling their weight in the CSR/ Sustainability arena, doing stuff they were hitherto not known for doing, and becoming more proactive as against the reactive ways of yore. Back then, banks waited for solicitations from organisations and individuals before deciding, and this based on insider connections, more than anything else, on which causes to support. The support was typically without any follow up enquiries as to how the funds disbursed was spent and how efficiently the organisation or individual so supported tackled the challenge. What we have today are banks that have well thought through CSR Strategies. Some of them have identified a burning cause(s) they support. Others are aligned to causes that are in strategic alignment with their line of business or the values that drive them. Not only are they not on a one-off basis, they are either encoded into the genetic makeup of the organisation or are values based propositions that are now finding room for execution. Either way, our banks are doing better. However, considering the wider ambit of CSR, we still must say that Nigerian banks, when it comes to the real meat of their business have not always served

their customers well. Blame it on the environment; blame it on the government, whatever it is, our banks have been called out time and again by numerous customers who feel they’ve been shafted by their banks by way of numerous illegal deductions, by way of interest rates that are way above what’s obtainable in developed and developing economies, by way of even the very chance to get the loan they do desperately need. The banks usually have no qualms putting this down to everybody’s fault but theirs. The ironic thing is that we see them in the forefront of promotions for SMEs and SMSEs, with a raft of seminars and products to help companies in those segments become more

viable and market-ready. Unfortunately, what they give with the right hand, it would seem, they take with the left. Just think about it: how many cash-starved organisations can do 25% or more in interest at repayment and without any moratorium. It would seem that despite their talk, banks detest small business. And as some bankers will tell you, it takes the same amount of resources it takes to process a 500k loan is what you need to process a N500m loan. So why bother with the small fry when the bigger fry promises more pickings? Fortunately for the SMEs and MSMEs, guerilla financial organisations are coming up to outflank the banks in that most important business of loans dis-

bursement. What’s the battle cry? Get loans without collaterals. Yes! And individuals as well as SMEs are flocking to them. Banks, who before now had been strategizing on how to contend with competition from telecoms companies that are now offering financial services, now seeing themselves on the back foot, are struggling to react effectively to this new challenge posed by nimble players whose activities threaten to further erode the profitability that banks enjoy. Quite a number of banks are now dealing their own collateralfree loans, the security requirement usually tied to a job. There are, of course, options for the self-employed, but usually smaller

amounts. The story from customers is that it is usually harder for the self-employed even to access those small amounts. Which is a shame, considering that for the most part, they are the ones who need it the most. That is not to discountenance our woeful record on debt repayment, something that runs across the entire bank customer spectrum. We find this development key as it means that people now have other options, and that it might just be a matter of time before banks without sufficient public sector clout start reeling from the losses. How are these upstarts doing it, and what are their rates of success? We soon shall tell you. Suffice it to say for now that it is the fabled entrepreneurial spirit that has latched onto this opportunity. That same spirit will make sure the opportunity gets bigger and bigger. The lesson for banks in all of this is that they and other traditional financial institutions need be sensitive to the needs and aspirations of those they call their customers. If funding is the big kahuna, what can they do about it, given the billions that they have in their vaults? Why not be creative about making those funds productive and thereby earn the loyalty of folks whose prosperity can only serve to increase the banks’ profitability? The wealthier a society, the wealthier it’s financial sector. It’s important to have that in mind when banks thumb their noses at the SMSEs.

Why do plastics bags when paper will do just fine? ONUWA LUCKY JOSEPH

y popular acclaim, one of the best things the last Nigerian national assembly did was in its waning days as it was winding down and some of its principal officers were preparing to head out the door for the last time. They passed a bill, not quite finished yet, some of the legislators readily admit, but a bill nonetheless banning the use, manufacture and sale of plastic bags in Nigeria. The punishment prescribed for going against the law (when it becomes law) is a three year ban or a fine of N500,000. We are actually a little late, even by generally lax African standards because before we got to this point, countries like Tanzania, Zambia, Kenya and Rwanda had already effected the ban on plastic bags. However, better late than never,

to mirror the mindset of environmentalists and many right thinking people right now. They all are clearly exulting and hoping that the details would be fully hashed out by the new assembly and that the president would not waste time before assenting to it. www.businessday.ng

However, as is usually the case, not everyone is doing the shoki dance (or whatever dance is the craze at the moment). The Chemical Society of Nigeria, (CSN) is up in arms against the bill, saying it was not carried along by the leg-

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islators before they reached their decision. Sunday Olawale Okeniyi, their president, insists that Nigeria can, like Singapore, collect, shred and incinerate the polymeric waste from plastic bags to generate energy. As in NEPA… as in PHCN…. as in the DISCOs can stop griping endlessly about gas supplies and simply marshal their troops to bring in the trash and Nigeria’s energy concerns would be a thing of the past. Hmnnnn….. We are not trivializing their concerns, but if in all of these many years of darkness, we’ve not seen a critical mass of such power pivots, why would it suddenly start after a ban on plastic bags is effected? The other talking point about job creation for plastic bag collectors is a moot point, really. The guys who collect plastic bags can also help collect paper which is more agreeable with the environmental @Businessdayng

and is sure to allay the concerns of environmentalists. We all see plastic bags and bottles clogging our drainages, and flooding the oceans and beaches. Studies conducted by marine biologists indicate that more marine life are feasting on plastics (which, by the way, are non-biodegradable). Studies are not conclusive as to how this will affect the fish long term. But if we are to go the selfish route as humans usually do, the fact that the plastic in the fish could end up in our system should be cause for concern. Thumbs up to the legislators who passed the bill. The plea is that the new chaps in the Senate and the House of Representatives will take the kind of decision that mirrors the concerns of their constituencies and not one beholden to any interests. And we urge the president to thereafter speedily put his pen to it.

Thursday 20 June 2019

BUSINESS DAY

Corporate Social Impact

Warren Buffet, Bill Gates and the big lesson on collaboration Stories by ONUWA LUCKY JOSEPH

was watching a video recently, on YouTube, and realised that Warren Buffet had once been (I had forgotten) the richest man in the world. Well, you know he started out in the wealth business well before Bill Gates, cobbling Berkshire Hathaway into a conglomerate of investment vehicles and fully owned businesses. But Bill beat him to the richest man title and was atop the pile for 13 consecutive years before Warren made the grade. That said, we still must not forget that Bill Gates had always looked to the Oracle of Omaha as a mentor and friend. It was more for the older man’s values rather than his money that Bill Gates sought to befriend him. This was someone who had been at the money game longer, who had bought and redesigned businesses, and whose reputation despite being in the shark-infested investment business was near squeaky clean. The major zit had been courtesy of his involvement with Salomon Brothers at a time when the government regulatory agency was determined to wind it down over humongous infractions. But he typically rode out the storm with his good name intact. Bill had made his own billions using Microsoft as his primary vehicle. Along with his friend Paul Allen, he had founded Microsoft in 1976 and gone on to make it the biggest computer software company in the world.

The remarkable story of his success is not what this write-up is about, but more about the unique collaboration between two extremely rich people who could both individually have struck out on their different ways and still have had enough resources to make a good success of it. Bill Gates and his wife Melinda eventually formed the Bill and Melinda Gates Foundation. And after he considered his 9-5 time done at Microsoft, he immediately moved over there and as a result of diligent application of his considerable financial and mental resources it has grown to become the world’s largest private charitable foundation. Warren Buffett, upon careful evaluation of his friend’s foundation, decided his wealth would be better utilized under the able leadership and management of Bill Gates and his partner/wife. And he didn’t

look back. The 88 year old billionaire who CNBC estimates has given away more than $46 billion since 2000 has since given about $25 billion dollars to the Gates Foundation. This, as well as his numerous other donations, (famously to the one named after his late wife and other charities particularly those run by his children) is in line with his plan to give away most of his wealth. The Bill and Melinda Gates Foundation is focused on global and local issues usually ignored by governments, its five areas of operations being: Global Health: under which issues like malaria, pneumonia, HIV, Tuberculosis, and vaccine development are pursued Global Development: handles issues like maternal, newborn and child health, polio, nutrition, vaccine

delivery, etc Global Growth and Opportunity: focused on agricultural development, gender equality, financial services for the poor, as well as water, sanitation and hygiene Global Policy and Advocacy: dedicated to building alliances with governments, as well as the private and public sector in different countries of the world The US Programme: Caters generally to the US educational sector, focusing on K12 education, and post high school success. Special consideration given to Washington State as the Gateses have long resided there. That Warren Buffett would, despite founding a foundation named after his own late wife, commit the bulk of his resources to the Bill Gates Foundation shows a good measure of far sighted strategic and it must be

added, practical, thinking, that’s not ego-rooted at all. What he considers even more critical than flaunting his name on a foundation is for the achievement of cogent results based on measurable parameters. And this the Gates Foundation has demonstrably exhibited via its successes in different parts of the world. There is a synergy about this two-man collaboration that a goit-alone philosophy may have been hard put to deliver. And it is a model that philanthropists in the third world would do well to emulate as they grapple with the immensity of effort required to improve on the fortunes of their environments. We believe this model has what it takes to get things done much better and sustainably. We at CSI will only be too happy to tell such stories should they come to our knowledge.

Who spoke at your graduation? Do you remember?

s kids don their graduation gowns, all they are thinking about is the next logical step life outside the four walls of the ivory tower. Even as they can mention the names of those who have done well, they are also intimately aware of the many who went to school like them but who are hunched up in different parts of the country, disabled by government policies, by a lack of adequate preparation as provided by the school, by lack of infrastructure, and by a cocktail of lacks that someone in another part of the world would find insipid, not to mention unimaginable. So, yes, they have that one year of national service before real life becomes their way of life. What should society do to steel them for the challenges ahead? Even in more advanced economies where things are far from being as dire as we have them here, the respective schools and alumni make a big deal of getting successful folks to talk to the kids and thereby set them on their way on a high note. Let it not be that all they think of as they go for national service is how the government is ‘condemning’ one brutal attack after another from deviants who ought to be in the slammer but who for reasons we don’t know are allowed to keep the arms with which they wreak havoc

of virtue is now yours to protect. And make no mistake, it is more polluted with toxic dialogue than it has ever been in modern history. The good news is the way to clean up the pollution can be found in the three words written on the cover of your diploma. It’s the motto of this great university: Per Veritatem Vis – Strength Through Truth.”

on innocent citizens who just want to make a life for themselves and in the at process help make the country a better place. That’s why we start a 3-part series on successful individuals doing the rounds of American schools as commencement speakers (Our Chimamanda Ngozi Adichie happens to be in that mix) to help inspire selfconfidence. To engender the can do spirit that’s required to get our young men and women as well as our beloved country running full steam ahead. (Kudos to Tony Elumelu, by the way, for his BUK speech). We start with Michael Bloomberg www.businessday.ng

who has done four stops so far. The speech excerpts are courtesy of Forbes Magazine Michael Bloomberg (Net worth: $56.2 billion) At Washington University in St. Louis: “Our democracy – as the Founding Fathers understood – relies on more than just votes. George Washington wrote in his Farewell Address, ‘Virtue or morality is a necessary spring of popular government.’ If the spring runs dry, democracy withers away – and the rights that we hold dear disappear. Graduates, that spring

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At Massachusetts Institute of Technology (MIT): “Graduates, we need your minds and your creativity to achieve a clean energy future. But that is not all. We need your voices. We need your votes. And we need you to help lead us where Washington will not. It may be a moonshot – but it’s the only shot we’ve got. As you leave this campus I hope you will carry with you MIT’s tradition of taking – and making – moonshots. Be ambitious in every facet of your life. And don’t ever let something stop you because people say it’s impossible. Let those words inspire you. Because just trying to make the impossible possible can lead to achievements you never dreamed of, and sometimes, you actually do land on the moon.” At Harvard Business School at Harvard University: “Market forces are among the most @Businessdayng

powerful tools in the world. But whether it’s climate change, or income inequality, or gun violence, or any other issue, those forces must be guided by ethical leaders, or else the market’s invisible hand can turn into a clenched fist. And when society’s most defenseless take it on the chin, I can promise you they will fight back with unpredictable consequences – and demand a better deal, as they should. Graduates, restoring the faith that Americans have been losing in our economic and political systems is a big job. If you won’t lead it, who will?” At University of Maryland: “When you experience a setback or failure, that’s okay. Don’t lose heart. In America, you can fail and try again. And again. And again. And still have hope of succeeding. Or at least in New York that’s what we say about the Knicks. Graduates, when everything burns down around you, don’t walk away. Fight for what you believe in. Ask others to join you. And demand that politicians run the risk of doing what’s right, not what’s easy. You will never regret it, and our country will be better for it.”

(For feedback, contact us at csrmomentum@gmail.com/ 08023314782)

Thursday 20 June 2019

BUSINESS DAY

MADE in aba Need for adequate power, better infrastructure in Aba GODFREY OFURUM

he finished leather and garment sectors in Aba, the commercial hub of Abia State, are contributing immensely to the economy of Abia State and deserve support. The shoe cluster in Ariaria alone employs about one million people and should not be ignored because of its economic relevance. The focus on providing infrastructure in Aba and Ariaria axis by the state government is to provide conducive environment for artisans in the various clusters in that business corridor. Governor Okezie Ikpeazu, while endorsing the Bank of Industry (BoI)’s loan scheme to the Leather Products Manufacturers Association of Abia State (LEPMAAS), comprising shoe, belt and bag makers in Aba, expressed his desire to make life better for the artisans. He also promised to extend similar gesture to the garment cluster at Ngwa Road axis to ensure that artisans produce in a more comfortable environment. “For the first time in 50 years, we did a cluster of five roads in that area. But that is like a small drop in a mighty ocean, because that place was abandoned for

years,” Ikpeazu said, recently. “You can’t access Ohanku and other places within that area and we are worried. Our thinking is that God will give us the grace to continue to search out where our people are working and deliver to them quality infrastructure that can at least create what is basically required for them to move from one point to the other,” he said. He decried inadequate power supply, which has stifled commercial activities in Aba and applauded Vice President Yemi Osinbajo for approving an independent power plant for Ariaria. This is as industrialists in Aba attributed closure of industries in the area to inadequate power supply. They urged the Enugu E lectr icity Distr ibution Company (EEDC) to increase electricity supply to the area to enable industries in the commercial city to operate optimally. Aba Chamber of Commerce, Industry, Mines and Agriculture (ACCIMA), a city chamber, said that small and medium industries in the commercial city are shutting down due to inadequate power supply. ACCIMA, in its bulletin, noted that few industries are managing to survive because they are providing their own power supply, an indication

that their installed capacity utilisation is far from being realised, hence making the economy more unstable, which in turn results in socioeconomic insecurity. According to ACCIMA, Aba is a city made up of sheer selfhelp efforts and enterprise. Aba is a town known for her numerous hubs of micro, small and medium enterprises (MSME). It is a city bubbling with the abundance of human potential in various areas of interest, contributing its quota to the revival of Nigeria’s economy. “Despite Aba’s contribution to the economy, the area receives an allocation of 10-15 megawatts of electricity from the national grid, against the required 110-120 megawatts,” the chamber said. It called for more allocation of power from the national grid to Aba— at least 50-80 megawatts of uninterrupted power supply— as is done with other cities of the country that is below Aba in economic activities, saying that this shall enable the rehabilitation of industrial concerns that have shut down, thereby ensuring societal security. Godwin Iheme, managing director, ICI Garment Limited, said that with adequate power supply, Aba industrialists can contribute meaningfully

to Nigeria’s gross domestic product (GDP). According to him, inadequate electricity supply has become a nightmare to industrialists in the commercial city. “EEDC rations electricity here. Our factory runs on generator and we spend an average of N10,000 daily on diesel. And recently, to help the big diesel engine, we acquired a small petrol generator, but the problem now is that the capacity is low for our equipment, which has forced us to reduce our

daily output,” he added. BusinessDay checks revealed that some areas of the town have been disconnected from the national grid for between three to five years. Mazi Jude Nwosu, managing director, Crunchies Fried Chicken Limited, a fast food firm, urged the government to do more in the power sector, noting that the firms put a lot of funds into providing their own power, which depletes their profits that would have been reinvested in the business to create employment.

According to him, selfgeneration of power and water cuts investable funds “because if we are to save these funds, we will be able to open more branches and for each branch we open, we employ about 50 people.” “Therefore,” he continued, “we urge the government to do more by providing some of these much needed amenities that will help us do more. If we do more, we pay more taxes and government will have more funds to provide infrastructure to the people.”

The changing face of Aba shoe industry

ODINAKA ANUDU

he Aba shoe industry is getting bigger. The majority of artisans are small and medium players struggling to compete with Chinese products, with little resources. Many Nigerians underestimate the potential of the industry. One million pairs of shoes are produced by more than 80,000 leather makers in Aba each week. Wi t h 4 8 m i l l i o n pa irs produced each year at an average price of N2,500 a pair, the industry is said to be worth up to N120 billion. T r a d e r s f r o m We s t African neighbours storm the industrial city every week to buy different product designs, just as Southern African schools are beginning to place orders directly from the shoe makers. Canadians, Europeans and the Chinese are also in the party, placing orders themselves directly or through their Nigerian proxies, BusinessDay was told in Aba. “We are already struggling to meet demands,” said Ken Anyanwu, secretary of the Association of Leather and

Allied Industrialists of Nigeria (ALAN), who produced Nigerian armed forces shoes in 2016. The business is going digital, with sales now online. The Aba leather industry is made up of shoes, trunk boxes and belts. It provides employment for tens of thousands, with many specialising in different stages such as designing, patterning, cutting, skiving, stitching, peeling and finishing. It is made up of clusters such as Powerline,

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Imo Avenue, Bakassi, Aba North Shoe Plaza, Omemma Traders and Workers, ATE Bag, and Ochendo Industrial Market, comprising input supplers, among others. However, the industry is in thriving in chaos as the majority of shoe makers in the industrial city are poorly structured and are not registered at the Corporate Affairs Commission. Exports are made informally, making tracking and planning difficult. Their machines are crude

and much of their work is still done by human labour. The more advanced shoe makers in Lagos are mostly foreigners, who design their shoes abroad and then import Completely Knocked Down shoes back to the country for finishing. “ This is where the problem lies. We in Aba have no good machines,” Anyanwu of ALAIN said. He said this is why the majority of Aba shoe makers are not meeting demands and are over working

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themselves once orders are placed. “It is a problem already for us because if a customer comes and we can’t meet demand, he will go elsewhere. The industry needs retooling,” he said. Nigeria and Ethiopia have things in common in terms of leather. Ethiopia is home to 56 million cattle, which provide ready raw materials to shoe makers. But Nigeria has 131 million cattle, goats and sheep, according to the Federal Ministry of Agriculture (2011 figures), with more shoe makers. The country is the second most populous (with 105 million people) after Nigeria with almost 200 million people. Nevertheless, Aba shoe makers import animal skins from China and many parts of Africa and Europe. “What happens is that the tanneries in Kano and Kaduna process animal skins and sell them as leather in the global market, earning foreign exchange,” said Chinatu Nwagbara, coordinator of Made-inAba Project, who produced @Businessdayng

shoes for Olusegun Obasanjo in 2016. “So we go to China and other countries to buy. Sometimes, we buy our products and re-import,” he said. More investments are going to Ethiopia. Between October and December 2016, Ethiopia attracted over $500 million in FDI to the shoe and leather industry. About 124 investors willing to invest $3.5 billion indicated interest to swell the export-oriented shoe market, according to the Et h i o p i a n I nv e s t m e n t Commission (EIC). Ethiopia exported $33.7 million worth of footwear products, mainly to the United States in 2015, one million lower than the preceding year. Through the African Growth and Opportunity Act (AGOA), the US-Africa trade law that allows dutyfree and quota-free access into the US market, Ethiopia shoe exports jumped from $630,000 to nearly $7m between 2011 and 2012, a more than tenfold increase, according to statistics from USAID.

Thursday 20 June 2019

BUSINESS DAY

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

briu@businessday.ng

08098710024

How dividend payments could help investors get the best out of listed stocks TELIAT SULE

he nationâ&#x20AC;&#x2122;s capital market has been in the bearish state since the beginning of the year. As at the close of business on Tuesday June 18, 2019, the All Share Index (ASI), the metric that gauges the overall market performance of all the listed stocks, closed at 29,818.80 points. That means year to date, the market is down by 5.13 percent. Sectoral indexes, which give market participants how stocks perform in their various subsectors, display different degrees of reactions to the market sentiment. The main board index closed year to date at -14.55 percent; NSE 30 Index, -12.69 percent; Banking Index, -10.09 percent; consumer goods index, -18.83 percent; Lotus Islamic index, -11.80 percent; industrial index, -15.21 percent, and pension index, -14.41 percent. With this picture in mind, some market participants or those exploring the capital market for the first time might think there is no hope for investors in the capital market. However, this perception is not true. Share price appreciation, which is a phenomenon relating to gradual rise in the share prices of quoted securities, is just one of the benefits an investor could gain from the capital market. Another benefit from the capital market is dividend payment,

Source: NSE, BRIU

and this is the focus of this writeup. In 2018 dividend season, which was for 2017 financial year, listed companies on the Nigerian Stock Exchange (NSE), rewarded shareholders with N591.71 billion dividends. A dividend season usually comes up on or before three months after the financial years of companies have ended. For instance, when the 2018 financial year ended on December 31, 2018, companies were statutorily expected to announce their audited financial results starting from April 1, 2019 which is three months after their financial calendar has ended. There is no sin if the results are made available earlier than this date.

In the on-going 2019 dividend season which is for 2018 financial year, so far, listed companies have declared N784.4 billion as dividends, translating to an increase of 32.6 percent over what was paid in 2018 dividend season. What this basically implies is that existing or prospective market players should not be discouraged by a decline in stock prices, even, this in itself, offers opportunities for shrewd players to take position in some strategic stocks at affordable prices. Another important issue this article aims to address is, if an investor uses dividend payment as a metric to build a portfolio, how will such portfolio look like? Alter-

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natively, how will each sub sector be weighted? We will assume two scenarios: those investors who are not averse to any sectors nor stocks; and those who want only halal stocks. In 2018 dividend season, banking stocks paid N245.6 billion as dividends to account for 41.5 percent of the dividends paid last year by listed companies. Cement companies from building materials sub sector, rewarded shareholders with N188.7 billion representing 31.9 percent of corporate actions in 2018. Investors who have stakes in food and beverages sub sector raked in N61.04 billion, which amounted to N10.3 percent of the dividends paid in 2018. Breweries sub sector paid N32.3 billion as dividends which translated to 5.5 percent of dividends paid last year. Investors in oil and gas stocks earned N27.8 billion as dividends, which translated to 4.7 percent of the total corporate actions declared on the NSE during the 2018 dividend season for 2017 financial year. In all, companies from five sub sectors-banking, cement, food and beverages, breweries, oil and gas, accounted for 99.3 percent of the dividends paid in 2018 dividend season for 2017 financial year. In other words, a portfolio built with mix of banking, cement, food and beverages, breweries, and oil and gas stocks in this proportion on January 1, 2017 which remained unchanged till mid June 2018 would have @Businessdayng

performed creditably well as their stocks accounted for 99.3 percent of the dividends declared in 2018, provided the appropriate stocks in each sub sector were selected into the portfolio. In 2019 dividend season, the same set of stocks-banking, cement, food and beverages, breweries, oil and gas, accounted for 95.9 percent of the corporate actions year to date. Investors that have stake in banking stocks have so far earned N220.5 billion as dividends year to date, representing 28.2 percent of the corporate actions year to date. Cement stocks from the building materials sub sector, have declared N277.9 billion as dividends, accounting for 35.5 percent of the corporate actions this dividend season. Food and beverages stocks have so far declared N46.8 billion as dividends representing 5.98 percent of the total dividends declared year to date. Also, stocks in oil and gas sub sector, paid N190.7 billion year to date, thus accounted for 24.4 percent of the corporate actions year to date. Stocks listed in the agric sub sector paid N4.86 billion in both 2017 and 2018. But while the corporate actions in 2017 amounted to 0.8 percent of the overall dividend payment, the same amount paid in 2018 translated to 0.62 percent of the overall corporate actions for that sub sector. In the aviation sub sector, quoted stocks paid N532.8 million as dividends in 2018 as against N812.7 million paid in 2017. Chemicals and paints stocks, also from the building materials sub sector, declared N2.26 billion as dividends for 2018 compared with N1.66 billion in 2017. For investors not averse to stocks from any sub sectors, they could focus on stocks from the banking, cement, food and beverages, breweries, oil and gas sub sectors for the remaining half of the year as the consistent dividend payment should guaranty them good rewards by next yearâ&#x20AC;&#x2122;s dividend season. Other investors who prefer halal stocks could select stocks from cement, food and beverages, oil and gas, agric, chemicals and paints, healthcare, conglomerates as well as from the construction sub sector.

Thursday 20 June 2019

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Wednesday 19 June 2019

Top Gainers/Losers as at Wednesday 19 June 2019 LOSERS

GAINERS Company

Opening

Closing

Change

NESTLE

N1420

N1400

-20

SEPLAT

N513.4

N497

-16.4

N11

0.8

PRESCO

N55

N50

-5

N6.45

N6.7

0.25

CONOIL

N23

N21.65

-1.35

N2.23

N2.45

0.22

MTNN

N133

N132

-1

Opening

Closing

Change

N31.5

N34.65

3.15

N11

N12

ETI

N10.2

ACCESS NEM

FO DANGSUGAR

Company

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

29,772.72 3,441.00 1,233,603,415.00

VALUE (N billion)

67.891

MARKET CAP (N Trn)

13.119

Global market indicators FTSE 100 Index 7,403.54GBP -39.50-0.53% S&P 500 Index 2,919.40USD +1.65+0.06% Generic 1st ‘DM’ Future 26,537.00USD +33.00+0.12%

Deutsche Boerse AG German Stock Index DAX 12,308.53EUR -23.22-0.19% Nikkei 225 21,333.87JPY +361.16+1.72% Shanghai Stock Exchange Composite Index 2,917.80CNY +27.65+0.96%

Foreign Portfolio Investors sold N198bn worth of Nigerian stocks in 5 months …gain of over N20bn Stories by Iheanyi Nwachukwu

n five months to May 31, foreign portfolio investors (FPI) in show of less interest in the Nigerian equity market could not allow their monies stay longer in stocks. Except for April, the capital exit seen in other months resulted in a huge N198.74billion which they took out of the stock market in the review fivemonth period as against N177.32billion they brought in, representing capital gain of N21.42billion. Out of N790.31billion worth of equities transactions done at the Nigerian Bourse in the review pe-

riod, foreign portfolio investors accounted for only N376.05billion, while N414.25billion worth of equity transactions were done

by local investors. This is revealed in the trading figures from market operators on their Domestic and Foreign Portfolio Invest-

Investors lose N21bn as Nigeria stock market records another session of decline

he Nigerian equities market recorded another session of decline on Wednesday June 19 which led to the benchmark performance indicator sinking further by 0.15percent. Following that dismal outing, the stock market has lost 0.91 percent of its value in three days, while year-to-date (ytd), its negative return is -5.27percent. At the sound of trade closing gong on the Nigerian Stock Exchange (NSE) 9th floor, the market closed with only 21 gainers as against 18 losers. Forte Oil Plc was the highest gainer, from N31.5 to N34.65, after adding N3.15 or 10percent; while Nestle Nigeria Plc was the highest loser, from N1,420 to N1,400, losing N20 or 1.41percent. The NSE All Share Index (ASI) closed lower at

29,772.72 points, against preceding day high of 29,818.80points. The value of listed stocks on the Nigerian Bourse decreased from N13.140 trillion on Tuesday to N13.119trillion on Wednesday, down by N21billion. In 3,441 deals, stock dealers exchanged 1.233billion units valued at N67.891billion. Forte

Oscar Onyema, NSE CEO

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Oil Plc, Prestige Assurance Plc, GTBank Plc, FBN Holdings Plc, and ETranzact Plc were actively traded stocks. A total of 970,166,694 units of Forte Oil Plc were exchanged in off market trades at N66.25 in five deals as Nigeria’s billionaire businessman Femi Otedola completed the sale of his stake in the Oil and Gas Company. The off market deals were negotiated deals between Stanbic IBTC Stockbrokers as buyer while APT Securities and Funds Limited, WSTC Securities Limited and Quantum Zenith Securities Limited were sellers. Market watchers foresee another session of mixed trading on Thursday, though with a mildly positive bias in the absence of external factors driving the market.

ment (FPI) flows polled by the Nigerian Stock Exchange (NSE). In January 2019, foreign investors brought in

N27.81billion and exited with N39.04billion; while in February, foreign investors inflow into the Nigerian stock market was valued at N43.93billion against N55.01billion which the exited with. This trend continued in March when their inflow into the stock market was just N25.89billion, but they succeeded in taking away N30.20billion. Further check in April, foreign inflow was N41.78billion while its corresponding outflow was N35.14billion. Just last month (May), N37.90billion worth of foreign monies were invested in the stock market while these investors left the market same month

with N39.35billion. In the five months period, Nigerian stock investors outperformed foreign investors accounting for 51.02 percent and 48.98percent, respectively. Foreign transactions which stood at N1.539trillion in 2014 declined to N1.219trillion in 2018. Over a 12 year period, domestic transactions decreased by 66.68percent, from N3.556trillion in 2007 to N1.185trillion in 2018. Total foreign transactions accounted for about 51 percent of the total transactions carried out in 2018, whilst domestic transactions accounted for about 49 percent of the total transactions in the same period.

SEC says derivatives will enhance capital market liquidity

erivatives has been identified as one of the investable products that would enhance the liquidity of the Nigerian Capital market. This was stated by Acting Director General of the Securities and Exchange Commission (SEC) Mary Uduk at the Final Reporting Workshop of the Knowledge Sharing Programme, in Lagos, Wednesday. The KSP is centred on “Capacity Building on Operation and Development of Financial Derivatives Markets in Nigeria,” aimed at tapping from the Korea’s expertise and excellence towards developing the derivatives market in Nigeria. The Nigerian capital market will not remain the same at the conclusion of this workshop as it has derived tangible benefits from this partnership. According to Uduk, there is no doubt that the KSP has presented a good

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opportunity for addressing some of the market’s challenges in setting up a strong and functioning derivatives market, especially in terms of having the required market infrastructure, regulatory framework and surveillance system for the derivatives market in Nigeria which are the target areas of research. “I am optimistic about our chances of creating a derivative market place that will be useful for our economy and the sub Saharan region. With the profiles of speakers lined up for today’s event, I believe that justice will be done to the topics and all of us will leave this venue more informed than we came” “The partnership between the Korea’s Ministry of Economy and Finance and the Securities and Exchange Commission, Nigeria is the first bi-lateral policy consultation between the two countries. The program has exposed my colleagues to the rich @Businessdayng

Mary Uduk, acting director general, SEC

system and diversity of the Korean financial system, which enabled Korea’s advancement and contemporary status among the comity of industrialised nations in the world” she said. The Acting DG stated that the final workshop will articulate recommendations for the course of actions needed for the development of the Nigerian financial derivatives market and the management of market volatility. According to Uduk, “This is indeed a demonstration of Korea’s commitment towards the full implementation of the KSP.

Thursday 20 June 2019

BUSINESS DAY

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Thursday 20 June 2019

BUSINESS DAY

Live @ The STOCK Exchanges Prices for Securities Traded as of Wednesday 19 June 2019 Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 238,153.01 6.70 3.88 253 17,341,130 UNITED BANK FOR AFRICA PLC 215,456.35 6.30 2.44 194 11,329,960 634,209.17 20.20 -0.25 211 5,077,255 ZENITH BANK PLC 658 33,748,345 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 249,472.28 6.95 0.72 169 31,536,554 169 31,536,554 827 65,284,899 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,686,795.72 132.00 -0.75 148 3,992,528 148 3,992,528 148 3,992,528 BUILDING MATERIALS DANGOTE CEMENT PLC 3,101,372.35 182.00 -0.05 64 3,826,263 LAFARGE AFRICA PLC. 153,829.45 9.55 -4.02 114 724,777 178 4,551,040 178 4,551,040 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 292,456.95 497.00 -3.19 42 171,865 42 171,865 42 171,865 1,195 74,000,332 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 14,408.66 5.40 - 1 50 1 50 1 50 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 1 50 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 OKOMU OIL PALM PLC. 63,530.41 66.60 - 15 53,576 PRESCO PLC 50,000.00 50.00 -9.09 12 243,651 27 297,227 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,520.00 4.26 - 1 100 1 100 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,800.00 0.60 - 8 159,444 8 159,444 36 456,771 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 794.19 0.30 - 1 500 JOHN HOLT PLC. 182.90 0.47 - 3 9,472 S C O A NIG. PLC. 1,903.99 2.93 - 1 100 TRANSNATIONAL CORPORATION OF NIGERIA PLC 45,932.23 1.13 0.88 66 3,387,666 U A C N PLC. 17,287.78 6.00 - 68 3,512,497 139 6,910,235 139 6,910,235 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 25,740.00 19.50 - 19 122,839 ROADS NIG PLC. 165.00 6.60 - 0 0 19 122,839 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 3,923.58 1.51 - 5 48,327 5 48,327 24 171,166 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 10,334.94 1.32 - 3 5,020 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 100,210.01 45.75 - 20 64,390 INTERNATIONAL BREWERIES PLC. 143,550.89 16.70 - 12 105,528 NIGERIAN BREW. PLC. 455,823.42 57.00 0.88 123 4,806,128 158 4,981,066 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 84,500.00 16.90 1.20 56 700,102 DANGOTE SUGAR REFINERY PLC 144,000.00 12.00 9.09 83 676,231 FLOUR MILLS NIG. PLC. 57,405.31 14.00 - 38 84,962 HONEYWELL FLOUR MILL PLC 8,247.41 1.04 2.97 59 1,222,394 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 1 100 NASCON ALLIED INDUSTRIES PLC 39,741.58 15.00 - 16 55,634 UNION DICON SALT PLC. 3,321.07 12.15 - 0 0 253 2,739,423 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 20,566.31 10.95 - 16 104,796 NESTLE NIGERIA PLC. 1,109,718.75 1,400.00 -1.41 21 25,145 37 129,941 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 4,678.16 3.74 - 15 89,749 15 89,749 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 27,793.34 7.00 -4.76 27 247,950 UNILEVER NIGERIA PLC. 178,095.17 31.00 -3.12 32 389,824 59 637,774 522 8,577,953 BANKING ECOBANK TRANSNATIONAL INCORPORATED 201,845.06 11.00 7.84 35 405,743 FIDELITY BANK PLC 51,864.89 1.79 3.47 78 5,099,463 GUARANTY TRUST BANK PLC. 912,366.56 31.00 0.65 217 34,012,367 JAIZ BANK PLC 14,142.84 0.48 - 19 658,007 SKYE BANK PLC 10,687.83 0.77 - 0 0 STERLING BANK PLC. 69,097.00 2.40 1.69 26 3,298,876 UNION BANK NIG.PLC. 200,933.19 6.90 -1.43 22 249,988 UNITY BANK PLC 8,883.90 0.76 - 16 238,211 24,301.91 0.63 3.28 38 1,575,115 WEMA BANK PLC. 451 45,537,770 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 1 10 AIICO INSURANCE PLC. 4,573.93 0.66 -1.49 18 776,928 AXAMANSARD INSURANCE PLC 18,795.00 1.79 -6.28 17 849,021 CONSOLIDATED HALLMARK INSURANCE PLC 1,626.00 0.20 -9.09 11 2,731,010 CONTINENTAL REINSURANCE PLC 19,811.94 1.91 - 0 0 CORNERSTONE INSURANCE PLC 2,945.90 0.20 - 5 690,000 GOLDLINK INSURANCE PLC 909.99 0.20 - 1 10 GUINEA INSURANCE PLC. 1,228.00 0.20 - 1 50 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,197.03 0.30 3.45 11 1,033,510 LAW UNION AND ROCK INS. PLC. 1,976.31 0.46 - 3 11,010 4,480.00 0.56 7.69 7 218,210 LINKAGE ASSURANCE PLC MUTUAL BENEFITS ASSURANCE PLC. 2,234.55 0.20 - 6 363,196 NEM INSURANCE PLC 12,937.23 2.45 9.87 15 875,428 NIGER INSURANCE PLC 1,547.90 0.20 - 6 29,901 PRESTIGE ASSURANCE PLC 2,691.28 0.50 -9.09 21 53,856,327 REGENCY ASSURANCE PLC 1,333.75 0.20 - 5 23,500 SOVEREIGN TRUST INSURANCE PLC 1,918.39 0.23 -8.70 12 3,771,679 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 1 3 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 2 5,010 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 0 0 WAPIC INSURANCE PLC 6,022.23 0.45 - 29 407,628

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172 65,642,431 MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 2,972.63 1.30 - 2 41,000 2 41,000 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 3,780.00 0.90 - 0 0 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 INFINITY TRUST MORTGAGE BANK PLC 5,796.93 1.39 - 0 0 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 1 1,000 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 1 1,000 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 7,040.00 3.52 0.86 45 640,886 CUSTODIAN INVESTMENT PLC 35,585.28 6.05 - 9 69,154 DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 FCMB GROUP PLC. 32,674.47 1.65 -2.37 45 1,078,344 ROYAL EXCHANGE PLC. 1,131.98 0.22 - 7 39,018 STANBIC IBTC HOLDINGS PLC 429,079.17 41.90 -1.41 21 819,825 UNITED CAPITAL PLC 13,860.00 2.31 2.67 53 2,721,362 180 5,368,589 806 116,590,790 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 0 0 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 852.75 0.24 - 5 50,780 5 50,780 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 593.50 0.60 - 2 11,951 2 11,951 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 7,575.00 5.05 - 3 7,000 FIDSON HEALTHCARE PLC GLAXO SMITHKLINE CONSUMER NIG. PLC. 10,164.95 8.50 - 13 34,238 MAY & BAKER NIGERIA PLC. 4,054.30 2.35 - 30 848,140 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 1,063.53 0.56 - 7 61,190 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 325.23 1.50 - 1 20 PHARMA-DEKO PLC. 54 950,588 61 1,013,319 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 816.96 0.23 4.55 4 300,500 4 300,500 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 2 700 NCR (NIGERIA) PLC. 648.00 6.00 - 0 0 TRIPPLE GEE AND COMPANY PLC. 346.47 0.70 - 3 3,803 5 4,503 PROCESSING SYSTEMS CHAMS PLC 1,502.74 0.32 -3.12 19 2,923,967 E-TRANZACT INTERNATIONAL PLC 9,996.00 2.38 - 2 42,050,818 21 44,974,785 30 45,279,788 BUILDING MATERIALS BERGER PAINTS PLC 1,883.85 6.50 - 16 79,050 CAP PLC 19,530.00 27.90 -0.36 33 365,941 CEMENT CO. OF NORTH.NIG. PLC 177,437.26 13.50 - 13 107,103 FIRST ALUMINIUM NIGERIA PLC 844.14 0.40 - 0 0 MEYER PLC. 313.43 0.59 - 3 3,156 1,959.74 2.47 - 0 0 PORTLAND PAINTS & PRODUCTS NIGERIA PLC PREMIER PAINTS PLC. 1,156.20 9.40 - 0 0 65 555,250 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 2,377.78 1.35 - 18 248,459 18 248,459 PACKAGING/CONTAINERS BETA GLASS PLC. 36,847.94 73.70 - 3 60 GREIF NIGERIA PLC 388.02 9.10 - 0 0 3 60 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 86 803,769 CHEMICALS B.O.C. GASES PLC. 1,565.08 3.76 - 1 7,254 1 7,254 METALS ALUMINIUM EXTRUSION IND. PLC. 1,781.64 8.10 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 74.80 0.34 9.68 3 200,098 3 200,098 4 207,352 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,503.05 0.24 -4.00 18 1,033,667 18 1,033,667 INTEGRATED OIL AND GAS SERVICES OANDO PLC 49,725.65 4.00 1.27 80 1,478,946 80 1,478,946 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 59,317.92 164.50 - 13 29,207 CONOIL PLC 15,024.06 21.65 -5.87 20 90,956 ETERNA PLC. 4,760.13 3.65 1.39 13 198,153 FORTE OIL PLC. 45,130.97 34.65 10.00 242 973,252,173 MRS OIL NIGERIA PLC. 6,354.80 20.85 - 2 340 TOTAL NIGERIA PLC. 50,928.28 150.00 - 17 14,103 307 973,584,932 405 976,097,545 ADVERTISING AFROMEDIA PLC 1,820.01 0.41 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 17,551.17 1.80 - 3 700 3 700 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 341.14 0.29 - 3 4,005 3 4,005 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 3,242.23 5.50 - 5 51,000 TRANS-NATIONWIDE EXPRESS PLC. 342.26 0.73 - 6 32,720 11 83,720 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 1 500 1 500 HOTELS/LODGING CAPITAL HOTEL PLC 4,723.78 3.05 - 0 0 IKEJA HOTEL PLC 2,723.22 1.31 - 7 22,600 7,862.53 3.50 - 11 2,600 TOURIST COMPANY OF NIGERIA PLC. TRANSCORP HOTELS PLC 41,042.18 5.40 - 0 0 18 25,200 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 163.30 0.27 -7.41 8 1,775,087 LEARN AFRICA PLC 1,033.74 1.34 - 1 15,748 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 776.54 1.80 - 2 2,000 11 1,792,835

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BUSINESS DAY Thursday 20 June 2019 www.businessday.ng

An evaluation of Nigeria’s stand on AfCFTA Odinaka Anudu, Maurice Joseph Ogu & Gbemi Faminu

igeria’s stand on the African Continental Free Trade Area (AfCFTA) is clear: No signing until sure that it will not affect the manufacturing sector or the economy adversely. For starters, the AfCFTA seeks to liberalise trade among African countries. It is targeted at a ‘borderless’ Africa, with an eye on a single market for goods and services on the continent. Experts believe it is easily the largest trade agreement since the World Trade Organisation (WTO) in 1994 and a flagship project of Africa’s Agenda 2063, targeted at creating a single market for 1.2 billion people and exposing each country to a $3.4 trillion market opportunity on the continent. The AfCFTA is expected to raise Africa’s nominal GDP to $6.7 trillion by 2030 if all the countries sign up. Components The treaty liberalises 90 percent of products manufactured in Africa, meaning that a country can only protect 10 percent of its local industries. Countries are expected to develop and submit schedules of concessions for trade in goods. This implies that they will submit the particular 90 percent of products that are to be liberalised and the excluded products that are to be exempted from liberalisation. These are goods considered ‘sensitive’ by each country. Negotiators have developed productspecific rules of origin. The rules of origin determine where a product was made. Products or goods from outside the continent will attract the requisite tariffs according to country-specific laws and customs specifications. The General Agreement on Tariffs and Trade (GATT) Article XXIV says that tariffs will be eliminated based only on goods originating in the customs territories making up the free trade areas. Rules of origin are essential for easy identification of goods and are like passports for products to enter a free trade area and circulate without duties or tariffs. GATT is a guide to international trade and represents an agreement between many countries on trade in goods and services. Africa moves on without Nigeria The AfCFTA officially came into force

President Muhammadu Buhari

on 30th May 2019 when it was agreed that the required number of ratifications had already been deposited and the agreement a binding international legal instrument. The Gambia had the previous month completed the number of countries to ratify the trade agreement to 22. South Africa, Ethiopia, Sierra Leone, Lesotho, Burundi, Namibia, Guinea Bissau, and Botswana, among others, had earlier signed up. Of course, there are still few hurdles to cross and necessary adjustments to make to bring it into full force, but the machinery has largely been set in motion. Questions and answers There are critical questions that need to be addressed by government officials. First, has Nigeria really embarked on a study to determine the impact of the free trade on the manufacturers who are the ones opposing the free trade? The Manufacturers Association of Nigeria (MAN) has asked for an evidence-based study on how this will leave this sector that contributes barely eight percent to the gross domestic product, but has it been addressed? If this has been done, can it be accessed via the Nigerian Office for Trade Negotiations and the Ministry of Industry, Trade and Investment’s websites?

Vice President Yemi Osinbajo

Also, if Nigeria says it will still sign, as many government officials have averred, have these officials said the specific products that will be liberalised and those that will be protected? If manufacturers say they do not know which products are part of the 90:10 window, what then are the criteria for Nigeria’s negotiators to determine what products should be protected and what should not? Moreover, is there any quantitative research on the consequences of continental import penetration on Nigerian firms as MAN has requested? What is the impact of AfCFTA on government revenue since certain tariffs will be reduced or even removed to encourage free trade? If Nigeria’s President Muhammadu Buhari refused to sign the agreement because of some of the questions raised above, how far has the country addressed these issues at the moment? Nigeria has no option Addressing the questions above is as important as understanding that the world is moving on. The world is eyeing the Nigerian market. To have 200 million people means market for the rest of the world. Common sense has shown that any restriction on trade leads to smuggling. A typical example is palm oil, which is on the Central Bank of Nigeria (CBN)’s list of 41 items.

Even though it is embargoed and cannot easily been imported, Malaysian and Indonesian oil is smuggled through Kano and Contonou, Benin Republic. The truth is that whether Nigeria signs the AfCFTA or not, these African products will definitely find their way into the country either by hook or by crook, being the largest market on the continent. Smuggling is already a gargantuan challenge for Nigeria and refusal to sign AfCFTA will only more than quadruple it. Aliko Dangote, president of Dangote Group, lamented few days ago at an annual general meeting the impact of smuggling on his sugar segment. “2018 was quite a challenging year for the company with several negative activities, which include influx of smuggled sugar into the key markets nationwide coupled with the Apapa traffick gridlock which continue to affect evacuation of products from the refinery,” Dangote had said. Free trade often has an internal mechanism for curbing smuggling. The upsides are there. But so are the downsides. Nigeria cannot continue with its protectionism for long as the wind of globalisation blows from all corners. What is needed now is a set of incentives from government targeted at cutting production costs and enabling Nigerian manufacturers to compete better.

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Advert Hotline: 08034743892. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Patrick Atuanya. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.